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NEB's role strikes a crude balance between safety and demand

Enbridge Inc.’s 2010 pipeline rupture spilled 3.3-million litres of oil in Michigan’s Kalamazoo River, fouling the environment and costing the company $1.2-billion (U.S.) to clean it up. American regulators accused the company of having a “Keystone Kops” approach to safety.

Kevin Van Paassen/The Globe and Mail

Finding itself in the public eye like never before, the National Energy Board is looking to persuade Canadians that the energy regulator is up to the job of protecting their safety and the environment.

Board chairman Peter Watson is in the midst of a cross-country tour to meet with municipal officials, First Nations leaders and first responders, and is promising to open the pipeline safety issues to new levels of public scrutiny.

But the regulator faces major challenges as environmental groups and First Nations complain that its process for reviewing pipeline projects is seriously deficient, and as it faces planned staff cuts in two years when temporary funding expires.

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Starting Monday, a web application with an interactive map will allow Canadians to view every significant pipeline incident reported to the board since 2008.

At the same time, Mr. Watson is requiring the industry to do away with a practice that requires municipalities to sign non-disclosure agreements before they can see emergency response plans.

"In a lot of respects, the NEB does find itself on the front page of papers. That wasn't the case just five to 10 years ago," Mr. Watson said in an interview during a stop in Ottawa.

"I didn't think the board was doing enough in terms of its engagement and connection with communities across the country and helping people understand its full life-cycle regulatory role around safety and environmental protections."

The NEB is dealing with an unprecedented demand for new pipeline capacity to move oil sands crude out of Alberta to the West Coast, East Coast and the southern border with United States.

That planned expansion has provoked a backlash from critics who warn of the possibility of catastrophic spills, and who worry the growing production from the oil sands will contribute to global climate change.

The industry's commitment to safety has been under intense scrutiny in the wake of some high-profile accidents. Enbridge Inc.'s 2010 pipeline rupture spilled 3.3-million litres of oil in Michigan's Kalamazoo River, fouling the environment and costing the company $1.2-billion (U.S.) to clean it up. American regulators accused the company of having a "Keystone Kops" approach to safety.

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Since then, the Canadian regulator has begun auditing companies' overall safety management to assess their overall commitment and recommend improvements in practices. It has also increased the number of inspections it undertakes, from about 100 inspections per year prior to 2012, to between 180 and 190 in recent years.

But the board faces budget cuts unless it can secure new funding from the federal government, which in 2012 approved a five-year spending increase. Its staff levels are projected to drop from 471 full-time equivalent positions to 398 in 2017-18.

Mr. Watson said he's confident Ottawa will approve necessary funding. "Right now, there are no cuts and we're just working through the program," the board chairman said. "It does sunset a couple years from now, but I have an opportunity to go forward in future to seek extensions."

The board is encountering a backlash over its pipeline reviews from environmental groups who argue it is interpreting its mandate too narrowly, and from First Nations who argue its consultation process is inadequate.

It faces court challenges over its refusal to consider the impact that expanded pipeline capacity would have on greenhouse gas emissions in the oil sands.

Its mandate requires it to assess issues that are "directly relevant" to pipeline applications. Panels have concluded that does not include emissions from the production of crude that would be transported in the pipeline. However, in determining whether the pipeline is needed and therefore in the public interest, panels do consider the economic benefits of increased production.

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"Our mandate just extends to the pipe and the inter-provincial jurisdiction," he said. "The complicating factor is the shared jurisdiction in the country where provinces are responsible for resource development and emissions and environmental impacts associated with production."

First Nations leaders in Ontario and Quebec have complained publicly about the adequacy of consultation as the NEB prepares to review TransCanada Corp.'s proposed Energy East project.

Mr. Watson said the board has a limited role in the consultation process. He said the regulator is eager to obtain input from aboriginal communities on direct impacts, but the more sweeping conversation about treaty rights and benefits needs to be undertaken by the government.

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About the Author
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

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