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A pump jack draws oil from the ground near a hydraulic fracturing operation near Bowden, Alta., Tuesday, Feb. 14, 2012. (Jeff McIntosh for The Globe and Mail/Jeff McIntosh for The Globe and Mail)
A pump jack draws oil from the ground near a hydraulic fracturing operation near Bowden, Alta., Tuesday, Feb. 14, 2012. (Jeff McIntosh for The Globe and Mail/Jeff McIntosh for The Globe and Mail)

Ottawa clears hurdles to resource development Add to ...

The Harper government is putting new muscle to its ambitious natural resource strategy, clearing away regulatory hurdles to drive Canada's energy and mineral development and expand exports to Asia.

Finance Minister Jim Flaherty’s budget Thursday included an announcement that the government is speeding up environmental reviews of major resource projects, including the controversial Northern Gateway pipeline that will bring oil sands bitumen to Kitimat, B.C., for export to Asia.

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Ottawa is also stepping up its battle with oil industry opponents by ordering the Canada Revenue Agency to increase monitoring of environmental charities that engage in political advocacy, a move critics say is an attempt to cow activists into silence.

Mr. Flaherty said the government was responding to complaints that environmental groups may be abusing their charitable status, in part by accepting foreign donations for campaigns that oppose pipeline construction and oil sands development.

Ottawa is particularly concerned about expanding oil and gas exports to Asia, and has expressed frustration with the lengthy hearing being conducted by a review panel into the Northern Gateway proposal. Prime Minister Stephen Harper has promoted Canada’s energy potential as an energy superpower and courted Asian investment in resource development and export facilities.

Mr. Harper invested a new urgency in the need for export capacity to Asia after the U.S. put on hold TransCanada Corp.'s plan to build the Keystone XL pipeline to provide oil sands producers access to the U.S. Gulf Coast refining hub.

The government estimates there are more than 500 projects, representing $500-billion in investment, planned over the next decade. But in the budget plan, the government said corporations that want to invest are facing an “increasingly complex web of rules and bureaucratic reviews that have grown over time.”

The budget laid out new time limits for such reviews, saying panel hearings should take no more than 24 months. Federal officials say the current Gateway review has been under consideration for 50 months and isn’t scheduled to conclude until the fall of 2013. However, the company only made its formal filing in May, 2010.

Mr. Flaherty confirmed the new time lines would apply to Gateway, though neither he nor officials offered details on how the process will be shortened.

The prospect of streamlining environmental reviews was welcomed by the oil and mining sectors, particularly Enbridge Inc. which faces opposition from first nations and environmentalists over its Gateway project.

“If there’s a way that we could still have a proper process with an earlier decision, we would like to see that,” said Janet Holder, the company’s executive in charge of Northern Gateway.

She pointed to the schedule for the review panel over the next two years, which includes a number of gaps that could potentially be eliminated.

“There’s a lot of time in there that probably could be shrunk down without causing any jeopardy to the process,” Ms. Holder said.

“From a federal government public policy perspective, [the change]moves the yardsticks significantly,” said Ian Anderson, the president of Kinder Morgan Canada, which is seeking to build new pipeline capacity to carry Alberta oil to the B.C. Lower Mainland for export to Asia.

Having a strict timeline will also increase the onus on industry to do its homework prior to filing for a project approval, he said.

But there is some skepticism whether Ottawa can retroactively impose new deadlines on the Northern Gateway review panel, which began hearings in January. Doing so would require a legislative exemption that has never been used federally, said Shawn Denstedt, a regulatory lawyer with Osler, Hoskin & Harcourt LLP.

To streamline the permitting process, Ottawa will introduce legislation to impose strict time lines for permitting of major projects and allow the federal government to delegate specific project reviews to provinces.

“We’re delighted. This is long overdue,” said Pierre Gratton, president of the Mining Association of Canada.

“We’ve estimated there’s $140-billion in new mining investment that’s ready to hit the ground in the next five years,” Mr. Gratton said. “A more efficient review process will help make that happen. It’s good for Canadians. It will create a lot of jobs across the country.”

Opposition MPs and environmental groups have warned that the Harper government is intent on gutting existing safeguards in order to rubber-stamp approvals for heavily-polluting oil and mining projects that pose health and environmental risks.

“This is a budget for the great pipeline to China,” NDP MP Megan Leslie said. “This is all about pipeline development at any cost.”

However, Mr. Flaherty said resource development does not have to come at the cost of environmental degradation.

The Finance Minister also announced the Canada Revenue Agency will step up enforcement of the Income Tax Act to ensure charitable groups don’t spend more than 10 per cent of their revenues on political activity.

While the budget doesn’t single out environmental groups, it does say that “concerns have been raised that some charities may not be respecting the rules.” Those concerns have largely been raised by pro-oil industry groups and Conservative MPs and Senators who have that slammed the use of foreign donations to oppose oil sands development.

Environmental groups are already fully transparent and file reams of information with Revenue Canada, including donations from outside the country, said Rick Smith, president of Environmental Defence Canada.

“This is about environmental charities being able to do their work to protect the environment and the health of Canadians,” he said.



With files from reporters Nathan VanderKlippe, Carrie Tait and Nicolas Johnson

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