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NEB reform needs to address structural problems and deficiencies


(This is a reproduction of our submission to the NEB modernization panel)


As we venture to make comments on the NEB “modernization” process, it is important to remember that the main role of the NEB currently is to review, monitor and regulate pipelines and transmission lines across provincial or federal borders. Being a regulator means monitoring industry behavior and correcting and/or enforcing when the rules aren’t followed. Unfortunately, it’s hard to think of the NEB as an enforcer as well as reconcile its regulatory duties with those of reviewing energy projects.

The NEB has been called a captured regulator and industry facilitator, and we agree.  Enforcement, accountability and transparency are still highly problematic. Spill prevention and emergency response plans are inadequate for existing pipelines.

Audits of the NEB by the federal commissioner of the environment and sustainable development in 2011 and 2016 have shown that the regulator had failed to do adequate follow-up and tracking in 93% and 47% of the the cases where gaps and deficiencies were identified. Needless to say that a critical component of regulatory compliance is making sure something has been done to fix the problem!

Recently the NEB was also called out for turtle paced enforcement of what industry insiders have called “ticking time bombs”, taking years to even push companies to release information on substandard pipefitting materials, a problem that first came to the public’s attention in 2008 and has since been attributed to the cause of a 2013 natural gas pipeline explosion despite TransCanada whistleblower Evan Vokes sounding the alarm with the NEB in 2012.

It is important to recognize that the NEB has a series of structural problems to address. Continuing failure is unacceptable. Aside from directly addressing the issues mentioned about below are some thoughts that could help address some of the structural issues that plague the NEB.

Looking forward to a fossil free future

As we enter a carbon constrained world where we are transitioning away from fossil fuels, a lot more attention needs to be put on decommissioning pipelines and mitigating financial risk for the government and people of Canada.

In light of this, the NEB should:

  • Establish a maximum lifespan by which pipelines should be decommissioned or replaced and ensure that the NEB uses its authority to get old or dangerous pipelines decommissioned in a timely fashion.

  • Ensure companies have a bankruptcy contingency plan that does not leave taxpayers on the hook for decommissioning or cleaning-up if pipeline companies go bankrupt.

  • Ensure fossil fuel production and demand forecasting takes into account our responsibility to meet the Paris agreement, climate policies, and not just business as usual scenarios that do not pass a climate test.

  • Ensure alternative energy production scenarios are considered in forecasting as well as in determining the need for a project, namely the potential impact of the rapid development of renewable energy production compared to the need for new pipelines.

Reducing and Preventing Conflicts of Interest

Conflict of interest is one of the main aspects of the recent public outcry against the National Energy Board. From the NEB being a called a captured regulator, to NEB board members holding secret meetings with industry and other external groups about ongoing hearings, to NEB staffers taking the revolving door to go work with industry lobbyists such as the Canadian Association of Petroleum Producers or the Canadian Energy Pipelines Association, we’ve got an NEB that needs to look deeply at its conflict of interest and has a severe crisis of independence.

We recommend the following considerations:

  • As a regulator, all NEB staff should be barred from working as a lobbyist for ten years. The personal connections accrued while working for a regular cannot and should never be open to leverage by industry lobbyists.

  • The Headquarters of the NEB should be located elsewhere than in Calgary to distance interests from the heart of the oil industry.

  • Be more transparent and make serious efforts to present information in a publicly digestible way to the broader public, but especially to people who live in communities adjacent to the pipeline or project routes. Ex: risk, emergency response, user friendly maps

  • Recentre the NEB as a regulator, on monitoring and enforcement.

  • A complete overhaul of board members and board member selection process should be done in order to reflect strong criteria that ensures they are at arm’s length from industry and focus on regulatory practice

Re-framing the public interest and public participation

While reflecting on the role and functioning of the NEB, we need to make sure the conversation includes where we are going as a society and the values that should be reflected in that orientation. Economic interests, often framed in the short term, need to be balanced with cultural, environmental and community well-being in the short and long term.

The public interest should:

  • Take into account notions of intergenerational justice

  • Address how NEB decisions and regulatory practices reinforce or add to existing colonial realities and encroaches on indigenous rights by working on integrating recommendations of the Truth and Reconciliation commission into practices and policies at the NEB, as well as the United Nations Declaration on the Rights of Indigenous Peoples

  • Reflect on how regulatory enforcement should take into account rising inequality in Canada when considering how to respond to spills and catastrophic events in relation to how these events disproportionately affects some people

  • When spills or other violations occur, ensure proper transparency, communication, feedback and participation in clean-up efforts with community stakeholders, including indigenous communities

  • Strive to foster meaningful public consultation that aims to provide the tools and information necessary for communities that stand to be affected by energy projects to participate


Protecting Communities, the Land and the Water

As the NEB purports to improve the stringency of emergency response plans and available funds that corporations need to set aside for clean-up purposes, the NEB must increase those commitments in order for communities to stay safe and to promote prevention practices. As we have seen with recent catastrophic spills by Husky Energy in the North Saskatchewan River, and Enbridge in Michigan, costs of clean-up and inability to contain spills and intervene quickly cannot be underscored enough. In light of this, the NEB should:

  • Focus regulation and enforcement on prevention of oil spills

  • Ensure oil pipeline companies are able to pay upwards of $400 per litre spilled for clean-up, based on the reported costs for the above mentioned spill clean-up

  • The inability of Husky, and Enbridge in the U.S. to contain and clean-up oil spills in a timely fashion without severely affecting drinking water systems and the health of the river ecosystem or people and communities living along the river should raise a red flag for even the federal government. If companies are unable to contain these catastrophes in rivers or oceans, transportation of bitumen needs to be stopped until a proven process and proper enforcement can be put in place.

  • A full audit should conducted on emergency response companies and practices to ensure the practices actually work and are financially and physically able to respond to emergencies and use best practices.