OTTAWA PAYS ATTENTION TO ALBERTA ON THE NEB
Justin Trudeau may have forgotten to mention Alberta during his Canada Day speech, but his Liberal government is going in the right direction when it comes to updating the National Energy Board.
In May, an expert panel tasked with modernizing the 58-yearold institution tabled a report that contained many controversial recommendations, including relocating the NEB from Calgary to Ottawa and creating a number of new oversight agencies.
Well, it’s time for the oilpatch to exhale.
By recommending the NEB remain in Calgary, the Trudeau government has recognized the importance of the regulatory body’s proximity to the sector it oversees. Having made the case to locate the federal infrastructure bank in Toronto, it’s only logical the NEB stay in the heart of Canada’s energy sector.
And, by rejecting the creation of new regulatory bodies, the government has acknowledged the NEB is — despite what some want to believe — a robust regulatory body.
That said, its discussion paper in response to the panel’s report does stick with the recommended overhaul of the NEB’s governance structure, which would mean separating the chair and chief executive roles and establishing a board of directors charged with oversight and direction. Hearing commissioners will not be on the board, and there is a commitment to increase diversity of appointees, including greater representation from Indigenous communities, which is long overdue.
The government paper also dispenses with the existing residency requirement for board members and hearing commissioners. If diversity is a goal, casting a wider net outside Calgary will help achieve that objective.
Predictably, reviews have been mixed. But when the former NEB chair says he’s optimistic, it’s difficult to dismiss the government’s position.
“The National Energy Board and Canadian Environmental Assessment Agency panels were asking the government to invest a lot of political capital creating new institutions,” said Gaetan Caron, who headed the NEB from 2007 to 2014. “Nor were the reports aligned in terms of what they were asking the government to do to address what is essentially the same problem — one of public trust in Canada’s national institutions.”
The expert panel’s May report recommended the approval process for pipeline projects be done in two steps.
The first would be a one-year period where the national interest of a project would be decided by cabinet. The logic is that this early step could save a company both time and money, should its project ultimately be rejected at the end of a long process.
That’s gone under the federal response.
For some, that idea was problematic because the government could be relying on incomplete information to determine the national interest. The other issue, said Caron, is that this first step was effectively predicated on establishing the equivalent of a national energy strategy, arrived at through a consensus involving the federal government and the provinces, with input from Indigenous peoples and environmental organizations.
Anyone familiar with the idea of a national energy strategy knows the challenges of such an objective. If that was a precondition, nothing would ever happen.
On the other hand, knowing early whether a proposal was in the national interest would help companies decide whether to pursue a project.
“It’s a very disappointing discussion paper. There is no direct acknowledgment of the need for a two-step process to revise our regulatory system where we actually force policy-makers to clarify policy efficiently at the beginning before these projects waste hundreds of millions of dollars,” said Dennis McConaghy, a former senior executive with Trans Canada Corp.
Caron said there are provisions in the federal paper that require early engagement by an applicant, and federal involvement before the filing of a project for approval takes place.
A review of the June 2016 Federal Court of Appeal ruling that soundly criticized the Crown for shirking its duty to consult on the Northern Gateway project, shows why federal involvement is critical to the process.
Caron believes the government is now proposing it help companies at the start of the process, where policy matters the most.
“Things become possible if you do it right,” he said, adding the discussion paper was a validation of the NEB’s existing strengths.
“It is an acknowledgment that a lot of the processes that we have today in Canada are working well and the report leverages the strengths that we have.”
Rather than focus on what’s not in the discussion paper — which remains open for comment until Aug. 28 — it’s more constructive to consider the merits of what is proposed, like time limits established through Bill C-38 that provide an important measure of certainty for project proponents.
The creation of a national energy information agency for collecting all relevant data remains on the agenda. The structure of a joint review panel involving the NEB and CERA — as was in place for Northern Gateway — would be reinstated under the federal proposal.
The paper also gives the NEB discretion on who can intervene in a hearing, eliminating the ‘standing test’ in place under C-38. The need for greater inclusion of Indigenous peoples is also clear.
All told, the federal response struck the right balance between the public interest and the need to get oil and gas production to market. Whether it’s enough for the NEB to get back to what it was meant to do — regulatory oversight — and not the place where grievances pertaining to energy and infrastructure are aired remains to be seen.
If all this had been in place a decade ago, we might be looking at a pipeline in the ground today rather than girding for yet another battle.