Pipeline Safety, Indigenous Peoples, and Modernizing the National Energy Board

Speech

Speech to the Alberta Institute of Agrologists

Alberta

March 16, 2017

National Energy Board Chair/CEO Peter Watson

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Introduction

  • I appreciate the opportunity to join you today and acknowledge that we are on the traditional lands of the Kootenay, Stoney, Blood, Peigan, Siksika and Tsuu T’ina First Nations peoples.
  • Over the past few years, you have undoubtedly heard about the National Energy Board and the work we do.
  • You may have read about us online or in a newspaper, seen us on the news, or heard about us in Parliament during Question Period.
  • Our work places us squarely in the midst of the most important public policy debates in Canada.
  • From pipeline safety, to controversial pipeline projects, to the modernization of the NEB, to the relationship Canada has with Indigenous Peoples…
  • The NEB is in the middle of it all.
  • So today, I want to talk with you about three things.
    • First, pipeline safety and environmental protection,
    • Second, modernizing the NEB and ensuring inclusive practices,
    • And finally, redefining our relationship and engagement with Indigenous Peoples.
  • How they relate to each other. And how they are critical to building a better Canadian energy regulator.

Why Regulate?

  • First of all, when we talk about modernizing Canada’s federal energy regulator, I think you have to start with a basic question, “Why do we need a regulator?”
  • I’ll give you a two-word answer, “Three Kids.”
  • You might know this story.
    • In June 1999, three kids were spending the afternoon at a creek near downtown Bellingham, Washington.  One eighteen-year old boy was fly-fishing; the other two were just having fun, like 10-year old boys like to do.
    • A nearby gasoline pipeline failed. 230,000 gallons of gasoline spilled into the creek.
    • The eighteen year old boy fly-fishing was overcome by fumes; he fell into the creek and drowned.
    • Moments later, the gasoline ignited and the two other ten-year old boys – who were playing near the creek – died instantly.
  • So it’s a sunny afternoon, three kids go to a creek, there’s a leak, there’s an ignition, and three families lives are changed forever.
  • All because of a pipeline that people in the county didn’t even know was there.
  • John Harris, who was a reporter with the local newspaper at the time, said that it,
    • “Never crossed my mind before that there could be a pipeline with gasoline running through the city. Most of the people I talked to had no idea that this pipeline runs right through town.”
  • Now that terrible tragedy eventually led to the formation of the ‘Pipeline Safety Trust’, an American organization that promotes pipeline safety through education and advocacy.
  • But I ask you. If you are a pipeline regulator in Canada, with jurisdiction over 73,000 km of pipeline that runs from coast to coast; and through many, many densely populated areas, why do you exist?
  • I’ll tell you why. You exist to do all you can to ensure that pipelines are safe and that the environment is protected.
  • So Canadians can count on you, have confidence in you – that they are safe – and their kids are safe.
  • Because we never want what happened in Bellingham to happen in Canada.

Excellence

  • So, as an energy regulator, how are we going to do that?
  • By being accountable and by being EXCELLENT at everything we do.
  • That means every facet of our work needs to aspire to excellence,
    • from our pipeline inspections,
    • to our understanding of the issues, trends, and latest technology,
    • to the need to have excellent management systems.
  • Because there isn’t just one thing that can cause a pipeline to fail.
    • It might be a substandard part,
    • It might be a lack of attention paid to the quality of a weld,
    • It might be poor training of employees,
    • It could be one of a hundred things.
  • And if we are to prevent incidents like the one in Bellingham from happening, we can’t be complacent. We must have excellence in everything we do – because public safety and the environment we value are at risk.
  • And over the past year, that commitment has informed much of our thinking on how we do our work at the NEB.

