The Social Licence to Regulate: Energy and the Decline of Confidence in Public Authorities


This article emerges from a panel discussion at the 2015 conference of the Canadian Association of Members of Public Utility Tribunals (CAMPUT) entitled the “Social Licence to Regulate”. The panelists were Rowland Harrison, Peter Robinson and Paul Boothe.1 The author acted as moderator. While the panelists’ remarks and discussion with the audience provided much grist for the mill, this article is the responsibility of the author and no part of it except where specifically indicated should be attributed to any of the panelists.

Following the sequence of questions addressed by the panelists, the article proceeds as follows:

  • Do we have a problem? Is there evidence of failure of public confidence with respect to energy regulatory systems?
  • If we have a problem what are its apparent causes? Are those causes external to the regulators, at the level of society and policy – or internal, such as matters of procedure?
  • Finally, what are the potential directions that policy makers and regulators might take to begin restoring public confidence?

It is important at the outset to note what amounts to both a supposition and a conclusion. To whatever extent the problem exists it needs to be understood as a system issue, one that engages not only the full complex of regulatory authorities whose mandates bear on energy development but also the policy and political systems under whose authority and oversight regulators operate. This is about more than any one regulator or jurisdiction and it is about much more than regulatory procedure.

Quis custodiet ipsos custodies?

The very notion of a “social licence to regulate” should give pause to anyone familiar with many of Canada’s established traditions. These include a habitual practice of civil obedience and respect for the rule of law as well as a practice of establishing and maintaining competent and well respected regulatory institutions. But something has changed of late and though the title “The Social Licence to Regulate” may seem ironic, it is no less a reflection of a real social phenomenon: the apparent erosion of confidence in public authorities who make decisions concerning energy projects (and other sorts of projects as well but that is not the subject at hand). A significant part of Canadian society no longer trusts the guardians and we find ourselves in the midst of an inchoate search for alternatives. What happened?

First, has there in fact been such an erosion of confidence? The evidence to date is indicative but largely anecdotal. By and large the academic literature has focused on questions of public trust in project developers and unease with potential consequences of projects themselves ranging from worries about health and safety to perceptions of unfair distribution of costs and benefits.2 Most of the debate and discussion at conferences has focused on corporate practices. There is some literature that systematically examines the degree to which regulatory institutions and processes engender or erode trust and confidence but almost none that touches on specific cases in Canada.3 It seems clear that there is an urgent need to develop a deeper understanding of attitudes toward regulatory processes both in general and with respect to specific projects and both at the level of society as a whole and at the community level.

In the meantime we have anecdotal information, much of which was cited by the CAMPUT panelists and which is indicative of a growing problem. Because of the tentative and anecdotal nature of the evidence, this article has avoided pointing fingers at any one jurisdiction or agency. At this stage in the debate a good part of what is being said has the character of slander and urban myth and nothing is served by contributing to either of those.

We do know that several regulatory agencies in several jurisdictions have come in for criticism over the past few years with this criticism expressed in media and in parliamentary processes. Those agencies include economic regulators of pipelines, power lines and energy distribution systems; resource regulators; and environmental protection regulators. The criticisms cover a wide range of concerns:

  • Regulators have lost some of their independence and are seen increasingly as subject to political manipulation in order to further political agendas irrespective of the consequences for the public interest.
  • Regulators have been accused of excluding questions from consideration – notably greenhouse gas emissions – that some influential part of the public believes should be explicitly under consideration in approving projects.
  • Regulators have been accused of conducting their procedures in ways that deliberately stifle debate and discussion including falling well short with respect to the duty to consult aboriginal Canadians.
  • Regulators have been accused of acting to undermine the legitimacy of project opponents.
  • Regulators have been seen to be lacking the tools – skills, authorities, systems – needed to properly oversee projects and to hold project developers to account for meeting regulatory requirements.
  • Governments have been accused of revising regulatory statutes while avoiding the legitimate scrutiny of the public or even of legislators.

