Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 23 - Evidence
OTTAWA, Thursday, May 17, 2012
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:06 a.m. to examine the subject matter of those elements contained in Part 3 of Bill C-38, An Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012, and other measures.
Senator W. David Angus (Chair) in the chair.
[English]
The Chair: Good morning, everyone. This is a meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. I would like to extend a warm welcome to our three witnesses, to colleagues on the committee and to our viewers on the CPAC network and the Worldwide Web.
We have a good friend of ours joining us by video conference. Brenda Kenny is President and Chief Executive Officer of the Canadian Energy Pipeline Association.
I wonder, Brenda, can you hear us?
Brenda Kenny, President and Chief Executive Officer, Canadian Energy Pipeline Association: Yes, I can. Can you hear me?
The Chair: Yes, we can. I was just checking in.
We are continuing what we characterize as a pre-study of Bill C-38, which is the present budget implementation legislation, a tiny document of a mere 427 pages. We are dealing with Part 3 thereof, which involves a process that the government hopes to implement to speed up and streamline the process for assessing environmental and other factors in the case of resource development projects.
This is our second hearing on the subject, and we hope to give some advance sober second thought to this piece of legislation. My name is David Angus. I am the chair of the committee, and I am a senator from Montreal, Quebec. To our immediate right are our folks from the Library of Parliament, Sam Banks and Marc LeBlanc. To Marc's right, from Newfoundland and Labrador, we have Senator George Baker. Then we have Senator Robert Peterson, from Saskatchewan, and a visiting senator to this committee and a very learned gentleman, Senator Jim Munson, from New Brunswick, I believe, though he also has domiciles in other parts of this great country. Welcome, Senator Munson.
Senator Munson: I represent Ontario, but my heart is in New Brunswick.
The Chair: To my immediate left is our able clerk, Ms. Lynn Gordon. Then we have, from Montreal Quebec, Senator Judith Seidman; from Manitoba, Senator Janis Johnson; from the Yukon, Senator Daniel Lang; from Quebec, Senator Dennis Dawson; from Saint John, New Brunswick, Senator John Wallace; and, last but not least, from Alberta, Senator Bert Brown.
We have four witnesses with us today. Are you in Calgary or in Edmonton today, Ms. Kenny?
Ms. Kenny: I am in Calgary this morning.
The Chair: Well, it must be early there. Thank you very much for joining us at what even sometimes seems like an ungodly hour here in Ottawa. We understand that you will be going first, but before I ask you to proceed with your opening statement, I want to say that Ms. Kenny is a very good friend of this committee. She has appeared before us four times during my tenure as chair with her expertise in the energy field.
From the Prospectors and Developers Association, we have Mr. Ross Gallinger, Executive Director. Good morning and welcome, Mr. Gallinger.
From the Mining Association of Canada — and thank you for your advance brief, which we all received — we have Mr. Pierre Gratton, President and Chief Executive Officer; and Ms. Justyna Laurie-Lean, Vice-President, Environment and Health.
Without further ado, everyone will make their presentations, and then we will go to questions. Ms. Kenny, please proceed.
Ms. Kenny: Thank you very much. I have somewhat informal remarks today that I hope will set the stage for your deliberations. I applaud the Senate committee for commencing preliminary discussions on these important issues and recognize you will have a critical role should this legislation pass the House of Commons. As a bit of a scene setter, the pipeline sector is very pleased with the advancements being considered in this bill. With broad strokes, I would like to provide some comments on the content overall.
First, a key thrust here is the consolidation of decision making. I want to point out that this is not a new idea. In fact, this has been advanced over many years through several different governments. The cabinet directive of one-project-one-review was put in place a number of years ago, and the idea that integrated decision-making is a core part of sustainable development has been advanced since Rio over 20 years ago. Several other governments around the world have moved in the direction of ensuring that environmental assessment is clear and focused on what matters most to decision-makers and ideally is integrated in decision making that will matter to the nation. At its heart, that is what we see in these proposed changes.
For our sake on the pipeline issues, of course, this is particularly important because if most of the transmission pipelines — of which there are a number of major systems serving Canada's energy needs as well as our export needs, spanning over 100,000 kilometres — are going to cross a boundary provincially or nationally, they will be regulated by the National Energy Board. I would point out that this institution has existed for over 50 years, driven by the statute of the National Energy Board Act. It has served Canada extremely well. Out of that act, we have a body called the National Energy Board that is comprised of learned experts whose job it is to ensure the regulation of pipeline assets throughout their entire life cycle. We have an important opportunity through consolidation to build a body of knowledge that can be applied during the very important project assessment stage.
The second key point is time certainty. This has been well acknowledged through a number of other hearings and conversations to be important for both planning for the nation and attracting investment. Clearly, if one is asked by the government to put in major developments, be that critical infrastructure or investments that will create jobs and generate prosperity for the nation, one needs to know whether that $10 billion might be required should the project be approved in about two years or ten years. Over the last number of years we have seen a breakdown in any degree of certainty on that, which has created a great deal of difficulty in planning for projects and attracting investment. Certainly, we have seen in practice that where there is discipline in the process, there is no reason that 15 months or 24 months is not ample time, even for a major project, to run through issues of concern to assess the evidence and to make sure all of the key factors have been addressed.
I would also like to point out that a number of the features of the bill focus on simplifying matters greatly and on common sense. Often we lose sight of that, and I recognize that many people will say, "Common to whom?" Clearly, one of the major features of moving away from the Canadian Environmental Assessment Act triggers based on whether the federal government has some kind of decision rooted in whether the consideration could have an environmental significance is critical. This allows the Government of Canada and key stakeholders to focus on what matters.
For example, navigable waters: The crossing of a waterway is of course for a pipeline a significant consideration, but if you are going to look at critical infrastructure along 1,000 kilometres in our geography in Canada, one can clearly see quickly that that will entail a hundred or more crossings of waterways. To expect that even after a certification of the highest order in terms of public interest one might actually halt a project because an underwater crossing could affect, on one given day, someone in a canoe is a little extreme, to say the least. I think we have resolved a lot of these things. By consolidating, certainly we are able to gather evidence and look at the affected issues in the concept of an overall project and an overall public interest. In that way, we can ensure that issues are well mitigated and conditions are put forward that will maximize the opportunities for Canada to get the best possible result.
Focusing in these hearings on directly affected parties and on people that have relevant information and expertise is equally important. It is the job of any good regulator to gather the most critical and most important issues at hand, assess them openly, and allow for cross-examination and deep exploration of those critical matters. The evidence that matters is of those parties directly affected and information brought forward that is going to make the most difference to the considerations. Clearly, Crown consultation is a critical component of these, and we look forward to increasing clarity on that front. We are strong supporters of appropriate Crown consultation.
