The National Energy Board (NEB) is Canada’s independent federal regulatory agency that oversees interprovincial and international energy infrastructure, such as pipelines, power lines and Canada’s energy imports. It also regulates oil and gas exploration activities not otherwise under joint federal/provincial accords.25
As the regulator of oil and gas pipeline projects in Canada, the NEB currently plays a key role in determining the fate of some of the largest oil and natural gas reserves in the world. With a board membership heavily influenced by carbon capital, its position is a serious cause for concern, making it a top legitimator. The NEB faces a potential overhaul through Bill C-69—a pending piece of legislation at the time of writing—but industry’s participation in this legislative reform process raises concerns about the bill’s potential to meaningfully address climate issues.
Head office: Calgary, Alberta
The NEB’s primary role is to regulate oil and natural gas pipelines interprovincially and internationally. The NEB also authorizes, regulates and monitors the export and import of oil, natural gas and electricity, and is responsible for analyzing and disseminating information about Canada’s energy supply.1
According to the National Energy Board Act, the NEB is responsible for ensuring that energy projects under its regulatory jurisdiction are aligned with Canadian environmental legislation and environmental protection, as an extension of its duty to uphold the interests of the Canadian public. This responsibility extends from the initial application phase of energy projects, where the NEB is tasked with assessing environmental impacts, to the mid- and end-life-cycle stages of environmental monitoring once a project is already under way.
Included in the NEB’s environmental mandate are protections for the physical environment, soil productivity, species at risk and human health. While the NEB has ruled to consider climate impacts in some pipeline assessments, such as the Energy East pipeline, climate change is not factored into its overarching regulatory mandate for pipeline projects, meaning that the carbon burden of the oil and natural gas projects the NEB regulates may continue to go unaddressed.2
Furthermore, upcoming changes to its legislation (see “Strategy”) suggest that the future of its climate mandate is uncertain.
In response to mounting criticism that the NEB was unfit to regulate Canada’s oil and gas pipelines, the Trudeau government appointed a five-member panel tasked with reviewing the NEB’s mandate and structure. In its report released in May 2017, the NEB Modernization Expert Panel acknowledged the credibility of claims that the NEB had been “captured” by industry interests. The panel proposed that government dismantle the NEB and establish a “modernized” Canadian Energy Transmission Commission that would ostensibly expand opportunities for public participation in the review process.3
Unfortunately, the panel itself appeared to be replete with fossil fuel ties: three of the five members held close ties to the pipeline industry. Panel member Gary Merasty, for example, sat on the board of directors for the Canada West Foundation, a prominent Canadian think tank that advocates for pipeline development, including Energy East and the Trans Mountain Expansion Project. Another member, Brenda Kenny, was formerly president of the Canadian Energy Pipeline Association, an industry association for pipeline companies such as TransCanada, Enbridge and Kinder Morgan.4 These kinds of ties should temper optimism as to whether institutional reforms made as a result of panel recommendations will substantially alter the status quo.
As a response to the Modernization Panel’s findings and other calls for regulatory reform, the federal government tabled Bill C-69 in 2018—a sweeping piece of legislation that would scrap the National Energy Board entirely and create a new regulatory body that would replace the overlapping assessments frequently required for major projects.5 The legislation would overhaul the current acts regulating the NEB and the Canadian Environmental Assessment Agency, as well as making amendments to other acts including the controversial Navigation Protection Act,6 which was gutted under Conservative prime minister Stephen Harper’s leadership.
