By Chris Tollefson, Executive Director Pacific Centre for Environmental Law and Litigation.

Early on in its remarkably candid treatise released today, the Expert Panel tasked with advising the Trudeau government on how to modernize the National Energy Board (NEB) observes that the issue it was asked to grapple with “is much larger than simply the performance of the NEB in and of itself”: read the panel report here.

Indeed.

Since the 2013 Northern Gateway pipeline hearings, our national energy regulator has been buffeted by one controversy after another.  The NEB must bear some of the blame for this.  Its work on the Northern Gateway, Kinder Morgan and Energy East files underscore that its expertise does not lie in the realm of environmental assessment.  But it is also a victim of history — an institution conceived and born in an era (almost 60 years ago) long before Indigenous rights, climate change and decarbonization had political, let alone legal, salience.

A key question confronted in this review was what role, if any, should be played by the NEB (or its potential progeny) going forward. Historically, the core role of the NEB was regulating the construction and operation of interprovincial and international energy infrastructure, particularly oil and natural gas pipelines.  

Yet, while the NEB has been legally responsible for reviewing proposed new infrastructure projects on a broad public interest-based test, it has been reluctant to grapple with broader, more policy-infused questions — including climate change, environmental impacts and Indigenous rights. 

The NEB’s reluctance and failure to grapple effectively with these questions has led to substantial delays, conflict and litigation.

In a breathtaking understatement, the Expert Panel observes: “The current process is frustrating for everyone.”

Will a Repackaged National Energy Board Be Able to Meet Canada’s 21st Century Challenges? https://t.co/mUOLZBeWMM @pcell_law #cdnpoli pic.twitter.com/jvpfOpB7vp

— DeSmog Canada (@DeSmogCanada) May 16, 2017

Ultimately, the Expert Panel concludes that the NEB should pass the torch to a newly created body: the Canadian Energy Transmission Commission (CETC). Though the NEB would cease to exist, the CETC would continue to carry on many of the NEB’s core technical and regulatory functions.  

A key challenge for the CETC will be to restore the trust of Canadians through a suite of recommended reforms aimed at “living the nation-to-nation relationship,” aligning energy infrastructure decision making with “national policy goals,” promoting public engagement, and improving regulatory efficacy.

Going forward, the Expert Panel recommends that new pipelines and other significant energy infrastructure should initially be assessed for their “alignment with the national interest.” This would be where climate impacts, cumulative effects, and Indigenous rights implications are considered. This process would conclude with a determination by Cabinet. 

If Cabinet gives its blessing, the CETC and the Canadian Environmental Assessment Agency would then jointly turn their minds to what the Report refers to as “licencing issues,” essentially ways to ensure that the various adverse impacts of the project under review are mitigated.

Stage one of the process would conclude within one year. Stage two, which could include public hearings and would culminate in a decision by the Joint CETC/CEAA panel, could take up to two years.  This bifurcation of the process, with an upfront ‘political’ decision by Cabinet followed by a technical review focussed on implementation issues, closely tracks what various business interests involved in the EA and NEB Modernization processes have been calling for.

Can a repackaged (yet not repurposed) NEB meet the array of 21st century challenges that await?  The approach recommended by the Expert Panel does not inspire confidence.

Nobody is arguing that the technical, safety and data collection functions currently vested in the NEB should be eliminated. These regulatory functions are important and need to be assigned to an appropriate government agency.

What the Expert Panel fails to address, however, is the need fundamentally to reform the assessment that major energy projects must undergo before we, as a society, allow them to proceed. These assessments must be capable of supporting informed, transparent and defensible social choices about future development.  This is quite different from regulatory processes that are principally aimed at mitigating anticipated harms.

For well over a generation, we have adopted an approach that allows projects, even quite ill-advised ones, to go ahead unless it can be shown that they will likely cause significant adverse effects, or if those effects can be justified on a vague “justified in the circumstances” rationale. 

One of the most noteworthy contributions of the Expert Panel report on reforming CEAA, 2012 was its recommendation that we move beyond this significance-based model, towards one that tethers project-level decisions to a rigorous assessment of whether the project will entail a net contribution to sustainability.

Pivoting from an approach that focusses on whether a project’s opponents can prove it will cause significant harms towards one that calls upon a project’s proponents to show it can be sustainable is an elegant reframing of what is often a dead-end debate. And a move that just might be a game changer.

Unfortunately, on this key point, the NEB Modernization Expert Panel report and the CEAA, 2012 Expert Panel report are like ships in the night. While regrettable, this failure to engage is not all that surprising.

The complexities of social choice have never been the NEB’s forté. The NEB Modernization Panel was assigned a triage mission whose overarching aim was to identify a set of core functions that can be properly assigned to Canada’s energy regulator.  In rolling back the NEB’s role to focus on regulatory issues, the Expert Panel’s report does precisely this.  

