The National Energy Board — a ‘captured’ regulator?

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As well as exploring the risks TransCanada’s Energy East Pipeline poses to existing jobs in New Brunswick and our natural environment, it’s important to examine the regulatory system under which the project is being assessed.

Pipeline proposals that cross provincial boundaries, such as the Energy East Pipeline project, go before the National Energy Board (NEB), the federal regulator on cross-jurisdictional energy projects. Founded in 1959, the NEB has undergone changes over the years. There were several changes in 2012 that have significantly limited the ability of members of the public to participate in NEB hearings. Timelines imposed on the NEB review process also threaten to stifle important discussion and limit constitutionally-required consultation with First Nations, since hard deadlines may rush a complex regulatory process. Further, the NEB no longer has the final say regarding whether a pipeline should be built; it merely passes on its advice to the government of the day who is in no way bound to follow the recommendation.

Changes to the NEB process made in 2012 now require that all First Nations, landowners, concerned members of the public, and organizations must apply for permission to participate in the hearing process. In order to be considered eligible, applicants must demonstrate that they are either directly affected by the pipeline or have relevant expertise related to the project. The NEB then decides who can participate in the process and who can write a letter of comment. Applications to participate in the review of the Energy East Pipeline project had to be submitted by March 3, 2015, well before TransCanada’s application could be deemed complete. Even seasoned commenters and intervenors struggled with this new process, let along your average property-owner looking to have their say about a pipeline that would intersect their property.

In April 2015 — one month after the application period to participate in the NEB’s project review had closed — TransCanada made a major revision to the Energy East application by canceling the export terminal in Cacouna, Que. In May 2015, over 60 groups across the country called on the NEB to close the Energy East file until TransCanada decides on its final route, arguing it would be irresponsible of the regulator to proceed with a review of an incomplete project application. The NEB has refused to close the file and has, instead, continued with the process. In a Letter to all Parties on July 16, 2015, the NEB announced the list of Aboriginal intervenors and stated that it will soon rule on who else will be granted intervenor status in the hearing, all well before TransCanada has even finalized its plans.

Watch this video we made about TransCanada’s Energy East Pipeline and the National Energy Board process:

You can also check out our two-page primer on the National Energy Board process, and our a step-by-step guide to help New Brunswickers participate in the NEB process.

Head buried in the (oil)sand?
The scope of the NEB’s review of Energy East has been criticized as incomplete by many organizations, including the Conservation Council, for its refusal to consider the project’s impact on climate change. When reviewing projects, the NEB does not consider ‘upstream’ impacts (the fact that the pipeline will facilitate an expansion of the oil sands, contributing to climate change) or ‘downstream impacts’ (the impact on the environment of eventually burning the bitumen product being transported in the pipeline).

TransCanada’s Energy East Pipeline would facilitate a 40 per cent expansion of the oil sands in Western Canada and would increase national greenhouse gas emissions by 32 tonnes — more emissions produced by all four Atlantic provinces combined.

The Conservation Council says the NEB assessment of Energy East can’t help but fall short from being complete due to its failture to address the project’s impact on climate change. “Providing information for the public to review without factoring in the effect the eventual burning of these million barrels per day will have on climate change is a glaring omission,” says Executive Director Lois Corbett.

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In March 2015, more than 100,000 Canadians called on the NEB to consider climate change in its review of Energy East.

Who is the National Energy Board?
The effectiveness and impartiality of the NEB has come under considerable scrutiny over the years. In November 2014, media outlets in Canada reported on concerns raised by Andrew Nikiforuk, an author and journalist who’s written extensively on the NEB. Nikiforuk said most board members are lawyers or engineers with ties to the oil and gas industry.

“But there’s no public health expert. There is no expert in environmental assessment, there is no pipeline safety expert, there is no representative from First Nations, there’s no representative or expert from fisheries, no oil spill or contaminant expert,” he told the CBC. “It’s a very striking board, it’s a board of white people, mostly Conservatives, all based in Calgary, all with very similar backgrounds, whose job is largely to facilitate the pipeline approval in the country.”

Also in November 2014,  a former BC Hydro CEO made headlines when he withdrew from the Kinder Morgan Trans Mountain pipeline expansion hearings, writing a scathing letter accusing the National Energy Board of “bias” in favour of pipeline approval.

“This so-called public hearing process has become a farce, and this Board a truly industry captured regulator,” Marc Eliesen wrote, as reported by the Vancouver Observer.

Eliesen, who once sat on the board of oil giant Suncor Energy, said he had good working knowledge of the NEB hearing procedure, based on his 40 years in Canada’s energy sector. After reviewing Kinder Morgan’s application and the NEB’s response to intervenor question, Eliesen decided the hearings are “dismissive of Intervenors” and shows a “lack of respect” for participants.

“In my view the NEB hearing process is a rigged game,” Eliesen told media. “In the past, there was a more objective evaluation of projects that would come forward…but it’s reached a stage where the NEB is not interested in the public interest, and more interested in facilitating the infrastructure for the oil and gas industry.”

Eliesen was back in the media in August 2015, commenting on the federal government’s appointment of a paid Kinder Morgan consultant to the National Energy Board.  Calgary-based petroleum executive Steven Kelly will become a full-time board member of the federal agency. Kelly’s consulting firm was hired by Kinder Morgan two years ago to prepare an economic analysis justifying the $5.4-billion Trans Mountain pipeline expansion. Kelly himself, in his capacity of vice president of IHS Global Canada, authored and submitted the 203-page Kinder Morgan report to the National Energy Board.

Now Kelly will soon sit in a position of power at the NEB —close to those who will rule on whether that very same Kinder Morgan oil pipeline is in Canada’s economic and environmental interest. A decision is expected in January 2016.

Eliesen told reporters, “It’s utterly incredible the Government of Canada would appoint such an industry consultant to a regulatory agency that presumably is interested in the public interest, and not in the interest of multinational oil corporations. The NEB have totally become a captured industry regulator,” he added.