One final comment I would like to make is that we see in this bill, specific to the National Energy Board Act, new tools for enforcement, which we are very open to, welcome and embrace. It is important in any modern regulatory regime to have a variety of tools at hand. There are some good ideas here, such as the ability to create fines, which the NEB has not had historically; enforcement ladders; and options for tools of enforcement, which I can speak to in more detail if you would like to explore that in questioning. We welcome these, even though we recognize as an industry that may well mean that some of our members might be the targets of those new enforcement rules, but ultimately, it is about supporting tools for behaviour change. The only thing I would leave the panel with to consider is that fines should not be looked at as a tool for punitive behavior but as a suite of tools to embrace, support and advance the best possible performance overall.
In conclusion, we are very pleased to see the consolidation of finally reaching the milestone of one-project-one-review. Many other countries have crossed this already, and Canada will find this very helpful. The time certainty of fair, clear and effective processes is key. Focusing on what matters in a simple, clear, transparent manner is welcome, indeed.
Those are my remarks. Thank you for allowing me to appear today.
The Chair: Thank you, Ms. Kenny. We will proceed with Mr. Gallinger.
Ross Gallinger, Executive Director, Prospectors and Developers Association of Canada: Good morning Mr. Chair and committee members. My name is Ross Gallinger, and I am the Executive Director of the Prospectors and Developers Association of Canada. I thank you for the invitation to appear before this committee and to offer comments on Bill C-38 and responsible resource development.
Our association, with more than 10,000 members, both individual and corporate, exists to protect and promote mineral exploration and development and to ensure a robust mining industry in Canada. We work closely with other organizations such as the Mining Association of Canada and the Canadian Chamber of Commerce, as well as with the Assembly of First Nations, with which we have a memorandum of understanding.
PDAC maintains that mineral exploration, mine development and mining operations can be conducted in keeping with the principles of sustainable development and in harmony with environmental, social and economic priorities of Canadians.
Our association has created a framework to help mineral exploration companies improve their corporate social responsibility practices: e3 Plus: A Framework for Responsible Exploration. The framework was developed with substantial input from industry experts, Aboriginal organizations, NGOs, academia, government and communities.
PDAC's member companies operate in remote areas of Canada, and are primarily small- and medium-sized enterprises that rely on equity financing to support early stage, higher risk exploration activities. Many of these operations are small scale, with perhaps half a dozen full-time employees and a number of seasonal staff who perform a variety of tasks in support of mineral exploration.
Across Canada, mineral exploration and mining is a lifeblood for small, rural communities. Throughout the economic turmoil of the past few years, these companies have continued to invest in Canadian projects, creating jobs and businesses that support the industry. Increasingly, these new businesses are Aboriginal owned and operated, leading to new opportunities throughout the country. Mineral exploration is the essential first step in the mining cycle and Canada has a number of formidable features that attract investment. We have good geology and good information available through public geoscience. We have a workforce with access to a number of training initiatives and we have a competitive tax system.
In 2011, exploration expenditures in Canada totalled $3.9 billion, a significant increase over the $2.7 billion that was invested here in 2010. In other words, there is great and growing potential.
In order to maintain this success, the PDAC and others have recommended the continuation of the Mineral Exploration Tax Credit. The METC and flow-through share financing continue to serve a critical role as they allow junior companies to raise needed capital, keep investment in Canada and sustain grassroots exploration activity in remote and northern regions where transportation and field camp costs are high. We are pleased to see the Mineral Exploration Tax Credit included in the March 29 federal budget. Bill C-38 would extend the METC for an additional year, to March 31, 2013.
In addition to raising capital, many other factors need to be considered in order for an exploration program to proceed and to be successful. A company needs professionally trained and experienced people, good community relations, geoscience data, access to land for exploration and clear, consistent regulations.
Our association is encouraged by the federal government's commitment to improve the regulatory environment. We share the goal of developing a system that provides predictable and timely reviews, reduces duplication, strengthens environmental protection and enhances Aboriginal consultation. The mineral exploration and development industry needs an efficient regulatory regime that encourages investment by providing certainty and predictability for resource development projects.
PDAC advocates for greater clarity around the Crown's consultation requirements, community engagement and project permitting, and we are encouraged that the responsible resource development plan includes measures to ensure that Aboriginal groups are more fully engaged in the environmental and regulatory process.
In conclusion, I would like to thank this committee for giving our association an opportunity to meet with you today. I look forward to answering your questions.
The Chair: Thank you very much, Mr. Gallinger. As a matter of interest, did you also appear before the House of Commons committee or one of the bodies there that is studying the bill?
Mr. Gallinger: Not yet.
The Chair: We will move next to Mr. Gratton, for the Mining Association of Canada.
Pierre Gratton, President and Chief Executive Officer, Mining Association of Canada: Thank you very much to this committee for offering us the opportunity to appear before you today.
The Mining Association of Canada represents the mineral producers and mineral processors in Canada. Our members are active in every province and territory in the country, with the exception of Prince Edward Island. Our members are committed to sustainable development through what has been recognized as a world-leading program called Towards Sustainable Mining, which is a condition of membership and includes public reporting and third party verification of performance across a range of environmental and social indicators.
As all of you are probably aware, our industry is enjoying a period of economic growth and new investment not seen in generations. This is taking place across the country. The general consensus is that while we remain a cyclical industry, we are expected to enjoy strong metal prices over many years to come.
Without wanting to get in between premiers and leaders of the opposition and the Prime Minister, I thought it would be important at least to point out a couple of things. The commodity boom we are seeing in this country is happening everywhere in this country and not just in Western Canada. I thought I would share a couple of points with you.
In Quebec, for example, it is estimated this year there will be a $4.4 billion in new mining investment, which is a 65 per cent increase over the previous year. In Newfoundland we have seen the value of mining and mineral processing increase fourfold since 2000. We have seen record exploration. We have gone from two to eight mines since 2005 and it is the province with the largest metal processing investment in the country right now. As I said to the St. John's Board of Trade a few weeks ago, there will be the opportunity, if there is not already the opportunity, for Newfoundlanders to leave Fort McMurray and go home to work.
The Chair: Now you need to tell us what is wrong with the stock market. Then everything will be fine.
Mr. Gratton: With that, I will turn to this bill. I make those comments because, given this commodity cycle, it is precisely this legislation that will enable the continued growth and the ability to attract this kind of investment to every region of the country.
I want to strike a note of caution. Our comments are based on a preliminary analysis of the legislation and of course further details and our views of this will depend on subsequent regulations and policies we have not yet seen.
