The province's Clean Environment Commission recommended Thursday that the province grant the project a licence — with some conditions.
"The commission recommends that a number of conditions be attached to this licence in order to provide some assurance that the goals of the Bipole III project can be met without compromising the environment of Manitoba," the commission's report stated.
Manitoba Hydro must improve its consultation process, as well as environmental assessment and monitoring activities, the commission said. Proper monitoring of the effects of construction, operation and maintenance of the project will help ensure that potential problems can be nipped in the bud, the commission said.
The commission also slammed the province for not heeding previous recommendations to improve the practice of environmental assessment in Manitoba.
"The commission realizes that it is not the task of the provincial government to conduct, nor to micro-manage the development of environmental impact assessments for proponents. Nor should it be," the commission said.
"But, it is the task of the Government of Manitoba to do whatever is necessary to ensure that potential environmental impacts posed by development are avoided, where possible, and minimized and mitigated, where not possible."
Conservation Minister Gord Mackintosh thanked the commission for the report and said work has already begun to improve the environmental assessment process. As a start, he said the province is creating an online public registry of all environment act licence applications, environmental impact statements and licence decisions.
"The report is very thorough and provides a number of recommendations that will benefit all future project reports in Manitoba," Mackintosh said in a statement.
The Bipole III transmission line — which will span 1,400 kilometres — has raised the ire of farmers, aboriginal people and others who say the project is too expensive and needlessly intrudes on the lives of residents.
The commission held hearings on the project for 10 weeks last fall and this spring. Many were concerned about the impact the project will have on the boreal woodland caribou herds in northern Manitoba, while others said they worried about the impact of such a large influx of workers into the area.
Others were concerned about the effects on agricultural practices, while aboriginal and Metis groups wondered how construction would affect hunting, gathering and trapping.
David Chartrand, head of the Manitoba Metis Federation, said the proposed line would cause "immense damage" to Metis people and threatened to fight the project in court if necessary. Other aboriginal communities, including Peguis First Nation, have argued there has not been full consultation on the project as required under Canada's Constitution.
Manitoba Hydro says the project — which is expected to cost $3.28 billion — is needed to make the transmission system more reliable and to export more surplus power to the United States.
Note to readers: This is a corrected story. A previous version said the commission granted the licence.