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Ben Dachis - Getting the Big (and Small) Things Right in National Energy Board Review

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To: The Hon. Jim Carr, Minister of Natural Resources

From: Benjamin Dachis

Date: June 14, 2017

Re: Getting the Big (and Small) Things Right in National Energy Board Review

It’s been a busy month on pipeline news. The National Energy Board (NEB) is setting the scope of its review of TransCanada’s Energy East pipeline; there’s turmoil over the fate of Kinder Morgan’s Trans Mountain pipeline; add to that the report of the expert panel on the modernization of the NEB, an organization whose fate is now in your hands.

I suggest two broad directions for reforming the NEB: first on getting a few big things right, then on getting a lot of the little things right.  

The one, big thing to get right is setting the NEB mandate appropriately. As Jeffrey Church argued, today’s frustration with the NEB is a result of the NEB being asked to decide whose preferences are worthier. That is a task for which it is ill-suited. People ask the NEB to adjudicate on everything because its mandate to act in the public interest has multiple, often conflicting objectives.

The government should amend the NEB Act to make economic efficiency the focus of public interest to be addressed by the NEB. That means that the NEB should be squarely focused on comparing costs and benefits, including, of course, the costs of mitigating any risks related to a project. 

But the new NEB has to get a number of the small things right too. Primarily, this means that the decision making process needs to improve. As Lesley Matthews argued:

  • The federal government should restore the independence of the NEB’s decision making authority for pipeline applications, eliminating political overrides of NEB decisions except via courts on questions of process.
  • To keep the review process timely, review participants should be limited to those directly affected or have relevant expertise related to the project under review.
  • NEB hearings are also not the appropriate venue for ongoing engagement with local and Aboriginal communities. The government should implement such a mechanism outside of the formal hearing process.

Legislative branches should be responsible for determining public policy goals, such as greenhouse gas emission reduction targets. Government should also stick to the big picture, and not directly intervene in any individual NEB hearing.

An autonomous and unelected regulatory body can achieve government goals efficiently and effectively, as long as the elected government articulates these goals clearly. That means the NEB should stick to the specifics involved in each individual hearing and not try to address the big picture.

This is the division of labour that you should put in place, as opposed to  the expert review panel’s suggestion that the government determine whether any specific proposal is in the public interest. If that decision isn’t clear to a regulator, then the government hasn’t defined the broader public interest clearly enough.

It’s time that Canadian governments took on more of the work of laying out the plan for energy policy, and leave to the NEB any specific questions about pipelines.

Benjamin Dachis is Associate Director of Research at the C.D. Howe Institute

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