Explainer: What Happens After the Northern Gateway Joint Review Panel Reports? (updated with new section on B.C. Government)

George Hoberg
December 17, 2013

After several years of political conflict and two years of public hearings, the Joint Review Panel for Enbridge’s Northern Gateway Project is set to release its report December 19, 2013, at 1:30 PST. The panel will be making recommendations to the cabinet about two things: first, whether or not the pipeline proposal should receive a certificate (a permit), and what “terms and conditions” should be specified for the project. These are actually two separate recommendations that are treated different legally. Examples of terms and conditions could be the requirement for specific spill response plans, or greater research into diluted bitumen behaviour in marine waters. The JRP proposed a set of terms and conditions in April 2013.

From JRP to Cabinet

The JRP was constituted as a panel of the National Energy Board under the National Energy Board Act. When the JRP started its work it had final decision-making authority on approval. But one of the most important changes of the controversial Bill C-38, much of which was designed to facilitate the approval process for large energy infrastructure projects, was the removal the final decision-making authority from the NEB and giving it to cabinet.

The relationship between the JRP recommendation (in this case acting as the NEB) and the cabinet are described in the National Energy Board Act, sections 53 and 54. Essentially, cabinet may accept or reject the recommendation decision of the JRP but can’t alter the terms and conditions it recommends. Cabinet has three choices:

  1. Direct the JRP to approve the application with the terms and conditions recommended by the JRP
  2. Direct the JRP to reject the application
  3. Direct the JRP to reconsider its recommendation or its terms and conditions

Cabinet can ask the JRP to reconsider its terms and conditions, and can do so repeatedly, but it can’t alter them. Cabinet can give specific deadlines by which the JRP needs to reconsider. Cabinet has 180 days to respond.

These provisions create the potential for conflict between the JRP and the cabinet over the terms and conditions. This scenario could arise if the JRP recommends, and then refuses to reconsider, terms and conditions that are so demanding that they make it difficult or unfeasible for Enbridge to proceed. Paragraph 7 of Section 53 states:  “Regardless of what the Board sets out in the reconsideration report, the Board shall also set out in the report all the terms and conditions, that it considers necessary or desirable in the public interest, to which the certificate would be subject if the Governor in Council were to direct the Board to issue the certificate.” It seems unlikely, however, that the JRP would risk an open confrontation with cabinet.

There are five scenarios for how the relationship between the JRP recommendation and cabinet action can be resolved. The percentage numbers given in brackets are my own personal speculation about probabilities of different outcomes.

  1. The JRP recommends approving the application, and cabinet concurs (60%)
  2. The JRP recommends approving the application, and the cabinet orders it to reconsider or reject it (5%)
  3. The JRP recommends rejecting the application, and cabinet concurs (20%)
  4. The JRP recommends rejecting the application, and cabinet orders it to reconsider (10%)
  5. The JRP recommends rejecting the application, and cabinet orders them to approve it anyway (5%). It could either do this by accepting the terms and conditions recommended by the JRP in its December 19 report, or order the JRP to reconsider its terms and conditions.

Options for the B.C. Government

The Government of British Columbia has specified five conditions for the province to support the pipeline. The last formal statement we have from the province on the Northern Gateway Pipeline is it final written submission to the JRP, where it took quite a strong position against the pipeline as proposed. The BC government will have to decide whether the terms and condition proposed by the JRP lead it to change its position. Note that the JRP will not be able to address the province’s fifth condition about getting a “fair share” of economic benefits – that would have to come from subsequent actions by Enbridge or perhaps the federal government.

If Premier Christy Clark chooses to dig in her heels and oppose the pipeline even if recommended by the JRP, her power will be mostly political, not legal. Legally, interprovincial pipelines are quite clearly a matter of federal jurisdiction. In the time of greatest conflict between the BC and Alberta governments about the pipelines, Clark did threaten to deny power from BC Hydro and deny forest permits. But given the formidable legal powers of the federal government in this situation, her leverage is political. B.C.’s most important resource is that Harper’s Tories need B.C. seats to form a government after the 2015 election. 21 B.C. ridings held by Tories, and a minimum of six of them are likely to be marginal ridings for the Tories in 2015.

So the real question is, if Clark determines that after the JRP report her five conditions are not met, and she chooses to dig in her heals and oppose the pipeline, will Harper be willing to provoke a political war with the province of BC? Albertans have long memories about what it’s like when a federal government imposes big energy policy decisions against the express wishes of the province. That might weigh on Harper’s mind, but he’s been awfully committed to getting oil sands greater access to tidewater.

After the Cabinet Decision

If the cabinet rejects the pipeline proposal, it is dead, and Enbridge’s only option is to go back to the beginning of the process.

If the cabinet approves the pipeline, the Enbridge will have the green light from the regulatory process to proceed. It might decide, however, that the terms and conditions are too demanding to justify commencing construction, or Enbridge might choose to postpone construction for political reasons.

If Enbridge chooses to proceed (and possibly even if they don’t), the cabinet decision is virtually certain to be challenged in court by First Nations and environmentalists. It is also conceivable that the Government of British Columbia could launch a legal challenge. When this process began, I said that the biggest obstacle to the construction of the Northern Gateway Pipeline is the adamant opposition of so many First Nations, and that remains the case. The government is required to demonstrate that they have consulted and accommodated the concerns of First Nations. It is plausible that the courts could decide that despite the equity offers by Enbridge and the safety assurances of the company and governments, that the concerns about the risk to First Nations values have not been appropriately accommodated. It could take several additional years for the case to be resolved in court.

If the government’s decision to approve the pipeline application is upheld by the courts, then construction can commence. When it does, it is virtually certain that a widespread campaign of civil disobedience will ensue by a coalition of First Nation and environmentalists

Stay tuned.

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