As an industry that operates outside of urban Canada, we are pleased that Bill C-38 recognizes the importance of Aboriginal consultation. With respect to the Canadian Environmental Assessment Act, we do not expect it to have a dramatic, substantive effect on mining projects. As we told the House of Commons committee when it was reviewing this act last fall, the dramatic improvement in the process for mining projects actually took place in 2010, with the amendments made in that year, which cut out delays in starting federal assessments and allowed the process to start at the same time as provincial assessments.
The Chair: May I interrupt you there for a point of clarification? I think you meant, when you told the Commons committee, that that was when they were doing the review of CEAA.
Mr. Gratton: Yes.
The Chair: They were doing a parliamentary review.
Mr. Gratton: We have not appeared before the house on this current legislation.
The Chair: No, I understand that.
Mr. Gratton: However, we made the point that in 2010 the amendments passed at that time greatly enhanced the process for environmental assessment for comprehensive studies and most of our projects are comprehensive studies. Nevertheless, we see the 2012 amendments promising significant additional improvements in clarity and predictability, as well as the promise of reducing duplication of process.
As an association serving a diverse group of members, an important feature for us is that for the first time since CEAA was created we have an act that will be easy to explain. For engineers, this is an important value. The current CEAA cannot be explained simply. The complex interplay of definitions, triggers, exclusion and inclusion lists left most people confused.
CEAA 2012 includes features that we have been calling for, including one clear responsible authority, clear and predictable process with defined timelines, sufficient flexibility to make common sense decisions. The screening process and the safety net process should ensure that unforeseen circumstances or situations can be resolved. It provides the authority to initiate and to engage in regional studies. This was a specific recommendation we had made, and I think it has been overlooked by many as an important environmental improvement. CEAA 2012 also provides for substitution and equivalency where warranted and an obligation on federal authorities to provide timely information.
There are, of course, some features of CEAA 2012 that will require careful implementation such as enforceable decision statements. It will be important that the agency ensure that these are clear and feasible. I would emphasize that none of these changes will affect the substance and quality of the assessment process. In fact, in our view, they will enhance it.
I would like to flag just one disappointment. Given that projects where the CNSC will be the responsible authority include uranium mines and mills, the benefits of these positive regulatory reforms, in our view, should be available to uranium operations to the extent possible. A uranium mining and milling operation has more in common with a gold mine than with a nuclear reactor. As a result, we are seeing that the uranium and milling sector has been exempted from some of the most beneficial streamlining measures announced in new CEAA, including equivalency, substitution and screening out. Further, the timeline specified in the transitional provisions does not impact current comprehensive studies where the CNSC is the responsible authority, when the same is not the case for those led by the NEB. We have difficulty reconciling the differential treatment in this regard and we are hopeful that, through regulations, the CNSC will be able to bring the same kind of certainty, predictability and efficiency that we are seeing in the other parts that are affected by these reforms.
We are less advanced in our understanding of the changes to the Fisheries Act. The incorporation of means for better federal-provincial cooperation is valuable, as is the incorporation of a larger tool box for dealing with the act's absolute prohibitions such as the possibility of regulations for section 35. However, at this time we are not clear how the fisheries and the pollution prevention provisions of the act would work together in practice. Section 35 of the act, I would note, was amended significantly, but section 36, which also governs our industry, was not; therein lies some the confusion for us.
As some senators may recall from our visit in November of last year, we had concerns about lack of clarity and consistency and how these two sections of the act work together. In our view, they have become possibly murkier. We hope to work with officials to develop greater clarity through regulations and guidance with respect to the Fisheries Act amendments.
I will stop there and thank you, once again, for the ability to address you today.
The Chair: Thank you, Mr. Gratton, and all three of you. I have a fairly short list but the first senator is Senator Lang.
I introduced the other senators earlier, Senator Fraser. I want to welcome you here. I know you are replacing our Deputy Chair, Grant Mitchell, today; Senator Joan Fraser from Quebec.
Senator Fraser: Thank you.
Senator Lang: I would like to thank the witnesses for coming out early this morning, especially our witness from Calgary. It is much earlier there than here.
I have a number of questions. First, Mr. Gratton, in your opening comments you made the observation that the environmental process would be enhanced by the changes here as opposed to some public statements that are being made that because of the changes presented there will be less of an environmental scrutiny. Perhaps you can expand on that statement, because that area is obviously of concern to all of us, namely that we keep an environmental standard.
Mr. Gratton: I would be happy to answer that question. There are several parts to the answer.
First, I would go back to the amendments of 2010, what they did and what I believe these amendments build on because they are similar types of changes. Regarding the changes to the 2010 amendments with respect to comprehensive studies, the biggest single benefit to our sector in terms of improved timelines was that it put the Canadian Environmental Assessment Agency in charge of mining comprehensive studies.
I am always amazed at how many people assumed that the agency was in charge before and they were not. If you had a new project, the biggest single source of delay was starting it. You would often have situations where mining projects could be almost completed or they may have even completed their provincial environmental assessment before the federal government would begin. That was because companies would go from department to department to department trying to get one of them to say, "We will do your environmental assessment." There was a lot of buck passing because the system was not set up to have someone in charge and they were not provided with the resources to undertake these reviews. We estimated that the average delay was about 18 months. When the federal assessment is starting 18 months later, you cannot have harmonization with the provinces.
These same types of changes are simply being brought to the panel reviews, for example. There will now be much greater opportunity for alignment and much greater opportunity for coordination with the provinces and it is entirely about process.
Until last June, I was the president of the Mining Association of B.C. It was a bit of a joke, but we used to say that for the federal EA report, they used to take the provincial one, write an executive summary and put the Government of Canada logo on it, but take an additional three years to do it. If you look at how environmental assessments are conducted, you will have working groups at the provincial level consisting of both federal and provincial officials. You would then go and do the federal one and have a working group of federal and provincial officials. They would be the same ones. These changes are encouraging governments to work more closely together so there is one robust, consistent review. In our view it will not in any way compromise the depth or substance of the reviews, but it will allow for, ideally, one in the case of equivalency or substitution or, at minimum, better coordination if there are two reviews between provincial and federal governments.
In addition there are some other measures here. I mentioned the ability to undertake regional assessments. I will take the Ring of Fire as an example, but we had the same issue when the diamond mining industry was growing in the Northwest Territories. Here was a brand new industry in a part of the country that had not experienced mining before. There was a lot of concern. What will this mean? How much growth will there be? How can we manage all of this growth? What social impacts might this have?
The burden would fall on the mining company, the proponent, to try to answer all the questions that were well beyond their purview and, I would argue, responsibility to answer. Regional EAs would allow, in this legislation, when the province requested, them to go in early, independent of any particular project, and say how can we plan for future development in this region? I think environmental groups and industry have been calling for this type of measure for many years and it is in this legislation.
