Proceedings of the Standing Senate Committee on
Transport and
Communications
Issue 13 - Evidence
OTTAWA, Tuesday, April 28, 1998
The Standing Senate Committee on Transport and Communications, to which was referred Bill C-9, for making the system of Canadian ports competitive, efficient and commercially oriented, providing for the establishing of port authorities and the divesting of certain harbours and ports, for the commercialization of the St. Lawrence Seaway and ferry services and other matters related to maritime trade and transport and amending the Pilotage Act and amending and repealing other Acts as a consequence, met this day at 10:07 a.m. to give consideration to the bill.
Senator Lise Bacon (Chairman) in the Chair.
[Translation]
The Chairman: We are resuming our examination of Bill C-9, An Act for making the system of Canadian ports competitive, efficient and commercially oriented, providing for the establishing of port authorities and the divesting of certain harbours and ports, for the commercialisation of the St. Lawrence Seaway and ferry services and other matters related to maritime trade and transport and amending the Pilotage Act and amending and repealing other Acts as a consequence.
[English]
We will now hear Mr. Gillis from the Strait of Canso Superport Nova Scotia.
Mr. Blaine Gillis, Strait of Canso Superport Nova Scotia: Honourable senators, I imagine that you have heard a great deal from the major port corporations and harbour commissions throughout Canada. I will provide a different perspective on a local or regional port authority, one of the 400 or 500 ports across the country. I am using the Strait of Canso as an example of other regional local port authorities that would need to be set up throughout Canada. I will first give you some background, deal with some of the issues on the port divestiture program, and then make some general recommendations.
Senator Bryden: Just to put you at ease, you should not at all be concerned about concentrating on the Strait of Canso. We spent all day yesterday on Toronto and Oshawa.
Mr. Gillis: The process we went through with the Strait of Canso will be typical of the process that other community port organizations will have to go through. We probably had a bit of a kick-start.
The Strait of Canso became the deepest, year-round, ice-free, dredge-free harbour in eastern North America in 1955 when the Canso Causeway was built. It is strategically located just off the Great Circle route. It can serve the Eastern Seaboard of the United States effectively, the St. Lawrence Seaway and up through the St. Lawrence. It has a full range of services.
In early 1996 when the marine service fees came into being, I represented a number of shippers in that area, lobbying on their behalf for marine service fee reductions. At the same time, our regional development authority was setting up a strategic economic plan. The two of them came together and looked at the port as one area that had a lot of promise in the local economy.
Over a period of seven months, from a position of having no formalized port organization or harbour commission, we managed to organize the shippers, the community interests and some governments to form the Strait of Canso Superport Corporation. That was created in February 1997.
The Superport Organization looked at marketing the Strait of Canso, developing the harbour, dealing with a number of harbour management issues, and considering taking over some facilities within the Strait of Canso that were being operated by Transport Canada.
The mandate was broader than just taking over the public facilities. We started by just organizing and educating the various shippers in the area, and our cargo movement increased from about 8 million tonnes in 1995, to 21.9 million tonnes in 1997. According to our calculations, that port ranks second behind the Port of Vancouver in the movement of cargo.
There is also a fair amount of industrial investment going on in the Strait of Canso, basically because of port facilities. The port and the industry along that strait bring approximately $250 million to the local economy.
Mr. Paul Crissman, our chair, sends his regrets. He was supposed to be here today, but he also is the president of Statia Terminals of Canada, which is involved in an offshore project for a gas plant on their property along the Strait of Canso. Those negotiations are in the eleventh hour, and he had to be present.
There are other opportunities for our port. We have the offshore. We are dealing with petrochemicals and cement plants, as well as with the private sector, for a major containment terminal and a deep-water multi-purpose terminal.
Within that context, the port authority got off and running early, just as the divestiture program began. We saw that as an opportunity to take over facilities in the Strait of Canso, to generate some revenue for the Superport corporation, and to identify some cargo and additional traffic for those specific terminals. We entered into a letter of intent with Transport Canada to obtain two facilities, the Mulgrave public wharf and the Port Hawkesbury pier. We looked at environmental assessment, structural assessment, some markets, and some financial considerations.
Some issues did develop. We were very optimistic going in, but some frustration and confusion occurred as we went through the process with Transport Canada. We are still negotiating with them.
The Mulgrave terminal was the larger of the two terminals. It had more flexibility to be attract additional cargo and shipping activities, and it had a chance to grow. The terminal was comprised of two berths, a south berth and a north berth. The north berth was in fairly good condition and was only about 14 years old. The south berth, however, was more than 50 years old, and its southern end had been condemned and fenced in.
After due diligence and looking at the structure, we realized that a major reconstruction project was needed to keep the south berth viable. It would require substantial capital, as opposed to developmental capital, which would increase the facility. We just wanted to maintain that south berth so that some new cargo and traffic would be attracted to it.
As we went through that process, however, Transport Canada, under the guidelines for the divestiture of local ports, worked out a formula which basically indicates that the Crown can be no worse off if it kept the port over a period of 25 years. The formula also calls for the government to bring the port to what it considers to be minimum standards. Those minimum standards are safety standards.
When the Superport Corporation looked at the project, however, we were looking at it as a commercial venture. Our standards would be to bring to the port to what we consider to be commercial standards. There is a difference of opinion between the minimum standards of Transport Canada and the commercial standards required by any venture in order to operate profitably.
In the opening session of negotiations with Transport Canada, its solution to the south berth problem was to use armour stone, which would basically protect the land mass. On a commercial basis, however, there would be no berthing capabilities, and only limited cargo movement across the entire area, thereby reducing revenue and reducing the viability of the facility.
Throughout the process, we had asked Transport Canada about the worst-case scenario. We wanted to know what amount of money the Government of Canada would need to put into the port to maintain it over the 25-year period. We did not receive an answer. We still do not have an answer. It is therefore very difficult for us to plan. If you are told the sum with which you have to work, you can plan around that. Without a number, we had to look at how Transport Canada was operating in constructing similar terminals. They used a construction method called "concrete crib construction," which we used for planning purposes. On that basis, it would cost about $15 million for the wharf. We went back and asked how they would fix it, as armour-stoning the south berth was not acceptable to us. We would use a construction method called "steel-sheet piling," which probably would come in at half the cost, around $7 million or $8 million.
We still do not have an answer. The board members do not want to go into another planning exercise until we a framework that will allow us to determine whether or not it is viable to take over this facility.
The other facility is called Port Hawkesbury pier. It is on the other side of the harbour, and it has limited commercial value. It does generate some revenue, but it also is in the centre of a waterfront development project for the Town of Port Hawkesbury. They have already invested something in the order of $3 million there, and they would have to invest some additional moneys.
The Strait of Canso generated $600,000 in harbour dues in 1997. We looked at this as a source of revenue for the Superport. The shippers on our board -- which has 11 members, 6 of them from the private sector -- thought that they could use it as a source of private revenue even if we reduced the rates substantially. When the facilities are transferred from Transport Canada, however, the harbour is de-proclaimed and the boundaries basically dissolve. There are no boundaries, and no jurisdiction is transferred.
There is no definition of the harbour. We are working with Nova Scotia to redefine harbour boundaries for the Strait of Canso. Hopefully we can gain jurisdiction over those boundaries, and the Superport Corporation can levy some kind of harbour development fee. We have spoken with the shippers about this already, and they know that they can lobby much more effectively on certain harbour management and development issues collectively. The more ships they attract, the less they pay for service fees and other issues.
At present, there is no means of transfer. Within the province of Nova Scotia, as is likely the case in other provinces, port operation and development were always a federal jurisdiction. There is very limited knowledge of this issue within the municipalities, and within provincial departments.
If the Strait of Canso Superport Corporation were to maintain the collection of harbour dues over a five-year period, which we think is a transitional period, it would amount to around $3 million worth of revenue, which could then be used for further development.
One of the other issues we have is that the formula which determines what a local port authority can receive from the $125 million port assistance fund becomes a problem. The fund has no guidelines, and it does not divide precisely between capital assistance and operating assistance. You could have a situation where the port's capital and infrastructure has been in good shape, yet the port is not viable operationally and is losing money. If you project an annual loss of $300,000 or $400,000 over 25 years, that port could receive more assistance than a port like the Strait of Canso or others which, in our view, are strategic for future development of Canada.
