Canadian Panel Reviewing TransCanada’s Energy East Resigns

(Bloomberg) -- TransCanada Corp.’s Energy East pipeline hit another snag as panel members reviewing the project for Canada’s energy regulator stepped down, threatening more delay.

The National Energy Board is adjourning its project hearings after all three panelists recused themselves to “preserve the integrity” of the regulator and of the project’s review, the board said Friday in a statement. Environmental groups had submitted letters last month asking for panelists to step aside over the risk of bias, after reports revealed two of the members had held meetings in Quebec in advance of the official proceedings, including with former Quebec Premier Jean Charest, who was then a consultant for TransCanada.

The halting of the review is the latest challenge for the C$15.7 billion ($12 billion) project that has already been delayed by local and environmental opposition in Quebec and by route changes made by TransCanada to appease concerns.

Canada’s oil industry has been hindered in building new export pipelines such as Energy East and TransCanada’s Keystone XL amid opposition to the development and transport of crude from the nation’s oil sands. Energy East would carry 1.1 million barrels a day across six Canadian provinces to a port on the Atlantic Coast.

‘Constructive Dialogue’

The panel recused itself "as a result of apprehension of bias that may otherwise arise from their continued participation in the hearing process," the NEB said. The hearing will resume once a new panel is appointed, the regulator said.

“We accept the NEB’s decision,” Tim Duboyce, a TransCanada spokesman, said in an e-mailed statement. “We look forward to the sessions resuming and a respectful and constructive dialogue with Canadians about Energy East.”

The chair and vice chair of the National Energy Board are also recusing themselves of some administrative duties, including assigning a panel for the Energy East project, because their participation in those meetings “may have created an apprehension of bias which could undermine the integrity and the credibility of the Board’s decision making process,” the board said in the statement. That includes their enforcement of time limits for the review that was due to end in March 2018.

Just how big a delay the move will cause for the Energy East hearings is unclear.

Review Overhaul

Canada Natural Resources Minister Jim Carr -- who last week called for "immediate" action after hearings were suspended amid protests -- said it’s up to the NEB to "determine next steps" for the hearings, and that a process already underway to select temporary board members could be used to replace the trio.

"Our government is committed to an open, fair, inclusive and transparent process for decisions on major energy projects," Carr said in a written statement. "While it is unfortunate that the circumstances have delayed the regulatory review for this project, independence and neutrality are fundamental principles for all of Canada’s regulatory institutions, including those reviewing major projects such as the National Energy Board."

Prime Minister Justin Trudeau has sought to rebuild confidence in Canada’s environmental review process by adding extra criteria to existing projects, boosting indigenous consultation and toughening carbon emission limits. He’s also pledged an overhaul of the NEB and said pipelines can’t get built without more public support.

Environmental Defence -- one of the groups that has called on Trudeau to delay the Energy East review until the entire NEB is overhauled -- said in a statement the resignation of the three panelists "doesn’t go far enough" and that "the review of Energy East should be suspended until the NEB is fixed."

A former government official expressed little surprise at the move, saying public support for regulatory hearings is any government’s priority.

"It’s clear that public confidence is critical to proposals for major energy infrastructure," said Chris McCluskey, an official in the Natural Resources Minister’s office under the previous Conservative government and now a senior consultant at Environics Communications in Ottawa. "The credibility of the independent regulator, both legitimate and perceived, is fundamental to building public support for these projects."

To contact the reporters on this story: Rebecca Penty in Calgary at rpenty@bloomberg.net, Josh Wingrove in Ottawa at jwingrove4@bloomberg.net. To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Carlos Caminada