NEB: Riders on the Storm
Since the very beginning, the Trudeau government has promised to reform the NEB and earn back the trust of Canadians. But not everyone will be happy with the changes whatever they may be
The Trudeau government promised to reform the NEB and earn back the trust of Canadians. Not everyone will be happy with the changes.
When the Trudeau Liberals are through, Canadians won’t recognize the review process for energy infrastructure projects. “Modernizing” the National Energy Board (NEB) has attracted much of the energy industry’s attention, but the government’s effort is much more comprehensive than that, including a review of national environmental assessments and changing the Fisheries and Navigation Protection legislation. Ottawa says dwindling public confidence was the impetus for the overhaul. Minister of Natural Resources Jim Carr says modernization is “designed to restore public confidence in the process.” That may be so, but what brave new world will confront energy infrastructure proponents when the Liberals are finished?
The source of the public discontent isn’t hard to identify. First Nations and eco-activist opponents of the Northern Gateway and Trans Mountain pipeline projects systematically undermined the NEB’s legitimacy, arguing that it was in the pocket of the energy industry.
A steady drumbeat of media criticism and protest stunts, including the lateAugust storming of an NEB panel meeting in Montreal, combined with a distaste for former Conservative prime minister Stephen Harper’s cheerleading for pipelines, eroded public support for the national regulator. A March EKOS Research poll commissioned by CBC showed that only 10 percent of Canadians gave the NEB high marks on trustworthiness.
On the campaign trail in 2015, Liberal leader Justin Trudeau promised changes at the regulator and those changes are now underway.
“The goal is to ask all of the right questions, put everything on the table, and emerge with a set of processes that reflect the realities of 2016, that respect the importance of partnerships and meaningful consultations with indigenous communities that understand we have international and domestic obligations to limit greenhouse gas emissions,” Carr says. “Our strategy is to create a process, and room for all Canadians who have an interest in major projects, to express themselves.”
The process will be led by an expert panel working under the purview of Environment Minister Catherine McKenna. Panel chair Johanne Gélinas is a partner at the sustainability management practice, Raymond Chabot Grant Thornton, and other members include a retired bureaucrat, a mining executive, and two lawyers. The panel travelled the country consulting with Canadians from September to mid-December and is required to submit a report by March 31—a daunting deadline given the scope of their mandate. At the same time, ministers in charge of the NEB: Carr, fisheries minister Dominic LeBlanc, and transport minister, Marc Garneau, are “mandated to carry out reviews and propose reforms to matters that intersect with environmental assessment,” according to the Government of Canada.
The focus for the oil and gas industry, of course, is the NEB. Carr’s reform man- date reads, “[to] modernize the National Energy Board to ensure that its composition reflects regional views and has sufficient expertise in fields such as environmental science, community development and Indigenous traditional knowledge.” This would appear to be a shift in focus for the NEB, and Gaetan Caron—NEB chair from 2007 to 2014, among the most tumultuous years for the agency—is not happy about the new direction. “If you looked at the last five years, all the criticism directed at the NEB process is not specific to any error the board made in its judgement or in its procedural choices,” Caron says. “The fundamental criticism directed at the NEB is a direct criticism of the policy choices under the terms of Mr. Harper’s government approach to climate change.”
From Caron’s point of view, pipelines have become a proxy for the fight over greenhouse gas emissions and international agreements like the Paris accord, and that has put the NEB on the front lines of a battle it is not equipped to fight. The NEB is guided by the National Energy Board Act, which reflects the constitutional division of powers between the Canadian and provincial governments, he says. The NEB cannot examine the impact of upstream emissions because that falls under provincial jurisdiction. And even though it is a federally created agency, the NEB cannot assume the authority of the Crown with respect to First Nations. “These are matters that the Board found in the past to be outside of the relevant considerations it had to look at in the pipeline examination,” he said.
There are really two world views in play—and in conflict—here. One is the more narrow, technical and traditional view of the energy regulator represented by Caron, Harper and the Conservatives, and the industry. Then there is the “globalist approach to climate change,” as Caron calls it, represented by Trudeau and the Liberals. The key question for industry, as Alberta’s oil sands producers prepare to add another one million b/d by 2025 and worry about getting product to market, is where the Trudeau government lies on the continuum between the climate change zeal of eco-activists and the economic realities of pipeline operators and producers. Recent pipeline decisions by Ottawa offer a clue.
In late November, the Prime Minister gave the green light for Kinder Morgan’s Trans Mountain expansion (from Edmonton to Burnaby) and the replacement of Enbridge’s Line 3 (Hardisty to Manitoba’s border with Minnesota). He said both pipelines were in the national interest and “that major pipelines could only get built if we had a price on carbon, and strong environmental protections in place. We said that Indigenous peoples must be respected, and be a part of the process.”
Industry can reasonably assume future pipeline reviews will be based upon the worldview reflected in Trudeau’s speech. That means completing the process laid out for the expert panel and the departments, then drafting new legislation for Parliament, and eventually re-organizing the bureaucracy and the regulator.
How all the pieces will fit and how the new process will work won’t be clear for another year—or perhaps two, if the changes are sufficiently controversial. But the general principles are fairly clear: a bigger role for Indigenous peoples, a more open and consultative process, attention to upstream emissions, and greater attention to climate mitigation strategies. If the Trudeau government can build a workable process that is predictable and not too onerous, there is a chance industry may have a way out of the morass of the past decade.
Industry can assume that future pipeline reviews will be based upon the worldview reflected in Trudeau’s speech
Anti-pipeline protesters shut down a Monteal hearing of the National energy Board on August 29, 2016