The NEB and Canada’s pipeline divide
REGULATOR NOW A PAWN IN CLIMATE FIGHT, EX- CHAIR SAYS
Among the promises made by Justin Trudeau’s Liberal government to restore “trust” in the National Energy Board, there is one that former chairman Gaetan Caron really likes: Keep politics out of pipeline reviews.
Justin Trudeau has taken a dysfunctional pipeline regulatory system and made it not merely worse, but a potentially impregnable barrier. It’s “regrettable” that so many politicians have lashed out at the quasi-judicial regulator, without providing backup evidence, and knowing that its 400 employees cannot defend themselves, said Caron, who led the Calgary- based energy regulator until retiring two years ago, after supervising or ruling on some of the highest-profile energy projects in NEB history.
“Overall circumstances have made it so that it has become cool to blame the NEB for being all sorts of things — such as being captured by those it regulates, not focused on evidence, and relaxed on safety,” Caron said in an interview this week at the University of Calgary’s downtown campus, where he enjoys working with students as an executive fellow at the School of Public Policy.
“For politicians to criticize a public institution, without the accountability to explain why, and defend themselves in an evidence debate, I find it very unfortunate.”
But Caron is skeptical that Trudeau’s de- politicization plan will succeed, or that his fixes to “modernize” the board will repair Canada’s pipeline divide.
Instead, he worries that pipelines have become proxies for bigger issues like climate change policy and aboriginal reconciliation that should be dealt with elsewhere, and that the proposed reforms will deepen animosity between regions, different levels of government, project proponents and opponents.
Caron mentioned the Green Party and the federal NDP for going “aggressively negative” on the NEB. But the new Liberal government also did plenty to discredit the institution.
The latest broadside came in Calgary last week, when Trudeau said: “The framework and the approach that the previous government took in the last 10 years on pipelines didn’t get anything done. They were unable to build the public trust, the public confidence to move forward on such projects. And what we need to do is restore a framework in which Canadians will have trust in their regulators and their governments to both create economic growth to benefit all Canadians but also to protect the environment.”
In fact, Enbridge Inc.’s Northern Gateway pipeline project stalled due to aboriginal opposition, after receiving NEB and cabinet approval. TransCanada Corp.’s Keystone XL project was killed by the U.S. administration. The Mackenzie pipeline wasn’t built because Arctic natural gas was no longer required after its review took too long, a cautionary tale that lengthy reviews kill projects.
On the other hand, Enbridge’s Alberta Clipper pipeline and Line 9 reversal, TransCanada’s base Keystone, and Kinder Morgan’s last TransMountain expansion all moved forward.
Trudeau wouldn’t even say whether he’d give Energy East, proposed by TransCanada, the green light if it receives NEB approval — hardly a vote of confidence in the regulator.
His explanation: “I am not going to pre- judge or shortcut the NEB process as it goes forward. It’s important that we have confidence in our regulators.”
Promised during the fall election campaign, the NEB reforms started two weeks ago. Natural Resources Minister Jim Carr and Environment Minister Catherine McKenna i ntroduced i nterim measures for pipeline projects already under review — Kinder Morgan’s new TransMountain expansion, which in the final stages of a two- year review and due for an NEB recommendation in May, and Energy East, the next big project to hold public hearings.
Under the new regime, there will an additional study of the greenhouse gas emissions of oil and gas projects that feed oil into the pipelines, as well as additional consultations with aboriginal groups and the public. The additional process will take place after the NEB has completed its own. A complete overhaul of the NEB and the environmental regulatory process is expected in the coming years.
The most immediate impact is that the federal cabinet will take an additional four months, or until December, to reach its decision on whether the TransMountain expansion is in the public interest.
“If we’re going to attract the investments we need to sustainably develop our energy resources, then we have to better engage Canadians, conduct deeper consultations with indigenous peoples and base decisions on science, facts and evidence,” Carr said.
Anyone f amiliar with the NEB’s costly, painstaking and inclusive hearings knows that’s exactly what the NEB has been doing for decades. Yet one area it’s steered clear of is the climate change debate.
