Canada: It's Been A Great Run NEB: After Almost 60 Years, The National Energy Board To Be Replaced With The Canadian Energy Regulator

On February 8, 2018, the Federal Government announced the first reading of Bill C-69: An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts (Bill C-69).

While Bill C-69 proposes to amend a multitude of Federal legislation, this article focuses on its impact on the National Energy Board (NEB). For a discussion of the other changes introduced through Bill C-69, please refer to McCarthy Tétrault's other blog posts on this topic which can be found here.

What does Bill C-69 mean for the NEB?

Upon Bill C-69 coming into force, the National Energy Board Act (NEB Act) will be repealed and replaced by the Canadian Energy Regulator Act (CER Act). Bill C-69 will also reincarnate the NEB as the Canadian Energy Regulator (CER), which will continue to be based in Calgary.

The structure and composition of the CER will be different than the NEB, the most notable of differences being:

  • The CER's adjudicative function will be separated from its administrative day-to-day operations through the creation of a Board of Directors comprised of between five and nine directors to provide oversight, strategic direction and advice on operations;
  • The CER will have a Chief Executive Officer, separate from the Chair of the Board, who will be responsible for day-to-day operations and will not serve on the Board of Directors;
  • The CER's adjudicative branch will include a group of up to seven full-time commissioners, with a "complement" of part-time commissioners, which will replace the current nine Board members; and
  • At least one of the CER's directors and at least one of the commissioners must be Indigenous persons.

Bill C-69 sets out a proposed mandate for the CER, which would include those areas traditionally within the NEB's purview, such as making decisions with respect to pipelines, power lines, offshore renewable energy projects and abandoned pipelines; overseeing pipeline construction, operation and abandonment; and making orders with respect to traffic, tolls and tariffs.

Notably, the CER's proposed mandate will not include impact assessment or consultations on major projects. The NEB previously conducted these assessments for projects within its jurisdiction. Under the new framework, these tasks will fall to the Impact Assessment Agency of Canada (IAAC), a similar reincarnation of the Canadian Environmental Assessment Agency, who will act as a central agency to conduct the impact assessment and consultations for the CER and the other lifecycle regulators.

Bill C-69 illustrates an increased government focus on project timelines. The CER will be guided by the overarching principle that all applications and proceedings must be dealt with "expeditiously as the circumstances and procedural fairness and natural justice permit." This is in-line with shorter timelines for project impact assessments, discussed in greater detail in another of McCarthy Tétrault's series of commentary on the IAAC.

Will Bill C-69 affect projects or complaints currently before the NEB?

Bill C-69 would leave the complaint regulation, as well as the NEB's traditional bread and butter of determining tolls, tariffs, and just and reasonable rates, firmly within the CER's purview (found in Part 3 of the current form of the proposed CER Act). As a result, in its current form, Bill C-69 will not impact the powers of the regulator over day-to-day Group 1 and Group 2 Pipeline regulation.

Projects that are currently before the NEB will be not be impacted. Pending applications before the NEB at such time as the CER Act may come into force would be determined by the CER in accordance with the provisions of the NEB Act.

One Project, One Assessment

Those projects requiring an impact assessment following Bill C-69 coming into force would face a different impact assessment process. These projects will undergo a single, integrated process carried out jointly by the new IAAC and the new CER.

Under this approach, the IAAC will conduct the impact assessment and coordinate consultations with Indigenous peoples in collaboration with the CER. The CER will retain accountability for regulating requirements under the CER Act.

Their impact assessments would be conducted by a panel, whose terms of reference, chairperson, and at least two members would be determined by the Minister. The final report for such designated projects would feature two sections on impact assessment by the IAAC and recommendations from the CER.

Shortened Timelines & New Powers

Major projects requiring an impact assessment under the proposed Impact Assessment Act would have a maximum 2 year timeline for a decision. Projects not subject to the new Impact Assessment Act would see the timeline for review reduced from 450 days to 300 days.

In addition to those discussed above, other proposed new or restored powers of the CER include:

  • removal of Federal Cabinet's ability to overturn a negative decision from the CER;
  • retention of Federal Cabinet's right to ask CER commissioners to reconsider a decision;
  • NEB's existing "standing test" would be eliminated to ensure that members of the public have an opportunity to express their views, through the CER's acceptance of comments on a draft list of issues and factors;
  • CER's participant funding program would expand to provide additional financing and support new activities;
  • CER's "public interest determination" is proposed to be expanded significantly to explicitly reflect consideration of environment, social, safety, health, socio-economic issues, gender-based impacts, and the impacts on Indigenous peoples of Canada;
  • express powers and provisions addressing offshore renewable energy development; and
  • CER is obliged pursuant to section 56 of the proposed CER Act to "consider any adverse effects that a decision or order may have on the rights of Indigenous peoples of Canada recognized and affirmed by section 35 of the Constitution Act, 1982".

What happens next?

As currently drafted, the anticipated date that the CER Act will come into force remains uncertain. The transitional provisions within Bill C-69 provide that the CER Act will come into force "on a day to be fixed by order of the Governor in Council."

As a result, Bill C-69 has a long way to go before it could impact projects in development. It must still go through the remainder of the House of Commons and Senate approval processes, receive Royal Assent, and be proclaimed into force on a day to be determined by the Governor in Council before its provisions will take effect. Our team continues to review the draft provisions and will monitor this process closely. Stay tuned for updates and a more fulsome review of the proposed changes to the NEB and the new CER.

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