Proposed Change to Ontario Regulation 328/03 – Leave to Construct Cost Threshold for Hydrocarbon Pipelines

In January 2021, we posted to the Environmental Registry for 90-day comment a proposal to increase the cost threshold for hydrocarbon pipelines that require OEB approval through its Leave to Construct process, as prescribed in regulation, from $2 million to $10 million. The posting closed in April 2021.

In this posting we are providing the specific regulatory amendment for additional feedback.

The change we are proposing to Ontario Regulation 328/03 under the Ontario Energy Board Act, 1998 (OEB Act) is as follows:

1.  Section 3 of Ontario Regulation 328/03 is amended by striking out “$2 million” at the end and substituting “$10 million”.

Commencement

2.  This Regulation comes into force on the later of January 1, 2022 and the day this Regulation is filed.

No other changes are proposed. Specifically, we note that Section 90(2) of the OEB Act, which states a Leave to Construct proceeding is not required for reconstruction or relocation of a pipeline if the size of the line is not changing and additional land is not required, remains unchanged.

Under the OEB Act, the OEB reviews Leave to Construct (LTC) applications for pipeline projects and will grant leave to carry out the work if it is in the public interest to do so. When determining whether a pipeline project is in the public interest, the OEB typically considers the need for the project, the nature of the proposed facilities and any alternatives, project cost and economics, environmental matters, Indigenous consultation, land matters and conditions of approval.

LTC proceedings do not apply to all hydrocarbon pipeline projects – only those that exceed certain thresholds.

We are not proposing to change other thresholds (i.e., relating to pipeline length, pipeline diameter or operating pressure) as these factors reflect the physical characteristics of pipelines.

For all hydrocarbon pipeline projects (i.e., whether there is a Leave to Construct proceeding or not), proponents will require authorizations from Ontario ministries, authorities and municipalities needed to support the construction of the pipeline. Other permits and approvals (e.g., relating to technical, safety and environmental requirements) would continue to apply. 

The Ministry of Energy (ENERGY) recognizes that the proposed regulatory changes may impact how the Crown consults with Indigenous communities for projects that cost between $2 million and $10 million. Without a LTC approval, the Duty to Consult could be considered through another mechanism.  As such, as part of this Environmental Registry posting, ENERGY intends to consult with Indigenous communities about this proposed regulatory change. ENERGY is also in discussions with the OEB and relevant permitting ministries about the potential impacts of this proposed change.

On the initial proposal posting, ENERGY staff undertook engagement and consultation with Indigenous communities and organizations throughout Ontario that included:

• Notification and follow-up letters outlining the proposed changes to O. Reg. 328/03 at the beginning and mid-points of the 90-day posting of the proposal to Ontario’s Environmental Registry (ERO) for review and comment;
• Inviting Indigenous communities and organizations to submit written comments via the ERO, directly to Ministry staff, or to arrange separate meetings with Ministry staff to share concerns and discuss potential options regarding the proposed change; and
• Hosting three virtual sessions for Indigenous communities and organizations to share information about the proposed changes, answer questions and discuss concerns.

For this posting, ENERGY has sent letters advising all Indigenous communities, as well as advising Indigenous organizations in Ontario, of the posting of the draft regulation to the ERO and Ontario’s Regulatory Registry (RRO) for a 45-day review and comment period.  This notification includes an invitation to submit written comments via the ERO/RRO postings or directly to ENERGY staff and an open offer to meet with Indigenous communities if they wish to share information and discuss concerns.