National Energy Board Ministerial Briefing Binder – Application process: Making decisions or recommendations in the public interest

FOR INFORMATION

Security: Protected B
Date: 4 November 2015

Background:

• An important part of the NEB’s job is to review and assess new project applications. Using the evidence that is placed before it during a public hearing, the NEB determines whether the project is in the public interest. A general overview of the process for the assessment of pipeline projects follows.
• While the NEB’s application process generally garners the most media and public attention, it is important to note that it is only one part – and merely the beginning – of our role. In fact, the NEB’s regulatory oversight spans the entire life of the pipeline – from the design of a project and the review process, and, if the project is approved, to construction, operation and ultimately until the pipe is safely removed from the ground.

Pre-Application and Application

• The NEB guidance on what is expected from a company is described in our Filing Manual. Pre-application meetings are sometimes also held with proponents to answer questions about the NEB process and filing manual requirements.
• A company may file a project description before it files an application. This is used for project specific public and Aboriginal engagement as well as the Participant Funding Program (PFP).
  • The PFP provides modest funding to facilitate the participation of the public in hearings with respect to new or abandonment projects for pipelines or powerlines. PFP was expanded in June 2015 to include environmental assessments of designated projects set out in the Regulations Designating Physical Activities (these regulations, which are often referred to as the “project list” are made under the Canadian Environmental Assessment Act, 2012).
• When the company files its application for the construction and operation of a pipeline, the NEB reviews it to see if the proposed pipeline can be built and operated safely, and whether it is in the public interest. Under the National Energy Board Act (NEB Act), the Board must hear from directly affected people and groups (including Aboriginal groups), and may hear from those with relevant information or expertise. At the completion of the hearing process for major projects (i.e., pipeline projects greater than 40 km in length), the Board makes a recommendation to the Governor-in-Council (with or without conditions). For smaller projects, at the completion of the hearing process the Board may issue an approval along with any necessary conditions.
• Major projects cannot be constructed until the detailed route has approved by the Board. Once a major project has received an approval, the company is required to file an application for the detailed route of the project. The Board may approve the application if there is no opposition to it. If there is opposition, the Board must have a public hearing. In either case, the Board will review the information presented and decide whether the company has proposed the best possible detailed route and the most appropriate methods and timing for construction. Smaller pipeline projects do not require detailed route approval.

Construction and Operation

• If a project is approved, the Board sends inspectors to the construction site to verify that the company is building the project according to the Board’s conditions, applicable regulations and commitments that the company made during the application process. The Board has a suite of enforcement tools to obtain the company’s compliance with NEB requirements. This includes Notices of Non-Compliance, Safety Orders, and Administrative Monetary Penalties (AMPs).
• The NEB reviews reports provided by the company to check on compliance and safety. Board staff also verify company compliance in the field during construction activities.
• During construction and after a project is built, landowner concerns can be addressed through the NEB’s Issue Resolution process. This may involve a field visit or individual follow up in person with the landowner and company.
• The NEB’s compliance verification activities include six comprehensive audits and at least 150 inspections of regulated companies. This is in addition to the 100+ technical meetings and exercises conducted each year. These tools proactively detect and correct non-compliances before they become issues.
• The NEB publicly posts all compliance and enforcement actions it takes on its website.
• Subsequent additions or modifications to pipelines are regulated by the NEB and some require further Board approvals.
• The NEB requires companies to strive for zero incidents. Should an incident occur that creates a risk to public safety or protection of property and the environment, the Board responds and has the authority to order the company to take immediate actions to address the risk. The NEB then investigates the incident and reports on the results. Companies must remediate the effects resulting from a pipeline leak or rupture as well as put in place preventative actions to prevent future occurrences.

Abandonment

• If a company wishes to abandon a facility, it must submit an application, which includes details on the company’s proposed abandonment activities. In particular, the company must describe the safety and environmental impacts of the proposed abandonment activities, and also the consultations undertaken with affected landowners.
• The NEB reviews the application. If the application is approved, the Board may impose conditions and inspect the abandonment activities.
• The NEB holds companies responsible for having the funds available to address any issues during and after abandonment.
• Currently, the NEB oversight typically ends when the pipeline abandonment project work is completed and all NEB-ordered conditions are met. When recent amendments to the NEB Act come into force in June 2016, this will not be the case. The NEB will have additional authority to make orders and regulations related to abandoned pipelines.

Figure 1: NEB Process Map: Pre-application, Application, Construction, Operation and Abandonment

Environmental Assessment at the NEB

• An environmental assessment (EA) is a review of the environmental effects likely to be associated with an energy project. This assessment is completed before the NEB makes a decision or recommendation on whether or not to approve an application.
• Both the NEB Act and the Canadian Environmental Assessment Act, 2012 provide the NEB with a mandate to consider potential environmental effects and conduct environmental assessments when making regulatory decisions and recommendations. In fact, environmental effects have been considered in Board decisions under the NEB Act since the Board was established.
• The NEB considers many factors when conducting an EA, including:
  • physical and meteorological environment;
  • soil, soil productivity and vegetation;
  • wetlands, water quality and quantity;
  • fish, wildlife, and their habitat;
  • species at risk or species of special status and related habitat;
  • heritage resources;
  • traditional land and resource use; and
  • human health, aesthetics and noise.
• The EA considers the likely environmental effects, the adequacy of proposed mitigation measures to protect the environment, and the significance of effects after mitigation measures would be implemented.
• The Board commonly imposes additional conditions on projects to ensure environmental protection measures will be implemented and will be sufficient.

