Expert Panel Releases Report on Modernization of the NEB

On May 15, 2017, the Expert Panel on the Modernization of the National Energy Board (NEB) released their report, titled “Forward, Together: Enabling Canada’s Clean, Safe and Secure Energy Future” (the Report). A key recommendation in the Report is the need for a clearly-defined national strategy from the Federal government to align and realize energy, economic, social and environmental objectives, in order for there to be an objective way for the regulator to review and assess new projects. The Report also proposes a new process for the review and approval of major transmission projects, which would involve preliminary approval of projects that are in the national interest by Cabinet, followed by a detailed review of the projects (including environmental assessment) by a newly-created Canadian Energy Transmission Commission, along with the Canadian Environmental Assessment Agency.

We described the mandate and composition of the five-person Expert Panel in an earlier post. Among other things, the Expert Panel was asked to review the NEB’s Governance and Structure, Decision-Making on Major Projects, Engagement with Indigenous Peoples and Public Participation. After having undertaken detailed consultations, the Expert Panel prepared the Report setting out a wide range of recommendations for reform and improvement of the role currently played by the NEB.

The Report starts with an explanation of the five “principles” that underlie the Expert Panel’s recommendations. These principles encourage commitment to a “Nation-to-Nation” relationship with Indigenous Peoples; alignment of the NEB activities with clearly-articulated national policy goals; transparency of process and decision-making; and public engagement through the lifecycle of energy projects.

A key concern noted in the Report is that the NEB is placed in an untenable position when it is asked to make decisions about major projects in a policy vacuum, where no guidance is given by government about how to reconcile facilitating economic development with environmental and climate change concerns. This point was recently made by NEB Chair Peter Watson in his remarks at the 2017 CAMPUT Conference (described here). The Expert Panel indicates that the answer is to have a clear articulation of energy policy and strategy to guide the NEB. The policy and strategy should be defined by the Federal government, in partnership with Indigenous peoples and the provinces and territories. According to the Expert Panel, the policy should be developed such that it “reconciles economic, social, and environmental (particularly climate change) goals in a way that can meaningfully inform decision-making and frame the context for debates about whether, for example, a proposed energy infrastructure project aligns with Canada’s big picture goals for economic, social, and environmental progress.”

In total, the Report includes more than 40 recommendations and sub-recommendations for modernizing the NEB and its processes. Three of the key proposals are the following:

1. Create a new Canadian Energy Information Agency (CEIA) – This agency would oversee the collection, analysis and dissemination of information about energy production, transmission, use, future trends and associated carbon emissions, to inform policy-makers, industry, Indigenous peoples, academia, civil society and Canadians. The Expert Panel recommends that the CEIA be independent from decision and policy makers, so that it can “tell it like it is.”
2. Reform of the NEB into the Canadian Energy Transmission Commission (CETC) – The current NEB would be reconstituted with a Board of Directors and separate roster of Hearing Commissioners. The Board of Directors would have an office in Ottawa (not Calgary) and would be responsible for the strategy and oversight of the CETC’s activities. The Board of Directors and Hearing Commissioners would be representative of different backgrounds and experiences.
3. New approach to Project Review – The recommendation is that there should be a more rigorous (and more lengthy) process for approval of projects of “national consequence.” This would involve a two-stage review, to be conducted over three years. The first stage would be undertaken by the Minister of Natural Resources to assess whether the project is in the “national interest” and should proceed to be considered by the CETC. Based on the Minister’s assessment, the Cabinet would make a determination about whether a preliminary major project proposal is in the national interest, taking into account consultation with Indigenous peoples, strategic-level assessment and engagement with stakeholders. The second stage would be a joint hearing by a five-person panel of the CETC and the Canadian Environmental Assessment Agency (CEA) – there would be two members from each agency, along with one independent commissioner. This single Joint Hearing Panel would review the entirety of a project and be responsible for environmental assessment under CEA authority, and licensing decisions and imposition of conditions under CETC authority. The Joint Panel would consider all of the things required to ensure that the proposed regulated activity can and will be conducted safely and securely. The Joint Panel would have authority to grant or deny licences, and would issue a clear, public decision letter explaining its judgment so that all parties can clearly understand how a decision was made and how evidence was considered. This is a change from the current approach where final approval for a project comes from Cabinet, not the NEB.

Members of the public are invited to submit comments about the Report before June 14, 2017, through the Expert Panel’s website.

As noted in the Report, many of the Expert Panel’s recommendations would require legislative changes. The government has not given any indication about how it will respond to the recommendations and has simply stated that “[o]ver the next few months, the Government of Canada will review the expert panel’s report in depth along with the reports from the other three environmental and regulatory reviews to inform the development of next steps.”