UPDATE 3-Canada to cut back on environmental reviews

Tue Apr 17, 2012 5:40pm EDT

* New rules will speed approval of pipelines, mines

* Canada keen to quicken development of oil-rich tar sands

* Environmentalists say new rules increase disaster risks

* Government removes veto right from energy regulator

By Euan Rocha and David Ljunggren

TORONTO/OTTAWA, April 17 (Reuters) - Canada said on Tuesday it would streamline the way it performs environmental reviews on major industrial projects in a bid to speed the development of mines and pipelines, a move critics predicted could cause an environmental disaster.

And in a policy change that could benefit the oil and gas industry, the Conservative government said it will strip key veto powers from the federal energy regulator and give itself the final say on approving major pipelines.

The right-of-center Conservatives say the current regulatory system is too complex and lengthy and could threaten up to C$500 billion ($505 billion) of new investments in energy and mining industries over the next decade.

"We have to compete with other resource-rich countries for fast-growing markets and scarce capital. And we must do it now," Natural Resources Minister Joe Oliver said in a speech unveiling the new rules.

The federal government now will focus only on major reviews, handing over responsibility for some projects to Canada's 10 provinces, while ensuring each proposed development is assessed only once.

Ottawa will also impose legally binding timetables on reviews, which in the past have taken up to seven years to complete. Once the new rules are adopted, an assessment will be limited to a maximum of two years.

"We have immense resources, we are an energy superpower, we're a mining giant, and this can have an incredibly positive impact on the future prosperity and security of Canadians," Oliver told reporters after the speech.

The Conservatives are particularly keen to speed development of the oil-rich tar sands of northern Alberta, which represent the world's third largest oil reserves, and to build pipelines to take the Alberta crude to ports on the Pacific Coast. Environmentalists strongly oppose that idea.

Under the current system, the government can stop a pipeline plan that the National Energy Board - the federal energy regulator - has approved but it cannot overrule a decision by the NEB to veto a project. That will now change.

An official document said Ottawa would "establish clearer accountability for decisions on major pipeline projects in the national interest by giving government authority to make the 'go/no go' decisions."

Kinder Morgan Energy Partners LP and Enbridge Inc are both proposing to build major pipelines from Alberta to the Pacific Coast.

The NEB has only vetoed three projects since 1959 but it sometimes attaches conditions to the approvals it grants.

"What I think this points to is potential politicization of these decisions," said Josh Paterson of the West Coast Environmental Law Centre.

Other green activists - who complain about the Conservatives' tight ties to the energy industry - say trimming the regulatory process could lead to disaster.

"These changes are about handing oil and mining companies their approvals faster, rather than asking what kind of legacy this leaves for the next generation," said Keith Stewart of Greenpeace.

Oliver dismissed the idea that the environment would suffer, noting that Ottawa planned to impose stiff fines on firms breaking the rules and would boost both pipeline inspections as well as measures designed to improve tanker safety.

"Projects will go forward too fast and mistakes will be made. There will be more court cases," said John Bennett of the Sierra Club.

Legal experts say truncating the regulatory process could leave proponents of major projects exposed to lengthy court battles.

Asked whether the new rules would prevent lawsuits, Oliver replied: "This legislative project does not impact on people's legal rights ... we cannot preclude legal action."

Over 40 federal government departments and organizations currently have responsibility for project reviews. This number will be cut back to three.

"The minister's goal of 'one project, one review, completed in a clearly defined time period' makes great sense and would support developments that bring jobs and prosperity to Canadians," said Todd Nogier, spokesman for pipeline company Enbridge.