Regulation - LGIC
Proposed Revision to Ontario Energy Board (OEB) Leave to Construct Cost Threshold for Hydrocarbon Pipelines
Regulation Number(s):
O. Reg 328/03
Instrument Type:
Regulation - LGIC
Bill or Act:
Ontario Energy Board Act, 1998
Summary of Proposal:
Section 90 of the Ontario Energy Board Act, 1998 (OEBA) requires that hydrocarbon pipelines in Ontario receive Leave-to-Construct (LTC) approval from the OEB if:
• the proposed hydrocarbon line is more than 20 kilometres in length;
• the proposed hydrocarbon line is projected to cost more than the amount prescribed by the regulations;
• any part of the proposed hydrocarbon line:
o uses pipe that has a nominal pipe size of 12 inches or more, and
o has an operating pressure of 2,000 kilopascals or more; or
• criteria prescribed by the regulations are met. 2003, c. 3, s. 63 (1).
We are proposing changes to O. Reg. 328/03 under the OEBA. The regulation sets the current cost threshold associated with the OEB's LTC for hydrocarbon pipelines at $2 million. If approved, the cost threshold would be increased to $10 million.
OEB LTC approval will still be required if the hydrocarbon pipeline project exceeds any of the other thresholds outlined in Section 90 of the OEBA.
For projects that do not require an OEB LTC approval (e.g., small natural gas distribution expansion projects), they are planned and assessed according to the environmental screening principles directed in the OEB's "E.B.O. 188 Natural Gas System Expansion Report" (E.B.O. 188).
The proposed changes would not alter existing requirements for proponents to seek authorizations from Ontario ministries, authorities and municipalities needed to support the construction of the pipeline. Such other permits and approvals (e.g., relating to technical, safety and environmental requirements) would continue to apply. However, if approved, the proposed regulatory changes may impact how the Crown consults Indigenous communities for projects that cost between $2 million and $10 million that would otherwise not trigger a Leave to Construct approval. As such, as part of this Environmental Registry posting, the Ministry of Energy, Northern Development and Mines intends to consult with Indigenous communities about this proposed regulatory change.
The proposed changes would also not apply to the construction of pipelines crossing Ontario's borders, which are regulated by the Canada Energy Regulator (CER).
Ontario Energy Board - LTC process:
The OEB LTC process is a regulatory review to determine whether hydrocarbon pipeline projects meeting the criteria of the OEBA are in the public interest. The review typically examines the system need for the project and alternatives, project costs and economics, environmental impacts, landowner matters and Indigenous consultation. An OEB LTC hearing is a quasi-judicial process where the applicant makes a case that its project should proceed. Intervenors apply to participate in the process and if approved for participation by the OEB, can test the evidence of the applicant (e.g., by asking questions which the applicant responds to, or filing their own evidence) and submitting final arguments on whether the project is in the public interest. OEB LTC hearings can be oral or written. Once the OEB has reviewed an LTC application and determined it is complete, the OEB's current service standard for an oral hearing is 210 calendar days and 130 days for written hearings.
Following receipt of OEB LTC approval, pipeline companies seek authorizations from Ontario ministries, authorities and municipalities to support the construction of the pipeline.
• the proposed hydrocarbon line is more than 20 kilometres in length;
• the proposed hydrocarbon line is projected to cost more than the amount prescribed by the regulations;
• any part of the proposed hydrocarbon line:
o uses pipe that has a nominal pipe size of 12 inches or more, and
o has an operating pressure of 2,000 kilopascals or more; or
• criteria prescribed by the regulations are met. 2003, c. 3, s. 63 (1).
We are proposing changes to O. Reg. 328/03 under the OEBA. The regulation sets the current cost threshold associated with the OEB's LTC for hydrocarbon pipelines at $2 million. If approved, the cost threshold would be increased to $10 million.
OEB LTC approval will still be required if the hydrocarbon pipeline project exceeds any of the other thresholds outlined in Section 90 of the OEBA.
For projects that do not require an OEB LTC approval (e.g., small natural gas distribution expansion projects), they are planned and assessed according to the environmental screening principles directed in the OEB's "E.B.O. 188 Natural Gas System Expansion Report" (E.B.O. 188).