All of this activity shows up in what one of the panelists described as “an explosion” of court challenges. Not many years ago court challenges to regulatory decisions were rare but as of spring 2015, the National Energy Board alone was dealing with 15 legal challenges in the Federal Court of Appeal and the Supreme Court of Canada. Traditionally, courts have deferred to the expertise and authority of regulatory bodies and this practice is deeply established in precedent4and likely to continue. However, the fact of so many challenges raises the question: does the public see the same qualities in the regulators that the courts do?

In an almost ironic collateral effect, having contributed (perhaps quite significantly) to creating the problem, Canada’s political leaders increasingly find it expedient to imply that regulators have not quite done what is needed to secure “social licence” for the projects that they are assessing. When the politicians start piling on, one can take that as good evidence of an emergent social and political phenomenon. In short, while work is needed to test the dimensions of the issue and to uncover solutions, we can say, prima facie, that we have a problem and that it is growing.

Something is happening here…

And we do know what it is, or at least we have a pretty good idea.

Part of what has happened over the last two decades or so is a failure of imagination on the part of governments and members of the energy industry. Ten years ago we could easily see the growing disconnect between energy preferences expressed by citizens as consumers (cheap, reliable) compared to their political or public opinion preferences (clean, virtuous). Twenty years ago it was possible to discern a growing problem in securing approval for new energy projects. The signature cases in fact go back to the 1970’s in the case of the James Bay project and the Mackenzie Pipeline. Aside from the recognition that aboriginal communities had legitimate concerns, the phenomenon more generally has largely been attributed (by government and industry) to people who presumably were not very public spirited or were paranoid or simply cranky. The labels which were applied reflected that. All of them were distinctly pejorative and dismissive such as NIMBY, NOPE and BANANA.5 The problem in other words was a few, albeit noisy, members of the public, and though governments and industry would regularly wring hands about the matter, decision makers remained confident that the broader public understood the need for new energy projects and that the necessary level of political support could be found.

Events in the past decade have shaken that confidence. More and more projects of many different sorts come in for vociferous and effective opposition from a wide variety of local communities including aboriginal communities and from environmental interests. The reasons for this are not difficult to discern and many of them were cited by the CAMPUT panelists. Briefly stated, much has changed: in substance especially as the climate file has emerged and at the level of society in terms of both broad social trends and the emergence of a newly forceful aboriginal community backed by both the law and political support. On the other hand, to date there remains a paucity of systematic analysis in the academic literature which effectively puts the pieces together in any sort of model of social behaviour or which plumbs those phenomena to discern what they might tell us about avenues that would lead to solutions. The following is intended as a starting point.

The most obvious source and one that is well established in the literature and in multiple sources of public opinion is the decline of trust and in particular the decline of trust in public institutions.6 The decline of trust in public institutions began in the United States in the early 1970’s and Canada not long after. One source, tracking levels of trust over several decades showed (in the early 1970’s) confidence levels that governments will “do the right thing” at around 60 per cent; since then, results have sunk as low as 20 per cent and since 1990 they have rarely climbed above 30 per cent.7 People simply don’t believe governments. What can be done about that is another matter but one might at least surmise that governments are moving in the wrong direction when they take more political control and reduce the independence of regulators.

Another and perhaps related phenomenon found throughout the literature8 is the breakdown of social cohesion, put another way, a process of increased fragmentation whether between interest groups or on a geographic basis. In particular, local communities have begun to assert themselves much more vigorously than they did in past decades and in a world of tightly targeted politics they have become effective at getting heard. Aboriginal communities in particular have become both a political and a legal force and if the courts have not in fact accorded first nations a veto, (not where there exists a reasonably articulated and proportionate public interest),9 the chattering class narrative appears to have accepted that they have. In some minds at least, local simply trumps the broader interest.

Some of this is undoubtedly good if one accepts that past practices often left local communities bearing the costs and risks while the broader society enjoyed the benefits. That is particularly true in the case of aboriginal communities for whom energy and resource projects are at one and the same time an existential threat to traditions and yet the only viable avenue for future community vitality. On the other hand in the rush by many commentators including political figures to appear sensitive to local concerns, the larger public interest has gotten lost. Some sort of rebalancing is needed so as to genuinely account for local concerns without pandering to them.

