This op-ed originally appeared on the National Observer.

After more than a year I decided to withdraw as an expert Intervenor at the National Energy Board hearing into Trans Mountain’s Expansion Project. I came to the discouraging conclusion that the Board was on a predetermined course of action to recommend approval of the Project. The Board did this by narrowly scoping its list of issues, removing cross-examination, and refusing to compel answers to information requests made by myself and most other Intervenors.

Corporations cannot regulate themselves. Their first priority is to maximize returns for their shareholders. Regulation is an accepted method in Canada to ensure private interest is not achieved at the expense of the public interest. Government steps in and establishes a regulatory framework to protect public health, safety and the environment as well as to attain objectives related to the nation’s economic and social goals.

Regulatory capture takes place when the regulator ceases to be independent and advances the commercial interests of the industry it is charged with regulating. The Board’s behaviour during the Trans Mountain hearing not only turned the process into a farce, it exposed the Board as a captured regulator.

Historically, the NEB had been an effective energy regulator, mindful of its obligations to the public interest. Significant erosion began to take place when Prime Minister Mulroney’s government altered NEB legislation in 1991. Among other changes, it required that the Board’s head office be relocated to Calgary and that its members be required to live in and around that city. The NEB became the only federal regulatory agency to be situated outside Ottawa.

Moving the NEB to Calgary dramatically altered the working of the Board. A large number of staff elected not to leave Ottawa and these were replaced by largely Alberta-based employees coming directly from the oil and natural gas industry. A close interaction between Board staff and industry representatives over the years has created a petro culture at the NEB — the goals and the aspirations of the industry became closely intertwined with those of the Board. The NEB has referred publicly to the industry as its partner.

Board members came from the Canadian energy industry, primarily from Alberta. There have been very few appointments that reflect other regions, professions, or interests outside Alberta and its pro-pipeline stance. Because of the Board members’ backgrounds, their objectivity and credibility is compromised. Past Board Chairs having been inducted into the Canadian Petroleum Hall of Fame and one acted as a consultant for Enbridge at Northern Gateway.

Deregulation of the oil and gas sector under the Mulroney government also transferred funding responsibility. Ninety per cent of Board funding is through cost recovery from the industry the Board is supposed to regulate.

The funding of the agency by industry and close proximity, both geographically and professionally, with industry interests has compromised the Board’s logic.

The NEB replaced the federal Department of Energy, Mines and Resources (now Natural Resources Canada) as the energy policy advisor to government. It is not in the national interest that policy advice come from an agency so closely tied to industry.

Last year, Prime Minister Trudeau promised to conduct the Trans Mountain and Energy East reviews under a credible process because the NEB cannot be trusted to do so. The Charest affair has brought that message once again to the forefront. Canadians want the prime minister to make good on his promise, since it looks like Minister Carr didn’t receive the memo.

Canada deserves a new Board, relocated to Ottawa, with a wide representation that reflects the interests of Canada and Canadians. It should be publicly funded with its policy advisory function transferred to the Ministry of Natural Resources. Until the overhaul that was promised is in effect industry capture will continue and communities will withhold permission for any new pipelines to be built.

Image: National Energy Board panel members, Roland George, Lyne Mercier and Jacques Gauthier. Photo: NEB

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The purpose of the National Energy Board, like any regulator, is to be unprofitable. They perform unprofitable environmental assessments to make sure we have access to unprofitable clean drinking water and preserve unprofitable nature for unprofitable future generations. That’s because citizens value things beyond profits, and the National Energy Board represents citizens. In theory… 

One of the last things the Harper government did before it launched the federal election was to appoint Steven Kelly, who is a consultant for Kinder Morgan, to the National Energy Board. This guy was paid to convince the government to approve the expansion of the Kinder Morgan pipeline. And now he’ll be part of the team that helps to decide if his own argument was convincing. If the pipeline review process was a cutest baby competition, we just hired the baby’s mom.

In fact, over half of NEB’s board members are pipeline mommies, a.k.a. oil industry professionals. Which is probably why the Kinder Morgan pipeline review processes has been widely condemned as a farce. The NEB refuses to take climate change into consideration in their review, even though scientists have made clear that more pipelines will lock us into a very hot, very grim future. But the fossil fuel industry, and their representatives in the NEB, are content to watch the world burn, as long as they can make money selling the matches.

There’s good evidence that the NEB no longer represents citizens and no longer works in the public interest. That could change before any more pipelines get built, depending on which Canadians are interested enough in their interests to vote on October 19th.

This video originally appeared in The Toronto Star. 

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Economist and former ICBC president  Robyn Allan withdrew from the National Energy Board’s (NEB) review of the Kinder Morgan Trans Mountain pipeline expansion project Tuesday, saying she can no longer “endorse a process that is not working.”

