Will a Repackaged National Energy Board Be Able to Meet Canada’s 21st Century Challenges?

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.”

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— 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 21^st 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