Regulatory Excellence

  • Last year, the NEB began to work on what the University of Pennsylvania has called, “Regulatory Excellence.”
  • And as I said before, if the public is to have sustained confidence that the pipelines we regulate are safe and the environment is protected, than we need to aspire to excellence in absolutely everything we do.
  • To do that, you need excellent management practices.
  • And if the NEB expects the pipeline companies it regulates to have excellent safety and management systems, then the NEB needs to achieve excellence in its own systems for safety and management systems oversight.
  • So in 2016, we implemented a new management system and something we call our ‘Departmental Results Framework’ which allows us to:
    • publicly track and report on the progress of our commitments – like improving our  pipeline safety and public engagement work;
    • assess the effectiveness of that work – with tools like performance measurements;
    • and help us align our staffing and budget – and even our organizational culture – towards excellence in safety oversight.
  • I think it is important to note that we will not assess our results and ‘Results Framework’ in isolation.
    • To be effective, the measurements need to make sense and reflect the interests of the people we serve – from landowners to environmental groups.
  • We consulted with stakeholders across Canada on the performance measurements that we wanted to put in place, and we will be open and transparent with those stakeholders in reporting our results.
  • And the timing has worked out well, as last year the federal government formed an Expert Panel on NEB Modernization which was tasked with making recommendations on the Board’s governance structure and mandate, among other things.
  • So it’s an exciting time at the Board, with a lot of change both from outside and within the NEB.
  • By focusing on achieving Regulatory Excellence and implementing our new Departmental Results Framework, in addition to the government’s modernization work, the NEB is going through nothing less than a transformation.
  • And so I reiterate, if the NEB truly wants to tackle the challenges we face, Canadians need to have sustained confidence in the NEB’s honesty and willingness to engage with them, and to be held accountable. 

Pipeline Safety & Environmental Protection

  • So how do we get there? As you would expect, a big part of our approach emphasizes pipeline safety and environmental protection.
  • And our goal is to prevent harm to people and the environment.
  • We do this by implementing multiple levels of oversight processes, or regulatory defences.
  • This starts with ensuring a company complies with regulatory requirements and project conditions.
    • Field inspections, company filings, incident reporting, and analysis of all this information guides our approach.
  • We also ensure a company complies with financial requirements – including the ability to pay for spills and the set-aside of funds to properly abandon their projects at the end of life.
  • We then go deeper and investigate the adequacy of a company’s management systems to prevent harm – in the areas of pipeline integrity, safety management, environmental protection, security of infrastructure, damage prevention, and public awareness.
  • We do this through comprehensive management system audits of a company or audits of a common set of issues across companies.
  • Again, we utilize all of the data and information at our disposal to target our audits and oversight to potential areas of risk and harm.
  • We then go deeper again and have begun to demand a strong safety culture in the companies we regulate – and have begun gathering data on safety culture.
  • And – to close the loop and ensure accountability to the public – we report our performance on each of these levels of oversight – through our Results Framework.
  • As I said, our goal is to prevent harm and to strive for zero incidents.
  • So let me say a bit more about Safety Culture, because if you strive for zero incidents, you must drive performance beyond compliance with standards and support and enable a strong safety culture in the companies you regulate.

Safety Culture

  • In the Board’s drive to achieve zero incidents, the NEB recognizes the need to go beyond compliance – and has embarked on a path to demand a strong safety culture in the companies it regulates.
  • Companies need to comply, and they need to have an ever improving management system.
  • The NEB clearly understands that culture, and the human factor, are at the root of performance issues.
  • And a strong safety culture is one in which:
    • leaders demonstrate that safety is their overriding priority;
    • every employee feels empowered for making safe decisions;
    • and the organization is continually learning from its experiences with the goal of advancing safety.
  • Leadership is key to maintaining a healthy safety culture. An organization that has a strong safety culture scrutinizes – as a normal business function – every decision it makes to ensure that risk is managed appropriately.
  • So in 2014, the NEB released a ‘Statement on Safety Culture.’ The Statement includes a definition of safety culture and outlines the expectation that companies regulated by the Board must build a positive safety culture.
  • Our ongoing work on safety culture has highlighted the need for industry to look beyond traditional safety measures (such as workplace injury rates) to other indicators of process safety.
  • So the NEB and a number of other regulators completed a ‘Safety Culture Indicators Research Project’ to identify specific indicators that could be used to gather data on safety culture during their compliance oversight activities and facilitate greater understanding of industry safety culture.
  • We released our report on safety culture indicators in 2016, and we continue to work to further improve the use of industry safety culture indicators in our work.
  • In addition, the NEB is looking in the mirror – and considering how achieving excellence in our own culture for safety and management systems oversight – will support broader performance improvements in industry.

