From difficult to impossible: NEB Modernization panel envisions a 3-year review process centred in Ottawa

From difficult to impossible: NEB Modernization panel envisions a 3-year review process centred in Ottawa

The NEB Modernization panel released their long-awaited review of Canada's energy regulator.

Back in December, the federal government appointed a 5-member panel to review the mandate of the National Energy Board (NEB) and make recommendations to improve how energy projects are approved in Canada. This latest report is in addition to a similar report released in April on the effectiveness of the Canadian Environmental Assessment Agency (CEAA).


The NEB is currently in charge of regulating the construction and operation of interprovincial and export pipelines, as well as tolls and tariffs on those lines. There are currently 73,000 km of federally regulated pipelines in Canada. The remaining 767,000 km are under provincial jurisdiction.

The agency also oversees LNG export and import terminals as well as interprovincial power lines. 

Aside from being an energy regulator, the NEB also publishes data and trends related to Canada’s energy markets. 


The panel has concluded that the NEB "has fundamentally lost the confidence of many Canadians." There are two major sticking points:

  1. The government's long-term goals of reducing GHG emissions and eventually "phase out" fossil fuels is completely at odds with plans to build large pipelines. The current NEB is not in a position to decide if Canada, as a country, should continue to develop its natural resources.
  2. There are literally thousands of different aboriginal and First Nations groups across Canada with different points of view, especially on matters of energy development. The federal government has made reconciliation with Indigenous groups a key election promise but unanimous consensus on any project will never happen. The panel concludes the NEB is ill-equipped to resolve issues relating to treaty rights and the use of traditional lands.

In order to correct these deficiencies, the panel recommends abolishing the NEB and replacing it with a "modern" Canadian Energy Transmission Commission (CETC) governed by a Board of Directors, with decisions rendered by a separate group of Hearing Commissioners, similar to the US Federal Energy Regulatory Commission (FERC).


Before beginning the regulatory review process, the Minister of Natural Resources, Indigenous groups and various stakeholders would take one full year to determine if the project is in the national interest. This includes impacts on Indigenous peoples, alignment with national economic, energy, and environmental policy and checks against provincial carbon caps. An appointed Governor-In-Council would then take 3 months to either veto the project or proceed with a full regulatory review.




A full regulatory review, if deemed required, would now be a two-year "more detailed" assessment followed by a decision by a joint-panel consisting of both the CETC and the CEAA. The panel would consist of 5 people, two from CETC, two from the CEAA and one independent. At least one panel member must be from the Aboriginal community. The panel's decision would be final and not require additional approvals from the federal government.

The full regulatory review process would therefore move from the current 15 months to a staggering 3 years.

As a point of comparison, the US approval process for federally regulated projects (including interstate pipelines and LNG terminals) is about 12 months. The Federal Energy Regulatory Commission (FERC) requires agreement from 3 out of 5 chairpersons rendered after the regulatory review.


The panel recommends "real and substantive participation of Indigenous peoples, on their own terms and in full accord with Indigenous rights, aboriginal and treaty rights, and title, in every aspect of energy regulation." This would be achieved through the creation of a government-funded Indigenous Major Projects Office. 

This group would be responsible for defining "clear processes, guidelines, and accountabilities" for the consultation process during regulatory review.


The panel also recommends a separate and independent reporting agency, similar in function to the US Energy Information Administration (EIA). The Canadian Energy Information Agency would have the "ability to tell it like it is on energy matters" and have no say on energy policy or regulations.

The panel says this change would make published energy statistics more "neutral and credible."


Various proponents complained that NEB hearings are too rigid and formal, and timeframes too short. The panel says they would like to see more representation from industry, environmental groups, Indigenous peoples, academia, landowners, municipalities and individual citizens of various backgrounds. The "new" regulatory process would allow every Canadian, regardless of proximity to the project, to provide input to the decision-making process.

The panel would like to see board members be less energy focused and instead represent a "broader cross-section" of people with a "wider scope of knowledge and experience", particularly in matters relating to Indigenous traditions and climate science.

Several Canadians apparently also objected to the NEB's head office being located in Calgary. The regulator is currently staffed with too many people from the energy sector which is perceived as a conflict of interest when approving energy projects. 

The panel therefore recommends the Board of Directors initially be relocated to Ottawa, where the entire CETC organization and Canadian EIA can eventually follow. The panel thinks that both the energy regulatory and data collector should be located in close proximity to StatsCan, Environment Canada and the Ministry of Natural Resources.


The federal government says these reviews and overhauls are required to restore faith in the country's regulatory bodies. Aside from the NEB and CEAA review, another report on the Navigation Protection Act was released in March while a fourth study on the Canadian Fisheries Act is pending sometime this spring. 

The Government of Canada is accepting comments on the NEB Modernization until June 14, 2017.

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