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The show goes on: Energy project approval processes continue amid COVID-19 restrictions

Author(s): Martin Ignasiak, Sander Duncanson, Jessica Kennedy, John Gormley

June 3, 2020

Despite the prohibitions on in-person hearings and logistical challenges presented by the COVID-19 pandemic, federal and provincial energy regulators have continued to process applications, including by replacing previously scheduled oral hearings with written processes. Although these changes have, in several instances, resulted in extended processing times compared to previously scheduled oral hearings and/or standard timelines, the consistent message from Canadian tribunals is that there are reasonable and fair ways to continue processing contentious project applications while also ensuring the health and safety of all involved.

In this Update, we:

  • Provide considerations for proponents seeking continued and timely regulatory processes to advance projects and other regulatory applications during the ongoing pandemic.
  • Consider recent procedural updates and decisions regarding application processes during the pandemic from Canadian energy regulators including: the Canada Energy Regulator (the CER), Impact Assessment Agency (the IAA), Alberta Utilities Commission (the AUC), Alberta Energy Regulator (the AER) and Natural Resources Canada (collectively, the Regulators).

Considerations for project proponents

  • The Regulators have generally sought to continue processing regulatory applications by replacing previously scheduled oral processes with written and/or remote processes. Proponents should be encouraged to see the Regulators seeking to implement creative solutions during these unprecedented circumstances while declining requests from project opponents to postpone hearings indefinitely until the COVID-19 pandemic is over. The overarching theme is that the continued processing of regulatory applications is in the public interest.
  • Project proponents can, however, expect prolonged regulatory timelines, particularly where oral processes would otherwise be required and are replaced by written and/or remote hearing processes. Written processes are also subject to potential delays, especially if and where Indigenous Group participants seek extensions due to pandemic-related challenges.
  • To date, the only hearing processes that have been modified are those that were scheduled for the spring or summer of 2020. Processes scheduled for the fall of 2020 or later have not been modified, but participants in those processes should anticipate possible changes to the hearing format and schedule as the hearing dates near and public health guidelines evolve.
  • For projects that have completed regulatory hearing processes and are awaiting a cabinet decision or are otherwise subject to legislated approval timelines, it may take longer than usual to get a decision. For example, the federal cabinet has recently granted itself extensions of up to 150 days, citing pandemic-related challenges associated with Indigenous consultation.

Canada Energy Regulator

In its general notice regarding the CER’s precautionary measures and business continuity plans related to COVID-19, issued March 16, 2020, the CER stated that it is “committed to carrying out [its] duties while doing [its] part to promote public safety and health.”

The Commission of the CER (the Commission) continues to process pipeline project and tolling applications by replacing previously scheduled oral hearings (or other previously scheduled in-person process steps) with written or virtual processes.

In three recent procedural decisions, summarized below, the Commission decided to replace or supplement oral cross-examination with written information request (IR) processes. These procedural decisions are in respect of Enbridge Pipelines Inc. (Enbridge)’s Canadian Mainline Contracting (Tolling) Application, NOVA Gas Transmission Ltd. (NGTL)’s Application for the Edson Mainline Expansion Project and  Detailed Route Hearings for the Trans Mountain Expansion Project.

Enbridge Mainline Tolling Application

On May 19, 2020, the Commission issued a procedural direction regarding Enbridge’s Canadian Mainline Contracting (Tolling) Application.

The Commission determined that the hearing should proceed, rejecting submissions by 16 of 26 participants that supported postponement of the regulatory process due to the impacts of the COVID-19 pandemic.

The Commission determined that the hearing process could be structured to balance the need to address pandemic-related challenges and the Commission’s “mandate to adjudicate in an appropriately expeditious manner under the circumstances.” To that end, the Commission determined that the hearing would proceed subject to the following process modifications:

  • None of the initial hearing steps will proceed in person.
  • Timelines for completion of substantive steps in the hearing process would be extended.
  • The hearing process would allow participants multiple opportunities to test Enbridge’s evidence via rounds of IRs.
  • Given that the oral hearing steps were not anticipated until 2021, the Commission would issue details of oral hearing steps at a later date, considering the public health guidance at that time.

