NEB process challenged by anti-pipeline activists – New CEO says regulator’s activity is ‘everybody’s business’ (original coverage)

(RegWatch Original) – Facing unprecedented scrutiny and criticism about its role in Canada’s energy economy, the National Energy Board is taking action to bolster its battered public image. Early this year NEB Chair and CEO Peter Watson kicked off a cross-Canada engagement initiative with the stated purpose of better understanding “what Canadians are thinking when it comes to pipeline safety and environmental protection.”

Watson, who became Chair and CEO of this Calgary-based regulator in June 2014, has committed to consulting on these two topics with the widest possible range of interested parties in every province and territory — including local government, Aboriginal organizations, and first responders (such as fire fighters and police).

The NEB also invited the general public to connect, via an online ‘soapbox’ where people are posting comments, debating ideas, and in some cases venting frustration about this regulator’s mandate. The tour is planned to continue into May 2015 and a report summarizing input is promised for early 2016. According to the regulator, this is just the first phase of a three-year outreach plan to restore confidence in the NEB.

Watson also announced that the Board is opening regional offices in Montreal and Vancouver in spring 2015, an unprecedented step that Montreal Mayor Denis Corderre called a “total change of culture in the institutional world” and an indication of this regulator’s willingness to be more sensitive to local interests.

Controversy has surrounded projects reviewed by the Board, and its decisions, since it was created in 1959. But rarely has its jurisdiction to carry out its duties prompted as much public outrage as in recent years with oil pipeline projects such as Enbridge Northern Gateway, Energy East, and Trans Mountain Expansion Project.

Climate Change Pressure

In the ongoing review of the $5.4 billion Trans Mountain project, for example, the NEB finds itself portrayed by some climate change activists as an enabler of fossil fuel development expansion, rather than a custodian of the public interest.

Not all of the criticism has been fair, or valid — reliability is 99.9998 per cent on the 71,000-kilometre network of pipelines regulated by the NEB — but it illustrates the unprecedented challenges the regulator faces as it works to carry out its mandate.

The City of Vancouver applied, unsuccessfully, to Federal Court for a ruling to compel the Board to consider upstream greenhouse gas emissions — those produced in the Alberta oilsands — as part of the NEB’s hearing of the Trans Mountain project. A related challenge of the Board’s jurisdiction over local government, by the City of Burnaby where the western terminal for the existing Trans Mountain pipeline is located, was dismissed late last year.

One persistent narrative in the Trans Mountain project hearing is that the format of the hearing itself is frustrating a full review of Trans Mountain’s 15,000-page application. A written, rather than oral hearing (which was the federal government’s decision) is muting the ability of Intervenors to question the company about its application, as the story goes.

Regulator Watch decided to evaluate that claim against the NEB’s own records for the Trans Mountain hearing. We also decided to explore in a bit more detail the emerging public sentiments that have prompted this regulator to look for new ways to connect with Canadians.

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Protests of logging, mining and oil and gas development have been a hallmark of British Columbia’s political environment for decades. Invariably, however, those protests happen in far flung locations where the fight is over a population of albino bears, an old growth forest or the location of a mine. In those places, only the most motivated of non-local protesters and well financed of media outlets can join the melee. Rarely, if ever, has BC been witness to a similar sort of protest in the most populous corner of the province.

Kinder Morgan Canada applied to the NEB in December 2013 to twin its existing 1,150-kilometre Trans Mountain pipeline, which carries primarily oil from a terminal in Edmonton to one on Burnaby Mountain in the heart of the Lower Mainland. As part of the hearing for its project, Kinder Morgan was drilling a handful of holes into Burnaby Mountain to determine whether geology of the mountain would support underground installation of a section the new pipeline. An underground route through Burnaby Mountain would spare residents the disruption of dug-up roads and properties.

Instead of welcoming this innovation, however, climate activists gathered at the drill site to voice outrage that the work would proceed at all. Police acting under a court-ordered injunction to maintain the peace were harassed, spat at, and had garbage tossed at them. Kinder Morgan contractors were bullied, threatened, and screamed at.

The authority of the NEB, a 55-year-old quasi-judicial federal agency that regulates energy trade and energy infrastructure, was rejected. So was the authority of the federal government and the B.C. Supreme Court.

Even the Canadian Constitution was challenged, as the City of Burnaby attempted to use the court system to overturn sections of the Constitution that make it clear that municipalities have neither legislative autonomy, nor any jurisdiction over federal or provincial agencies.

