Documents show Higgs was behind controversial letter sent to EUB

A controversial letter sent by New Brunswick Natural Resources and Energy Development Minister Mike Holland to the Energy and Utilities Board was written by a team of civil servants and submitted to Premier Blaine Higgs, not Holland, for a decision on whether to send it, internal government emails show. 

The January letter to the EUB, which was about an Irving Oil application to raise petroleum wholesale margins, triggered intense criticism of Holland for interfering in proceedings of the independent regulatory board, including a call for his resignation.

But documents obtained by CBC News under an access-to-information request show Holland had little to do with writing the letter or the decision to send it, with that choice instead falling to Higgs. 

The letter was assembled and reviewed by up to five civil servants and government lawyers. According to emails exchanged inside government, it was then forwarded to Louis Leger, Higgs's chief of staff, on Jan. 5.

Under the subject heading "DRAFT Minister Letter to EUB supporting interim decision," Leger then forwarded the letter to Higgs, with a note that a decision on what to do with it could be made by him the following day.

"Premier, We can discuss tomorrow [January 6]  if a letter is required," wrote Leger,

The letter was agreed to and on Jan. 6, Holland, who was not included in any of the email chains about the document's creation or approval, signed it. Two days later his office forwarded it to the EUB. 

In an interview Higgs acknowledged being involved in approving and sending the letter but said it was not his decision alone.

"It was a joint decision amongst our team," said Higgs.

"I was fully supportive but we met with Cabinet Ministers to approve it and to decide to send it but I was certainly supportive," said Higgs.

A request for an interview with Mike Holland about the letter was received by his department and acknowledged but not responded to.

Opposition suspected Higgs's role

New Brunswick Liberals were convinced Higgs was behind the letter because of his years working as an executive for Irving Oil and filed a complaint with New Brunswick Integrity Commissioner Charles Murray in late January based on that suspicion.  

Liberal MLA and opposition finance critic Robert McKee said he is not surprised emails show the letter went to the premier for approval.

"This shows how much really involved Higgs was, how much his senior staff were involved," said McKee.

The letter sent by Holland was meant to add weight to an application made to the EUB on Jan. 5 by Irving Oil's chief marketing officer, Darren Gillis, for an "immediate" 3.5 cent increase in petroleum wholesale margins.  

The Irving application asked the EUB to grant it an interim price increase in January before a full hearing into a request for a permanent and slightly larger increase could be organized for later in the spring.

Minister out of loop

Although the change had the potential to add $1 million per week to the cost of petroleum for New Brunswick consumers, Holland said in the letter he was "supporting" Irving Oil's request for an "expedited" review of its application and "if warranted an interim order to increase the wholesale margin."

That unleashed criticism of Holland by all three New Brunswick opposition parties, including a call from Green Party Leader David Coon for him to resign.

"This was an egregious abuse of power by the minister, to try to influence the work of the EUB," Coon said in a news release at the time. 

"The EUB is an independent and quasi-judicial regulator that makes legally binding rulings based on the evidence provided to them, and on the strength of the arguments made by the applicant and official intervenors. The Minister must be held to account for trying to influence the work of the EUB,"

But emails released by both Holland's department and the Premier's Office to CBC News suggest the minister had little to do with the letter other than putting his signature on it

Three weeks of strategizing

Instead the letter appeared to be the culmination of nearly three weeks of government strategizing by civil servants over how to assist Irving Oil in an effort monitored not by Holland, but by Higgs, his chief of staff, Louis Leger, and top civil servant Cheryl Hansen.  

An email on Dec. 29 shows Higgs and Hansen asking for a briefing on Irving Oil and the EUB from senior officials, a full week before the company applied to the board.

"Cheryl and Premier connected today and they are looking for an update....EUB status regarding IOL [Irving Oil Limited]," reads the email sent to Tom MacFarlane, the natural resources deputy minister.

The released emails are heavily redacted and do not show any direct communication between Irving Oil and government and do not explain why suddenly, on Dec. 21, civil servants began investigating how the company might go about pursuing higher prices.

But emails with subject lines like "Investigation by the Board" and "Urgent: Update on EUB"  began to be traded among officials in Holland's department trying to understand how Irving Oil might make its case for higher prices.

One email exchange on Dec. 22 raised the question of whether the government could use its powers to "expedite a hearing before the EUB where Irving could make their claim, present their evidence." 

MacFarlane even reported he spoke directly with acting EUB chair Francois Beaulieu "before Christmas" about Irving Oil's approaching application, even though Beaulieu would later have to conduct those hearings.

Discussions with Irving Oil

Despite no mention of meetings or discussions with Irving Oil in documents released by the province, in his interview Higgs said there were some, and that is what triggered all of the internal activity.

"I was aware of what they were seeking to do," said Higgs.

"They would have been presenting their case to cabinet, some members, not necessarily all members."

David Coon said the province's conduct, revealed in the internal emails, was inappropriate. 

"Government was actively engaged in trying to assist Irving Oil, expediting their application to the EUB, and that is unprincipled, and unbecoming," said Coon.

Irving, government used similar language

Holland's letter to the EUB was being worked on at the same time Irving Oil was preparing its application. Language in the letter was picked to match language Irving Oil was using and ultimately it was civil servants who proposed Holland alone sign it. 

"I suggest we keep it from the Minister as he is responsible for the Act we are referencing," Heather Quinn, director of the energy branch inside the Department of Natural Resources, wrote in a letter to deputy minister MacFarlane.  

"I assume we will want to send it tomorrow (January 6) or Thursday (January 7) once we check the language against the (Irving) application to the Board," she wrote.

"OK. Sounds good ," replied MacFarlane.

Government lawyers were consulted, including deputy attorney general Mike Comeau, and drafts of the letter were emailed to Louis Leger and Cheryl Hansen and then forwarded to Higgs.  Although the premier said Holland was involved, there is no record in the emails that he was sent a copy for his own input.  

Irving Oil eventually dropped its application in early March after the EUB ruled the company provided no evidence to support its need for interim price increases, but McKee said this does not lessen his concern over how government attempted to involve itself on the company's behalf. 

"The exchange of these communications prior to even the application being made, just shows that government officials, cabinet members, executive council were involved to a degree here that is totally inappropriate," he said.