A third sociological phenomenon that appears to underpin a substantial part of public opposition is the emergence in recent decades of a society obsessed (the word is not too strong) with worries about threats to health and safety. Energy developments of all sorts raise questions about health and safety and the science around those questions is often complex and ambiguous. Much of the literature10 touches on these issues and consistently stresses two aspects: the need for concerned voices to be heard; and the importance of trust in authorities to do the right thing when it comes to resolving issues that are far too complex for most experts, far less any lay person, to understand.

Into this stew of hopes and (mainly) fears, governments have thrown one of the largest policy failures of several generations – the failure to deal honestly with the issue of climate change. Fingers can be pointed in all directions and no political party or government in Canada can claim with any justice that it has consistently acted with wisdom and foresight. Governments have consistently reinforced the belief that it is unlikely that they will do the right thing: whether over-committing to action while ignorant of the consequences, particularly for a resource based economy; simply ignoring solemnly made commitments; undertaking policy measures whose consequences were ill-understood; or doing very little while pandering both to corporate interests and to consumers. In the meantime, the public – or substantial parts of it at least – looks for a forum in which to express their concerns and absent any other forum, regulatory processes for individual projects become the default mechanism despite not being constituted legally or otherwise – to address the issue.

Other policy failures reinforce the overall effect. The inability to come effectively to a resolution with aboriginal communities is an obvious one. More amorphous but likely of growing concern is the spotty record of regional land use planning and cumulative effects management.

All of this plays out in the world of social media. There is much – and little – that can usefully be said about social media in this context. In the next section, this article proposes a model of sorts which suggests that in most cases, public policy or the broad public interest needs to be addressed with at least three critical elements in mind: a broad geographic perspective (national, sometimes global); a long time horizon; and a capacity to integrate a complex mix of variables and objectives. Most of the time public policy falls well short on all three dimensions and politics even more so. In any event, for all that may be said good or bad about social media, one thing seems clear: much of what transpires there is intensely personal, immediate and simplistic and as such, one of its effects is to further weaken an already weak societal capacity to take more global, long term and complex elements into account.

We live in an increasingly fragmented society burdened by multiple fears and believing – sometimes with good reason – that authorities will do the wrong thing. As citizens we are called upon to be “literate” in multiple realms including energy – calls that are most often drowned out by other, personal priorities. Against that backdrop, energy projects often face at least two substantive challenges: to do what is just with respect to local, especially aboriginal, communities while maintaining a sense of the broad public interest; and to come to grips with vexing environmental issues, notably climate change and large scale impacts on land, water and habitat. Modern communications then insert themselves into that mix. In contrast to a public policy need for thinking that is broad based, long term and able to deal with complexity, our means of addressing ourselves to our fellow citizens have become (with apologies to Thomas Hobbes) ever more nasty, brutish and short.

Rethinking Leviathan

Without going so far as to advocate the return of absolute monarchy, one can find in Hobbes a useful corrective to the emerging social licence movement, some of whose members appear to believe that anything is better than our currently constituted authorities and that local communities should be the ultimate arbiters of what is acceptable or not. This view seems perverse and dangerous. Our highly sophisticated and competent set of energy regulators (economic, resource and environmental) has for many decades upheld the social contract around energy development. If the social contract has become as frayed as it appears, that is a long way from saying that the guarantors of that contract should be pushed to the side, quite the opposite in fact.

The preceding section touched on the idea of a policy model in which various decision makers act within a three dimensional space, the dimensions being time, geography and degree of complexity. At one extreme (call it the lower left) of that space, decisions are made with a perspective which is short term, local and one-dimensional (a job, my health, potholes in my street). Most private transactions occur in this area. At the opposite extreme (call it the upper right) can be found some sort of ideal for policy making – long term; encompassing the whole polity (and even reaching beyond it); and embracing multiple objectives such as the economy, health and safety, the environment and social justice. Very rarely does policy even approach that ideal but it is inescapable that most of our energy challenges can only be effectively addressed in that realm. Climate change is a long term global phenomenon with myriad implications for human society; pretty much everything about energy is a long game and energy decisions affect widespread geography in multiple dimensions.

