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Canadian regulator in big trouble NEB caught in apparent conflict that has unseated a panel hearing Energy East application, put Trudeau government in bind GARY PARK For Petroleum News
Since it was established by the Canadian government 57 years ago, the National Energy Board has built an unparalleled reputation for integrity and seldom-questioned decision making - until the last few months, that is.
Now it’s in a position also without parallel, having to explain blunders that further fuel campaigns by activist organizations bent on disrupting and discrediting work of the federal regulator.
The agency handles about 750 applications a year involving inter-provincial and international energy proposals, dealing efficiently with their economic, environmental and technical aspects.
But in recent years, smothered by social media and public protest, the NEB has come under assault for not making room for wider participation in its deliberations, even though that role was not part of its federal mandate, and accusations of outright bias by the board.
Overhaul underway The government of Prime Minister Justin Trudeau, elected with a commitment to “engage” the public on any and every issue by making regulatory reviews more credible, is now working to overhaul the NEB’s function.
Natural Resources Minister Jim Carr declared that “all Canadians” should have the right to participate in hearing processes, while conceding that “not everybody will agree with every decision that we make.”
That alone poses a serious threat to the energy industry’s ability to proceed with projects, mostly pipelines, to deliver oil, natural gas and hydro-electricity to customers and generate global wealth for companies and the government.
All the while sniping at the NEB has continued unabated from the sidelines, boiling over late in August when the opening of a regulatory hearing in Montreal into TransCanada’s Energy East pipeline - to deliver 1.1 million barrels per day of crude from Western Canada and North Dakota to Quebec and New Brunswick refineries and open up export markets in Europe and Asia - was postponed until October after a dozen protesters stormed the hearing room and refused to leave until the cancellation decision was made.
Investigation of pro-pipeline bias The NEB then made an equally stunning announcement that it was investigating allegations that two of the three-member Energy East panel had demonstrated a pro-pipeline bias, partly in response to a statement by Carr that Canadians were entitled to have confidence in the independence and impartiality of institutions like the NEB.
The next blow came in quick order when all three panel members recused themselves when it was confirmed that NEB Vice Chair Lyne Mercier and board member Jacques Gauthier had met privately in January 2015 with former Quebec Premier Jean Charest, who was a paid consultant for TransCanada at the time. NEB Chair Peter Watson and Mercier will not be involved in selecting the new panel.
Carr refused to comment on the NEB panelists or the appearance of insider influence, saying only that there was plenty of time for the NEB to get the Energy East hearings back on track, noting that the ultimate decision on whether to approve the pipeline remains up to the Trudeau cabinet, based on its interpretation of the “national interest.”
NEB in shambles But the damage has been done, leaving the NEB in a shambles, three months before the federal cabinet must decide whether to approve Kinder Morgan’s Trans Mountain expansion at the same time Trudeau is hoping to negotiate a national policy for reducing greenhouse gas emission.
Approving the Trans Mountain plan this year could cost Trudeau some of his Liberal members of Parliament in British Columbia and eventually approving Energy East could set back the gains he made in Quebec a year ago.
For Trudeau the greatest challenge may be whether Energy East will inhibit his ability to deal with major energy pipelines and probably become a hot issue in the next election season in 2019.
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