National Energy Board plan a blow to judicial independence

In February 2018 the Trudeau government tabled Bills C- 68 and C- 69, which proposed to significantly restructure the National Energy Board ( NEB) and replace it with a new Canadian Energy Regulator ( CER). This action ignored the professionalism and regulatory competence demonstrated by the NEB over almost 60 years as it delivered one of the safest and most efficient energy pipeline systems in the world. Ottawa proposes to replace the NEB with a new, untested bureaucracy to assess all resource projects in the country with an estimated additional cost of $ 1 billion over five years.

Regrettably, such ill- considered legislation will unquestionably saddle investors and the Canadian public with continued regulatory uncertainties, mounting delays and increased costs leading to more abandoned resource projects.

Even more consequentially, Bill C- 69 contains clauses that have significant negative implications not just for the regulated energy sector, but also for the Canadian independent tribunals and the legal system. Sections 12 to 14 of the Transitional Provisions of the Act are specifically aimed at eight “permanent” appointed members of the NEB who shall cease to hold office at the time of the commencement of the proposed legislation standing in stark contrast to provisions that grandfather and maintain current NEB staff. Therefore, the new CER, whose daily activities mirror the NEB, will begin its work with a completely new cohort of untrained commissioners and directors. Why should this be of concern to Canadians?

Full- time board members of the NEB are appointed with seven- year, good behaviour Order- in- Council t enures affirmed by t he Governor General. Under the NEB Act, such members may be removed from office only upon address of the House and the Senate. The NEB is an administrative and regulatory body that functions as a court of public record with the powers to collect evidence, take testimony and issue subpoenas. Hence, such Governor- inCouncil appointments are made at the highest level for Canadian administrative tribunals with protections specifically crafted to offset political interference associated with major energy projects.

By pursuing Bill C- 69 in its current form, and arbitrarily terminating these appointments, Parliament may be setting a dangerous precedent that sanctions political interference with independent, public interest decision- makers. Any such infringements will have potential ramifications for decision-makers in other administrative tribunals. Additionally, will this legislative action allow the decisions made by the current “lame duck” members to be challenged? Will the future CER commissioners enjoy similar independence from government knowing that they too could be legislated out of their appointments if they make technically correct, but politically unpopular, decisions?

In proposing Bill C- 69 the government has negatively threatened the financial security of current NEB members and has chosen to ignore common law principles related to fixed- term contracts for quasi- judicial appointees certified by the Governor- in- Council. None of t hese charac t eristics should be associated with well- conceived legislation. Arguably, any attempt to summarily dismiss and replace NEB members diminishes judicial independence and, in so doing, risks dishonouring the Crown. Simply put: “Government can’t be whimsical and have it both ways.”

Unquestionably, Parliament has the power to create new legislation. However, it also has an obligation to honour and uphold employment contracts for fixed- term appointees of independent, quasi-judicial tribunals. Unilaterally abrogat- ing contracts for quasi- judicial appointees undermines the honour of the Crown, risks eroding public confidence and exacerbates regulatory uncertainty among industry and investors.

These sweeping legislative changes, bereft of balanced transitional provisions, increase uncertainty in an already turbulent, degraded Canadian energy investment climate. Legislative initiatives, coupled with the statements of certain government leaders that propose to eliminate all the quasi- judicial appointees to the NEB without full compensation or due process, raise urgent questions about how government has, determinedly but perhaps unwittingly, fettered the discretion of NEB appointees in this transition period. It also erodes the authority of the NEB at an important time.

For greater certainty, this is not entirely a personal l ament f or current NEB members who are talented Canadians chosen, through an exhaustive independent process, for their expertise and judgment. Such poorly conceived, subjective and ineptly delivered changes to long- established regulatory processes compromises quasi- judicial, and perhaps judicial, independence that can only lead to a further erosion of the Canadian regulatory and capital investment environment.