The National Energy Board’s decision to grant Costco intervener status in its review of the Kinder Morgan Trans Mountain pipeline even though it had missed the deadline to apply is raising questions given that the U.S. Environmental Protection Agency (EPA) was denied its request for an extension to the same deadline.

Costco submitted a late application to participate in the review of Kinder Morgan’s proposal to triple the capacity of its pipeline to Burnaby on April 9, 2015. The company argued that it received formal notice of the pipeline’s potential impacts on its Langley property on Feb. 4, 2015, when it was served with notice for land acquisition.

In a letter sent to all interveners, the National Energy Board wrote that Costco had provided sufficient reasons for the board to consider a late submission based on the fact “the project may cross Costco’s lands and it has the potential to be directly affected.”

American authorities are nervous about Kinder Morgan’s proposal to increase oil tanker traffic by a factor of seven through the shared waters off B.C.’s coast, particularly in light of the recent slow response to a small fuel spill in Vancouver Harbour.

“A catastrophic oil spill would set the Puget Sound clean-up effort back decades, and result in billions of dollars in harm to our economy and environment,” the state’s Ecology Department officials wrote to Washington Governor Jay Inslee in 2013 in documents obtained by the Globe and Mail.

The officials also raised red flags about Canada’s oil spill response capability, writing: “B.C. lacks authority over marine waters, and their federal regime is probably a couple of decades behind the system currently in place in Washington State. … When it is spilled, we are concerned that dilbit oil may be considerably more toxic and damaging, and far more difficult to clean up, than conventional crude from Alaska.”

The documents also indicate that American officials urged the U.S. to sue the NEB for barring the EPA from participating in the hearings on the grounds that it had missed the deadline to apply.

Ultimately, the EPA was granted a lower status as a “commenter,” which does not provide the same ability to provide sworn evidence or ask questions of the proponent.

Asked why Costco was granted intervener status when the EPA was not, National Energy Board Communications Officer Tara O’Donovan told DeSmog Canada that the EPA never officially asked for intervenor status — instead, they asked for an extension to the deadline to apply. The board denied that request in this ruling “as the EPA had not outlined how it would be impacted if it was not able to submit a late application.”

“This letter did not provide any information about the EPA’s mandate, why it sought participation in the hearing, or whether it sought intervenor or commenter status. The Board is required by natural justice to make each decision solely on the basis of the information filed on its record,” O’Donovan wrote via e-mail.

The EPA subsequently filed a late application to participate as a commenter, which “included further details on the agency and the relevant information or expertise it could provide to the board.” The board then granted the EPA commenter status in an April 2, 2014, ruling.

The Globe reported this week that EPA officials wrote in e-mails that the NEB’s decision was contrary to the boards’ obligations under Canadian law. The Canadian Environmental Assessment Act requires the NEB to “consult and co-operate” with the EPA.

 “It does appear that NEB should have consulted with the U.S. (and, in turn, EPA and other such agencies) given the scope of the project which will increase tanker traffic in the [Puget] Sound. … NEB never actually sent out an offer to consult as contemplated by Section 18 of the CEAA,” wrote Courtney Weber of the agency’s Seattle office in the documents obtained by the Globe.

The National Energy Board is expected to make its recommendation to the federal government by January 2016.

The board has been criticized for eliminating all oral cross-examination of evidence during the Trans Mountain review. Many of the province of British Columbia's questions — including its request to see Kinder Morgan's oil spill response plan — have been refused. The City of Burnaby says only three of its last 217 questions were answered.

In late March, several B.C. mayors declared non-confidence in the National Energy Board and called on the federal government to put the current process on hold. The mayors also called  upon the Government of British Columbia to re-assert its role in environmental assessment and to establish a provincial process to assess the Trans Mountain proposal.

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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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