Governance of Administrative Agencies


Good corporate governance is fundamental to any effective, well-managed corporate entity.

This principle applies equally to administrative agencies within a government framework. However, tribunals carrying out a quasi-judicial function within a parliamentary system present unique accountability and independence issues.

For over a century there has been an unresolved problem in Canadian political theory presented by the competing objectives of simultaneously maintaining the independence of adjudicative agencies while holding them accountable for their decisions.

With the creation of the Alberta Energy Regulator in 2012, the evolution of the National Energy Board as the Canadian Energy Regulator and the Ontario Energy Board as the Ontario Energy Regulator, both in 2019, a new governance model has emerged for three of Canada’s largest and most important regulatory bodies that has laid plain the issues that arise when independent adjudicative bodies are placed under more direct control by their political masters.

This article will discuss some governance and management issues raised by this new governance structure and question whether the approach will have the advantages claimed when compared to the status quo or other incremental approaches.


There are two general principles and two specific realities about agency governance:

Principle 1: Form (or structure) should follow function.

Reality 1: The functions that are performed by adjudicative administrative agencies are complex, diverse and specialized. One size does not fit all. Legislative templates are a blueprint for box tickers that ignore the value of intelligent exercise of discretion in designing a successful agency.

Principle 2: Corporate governance provides an architecture of accountability — but architecture in itself does not deliver good outcomes.

Reality 2: People are the key. Effective agencies depend on behaviours and relationships more than procedures and structures.


Agency powers and authority are assigned to it by the legislature. Agency accountability is to the legislature. Only the legislature can disband an agency or change its mandate.

Individual Commission or Board members are typically appointed by the Lieutenant Governor in Council (provincial) or the Governor in Council (federal). Only the Lieutenant Governor/Governor in Council can cancel the appointments. Individual Commission members are accountable to the Lieutenant Governor/Governor in Council. The Lieutenant Governor/Governor in Council approves Cabinet decisions and so when decisions are said to be made by the Lieutenant Governor/Governor in Council those decisions are in reality, decisions of Cabinet. The Government Organization Act specifies that there will be a responsible minster for each act of the legislature.1

In practical terms, agencies are accountable to the legislature through the responsible minster and individual Commission members are accountable to the Lieutenant Governor/Governor in Council through the responsible minister.

The accountability for adjudicative decisions for many agencies lies with the Court of Appeal on questions of law or jurisdiction, and ultimately, the legislature through legislative change. With respect to financial and administrative functions, there are well established procedures and controls already in place to provide robust accountability mechanisms. Through the responsible minister an agency is accountable to the legislature through the legislative committee process. The estimates debates in Committee of Supply are designed to review initial spending budget proposals. Post spending review is carried out by the Auditor General and the Public Accounts Committee.

In addition, certain agencies are financially and administratively accountable to the legislature through various directives related to governance and accountability, financial management, human resource management and procurement promulgated by Treasury Board, Cabinet and the Ministry of Finance under the authority of other acts of the legislature.


Central to the governance structure of a quasi-judicial adjudicative agency is demonstrating that the agency operates at arm’s length from government, is immune from short term political and interest group pressures and that decisions about the sector are made fairly. While there are a number of possible approaches to corporate governance systems within administrative agencies, the following briefly summarizes and comments on the options that are most relevant for an adjudicative agency.

Independent adjudication role

This approach would have the agency member fill only an adjudication role and would have a separate staff organization, headed by other than an agency member that would handle financial and administrative matters and any other regulatory issues, independent of the appointed members. The main advantage of such an approach would be the preservation of independence for the agency members in the adjudication role, and allowing them to focus all of their time and effort on adjudication.

Corporate board of directors

A board of directors type of governance model involves the provision of strategic direction at a very high level and of certain financial and other controls. It is typically a part time assignment.

The corporate board of directors is typically implemented in two possible structures: unitary or two tiered. Unitary boards share responsibility between executive and non-executive directors while two-tiered boards separate responsibility between management and a supervisory board.

Committee of the whole

This governance model would have the agency members involved in essentially all matters related to its responsibilities. Attempting to involve all of the agency members in all issues, coupled with the time-consuming adjudication role, could place major time demands on the agency members. In turn this could mean that all agency members would have some relatively shallow involvement in all matters, and the quality of decisions related to such matters could suffer. Additionally, it could lead to delays, wasted staff time and cause friction and a loss of respect between the agency members and staff.

