The federal energy regulator has suspended its environmental assessment hearings of the controversial Energy East project as the heated political battle in Quebec threatens to derail the $15.7-billion pipeline proposal.

The National Energy Board said Tuesday it would not hold further public sessions until it could deal with complaints against two board members – Jacques Gauthier and Lyne Mercier – who met privately with former Quebec premier Jean Charest while he was being paid as a consultant to TransCanada Corp.

The NEB cancelled a planned hearing in Montreal on Monday after protesters stormed the hearing room and one man charged the table where panel members were seated before being restrained by security guards. The anti-pipeline activists argued the hearing process is rigged to reach a positive conclusion, and that the meeting with Mr. Charest was inappropriate and evidence of bias.

The stakes are high as the federal government seeks to balance environmental concerns and its climate change agenda with a desire to develop and export Canada’s resources. Energy East – which would supply some western crude to eastern Canadian refineries – drew supportive comments from the Liberals in opposition, in stark contrast to proposed pipelines through B.C., which were seen as politically more challenging. But now the TransCanada megaproject is running into major roadblocks in Quebec and east-west battle lines are being drawn.

“This decision [to suspend the hearings] has been made as a result of a violent disruption on the first day of the proceedings and ongoing security concerns,” the National Energy Board said in a release Tuesday.

“Disruptions like this one compromise the board’s ability to conduct the session in a secure manner and also prevent intervenors from having an opportunity to be heard, sharing their views and asking questions. All participants in this hearing have a right to be heard and with respect.”

TransCanada is looking for approval for the pipeline that would deliver 1.1 million barrels a day of crude – mostly diluted bitumen from the oil sands – to refineries and an export terminal in Eastern Canada. The industry and Alberta government argue the pipeline is needed to secure access to new markets and world prices for western crude.

Municipal politicians – including Montreal Mayor Denis Coderre – First Nations leaders and environmentalists are staunchly opposed to the project, arguing it would threaten local waterways and contribute to growing greenhouse gas emissions from the oil sands.

Alberta Premier Rachel Notley – a key ally of Prime Minister Justin Trudeau – is pushing for approval to facilitate greater exports for the province’s oil industry and to bolster support for her aggressive climate policy, while prominent mayors in vote-rich areas of B.C.’s Lower Mainland and Quebec are leading the charge against the pipelines.

The federal Liberals themselves have been critical of the National Energy Board – charging it lacked credibility under the former Conservative government. But the new government announced in January that the current board would review the Energy East pipeline under its existing mandate, with some added consultations, while it promised to “modernize” the regulator for the future.

After a Tuesday speech to the Chamber of Commerce in Calgary, Natural Resources Minister Jim Carr said the “independent” NEB is going to have to determine how it proceeds with the Energy East review. “We are hopeful that the process will get back on the rails as soon as possible, and the Canadians who have something to say will have a chance to say it,” he said.

Mr. Carr was asked whether the two panel members should be replaced. “It’s not a decision that the Government of Canada today would want to make. This is something the National Energy Board is going to have to deal with,” he said.

After news of the meeting with Mr. Charest broke this summer in an online publication, groups in Quebec and Ontario petitioned the National Energy Board to have Mr. Gauthier and Ms. Mercier removed from the Energy East panel. The board invited all parties to make written submissions by Sept. 7, after which it will decide their fate. It will not resume hearings until that matter is resolved, it said Tuesday.

Ms. Mercier is the board’s vice-chair and was initially appointed by the Conservative government in December, 2008; she was a long-time executive at Montreal’s Gaz Métro, the natural gas distributor in the province. Mr. Gauthier was appointed in 2012 after serving as chief executive of a Montreal-based energy and environmental services company, LVM Inc.

Both members were reappointed to the board in June, 2015 – though their terms were not due to expire – as then-prime minister Stephen Harper made a series of appointments aimed at keeping Tory appointees in place for the next several years.

The Charest meeting occurred in January, 2015, as part of broader public engagement by the NEB in Quebec that included chairman Peter Watson and francophone board members and senior staff. Quebec business leaders were invited as well as Mr. Charest, and there were subsequent meetings with prominent environmentalists and local politicians.

A board spokesman said Mr. Charest did not reveal to the board that he was being paid by TransCanada. The NEB initially denied Energy East was discussed at the meeting, but later confirmed the subject was raised. TransCanada said the former premier served as a consultant but it was not his role to lobby on Energy East.

Critics argue that panel members who were due to preside over a quasi-judicial process should not have met privately with Mr. Charest – or indeed any interested party – to discuss Energy East. The NEB “has to stop digging this hole they’re digging and regroup,” said Steven Guilbeault, a senior director for the Montreal-based environmental group Equiterre. “The two commissioners must be asked to recuse, or forced to do so if they won’t agree.”

Ms. Mercier and Mr. Gauthier are the only two native francophones on the board, and the Liberals will have to appoint new French-speaking members if they want the environmental assessment hearings to have any credibility in the province, Mr. Guilbeault said.

Conservative MP Candice Bergen accused the Liberals of feeding the anti-NEB sentiment in Quebec and across the country by undermining its credibility while in opposition and after taking office. She said the panel members made a mistake in meeting with Mr. Charest but should not step down.

“I think that for those who are questioning the credibility [of the regulator], it wouldn’t matter what the panel members did,” Ms. Bergen said. “The only thing that would satisfy them would be if these proceedings were shut down entirely, and no pipelines were built, and no Canadian oil was taken out of the ground again.”

Mr. Guilbeault said it was the former Conservative government that fed the distrust of the NEB by stacking it with pro-industry members and gutting the process.

OTTAWA — The Globe and Mail
Published Tuesday, Aug. 30, 2016 3:33PM EDT
Last updated Tuesday, Aug. 30, 2016 10:50PM EDT