In a letter addressed to Sherri Young, secretary of the NEB, Allan said the “review is not conducted on a level playing field” and that because the panel is “not an impartial referee…the game is rigged.”

Allan said she began to seriously question the process when oral cross-examination was removed from the process.

“I had concerns with what that would do to the overall calibre of the process,” she said.

Allan said she wanted to “participate in good faith through the process of information requests” but now that it has been completed “it’s very clear it has been an exercise in futility.”

“I wanted to see the process through enough to unequivocally conclude that it’s broken,” she said. “ Now I see it’s beyond repair.”

Allan said the limited scope of the board’s review of the process is an “unconscionable betrayal of Canadians.” 

“The board does not include the very serious issues the Canadian public expects the scope to include. And that’s not just the absence of greenhouse gasses in the review and the very serious implications of those for climate change — we don’t even have a classical economic scope of issues,” Allan said.

Allan said the review does not give full consideration to the impact the added Trans Mountain pipeline will have on the whole system, including the increase of tanker traffic in the Burrard Inlet.

Concerns are running high in the Vancouver area after the accidental release of bunker fuel from a cargo vessel in English Bay called the city’s oil spill response capabilities into question.

“You’ve see even just from the bunker C fuel spill in the Burrard Inlet that they were totally incompetent in their ability to deal with [a spill],” she said, adding that the board will only consider the incremental rise in tanker traffic in Vancouver’s waters resulting from the Trans Mountain expansion, but not the impact on tanker traffic as a whole.

“They’re not looking at the whole system,” she said. “This is a deception being perpetrated on the public.”

Allan also said the board relies too heavily on Kinder Morgan’s assessment of risk. Recently the City of Vancouver, City of Burnaby and Tsleil-Waututh Nation commissioned an oil spill assessment by modelling experts Genwest Systems that found two key faults with Kinder Morgan’s oil spill assessment.

Allan said she expects the board to support Kinder Morgan’s risk assessment over those submitted by third parties and downplay the significance of spill risks for the project as a whole.

“The board will say — because Kinder Morgan says — that a spill is ‘not likely’ and therefore we don’t have to consider the cost or the implications.”

Recently NEB chair and CEO Peter Watson addressed public concern over the review process in British Columbia where opposition parties, several major environmental organizations and municipal leaders are calling on the provincial government to pull out of the federal process.   

Allan called the public outreach “duplicitous.”

“The public relations activities that Mr. Watson has been involved in are media spin,” she said. “It’s part of a strategy to lull the Canadian public into a sense of safety when none exists.”

Allan said intelligent Canadians don’t necessarily have the time to investigate the federal government’s review process. She felt she might be able to help: “from the beginning with my expertise and ability and concern I felt that was an effective role I could play.”

Now, after a year of pro bono engagement with the process, Allan says she can no longer participate in good faith.

“What I’ve concluded is the game is rigged, the National Energy Board is a captured regulator and their actions are putting the healthy and safety of the economy, society and environment at risk.” 

Robyn Allan Withdrawal Letter NEB May 19, 2015

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An energy executive is weighing in on the federal review of Kinder Morgan’s Trans Mountain oil pipeline expansion with a scathing letter that calls the National Energy Board’s review process “fraudulent” and a “public deception” — and calls for the province of British Columbia to undertake its own environmental assessment.

Marc Eliesen — who has 40 years of executive experience in the energy sector, including as a board member at Suncor — writes in his letter to the National Energy Board that the process is jury-rigged with a "pre-determined outcome."

Eliesen is the former CEO of BC Hydro, former chair of Manitoba Hydro and has served as a deputy minister in seven different federal and provincial governments.

In his letter, Eliesen tells the National Energy Board (NEB) that he offered his expertise as an intervenor in good faith that his time would be well spent in evaluation Trans Mountain’s proposal.

“Unfortunately, I have come to the conclusion that the board, through its decisions, is engaged in a public deception,” Eliesen writes. “Continued involvement with this process is a waste of time and effort, and represents a disservice to the public interest because it endorses a fraudulent process.”

Eliesen writes that he was dismayed when the oral cross-examination phase was removed from the Trans Mountain hearings. He notes that oral cross-examination has served as a critical part of all previous Section 52 oil pipeline hearings.

“It is my experience that when a proponent does not face the spectre of oral cross-examination, their written responses to interrogatories suffer from a lack of detail and accountability,” Eliesen writes. “Still, I was willing to see the results of the Information Request process the board promised would be sufficient.”

When those information requests came back, however, Eliesen lost all hope in the process.

The unwillingness of Trans Mountain to address most of my questions and the board’s almost complete endorsement of Trans Mountain’s decision has exposed this process as deceptive and misleading. Proper and professional public interest due diligence has been frustrated, leading me to the conclusion that this board has a predetermined course of action to recommend approval of the project and a strong bias in favour of the proponent.