On May 22, 2020, the Commission issued a hearing order establishing a written evidence and IR process that extends to April 2021.

NGTL Edson Mainline Application

In CER Proceeding GH-001-2019 regarding NGTL’s Application for the Edson Mainline Expansion Project, the Commission issued a procedural update on April 21, 2020, in which the Commission decided to replace oral cross-examination with a written process. Previously, the oral hearing had been scheduled to include oral cross-examination beginning in late May.

The Commission rejected requests from six intervening Indigenous Groups for an adjournment until the COVID-19 pandemic is over. The Commission found that:

  • Current pandemic challenges constitute a material change in circumstances that will prevent in-person cross-examination from occurring in the foreseeable future and for a potentially indeterminate period of time.
  • Oral cross-examination is not a right of the parties in a pipeline certificate hearing.
  • Written IRs would provide all parties with a meaningful opportunity to test evidence and otherwise ensure that administrative law principles and procedural fairness will be respected.

The Commission further noted that it was not contemplating extending the legislated 15-month time limit to provide the Minister with its report (due November 26, 2020).

On May 27, 2020, after receiving further comments (and adjournment requests) from affected parties, the Commission established a written hearing process concluding in August 2020. The Commission held that “even a short adjournment would create delays that are neither necessary nor desirable” and, instead, established a written process with “generous” lead times. It also reiterated its intent to adhere to the legislated time limit.

Trans Mountain Expansion Project – Detailed Route Hearings

The Commission similarly decided to replace oral cross-examination with written IRs in its April 21, 2020, procedural directions in ongoing detailed route hearings for the Trans Mountain Expansion Project.

For example, the Commission issued a procedural direction in CER Hearing MH-027-2020, which is in response to a statement of opposition filed by the S’ólh Téméxw Stewardship Alliance (STSA), a B.C.-based alliance of Indigenous Groups, to Trans Mountain’s proposed detailed route. The previously established process anticipated that all written steps would conclude in March and that oral Indigenous knowledge sharing, cross-examination and argument would occur at an in-person oral hearing in April 2020. Under the revised process, STSA was given the opportunity to file two rounds of IRs about Trans Mountain’s evidence and provide additional written evidence. Trans Mountain then has the opportunity to file one round of IRs about the STSA’s evidence and file further reply evidence in June 2020. The Commission indicated flexibility with respect to the format of final argument (written or oral via remote technology), which has not yet been set.

In a separate letter to the parties of the STSA hearing, the Commission confirmed that it will not hold in-person Indigenous knowledge sessions at this time, and noted it was unclear when it would be possible to hold such sessions. The Commission rejected STSA’s request to postpone any Indigenous knowledge session until it was safe to conduct the session in person. The Commission stated that it would work with the STSA to identify alternative means by which Indigenous knowledge can be shared, including by teleconference, videoconference, pre-recorded audio or video, or written submissions. After receiving further comments, the Commission later decided on May 29, 2020, to receive Indigenous knowledge via videoconference in June 2020.

Natural Resources Canada/Governor-in-council

We are aware of at least one instance where the COVID-19 pandemic has prolonged the timeline for decision-making by the federal government on resource projects.

Specifically, on May 19, 2020, the Minister of Natural Resources Canada issued a notification of the government’s decision to extend its timeline to make a decision on the NGTL 2021 System Expansion Project by up to an additional 150 days (the legislation requires a cabinet decision within 90 days of receiving the CER’s recommendation report, which was received on February 19, 2020). The Minister stated that the governor in council extended the timeline to ensure there is sufficient time to fulfil its constitutional obligation to consult with affected Indigenous Groups, while respecting public health and safety precautions. The Minister indicated that due to health and safety guidelines and concerns related to the pandemic, Phase III consultations (following the CER recommendation but prior to a final cabinet decision) have faced delays, and some Indigenous Groups have requested additional time so that they may fully participate in Crown consultations on the NGTL 2021 System Expansion Project.

