PIPE DREAMS: The Fight for Canada’s Energy Future

As this issue of Energy Regulation Quarterly goes to press, the political and regulatory framework governing federal pipelines is in turmoil, resulting directly from the late-August decision of the Federal Court of Appeal quashing approval of the proposed expansion of the Trans Mountain Pipeline (TMX). Construction of TMX had begun and was immediately halted by order of the National Energy Board (NEB). The project faces a serious – possibly fatal – delay.

TMX is but one federal pipeline project that, since 2012, has been confronted by deep, divisive controversy in the regulatory, political and judicial arenas. The approval of Enbridge’s proposed Northern Gateway was later quashed by the Federal Court of Appeal and the federal government then abandoned the project. TransCanada’s Keystone XL was denied by President Obama, but later approved by President Trump. However, Keystone continues to face regulatory and legal challenges in the U.S. TransCanada’s application for approval of its proposed Energy East project was withdrawn in the face of changed circumstances, including particularly an unanticipated broadening of issues that the National Energy Board proposed to consider in its review.

Jacques Poitras’ PIPE DREAMS is a comprehensive account of the rise and fall of Energy East. It is, however, much more than the story of just one of these embattled pipelines. While focused on Energy East, PIPE DREAMS presents a sweeping review of the issues and offers valuable insights into the underlying dynamics that have made these projects so controversial. The real scope and value of PIPE DREAMS are captured in its sub-title: The Fight for Canada’s Energy Future.

Poitras’ approach to his subject is novel; he personally drove the length of the proposed Energy East project, from Hardisty, Alberta to Saint John, New Brunswick. Along the way, he engaged – in the trenches, so to speak – with numerous individuals and groups, ranging from individual landowners (some of whom had had a long history with TransCanada’s mainline on their properties), to municipal politicians, to Indigenous peoples (some of whom, particularly Carry the Kettle First Nation in Saskatchewan, supported the project1) and others. He heard myriad views, ranging from concerns about potential specific impacts to the role of the project as a 21st century version of the national railway.

PIPE DREAMS is, however, more than a travelogue of Poitras’ cross-country journey focused on issues specific to Energy East. He also describes the broader societal issues at the core of much of the controversy – climate change, Indigenous rights, regional aspirations and tensions, etc. He provides valuable insights into why many protesters focus on pipeline projects while their real concerns are much broader: “Stopping a pipeline wasn’t going to stop climate change, of course, but it might shift the debate.”2

Prior to TransCanada’s withdrawal of its application to the National Energy Board, the Board’s process for reviewing the Energy East project had been confronted by several challenges, particularly recusals by a number of Board members (including the chair and vice-chair) that necessitated the appointment of a new panel to deal with the application. Poitras offers a valuable account of the events that led to the recusals.3

The recusals necessitated the appointment of a new NEB panel for the Energy East project, comprising members who had only recently been appointed to the Board. This new panel issued a revised draft List of Issues that included consideration of downstream emissions – a decision that, in Poitras’ words, “shocked the pipeline world.”4 After the Board later confirmed that it would indeed consider downstream emissions, TransCanada immediately suspended its application and, on October 5, 2017 announced that the application was formally withdrawn.

Poitras provides an objective discussion of whether the change in the scope of the Board’s criteria was the only factor that led to TransCanada’s decision. Other factors may have included the intervening approvals of TMX in Canada and of KXL in the U.S., arguably undermining the need for Energy East. There can be no doubt, however, that the Board’s decision to include consideration of downstream emissions was the immediate trigger for the decision. As Poitras notes, without the recusals resulting in the appointment of a new NEB panel, the processing of TransCanada’s application would have continued on the basis of criteria that had been established by the previous Board panel, rather than the broader criteria adopted by the newly-appointed panel.

There is another dimension to this saga that will interest energy regulatory lawyers: what might be learned about the role of developments in government policy during a tribunal’s independent review of specific applications? In Poitras’ view, the appointment of a new NEB panel following the recusal of the original panel gave the Board “a second chance…to adjust to a changing political context.” Indeed, the panel directly attributed its new criteria to, inter alia, “the federal government’s stated interest in assessing upstream GHG emissions associated with major pipelines.”5

Poitras writes:

…TransCanada’s halting of its application was a reflection of an entire industry wondering what the future held. Was a new fossil fuel infrastructure possible in the rough-and-tumble collision of opinions inherent in a democracy, and was it even viable in a world grappling with climate change and a possible peak in oil demand?6

The question is a variation of that asked by Dennis McConaghy in his account of the denial of KXL by President Obama, DYSFUNCTION: Canada after Keystone XL:

Does Canada really share the fundamental conviction that developing its hydrocarbon resources is in their public interest? Since KXL’s demise, Canada has shown itself profoundly equivocal to that proposition.7

Indeed, the question is at the very core of the controversial debate around these and future energy infrastructure projects in Canada.

PIPE DREAMS is a highly informative account of the Energy East saga that makes a valuable contribution to understanding Canada’s current existential debate about the future of its oil and gas industry. It is also “a good read”, sprinkled with historical background and engaging accounts of some of the behind-the-scenes dynamics at play, such as corporate tensions encountered along the way between TransCanada and the Irving interests in New Brunswick.

  1. Poitras offers a fascinating account of the history of this First Nation and its ancestral territory in the Cypress Hills, including the 1873 massacre recounted in the novel and movie The Englishman’s Boy.
  2.  Jacques Poitras, Pipe Dreams: The Fight For Canada’s Energy Future (Toronto: Penguin Canada, 2018) at 125.
  3.  See also Ron Wallace, “The Tortuous Path to NEB ‘Modernization’” (2018) 6:2 Energy Regulation Q 23, online: <http://www.energyregulationquarterly.ca/articles/the-tortuous-path-to-neb-modernization#sthash.uJryw0EW.dpbs>.
  4.  Supra note 2, at 227.
  5.  Letter from the National Energy Board to Interested Parties (23 August 2017), online : <https://apps.neb-one.gc.ca/REGDOCS/File/Download/3320560>.
  6.  Supra note 2, at 6.
  7.  Dennis McConaghy, Dysfunction: Canada after Keystone XL (Toronto: Dundurn 2017) at 137; See review Rowland J. Harrison, Q.C., “DYSFUNCTION: Canada after Keystone XL, Dennis McConaghy, Dundurn Toronto, 2017” (2017) 5:2 Energy Regulation Q 43, online : <http://www.energyregulationquarterly.ca/book-reviews/dysfunction-canada-after-keystone-xl-dennis-mcconaghy-dundurn-toronto-2017#sthash.wx8ERJ4U.dpbs>.

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