In effect, this so-called public hearing process has become a farce, and this board a truly industry captured regulator.

A regulator is considered ‘captured’ when it turns into more of a industry facilitator, rather than a regulatory watchdog.

Kinder Morgan’s Trans Mountain expansion proposal would triple the amount of oil the company ships to Burnaby and increase the number of oil tankers travelling through Vancouver Harbour and the Gulf Islands seven-fold.

National Energy Board Has 'Pre-Determined Course of Action' to Approve Trans Mountain: Eliesen

Eliesen argues that a series of National Energy Board decisions reflect a pre-determined outcome.

“They reflect a lack of respect for hearing participants, a deep erosion of the standards and practices of natural justice that previous boards have respected, and an undemocratic restriction of participation by citizens, communities, professionals and First Nations either by rejecting them outright or failing to provide adequate funding to facilitate meaningful participation,” Eliesen writes.

To illustrate this behaviour, Eliesen outlines six examples:

1) Intervenors being excluded from the formulation of the list of issues to be taken under consideration during the review. Kinder Morgan’s opinion, on the other hand, was taken into account when formulating the list.

2) The board refusing requests from intervenors — including municipal governments and First Nations — for more time to prepare information requests (due to the highly technical, voluminous nature of Trans Mountain’s application).

3) The lack of basic professional standards of disclosure, source verification, references and methodology in Trans Mountain’s studies.

“It is shocking that in a process such as this where due diligence is required on a major capital project that the board has not held Trans Mountain to a minimum professional standard of accountability and transparency,” Eliesen writes. “The Board’s veneer examination of the proponent’s case is reflective of a decision not to dig too deeply for fear the economic case may crumble, or a lack of economic, financial and business acumen on behalf of the Board to know where and how to dig.”

When basic business questions are asked by intervenors, Trans Mountain refuses to answer them, Eliesen adds.

4) The board’s axing of oral cross-examination. The Government of Canada’s Department of Justice has informed the board that evidence given without cross-examination should be rejected. The Department of Justice stated “Canada’s position is that cross-examination is necessary to ensure a proper evidentiary record …” Furthermore, “cross-examination serves a vital role in testing the value of testimonial evidence. It assists in the determination of credibility, assigning weight and overall assessment of the evidentiary record. It has been termed ‘the greatest legal invention ever invented for the discovery of truth’ … without cross-examination the board will be reviewing only untested evidence.”

5) The board's failure to compel Kinder Morgan to answer questions adequately. In the absence of oral cross-examination, the board is relying on written information requests between intervenors and the proponent. However, Trans Mountain has failed to respond in a way that addresses the core elements of most questions — and the board has failed to compel them to answer.

“They have either provided non-responses, general statements, or referred back to the inadequate information in the original application that gave rise to the question in the first place. In many instances Trans Mountain has assumed the regulator’s role declaring that the question asked is outside the List of Issues established by the NEB,” Eliesen writes.

Out of the approximately 2,000 questions not answered by Trans Mountain that intervenors called on the board to compel answers to, only five per cent were allowed by the board and 95 per cent were rejected.

6) Trans Mountain has failed to answer even the Province of British Columbia’s questions, so the province asked the NEB to compel Trans Mountain to answer. But guess what? That request was also denied by the board.

“The board has sided with Trans Mountain dismissing the Province of B.C.’s need for answers in pursuit of its duty to British Columbians,” Eliesen writes in his letter. “The NEB’s bias in support of the proponent is reflecting poorly on the Province of B.C. in that it is unable to obtain necessary answers to conduct its due diligence.”

Province of B.C. Should Cancel Equivalency Agreement, Launch Own Review of Trans Mountain

Eliesen finishes his letter by calling on the Province of B.C. to cancel the equivalency agreement with the federal government to undertake its own environmental assessment as the only meaningful way to get answers to its questions.  

Andrew Weaver, Green MLA for Oak Bay-Gordon Head, joined the call for the B.C. government to issue the 30-day notice required to cancel the equivalency agreement with the feds and launch its own, separate environmental assessment process.

“In the past week alone we have seen Kinder Morgan sue Burnaby residents for trespassing on parkland and one of the most credible intervenors, Marc Eliesen, fully withdraw from the hearing process,” Weaver says.  

The June 2010 equivalency agreement signed between the federal government and province set the review process for major pipeline and energy projects under the National Energy Board, with final approval to be determined by the federal cabinet. The equivalency agreement for the Trans Mountain project can be cancelled with 30 days notice.

“The B.C. government needs to stand up for British Columbians,” Weaver says. “What we need is a made-in-B.C. environmental assessment that is controlled by British Columbians to ensure our concerns get respected and that our questions get answered.”

Marc Eliesen Letter of Withdrawal from Kinder Morgan Trans Mountain expansion NEB process

Photo credit: Jenny Uechi, Vancouver Observer

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