Bill C-69 suggests some positive steps forward—including its commitment to offer greater opportunities for public engagement and participation from Indigenous communities in the regulatory process.7 But it also bears critical limitations when it comes to climate change: downstream emissions are not assessed under the new act, meaning that only the emissions created at the point of resource extraction would be counted in the impact assessment process.8 The new process also retains the power of the federal cabinet to approve a project deemed to be in the “national interest,” even if the assessment determines that it would cause significant negative environmental or social effects.9 Meanwhile, even the bill’s own limited improvements may be under threat: amid considerable pushback from industry and some provinces, in April 2019 the federal government entered into a new round of consultations, raising concerns that industry interests may further erode its potential benefits.10 In June 2019, the Senate passed the Bill after adding 180 amendments further privileging the interests of the oil and gas industry.11
Kinder Morgan Trans Mountain Expansion Project
The NEB came under fire in 2017 for its approval of the Kinder Morgan Trans Mountain Expansion Project despite strong opposition from over 20 municipalities and 17 First Nations affected by the project. The expansion would triple Trans Mountain’s existing pipeline capacity, enabling it to transport 890,000 barrels of diluted bitumen from Edmonton, Alberta, to Burnaby, British Columbia, each day.12
Following the approval, 15 judicial reviews were filed by environmental groups, Indigenous communities and coastal municipalities to contest the NEB’s decision in the Federal Court of Appeal. Many Indigenous communities claimed that the government breached its duty to consult and accommodate Indigenous peoples whose territories are situated on the pipeline route. Other cases launched by environmental groups argued that the NEB and federal cabinet failed to uphold the Species at Risk Act, given the pipeline’s potential impacts on endangered southern resident orcas.13
Procedural amendments made during the NEB’s pipeline review process may have directly facilitated the pipeline’s approval. The review may represent the first NEB hearing about a major project that denied any oral cross-examination of the witnesses and the evidence they put forward.14 As a result, Kinder Morgan’s submissions were directly accepted into the submission process even though the company’s evidence that diluted bitumen can be cleaned up in a marine environment was labelled as a “draft” at submission and drew on unproven remediation methods.15 Furthermore, the NEB denied members of the public any access to the panel save for vetted intervenors.16 The NEB accepted 80 per cent of Kinder Morgan’s motions but only 11 per cent of the select few intervenors’ motions.17
The NEB’s executive ties with Kinder Morgan suggest that conflicts of interest may have been influencing the process: Steven Kelly, a former consultant for Kinder Morgan, was appointed to a permanent position on the NEB board in 2015. While working as a consultant for Kinder Morgan, Kelly co-authored a report on the economic benefits of the Trans Mountain pipeline project which was submitted in the company’s application to the NEB. Following public opposition, the report was withdrawn from Kinder Morgan’s submission, but Kelly remained on the NEB’s board during the company’s assessment.18
On August 30, 2018, the Federal Court of Appeal ruled against the federal government’s approval of the Trans Mountain expansion, stating the government failed to adequately consult with First Nations affected by the project.19 Reporting on behalf of the panel responsible for the ruling, Justice Eleanor Dawson cited the inadequacy of the NEB’s final report and the NEB’s failure “to allow participants to cross-examine the Texas company officials about their evidence and testimony during its review.”20
Another pipeline controversy erupted around TransCanada’s Energy East pipeline review process, which was withdrawn by the company in October 2017. The C$15.7 billion pipeline would have carried 1.1 million barrels of diluted oil sands bitumen daily from Alberta to New Brunswick.21
During the review process, the NEB was subject to allegations of conflict of interest when two appointees tasked with reviewing the project met privately with former Québec premier Jean Charest, who was lobbying on behalf of TransCanada. Initially, the NEB claimed that the meetings were unrelated to the pipeline, but it later issued an apology clarifying that the matter had indeed been discussed.
Following the controversy, three members of the panel reviewing the Energy East project stepped down, including the NEB’s chair and CEO Peter Watson and vice-chair Lyne Mercier.22 Despite their withdrawal from the Energy East assessment, both maintain their chair positions at the NEB. The hearings were temporarily shut down until January 2017. A new panel determined that the initial hearing process would have to be redone to account for potential bias, and it subsequently concluded that Energy East’s climate impacts should be taken into consideration in the revised assessment.23 The same year, TransCanada cancelled the project entirely, citing “changing circumstances” as the cause of its decision, but refusing to attribute the cancellation to the amended climate assessment.24
The controversy fuelled a growing concern among the public and some provincial governments that the NEB had lost its capacity to act as a reputable regulatory body for the oil industry, contributing to the Bill C-69 reform process now under way. As noted above, the implications of these reforms for climate have yet to be determined.
Learn more about the National Energy Board at LittleSis.org
The intent of the Corporate Mapping Project database is to engage Canadians in a conversation about the role of the fossil fuel sector in our democracy, by “mapping” how power and influence play out in the oil, gas and coal industries of BC, Alberta and Saskatchewan.
At the time of writing, the NEB decides to integrate climate impacts into its pipeline reviews on a case-by-case basis. For example, while the NEB ruled to consider climate impacts in the Energy East pipeline, in 2019 the regulator ruled to exclude a similar assessment in the review of the Trans Mountain pipeline project. “Canadian Regulator Won’t Consider Climate Impacts of Trans Mountain,” National Observer, February 19, 2019, https://www.nationalobserver.com/2019/02/19/news/canadian-regulator-wont-consider-climate-impacts-trans-mountain.
Patrick DeRochie, “NEB ‘Modernization’ Panel Is Stacked with Pipeline Industry Insiders,” Environmental Defence blog post, November 11, 2016, https://environmentaldefence.ca/2016/11/11/neb-modernization-panel-stacked-pipeline-industry-insiders/.