Specific committees

This approach might involve a number of committees, with two or so agency members and selected senior staff that would be given the responsibility to deal with certain matters. The delegation of specific matters to committees could, in some cases, include the making of the final decision, with a report back to the entire board. In other cases, the committee would be charged with bringing recommendations back to the full board to deal with.

The triumvirate structure

The Alberta Energy Regulator structure, similar to structures proposed for the Canadian Energy Regulator and the Ontario Energy Regulator, is based on a triumvirate model. The model is asserted to better address key issues of independence and accountability.

This “three-legged” structure separates corporate board, management and adjudicative functions. The critical characteristic of the triumvirate structure is the virtually complete split between the adjudicative function and the balance of the organization’s functions.


The fundamental problem in fragmenting the governance framework of an adjudicative agency is deciding just what and whose interest the organization is supposed to protect given the agency is primarily a guardian of the public interest and is accountable to a responsible minister. A traditional corporate board’s responsibility is a fiduciary duty towards the corporations they oversee. This creates a conflict between the interests of the organization and the interests of the public.

The adjudicative functions must be guided by founding legislation while safeguarding the public interest, subject only to review by courts or by the legislature changing the law.

An asserted benefit of the triumvirate model is increased independence from government or interest-group politics.

A separate buffered governance board composed of stakeholder representatives, or non-experts or political appointees will have its own problems and challenges. Limited, direct current knowledge of the industry and potential influence by political factors among them.

Recall the unitary model largely employed for decades by adjudicative agencies. Combined CEO and board chair with an integrated management structure. Oversight of the CEO/chair was provided through the responsible minister. Such a structure requires a strong individual and the ability to make executive decisions — not a part-time chair, separate from the executive and the chief hearing commissioner.

The unitary structure provides a focused entity with clear accountabilities, rather than a diffused and fragmented arrangement. Communications, resources, expertise and accountability are unnecessarily divided in a three-legged structure, when an inherently integrated unitary structure provides a clear, relatively manageable approach.

The legislation establishing adjudicative agencies typically assigns a number of important responsibilities to the agency and then to the members that constitute the agency. In order to discharge those responsibilities in an effective manner, the members need a degree of knowledge and involvement that goes beyond those typically associated with a corporate board of directors structure or elected members of government.

Legislation that mandates a system where agency members are only adjudicators is unnecessary and may reduce the effectiveness of the agency in delivering its regulatory objectives. A complete separation of agency members from the other agency operations, including regulatory and finance/administration functions will preserve the independence of members and allow them to focus all of their time on adjudications.

However, in a regulatory system that is broad and complex, members are better served by having a degree of involvement in the broader work of the agency. This will mean varying degrees of involvement depending on the function.

Integration of members will, in addition to improving proper discharge of responsibilities, allow members to be proactive to new issues and challenges, foster an effective relationship between agency staff and members and create a system that is unified, easy to describe and understand and manage.

Financial and administration functions represent the areas where there is the least need and rationale for member involvement. The need can be satisfied with a committee approach involving the chair, chief executive and a subset of the agency members. There are clearly variations on this approach, however the end result is members are not using their time extensively in delivering financial and administrative matters, however the complexities, expense and bureaucracy of a third governance leg, board of directors, is avoided.

Reporting and communication between members and staff would clearly still be required, but at the right level and frequency.


The recent movement to a three-legged governance model for adjudicative agencies seems largely based on theoretical corporate governance, with little consideration for the existing governance, accountability mechanisms and complexities of operating a quasi-judicial agency in the parliamentary system. Nor does it seem to consider whether this new structure would improve the agency objective of delivering its responsibilities in the most effective manner.

The separation of responsibilities among administrative/financial, management and adjudicative functions is likely to make it harder, not easier, to develop effective managerial, governance, performance and accountability arrangements.

If changes are required, a minimum incremental change approach is preferable, particularly given the risk of unintended consequences in making large changes to a complex and nuanced institutional relationship.

Issues of governance and accountability are important to effectively run adjudicative agencies — but as the tail, not the dog.

  1. Government Organization Act, RSA 2000, c G-10, online: <>.

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