In the case of the Strait of Canso, we are looking for capital to bring the port up to what we consider to be a commercial standard. We are also looking for some transitional funding in the operational phase, which would amount to maybe a little over $1 million. We feel that sufficient funds for community port organizations are not available as we go through this process. We have problems with the way that the formula is being applied, and, if it is applied so that certain ports are brought up to commercial standard, we think that $125 million, may be insufficient for the nation-wide process.
We have proposed some general recommendations. We feel that there has been a lack of vision in looking at strategic harbours and ports outside the port corporations and the harbour commissions. Certain strategic areas such as the Strait of Canso have a real competitive advantage, not only for the local community or for the region, but for all of Canada.
As shipping trends change and the size of ships increases, there are only a few strategic harbours that are cost-effective, ice-free, and which do not have to be dredged. These harbours have not been looked at in the vision of Canada as a shipping nation. In Nova Scotia, a recent study that found that in excess of 25 per cent of the Nova Scotia economy is represented by ocean industry. It is extremely important for Nova Scotia.
One thing that we have put forth for consideration is that there may be another status for ports such as the Strait of Canso and other local ports. When the strategy was developed, the port corporations and the harbour commissions were put in one category, and all other ports were put in a regional/local category. There may be 400 or 500 ports in that category. Some of these ports do not exist any more, but there is another category below port authority, port corporation or harbour commission, and the Strait of Canso and those other strategic locations which would fit into that category should be considered.
We have recommended that another status given to ports such as the Strait of Canso. I am thinking of Bayside, New Brunswick, and a few others which may be in the same category. Within that status, there should be some special consideration for funding which would bring them up to commercial standards, and give them a chance to be viable.
There should also be a review of the funding formulas so that we can reach a common ground on minimum commercial standards. The $125 million in assistance may not be sufficient to give the local port authorities a real kick start.
Senator Roberge: What other ports in Canada would qualify as strategic ports?
Mr. Gillis: I would say Bayside, New Brunswick is one that should be considered. On the West Coast, the Port of Victoria should be looked at in the long term. In Newfoundland, Come-By-Chance is another port that has to be considered. I am not familiar with all of the ports on the gulf side of New Brunswick, but there is probably one there that should be considered.
Senator Roberge: What about Sept-Îles?
Mr. Gillis: Yes. This is not a black and white issue. There is a grey area, in that local or regional ports such as Sept-Îles, Georgetown, or the Strait of Canso may have strategic positioning for Canada in time, looking at larger vessels and different movements.
The Port of Vancouver is probably the only port in all of Canada that is ready for the next century. They really looked at the inner harbour, and they realized that, because of land use, zoning, and environmental issues, they had to consider setting up new bulk and container terminals. They moved 30 miles outside the city and set up Delta Port, which is strategically positioned. I do not think there is a port on the eastern seaboard of Canada that is strategically positioned for the next century, including the Port of Montreal.
The trend is to larger container ships. Those ships will likely be coming from free trade blocs and going to other free trade blocs; from Europe to North America or South America. They will drop their cargos, and they will have a feeder system into other ports, or a rail system. Unless we are in a position to do that in Eastern Canada, the cost of moving commodity and product will become prohibitive.
Senator Roberge: There is a lot of similarity between Canso and Rotterdam, which has exactly that function in Europe.
Mr. Gillis: Yes.
Senator Roberge: It is the central point, and from there the cargo goes to other ports or inland.
I am trying to understand your point regarding the formula for contribution. Based on that formula, what would your revenue be?
Mr. Gillis: I use the word "formula" in a broad way. It is more of a guideline.
In its divestiture guidelines, Transport Canada indicates that the Crown can be no worse off over a 25-year period. The operating and capital costs of a port would be looked at and projected out. If the port were losing $200,000 year, that would be projected out.
That policy is fair to ports where the infrastructure is in good shape. If the infrastructure is old, however, you get into the second part of the problem, where you bring it up to minimum standards for safety reasons.
Senator Roberge: How do they define "minimum standards?"
Mr. Gillis: Our argument is that, if we are taking it over as a commercial venture, it must be brought up to commercial standards. We have been told that minimum standards would mean that the south berth must be replaced; that stone will be put from one end to the other, shoring up the landfall. Basically, that is a minimum safety standard so that nothing falls into the harbour. From a commercial point of view, we would lose all that berthing space, plus the ability to generate additional cargo on that facility.
It is frustrating. We have dealt with some good and capable people, but the Superport Corporation started the process with a partnering approach, and we have moved into more of an adversarial approach. It is difficult.
Even if someone were to tell us that they have done the calculation, and the figure is $6.5 million, we would have to wonder what we could do with that amount. If we use steel sheet piling instead of concrete crib construction, that costs $8 million, and we must source the remaining $1.5 million.
In the case of the Strait of Canso, we got the community organized and got off and running. We saw other opportunities with Sable Island off shore, amongst other projects, and we are pursuing them with basically no budget. There is a great deal of volunteer effort. We saw this as an opportunity to generate some revenue in order to keep those facilities, set up a port corporation, and look at future developments.
As we went through the process, it became apparent that vision was lacking at some of these other ports. We must deal with the major port and harbour commissions, as well as with the local ports. In some cases, however, you cannot fix an old road. In some cases, it is better to build a new road, and be in a position for the future rather than the past.
Senator Rompkey: I wish to follow-up on Senator Roberge's comment about Sept-Îles. I would like to hear your view on the effect that this bill will have on Sept-Îles port.
I would like to point out that 50 per cent of all of the iron ore in the world is shipped to Sept-Îles, and over 90 per cent of the iron ore in Canada is shipped out of Sept-Îles. There are only three iron ore mines left in the country, and they are all on the Ungava Peninsula. They are owned by the Iron Ore Company of Canada, by Wabash Mines, and by Quebec Cartier, which I believe is still partly owned by the Government of Quebec.
This is an important employer in the area, and it is important for that part of the Canadian economy. At the moment there is a campaign on Parliament Hill to keep mining in Canada, and to support the mining industry. Clearly this will have an effect on the iron ore industry, in that it will increase costs for the companies. Presumably they will pay for berthage, which will drive up their costs, lower their profit, and impact their competitiveness in the world market. Many of those companies are doing very well now. The Iron Ore Company is doing well competing in the world market, but it is a tough market, and they have instituted many policies on quality control, training, and so on. Their productivity is good. All of these companies are vulnerable, however. The global market is a tough market. If you increase the costs, competitiveness is impacted.
I would certainly like to look at the effect of this bill on the iron ore industry. It is a serious problem that warrants examination.
The Chairman: For your information, the Iron Ore Company of Canada will be here on Monday, as will two others.
Senator Rompkey: Would you care to comment on that?
Mr. Gillis: I could make some general comments. Approximately 18 to 20 million tonnes of iron ore go through that port. I am looking at it as a community, not-for-profit, local port authority. That is how that group set up in the Strait of Canso.
Another option is that a company can come in and actually take over the facilities. If they are public facilities that are being used by the company, they could buy them from Transport Canada. In that case, the company would probably integrate the port into its manufacturing or processing, and charge the cost back to the consumer. That would only work as long as the infrastructure was in good shape. If the infrastructure were to start to deteriorate, there would be major capital costs, and the price of the product would go up. In commodity markets, one cent a pound can make or break you.
Senator Forrestall: You said that the original port assistance fund of $125 million might not be enough, and that additional funds might need to be budgeted. Do you have any idea how much additional money might be required?
Mr. Gillis: I would not know exactly. I can probably extrapolate from the Strait of Canso Superport experience.
We looked at Mulgrave Marine Terminal, which I mentioned. If we were to use concrete crib construction, which is Transport Canada's standard construction method, to rebuild the facility, it would cost about $15 million. Using steel sheet piling might cut that cost in half. The difference is that steel sheet piling might last 20 to 25 years, whereas concrete construction can last 50 to 80 years. When you are taking over a port, you want to have the facilities in the best shape possible.
If we consider the sum of $15 million, the fund would cover only 10 or 12 ports in the country. Some of the ports would not require that much money, but I would say that seven or eight strategic ports deserve more consideration, and there are another 25 that should be given port authority consideration. The budget could conceivably double.
I asked where the figure of $125 million came from, and I could not get a satisfactory answer. I had assumed that further analysis as to the condition of the Transport Canada ports had been done, and that that was how the figure of $125 million was arrived at.