However, where this Expert Panel has failed, and where the CEAA, 2012 Expert Report adds enduring value, is in confronting the legitimacy crisis that pervades decision making around fossil fuel infrastructure development. In determining what advice to follow, the Trudeau government should bear this in mind.

Image credit: Zack Embree

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After six months of consultations, the National Energy Board (NEB) Modernization Expert Panel has delivered its long-awaited report.

The results are damning.

“In our consultations we heard of a National Energy Board that has fundamentally lost the  confidence of many Canadians,” the five-member panel wrote. “We heard that Canadians have serious concerns that the NEB has been ‘captured’ by the oil and gas industry.”

The 87-page report issued 26 key recommendations to repair the oft-criticized quasi-judicial tribunal, responsible for regulating interprovincial and international oil, gas and electricity projects.

Those include establishing a one-year review process by cabinet to ascertain whether a major project meets “national interest” prior to regulatory review, replacing the NEB with a “Canadian Energy Transmission Commission” and placing a broader focus on interprovincial transmission lines and renewable energy.

In addition, the panel recommended the government create a new agency responsible for collecting information about energy, relocate board headquarters back to Ottawa, considerably improve consultation with Indigenous peoples including an Indigenous Major Projects Office and extend the timelines for review of major projects (which were accelerated under the previous Conservative government).

“It’s clear that this is a pretty major confirmation of what we’ve been saying for years,” says Adam Scott of Oil Change International in an interview with DeSmog Canada.

“It’s basically saying that the National Energy Board as it stands today is a broken and outdated institution that’s not fulfilling its role, and not serving the best interest of Canadians. It was very good at the very beginning to see that acknowledgment: there’s a problem here, and we really need to do something bold to rebuild what the NEB is and figure this out.”

Trudeau Promised to Fix the National Energy Board. Here’s What His Expert Panel Recommends https://t.co/tkSQLYJcNz @james_m_wilt #cdnpoli pic.twitter.com/pb8I2Hh9re

— DeSmog Canada (@DeSmogCanada) May 16, 2017

Recommendations Include Prioritizing Renewables, Transmission Lines and Independent Information

According to Natural Resources Canada, the panel travelled to 10 cities, heard presentations from almost 200 people and received another 200 written submissions online.

Dan Woynillowicz, policy director at Clean Energy Canada, says in an interview with DeSmog Canada the recommendation to focus more on interprovincial transmission lines and renewables is “very consistent with the direction that the Pan-Canadian Framework on Climate and Clean Growth sets for the country.”

“As acknowledged in the report, so much of the focus and conflict right now has been around pipelines,” he says.

“But in making recommendations for how to approach this regulatory decision-making in the future, they need to make sure that expertise is being brought in on the electricity side [to address] the interprovincial nature of that.”

The creation of a proposed Canadian Energy Information Agency will also assist with this task, he says.

The NEB’s current “Energy Futures” projections are “always very conservative when it came to renewable energy” and largely disconnected with climate policies that have been put in place on both provincial and federal levels.

As the panelists wrote: “We heard over and over in public consultations in all the regions of Canada that the NEB appears to be operating in a national policy vacuum.”

Critics Flag ‘National Interest Designation’ As Giving Cabinet Too Much Say

However, experts have already voiced serious concern about the recommendation that federal cabinet have the ability to designate “national interest” for major projects.

In a statement, Erin Flanagan of the Pembina Institute noted: “The recommendation that the Government of Canada make up-front recommendations on the extent to which proposed projects align with national policy objectives lacks any discussion of trade-off rules or other guidance to ensure this process is not arbitrary.”

Similarly, Anna Johnston of West Coast Environmental Law said in a statement: “The NEB Panel’s recommendation for determining ‘national interest’ is putting the cart before the horse. How can you determine whether or not a project aligns with policy objectives, respects Indigenous rights or carries unacceptable risks before a full impact assessment is conducted?”

Indeed, it’s unclear how cabinet would adequately assess national interest before an environmental assessment is even conducted.

Patrick DeRochie, climate and energy program manager at Environmental Defence, says in an interview with DeSmog that there needs to be more clarification about how the NEB modernization would intersect with the proposed changes to Canada’s environmental assessment process, including issues like “net contribution to sustainability.”

“This national interest determination doesn’t actually spell out how we get to that, or why a project would be rejected within that process,” DeRochie says.

Flanagan also noted in her statement that Pembina is “disappointed” with the recommendation that environmental assessments of energy transmission projects (and energy transmission project alone) be conducted in collaboration between the proposed Canadian Energy Transmission Commission and Canadian Environmental Assessment Agency, as opposed to just the latter.