As it turns out there is a mismatch between the needs of policy and the realities of politics. Famously, all politics is local. Political time horizons, never longer than the electoral cycle may now be approaching that of the twitter cycle. And if political decisions sometimes embrace complexity, they do so only intuitively and the narrative is most often one-dimensional in order to match modern attention spans.11 Democracies are untidy and in many ways ill suited to the challenges they face, but somehow they work and one of the mechanisms that makes them work is institutions with the capacity to reach toward the upper right of our imagined decision space.

Enter the independent regulator.   Regulatory agencies vary widely but in general they have a combination of attributes which make them unique in society. Their business is the public interest as defined by legislatures. They are expert and capable of processing complex information. They characteristically make decisions with very long time horizons. They function within carefully defined rules of procedure and a legal context in which procedural fairness is of central importance. And by virtue of their arms length relationship with democratic decision makers they have some degree of immunity to the pressures of local-ism, short term-ism and simple-ism.

There are several general ways in which the regulatory system might be restored to a position of greater confidence in the minds of Canadians but in order to understand how, it is necessary to understand that regulators can and do play different roles. One of these is transactional. Another is what might be termed part of the infrastructure of public policy.

The principal role for regulators is to ensure that the public interest is served with respect to individual economic transactions, in the first instance through approval processes and on an ongoing basis through monitoring and enforcement. Economic regulators assess projects and issue approvals in terms such as “public convenience and necessity”. Resource regulators protect the integrity of publically owned resources in their approval of private investments and operations to extract such resources. And environmental regulators seek to ensure that broader environmental values are protected. Most of this is essentially transactional, involving a private applicant or operator of one sort or another and often a host of related interests such as landowners or communities. In order to maintain the integrity and manageability of its decision processes, the regulator needs to maintain its focus on the specific case before it, working within a complex system of laws and legal requirements and policies that necessarily bear on the decision.

Regulators also perform broader roles. Some are established and trusted sources of data and analysis. Some are mandated to provide advice to their respective governments using a variety of procedures. These roles inherently entail a view of the world which is longer term, broader and in some respects more complex than that involved in transactional roles. In these roles regulators cannot usurp the democratic actors who need to make the policy decisions but they can inform such decisions, they can provide helpful forums where citizen voices can be heard, they can act as repositories of trusted and widely accessible information and they can help make what are ultimately political decision processes more transparent.

In the search for solutions several steps should be taken by anyone offering advice.

One is to ensure that one understands what it is that regulators do and don’t do, how they do it and why certain practices need to be followed both for practical and fairness purposes.

Another is to better understand what might be called the regulatory ecosystem. Different regulators do different things often using methods and procedures that are distinctive to their particular business; much that vexes various citizens is often outside of any one regulator’s responsibilities. Jurisdictions and responsibilities inevitably overlap and sometimes collide so that cooperation and division of labour are essential characteristics of a well functioning system.

Finally it is essential to recognize that every potential solution carries with it certain inherent tensions. If policy informs regulatory decisions, are those decisions compromised in some way or are they more legitimate? If regulators are part of broader debates does that risk unreasonably colouring decisions in individual applications or does it make for better informed decisions? Does more liberal procedure enhance or does it diminish the quality of procedural fairness? If individual board members or commissioners communicate directly with the public do they risk compromising their perceived objectivity respecting individual applications? If regulators are not trusted then how can expanded or more independent roles be perceived as legitimate; which is the chicken and which is the egg?

With all that in mind, several avenues are worth exploring.

Start with the notion of independence. Every public action has some element that might be termed political (in the sense of the authoritative allocation of values) and every public actor needs somehow to be accountable. The question is how that accountability is brought about. Arm’s length regulatory bodies are arguably one of the genius ideas of western democracies but they inevitably engender some suspicion that there is something undemocratic about them and, for political leaders, something that gets in the way of political choices. We have seen a general erosion of independence for regulators in several Canadian jurisdictions. This has arguably done nothing to improve the quality of decisions while at the same time further eroding public trust. But it is overly simplistic to say – “let’s have more regulator independence”. We need to rebuild our understanding of why independence is useful and even necessary, why it needn’t conflict with democratic accountability and in what circumstances the role of the regulator is to decide and when it is to advise those who are most directly accountable to electors.