The proposed changes would not alter existing requirements for proponents to seek authorizations from Ontario ministries, authorities and municipalities needed to support the construction of the pipeline. Such other permits and approvals (e.g., relating to technical, safety and environmental requirements) would continue to apply. However, if approved, the proposed regulatory changes may impact how the Crown consults Indigenous communities for projects that cost between $2 million and $10 million that would otherwise not trigger a Leave to Construct approval. As such, as part of this Environmental Registry posting, the Ministry of Energy, Northern Development and Mines intends to consult with Indigenous communities about this proposed regulatory change.
The proposed changes would also not apply to the construction of pipelines crossing Ontario's borders, which are regulated by the Canada Energy Regulator (CER).
Ontario Energy Board - LTC process:
The OEB LTC process is a regulatory review to determine whether hydrocarbon pipeline projects meeting the criteria of the OEBA are in the public interest. The review typically examines the system need for the project and alternatives, project costs and economics, environmental impacts, landowner matters and Indigenous consultation. An OEB LTC hearing is a quasi-judicial process where the applicant makes a case that its project should proceed. Intervenors apply to participate in the process and if approved for participation by the OEB, can test the evidence of the applicant (e.g., by asking questions which the applicant responds to, or filing their own evidence) and submitting final arguments on whether the project is in the public interest. OEB LTC hearings can be oral or written. Once the OEB has reviewed an LTC application and determined it is complete, the OEB's current service standard for an oral hearing is 210 calendar days and 130 days for written hearings.
Following receipt of OEB LTC approval, pipeline companies seek authorizations from Ontario ministries, authorities and municipalities to support the construction of the pipeline.
Analysis of Regulatory Impact:
If approved, the proposed changes to O. Reg 328/03 will apply throughout Ontario to all new hydrocarbon pipelines constructed entirely within Ontario's boundaries.
Based on OEB LTC applications received for pipeline projects from 2017-2020, an increase in the cost threshold from $2 million to $10 million would have reduced the number of projects undergoing LTC approval by approximately 24 percent.
Reducing the number of pipeline projects undergoing LTC approval is expected to reduce the cost and time required for small pipeline development and construction in Ontario (i.e., for projects which are below all the OEB's physical thresholds for pipeline length, diameter and pressure).
If approved, the proposed regulatory changes may impact how the Crown consults Indigenous communities for projects that cost between $2 million and $10 million. Without a Leave to Construct approval, Duty to Consult could be considered through another mechanism. As such, as part of this Environmental Registry posting, the Ministry of Energy, Northern Development and Mines intends to consult with Indigenous communities about this proposed regulatory change.
Pipelines that cross Ontario's boundaries are regulated by the Canada Energy Regulator (CER) and will not be affected by the proposed changes. CER regulation also applies to pipelines and projects located entirely within Ontario, if the pipeline or project is part of an interprovincial pipeline system.
Based on OEB LTC applications received for pipeline projects from 2017-2020, an increase in the cost threshold from $2 million to $10 million would have reduced the number of projects undergoing LTC approval by approximately 24 percent.
Reducing the number of pipeline projects undergoing LTC approval is expected to reduce the cost and time required for small pipeline development and construction in Ontario (i.e., for projects which are below all the OEB's physical thresholds for pipeline length, diameter and pressure).
If approved, the proposed regulatory changes may impact how the Crown consults Indigenous communities for projects that cost between $2 million and $10 million. Without a Leave to Construct approval, Duty to Consult could be considered through another mechanism. As such, as part of this Environmental Registry posting, the Ministry of Energy, Northern Development and Mines intends to consult with Indigenous communities about this proposed regulatory change.
Pipelines that cross Ontario's boundaries are regulated by the Canada Energy Regulator (CER) and will not be affected by the proposed changes. CER regulation also applies to pipelines and projects located entirely within Ontario, if the pipeline or project is part of an interprovincial pipeline system.
Further Information:
Link to Environmental Registry
Proposal Number:
21-ENDM001
Posting Date:
January 29, 2021
Comments Due Date:
April 29, 2021
Proposal Status:
Following consideration of comments received in response to our proposal, the government is proposing further consultation on potential draft amendments to O. Reg 328/03 under the Ontario Energy Board Act, 1998. As noted in the original proposal, the regulation sets the current cost threshold associated with the OEB's Leave to Construct for hydrocarbon pipelines at $2 million. If approved, the cost threshold would be increased to $10 million.