“Many experts agree that consistent application of [environmental assessment] law can only be achieved if all projects are reviewed under one set of rules, applied consistently,” she wrote.

Natural Resource Minister Suggests Government Won’t Adopt All Recommendations

Next up is a 30-day window for public comment on the report, closing on June 14, 2017.

Jim Carr, minister of natural resources, told reporters in Ottawa on Monday: “Now the government will ask Canadians what they think, and with other reviews that are happening now, come the fall, we’ll meet together as a government and determine the modernization of the National Energy Board and environmental assessment in Canada.”

In addition, he implied the government wouldn’t be accepting all 26 recommendations, telling the National Observer: “That means that we wouldn’t have any tough decisions to make, and I can tell you, we will have tough decisions to make.”

Woynillowicz adds that transmission projects that allow for more renewable energy and emissions reductions are still at risk of being held up because of an insufficient regulatory process, and that having these recommendations adopted will increase the likelihood that they’ll get built.

“I think it’s really positive that this review has happened,” he concludes. “Hopefully Minister Carr and the federal government will pay heed to these recommendations and move quite quickly to adopt them.”

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Want to modernize Canada’s National Energy Board (NEB)?

Bring the regulatory agency — first founded way back in 1959 when the realities of climate change weren’t readily known — into alignment with our carbon-constrained present.

That recommendation, coming from the Pembina Institute, comes in a report released Friday to coincide with the end of a federal review of the National Energy Board that brought an expert panel into halls and meeting rooms of 10 cities across the nation.

In the report, “Good Governance in the Era of Low Carbon,” the Pembina Institute states the review is an important opportunity to not only bring the mandate of the NEB into the 21st century, but also to restore public trust in what many see as a broken process.

The National Energy Board has been called a “captured regulator” that has “lost touch with what it means to protect the public interest,” by Marc Eliesen, former head of BC Hydro and former deputy minister of energy in Ontario and Manitoba.

Eliesen was one of many groups and individuals to publicly pull out of the NEB review of the Kinder Morgan Trans Mountain pipeline after the process was called “fraudulent” and an act of "public deception."

“Over the last decade, energy infrastructure proposals — including fossil fuel projects like oilsands pipelines and renewable energy development like wind farms — have become increasingly contentious across Canada,” the Pembina report states.

Modernize the National Energy Board? Here’s How https://t.co/CUp1RVOETT @Pembina #cdnpoli #NEBreview

— DeSmog Canada (@DeSmogCanada) March 31, 2017

“Public trust in energy decision making is at an all-time low, brought on by rapidly changing realities in, and expectations of, the energy sector.”

Erin Flanagan, federal policy director with Pembina and lead author of the report said changes to the NEB could help temper public skepticism by bringing the activities of the agency into alignment with Canada’s climate commitments.

“Canadians need an unbiased and trusted energy regulator capable of supporting Canada’s clean growth agenda,” Flanagan said.

Under the Paris Agreement Canada has committed to reduce emissions 30 per cent below 2005 levels by 2030.

Yet the approval of major fossil fuel projects and infrastructure by the federal government have many wondering how growth in Canada’s energy sector will square with low-carbon commitments.

“National Energy Board modernization is Canada’s opportunity to turn the corner on frustrated project reviews, and instead build processes that work for all interested parties and ultimately deliver credible recommendations to government.”

The report recommends the NEB consider the climate impacts of projects as well as the impact of new projects on Canada’s climate commitments.

“In its current function the NEB…fails to assess climate change impacts in its activities, from project reviews to data production and monitoring,” the report states.

A modernized NEB would apply best-available climate science to project reviews, keep project approvals in line with low-carbon goals and protect the long-term interest of Canadians by quantifying the climate risk associated with projects. 

Currently the NEB does not incorporate an analysis of how energy projects will impact Canada's climate committments, nor does it define what is meant by "public interest."

“The federal government has an opportunity to build on the NEB’s core competencies by ensuring it has a mandate to produce energy data consistent with successful implementation of the Paris Agreement," Lindsay Wiginton, analyst with the Pembina Institute and co-author of the report, said. 

"This is an essential requirement for Canada: data produced by the NEB is widely used for energy policy development and planning across the country, and it should reflect our climate commitments.”

The report also recommends reforms to how and what projects are submitted to the NEB for assessment.

“National and sub-national governments must implement and enforce climate policy commensurate with achieving Canada’s domestic and international climate commitments. This will encourage (though not guarantee) the selection of projects that support Canada’s transition to a decarbonized economy before they arrive at the regulator.”

In addition to addressing climate impacts, the NEB should also operate in a manner that supports Canada’s commitment to respect the rights and title of indigenous peoples, including facilitating the 94 “Calls to Action" intoned in the findings of the Truth and Reconciliation Commission.

