A Canadian Liberal government-appointed inquiry called Monday for replacement of the National Energy Board (NEB), doubling the time allowed for energy project reviews, and an aboriginal role in approval decisions.
“There exists a major challenge to reconcile Canada’s energy, economic, and climate goals,” says an NEB “modernization” panel that grew out of 2015 Liberal election promises to overhaul the 58-year-old regulatory structure.
The five-member panel’s 90-page report sketches a reform blueprint intended to turn the NEB’s law court-like arena of contested quasi-judicial proceedings into a cooperative forum for making peace between traditional adversaries.
The group describes the goal in a single long sentence: “We envision a future where industry representatives, environmental organizations, Indigenous peoples, academia, landowners, municipalities, provincial and territorial governments, community organizations, and individual citizens of various backgrounds can work with the NEB to direct research, inform Canadians and decision-makers, and work collaboratively to make sound decisions, advance sound solutions, address emerging risks, and protect the livelihood and wellbeing of all Canadians.”
The report recites grievances against the current system of translating public concerns into project approval conditions by native, environmental, landowner and academic groups that dominated panel meetings and internet opinion collection.
“We heard from parties to NEB hearings who felt that the entire system was one of ‘people versus suits’ and that the ‘suits’ have outsize influence and resources,” says the modernization inquiry. “Overall, we heard from people across the country that feel as though the NEB does not listen to their concerns, and, indeed, has no process by which to do so.”
The modernization panel recommends replacing the NEB with a “Canadian Energy Infrastructure Agency,” run by a corporation-like board of directors in Ottawa. The new apparatus would be one-half of a two-stage approval process for pipelines and power transmission networks.
In the first stage of the proposed regulatory reform regime the federal cabinet would have one year to determine whether projects fit in principle into overall national energy, environmental and native-rights policies.
In the second stage the new agency would have two years to examine projects’ practical economic, engineering and safety aspects, and land, air, water and community effects.
Current pro-development rules enacted by the former Conservative government set an 18-month target for NEB reviews and cabinet ratification of the regulatory decisions and conditions.
The current rules also limit “standing” or participation rights in law court-like fashion to parties directly affected by projects or capable of contributing useful evidence, with all others restricted to sending the board “letters of comment.”
The modernization inquiry recommends opening hearings and appointing regulatory commissioners from diverse backgrounds across Canada, effectively putting distance between the agency and the current NEB headquarters in the oil and gas capital of Calgary.
In the reform blueprint every project review would include at least one aboriginal commissioner, and would work in tandem with a new national environmental assessment structure proposed in April by a parallel Liberal cabinet-appointed inquiry.
The tight Conservative rules responded to a six-year regulatory ordeal that aborted the Mackenzie Gas Project, after the NEB postponed approval while under orders to await a book-length report on Arctic society by a panel of aboriginal and Northwest Territories authorities.
The NEB modernization inquiry acknowledges industry needs timely decisions, but makes no recommendations for responding swiftly to market opportunities or limiting regulatory costs measured in hundreds of millions of dollars.
The inquiry also acknowledges, “Simply instructing a modern NEB to ‘follow government direction’ is unhelpful without assuring that such direction is available, up-to-date, clear, and consistent with its legislative mandate.”
To attain clarity, the modernization panel recommends three policy agencies: an expanded version of the current Major Projects Management office, a new parallel “Indigenous Projects Office” and regional “multi-stakeholder task forces.”
The inquiry recommends no changes to a complicating factor on the Canadian energy scene: provincial jurisdiction over oil and gas production and power generation, which confines federal authority to long-distance pipelines and transmission systems. The division of powers is a cornerstone of the country’s constitutional “bedrock” and national policy clarity has to arise from federal-provincial agreements, says the reform plan.
For every step of the Canadian regulatory way the NEB modernization panel recommends “real and substantive participation of Indigenous peoples,” including acceptance of native traditional or tribal wisdom as no less valid than science.
Additional recommendations include creation of an ombudsman’s office to help landowners cope with pipeline and power transmission projects, and creation of a Canadian counterpart to the United States Energy Information Agency.
Liberal Natural Resources Minister Jim Carr described the NEB modernization panel’s report as “thoughtful and really interesting.” But he made no commitments. The government will collect public responses and consider the proposals in the fall along with recommendations of the parallel environmental regulation review, he said.
The Canadian Energy Pipeline Association (CEPA) was also wary. “CEPA recognizes there will be significant change to how the transmission pipeline industry is regulated, and how major pipeline projects are reviewed in Canada," said an association statement.
"We also must consider how this report will link to, and integrate with the CEAA [Canadian Environmental Assessment Agency] Expert Panel Report that was released in April. We look forward to learning more on how the government will incorporate these recommendations going forward.”