When I realized that the guidelines lead to minimum standards, which are really safety standards, I knew there were problems.
Senator Forrestall: A level playing field is important to each senator who represents a port. The federal authority should not intervene in a port in a manner which would be detrimental to the capacity of the port next door to grow, expand, and attract new business.
I would think that $125 million is a drop in the bucket compared to what must be done to renew our ports. I would think that we need $1 billion to $2 billion for systems that eliminate redundancy, and which best serve the needs of all our producers.
I do not see this bill as an attempt to maintain the status quo of a level playing field. Playing with unrealistic figures like these is treading on dangerous ground. In reality, it will be said that the money was simply for tidying up, and that much more money is required to address the needs of the ports.
The Superport Corporation must be involved. No other place in North America has a depth of 200 feet immediately off the shoreline.
I wonder about this question of fairness and the level playing field. What will it really cost? How will we divvy up those costs? How will ports like the Strait of Canso be affected?
Mr. Gillis: The Strait of Canso never before had a port authority. At different times, different government groups developed certain projects, but there was never an organized, formal port authority. Most ports in Canada are 200 or 300 years old, but our port is only 35 years old.
I find it difficult to focus in on Canadian for trade and export. Aside from information cargo moving by wire or wireless system, any kind of bulk or break or container cargo can go by marine transportation; inland, it can go by rail. As an economic generator for the country to service trade and export, transportation must be given more consideration.
In terms of port activities, there are strategic areas within the country that should really be examined for future development.
Senator Forrestall: You do not feel that there is a level playing field?
Mr. Gillis: There is no level playing field at this time.
Senator Forrestall: Could you tell us how serious that is? Does it matter in a competitive world?
Mr. Gillis: If the Strait of Canso were a port corporation similar to Vancouver or Quebec and had been started 30 years ago, we probably would have a container terminal. We probably would have a deep-draft, common-user terminal, and a combination of public and private partnering would be in place to get those things going. We would have sufficient activity and cargo to generate our own revenue for further growth and expansion, which is not the case today.
For this port to get up and running, we consider ourselves the "wild west" port of the eastern frontier. We generate activity through people and through contacts; making phone calls and knocking on doors. We hustle money for planning work, and then we generate more activity. It will be a long process. We are number two in Canada, and we will try harder, but it is not a level playing field.
The offshore has taken off. There is a major trade show taking place in Houston which I used to attend regularly, but the Superport Corporation has no money to send anyone. We need to generate sufficient revenue to generate opportunities. We thought port divestiture would give us a chance to start that process.
Senator Buchanan: Was the Superport Corporation consulted by the department when the bill was put together?
Mr. Gillis: No. Actually, I am a consultant myself, and I provided some planning organization work. I got the shippers together to form the Superport Corporation in 1997. The strategies to which you refer were developed around mid-1995. This is a very complex area of marine transportation. When I review these strategies, it seems these other strategic areas or strategic ports were not considered. There were just two categories, and we were not consulted.
Senator Buchanan: I do not know how many committee members have actually been down the Strait of Canso, but everything Mr. Gillis is saying about the strait is absolutely true, and everyone should visit it.
Since 1955 the hope has been that the Strait of Canso would become the industrial heart of Nova Scotia. It began very well, but it did not move. I congratulate all the people involved in getting the Superport Corporation under way.
Last week I attended a conference in Halifax on East Coast energy. The Sable Island project was well represented, as was the importance of the Strait of Canso to that development.
There are 5,000 or 6,000 acres of land at Bear Head that we put together back in the 1980s. There is another 10,000 to 15,000 square feet in Melford that we put together. Many of the parcels which have been put together are located on the finest, deepest harbour in Eastern Canada.
I recall when the largest tanker in the world came into the Strait of Canso. I was down there when it pulled away from its berth, turned around and left the Strait of Canso. It was an incredible sight.
I continue to be a supporter of the Strait of Canso. It is one of the finest, if not the finest, deep-water harbour in Eastern Canada and the Eastern United States. It is waiting to be developed. Some developments have occurred and they will continue.
Mr. Gillis, did you attend the conference in Halifax?
Mr. Gillis: No.
The Chairman: I do not want to stop you, Senator Buchanan, but there are other senators who wish to ask questions.
Senator Buchanan: A number of people from other countries, the North Sea countries, and from the United States, particularly Houston, are well aware of the Strait of Canso and its potential for petrochemical industries along there and the resulting transportation out of petrochemicals, and the massive amounts of land that are there. It is realistic to look at the Strait of Canso as one of the boom areas into the year 2000 and beyond.
The Strait of Canso will not be competition to the Port of Halifax or the Port of Saint John, because you are developing a different kind of port strategy there. The Port of Halifax for the most part deals with bulk carriers and container vessels. So the strategy is different.
Mr. Gillis: That is true for the most part. We have had several off-shore interests looking at container terminals, as well as Nova Scotia interests looking at container terminals. It is as a result of the larger vessels.
Senator Buchanan: I want to mention the coal liquefaction project, which was announced back in 1980, for the Strait of Canso. The coal liquefaction project will utilize in excess of 400,000 tonnes of Cape Breton coal, primarily from the new Donkin mine, if we can get it built.
The Chairman: I think you are straying far from Bill C-9.
Senator Buchanan: The Donkin coal they found in Trenton, New Jersey was the best coal in North America for coal liquefaction. One of the ingredients in the coal liquefaction plant is hydrogen, and hydrogen can be taken out of natural gas as it comes into the Strait of Canso area and across into Point Tupper with the pipeline that will be built now. You can take hydrogen out of natural gas and utilize it in the coal liquefaction process. Everything is there: the coal, the deep-water facilities, and the hydrogen. It is an incredible situation. Do you agree, Mr. Gillis?
Mr. Gillis: Our chairman is negotiating a liquid gas plant for his property. We have also talked with experts in coal trans-shipment, coking and liquefaction as a major project that could be undertaken. They need further study but those are opportunities for that strait. It further indicates the strategic importance of certain of the ports for all of Canada.
Senator Buchanan: I would ask Senator Bryden and Senator Rompkey to consider this. As with the Devco Committee, we must continue to look at these areas. I agree with the recommendations that Mr. Gillis has put forward. He will have no difficulty with many of the members of this committee.
Senator Forrestall: With great trepidation, I look at the whole situation in Cape Breton, and I can see nothing but doom and gloom with respect to its future instead of the 27 years of reserves we thought we had. We are probably down to 11 or 12 years of reserves.
Vital to the port is rail. Is there sufficient business in the port to offset the movement of coal to sustain the rail operation into that part of the world?
Mr. Gillis: At the moment, it is critical. The Devco operations maintain themselves by the tonnage moved by rail. A short-line operator goes through Cape Breton and the central part of Nova Scotia to Truro. Coal is a great portion of their cargo, and if that stops, the viability of that line will come into question. The port at this time does not have sufficient cargo to justify that rail company operating for the Strait of Canso. Every cargo movement along that line is vital to its viability.
Senator Bryden: Of all the witnesses we have heard, including the people who appeared from the department, you are the first witness who referred to strategic ports for the next century. When I went through the bill, I was struck by the fact that you go from the seaway and the CPA ports to simply a large class of ports that basically are all put in the same category, whether they have one wharf or refinery terminals and so on. As a matter of fact, I suggested in the Senate that there be another category of commercial ports. You have put it very clearly.
I wish to ask you about a couple specific situations. You used the term "transhipment". Is Statia Terminals still in your region?
Mr. Gillis: Yes.
Senator Bryden: It is my understanding that 300-dead-weight-tonne tankers call in there from Holland and Norway.
Mr. Gillis: Actually, they come from the North Sea and the Persian Gulf and are loaded onto smaller feeding tankers that go into New Jersey, New York and Baltimore. The economics of transportation and transhipment make that very viable. That is similar to the concept that we would look at for transhipment of coal from the Far East, blending it with local coals to get a certain BTU content, and moving it into the eastern seaboard.
Senator Bryden: So you would not be competing with Halifax or Montreal.
Mr. Gillis: No.
Senator Bryden: You are competing with another system of getting that material into the eastern U.S.
Mr. Gillis: That is right. Of the harbour dues, which amounted to $600,000 in 1997, Statia Terminals contributed approximately $400,000. Bulk commodities on the international market, such as oil petroleum products, are owned by a distributor-wholesaler, and it is that distributor-wholesaler who pays the harbour dues. The pricing of that commodity into the New York, New Jersey or Baltimore market is fixed for a long term. Therefore, when we deproclaim harbour dues, the windfall goes to the owner-distributor. The customer at the other end will still pay the same price. The port loses the harbour dues and therefore Canada loses the harbour dues.
That is different from mining gypsum or iron ore. The mining company pays the harbour dues and they should get a break because they are exporting out of the country. Like anything else, harbour dues should be defined properly because there are certain advantages that can be attained with no cost to anyone. Those prices are fixed, but there are others on which harbour dues should be eliminated to give local mining operations a competitive advantage.
Senator Bryden: At Port Hawkesbury there is also an aggregate company.
Mr. Gillis: Yes, Martin Marietta Materials Limited. They moved 1.8 million tonnes of aggregate stone, and this year and the past year they brought in 200 tonnes to 300 tonnes of cobalt to service their power plant.
Senator Bryden: Are they within the purview of the Strait of Canso superport?
Mr. Gillis: Yes.
Senator Bryden: You have probably seen the studies we have on the impact of major marine initiatives on various commodity groups.
Mr. Gillis: Yes.
Senator Bryden: The case studies done were of the aggregate company and the company that is transhipping. Both companies indicated that with the proposed new marine fees those businesses would no longer be viable. Are you aware of that?
Mr. Gillis: At the original rate proposed by the Coast Guard for marine service fees, the viability of both companies would be in question. I believe the rate is now 9.9 cents per tonne going through. Originally, the rate was in the order of 17 cents to 18 cents per tonne. As aggregate is a high-volume, low-price bulk commodity, any rate increase on a per tonne basis is extremely negative to the viability of the operation. That is a very sensitive cargo.
The same is true with regard to cargoes that you do not own but are transhipping. Your entire economics becomes the economics of transportation costs.
When dealing with a world commodity, when you get to a certain price point for ships to come in, the ships will look for other alternatives, which they may or may not be able to find. It becomes a balance of volume versus price with super ships.
Both of those points, at the time of the marine service fees, were quite an issue of concern for the community.
Senator Bryden: As far as you know, the two companies can manage the new fee structure?
Mr. Gillis: Yes, they can.
Senator Bryden: Is there a long-term arrangement on those fee structures?
Mr. Gillis: Not to the best of my knowledge. The fee structures at this time are for navigational aids. The ice breaking issue has not been dealt with properly in Canada. The Strait of Canso is an ice-free port and we hope it will be considered such in this process; if so, it therefore will not incur any additional fees for ice breaking services, and that would give the port another competitive advantage.
Senator Bryden: The officials from the Department of Transport indicated that a significant number of letters of intent had already been entered into with small ports for negotiations and so on. You indicated that initially you entered into a letter of intent.
Mr. Gillis: We still have a letter of intent. We are still negotiating with Transport Canada, although it is frustrating.
Senator Bryden: I believe you said that initially you thought it would be a public-private operation.
Mr. Gillis: When we started the process with Transport Canada, I thought it would be much more of a partnering approach. We shared information and it was very congenial. However, it started to get more adversarial when we tried to get definitions of minimum standards, for example. We were thinking in terms of commercial standards. We did our homework based on the information we had.
We thought the south berth would have to be replaced and that, with the concrete crib construction that Transport Canada uses, it would cost $15 million. I was basically told that they were required to protect it to minimum standards, that armour stoning the entire south berth would protect the back-up land from falling into the harbour, and thatthat would be all they were required to do.
Senator Bryden: That essentially shuts that down.
Mr. Gillis: It basically shuts that down. We were counting on the Mulgrave Marine Terminal to generate enough revenue to cover off the Port Hawkesbury pier which, although it generates some revenue, is not conducive to cargo. It is in the centre of the downtown waterfront development and is used as a breakwater for the marina and a few other things. If it is not maintained and is therrefore lost, the entire area is in jeopardy.
Each port must be looked at on a case-by-case basis. You cannot group all ports in the regional-local category. There are other ports in that category that are very strategic for Canada and the local area and should be given special status and special consideration.
Senator Spivak: You said that this port is strategically located on established international coastal shipping lanes of the North Atlantic.
Your diagram shows the number of miles to Rotterdam and to Gibraltar. This port basically ships out gypsum, coal, chemicals and wood pulp.
You mention European markets, but what about South America? This port is not strategic to the Far East. You are talking about a special status as a result of a competitive advantage. I do not know much about ports, but we do have a port in Manitoba; it is called Churchill.
In terms of exported product, where is the railway access? Senator Buchanan was telling me that, on this map, the Cape Breton & Central Nova Scotia Railway does not exist any more.
Mr. Gillis: The railway goes into the Port Hawkesbury side. It is not operated by CN, but by a shortline operator. When I say strategic, this is the deepest, continental-based port in eastern North America.
Senator Spivak: I understand that.
Mr. Gillis: This port is ice-free and dredge-free. Depending on the vessel's point of departure, our port is one of the closest to Europe.
Senator Spivak: What about South America?
Mr. Gillis: It is probably one of the closest ports to certain places in South America. The curvature of the earth and the departure port must be considered. This port is very strategic for the Eastern Seaboard of the U.S., as well as for the Gulf of St. Lawrence and the St. Lawrence River upward, for trans-shipment.
If we project to the year 2015, we can visualize a super-container vessel coming into the Strait of Canso with about 9,000 TEU, and feeding two or three 3,000-TEU vessels going up to Montreal. That is not out of the question; it is a possibility now.
Senator Spivak: Shipments of grain will now go north and south. Apparently, the markets in South America are expanding markets for grain. The rail goes down there.
Is there any rail linkage to this port which would make it economically competitive? Is there a rail line from the west to accommodate that growth, or is that a possibility for the future?
You are talking about a strategic port, and saying that it will be a major port in the future. Apart from the eastern products, such as coal, gypsum, and wood pulp, what are the other prospects, and how will the port be competitive?
Mr. Gillis: I dusted off a number of old studies. One study looked at unit trains -- trains of a mile or two in length, and filled with one commodity -- moving through a major grain trans-shipment terminal in the Strait of Canso. That study also looked at vessels coming from the Great Lakes and moving down to the Strait of Canso.
Senator Spivak: Does that connect?
Mr. Gillis: Yes. You can come straight through the Gulf of St. Lawrence through the canal at the Strait of Canso. Grain could be placed into a huge grain terminal there and, when sufficient volumes are reached, shipped cost effectively by super-tanker to South America .
Senator Spivak: Is that better than the St. Lawrence route?
Mr. Gillis: Yes. It is returning to economies of scale. The smaller boats from the St. Lawrence, along with the unit trains, can feed into a massive cargo which will be moved out by very large vessels. These elements can be examined strategically.
Over the last few years, grain has been moved down the Gulf Coast of the U.S. by barge and rail. Even then, it is moving out in smaller vessels.
From continent to continent, the best way is to run as Purolator does. Very big planes go from point "A" to point "B"; then smaller planes go to points "C", "D" and "E." In shipping trends -- ship sizes, shipping alliances, and the organization of shipping in the world -- it seems more companies are moving to that type of process. Smaller boats feed into the major ports, and the big ships move from port "A" to port "B."
Senator Spivak: Is there not a plan to widen access into the St. Lawrence, thus allowing entry to bigger ships?
Mr. Gillis: That could probably be done. Some dredging could be done, but, with the size of the vessels that we are describing, the movement and logistics would be very difficult.
The Chairman: Thank you, Mr. Gillis.
Our next witnesses are ready to proceed.
Ms Marie Ann Bowden, Associate Dean of Law, University of Saskatchewan: Thank you for this opportunity. I teach environmental law, and I am on the board of directors of the Saskatchewan Environmental Society. Mr. Gertler and I are members of the Steering Committee of the Environmental Assessment Caucus of the Canadian Environmental Network, which represents approximately 1,300 environmental groups across this country.
As members of the CEN, we enjoy membership on the Regulatory Advisory Committee to the Minister of the Environment, or RAC. We report directly to the Minister of the Environment on matters relating to the Canadian Environmental Assessment Act.
The caucus feeds into RAC because it is concerned by, and has been concerned by, the history of environmental assessment in this country, with the adoption, implementation and application of what is now the Canadian Environmental Assessment Act.
We are committed to this statute, and to its implementation. It is an instrument of public policy, good decision-making, good planning and, ultimately, if you will remember the phrase, sustainable development.
The RAC came into being in 1992 with the passage of the Canadian Environmental Assessment Act. There was a three-year gap between the passage of that legislation and its actual proclamation. The gap was required because the act would not work without four regulations that were required to be put in place in order to proclaim the legislation. What RAC did that was unique was to get together a group of stakeholders, who had an interest in environmental assessment, to try to come to some consensus or agreement on the content of those regulations and the priority in which they would be implemented. What you have then is a meeting, or a large table at which members of industry, such as the Canadian Association of Petroleum Producers, the Canadian Mining Association and the pulp and paper associations, along with environment organizations, non-government organizations, aboriginal groups, provincial governments and federal departments are represented around the table. RAC, indeed, hashes out the content of regulations and sets priorities and policies regarding environmental assessment in this country. It plays an important role.
It was as RAC members that Mr. Gertler and I learned about the changes to the Canada Marine Act which would impact on environmental assessment in this country. Indeed, as we state in our brief, we feel that the amendments within the Canada Marine Act affecting CEAA will seriously affect the credibility and the viability of environmental assessment in this country. What we are here to do today is alert you to these amendments within the legislation and to give you some idea of what the impact is. We really believe that these impacts have heretofore been unknown by the members of both the other place and the Senate.
Essentially, Bill C-9 proposes to treat ports in such a manner as to remove the Navigable Waters Protection Act trigger to the Canadian Environmental Assessment Act. In other words, in essence, that will affect negatively the protection of the waters, waterways and shore lines of Canada. The NWPA, which is the trigger as we call it, is most likely the most important trigger in environmental assessment vis-à-vis ports. You should only consider its inclusion within the Marine Act after all information has been brought to your attention, and that is what we will try to do.
We recognize that it is very unusual to bring such a request for an amendment to legislation before the Senate. However, it is important that you know the circumstances that surround our request. The Canada Marine Act changes regarding the application of the NWPA were included in the earlier bill that was introduced in the other place and received first and second reading. It is our understanding, however, that the implications were not brought to the attention of the Minister of the Environment; nor were the full implications regarding environmental assessment known to the Minister of Transport. It appears that the minister was only apprised of these impacts after the second reading. Perhaps the initiative for these amendments originated with the ports and the harbour commissions themselves. That is the only conclusion we can draw.
I will give you some background. I apologize for slipping into professorial mode, but let me continue. In 1972, a cabinet directive established what was known as EARP, the Environmental Assessment Review Process. It was supported by the Government of Canada and Canadians for its objectives. The notion was that the environmental impacts of a proposal or a project were to be considered early in the planning process. This was a planning tool. The notion was that just as one considers the fiscal implications or the financial viability of a project, so, too, the environmental viability should be looked at prior to irrevocable decision-making.
If a project is found to have environmental impacts that, arguably, should be mitigable, then, if they are mitigable, that should be done early in the planning stage to avoid down-the-road expenses. Indeed, it has been found that environmental assessment is cost-effective for that reason alone.
According to the Canadian Environmental Assessment Act, an environmental assessment is "an effective means of integrating environmental factors into planning and decision-making processes in a manner that promotes sustainable development."
If the negative impacts cannot be mitigated and are considered to be significant, then the acceptability of the project must be judged on that basis and in full public view. That is fair. Having said that, only certain projects are looked at under this act. Of course, certain individuals will always make the argument that you must assess the painting of a flagpole in front of a Canada post office, for example. Of course you don't do that; that is just one of the great myths fostered by certain anti-environmental-assessment individuals.
Under the legislation a project is defined as either a physical work or a physical undertaking, and, within the materials that we have provided for you, you will see a definition of those. Once we have a physical work or an undertaking, it will only be assessed provided that one of four criteria is met. First, if the proponent is a federal authority, which is usually a federal department or agency -- in other words, say Public Works is to build a bridge -- then the CEAA kicks in or is triggered. If a federal authority authorizes a payment, a loan guarantee or financial assistance for a project, again, that is self-explanatory, and the CEAA kicks in. If the project is on federal lands that will be disposed of -- leased, sold or whatever -- in order to pursue the project, then again the CEAA kicks in.
Here is the important one for our purposes: If the federal authority issues a permit, or a license, or an approval that is necessary for the project to proceed, and that permit, license or approval is on what is known as the law list, one of those four regulations initially drafted in 1992, then CEAA is triggered. It is only in those circumstances that environmental assessment is necessary.
Once there is a trigger, what is known as a "screening" takes place. The proponent of the project, through a federal department or other federal authority, whoever it may be, looks at the project to determine what the environmental impacts are. Again, they may propose a mitigation plan. In so doing, if, in the planning stages, negative environmental impacts can be eliminated, that is done and the project then proceeds to get the approval and then proceeds to seek other approvals necessary under other legislation.
There are other projects which by their very nature are likely to cause significant impacts. Nuclear power plants leap to mind. Those are on what is called a comprehensive study list and, as the term implies, a more comprehensive review of those is necessary initially.
After screening, if it is found that this project is still likely to have significant impacts, it is possible that a panel or a mediation will be called for. The vast majority of projects simply are screened and mitigation measures are employed to take care of the negative environmental impacts.
In order to give you an example relating to the marine world, there has been a recent screening triggered by the Navigable Waters Protection Act through the Coast Guard, and ultimately through the Department of Fisheries, to deal with the movement or relocation of a float plane operation in Burrard Inlet. The screening was done and the resultant mitigation conditions were very simple. Kelp beds in the cove area where the float plane relocation was to occur were to be buoyed out so that during construction and relocation process these beds would not be interfered with. There was also a requirement that any waste be put in the holding tanks and be properly disposed of, rather than deposited in the water. Three or four other conditions of that magnitude were attached to the approval, but the screening went through in a very short period of time and the project continued.
We have some statistics for you on page 6. Since the coming into force of the act in January 1995, there have been 13,500-plus, almost 13,600, triggers and screenings. Of those, there have been only 24 comprehensive studies and, of all of those, there have only been seven full panel reviews, including public hearings. The concern that everything will require panel hearings, that this will take years to complete, that it will slow down a project, is in fact a myth.
Both government and private proponents who receive moneys, receive the lands, or themselves trigger by seeking a permit, have found that environmental assessment is cost-efficient.
Negative impacts have been eliminated right up front. We have abatement before the fact, rather than after-the-fact strategies which attempt to clean up what is sometimes an irreversible environmental mess.
I would like to finish by reminding you that environmental assessment is not anti-development. I am from Summerside, P.E.I., and I would like to go home this summer. I could not do so if I were indeed against development.
An attempt has been made, it would seem, to create an unjustified special status for a particular sector of the economy. This status is not enjoyed by either the public or private proponents, and we would like to bring that to your attention before it goes too much further.
Mr. Franklin Gertler, Centre Québécois du droit de l'environnement (CQDE): I realize that a tag-team effort is unusual and, although the subject matter is highly technical, I will try to be as brief as possible. Our proposal to you will be that clauses 47, 73, and 101 of Bill C-9 be dropped or withdrawn.
We have provided you with an excerpt from Chapter 37 of the Statutes of Canada from 1992, which is the Canadian Environmental Assessment Act. I should note that there have been some small amendments since that time, but I do not think that they touch these provisions. We have also given you the full text of the Law List Regulations, which are the regulations made in late 1994 which were among those that made it possible for the legislation to come into effect. We have given you the pertinent provisions of the Navigable Waters Protection Act. We have also provided you with statistics which are up to date to the end of February, and reflect which departments have been involved in environmental assessment since 1995, and what level or degree of environmental assessment they have had to perform.
We hope those will be helpful.
We urge the removal of these clauses because, as they stand, they would allow the Navigable Waters Protection Act to be non-applicable to the ports and other entities created under this legislation. This would cripple the application of the Environmental Assessment Act in the very sensitive environments in which these entities operate.
We are not talking about the small areas. The Port of Vancouver, for example, is not just what you see downtown or in English Bay. It stretches tens or even hundreds of kilometres up and down the coast. This is a large area containing the sensitive environments of the Fraser delta and so forth.
I should like to say a word about CEAA and the ports, about the history of the CEAA, and about the social contract which underlay the legislation. Under CEAA, Crown corporations and harbour commissions are excluded from the definition of "federal authority," and pursuant to clause 164 of the bill, the definition of "federal authority" would not include port authorities and certain other entities contemplated there.