Ms. Kenny mentioned the enforcement provisions. That is brand new. You will see this at the provincial level. When you get your EA certificate in British Columbia, it comes with a whole list of conditions. The federal EA did not come with conditions. Now it will. Taken together, all these improvements speak to a more robust environmental review and greater protections for the environment than existed previously.
Senator Lang: I have a question for Ms. Kenny on pipelines and on the issue that has been in the news for the past years, namely, the Gateway project and the environmental review that is under way. The fact is that some 4200 interveners came forward. My understanding is that the legislation here will now require that you have to be an affected, interested party to be considered, although the hearing can go beyond that if they wish.
In view of the experience that we have seen in the last little while with the environmental process, do you think the changes here will streamline the process in a better way so that we do get the facts before the environmental hearing that we are looking for?
Ms. Kenny: With respect to the Gateway hearing itself, I understand from statements made by ministers in this government that will there be some sort of a transition plan. If this legislation is passed, consideration of any existing process will ask the question of how we might take advantage of some of these provisions and make the objectives of good, clear environmental assessment better.
In general practice, one of the things that I have observed over 25 years of practise in regulation and in industry is that what matters most at the end of the day is evidence that you can test in a public hearing, publicly and transparently, and information that has a material impact on the decision at hand. Whether you are a regulator or an industry, some of your early stage planning, for instance, as a proponent will involve active engagement of stakeholders on the ground to learn what is on their minds, how your plans can address those issues, and you will roll that information into your application as well.
I think what is important in making the distinction between opinions and "directly affected" are that any number of polls will give you public perspectives, and those are important and useful, but what matters when you have to make a decision is who is affected, what their views are on it, what their understanding is of the impacts directly on their communities, or traditional use in the case of critically important Crown consultation, and how you internalize those as the decision-maker to be able to report to cabinet on your decisions and recommended conditions.
By being clearer about "directly affected," I think it enables a panel to have some means to do a better job of constraining their attention to those things that will actually have a material impact.
Second, of course there is a time and effort, and therefore money, cost to government to participate in processes that are perhaps overburdened with opinion, albeit valid in individual rights but not particularly helpful in the decision making. Let us focus on what matters and these provisions, I think, will help a panel do just that.
Senator Munson: Thank you very much for being here this morning. I appreciate your input into this whole assessment in environmental assessments. The word around here that the government is using is "streamlining."
We have heard explanations this morning of simplifying matters, common sense, time sensitive and so on. Those are valid arguments that you are making. What would you say to environmental groups who believe that these environmental assessments — there is another word they use — are being "gutted," that there will not be that very stringent oversight into all these programs when it comes to mining, Gateway pipeline, et cetera? There are folks out there in the environmental world who absolutely do not like what they are seeing in this massive bill. If you walk through many of the — I do not know how many — different categories, the word "simplify" may be one thing but could it be to the detriment of the environment?
Mr. Gratton: Again, I do not think so, or I disagree with that. When the Canadian Environmental Assessment Act was first passed in 1992, very few provinces had environmental assessment legislation. Now pretty well all of them do. We now live in a country where we have two environmental assessments being undertaken for major projects like mining. That did not used to be the case.
I think that what has happened here is the federal government has taken a step back and said, okay, it has been 20 years, have the circumstances changed?
To Brenda Kenny's comments earlier, this type of thinking began under the previous government as well and we started to see, through cabinet directives and through the amendments in 2003, changes that were pointing us in the direction of where we are today.
I think the substitution and equivalency provisions are subject to provinces having legislation and systems that are equivalent to the federal government's, so it is not a given that that will happen. In a sense it provides very strong incentive to those jurisdictions at the provincial level, whose legislation may not be at the same level as Ottawa's, to improve their own legislation and systems. I think if they want to assume control of their resources, which many provinces do, and they do not want the federal government as involved as much as it currently is, here is an incentive to allow them to do just that by improving the quality of their legislation.
We are all Canadians and I think the people of Manitoba can hold their own governments to account to ensure that environmental assessments in Manitoba are sufficiently robust and that reviews will not be compromised, but ultimately there will be a review for every major mining project in this country. It may just be one review, it may be two, it will depend, but there will be one review, and I do not think the quality or breadth of that review will change in any way as a result of these amendments.
Senator Munson: Would anyone else care to comment?
The Chair: You mean among the witnesses?
Senator Munson: Yes.
The Chair: I was going to comment that you must be gratified in this non-partisan Senate to note that the present government agrees with the previous government so wholeheartedly.
Ms. Kenny: I would like to make a comment. I would echo some of the comments made by Mr. Gratton, but the well-studied consideration of what has transpired in this bill is the culmination of over a decade of analysis, and many other countries in the world, such as Australia, have already moved in a very similar direction. There has been thorough analysis of what the options look like.
I think, when you look at the core of this, it is a bill that should be comfortable to a variety of partners. The Smart Regulation panel that the Liberals held had many of the same principles that are now echoed in this legislation. I think it is patently false to refer to this as being gutted in any way. A consolidated, sensible, evidence-oriented approach is a good thing to do. Our current legislation had a huge amount of overburden causing a lot of assessments that had government agencies looking at things that were of no consequence whatsoever.
I have shared with the Senate in the past, during earlier hearings on previous bills, photographs of a dry field that occasionally might have had a creek running in it and it was deemed to be a navigable waterway. I do not think that changing the provisions of CEAA to focus on the projects that actually have a material impact in any way guts the legislation.
As far as significant oversight, let us be clear: The latitude of individual regulators to ask questions about issues of concern to them has not changed. The latitude for transparency has, in many regards, improved. I think also the full life-cycle monitoring is important to recognize. EA is an early planning tool. It is not a panacea for environmental protection.
What is important is, where a project is evaluated and deemed to be acceptable to proceed for the public interest, do you have the right connections to ongoing monitoring to follow up? Do you have that placed in an agency that has the wherewithal and the capacity and knowledge to learn from past projects and bring that forward into their next public hearing and evaluation?
Frankly, the proposed legislation does a better job on all those counts which, ultimately, I believe, will result in improved environmental performance in Canada.
Senator Munson: All of you also mentioned the Aboriginal groups and consulting. Obviously Aboriginal groups have a major stake. How do you define "consulting"? Who has the final say if Aboriginal groups, for example, do not like this Gateway pipeline and they have witnesses and hearings and so on, and at the end of the day the government wants the pipeline built, as well as mining companies?
What does "consultation" mean to you with Aboriginal groups? How far do you take that consultative process with their concerns?
The Chair: You bring them to the Supreme Court.
Mr. Gallinger: I will take a view on that. From our perspective, in terms of the guidance we have given to members and the way things work, what we have seen on the ground is early engagement, and I see two sort of distinct paths around consultation with First Nations and leading to the end.