Modernizing the NEB & Enduring Inclusive Practices

  • Much has been said over the past while about the need to modernize the NEB.
  • Without a doubt, there is an absolute need for this to occur.
  • We understand the critical importance of public trust. We fully support the Government of Canada’s review to modernize the NEB and we are committed to helping the Government achieve its objectives.
  • Quite frankly, modernization will put wind into the sails of the NEB.
  • Right now, I would say that the framework that the NEB currently operates under gives the impression that our only role is as an ‘expert quasi-judicial tribunal.’
  • I have to say that I have never liked the terms ‘expert’ or ‘quasi-judicial’.
    • They conjure up images of boundaries and walls around the NEB that should not be crossed.
    • They also give the impression that we are a ‘level above’ those we interact with.
  • But we are not an organization with walls around it. We surely can and should authentically work with others.
  • I believe that a twenty-first century energy regulator needs to have stellar competence, but it also must be inclusive and engage empathically with others.
    • All the while, maintaining the utmost integrity in its practices and behaviors.
  • And while we work at arms-length on hearing matters and applications from the industry we regulate as well as the stakeholders that intervene – and nobody can interfere with those decision-making processes – we must be mindful that the public has less time for formal, exclusive, expert processes and the public wants to be more involved.

Making the NEB More Inclusive

  • So what steps can be taken to allow the NEB to be more inclusive?
  • First, Government can provide additional clarity in our legislation around the factors they believe must be considered for the ‘public interest.’
  • They could also consider adding a transparent legislative mechanism to provide us policy direction in the future.
  • Second, in addition to reviewing the diversity of Board Members making adjudicative decisions, Government could consider an advisory board or governance board that include a diverse group of Canadians, to increase awareness and oversight of systematic performance of our organization.
  • As part of its ‘Results Framework,’ the NEB will be assessing the fairness and accessibility of its adjudication process, in a systematic way. I believe more needs to be done here, including a reassessment of our Participant Funding Program.
  • Third, both the legislative framework and our own internal processes need to re-assess how pipelines and the NEB’s legislated processes interact with landowners and municipalities, particularly for infrastructure planning.
  • The current imbalance of power needs to be addressed and more inclusive planning processes put in place for municipalities.
  • For landowner issues, some have suggested that a Landowner Advocate model be developed and funded. This is an idea worth considering.
  • Lastly, we can’t talk about inclusivity without addressing our engagement with, and inclusion of, the original stewards of the land in Canada – Indigenous Peoples.

Redefining the Relationship & Engagement with Indigenous Peoples

  • The interests of Indigenous Peoples have been a significant part of how the NEB has considered its responsibilities over the past few years.
  • A number of the NEB’s Board Members have significant knowledge of Canada’s Indigenous Peoples;
    • two Board Members are Indigenous,
    • three Board Members have substantial experience working in Canada’s North with Indigenous Peoples,
    • and, one Board Member is a former Deputy Minister of the federal Department of Indigenous and Northern Affairs.
  • The NEB has also acknowledged that Indigenous Peoples have an oral tradition, so to respect that, Board Panels have invited Indigenous Interveners to provide oral traditional evidence during hearings.
  • While the Board’s approach to this point has been in good faith, we know that much more needs to be done – specifically, there needs to be a greater focus on engaging Indigenous Peoples on the lifecycle of pipelines.
  • The NEB needs to have a relationship with Indigenous communities. And we need to start building that relationship well before an application for a pipeline even appears.
  • The Board also has to learn what Indigenous Peoples know about their traditional territories – respect the values within that – and continue to incorporate it into our work.
  • We have to take the Indigenous relationship with the land and weave it into our own responsibility for helping ensuring that pipelines are safe during their entire lifespan.
  • That means the relationship has to continue well beyond a pipeline hearing. The relationship and engagement has to be enduring – it has to last to the end of the life of that pipeline – and then beyond that.

