The National Energy Board (NEB) was created in 1959 under Prime Minister Diefenbaker, and was tasked with making recommendations about “the policies which will best serve the national interest in relation to the export of energy and sources of energy from Canada” and “aspects of energy policy coming within the jurisdiction of Parliament as it may be desirable to entrust to such a Board.”
Ironically, the NEB was initially created to depoliticize the approval process of pipelines, and was granted the dual role of advisor on energy policy and adjudicator on energy projects. In other words, it played the unusual role of advocating for certain policies that it developed, in proceedings over which it was also the judge.
Today, the NEB regulates:
- The construction, operation, and abandonment of pipelines that cross international borders or provincial boundaries, as well as the associated pipeline tolls and tariffs;
- The construction and operation of international power lines and designated inter-provincial power lines;
- Imports of natural gas and exports of crude oil, natural gas liquids, natural gas, refined petroleum products and electricity; and
- Oil and gas exploration not otherwise regulated by provinces.
The NEB also produces energy information, statistics and analysis such as supply and demand forecasts, and market snapshots.
In 2012, omnibus bills C-38 and C-45 amended the NEB Act and increased the mandate of the NEB to include environmental assessments for certain projects. The NEB Act was also amended to include time limits on proceedings, as well as limits on public participation.
In the past several years, the role of energy regulators has expanded dramatically. Regulators must now consider Indigenous consultation and accommodation, and public input and interest has also increased dramatically as issues under the NEB’s purview are increasingly part of the national dialogue (i.e. pipelines and climate change). The NEB’s reluctance to consider the upstream and downstream climate impacts of the projects they regulate has also drawn serious criticism.
The NEB has struggled to fulfill this expanded mandate, which is much broader than originally envisioned in the 1950s. Further, allegations of conflict of interest and close ties to the industry it is meant to regulate have caused many to describe it as an ‘industry captured regulator.’
This broad mistrust of the NEB caused the Prime Minister to issue the Minister of Natural Resources a mandate letter that included a commitment to “modernize the National Energy Board to ensure that its composition reflects regional views and has sufficient expertise in fields such as environmental science, community development, and Indigenous traditional knowledge.”
Recently, the NEB has come under intense public scrutiny – notably for their controversial review of Kinder Morgan’s Trans Mountain Expansion (TMX). In August 2018, the Federal Court of Appeal ruled that the NEB’s exclusion of marine shipping from its environmental assessment of TMX was such a fatal flaw that it made the NEB’s report too deficient for Cabinet to consider. Unfortunately, the NEB is now conducting a ‘redo’ of the marine shipping aspects of the review, and appears to be making the same errors that landed the government in court last time.
All of this follows alleged conflicts of interest on other energy projects. Notably, NEB CEO Peter Watson and the original panel from the Energy East pipeline review recused themselves from the review, following the revelations of secret meetings with former premier Jean Charest, who was working for Energy East proponent Trans Canada Pipelines at the time.
Modernizing the National Energy Board
As many commenters have stated, the NEB is broken and is in urgent need of an overhaul. The NEB modernization is an opportunity to fix it.
In November 2016, the federal government appointed an Expert Panel to conduct a targeted review of the NEB’s structure, role and mandate under the NEB Act. The NEB Modernization Expert Panel Report made several recommendations for significant changes, and stated:
“In our consultations we heard of a National Energy Board that has fundamentally lost the confidence of many Canadians[…]Canadians described an organization that limits public engagement particularly since the legislative changes enacted in 2012, does not explain or account for many of its decisions, and generally operates in ways that seem unduly opaque. We heard a broad consensus from non-industry players who feel as though they must fight to have access to usable information about NEB-regulated activities, who must fight to be heard, and who have little assurance that, when they are heard, their input is afforded any weight.”
Since the NEB Modernization Panel’s review concluded in June 2017, the federal government announced Bill C-69, which makes important changes to environmental decision-making. With Bill C-69, the government is proposing to replace the NEB Act with the Canadian Energy Regulator Act, which sets up a new regulatory board to review decision on pipelines, major projects and energy projects.
Bill C-69 could go much further in implementing the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). However, the Canadian Energy Regulator Act is an improvement on the current law, and has the potential to change how we approve projects and honour reconciliation with Indigenous people with proper consultation.
How you can help
Right now, Bill C-69 is being criticized as a law that makes the project approval process much longer and curtails the NEB’s previous systems. This is not true – we’ve broken down the myths surrounding the bill and the facts Canadians need to hear.
Bill C-69 needs your help to pass in the Senate. Tell Canada’s Senators to pass Bill C-69, and put stronger environmental laws in place for generations to come.
West Coast Environmental Law Submissions on Modernizing the National Energy Board’
(Jessica Clogg and Anna Johnston, August 2017)
This submission outlines key recommendations from West Coast Environmental Law Association in response to the federal government's Environmental and Regulatory Reviews Discussion Paper, regarding the National Energy Board. This brief identifies key issues in the Discussion Paper in building a modern, trustworthy lifecycle energy regulator.
West Coast Environmental Law submission to Expert Panel on NEB Modernization
(Eugene Kung, March 1, 2017)
This submission to the NEB Modernization Panel outlines a series of recommendations to help the NEB restore public trust in Canada's environmental laws and regulatory regime while playing a key role in the decarbonization of our energy structure.
What is the Charest Affair, and why should I care?
(National Observer, August 29, 2016)
An analysis of the controversy surrounding the NEB review of the Energy East pipeline proposal.
National Energy Board is a Captured Regulator in Urgent Need of Overhaul
(Desmog Canada, September 9, 2016)
Marc Eliesen, a senior energy executive who once served as CEO of BC Hydro, explains why he quit his role as an intervenor in the federal review of Kinder Morgan's Trans Mountain pipeline and oil tanker expansion project.
Blogs on the NEB: