September 7, 2015

Kinder Morgan Trans-Mountain pipeline: conflict of interest


On August 21, 2015, the National Energy Board announced a postponement of its oral hearings scheduled to start the following week, because Kinder Morgan’s oil price expert, Mr. Steven Kelly, was appointed to the Board. Mr. Kelly had prepared an extensive report supporting the pipeline project’s economic benefits. The report formed part of Kinder Morgan’s application for the project to be built, and had been the subject of responding expert evidence and the hearing’s interrogatory process. However, on July 28, the federal natural resources minister, Greg Rickford, announced Mr. Kelly had been appointed to a seven-year term on the Board.

The Board, rightfully concerned with public confidence and the impartiality of its decision-making, decided to strike Mr. Kelly’s evidence from the record. The Board directed that Kinder Morgan list the evidence that Mr. Kelly prepared, and set a schedule of submissions on addressing the evidential gap.  Kinder Morgan has announced that it will provide replacement expert evidence and seeks an expedited timeline to continue the hearing. Intervenors have responded by wanting to know how and when the conflict of interest arose, the impact of the conflict of interest on the Board members, advised of the need to provide new responding expert evidence to Kinder Morgan’s anticipated new expert evidence, and have sought that the Board provide funding to replace funding wasted by these events.

These events underscore the importance of tribunals ensuring the independence and integrity of their processes. While the NEB’s decision to strike the evidence of Mr. Kelly is a significant step towards addressing the conflict of interest, it is clear that the Board and Kinder Morgan should give full disclosure of what occurred, to restore some modicum of public confidence in the regulatory review.