Though routinely asked by environmental organizations to get involved, the NEB decided i n the past that there wasn’t enough specific connection between a pipeline under review and t he greenhouse gas emissions of upstream and downstream facilities, said Caron, who was NEB chair for seven years, vice- chair for two, a member for two and chief operating officer for eight.
The Laval University engineering graduate was a member of the panels that reviewed the Mackenzie pipeline, the base Keystone pipeline, the l ast TransMountain expansion, and was NEB chair during the Northern Gateway review.
In reviewing the base Key- stone pipeline, for example, the NEB concluded it could be supplied by too many upstream sources, and could feed its oil into just as many refineries, to make greenhouse gas effects “relevant” to a decision under the NEB Act, he said.
“The test is always relevance to the pros and cons of the public interest of the pipeline,” he said.
Caron is supportive of Canada’s climate change commitments in Paris, along with Alberta’s carbon tax and cap on oilsands emissions. He just doesn’t think pipelines are the right place to achieve those policy goals.
“Who is talking today about the need to change driving habits, or to move to higher- density housing, to sell one of two cars, and make transit more available?” he asks.
Caron al s o questions plans to expand public consultations. Under current legislation, the NEB has to hear directly affected persons, as well as people it believes would bring special value or expertise.
In recent years, hundreds, even thousands of participants have sought to have a say, seen as a tactic to delay proceedings.
“Does the Trudeau government want to relax the directly affected test?” Caron asks. “That would be very interesting to monitor. Even with the directly affected label that you must show, we got thousands of intervenors wanting to be heard. And in the case of TransMountain, many were offended that the panel chose as a matter of procedural choice, to not include cross- examination other than the oral evidence of indigenous people and the elders.”
Caron agrees with a recent decision by the Federal Court of Appeal that not everyone has the right to participate in hearings.
The 2014 ruling came in response to requests for a judicial review by environmental organization Forest Ethics and by Donna Sinclair, after they were excluded from NEB hearings on the Line 9 reversal. Sinclair had claimed she could bring special religious knowledge because “a spill from a pipeline, even far away from her home, is ‘ an insult to ( her sense) of the holy,’ ” the ruling noted.
“Board hearings are not an open- l i ne radio show where anyone can dial in and participate,” the court ruled. “Nor are they a drop- in centre for anyone to raise anything, no matter how remote it may be to the board’s task of regulating the construction and operation of oil and gas pipelines.”
Caron supports wholeheartedly the expansion of consultations so there is more feedback from Canada’s indigenous people, because “there cannot be too much of a good thing.”
He is hopeful that there will be more to reconciliation than their input on pipelines.
It’s the potential for “perverse effects” from the new climate change test that worries him the most.
One is federal intrusion into provincial powers.
“Imagine the scene — the f ederal government saying ‘ The provinces are doing what they can, we don’t think it’s enough, so when we look at pipelines, which is a means for provinces to transport what under the Constitution they have the power to develop, we are going to choke the oil flowing through these pipelines so we can reach our Paris commitments,’ ” Caron said. “If it is not a federal intrusion of provincial powers, if it is not also doing policy through the backdoor, what is it?”
And he is concerned that Canadian oil will be kept in the ground, while oil will be imported in growing quantities from regimes like Saudi Arabia to help meet demand as part of a transition to a carbon-free society.
“You have a situation where you say, ‘ As a nation we have managed to become ashamed of our prosperity in natural resources,’ ” Caron said. “And that is OK because we feel better in our conscience.”
Overall, the changes reverse some of the reforms made only four years ago under the Conservatives, who eliminated duplication with provinces and introduced fixed timelines.
For sure, Ottawa may show that change can triumph over experience, and that having a national debate on climate change, aboriginal rights, oilsands growth and energy regulation on the back of pipeline reviews can soothe discord and get them built. But it may also break what didn’t need fixing, and make pipeline reviews even more political. Like Caron, many are watching.