A company needs to do consultation early. It is in the guidance that we have in e3 Plus, and I know Mr. Gratton will talk about it in terms of the tools they have in the Mining Association of Canada, but there is also the duty of the Crown in terms of consultation as well.
A company needs to start early with not only indigenous, First Nations, Metis groups but also local communities because opposition can cause problems later on in terms of environmental assessment processes and approvals and permits. Companies get in early to do that kind of consultation. The second part is also part of the approvals process in terms of involvement in consultation and requirements by the regulatory agencies to do that.
It is a two-pronged process, but at the end of the day there is a process for input into that aspect, and in terms of the approvals process under environmental impact assessments, it is stated in terms of who actually makes the final decision, but all that input has to come together to the agency in order at the end of the day to determine what is in the best interest.
Ms. Kenny: As with other industry segments, the pipeline industry focuses on this very heavily. We do have guidance to members, but in addition, any given proponent will, of course, be very well versed themselves in the duty to consult, which is borne out of, in the first instance, a desire to thoroughly understand any concerns that exist in communities that will be touched by that proposed infrastructure; know exactly where the concerns are, what are the interests and how can we work together through those interests. Secondly, of course, is the legal requirement for Crown consultation, which is embedded in our Constitution, and that is important, through the course of a conversation that can go on for many years.
A major pipeline project does not start with the filing of an application. They typically start two, three, four, five years in advance of that with a lot of on-the-ground consultation. One wants to know what the issues truly are and genuinely are, and I think consultation requires the interests of both parties to be honest, clear and open with the interests at hand and work to accommodate those in the best way possible.
Mr. Gratton: The enhanced resources to undertake consultation that is being provided through this will be really important, and hopefully this will also lead to better coordination between provincial and federal governments on consultation. If there is an issue that everyone has had, including Aboriginal organizations, it is the idea of being over-consulted in the sense that Aboriginal communities will be requested to meet with proponents, provincial governments and federal governments on the same project.
In British Columbia, there has been a move to consolidate the various ministries around consultation because not only was the provincial government consulting on projects but each department would consult on different bits of the project, and that was even more confusing because you would be looking at possible effects from a transportation perspective, and you would be consulted on that aspect, but then environment would come in and talk about water quality. There was no ability to see the project as a whole.
I am hopeful that here we are seeing more consolidation and cooperation between both levels of governments with respect to their duty to consult. I think Mr. Gallinger answered the question with respect to our obligations. It is simply good business to get in early and build those relationships from the get-go.
Senator Seidman: Ms. Kenny, you referred to some of the positive aspects of these changes in the proposed legislation, the certain timelines. There is no question we have heard a lot about this from other members of the industry in terms of making any kind of investments one needs some kind of degree of certainty, and two to ten years for review, or even longer, is clearly problematic.
You also referred to simplification by getting rid of duplication of reviews. We heard from officials last week, and I think Mr. Gratton referred to it again today, that provincial review and regulations would have to be the same as federal review process and regulations in order for that to qualify.
You talked about, and I would like to hear more about it, the benefits of dealing with navigable waters. Could you please explain to us in more detail what this proposed legislation means in that regard.
Ms. Kenny: In simple terms, my understanding of this proposed legislation is, if through the course of an integrated review where all factors are looked at by one agency, in general terms, any pipeline project crossing a provincial or national boundary would be the National Energy Board. Through the course of analyzing the data, of listening to parties, of consulting with other federal authorities, including Transport Canada, if it is deemed that this project would be in the national interest, the NEB puts forward various conditions around that and very clear views of the board. The NEB will typically release a very fulsome analysis of what they have heard, including the views of the board, et cetera, so the conditions are there. Any particular concerns in any given crossing with respect to navigable waters would be addressed through the course of that hearing.
At such time it is deemed to be in the national interest and has received a certificate from the Government of Canada, common sense would tell you that a further permit to analyze whether or not a particular river crossing should be permitted is, to say the least, redundant and, at the worst, somewhat obstructive to the public interest. It is a bit silly to imagine that you have gone through a two-year hearing and further deliberation of the facts to realize that the nation needs a thousand-kilometre pipeline and then say, actually, the local canoe club does not want it to go across this river. It does not make sense. It is a very practical outcome, and frankly, it saves a lot of time for Transport Canada officials.
Why would officials reanalyze to grant a permit on something like that as opposed to, in the early planning, say to the public hearing and the NEB, "We need you to be aware of these sorts of features because navigation is critical to the country," and build that into your thinking.
Senator Seidman: It does not change the transparency in any way, as far as this is concerned?
Ms. Kenny: I think, frankly, it improves the transparency because in the past we have had a plethora of individual permits that were often after the fact. A normal Canadian does not have the time or interest of chasing each and every detail, but to have those major considerations rolled into a proper transparent public hearing and an appropriate evaluation is good.
Let us be clear. If a project is to proceed, regulation does not stop there. There is very active oversight throughout the design, construction and operation; and again, part of this bill includes an extra $14 million for the NEB to do more inspections and more audits. As an industry, we applaud that. Regulatory capacity is critical to see this through, but it comes down to focus on what matters, focus on the results and do not think that a plethora of segregated permits makes you safer or makes the environment better. It frankly does not. Consolidated, integrated, good regulation is the way to go.
Senator Seidman: You are saying it increases transparency because of the reduction and simplification of the whole process.
Ms. Kenny: I believe so, absolutely. I am coming at this as a past regulator, an academic. I did my doctorate in these sorts of thing and am now working at industry. I believe from any lens, this lends itself to more transparency because the issues at hand are on the public docket. Key people who are informed and affected will be able to ask lots of questions on that. On an ongoing level, of course, the NEB is trying its best to be as transparent as possible, and I think that will continue to improve over time. The infusion of additional monies, as I said, $14 million toward further inspections and audits, in our view is a good thing. For our part as an industry, I want to say the quid pro quo is we also need to pick up our game in transparency, too. People ask us important questions, and we are working hard on them. We have internal management systems, 16 different working groups addressing operating standards that roll out across the industry and a lot of substance to back this up that is very important.
Senator Seidman: Thank you. I appreciate that.
Mr. Gratton, it was interesting that you said for the first time since CEAA was created we will have an act that we will be able to explain. Again, we are talking about transparency here. That is really good. However, then I get to the end of your statement to us where you said that you do not really understand the changes in the Fisheries Act. In fact, you think that the issue appears to be made murkier by the amendments. Might you explain that in a little greater detail?
