Author: Trevor McLeod

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Executive Summary

The Trudeau government is looking for ways to make the National Energy Board (NEB) more “modern, efficient and effective” in an attempt to regain public trust. Most of the criticism of the NEB stems from (1) concerns about the legitimacy of the regulator and (2) whether Canadians trust it to make important energy decisions. This submission shows that the two concepts are distinct – and that distinction matters.

We deal with legitimacy first, demonstrating how it can be bolstered through results and procedural fairness – which often must be traded off, one for the other. Legitimacy suffers when efficiency, certainty and procedural fairness – including transparency and accountability – are compromised. While we find evidence to suggest that Canadians believe the NEB process is fair, there remains room for improvement – particularly with when and how communities are engaged. Yet, we warn that some of the recommendations received by the expert panel, if implemented, would in fact damage the NEB’s claim to procedural fairness and harm its legitimacy.

Our research shows plainly that legitimacy alone is not enough to rebuild trust in the NEB. Trust involves something more; it is highly subjective and constitutes a leap of faith for each individual. Here again, some of the proposed changes to the NEB’s structure, role and mandate may make things worse by not addressing the real problem. Other recommendations, such as moving the energy information function from the NEB to the federal government/Statistics Canada, should improve trust in the entire energy system.

We make the following six recommendations to the panel and the minister. These recommendations will both enhance the legitimacy of the NEB, and help it to rebuild public trust:

01 The panel should adopt a two-part review process that puts the political decision up front. Separating the political decision from the regulatory decision – and making the political decision up front – enhances the legitimacy of the entire process and gives potential investors the certainty they need.

02 Climate change decisions should not be made by the NEB. Important climate policy decisions – which are value judgments – belong in the political sphere, not in the regulatory sphere. The NEB mandate should not be broadened to include consideration of upstream oil and gas emissions. There are legal and practical issues associated with expanding the NEB mandate to include such emissions.

03 NEB staff should continue to improve engagement in local communities. There is a legitimate role for NEB staff to play in communicating with people about the regulatory process and procedure. Having staff in communities should help to build trust between Canadians and the regulator.

04 NEB panel members should not engage with communities; they should remain objective and above the fray. We recommend that the role for panel members be modelled on the role of case management judges in the Canadian legal system.

05 NEB panel members should avoid turning into competing experts. Experts are necessary but we need to make sure NEB panelists do not turn into advocates for a particular world view. If opinions cannot be changed through discussion and persuasion, then our institutions will be meaningless.

06 The NEB’s energy information function should be housed elsewhere. This function should be moved into a respected, trusted federal body such as Statistics Canada, or an arm thereof – as is the case in other jurisdictions. Separating the energy information function from the NEB will avoid the perception of conflict of interest and build trust in both energy information and the NEB.

Read the full report on NEB modernization (pdf) below.