All of this maneuvering has been happening well in advance of any decision by the regulator to allow Kinder Morgan to build its new $5.4 billion pipeline. The NEB’s Trans Mountain hearing is not expected to conclude until October 2015 and no decision is expected before January 2016.

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The regulator has 12 issues to consider for this hearing. Many of those have an environmental component, such as potential environmental effects and cumulative impacts, or prevention of spills from oil tankers moving through Metro Vancouver’s Burrard Inlet.

Climate change impacts associated with expanded oil development in Alberta, the so-called “upstream” impacts that are not directly associated with pipeline construction, are excluded. That wasn’t the regulator’s decision. It was Ottawa’s. Nonetheless, the exclusion has left the NEB with a problem for which there is no remedy except to endure the dissent that has been stirred up about its hearing process for Trans Mountain. In the narrative of the Burnaby Mountain protesters, no expansion of fossil fuel development can be tolerated, anywhere, ever.

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Two days after Kinder Morgan pulled up its drill and hauled out its equipment, project opponents lingered on the mountain celebrating what they described as a “victory.”

But for whom, and over what?

The regulator continues to hear Kinder Morgan’s application, which would increase capacity on the Trans Mountain system to 890,000 barrels of oil per day from Alberta to a storage tank farm on Burnaby Mountain and a marine oil shipping terminal at the foot of the mountain.

The expanded pipeline would allow Alberta oil producers to break free of a North American infrastructure bottleneck that compels them to sell their product into the US midwest at a significant discount to similar quality oils that have pipeline connections to tidewater elsewhere in the world.

For the NEB, the framework for the assessment is straightforward. The regulator must determine that Trans Mountain Expansion Project provides economic benefit to Canadians, that no communities along the route would be unreasonably disrupted by the project, and that the environment would protected during construction or subsequent operation of the line.

In its application, Kinder Morgan tells the NEB that overcoming the North American infrastructure bottleneck would allow Alberta oil producers to escape the infrastructure bottleneck and put about $18.5 billion of new taxes and royalties into the Canadian economy over the first 20 years of operations on an expanded Trans Mountain pipeline. It says the $5.4 billion project would be the primary source of construction work for nearly two years in communities along most of the route.

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A review of the list of Intervenors for the project shows that the NEB included a number of expert environmental critics, including the science-based Watershed Watch Salmon Society, conservation project specialists Georgia Strait Alliance, and prominent international climate researcher/Green Party MLA Andrew Weaver. The NEB even decided that two representatives of Friends of the Earth-US, one from San Francisco and one from Bellingham, had something to contribute. A reputation for constructive criticism and reasoned dialogue with opponents is a common denominator with these Intervenors.

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One persistent narrative is that the format of the hearing itself is frustrating a proper review; that a written rather than oral hearing process has denied the public the opportunity to grill Kinder Morgan in front of an NEB panel. (Again, this was a decision from Ottawa).

Although there are oral components to the hearing, such as a recounting of traditional evidence by Aboriginal groups, Trans Mountain intervenors are largely restricted to submitting written questions about the 15,000-page application to the NEB for response by the proponents. At the recent Enbridge Northern Gateway hearing, by contrast, the proponents were asked questions in a quasi-judicial setting.

The federal government chose the Trans Mountain format with the intent of streamlining a regulatory process to include tighter timelines — and counteract Canada’s growing international reputation as a jurisdiction where the process leading to a decision about a private sector investment has become unnecessarily onerous. Only time will tell whether this change has been effective. In the interim, here are some numbers to mull.

The NEB granted Intervenor status to 400 individuals and groups for Trans Mountain Expansion Project. A Regulator Watch examination of Intervenor filings on the NEB website show that 122 Intervenors took advantage of their opportunity to question Trans Mountain about its project — more than 10,000 questions were asked in writing in the first round of the process. In the second round of questioning, 69 Intervenors participated, asking 5,700 questions. That means at least half of those selected as Intervenors by the NEB have not exercised their opportunity.

Regardless, even by NEB standards this is a lot of questions — although perhaps not as many as the NEB was prepared to allow.

Scott Simpson – RegulatorWatch.com – April 17, 2015

Scott Simpson is a Sr. Writer & Analyst for RegulatorWatch.com 

He is a Metro Vancouver communications consultant, working with clients in the energy, resource and public policy sectors. Previously, Scott spent 32 years as an award-winning reporter, columnist and editor at the Vancouver Sun, including a 10-year stint as a business reporter where led provincial coverage of regulatory affairs.