In addition, although public assets support the ports -- that is they use public resources and their capital originally comes from the public purse or public property -- they do not receive appropriations from Parliament for the carrying out of their projects on a yearly basis. Although they are situated on public lands, in the carrying out of their projects, generally speaking, those lands are not transferred to any other party. In any case, under clause 164 of this bill, their lands are to be excluded from the definition of federal lands within CEAA.
In those circumstances, and because of sections 8 and 9 of CEAA, as amended by this legislation, the projects of the ports will escape three of the four triggers from environmental assessment. That leaves only the regulatory approval triggers under subsection 5(1)(d) of CEAA and the Law List Regulations. When we do the detail work, we find that the ports in most cases really only go after two kinds of authorizations. One is under the Fisheries Act, section 35, for the alteration of fish habitat, and that need not concern us further because that is not an issue under this legislation. The other is approval under the Navigable Waters Protection Act for works in, across, or through navigable waters.
Under CEAA, there have been 371 screenings for Navigable Waters Protection Act approvals. Of course, all of those do not involve ports, but it provides some idea of the magnitude of the number of screenings. In only three cases have comprehensive studies involving more in depth initial assessments been required, but even then hearings have not been required. There have been no panels with public hearings for those projects. That gives you an idea of what is or is not the impact of the obligation to carry out environmental assessment in the ports context.
In most cases, what would be required is a paper exercise of reviewing existing information to try to minimize the environmental effects of a project which, in almost all cases, will go ahead.
I would like to turn to the adoption and coming into force of CEAA. We know that CEAA was born out of political compromise. It came out of the controversy surrounding the Rafferty-Alameda and Oldman River dam projects. In the end, environmentalists supported the passage of the new legislation and its proclamation only on the understanding that the new legislation would be broadly applicable to ensure continued federal role in the protection of the environment.
In 1992, I came before a committee of the Senate at the express request of the government of the day. There was a last-minute push on by provincial and industrial interests to have that legislation amended or stopped here in the Senate. The understanding was that this would be good, strong legislation, part of that understanding being that the Navigable Waters Protection Act and Fisheries Act triggers in the legislation and in the regulations would be there to ensure broad application. Environmentalists came before a committee of the Senate and urged the Senate not to accede to the request to put a stop to the legislation.
That was the compromise; that was the political deal, if you like.
The triggers under the two acts I have just mentioned, the Fisheries Act and the Navigable Waters Protection Act, are essential because they apply to projects throughout Canada which impact sensitive and important marine and fresh water environments. Furthermore, they apply equally and fairly to all public and private sector actors, and bind the federal and provincial Crown and Crown entities. In short, they apply to all kinds of projects in Canada.
That brings me to the proposed Canada Marine Act and its effect on CEAA specifically.
Despite the declared objective in clause 4(d) of the bill, it is our opinion that, without the small but important amendments we propose, this legislation will constitute an unfortunate and unacceptable step backward. We know that the provincial environmental assessment planning and zoning legislation does not apply to the ports. In this regard, that is the clear understanding of the legislator, and the implication of clause 48 of the bill before you.
Furthermore, the environmental measures promised through volunteerism and eventual regulations under the Canada Marine Act will not and cannot afford the public protections offered by the CEAA. Environmental assessment requires broad consideration of all of the environmental implications of the project, including the cumulative effects and effect on species and ecosystems beyond the immediate site of the project.
Even if promised new regulations are passed that are functionally equivalent to the NWPA, which is not assured, they will be self-applied by the entities in question. No approval from any federal authority will be required, and there will be no new Law List trigger to replace section 5 of the NWPA. This will produce a startling result -- that is, all federal, provincial, municipal and private sector project proponents in Canada, except Canada port authorities, public ports and the seaway, and any third parties undertaking projects on the federal property that those entities control, will be required to obtain NWPA approvals, and may thereby be subject to federal environmental assessment under the CEAA. This is an aspect you should not ignore, because I think that is a direction the ports are moving in -- free trade zones and having multifaceted industrial and commercial trading operations on their port lands. With the exception of those entities, everyone will be required to obtain NWPA approvals, and will thereby be subject to assessment under the CEAA.
I will put a provocative example to you. Hydro-Québec must obtain approval for its works under the NWPA and trigger the CEAA, but that would not be the case for the Port of Vancouver. The Port of Vancouver would become a self-regulating enclave, immune from important federal regulation and not subject to any legally enforceable public process or environmental assessment.
In this context, I have taken note of the assurances given to this committee by Mr. Bowie on April 2. I am afraid that the witness, although trying to be helpful, missed the point. The regulations contemplated under the bill will not be a substitute for the application of the CEAA through the NWPA. Furthermore, any eventual new regulations under the CEAA dealing with Marine Act entities, which are far from certain, would not ensure the same broad coverage as the NWPA triggered for the CEAA.
We ask that clauses 47, 73 and 101 be withdrawn. This is a public act of general and national application. No amount of appeal to words like "competition" and "commercialization" and claims of good corporate citizenship can hide the reality of what is proposed.
In our understanding, it is the wish of the Canadian people that the environment be protected for the long-term, and that only environmentally sustainable and defensible proposals and projects proceed. We certainly hope that the Government of Canada shares this concern. To make the fundamental change that would be brought about by these seemingly innocent provisions in Bill C-9 is, in our view, unconscionable. If this kind of change is proposed, it should be done in a straightforward manner by addressing the matter in the context of the Canadian Environmental Assessment Act. We propose the simple and effective solution of removing clauses 47, 73 and 101 from the bill.
Senator Rompkey: I am surprised that this bill got through without any reference to the environment. I thought there was a litmus test that all legislation and government policy had to pass. I thought some process had been in place for a number of years, whereby you could not do anything until it was cleared. It is like Mackenzie King saying, "Clear it with Jack." You had to check with Jack Pickersgill before anything happened. I thought the same thing applied with respect to policy as well. My first comment is one of surprise that a piece of legislation is before us without having gone through some sort of litmus test within the government process.
Are you telling us that the Port of Vancouver, if it has projects, will not be subject to environmental assessment, but the Port of Sept-Îles, if it has projects, will be?
Ms Bowden: Let me make two points. At an RAC subcommittee meeting regarding Crown corporations, we mentioned the NWPA trigger and asked if it applied, and the answer was, "So far." We asked what that meant, and the reply was, "The Marine Act." Nothing more was said.
We contacted the Canadian Environmental Assessment Agency the next day after looking up the Marine Act on the web, and the CEAA was unaware of these provisions. We brought it to their attention. It is a little confusing to me as to how exactly this happened. It will not apply to any port, be it the larger ports like Vancouver, the Canadian port authorities, or the seaway.
What you might hear is ports such as Vancouver trotting forward and saying, "But we have our own environmental assessment process, and it is a fine one. In fact, if is better than what you have at the federal level." Frankly, that is not the case. Some are and some are not. The process is very radical in terms of its rigour.
To give you an example of the general efficacy of these processes, when this came up at the RAC meeting, a representative from Transport Canada said that, while processes might be in place, their nature had not been disclosed to Transport Canada. When it comes to environmental assessment, public participation is a fundamental proposition, and we wondered how public participation could be possible when the process was not even shared with Transport Canada. The individual from Transport reiterated that his department did not know what the ports were doing in terms of environmental assessment.
This notion of a level playing field, or a better than level one, that you might hear from some of the larger ports, is patently untrue. It is not the case.
Senator Rompkey: There is a level playing field in the sense that everyone is treated equally under the law. No port in Canada is required by law to submit itself to an environmental review. They may have some of their own, but they are not required to submit themselves to a federal review. Is that what you are saying?
Ms Bowden: Right now they are because of the NWPA. If this goes through, the NWPA trigger is there.
Senator Rompkey: No port in Canada.
Ms Bowden: No, sir.
Senator Rompkey: But other projects will be required to submit to environmental review, and many of them involve ports.
Mr. Gertler: That is right.
To be fair, it is possible for the ports, even after this legislation passes, to trigger, by happenstance in some cases, a federal environmental assessment. Let us take the example of a port which, in the process of its operations, wants to engage in dumping toxic material into the ocean, such as in the case of Baie- Comeau or the Port of Halifax. There are a number of examples.
