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Ottawa pushes climate tests on proposed pipeline projects

A ship receives its load of oil from the Kinder Morgan Trans Mountain Expansion Project's Westeridge loading dock in Burnaby, British Columbia, on June 4, 2015. The British Columbia government's final submission to the National Energy Board says it is unable to support Kinder Morgan's proposed pipeline expansion from Alberta to the West Coast.B.C. THE CANADIAN PRESS/Jonathan Hayward

The federal energy watchdog is failing to adequately track companies' compliance with their regulatory requirements, Canada's environment commissioner said Tuesday in a report that adds fuel to a raging political debate over the approval and safety of oil pipelines.

Prime Minister Justin Trudeau met Tuesday with Montreal Mayor Denis Coderre, and stressed the importance of stringent environmental reviews of proposed resource projects. Mr. Coderre and other area mayors announced last week their opposition to TransCanada Corp.'s proposed $15.7-billion Energy East project, which would deliver 1.1 million barrels a day of Western crude to Eastern refineries and export markets.

Mr. Trudeau confirmed that Ottawa will impose a climate test on proposed pipeline projects currently under review to assess their overall impact on greenhouse-gas emissions, as well as other measures aimed at boosting public confidence in the regulatory process. The additional scrutiny will apply to several projects currently in the regulatory review process, including Energy East and Kinder Morgan's proposed expansion of the TransMountain pipeline to Vancouver.

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"The federal government's role is to put in place a process through which TransCanada or any other company might proceed, to demonstrate that a project is in the public interest and get Canadians' approval," the Prime Minister told reporters after his meeting with Mr. Coderre.

"We will both build on previous work done by the processes that did exist and we will ensure that, in the process going forward, we take into account all greenhouse-gas emissions, including those upstream."

Mr. Trudeau said Ottawa will be a "responsible mediator" between proponents of pipelines and resource development, and opponents – though eventually, the government will have to decide, based on National Energy Board recommendations and the other consultations it is pursuing.

New Democratic Party and Green Party MPs said the environmental commissioner's audit of the NEB undermines Mr. Trudeau's assurances by raising questions about the effectiveness of the regulator itself.

Commissioner Julie Gelfand – who is part of the Office of the Auditor-General – released a report Tuesday that concluded the Calgary-based federal regulator did not adequately track the implementation of conditions that the board itself required in previously approving pipelines, nor did it consistently follow up on deficiencies in companies' overall regulatory compliance.

With the proposed expansion of oil-and-gas pipeline capacity, "it is clear that the National Energy Board needs to do more to keep pace with the rapidly changing context in which it is operating," Ms. Gelfand said at a news conference.

NDP MP Nathan Cullen said the audit raises concerns that the energy board is not adequately policing the companies it regulates. "The commissioner has uncovered a startling lack of adequate monitoring by the national Energy Board for the pipelines it approves," Mr. Cullen said.

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In a statement Tuesday, the National Energy Board insisted it was fully enforcing its conditions for pipeline approval and regulatory requirements but needed to do a better job of documenting the work it does. "The NEB absolutely enforces and monitors all companies' compliance with pipeline approval conditions and has complete confidence that compliance with pipeline approval conditions is appropriately and comprehensively evaluated by NEB staff and board members," its chairman, Peter Watson, said in a statement.

In the House of Commons, NDP Leader Tom Mulcair accused the Liberals of breaking a campaign promise to strengthen the environmental assessment process and force Kinder Morgan and TransCanada to resubmit their applications under the new process. Since assuming government, the Liberals have said they can't intervene in a quasi-judicial hearings already in process, but will add "transition measures," such as the climate test and further consultations with First Nations.

Environment Minister Catherine McKenna dodged Mr. Mulcair's accusation but said the Liberal government is "committed to rebuilding the trust in the environmental process … basing our decisions on evidence and science, in consultation with indigenous people and with input from the public."

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About the Authors
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More

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