The federal Liberal government says it will streamline the approval process for major natural resources projects, scrapping the National Energy Board and empowering a new body to conduct more extensive consultation with groups affected by development.

The changes are part of the largest overhaul of Canada's environmental assessment process in a generation.

The new system comes after years of criticism that the National Energy Board, the regulator that weighs approval for construction of projects such as pipelines, was ill-suited to conduct environmental assessments or the Crown's duty to consult with Indigenous peoples.

'I'm all about no drama, so I think we will get to a resolution,' says Catherine McKenna. 8:50

To that end, the new legislation, the 340-page Bill C-69, creates the Impact Assessment Agency of Canada to carry out review of all major projects in this country, to assess not just the environmental considerations, but also health, social and economic impacts, as well as effects on Indigenous peoples, over the long term.

The government is using the tagline "One project. One assessment" to reflect its intention to ditch the overlapping assessments that are currently required for some projects.

"The legislation we are introducing today aims to restore public trust in how the federal government approves major projects like mines, pipelines and hydro dams. These better rules are designed to protect our environment, while improving investor confidence … they will also make the Canadian energy and resource sectors more competitive," Environment Minister Catherine McKenna told reporters in Ottawa Thursday.

Power Panel on feds' decision to scrap the National Energy Board 11:24

The new agency will have set timelines for the review of projects — a maximum of 300 days for smaller ones with fewer assessment requirements — so that they can be carried out in a "timely manner."

Bigger projects that are subject to a panel review — a group of independent experts appointed by the minister to conduct a more thorough environmental assessment beyond what was done by the agency — must have a decision within 600 days, down from the current 24 months (730 days).

Minister of Environment and Climate Change Catherine McKenna says the government will establish a new Impact Assessment Agency of Canada which will lead all federal reviews of major projects. 1:35

The agency will also hear from groups that have long said the existing hearing process is too restrictive and didn't allow environmentalists or Indigenous peoples to have their say.

The existing "standing test," which dictates just who can participate during the regulatory review process, will be scrapped to give members of the public the chance to speak.

The legislation demands the agency consider impacts on Indigenous rights and culture early in the decision-making process. The federal government will provide financial support to allow for more substantive Indigenous participation.

National Energy Board replaced

The National Energy Board will be replaced by the Canadian Energy Regulator (CER), a body that will be tasked with regulating pipelines, and the traffic, tolls and tariffs relating to the transmission of oil and gas through pipelines. The regulator will continue to be based in Calgary, despite the recommendations of the expert panel.

While the Impact Assessment Agency will conduct the impact assessment and co-ordinate consultations of major projects, the new CER would retain regulatory functions.

The government will invest up to $1.01 billion over five years to support the new impact assessment regime and CER and bolster scientific capacity in federal departments and agencies.

Green Party Leader Elizabeth May said she is concerned the legislation allows board members from the CER, the Canadian Nuclear Safety Commission and the offshore petroleum boards to participate in the impact assessment. She said these bodies should have no role in the approval process of a project they might be later asked to regulate, calling it a "a blatant conflict of interest."

The Canada-Nova Scotia Offshore Petroleum Board and Canada-Newfoundland and Labrador Offshore Petroleum Board, to this point, have not been part of the environmental review, focusing instead on granting approval for activities like exploratory seismic testing.

Perrin Beatty of Canadian Chamber of Commerce on dispute over Trans Mountain pipeline 7:29

The Sierra Club Foundation of Canada also identified this as a troubling development.

"This decision will damage our oceans … it places too much power in the hands of the oil boards to determine if we will meet our climate commitments," Gretchen Fitzgerald, the national program director of Sierra Club, said.

"We will not take this lightly and will be pushing decision-makers to change the draft bill in the months ahead."

Trans Mountain must go ahead: McKenna

When asked if she thought Kinder Morgan's controversial Trans Mountain expansion project would have been approved under this new assessment process, McKenna said yes.

She said the Liberal government unveiled new interim principles for approving pipelines shortly after it was elected — and it carried out consultation with Indigenous peoples beyond those done by the NEB — measures that are similar to what is being proposed with this new legislation.

Kinder Morgan's $6.8-billion, 1,150-kilometre Trans Mountain pipeline will move a mix of oil products from Edmonton to a terminal in Burnaby, B.C., near Vancouver, where it will be exported to markets in Asia.

She said cabinet's decision to approve the expansion was based on a thorough review of science, and in the context of a new national price on carbon.

"We need this project to go ahead," she said.

'We know won't satisfy everyone'

Despite the new process, McKenna said the federal cabinet will retain its right to approve projects it feels are in the national interest, even if an assessment process determines a project could cause certain environmental, health, social and/or economic effects — a substantial power that essentially gives the federal government a veto.

"We know the changes that we're announcing today won't satisfy everyone," McKenna said. "People who tend to distrust business and want no project to go ahead will say we're doing too little to protect our environment ... [But] Canadians want a modern environmental regulatory system that protects the environment, supports reconciliation with Indigenous people and attracts investment."

McKenna said the former Conservative government of Stephen Harper made decisions based on "politics" rather than science.

"This lack of trust in resulted in polarization and paralysis, projects stalled and resource development became a lightning rod for public opposition and court challenges raising concerns of investors and shareholders," McKenna said.

"Ironically their changes made it a lot more difficult to get projects approved."

The government also announced Thursday that it will reverse Harper-era changes to the so-called "projects list," a list of proposed developments that could have the greatest potential for adverse environment effects and thus require further federal scrutiny.

Environment Minister Catherine McKenna speaks during a news conference on the government's environmental and regulatory reviews related to major projects. (Justin Tang/Canadian Press)

Under the Harper government, McKenna said the process of putting a project on this list was secretive and arbitrary. While she vowed changes, the government said it will engage in further consultations on how to make the list more "robust."

The Conservatives said they would take more time to review the lengthy piece of legislation, but said they would stand against Liberal efforts to throw up more red tape or apply onerous regulations on a key sector of Canada's economy.

"The world benefits when Canadian resources are competitive because of our world-leading environmental regulations and social responsibility," Alberta Conservative MP Shannon Stubbs said in a press release.

"The Trudeau Liberals need to start championing Canada's natural resource industries instead of putting road blocks in their way."