Canada’s National Energy Board was served a legal notice on Thursday demanding a public inquiry into the Charest affair and a shake up in the regulator's senior management - a move that would disrupt ongoing federal hearings on a major pipeline proposal.

The notice makes seven demands, including calls for the temporary reassignment of all senior officials associated with the Energy East pipeline controversy, starting with the federal regulator's chairman and chief executive, Peter Watson.

The demands were prompted by revelations made last week by a National Observer investigation into a private meeting held in January 2015 between several NEB representatives and former Quebec premier Jean Charest, who was working for Calgary-based pipeline operator TransCanada Corp. at the time.

The legal letter was sent by Dominique Neuman, a lawyer representing two Quebec advocacy groups that are intervening in the ongoing hearings into the Energy East pipeline project: Stratégies Énergétiques and the Association québécoise de lutte contre la pollution atmosphérique (AQPLA).

If accepted, the demands, sent to the NEB's secretary, Sheri Young, would target senior management at the Calgary-based regulator while suspending federal hearings that formally got under way this week in Saint John, New Brunswick on TransCanada’s proposed Energy East pipeline.

The 4,500-kilometre project, stretching out from Alberta to New Brunswick, is considered to be the largest ever pipeline proposed in Canada and has strong backing of western Canadian oil producers who believe it will allow them to reach new markets and expand. First Nations groups, environmentalists, and some mayors along the route have fiercely opposed the proposal arguing that it would prevent Canada from meeting its climate change goals and lead to devastating spills that could cripple local economies.

Private meetings exposed

TransCanada hopes to build the pipeline within a few years, pending approval from the NEB, but revelations by National Observer about private meetings held by panelists and other NEB representatives with former Quebec premier Jean Charest and other stakeholders have prompted harsh criticism from across the country that the process has already been rigged to ensure that Energy East will be built.

Two panelists on the NEB committee that is leading the hearings, Jacques Gauthier and Lyne Mercier, were among the Board representatives who met with Charest and others in private to discuss the Energy East project. Charest was being paid as a consultant for TransCanada at the time of that meeting.

"It is false to claim that the Board's duty to consult parties authorizes it to hold such consultations privately or secretly with only one or some of the parties, outside of the hearing process established by the decisions of the Board," said the letter, signed by the lawyer, Neuman, who is representing the two Quebec groups at the hearings. "On the contrary, this is precisely what the rules prohibit."

The NEB initially denied that the participants discussed Energy East when National Observer first reported about the meeting in July, but it later apologized for providing false and misleading information after records released through access to information legislation revealed that the pipeline project was indeed on the agenda for discussion with Charest.

Hearings should only proceed "in a manner that respects the rule of law"

“Our lawyer is telling them they broke their own rules and it shows that they were aware that it wasn't acceptable,” said André Belisle, the president of the AQPLA, an environmental group that advocates for clean air and action on climate change. “They (gave false information) to hide this thing that was unacceptable and unethical so this whole process lost its credibility.”

Bélisle also noted how iPolitics had reported that Gauthier and Mercier's terms as NEB members were supposed to expire last December, but they received extensions from the former Harper government, right before the 2015 election.

TransCanada declined to comment on the letter and the NEB didn’t immediately respond to a request for comment. Charest has been out of the country and could not be reached for comment, but he has denied doing any lobbying on behalf of TransCanada.

The panelists also met privately with other intervenors, registered to participate in the hearings, including the Board of Trade of Metropolitan Montreal - a business lobby group that favours the project, and Équiterre - a Quebec-based environmental group that is opposed to Energy East.

The participants discussed TransCanada’s project at each of the meetings which is a violation of NEB rules that require it to review projects in public, keeping a full record of discussions, using a fair and transparent process, the letter said.

Under Canadian law, the NEB has all of the powers of a federal court and it is required to avoid any appearance of bias or conflicts of interest.

The letter said that the NEB’s chairman and chief executive officer, Peter Watson, and Mercier, the vice-chairwoman, must both step aside from any tasks associated with Energy East during the course of an investigation since they both participated in the controversial meetings.

The letter also said that a new panel must be named that would then conduct hearings into what occurred in the meetings. The Quebec groups believe that all participants, including Jean Charest, Watson and Mercier, to testify and be subject to cross-examination.

“Such an inquiry and special hearings would allow a future panel to identify just how much the Board’s integrity has been compromised, while also identifying other employees or people who were took part in this… and then to identify measures to ensure that hearings can proceed in a manner that respects the rule of law,” said Neuman's letter.

Roland George, Lyne Mercier, Jacques Gauthier, National Energy Board, Energy East, TransCanada
The NEB's three panel members for the Energy East project appear in an undated photo: Roland George, Lyne Mercier and Jacques Gauthier. Photo from NEB website.

The presiding member of the Energy East panel, Roland George, didn’t participate in the meetings, but the letter also called for him to temporarily step down unless he could prove that he wasn’t aware of the meetings, or had actively opposed them. They noted that this is especially important given that George had committed to a “fair and transparent process” that would uphold the NEB’s standards” in a note posted on the regulator’s website.

The letter also noted that all employees of the Board have a responsibility and duty to abstain from participating in any activities that could discredit the NEB or affect its obligations to be independent and impartial.

The letter also said that senior officials at the NEB also had a responsibility to ensure that its employees and representatives were following the rules and that all must be recused from continuing to deal with this file, pending the investigation.

Belisle said his group would give the NEB 48 hours to respond to the letter, promising other action was in the works to address concerns about the fairness of the review.

Seven demands

Here's a summary of the seven demands made in the lawyer's letter sent to the NEB on Thursday:

  1. Recusal of the NEB's Energy East panel members Lyne Mercier and Jacques Gauthier for knowingly participating in private meetings to discuss the pipeline project under review.
  2. Recusal of the NEB's Energy East panel's presiding member Roland George, unless he was unaware or actively protesting the private meetings.
  3. Immediate replacement of NEB chairman and CEO Peter Watson and vice-chairwoman Lyne Mercier, for any roles or duties at the Board that relate to the Energy East review.
  4. Suspension of Energy East hearings until a new panel is appointed.
  5. Removal of any employees involved in the meetings, along with their supervisors, from any duties related to the Energy East review over a failure to enforce and respect NEB's code of conduct.
  6. Immediate release of all the NEB's documents and information related to the meetings.
  7. Demand that the future panel hold an inquiry and special hearings that would require all people involved in these meetings to testify and be subject to cross-examination.

ES & AQPLA Legal Notice NEB by mikedesouza on Scribd

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