Mr. Gratton: To be honest, I do not think the Fisheries Act changes were done with mining in mind, and therein lies the issue for us. We are governed both by section 35 and section 36, and section 36 is the part that deals with the deposition of a deleterious substance into water frequented by fish. It is what someone called the pollution side of the equation. We are in a situation, notwithstanding the fact that it might be made easier through section 35 to either avoid the need for a section 35 authorization for a small wet spot that does not meet the new threshold that has been established in the legislation. We will still be subject to the limitations under section 36 about depositing anything in that area. Whether it is tailings or where we put our waste rock in dealing with runoff and waste rock or other types of activities that might involve impacting water on the mine site footprint itself, we are still governed by section 36. We do not really see much in the way of making it easier or in any way improving the complexity that we face with respect to the intersection of those two parts of the Fisheries Act. We would argue that that same idea of a threshold should apply in section 36, but it is not there, so we are left with two very different parts of the act saying different things to us. We are working with officials to try to get some clarity around that, to see what it will mean and whether we might be able to better understand the intersection of those two.
In the past, for example, and when I say "past," I mean a number of years ago, if we were putting in a mine and there was an area that had water in it and maybe some fish, and I am not talking about a large water body, but Canada is a very wet country so it is hard to go anywhere without affecting some water, but if there was a small pond and we needed to drain that and maybe fill it up in order to put the mill in place, we would get a section 35 authorization. In recent years, Fisheries and Oceans has been more and more reluctant to do that, and we have been falling under section 36 of the Fisheries Act, which limits our ability to affect water at all. I cannot explain it as clearly as I would like because we do not understand it as clearly as we would like at this point in time. Maybe Ms. Laurie-Lean can add to that.
Justyna Laurie-Lean, Vice-President, Environment and Health, Mining Association of Canada: In the past, it was our understanding and we believe officials' understanding that the two parts of the act were dealing with the same water body, so something either was fish habitat and water frequented by fish or it was not. We sometimes disagreed in what circumstances it should be and how they should be applied, and we found that in practice it was very complicated to figure out how to navigate the permitting process. It would end up being one department made the decision and punted it to the other one, which made a decision, which punted it back, and, as you can imagine, that sometimes caused confusion. One of our advocacies over the last year was to have greater clarity and certainty. This change divorces the two parts of the act, and now a puddle, for example, will now not be a fish habitat and not subject to one, but it is still subject to the prohibitions in the other. Now that you have further divorced the two parts of the act, how will that work in practice when we are operating or proposing a project? We are hoping, through regulations and policy statements and guidelines, that that can be resolved.
Senator Seidman: Thank you. That makes it a little clearer for me.
The Chair: Just on that last point, you say you are having ongoing discussions with the officials with a view to hopefully resolving this kind of anomaly, it seems. If the provisions were introduced without regard to mining, they were focused on fishing. Is there something we can do if we do a report on this pre-study?
Mr. Gratton: It would be helpful if you were to flag this inconsistency and this confusion for us. As I said at the very beginning, we do not think they developed these with mining in mind, because if you are a sector of the economy that is not governed by section 36, this is a non-issue and this new approach will make life a lot easier. However, this affects mining, and I guess forestry is also governed. Their effluent is regulated by the federal government through the Pulp and Paper Effluent Regulations. For a few sectors, the confusion exists. If you could send the message, "You need to work on this," that would be welcome. We would appreciate that. We would be able to quote you. The Senate is urging that you do this.
The Chair: You can count on the good old Senate every now and again.
Senator Baker: The chair himself is a well-known jurist in Canada, with a considerable reputation. Perhaps we could give our opinion on the intent as far as we understand it. I listened to the officials on this and thought that I understood that the changes made to section 35 in the definitions of "commercial," "recreational" and "Aboriginal," the three definitions, which had, in its particularization, that it means licensed fish would apply. It would apply as a definition section to section 36. That was my understanding. It was the intent as given to this committee at the very beginning, but I can see now what the problem is. These are considered to be, in the past two separate sections, one not determinative of the other, as far as the intent is concerned.
Mr. Chair, perhaps we could say or get the department to give their interpretation on the record, because, as you well know, that would go a long way in the interpretation of the statute down the road.
The Chair: Senator Baker, that is a very good point. This flows from your questioning of the officials last Thursday morning, a week ago today. I think it bears considering calling back the particular representative from DFO to help us in that regard. Is that what you had in mind?
Senator Baker: Yes. I think there were three witnesses who gave testimony, and it was our understanding that that was the intent of the change. Mr. Chair, thank you.
First, I would like to welcome Mr. Gallinger, who is very well known throughout Canada with prospectors and developers and junior mining companies. His organization is very much appreciated in each one of the provinces, especially in the province of Newfoundland and Labrador, where there are no provincial associations established as yet. However, as I understand it, they are hoping to become established.
Mr. Gallinger, you praised the federal government on this budget, and your praise concerned the extension of the tax credit. You said that this was a crucial move by the government. However, my institutional memory goes back many years, and has that one-year extension not been part of our history over the years? It was extended for a year last year, I believe, and extended for a year the year before that and the year before that and the year before that and the year before that. Would you recommend that the government make this a permanent feature?
Mr. Gallinger: Absolutely. We advocate on a yearly basis to not only just extend it for the next year but to make it more permanent. These days, with economic uncertainty and the current status of the junior sector, the raising of capital for exploration across Canada is starting to become an issue, which makes the Mineral Exploration Tax Credit even more important for Canadians being able to raise money for exploration. We will continue to advocate for the METC to be a much more permanent feature within the suite of financing options for our junior sector.
Senator Baker: You kept repeating the e3 Plus: A Framework for Responsible Exploration. Before I move on to the mining association, could you explain that?
Mr. Gallinger: e3 Plus is a framework for responsible exploration.
Senator Baker: What does that mean?
Mr. Gallinger: It is a set of eight principles that provide guidance to junior exploration companies on the exploration side on things such as engagement with communities, health and safety for both workers and for communities: community development, environmental protection, risk due diligence aspects, and a number of other things.
There is a set of guidelines. It is a voluntary guidance tool, but it is accessible by anyone. There are eight principles with guidance and then a series of tool kits. If you want to understand how to lay out a drilling operation in the bush, there is guidance within the tool kits to be able to pull out a management plan as to how to do that without impacting the environment.
This is available not only to PDAC members; it is available to the public in general. We are finding it being used around the world to help in that guidance. There are over 1,500 pages of information, tools and guidance that people can access. It is accessible both to our members who want to do things correctly, in terms of guidance for best practice, but it is also available to the public to use, to say: Are these companies doing the right thing?
Senator Baker: Thank you. Keep up the good work, Mr. Gallinger.
Mr. Gratton, you mentioned you were very disappointed with the Government of Canada in its treatment of uranium mining as it relates to the classification of the mining of uranium. Could you explain that a bit? You likened it to gold mining, yet the Environmental Protection Act or the regulations in some way discriminate against you?