Federal project approvals of the Site C dam, the Kinder Morgan Trans Mountain pipeline and the Pacific Northwest LNG terminal in B.C. have each been met with legal challenges from local First Nations who argue the approvals violated aboriginal rights and title or the principle of free, prior and informed consent.

“Modern regulators should conduct their work in the spirit of reconciliation with Indigenous peoples,” the report states, adding changes to legislation made in 2012 unnecessarily limited public participation in project assessments.

A lack of public participation and perceived transparency has also damaged the NEB’s reputation and the credibility of its processes, the report finds.

Pembina recommends a revised energy project review “support systems for the full and meaningful participation of the public and any interested parties” and ensure “provisions for ensuring the independence of commissioners, participating experts and project documents are in place.”

In September a three-member NEB panel recused itself from the review of TransCanada's Energy East pipeline, after the National Observer revealed the panelists quietly met with former Quebec Premier Jean Charest who at the time was working for TransCanada. 

“Public trust in the NEB is at an all-time low because of its perceived (and/or real) state of industry capture and the politicization of its decision-making," the report states, recommending energy regulators be "independent of bias and interferences from government and non-government stakeholders."

The Pembina Institute submitted the report to the expert panel charged with reviewing the NEB. The panel will make recommendations to Natural Resources Minister Jim Carr by May 15, 2017. 

Image: Prime Minister Justin Trudeau and Natural Resources Minister Jim Carr. Photo: Government of Canada

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The Tsleil-Waututh nation announced it will launch a legal challenge against the Canadian government and the National Energy Board (NEB) Friday over legal compliance and consultation with First Nations in relation to the proposed Kinder Morgan Trans Mountain pipeline expansion.

At an outdoor press conference on Tsleil-Waututh territory overlooking the Burrard Inlet and Kinder Morgan facilities, Chief Maureen Thomas said her nation has been ignored by the government throughout the Trans Mountain pipeline review process.

“Today with a heavy heart we want to announce we are going to….I don’t want to use those words…but we are going to fight,” she said.

Merle Alexander, aboriginal resource lawyer with Gowlings LLP said there are a number of “procedural errors” affecting the pipeline assessment process. “If these decisions aren’t corrected now they’ll affect the entire review process,” he said.

The Tsleil-Waututh nation will commence a legal action in the federal court of appeal, challenging a number of decisions of the NEB that include failed consultation, improper project assessment and a fundamental mischaracterization of the Trans Mountain project which involves an expanded pipeline, a terminal and increased storage facilities.

“The case is really one about legal compliance,” Alexander said. “Tsleil-Waututh is forcing legal compliance with Canadian legal law as well as enforcing their own legal government.”

Rueben George of the Sacred Trust Initiative and project manager of public engagement for the Tsleil-Waututh says the legal challenge is in the interest of all Canadians.

“The actions we take are to benefit everybody,” he said, “because Canada is making the wrong decision in supporting Kinder Morgan.”

“Since time immemorial we have been stewards of our land and we have a track record of taking care of our people.”

“I’ve had the land and waters feed my spirit. Everything we get out of the water is goodness."

“What that is over there is Kinder Morgan,” he said, gesturing over his shoulder to Kinder Morgan’s storage facilities. “What they put in the water isn’t goodness.”

In 2007 the Trans Mountain pipeline ruptured in a Burnaby neighbourhood after a road crew’s excavator accidentally hit the line. Roughly 250,000 litres of oil spilled into the community with 70,000 litres entering the Burrard Inlet.

The proposed pipeline expansion would increase the line’s capacity from 300,000 to 750,000 barrels of oil per day. The increase in capacity could quadruple the number of oil tankers moving through the inlet, from five to more than 20 each month.

Chief Thomas said the case is ultimately about taking a stand.

“We have to take a stand, stand up for what we believe is truly right. What we really believe is right for us is protecting land and waters to the best of our ability. We have to move forward in a way that we really do become aware of what is going on and not take things for granted. You have to be the one to stand up,” she said.

Thomas recounted the decline of local plants and species in the region, saying local people can no longer harvest shellfish from the once-fertile and clean waters.

“When you look at the future you have to make sure you have water, food for your family. Those are necessities. This land, area has been continually declining in providing our people food. Our people once survived from the food of this land. The animals, the plants, they are declining every day. We have to find a way to stop that decline to the best of our ability.”

The Tsleil-Waututh have worked for years to rehabilitate and lessen their impact on the local area. They’ve introduced wind power, salmon rehabilitation projects and have reintroduced elk to the hillside.

“We’re not people that fight,” Thomas said, “but we want to protect and respect these lands.”

Image Credit: @kingcornevj via Twitter

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