Aboriginal Consultation and the Crown’s Duty to Consult

• The Crown has a duty to consult and, where appropriate, accommodate when the Crown contemplates conduct that might adversely impact potential or established Aboriginal or Treaty rights, such as the Board issuing a permit or a certificate. The Courts have stated that the NEB does not hold a duty to consult, though the Crown may rely on our processes in discharging its duty.
• The Crown has stated that it will rely on the NEB process to the extent possible to meet any duty it may have to consult with Aboriginal groups. In support of this objective, the NEB created its Enhanced Aboriginal Engagement program, which assists the Crown in discharging its duty to consult for major projects processes before the NEB. This is in addition to the NEB’s robust requirements and its application assessment process, which are described in following paragraphs.
• The NEB requires a proponent to have a consultation program with potentially impacted Aboriginal groups to obtain their comments and views about the proposed project. The proponent is then required to tell the Board how it has addressed any concerns that were raised by the potentially impacted groups, and which issues are outstanding. The Board, or any other party to the proceeding – including Aboriginal participants – may ask questions on any of the information that has been filed.
• During the NEB’s application process, the NEB examines:
  • potential impacts of the project;
  • the appropriateness of the applicant’s consultation program;
  • how impacts of a project were addressed in the application; and,
  • whether conditions are necessary to mitigate any impacts.
• Aboriginal groups are encouraged to participate in the NEB process, and measures are taken to make our hearing processes accessible to them. For example, the Board:
  • incorporates traditional practices into the hearing process where possible;
  • hears oral traditional evidence in Aboriginal communities; and,
  • provides funding to facilitate public participation, including participation of Aboriginal groups, in the hearing process.
• Where there are issues that are raised by Aboriginal groups during an NEB hearing process that fall outside of the NEB’s mandate, additional consultation is undertaken by the Crown under the leadership of the Major Projects Management Office (MPMO) of Natural Resources Canada. s. 21(1)(a) s. 23

Jobs, Growth and Long-term Prosperity Act (Bill C-38)

• In 2012, Parliament passed the JGLTPA, which amended the NEB Act and other legislation. Certain aspects of the pipeline assessment process changed as a result.

Current Status:

• All necessary changes to the NEB processes as a result of the JGLTPA have been implemented.

Analysis:

• Recent political discourse regarding the NEB, pipelines and environmental assessments has referred to the 2012 JGLTPA changes to the NEB Act.
• Some of the more controversial changes from the JGLTPA included:
  • Legislated time limits for NEB applications: Applications for major projects were made subject to a fixed 18-month beginning-to-end time limit (no more than 15 months for the NEB review, and three months for the Governor-in-Council (GIC) review).
  • Participating in a Hearing: A new legislative test was added to the NEB Act governing participation in hearings. Under the new test, the Board must hear from those who are “directly affected” by a proposed project, and may hear from those who have relevant expertise or information. The test applies to intervenors^{Footnote 1} and to those who simply wish to submit a letter of comment about the proposed project.
  • Navigable waters: The Board was given responsibility for navigation and navigation safety for NEB regulated projects. Transport Canada previously had this responsibility.
  • Environmental assessments: The Canadian Environmental Assessment Act, in force since 1995, was repealed, and the Canadian Environmental Assessment Act, 2012 (CEAA 2012) came into force. While the NEB continued to have responsibility for carrying out environmental assessments of projects regulated by it, the number of projects subject to an assessment under CEAA 2012 was reduced.
  • Decisions on Certificates: NEB denial of a major project application became subject to Governor-in-Council approval.^{Footnote 2} The NEB Act now also contains an additional process which allows Governor-in-Council to request that the NEB reconsider its recommendation and/or any condition proposed by the Board for a major pipeline project.
  • Fish and fish habitat: While not a direct result of the JGLTPA, on December 16, 2013, the Board and Fisheries and Oceans Canada (DFO) signed an MOU where the Board became responsible for assessing potential impacts to fisheries from proposed NEB regulated applications. The Board and DFO stated that the MOU better integrates the Government of Canada’s initiative to streamline application processes by eliminating the requirement for duplicate reviews.
• Other changes were made to the NEB’s processes in 2015, via the Energy, Safety and Security Act and the Pipeline Safety Act. Changes made under these Acts received broad political support and had a much more positive reception than the 2012 legislative update.

Next Steps:

• Changes under the Energy, Safety and Security Act come into force in February 2016, while the changes under the Pipeline Safety Actare scheduled to come into force by June 2016. The NEB is working to implement the changes by the coming into force dates. In some cases changes to regulations will be required. Regulatory changes required to implement the Board’s new Damage Prevention program are described in Item 4.1.

Date modified:

2021-06-11