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Shake-up faces regulators Canadian, Alberta agencies under fire over environmental roles as activists swamp hearings; opposition pledges overhaul of NEB GARY PARK For Petroleum News
The two Canadian political leaders who are engaged in an election campaign brawl they hope will see one of them defeat of Prime Minister Stephen Harper on Oct. 19 are ready to grab any issue to tip voters into their fold.
In the thick of the contest, the New Democratic Party’s Tom Mulcair and the Liberal’s Justin Trudeau have resorted to an all-out assault on the National Energy Board, whose record over 56 years of measured decision-making has become a model for energy regulators around the world but now faces the prospect of a sweeping overhaul.
Things are the same in Alberta where freshly elected Premier Rachel Notley of the provincial New Democratic Party has started a review of what she sees as the “conflicting mandate” of the Alberta Energy Regulator.
Notley said she has long held the view that the AER is “both a promoter of energy and the primary vehicle of environmental protection in Alberta.”
“What’s troubling about the AER is it has actually taken over responsibility for most of the environmental protection ... within the energy sector. You can’t do that job when your overarching mandate is to promote energy development,” she said.
That role was reinforced in 2012 when the previous Alberta government established the AER to provide one-stop regulatory decision making after the industry complained about the delays and costs of approval processes.
Under new legislation the AER combined the duties of the Energy Resources Conservation Board and those of Alberta Environment and Sustainable Resource Development to create a single entity with oversight of public lands, environmental protection and the use of water with the technical and economic aspects of project applications.
Environmental issues dominate At the federal level, even though major projects are subject to environmental assessments by independently appointed panels, the NEB is charged with ultimately weighing the social, economic and environmental impacts of pipeline projects that cross provincial borders.
But, as has occurred in the United States, the regulatory process has increasingly been dominated in recent years by environmental issues and swamped by activist groups.
Mulcair and Trudeau have climbed aboard that bandwagon, insisting that the NEB must include environmental concerns and climate change in its deliberations, expanding the federal legislation under which it operates.
Mulcair has argued that the NEB must take into account greenhouse gas emissions as it assesses the merits of projects, otherwise Canada’s environmental reputation will be further sullied.
However, if that shift were to take place the NEB would be held responsible for a complex task in making its recommendations to the Canadian government on pipelines such as Northern Gateway, Trans Mountain and Energy East.
It would, for example, be required to assign specific carbon emissions from the production stages of various oil sands operations that have committed their output to proposed pipelines.
No specifics Although Mulcair insists an NDP government would require the NEB to ensure projects were consistent with Canada’s climate-change goals he has been unable to demonstrate how that would be achieved.
Trudeau said he would “modernize and rebuild trust” in the NEB by allowing the public to “meaningfully participate” in public hearings.
Among the many changes to the NEB introduced in 2012, the Harper government set fixed deadlines for the NEB to complete its reviews of projects and reduced the scope of environmental hearings while transferring some of the responsibilities to the provinces.
For now, the NEB has become a victim of its own making, forced to postpone a final round of hearings on Kinder Morgan’s proposal to triple capacity to 890,000 barrels per day on its Trans Mountain pipeline from the Alberta oil sands to the British Columbia coast and Washington state refineries.
Conflict issues The regulator has opened itself to conflict of interest accusations after striking from its record a 230-page report submitted in November 2013 by Steven Kelly, then the head of downstream consulting operations with IHS Global Canada.
Kelley submitted evidence for Kinder Morgan on oil market supply and demand before he was appointed this summer to a seven-year term on the NEB, starting Oct. 13.
“There can be no question that public confidence in the impartiality of tribunal decision-makers is integral to the administration of justice,” said the panel appointed by the NEB to handle the Trans Mountain hearing. “The dual role of Mr Kelley, as a person who prepared evidence in this proceeding and as a future board member may raise concerns about the integrity of this hearing process.”
No matter how technical and mundane the content of Kelly’s report, the NEB’s decision to further delay its work on Trans Mountain shows conclusively how the work of regulatory agencies has been irreversibly changed.
Sven Biggs, campaign organizer for ForestEthics Advocacy, said the removal of Kelley’s evidence shows that the Harper government’s “last minute attempt to stack the National Energy Board with energy industry cronies has backfired. This is a scandal ... that shows the Prime Minister’s office is manipulating independent government processes to forward their own political agenda.”
Kinder Morgan said it will take less than a month to replace Kelly’s findings - which, in any event, are two years old and have been outdated by the subsequent collapse in oil prices - by hiring the Texas-based consulting firm Muse Stancil to prepare a brief report.
The NEB has yet to announce how it plans to proceed or to set a date the resumption of hearings.
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