The notion of “regulatory capture” — a regulator essentially becoming a tool of the industry it’s meant to regulate — is not new in the U.S.
There, stories abound about banking regulators aggressively ignoring signs of malfeasance and even criminality in the years ahead of the financial collapse.
But that sort of short-sighted abrogation of regulator responsibility would never happen in Canada, right? Well it can and it is, says a former energy industry insider.
The National Energy Board, the federal panel that determines, among other things, which pipelines will and won’t get built, is “a truly industry captured regulator,” according to Marc Eliesen, a former CEO of BC Hydro and former Suncor board member.
Eliesen recently announced his withdrawal from hearings into Kinder Morgan’s Trans Mountain pipeline expansion, and sent a scathing letter to the NEB accusing them essentially of becoming a rubber-stamp body for the industry.
"In my view the NEB hearing process is a rigged game," Eliesen told The Vancouver Observer.
"In the past, there was a more objective evaluation of projects that would come forward ... but it's reached a stage where the NEB is not interested in the public interest, and more interested in facilitating the infrastructure for the oil and gas industry."
Elisen objected to the NEB’s decision to allow Kinder Morgan to ignore 95 per cent of the 2,000 questions posed to it by intervenors in the hearing.
The NEB itself denies it is anything but objective when it comes to evaluating energy projects, and in this case, “there are currently more than 400 intervenors participating in this review, which is more than we have had in any previous hearing," spokesperson Sarah Kiley said by way of explanation.
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Kiley said the Board's decisions are "based on fact and evidence, and not on any predetermination."
But “predetermination” is precisely what many activist groups accuse the NEB of practicing. This spring, the board released a “list of issues” to consider during hearings for TransCanada’s proposed Energy East pipeline, months before TransCanada actually filed its application (that happened last week).
Critics said the list of issues was designed to aid the project and hinder opponents. While the list does include the direct environmental impact of the project and of possible accidents involving the project, critics say it intentionally excludes mention of climate change and the broader impact of expanding oil production.
The list “does not include the significant impacts the project will have on climate change emissions, the impacts of increased tar sands production on downstream First Nations or the fact that almost all of the crude shipped will be exported unrefined,” the Council of Canadians said, in announcing a legal challenge to the list.
“I don’t believe that deciding on the issues in advance of TransCanada’s actual application being filed is acting in good faith,” Jason McLean, a lawyer for the Council, said in a statement.
The Council isn’t the only group challenging the NEB over a perceived bias. University of Toronto geography professor Danny Harvey filed a Charter challenge against the NEB this past summer, after the board refused to hear his evidence on climate change as part of hearings into the Trans Mountain pipeline expansion.
The NEB had decided a year earlier it would not consider the impact of climate change or oilsands expansion when ruling on the Trans Mountain pipeline.
Critics say it all amounts to an energy regulator that has rigged the game in favour of the industry, and against any other potentially competing concerns.
“There's no public health expert. There is no expert in environmental assessment, there is no pipeline safety expert, there is no representative from First Nations, there's no representative or expert from fisheries, no oil spill or contaminant expert," Andrew Nikiforuk, who has written extensively on the oilsands, tells CBC.
But if the NEB has become a captive of the industry, it has done so with the help of federal government policy. Since it took power in 2006, the Harper government has stacked the NEB with industry insiders to the exclusion of almost anyone else.
At the same time, the government shifted the regulatory framework to essentially make the NEB a one-stop shop for energy project approval. In 2010 they placed the NEB in charge of environmental assessments for energy projects. Those had previously been done by joint panels appointed by the environment minister.
This didn't escape the notice of the opposition. The NDP has long criticized the government for failing to make the NEB representative of stakeholders in the approval process.
But for all that, the NEB isn't entirely a rubber-stamping body, at least not yet. It's been holding up progress on Enbridge's Line 9 pipeline reversal, on concerns the company hasn't done enough to prevent spills.
You'd think that would be a point of contention, but Enbridge CEO Al Monaco came out this week and said the NEB was right in questioning the project's safety measures.
So even in instances where an energy company doesn't get its way, it appears the NEB still sees eye to eye with the industry.