The Liberal government is proposing new rules that would require resource companies to consult with Ottawa and Indigenous communities on major projects well before the firms finalize their plans and apply for regulatory approval.

The companies would also be expected to provide greater opportunities for partnership with Indigenous peoples, and seek their consent for developments that impact their traditional territory, although they would not have a veto.

The Liberals released a discussion paper Thursday that proposes sweeping changes to the federal regulatory review process for major resource projects, undoing many of the controversial changes put in place by the Conservatives just five years ago. The government plans to introduce legislation by the end of the year.

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Its proposals call for additional environmental protection and increased public and Indigenous involvement in decision-making in the review period, while insisting the new regime will "ensure good projects go ahead and resources get to market."

Under the plan, the government would establish a single agency responsible for assessing federally designated projects. In addition to environmental impacts, the review would consider social, health and economic aspects of a project and require a gender-based analysis.

"At the end of the day, we want to get good projects built to create jobs and support communities across our country, while protecting the environment for our children," Environment Minister Catherine McKenna said in a release.

The government says assessment process would be based on the "full recognition of Indigenous rights and interests." However, one senior official said the project proponents and the government would "seek" the free, prior and informed consent of Indigenous peoples over resource projects on their traditional territory, but would not necessarily require their consent.

The former Conservative government overhauled the assessment process in 2012, with the aim of accelerating decision-making by limiting the environmental considerations that would be taken into account, and preventing project opponents from bogging down review hearings.

Echoing concerns of environmentalists and First Nations, the Liberals argued the Conservative tilted the process in favour of pipelines and other resource projects. In its discussion paper, the government says the current process is not transparent and lacks scientific rigour, fails to protect waterways and fisheries, and does not allow for sufficient participation by the public and Indigenous Canadians.

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The oil industry's proposed pipeline expansions have drawn the most attention, and prompted an often-heated national debate over the risks and benefits of resource development, pitting Alberta and its oil industry against vocal opponents in British Columbia and Quebec.

Despite criticizing the Conservative approach, the Liberals decided when they took power in late 2015 to review pipeline projects already in the queue under the existing process, saying it would be unfair to make the companies wait for the promised reforms. Instead, the government adopted "interim measures" that included increased consultations and an assessment of the greenhouse-gas-emission impacts of pipeline expansion.

As a result, the proposed reforms would not impact the currently planned projects that would greatly expand the oil industry's export capacity. Ottawa approved two projects last November – including the hugely controversial expansion of the Kinder Morgan Inc. TransMountain line to Vancouver – and is currently reviewing TransCanada Corp.'s Energy East project.

Industry officials reacted cautiously to the proposals on Thursday, saying they needed to review the discussion paper to understand the full impact. The government proposes to keep the National Energy Board (NEB) as a regulator of ongoing operations, and maintain its office in Calgary, but the board would have a diminished role in the environmental assessment process.

Instead, the government would create a single review agency that would replace the NEB in assessing pipeline and major energy projects; that agency would work with the NEB to benefit from its technical expertise.

The Canadian Energy Pipeline Association (CEPA) – which represents companies such as TransCanada – had proposed a two-step approval process, with an initial finding on whether a project was in the national interest and then a more technical environmental assessment.

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The Liberals' discussion paper rejected that approach, but CEPA president Chris Bloomer said there are elements in the plan that could ensure the broad political debates and decisions occur outside the environmental assessment process. "There's a lot in the discussion paper that requires further definition," Mr. Bloomer said. "We think we can work with it but this is not the end of the process."

Mining projects are reviewed under the Canadian Environmental Assessment Act, which will also be updated. Canadian Mining Association president Pierre Gratton said he was pleased to see Ottawa rejected recommendations made this spring by a government-appointed advisory panel that industry feared would have made it extremely challenging to win approval for projects.

However, one environmental lawyer said the government's proposals "fall far short" of establishing a process that would ensure sustainable development for the benefit of the communities.

The measures "would not give Canada a leading-edge, world-class environmental review process," said Anna Johnston, staff lawyer at West Coast Environmental Law. "It would still let short-term economic benefits that go to a few trump environmental harm and long-term sustainable economic development."