Policy matters and much of the harm done to public trust in our regulators has come about due to debris falling from failed policy. Absent enduring policy, day to day regulatory transactions will inevitably continue to suffer collateral damage. Regulatory agencies can be part of the solution here but only if political decision makers recognize that they (the political decision makers) need help and that more fresh air and sunlight may make for more enduring policy even if it narrows political choices. Some of the best stories of policy success in Canada have somewhere in them a process of enquiry or hearing such as informal advisory processes, formal commissions of enquiry or parliamentary hearings (including by our much maligned Senate). Regulatory agencies with their expertise, their objectivity and independence and their established capacity to “hear” with procedural fairness could carry some of this burden and in the process burnish their somewhat tarnished image.

Procedure matters. But not all regulatory actions are created equal and procedural choices involve inevitable tradeoffs. Regulators considering project applications have to place some limits on the scope of issues in front of them, the standing of those seeking to be heard, cost and time. Without such limits decisions will take forever. And in a world where Canadians retain the habit of expecting affordable and reliable energy services and where all Canadians benefit from selling our resources abroad into markets that have other (eager) suppliers from which to choose, “forever” is not a realistic option. At some point the broad public interest has to take precedence over the local or issue specific interest that has one more thing to say. And at least part of the mind numbing legalism of the whole business is there to secure those guarantees of procedural fairness that are so vital to the question of trust.

Regulators sitting in essence as commissions of enquiry may have more latitude – to be less legalistic, to consider much broader questions and to hear a broader range of stakeholders in less formal settings. The important point is that we need to develop a better and broader understanding of the nature of the different processes that regulators can undertake, why some procedural limits are unavoidable and where more procedural creativity and openness may be a very good thing.

Communications matter. Most regulators operate in a grey world somewhere between the courts and the realm of ordinary citizens. As such they traditionally regard communication as something that happens when they issue their decisions and the reasons therefore. That is changing. Most regulators are not in fact mysterious scary people but to the ordinary citizen they are distant and incomprehensible. More exposure – ideally as direct as possible and not too much filtered through tweets and Facebook pages – would contribute to greater trust. Communicating with the intent of explaining decisions is a trickier matter. Decisions are written so as to pass legal muster and a “simple” explanation will almost always lose some of the nuance and detail that are essential to the decision.

Regulators also have another communications function more related to their roles as part of the policy infrastructure. Regulators are large repositories of information which can and should be made ever more accessible to the public. Helping people find their way through the thickets of information residing with various regulators and other agencies may not be per se the responsibility of regulators (this is really the business of policy officials) but regulators themselves have both a stake and a role in improving access to such information.

Capacity matters. We are asking more and more of our regulators. The business of energy will continue to bring forward more applications and operations will need to be ever more carefully monitored to meet public expectations respecting health, safety and environmental protection. More people will want to be heard about more things. We may add new or extended functions. All of this will require more dollar resources and more human capacity. And all of it will be paid for by all of us: ratepayers for domestic energy, public resource owners, shareholders and taxpayers. The regulatory infrastructure that supports our energy economy is as vital to its functioning as roads and pipelines and, in a world where public trust has become one of the scarcest resources of all, it has become even more vital.

At the same time, if we believe that local communities and citizens should contribute more to decision processes then those communities and citizens will need to acquire more capacity if their interventions are to be constructive. They will need data and information and the means to process it. They will need processes within the community which are themselves democratic and procedurally fair. And they will need sophisticated representational capacity. We need to examine much more closely just what all this means in terms of costs that, as a society, we should be prepared to pay.

Who guards the guardians?

We do. We do so by better understanding their functions, what they do and don’t do, what they can and can’t do. We need to refresh our understanding of the virtues and limits of regulatory independence. We need to provide regulators with policy and legislative contexts that don’t collapse around their ears as they try to do their jobs. Regulators need to take a more creative view of procedural questions but we need to understand the limits to which they can go. Regulators need to communicate and we need to help them do so. Communities themselves need to take more responsibility for being constructive intervenors. And we need to pay for it.

All of this and much more should be grist for a new conversation about public confidence in regulatory processes and authorities. It should start with less arm waving and more analysis and it should involve less tweeting and more conversation.

