The Politicization of Canada’s Large Project Review Process

Previously in this blog, Jennifer Winter provided an excellent summary of Federal changes to how energy projects in Canada would be reviewed and regulated ( https://www.policyschool.ca/big-changes-ahead-energy-regulation-canada/). Under Bill C-69 much of the NEB’s previous solely held decision making authority is eliminated.

It seems clear from their comments that the federal government has lost confidence in the NEB and its historic process for reviewing new energy projects. The obvious question, though, is given the government’s stated objective of making Canada’s energy industry more competitive, why it chose to replace a long standing decision making process instead of repairing the deficiencies?

So what do we know?

What we do know is that the NEB’s quasi-judicial review process had a number of inherent benefits for the Canadian energy industry.

For example, we know that Canadian Courts have for decades made it clear that judicial review of a tribunal decision is warranted only if a decision is demonstrably unfair or unreasonable. The regulatory certainty this provides was a significant competitive advantage.

We also know that the NEB has a 50 plus year history of successfully making consistent decisions on technically complex issues. The regulatory predictability this provided undoubtedly simplified our energy industry’s investment decisions and also increased its ability to attract investment.

We know too that to ensure judicial deference the NEB has scrupulously safe guarded its independence from political interference. This has, in turn, allowed it to issue potentially controversial approvals it felt were in the broad public interest despite political discomfort and until recently helped to assure investors that political interference post approval was not a risk in Canada.

We know that until recently, industry could also expect that the NEB process would be respected by the parties involved. It is notable that most of the process disruptions faced recently by the NEB have occurred post the 2012 reductions in the NEB’s authority as the final decision maker.

We also know that part of the Courts’ deference was due to the expertise of the NEB. Effective regulatory decision making is a profession and as lawyers discovered centuries ago, sitting in judgement is not a place for amateurs, no matter how well meaning.

We do know that the NEB has rather formal process rules to keep its decisions acceptable to the Courts and that for the public, this formality can be intimidating. However, we also know that if given the flexibility tribunals can be quite adept at ensuring that their processes are also accessible to the public.

We also know that tribunals are generally limited to interpreting existing policy and so can have trouble incorporating as yet unwritten policy into their decisions. However tribunals have shown that this issue can be addressed whenever government is prepared to provide the proposed policy as evidence and allow it to be tested at hearing.

Finally we know that tribunals, if allowed, can also be very good at ensuring large numbers of interested parties can participate effectively. This is often accomplished by requiring potential participants to form groups of likeminded individuals. This approach helps to ensure all viewpoints are heard while actually strengthening their effectiveness and preserving the timeliness of the review.

So what don’t we know?

In introducing Bill C-69, government stated that its aims included restoring public trust while better protecting the environment, improving investor confidence and making Canadian energy & resource sectors more competitive. What we don’t know is why the federal government believes a new process will be better able to accomplish these objectives?

For example, with respect to restoring public confidence, does this government really believe there will be more public faith in a politicized decision over an independent one? Perhaps this government should simply ask itself if it would have more faith in a future politicized decision if another party was in power.

It certainly seems very unlikely that a new process will increase investor confidence if it reduces regulatory certainty. It is also difficult to see how the new process will make our energy & resource sectors more competitive since while the review process is now less certain the environmental assessment process appears to have remained largely unchanged.

And it is definitely difficult to see how the new process will increase “inclusivity”, another stated goal of the government. Inclusivity is more than just listening to concerns; it must also involve capturing and addressing those concerns. Simply opening the floor to as many people as possible is at best disingenuous if there is no intention to use this information.

In conclusion, while government appears to have decided the NEB process “wasn’t working” it is very difficult from a public policy perspective to understand why replacing it was preferred. Given its importance to Canadians hopefully as the debate continues, government will fill in the missing information.