Impact Assessment Agency

The federal Minister of Environment and Climate Change (Minister) and the IAA have issued extensions for the assessment of proposed projects on a case-by-case basis as a result of the COVID-19 pandemic.

For instance, on April 3, 2020, the Minister extended the time limits for the proposed Grassy Mountain Coal Project, located in Alberta, by 90 days “to recognize the extenuating circumstances arising from the COVID-19 pandemic and its impacts to communities, businesses, and stakeholders.”

At the request of the Province of Québec, on April 14, 2020, the IAA similarly extended the 180-day time limit for the planning phase under the Impact Assessment Act for Gazoduq Inc.'s proposed Gazoduq Project, a proposed 780-kilometre natural gas pipeline between northeastern Ontario and Saguenay, Québec.

Alberta Utilities Commission

As part of its response to COVID-19, in Bulletin 2020-06 the AUC deferred until further notice all scheduled in-person public hearings, consultations or information sessions. The AUC emphasized the highly fluid nature of these unprecedented circumstances, and encouraged stakeholders to monitor the AUC COVID-19 impacts page for most recent information and updates. At the time of this Update, five oral hearings for project applications, previously scheduled in the months of March, April, May and June, have been “deferred until further notice.” Previously scheduled technical conferences for the Distributed System Inquiry (AUC Proceeding 24116) and the oral hearing for the 2021 Generic Cost of Capital Proceeding (AUC Proceeding 24110) have similarly been deferred until further notice. However, written process steps continue to be established and enforced by the Commission (with extensions granted where warranted). The AUC has indicated that, should there be an essential economic requirement to proceed with a hearing or other public proceeding, written or remote-participation options will be explored with parties.

Recently, the AUC has implemented alternative means to allow proceedings to continue during the pandemic. For example, on May 28, 2020, the AUC proposed a remote hearing process to consider the East Strathmore Solar Project. The Commission found that although COVID-19 restrictions on gatherings have recently been relaxed, public health authorities continue to recommend physical distancing, limiting travel and other measures to prevent the spread of COVID-19. Therefore, the Commission stated that, instead of the previously set in-person hearing steps, the hearing would be carried out both virtually and in writing. Specifically, the Commission proposed to hold a two-day virtual hearing using an audio-visual online service, with argument and reply argument to be filed in writing after completion of the virtual hearing.

Alberta Energy Regulator

The AER announced on March 17, 2020, that oral portions of AER hearings will not be held. The AER indicated that it is reviewing its current and future adjudicative functions to ensure they remain fair and transparent, while protecting the health of everyone involved. However, on March 23, 2020, the AER issued a hearing order and schedule for an oral hearing to be held in October 2020 for Proceeding 379 regarding applications to conduct hydraulic fracturing activities near the Brazeau hydroelectric facility.

The AER has continued to issue notices of applications and hearing processes, which generally provide for the processing of applications via written processes and scheduling of oral hearings to be determined at a later date (see AER current hearing schedule). In ongoing proceedings, the AER has indicated that it is exploring technology options for holding pre-hearing conferences and other hearing steps remotely and has granted schedule extensions in light of the pandemic. It appears that the AER has not yet been faced with the need to reformat an oral hearing in light of the pandemic.

In an April 30, 2020, procedural decision regarding a regulatory appeal hearing, the AER noted that restrictions on face-to-face gatherings resulting from the COVID-19 pandemic are ongoing. It stated that, while the hearing timing and format would be decided at a later date, it may include a combination of written submissions, a more detailed and iterative written IR process, an opportunity to ask witnesses questions directly via electronic means and written or oral argument.

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