Panel Recommends Scrapping NEB, Puts ‘Cart Before the Horse’ on Project Assessments
The tarnished National Energy Board will be scrapped and replaced by a new Canadian Energy Transmission Commission (CETC) if the Trudeau government accepts this week’s recommendation from a review panel charged with restoring the country’s tattered trust in federal energy regulation.
And that was almost the least of the shake-ups put forward in the 100-page panel report.
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The National Energy Board is primarily responsible for regulating energy infrastructure under federal jurisdiction—including, most sensitively, pipelines that cross provincial borders. Since a series of rule changes introduced under the previous Conservative government, the NEB has been savaged for appearing to be captive to industry interests in its handling of proposals for projects such as TransCanada Corporation’s Energy East pipeline, and Houston-based Kinder Morgan’s Trans Mountain pipeline expansion.
In its report, delivered Monday to Natural Resources Minister Jim Carr and available on the ministry’s website, the Expert Panel on the Modernization of the National Energy Board foresaw the new Transmission Commission functioning as “a regulator, not as a policy-maker.” The new agency would keep an office and technical capacity in Calgary, panel members told the National Observer in an interview. “But a new board of directors, support staff with other functions such as an expanded expertise on electricity transmission issues, and communications officers, would be added in Ottawa,” the online daily notes.
The NEB’s replacement would also take its orders from Parliament Hill. It “must align itself to the government’s environmental (particularly climate change), energy, social, and economic policy goals,” the panelists concluded. In particular, the regulator “of the future” is to be “not on one side or the other of the energy vs. climate debate. It must strive to make decisions consistent with both policy frameworks.”
The panel’s most far-reaching proposal, however, would turn the conventional approval sequence for major fossil infrastructure projects like pipelines on its head.
Until now, companies have submitted proposals to the NEB, which reviewed them and then advised the federal cabinet on whether it was in the national interest for projects to proceed. Under former prime minister Stephen Harper, the federal cabinet also gave itself the power to green-light projects, even if the NEB determined that they were not, in fact, in the national interest. But the cabinet’s decision remained the last step in the approval chain.
The review panel would reverse that. For all major projects, it recommended “a one-year process to determine alignment with national interest by the Governor in Council [the federal Cabinet] before detailed project review or licencing decisions, informed by substantive Indigenous consultation and stakeholder engagement.”
Only once cabinet had confirmed that the project aligned with national policy goals would a two-year environmental assessment begin, jointly managed by the new CETC and the existing Canadian Environmental Assessment Agency.
That proposed change drew an instant and sharp challenge from West Coast Environmental Law. “The Panel has effectively recommended replacing environmental assessments—our main tool for publicly and thoroughly evaluating the risks and benefits of proposals—with a politicized ‘national interest determination’ made without all the information about a project’s environmental implications,” said Staff Counsel Anna Johnston.
“It 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?” Johnston asked.
The Alberta-based Pembina Institute called the panel report “substantial and thoughtful” but also found fault with “the recommendation that the Government of Canada make up-front recommendations on the extent to which proposed projects align with national policy objectives.” That suggestion, Pembina noted, “lacks any discussion of trade-off rules or other guidance to ensure this process is not arbitrary.”
Pembina was also “disappointed” the panel didn’t insist on assigning future environmental assessments to “a reformed EA agency,” instead of allowing the new Commission to share that role. “One assessment authority for all types of projects would have a greater degree of specialization, and therefore capacity, to consider the environmental and social impacts of proposed projects,” Pembina noted.
Like the NEB, Canada’s process for assessing the environmental impacts of major industrial and infrastructure projects has been under review. An expert panel on that subject recommended in April that the government replace the discredited Canadian Environmental Assessment Agency (CEAA) with a quasi-judicial Impact Assessment Commission.
This week’s report also responded to an avalanche of criticism directed at the NEB for shutting out the Canadian public and ignoring Indigenous concerns with projects
“Our recommendations call for the equal recognition of traditional knowledge in hearings, [and] acknowledgment of Indigenous worldviews” in all aspects of regulatory decision-making, the panel writes, urging the creation of “a new Indigenous Major Projects Office to support true consultation and accommodation” with Indigenous groups. Similarly, it calls for the creation of a new position of Public Intervenor “to increase engagement [in] a fundamentally reformed approach to open and inclusive proceedings.” Those should also include “public decision rationales for all licencing decisions,” as well as “fully open information on monitoring, compliance verification, and enforcement actions.”
To support those goals, the panel calls for the creation of “a new, independent Canadian Energy Information Agency, separate from both policy and regulatory functions, accountable for providing decision-makers and the public with critical energy data, information, and analysis.” The United States has such an agency—the U.S. Energy Information Administration.
The panel was named last November with a mandate to “position the NEB as a modern, efficient, and effective energy regulator, and regain public trust.” A spokesperson for the embattled agency told the Observer the NEB “has not yet had time to review the recommendations thoroughly, but is open to the report’s suggestions.”
After receiving the report in Ottawa, Carr told media it was “thoughtful” and “really interesting,” but dismissed the likelihood that all the panel recommendations will be adopted into policy.
“I’m thankful for [the panel’s] work,” he told reporters. “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.”
Former Harper-era cabinet minister Jason Kenney, and now leader of the Alberta Conservative Party, denounced some elements of the recommendations as “absurd”—notably its plan to put major pipelines through a more extended review. “Only the ideological opponents of resource development think pipeline permitting should go slower,” Kenney tweeted in response to the panel’s report.
The Canadian Energy Pipeline Association was more circumspect. “We also consider how this report will link to and integrate with the CEAA Expert Panel report that was released in April,” a CEPA spokesperson stated. “We look forward to learning more on how the government will incorporate these recommendations.”
Indeed, Pembina noted, “the Expert Panel’s recommendations are only as good as the federal government’s next steps. It’s up to Prime Minister Trudeau and his Cabinet to seize this once-in-a-generation opportunity to reform Canada’s energy project review landscape by ensuring NEB modernization works in sync with other elements of the federal environmental law reform process.”