Mr. Gratton: I did not say "very disappointed;" I said "disappointed."
Senator Baker: You were disappointed.
The Chair: I was going to make same observation, sir. Well done.
Mr. Gratton: The thrust of all of this is very positive. If you are a uranium miner, you fall under the CNSC, which is also the authority that deals with nuclear reactors.
The Chair: My predecessor used to have a fine of $2 for the use of acronyms, but in your case this is okay.
Mr. Gratton: The Canadian Nuclear Safety Commission. As you would expect for nuclear reactors, it is very highly regulated. I think Canada has often talked about how we have the best, safest and most robust system for regulating nuclear facilities anywhere in the world. A uranium mine, on the other hand, does not have nearly the same kinds of risks and yet falls under the same processes that govern nuclear reactors.
We flag it because if you fall under the Canadian Environmental Assessment Act as a gold miner, you have in there the possibility of having substitution to provinces, moving towards equivalency. A lot of the other timelines that have been built in are all there, but they are not necessarily there under the CNSC, at least not currently.
I understand that the head of the CNSC, Mr. Binder, is fully committed — and has stated so many times — to bringing the same kinds of efficiencies to that side of the business, and I guess it would be through regulation, policy and just general administration. However, we do not see that yet, so we just flag it as an issue and a way of saying that we certainly hope to see those same kinds of benefits brought to a lower-risk activity that falls under the umbrella of the CNSC.
Senator Baker: The same thing applies to thorium or any other radioactive mineral, the same problem with uranium?
Mr. Gratton: I do not know.
Senator Baker: That is one of the rare minerals.
I have one final question, Mr. Gratton. In examining the provincial laws, no one disagrees with the fact that, in some cases, you are required in a mining development to satisfy provincial and federal regulations, you have the same demanding public hearings, and you have to do both with duplication. I do not think anyone in Canada agrees with that duplication that exists, and it comes from the province just copying federal legislation in some cases, Environmental Protection Acts and so on. Everyone can agree with that.
I have looked at the provincial acts as they have changed over the years, and they are becoming incredibly complex. The regulations seem to be ever changing as far as pollution is concerned and as far as studies are concerned.
Does that concern you, this proliferation of very complex regulations dealing with soil and groundwater?
Mr. Gratton: Maybe Ms. Laurie-Lean can talk about the work that has been under way on air quality, where there has been quite a bit of progress made between federal and provincial governments moving towards an airshed approach.
Ms. Laurie-Lean: There is quite a bit of federal-provincial cooperation, so we are hopeful that that will help in the future. This has been ongoing for several years under the Canadian Council of Ministers of the Environment, and it has been an initiative with environmental groups, industry groups, provinces and the federal government to design a joint system where each party plays to its strength while the federal government provides a backstop and overall standards. That is not yet in place, but it looks very hopeful.
However, in terms of comments on what is happening within provinces, we have to note that the Mining Association of Canada deals only with the federal level. There are provincial associations that deal with provincial governments, and it does vary quite a lot across the country. There is considerable variation in approaches, in the legislative structures and so on. It is very difficult to make general statements. The circumstances and the need vary quite a bit as well.
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Senator Dawson: I am going to begin, since the gentleman pointed out that you were an eminent lawyer from Quebec. I would like to quote a letter from the Quebec Bar addressed to Senator Day, as chair of the Finance Committee, and it concerns Bill C-38. I sent it over the Internet because you had not received it, even though you are an eminent member of the Quebec Bar.
The Bar considers that the deadlines imposed by the government for the examination of Bill C-38, in particular its provisions aimed at amending environmental legislation, are clearly insufficient to allow the stakeholders concerned to provide the necessary advice and to allow legislators, both yourselves and us, to discharge our mandate in an informed way.
I sent it to you because at the end of his letter, he concludes by asking Senator Day to authorize an appearance before the committee.
I am the chair of the Transport Committee. I contacted the bar to say that I would like to have its opinion on the provision in Bill C-38 that concerns transportation. I sent it to you. I think it is important to give you the opportunity to be heard.
The Chair: Through our clerk.
Senator Dawson: I am counting on you to send it to her.
The Chair: It has already been sent.
Senator Dawson: Mr. Gratton, I would like to go back to Senator Baker's questions concerning the provinces; in particular, I do not think that the Plan Nord is the Quebec government's priority this week, even if that has been the case over the past few months. In the case of the northern plan and the BAP, does this legislation simplify things, or should Quebec have been consulted more, as it claims, in order to ensure that our voice will be heard in the amendments?
Mr. Gratton: As my colleague mentioned, there is the Quebec Mining Association, which knows the BAP better than we do. I would say that the proposed legislation on environmental assessment will only allow Quebec, with its legislation, to be master in its own house, to govern better and perhaps, if its law sufficiently resembles the Canadian law, to be the government that will determine whether a project deserves to go forward or not.
In my opinion, Quebec may have the best environmental assessment legislation in Canada. And so, I think that there will most probably be an agreement between both governments to allow the BAP or Quebec to use substitution measures. In fact, there is one point which may be important. For approximately two years now Quebec, following a decision handed down by the Supreme Court, has been experiencing a situation where the federal government is more involved. In the past, in northern Quebec, only the BAP was present, but over the past two years, the federal level has been there instead of the BAP. And so, they may not have the same level of frustration as do other provincial jurisdictions, where the federal government has for a long time been involved in their affairs.
Senator Dawson: But do you not see anything in this law specifically that is a breach?
Mr. Gratton: No, because this does not affect the quality of the provincial legislation. It will allow the provinces to better manage their affairs with their own laws.
The Chair: Without interference?
Mr. Gratton: Without interference by the federal level.
Senator Dawson: Thank you. That is good news.
The Chair: Thank you very much, Senator Dawson. I think that we must point out the fact that for the purposes of our study on the energy sector, not for this particular exercise however, we have invited the Government of Quebec to come and explain their excellent environmental legislation and related studies. They have up till now refused to appear before a federal entity.
I am in contact with the ministers and the premier, and we have made a great deal of progress in order to obtain certain information on these topics. But for two or three weeks now, there have been some events in Quebec that have put a halt to this progress.
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Senator Peterson: Thank you for your presentation. I had hoped that there would be some government officials here because, although our witnesses are very capable and brought up some very good points, I do not think that they wrote the legislation. We will have to find some way of getting their issues back to the main bill somehow.
The Chair: Let me just say, because I think you raised a good point, that, as you know, we had some 21 officials at our inaugural hearings on Bill C-38 last week, as an introduction to the subject matter that we are studying. Next Friday, or May 29, we will be having three ministers — at least two but maybe three — and officials here about the subject matter concerned. That will be the time. It should be known that Senator Peterson has a special expertise in uranium, mining and matters chemical, so he knows whereof he speaks.