There was a wish to dredge and then dump out to sea that would require a permit under the Canadian Environmental Protection Act, what we used to call an ocean dumping permit. In that case, that would be a trigger for environmental assessment. That is perhaps not the most common case. The single most important trigger for the application of the Environmental Assessment Act to the operations and projects of or within the territory under the control of the ports would be gone. I do not wish to be unfair and say that it would never apply. It could apply, but it would be much less extensive in its application.
Ms Bowden: What you are doing is taking a discrete sector, the ports, and saying here is this law of general application across the country. For anyone who requires a permit, NWPA must at least look at the environmental implications in a public process.
If I want to build a resort as a private proponent, and, in order to do that, I want to construct something in a lake which will interfere with navigable waters, I must look at the environmental applications. Through the Canadian Environmental Assessment Act, we are saying that we will create a special case, and ports will no longer need to do this.
Senator Rompkey: Do you have two departments in conflict with each other? Do you have conflicting pieces of legislation?
Ms Bowden: We do not have departments in conflict with each other. My understanding of this is that Environment Canada knew nothing about it. While Transport Canada knew of the sections, it was not aware of the implications.
Senator Rompkey: Are there federal laws which are in conflict with what will happen here? Is there legislation relating to environmental protection and assessment?
Ms Bowden: Yes.
Mr. Gertler: Due to these small changes to the application of the Navigable Waters Protection Act, the Canadian Environmental Assessment Act will be crippled in its application to the ports.
Senator Rompkey: If this legislation is enacted, you will have two acts in conflict with each other, will you not?
Mr. Gertler: Perhaps the intention of Parliament will seem confused. In 1992, legislation is enacted, and in late 1994 the regulations are brought in to make it applicable. With the new millennium, environmental considerations will be at the centre of decision making. Within three or four years, a major chunk of the environment, one for which the federal government has special responsibility, will no longer be subject to the act. It creates an ironic situation.
Environmentalists have been accused of inciting the federal government to act as a policeman; to tell provinces and private sector people what and what not to do with their lands. That unfair characterization is not going to be changed. Certainly, the Canadian Environmental Assessment Act has not brought the economy to a grinding halt, the way that some people said it would. It is passing ironic that, without changing the general application of legislation, and with no environmental justification, we will take an important sector of federal responsibility and place it under a new regime. This occurs as a result of someone offshore trying to compete with us.
A study was done for the RAC by outside counsel, comparing the environmental regimes applicable to the ports of the Pacific Northwest with the regime that would be applicable to the Port of Vancouver. It was demonstrated that the U.S. ports in the Pacific Northwest, which presumably are some of the main competitors for Vancouver, were indeed obliged to subject themselves to both federal and state environmental assessments.
Senator Roberge: You mention new regulations; have you seen these regulations?
Mr. Gertler: No.
Senator Roberge: If your organization could sit with the federal transport department and go through those regulations, making those regulation conform to reality, would that be a solution?
Mr. Gertler: Let us take the case of the Canada port authorities, because it is really a parallel regime for the three parts of the legislation. Clause 47 reads:
The Navigable Waters Protection Act does not apply to a work, within the meaning of that Act, to which regulations made under section 62 of this Act apply.
The first thing I notice is that it can be any regulation. It does not say regulations which effectively protect the environment and are equivalent to environmental assessment under the Canadian Environmental Assessment Act. Any regulation under clause 62 will do the trick.
Clause 62 reads like a précis of the Navigable Waters Protection Act. Subsection 62(1)(e) reads that the Governor in Council may make regulations respecting:
the regulation or persons, vehicles or aircraft in a port.
That will hardly replace or address the concerns regarding environmental assessment or protection. It would, however, be sufficient to render the Navigable Waters Protection Act inapplicable and therefore put us in a situation where there is no trigger for environmental assessment.
I do not want to engagé dans un procès d'intention, but we have not seen the regulations. We have not seen any indication of the drafts. In any case, those regulations would be the kind that close the barn door after the horse escaped, and would not be the forward-looking preventive regime that is provided for under CEAA.
If you read through the way that power is drafted in clause 62 and the parallel powers in clauses 74 and 98, the regulations apply only to the fiscal emplacement or the property on which the port is situated. Environmental assessment, on the other hand, considers off-site matters, migratory species and pollution, as cumulative effects with other developments affecting the shore. If a spawning area for salmon were to be affected when work was carried out in the port, you would not just look at whether that particular spawning ground would be wiped out. Whether or not the salmon in the whole ecosystem were already under great stress, and whether we could afford to lose one more spawning ground would also be considered. That is the situation. Those are the regulations to which you are referring.
There was some discussion of possible regulations with respect to Crown corporations and harbour commissions, and their environmental assessment obligations under CEAA. Once again, however, we have not seen the regulations. We say that it would be unwise in the extreme to proceed with this legislation as it is now drafted, because we are basically walking off the end of a pier.
Senator Spivak: I was here in 1992 when this was dealt with at the Senate. I recall the experience vividly, because it was a monumental task to produce the legislation. At the time, the feeling was that the compromises had to be made, or the legislation would be in jeopardy. It was not believed to be the best legislation possible, however.
I am wondering about the reasons for this. Is it just an accidental occurrence that these things happen? Given the amount of pressure from provincial sources and from some industrial sources to weaken environmental legislation, is it possible that this has to do with the harmonization accord, and the feeling of the provinces that more environmental tasks should be within their jurisdiction?
There seems to have been a shift in public perception, and the environment is now viewed as a shared jurisdiction. At one time, it seemed clear that the environment was a federal responsibility. What is your view on the sharing of the environmental mandate?
If we do not succeed in having these amendments passed, what is the legal remedy in terms of the unequal application of this bill? Is it a Charter issue?
I do not underestimate the lobbies which want more and more things handed over to the provinces. The provinces have neither the money nor the enforcement capability. I suppose that they just want the power so that they can ignore it. That may be a harsh statement, but the facts do not correspond with the desire to have that power.
Ms Bowden: With respect to harmonization, I do not think that there is a relationship, because ports are strictly federal jurisdiction. They are a federal enclave. The provinces have no jurisdiction in terms of ports and the environment.
Let me tell you of something I recently learned. Unfortunately, I do not have all the details. There is currently a project involving the possibility of a causeway to the Toronto Island Airport. There is no municipal or provincial environmental assessment process which applies to that, because the Toronto harbour area is solely a federal responsibility. The only way that project will be reviewed, as I understand it, is if the NWPA is triggered, and CEAA then applies.
When dealing with these ports as little federal pockets with no provincial jurisdiction, federal environmental assessment under the CEAA is the sole means of examining those projects and their environmental acceptability.
Harmonization is not at play. NWPA is the big factor. If we are talking about two voices singing in harmony versus one voice, all of a sudden no one is singing, and the environment is left at the mercy of the individual port and its process.
As someone who wishes to look into this, I have to look at the process, if one exists, put in place by the individual port.
Senator Spivak: I understand.
Mr. Gertler: In response to the third question, my answer is that there is not much legal remedy. I suppose that, in the long run, this might lead to confrontation and litigation. There have been cases involving aboriginal peoples and ports. There are two things at play which might lead to litigation in a rather awkward and ineffective way. One would be attempts to enforce the public right to navigation, and non-interference with that right under the common law. Justice La Forest went into that at some length in the Oldman River dam case. He spoke of the NWPA as being simply a legislative expression of that right. It would be messy, however, and someone would have to try to get an injunction.
Similarly, if there is no proper assessment of projects in a marine or wetlands environment, and destruction of fish habit or polluting of their waters occurs, you might find yourself in a situation of private prosecutions, which are possible under sections 35 and 36 of the Fisheries Act. Again, these are not great remedies. It is trying to patch things up after the damage is already done, instead of using the hallmarks of environmental assessment -- foresight, good planning and public participation -- in those decisions.
Senator Bryden: You are on the steering committee of an organization called the Environmental Assessment Caucus of the Canadian Environmental Network. How many organizations or people make up that network?
Ms Laurie Ham, Environmental Planning and Assessment Caucus, Canadian Environmental Network: The Canadian Environmental Network represents approximately 1,300 environmental organizations across Canada. From that network come issue-based caucuses which are nation wide.
Senator Bryden: I can understand that two departments did not talk to each another, which happens all the time, and that something like this could get into the bill. I do not, however, see how this got past your organization for four years. You are raising it at this late stage for us to try to fix. I would assume that someone in these 1,300 organizations monitors federal and provincial legislation.