* Michael Cleland, Senior Fellow at the University of Ottawa Collaboratory on Energy Research and Policy in collaboration with Laura Nourallah, PhD candidate at the School of Policy Studies at the University of Ottawa

  1. Rowland Harrison is a former member of the National Energy Board and recently completed his term as the TransCanada Chair in Administrative and Regulatory Law at the University of Alberta; Peter Robinson is Chief Executive Officer at the Suzuki Foundation; Paul Boothe is a former Deputy Minister of the Environment in Ottawa and is at present the Director of the Lawrence National Center for Policy and Management at the Ivey School of Business at Western Ontario.
  2. Nicholas L Cain & Hal T Nelson, “What drives opposition to high-voltage transmission lines?” (2013) 33 Land Use Policy 204; Michael Siegrist, Heinz Gutscher, & Timothy C Earle, “Perception of Risk: the Influence of General Grust, and General Confidence” (2005) 8 Journal of Risk Research, 145; K David Pijawka, K D, & Alvin H Mushkatel, “Public Opposition to the Siting of the High‐Level Nuclear Waste Repository: The Importance of Trust (1991) 10 Review of Policy Research 180; Paul Slovic, “Perceived Risk, Trust, and Democracy” (1993) 13 Risk Analysis 675 [Slovic].
  3. Nicolàs C Bronfman et al, “Understanding Social Acceptance of Electricity Generation Sources” (2012) 46 Energy Policy, 246; Philip Sinclair & Ragnar Löfstedt “The Influence of Trust in a Biomass Plant Application: The Case Study of Sutton, UK” (2001) 21 Biomass and Bioenergy 177; Roger E Kesperson, Dominic Golding & Seth Tuler, “Social Distress as a Factor in Siting Hazardous Facilities and Communicating Risks” (1992) 48 Journal of Social Issues 161.
  4. For a very helpful review of where and how courts have shown deference to regulators (or not) see: David Mullan, “2014 Developments in Administrative Law Relevant to Energy Law and Regulation” (2015) 3:1 Energy Regulation Quarterly 17.
  5. For any who are uninitiated: Not in My Backyard; Nowhere on Planet Earth; Build Almost Nothing Anywhere Near Anybody.
  6. Shafak Sajid, Restoring Trust: The Road to Public Support for Resource Industries (2014), The Canada West Foundation, online: Centre for Natural Resources Policy < Restoring Trust Report v2.pdf>; Neil Nevitte & Mebs Kanji, “Authority Orientations and Political Support: A Cross-National Analysis of Satisfaction with Governments and Democracy” (2002) 1 Comparative Sociology 387; Neil Nevitte, “The Decline of Deference Revisited: Evidence after 25 Years” (2001), World Values Surveys, online: UCI Center for the Study of Democracy <>; David Zussman, “Do Citizens Trust their Governments?” (1997) 40 Canadian Public Administration 234.
  7. Frank Graves, The Trust Deficit: What Does it Mean (May 14 2013), online: Ekos Politics <>.
  8. Jane Jenson, Mapping Social Cohesion: The State of Canadian Research (1998), Canadian Policy Research Networks Inc, Study F-3, online: CPRN <>; Gilles Bourque, & Julles Duchastel, « Les identités, la fragmentation de la société canadienne et la constitutionalisation des enjeux politiques » (1996) 14 International Journal of Canadian Studies 77; Robert Putnam, “Bowling Alone: America’s Declining Social Capital” (1995) 6 Journal of Democracy 65.
  9. Tsilhqot’in Nation v British Columbia, 2014 SCC 44, [2014] 2 SCR 256.
  10. Barry G Rabe, “When Siting Works, Canada-Style” (1992) 17 Journal of Health Politics, Policy and Law 119, Slovic, supra note 2; Howard Kunreuther, Paul Slovic, & Donald MacGregor, “Risk Perception and Trust: Challenges for Facility Siting” (1996) 7 Risk 109; Christine Rivard et al, “An Overview of Canadian Shale Gas Production and Environmental Concerns” (2014) 126 International Journal of Coal Geology 64.
  11. As of 2013, for Canadians – eight seconds, one less than that of a goldfish according to a recent study by Microsoft. Kevin Mcspadden, “You Now Have a Shorter Attention Span than a Goldfish” Time Magazine Online (May 14 2015) online: Time <>.

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