Canada: The Creation Of The Canadian Energy Regulator

This article supplements our multi-part series on changes to Canada’s regulatory regime governing project development and operation in Canada.

This post summarizes the proposal to establish the Canadian Energy Regulator (Regulator) as introduced by Bill C-69, An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts (Bill C-69). Bill C-69 proposes the repeal of the existing National Energy Board Act (NEB Act) and the enactment of the Canadian Energy Regulator Act (CERA).

Overall, CERA parallels the current regulatory regime under the NEB Act in several areas, including: pipeline traffic, tolls and tariffs; authorizations for the export of oil and gas; liabilities for unintended or uncontrolled releases; and a pipeline company’s financial requirements.

CERA also confirms the Regulator’s jurisdiction over abandoned facilities and expands its jurisdiction to include offshore renewable energy projects and offshore power lines (including associated liabilities and financial requirements).

The proposed changes to the regulatory regime are aimed at restoring investor confidence, advancing reconciliation with Indigenous peoples, and offering greater certainty, more transparency and enhanced participation by the public and Indigenous peoples.

The most significant of these changes are as follows.

New Corporate Structure

CERA establishes a new entity—the Canadian Energy Regulator—to replace the National Energy Board (NEB). The Regulator will be an agent of the Crown and its head office will be in Calgary.

The Regulator will have a five to nine member board of directors responsible for the governance of the Regulator. At least one of the directors must be an Indigenous person.

The Regulator will also have a Commission of up to seven full-time commissioners—one of the commissioners must be an Indigenous person. The Regulator may also have an additional complement of part-time commissioners. A commissioner is not eligible to be a director of the Regulator.

Canadian Impact Assessment Agency to Conduct Impact Assessments for “Designated Projects”

The Regulator will continue to have jurisdiction over energy projects. However, impact assessments for projects that are “designated” pursuant to the proposed Impact Assessment Act (IAA) would be conducted pursuant to the IAA. The IAA will require the Minister to refer the impact assessment of a designated project to a review panel if the designated project includes physical activities regulated under CERA. In this circumstance, at least one member of the review panel must be a commissioner under CERA.

Legislated Timelines

Similar to the existing regime, CERA establishes legislated maximum timelines for the review of projects that are not also designated projects under the IAA. In some instances, such as for an application requesting a pipeline exemption order, the maximum timeline for review is shorter than current NEB Act timelines. The review timelines for designated projects are discussed in our prior blog on Bill C-69.

CERA timelines are subject to the discretion of the Lead Commissioner of the Regulator to specify “excluded periods” and also subject to the discretion of the Minister to grant “extensions”, which could extend the timelines for consideration of applications.

The current regime under the NEB Act describes the discretion of the NEB to exclude periods in the calculation of timelines. The Lead Commissioner’s discretion under CERA to exclude periods will be defined by regulation.

Broader “Public Interest” Considerations

When considering whether to make a recommendation to the Minister on an application for a pipeline certificate, CERA expands the range of factors the Commission must consider in its public interest determination.

Additional factors the Commission must consider include:

  • environmental effects (including cumulative environmental effects);
  • safety and security of persons and the protection of property and the environment;
  • health, social and economic effects;
  • interests and concerns of Indigenous peoples; and
  • effects on the rights of Indigenous peoples.

CERA requires the Commission to consider these factors in light of Indigenous traditional knowledge provided to the Commission and in light of scientific information and data. CERA also requires the Commission to consider these factors when deciding whether to issue a certificate for a power line or an authorization for an offshore renewable energy project or offshore power line.

Increased Indigenous Participation

Specific provisions of CERA are directed at increasing the involvement of Indigenous peoples in the regulation of Canadian energy projects. For example, and as noted above, CERA requires the Commission to consider in its public interest determinations the interests and concerns of Indigenous peoples and the effects of a project on the rights of Indigenous peoples. The Commission must also consider in its decision making the adverse effects that its decisions, orders or recommendations may have on Indigenous peoples. Further, CERA requires that the consent of a band council be obtained before a company uses or takes possession of reserve lands to construct a pipeline or engage in activities that are required to determine pipeline routing.

CERA authorizes the Regulator to establish committees or programs to enhance Indigenous involvement in pipelines, power lines, offshore energy projects and abandoned pipelines, and in matters related to the safety, security and protection of persons, property and the environment. CERA also authorizes the Minister to enter arrangements with any Indigenous governing bodies for carrying out the purposes of CERA, if authorized by regulation to do so.

Expanded Public Participation

In line with the federal government’s stated goals of transparency and enhanced participation by the public and Indigenous peoples, CERA requires that all decisions of the Commission (except decisions reated to the Regulator's internal administration) be written, and that all such decisions and reasons be made public. Of particular note, the new regulatory regime will eliminate the “directly affected” standing test currently found in the NEB Act. CERA permits any member of the public to make representations to the Commission on a certification application for a pipeline.

CERA also authorizes the Regulator to engage with the public and Indigenous peoples on matters within its mandate and to establish processes for that purpose. The Regulator also may enter into arrangements with any government or Indigenous organization to establish collaborative processes. 

Alternate Dispute Resolution

If parties involved in a dispute related to a matter under CERA consent, the Regulator must provide an alternate dispute resolution process for the dispute.

Implications for Energy Project Development

The NEB Act will continue to govern until CERA comes into force. Even after CERA comes into force, the NEB Act will govern in certain respects. For example, applications that are pending before the NEB immediately before CERA comes into force will continue to be processed in accordance with the version of the NEB Act that was in force prior to the coming into force of CERA.The CERA will also include a provision to allow current members of the NEB to continue to hear and decide matters that were before the board member prior to the CERA coming into force, at the request of the Lead Commissioner.

The details related to implementing the new project review regimes under CERA and IAA are important to their success. Certainty, fairness and efficiency are essential to Canada’s ability to attract developers and have good projects approved and built.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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