3 Generations

  • Lately, I’ve been thinking a lot about what that would mean to me.
    • What does the ‘lifespan of a pipeline’ mean?
  • Today, I think that could be well beyond 50 or 60 years.
  • So if we take 60 years as an example, well, that means 3 generations in my family.
  • My oldest son is getting married soon. I don’t know when (or if) he will have a child…but if an application for a pipeline landed in my office today…and if that pipeline was built…
    • It’s possible that my potential grandchild would be retiring from the NEB when the pipeline is set to be decommissioned.
  • So when I think of the lifespan of a pipeline, I think about multiple generations of my family.
  • And I can’t help but conclude that if the NEB and Indigenous Peoples can’t engage at the start of a project, how can they work together through multiple generations over the lifespan of a pipeline?
  • So we need understanding, we need respect, we need to commit to enduring engagement and we need recognition from the NEB of the importance that Indigenous Peoples have with the land and the environment.
    • And we have to commit to new ways of doing things.

Indigenous Committees

  • One of those new ways of doing things is ‘co-development’ of approaches to pipeline oversight.
  • I am very optimistic about the federal government’s commitment to co-develop ‘Indigenous Advisory and Monitoring Committees’ for the TMX and Line 3 pipeline projects.
  • Right now, the Government, along with Indigenous Peoples and the NEB are working to co-develop Indigenous Advisory and Monitoring Committees for those two pipelines.
  • And I believe that when these committees are in place, they will reflect a real commitment to working together between Indigenous communities from across BC and the Prairies, the Government, and the NEB.
  • They will be part of the safety and environmental monitoring of those two pipelines and be participants in the lifecycle oversight process…this is big step for all of us.
  • So, this strong working relationship will begin with these two projects – and it will be the foundation for a new way of doing business for the NEB – and it will be an enduring relationship.
  • Through these Committees, we will need to be accessible and open to Indigenous Peoples at the beginning, middle, and end of a pipeline project.
  • I am very hopeful that strong working relationship approaches like these Committees’ will be the NEB’s new way of doing things into the future.

Energy Information

  • Before I conclude, I also want to state that it will be difficult for a modernized energy system to work really well if the policymakers, regulators, stakeholders – and indeed all Canadians – don’t have good energy information.
  • Quite frankly, the energy information system within the Government of Canada needs to be strengthened – all parts of the system.
    • We need better data, because that will lead to better analysis, which will help support the myriad of energy policy decisions needed in the future.
  • The increasing pace of change in Canadian and global energy markets and climate policy development suggest that the need for up-to-date analysis on energy trends is greater than ever.
  • It should be our goal to help Canadians and policy makers understand these complex interactions through publicly-developed analysis, reports, and statistics.
  • We also need innovation in how we deliver this information. We need cutting-edge data visualization to deliver cutting-edge energy information to Canadians.
  • To me, a strengthening of the energy information system within the Government of Canada is an essential compliment to the reforms underway.

Conclusion

  • In closing, I want you to know that my goal is for this country to have a national energy regulator that maintains the public confidence of Canadians.
  • And to accomplish that, it will be built on a foundation of three elements.
  • First, a relentless focus on safety and environmental protection – because we never want anything to go wrong.
  • Second, modernizing our legislation and processes to support the move away from ‘exclusivity’ to ‘inclusivity.’
  • And third, enduring engagement with the original stewards of the land – Indigenous Peoples.
  • If we do that, then we will truly be driving excellence. And it will put wind in the sails of the National Energy Board. Thank you.

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