Mr. Gertler: I am the one who has been around for four years. I certainly would not want to blame this on Ms Ham.
You must understand that we have a very small staff, and we are all volunteers. People tend to specialize; all 1,300 groups are not watching out for environmental assessment issues.
We learned of this in November of 1996 at a subcommittee meeting which dealt with the environmental assessment regulations to be applied to Crown corporations. I can offer no explanation for why we did not learn of it earlier. I can only say that this is a situation in which the Senate can do its job and ensure that the legislation of Canada is good legislation.
I do not, however, apologize for the fact that the Canadian Environmental Assessment Agency, the sole job of which, employing a staff of 100, is to oversee the development and implementation of environmental assessment in Canada, was unaware of this.
At that meeting in 1996, I personally brought it to the attention the agency staffer who was present. I subsequently brought it to the attention of the director of regulatory affairs and the vice-president of the Canadian Environmental Assessment Agency, and they were thunderstruck.
Ms Bowden: It is interesting to look at the wording. All it says is that the NWPA does not apply if regulations are passed. It looks fairly innocuous. Looking at the legislation, you see nothing about environmental assessment or the section 5 trigger.
Senator Bryden: With all due respect, I used to draft this stuff. Everyone looks askance at anything that says to wait for the regulations, particularly when the environmental act will not apply.
If, for whatever reason, it is not possible to do what you ask at this stage, is a possible option to delay proclamation, until such time as the regulations that are being proposed are prepared and made public?
Ms Bowden: The problem in looking at the regulations is that they do not imply environmental assessment. That would be fine if we knew that those regulations would, in essence, bring the ports back into the CEAA. Quite frankly, if we have a multitude of different environmental assessment processes across the country, we are in trouble. We need the consistency that the CEAA provides for us. If it called for environmental protection including environmental assessment as provided for in the Canadian Environmental Assessment Act, and it would not be proclaimed until the regulations were in place, it would be fine.
Senator Bryden: At this stage, one of our problems is how many amendments we can make to the act. Other very significant amendments need to be considered. If these three sections were not proclaimed until such time as those regulations come forward, that might work for you. I know that it is not the same as putting it in the legislation. Sometimes, however, it is not possible to get a whole loaf.
Ms Bowden: Can we get half a loaf by adding words to clause 62(b) which would cause CEAA to at least refer to environmental assessment? Would it be easier to add to that rather than to delete the sections?
Senator Bryden: I am looking at options.
Mr. Gertler: Clever people can do clever things. I think that you put your finger on it when you said that regulations are not legislation, however. Promised regulations are certainly not legislation. Even if we saw them, they could be undone. That is part of the problem, frankly.
Rather than having clear and unequivocal application of CEAA, the legislation itself was made dependent on the regulations. That makes it easily susceptible to this kind of "side-wind" arrangement. Rather than saying that there will be federal environmental assessment for all projects in ports, we have said that there will be federal environmental assessment for all projects in ports that require approval under regulation, if that regulation is one of those listed in the regulations. We got too fancy, and now we are in a situation where there are too many ways to pull out parts and make the whole machine break down.
Senator Spivak: This has happened many times before. Many amendments were brought in under the previous government. Frankly, it seems to me that it is easier to add an amendment when you already have other amendments, than to put forward an amendment which the government has to then consider. That is difficult to do.
Regulations are not legislation. They are subject to change. In other words, another cabinet could come in and change those regulations. Why are we looking for zebras when we should be looking for horses? What is the point? Why look for an esoteric solution?
Senator Bryden: Legislation is also changeable. I realize that orders in council change regulations, and so on.
Senator Spivak: It is not as changeable as regulations, and it is a public process.
Senator Forrestall: Senator Bryden is trying to suggest to you that, given the broad range of amendments that this committee might like to make with respect to this bill, your suggestion might be difficult.
We have a device that comes up every fall -- we produce an omnibus bill in order to correct these very clear anomalies. It seems to me that this is a perfectly acceptable way to stand these sections so that they will not have application. In the absence of application, there are other pertinent laws, and you are more aware of them than I am. Perhaps a year from this fall, or even this fall, we can deal with proper amendments, as opposed to regulations. That is what we are saying. It is a way of, firstly, recognizing the deficiency, and, secondly and more importantly, trying to find the way to most efficiently correct it. That may very well be the way.
It bothers me to learn that at least one group has access to the regulations, and has started to look at them. Other organizations, groups, and interested ports have not seen the regulations, and have virtually no idea what the regulations will be. Do you have any idea why that may be?
Mr. Gertler: To go to your last point first, I am not sure that we are understanding each other. With respect to the use of the provisions of this bill which relate to NWPA regimes for the ports, the regulatory advisory committee has not seen any draft of any regulations.
Two things have been debated and are quite related. There has been some meagre information given regarding in-house environmental management tools, which range from audits and site assessments to something resembling an environmental assessment. In March 1998, we have the beginning of some discussion of regulations respecting the application of the CEAA to ports and Crown corporations. That is a discussion which would properly take place before the regulatory advisory committee. Those are the kinds of regulations we have just started to discuss.
I do not know whether clause 205 -- I am looking at the coming into force clause -- gives you any power. With respect to everything except Part 3, it looks more like a gun to your head. The way it reads now, it is an all-or-nothing proposition. I certainly would not wish to encourage you to pass it now in the hopes that it will not be proclaimed, and could then be amended later in the fall. I am not willing to speculate about that.
It might be appropriate for this committee to hear from the Minister of Transport once again, in order to get further explanation. Perhaps you should also hear from the Canadian Environmental Assessment Agency or the Minister of the Environment. After that, perhaps we could discuss matters with committee counsel or with researchers, or come back if further clarification is required. We are in an awkward position, as we are the opposition here.
We did not like the Canadian Environmental Assessment Act from the beginning, because it was relatively weak legislation. We certainly think that it is dangerous to have any semblance of moral authority to urge provinces and private industry to be concerned about the environment. We think it is folly to create a position where a sector for which the federal government has entire responsibility is given an environmental assessment holiday. We cannot then demand that projects outside of Canada be subject to the CEAA. If entities entirely within federal jurisdiction, fundamental to our economy, and responsible for important parts of our ecosystem, are let out of the CEAA, how are we to require aboriginal people on their lands, provincial utilities, or private enterprise to be subject to it?
We have been talking a great deal about legalities and so forth, but let us strip that away. What is the environmental justification for saying that there will be no environmental assessment? Given the understanding of sustainable development in the integration of environmental and economic concerns, what is the justification for giving a whole sector a holiday? Is this bill trying to say that we cannot afford environmental protection, or environmental assessment, because we must be competitive? Frankly, when you strip away the technicalities, it is a shocking proposition.
Senator Forrestall: That is very nice. I always need a lecture in the middle of the day. If I or one of my colleagues puts a motion to delete those sections on the table, and we lose the vote, a very large door will be closed. The minister can come in and say, well sure, it came up, it is a question, we will take a look at it, and if it needs correcting we will correct it in the next omnibus bill or at the next opportunity. We do not wish to do that if we can avoid it.
In my view, we would all agree to try to find a way to remove the difficulty that you see, even if it is only temporary. I would trust you to watch it like a hawk, and to make sure that we do not forget that we have it hanging out there.
Ms Bowden: I would suggest that you give us a little time to come back to you with a response. We can forward that to the committee.
The Chairman: You can forward that to us, and we will distribute it to the members.
Ms Bowden: If it is all or nothing, and your fear is we will end up with nothing, obviously we will try to fix this in such a way that the end is achieved.
Senator Forrestall: If we lose it here, we can move it on the floor of the Senate and lose it there. An advisor to the minister would suggest that it is not that bad, and would ask to get on with it.
If you would send us your response, we would appreciate it very much.
Ms Bowden: Perhaps we could give you a list of alternatives or explain several alternatives to you.
The Chairman: That will be for consideration by the members.
Senators, we must adopt a legislative budget before we leave. Does anyone wish to move the adoption of that budget?
Senator Bryden: I so move, Madam Chairman.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: Carried.
We also have before us the budget on the subcommittee on communication. You all have the numbers in front of you.
Do I have a mover?
Senator Forrestall: I so move, Madam Chairman.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: It is carried.
The committee adjourned.