Oil Pipelines and Sneaky Business

by Thomas Turoczi
Loophole in NEB legislation
Pipeline operators are benefitting from an apparent loophole in the Canadian National Energy Board Act. Oil companies must apply for regulatory approval under section 52 of the legislation and are subject to an environmental impact assessment. [1] As long as the responsible authority is the National Energy Board an EIA is mandatory. The scope of the assessment however, is limited to the capacity the proponent is applying for. [2] In other words, the full output potential of a new pipeline project does not require disclosure. Subsequent applications to modify output require “far less scrutiny” under a different section of the legislation. [2] Companies know this and never apply with their design capacity. Instead, they bid to export at acceptable levels and once their project is approved, they can request to expand production. [1] The post-decision requests to increase/maximize capacity fall under section 58 of the Act, a process which is a walk in the park in comparison. [1, 2] Design capacity expansion happens under the radar and though both terrestrial and marine spill risk increases (across the entire system), landowners do not get a say at all and the environment is only marginally considered. By this stage, the EIA is limited to pumping vicinities. [1]


Companies like Kinder Morgan, and Enbridge are calling the shots and having a ball. When in June, the Ontario Pipeline Landowners Association complained about not being notified of Enbridge’s 20% increase in crude transport from Sarnia to Hamilton, their public hearing request was denied. Enbridge claimed those residents did not fall in the immediate area to be considered “affected parties,” and the Board played along. [1] During Enbridge’s Northern Gateway project review, it was revealed their pipelines were designed to ship far more oil and condensate than the “applied for” capacity they submitted. [2] Putting the new figures into perspective: “50 per cent more oil tanker traffic than the (initial) marine spill risk assessment considered.”[2] The Gitga’at were unable to have the scope of the EIA adjusted to project additional biophysical impacts with future expansion.  Apparently, the rules are set in stone: “the board elects to assess ‘applied for,’ not designed capacity.” [2]


Similarly, the presence of Kinder Morgan’s Trans Mountain pipeline is already causing public outcry based on the company’s track record of past spills. What the public might not know, is that tankers in BC waters are nowhere as many as could be once it decides to expand to full capacity.[2]
Root of the problem
The National Energy Board has been criticized in the past for its conflicting responsibilities. The Canadian Association of Energy and Pipeline Landowner Associations had suggested a mandate to simultaneously facilitate economic growth, police industry, and represent landowner interests is a joke. Reform is necessary because “one regulator cannot discharge three contradictory and competing mandates.”[3] Perhaps this is true. But the problem does not start nor stop with the Energy Board. The “toleration” of loopholes like this one is a reflection of a broader federal agenda. Currently, economic growth priorities fully overshadow environmental concerns at the Parliamentary level. [4, 5] They do so and in the name of efficiency they do – just consider the recently passed Bill C-38 and the range of legislation it amended to make resource extraction more feasible. Among the many, it made changes to the National Energy Board Act…and no, not for the better. [5, 6]


[1] The Tyee (2014). “The Loophole Big Oil Uses to Pump More Crude” Retrieved from http://thetyee.ca/Opinion/2014/03/03/Big-Oil-Loophole/ Accessed October 3, 2014.
[2] Burnaby Pipeline Watch (2014) “Kinder Morgan Pipeline Expansion Designed to Carry Much More Oil” Retrieved from http://www.burnabypipelinewatch.ca/content/kinder-morgan-pipeline-expansion-designed-carry-much-more-oil Accessed October 4, 2014.
[3] Canadian Association of Energy and Pipeline Landowner Associations (www. caepla.org) (2011) “Canada’s National Energy Board & the Need for Its Reform” Retrieved from http://www.landownerassociation.ca/rsrcs/CanadasNationalEnergyBoard_NeedForItsReform.pdf  Accessed October 4, 2014.
[4] CBC News (2014) “Northern Gateway pipeline approved with 209 conditions” Retrieved from http://www.cbc.ca/news/politics/northern-gateway-pipeline-approved-with-209-conditions-1.2678285 Accessed October 5, 2014
[5] Green Party of Canada (May, 2012) “May Clarifies Deliberately Confusing Bill C-38” Retrieved from http://www.greenparty.ca/media-release/2012-05-10/may-clarifies-deliberately-confusing-bill-c-38 Accessed October 5, 2014
[6] Mondaq (2012) “Canada: National Energy Board Act Amendments Impose Timelines for Project Approval” Retrieved from http://www.mondaq.com/canada/x/189194/Environmental+Law/National+Energy+Board+Act+Amendments+Impose+Timelines+for+Project+Approval Accessed October 5, 2014