Members of Canada's pipeline regulator should resign en masse, says former energy exec

A veteran energy industry executive, Marc Eliesen, has a simple message for the board members of Canada's national pipeline regulator: He wants all of these members of the National Energy Board (NEB) to resign.

“The Board has lost touch with what it means to protect the public interest,” former B.C. Hydro CEO Marc Eliesen wrote in remarks presented on Wednesday to a federal panel reviewing the "modernization" of the regulator. Eliesen provided a copy of his remarks to National Observer.

Eliesen has four decades of experience as a chief executive at provincial energy corporations, as CEO of B.C. Hydro and Ontario Hydro and as chair of Manitoba Hydro and CEO of the Manitoba Energy Authority. He also served as deputy minister of energy in Ontario and Manitoba, deputy minister of energy and mines in Manitoba and was a board member for Calgary-based energy company Suncor.

Eliesen, who has become one of the NEB's most vocal critics in recent years, was scheduled to deliver his comments in Vancouver on Wednesday to a panel appointed by Natural Resources Minister Jim Carr to report on how to modernize the National Energy Board.

But that alone won't fix the board's problems, Eliesen told National Observer.

“It’s not about modernization. Right from the start, this has been all about public trust. The National Energy Board has lost the public’s trust,” Eliesen said in an interview on Tuesday. “No amount of tinkering is going to change that.”

At the root of the problem, he said, is what he called the “cozy relationship” between energy companies and the NEB's staff. The 20 members of the current board “disproportionately represent the energy interests of Alberta,” he wrote in his remarks to be delivered on Wednesday. Many members appointed during the last months of Stephen Harper's government are closely tied to oil and gas companies, he noted.

He also pointed to a secret meeting held last year between TransCanada consultant Jean Charest and members of the panel reviewing the company's Energy East project. After National Observer reported on the meeting, all three members of the Energy East panel and NEB chair Peter Watson recused themselves from the file, which has since been restarted from scratch.

In another incident, the NEB removed paragraphs from the public version of a report on pipeline safety at Enbridge, at the company's request. The NEB later told National Observer that the report had been based in part on secret environmental reports produced by Enbridge, but said that it couldn't release copies of the reports because NEB staff had reviewed them at Enbridge's offices and hadn't made copies. “That's inexcusable,” Eliesen told National Observer.

“A regulator is not a partner of industry. A regulator must be arms-length and independent from industry,” he wrote. In his view, there is no solution but for all of the current members to resign. They should be replaced by new members with a "broad range of experience and expertise that fully represent the public interest of Canadians," Eliesen wrote.

He is also recommending that the NEB move back to Ottawa, where it was based until Brian Mulroney's government moved its offices to Calgary in 1991. That has created what he called a “revolving door between the NEB and industry,” where regulators end up seeing their priorities and those of the industry they are to regulate as one and the same.

The federal department responsible for the NEB, Natural Resources Canada, declined to comment on Eliesen’s recommendations, but said in a statement that the government “welcomes all suggestions to modernize the NEB."

NEB a "captured regulator"

Eliesen was an expert intervenor during the NEB's review of Kinder Morgan's Trans Mountain expansion project in 2014, but pulled out before testifying, instead writing in a scathing letter to the board that the process was “deceptive and misleading.”

In the letter, he wrote that he believed the process was rigged in favour of Kinder Morgan, and that the board members reviewing the project had systematically ignored or rejected contrary opinions.

That was an opinion endorsed by many First Nations, environmental organizations and West Coast municipalities. “Many, many voices were shut out of the process,” Vancouver mayor Gregor Robertson told the board last summer. Twenty other municipalities and 17 First Nations oppose the pipeline expansion.

According to Kinder Morgan, if the expansion goes ahead, a worst-case accident at the company's Burnaby terminal could spill 16 million litres of oil, which, Vancouver estimates, could kill as many as 100,000 birds and wipe out seals, salmon and killer whales. But none of that was properly considered by the panel reviewing the project, he said.

“The Board’s behaviour during the Trans Mountain review not only exposed the process as a farce, it exposed the Board as a captured regulator,” Eliesen wrote in his remarks delivered on Wednesday, meaning that the board is controlled by the industry interests it is supposed to regulate.

In 2016, Prime Minister Justin Trudeau appointed a separate panel to review the Trans Mountain project.

In a report to the federal government last November, the panel recommended further study on the project. Trudeau announced a few weeks later that the pipeline would go ahead, despite saying during the campaign that the project would be subject to a complete review. “It appears that they’ve reneged on this promise, just like they have reneged on a number of other promises,” Eliesen said.

"Old school approach to a new school reality"

Both the Kinder Morgan and Energy East reviews should have been suspended while the government completed its larger modernization review of the NEB, he said.

Eliesen is also arguing that some of the current responsibilities of the NEB be shifted to other government departments. That should include the job of assessing the environmental impact and safety of pipeline projects, which he argued should be returned to Environment Canada. The department was responsible for environmental assessment until legislative changes in 2012 shifted that job entirely to the NEB.

That's a huge problem, Eliesen argues: the board is too closely tied to industry to offer a neutral assessment of the environmental impact of pipeline projects, and members aren't equipped to evaluate the often-complex science involved. The NEB's current pipeline review process, for example, doesn't look at downstream emissions – that is, greenhouse gases produced when the oil is eventually used. That is a “glaring old school approach to a new school reality,” Eliesen wrote, and evidence that the board is out of touch with current climate science.

The modernization panel's public hearings are scheduled to continue until the spring, ending in Montreal on March 29.

The NEB is also now looking for a new permanent board member to replace Ron Wallace, who retired in 2016. The job was officially posted in late January, and applications are being accepted until the end of the day on Wednesday. The board currently has eight permanent members, each appointed for a seven year term.

Editor's note: This story was updated at 1:45 p.m. on Feb. 8, 2017 to add a comment from Natural Resources Canada.