Senator Peterson: I am pleased to hear that we can then follow up as to how they will be dealt with.
Under the proposed legislation, neither the NEB nor CNSC nor CEAA will be the final arbiters on any issues that come forward. Take the NEB as an example. If they have a proposal in front of them, should they make a final decision on that, or should they just review everything, say "Here are the pros and the cons" and let cabinet make the final decision?
Ms. Kenny: Perhaps I can speak to that, given the NEB oversees pipelines. It is important to note that since the National Energy Board Act came into force over 50 years ago, its role has been to conduct major public hearings looking at all matters of public interest, to evaluate those, to present the views of the board and to make determinations, including conditions. That document has always gone to cabinet, essentially, for a GIC decision.
Where there was a project conclusion that, yes, the NEB recommended that it should proceed, it went to GIC for the certificate of public convenience and necessity. That aspect is largely unchanged.
In the past, if the NEB had determined that a project would not proceed — and there are several examples of that — it would end there. I think that the change that we see in this legislation allows for that decision of "no" to be endorsed by GIC. I cannot honestly imagine this occurring, but, from a viewpoint of national interest, I think it is reasonable and appropriate that the cabinet of the country would have the right to determine that, in light of all of the advice and evaluation of evidence, for some overarching national need, they could say yes, just as, in the past, they have always been able to say yes or no.
Senator Peterson: This will just provide more transparency? Maybe the public were not aware of these issues?
Ms. Kenny: I think that is fair to say. The public were, perhaps, never aware of the fact that it would go to GIC for the actual certificate of public convenience and necessity. That has been the case since this statute first came into play immediately following the pipeline debate and the controversy in the 1950s that led to this structure. Of course, you need evidence-based decision making, and that has been the whole construct for 50 years.
Senator Johnson: Ms. Kenny, will Bill C-38 be helpful in your operations to make our Canadian companies a preferred destination? We were just in Washington talking about the Keystone pipeline again, which they are very interested in. There has been a lot of pushback on the lines and on the things that were changed. Would this bill make a difference to what we are doing here and in your sector?
Ms. Kenny: It will be positive for our sector in that it will clarify the consolidation, will make the evaluation of evidence more transparent, and will create clear expectations in terms of timelines. Ultimately, the transparency and the evaluation of evidence are key. If by "preferred destination" you mean that a clearer regulatory process will make it easier to attract the billions of dollars that we need to attract investment, the answer is yes.
Let us put this into context. The EIA predicts that energy infrastructure around the world will require about $33 trillion in investment in the next 20 to 25 years. That is "trillion" with a "t." That will be necessary to meet energy needs around the world; and Canada is but one destination for that investment. Pipelines are vehicles for private investment but, ultimately, they are about critical infrastructure for national interests. That is why we had the pipeline debate in the 1950s. This cannot be understated. We have chosen as a nation to leverage the efficiency, best practice and pooling of capital that comes from private enterprise, such as the many major pipeline companies in Canada. The outcome of having pipelines is fundamentally one of national public interest. When you put those two together, this bill will allow us to ensure that we can secure the investment necessary to meet Canadian needs, whether Canadian use of energy or exports for trade, to have a clear and transparent evaluation of critical evidence so that Canadians can be involved if they are directly affected or have critical information that is useful, and to see transparently how the decisions were arrived at, be that a yes or a no.
Senator Johnson: Could you comment on how this will reflect in terms of our work with the United States and all the current pipeline issues there? We know the issue is pretty political and will be resolved, they say.
Ms. Kenny: It is highly political. The United States has some unusual legislation with respect to linear infrastructure. Gas pipelines are nationally regulated; oil pipelines are regulated state-by-state, except for the crossing of a perimeter boundary, which triggers a presidential permit through the State Department — the only insertion place that we have run up against; and that has created the national controversy over Keystone.
Canadian actions simply say to any observers around the world that we intend to deploy, in Canada, state-of-the-art regulatory tools so that we can manage our affairs in our nation for our national interests. If that gives our neighbours to the south or others grief or concern, we still intend to be clear as a nation on our interests and to have good regulations. I cannot imagine why that would give them concern.
With respect to international trade, I will close on this point. If you are going to move energy across landscapes, pipelines are the safest, most effective and most economically efficient way to do that. That is the same around the world. For Canada, trade is a huge component of our GDP. In Canada today, about 26 per cent of the TSX is wrapped up in that sort of opportunity; so one in four pensioners count on these choices for Canada. That is important. We want to do it right — environmentally responsibly — and this proposed legislation gives Canada positive progressive tools to do that well.
Senator Johnson: That is excellent. It was a wake-up call for the United States, as you probably know, in terms of Keystone when we decided to go to Asia to talk about those matters there.
Do you have anything further to add about this for our review? Your answers have been excellent and enlightening.
Ms. Kenny: I would add that the United States remains a strong trading partner for Canada, and I do not expect that will change. We are their number one provider of energy in both natural gas and oil outside of their national production. Perhaps some Americans have either not fully appreciated Canada's role in providing energy needs to be met, or considered the political certainty, transparency and proximity that Canada provides. Perhaps it has been taken for granted a little.
Even for Canadians, it is important to recognize that provisions in NAFTA have secured a good trading relationship in energy in Canada, but it does not guarantee that we will sell our energy to the United States. NAFTA simply says that if we are trading energy within Canada, we allow for similar terms if they so choose to buy energy from us; so we do not have preferential terms. That is really all it says. This is a wake-up call for folks who have perhaps been complacent about where energy security, transparency and political certainty can come from. Canada is a great trading partner for any nation around the world.
Senator Johnson: Thank you so much.
Senator Wallace: With the various changes proposed in Bill C-38, for each of us, as for you having gone through the same exercise, it is to appreciate the change from where we are today and where the bill would take us. Of course, you have assessed what impact it would have on your businesses.
You have somewhat touched on these two issues that I will raise. I would be interested in your comment on the environmental assessment provision that would change the requirement. The decision on project approval will depend on whether it could cause significant adverse environmental effects — significant adverse environmental effects. The words "significant adverse" are in addition to what is in the existing legislation. What comments might each of you make on that change, in particular as a practical matter and what it means to the regulatory approval process that you have been involved with in the past? What change would you see that making going forward? How significant is that? What does that mean to you?
Ms. Kenny: That is a great question. It is important to note that the issue of significant environmental affects has been embedded in the CEAA from the beginning. It is an objective of understanding that the low-level effects are important to understand and to mitigate; and that occasionally, there are significant effects for which one would say, "I am not sure that this project should proceed. Let us evaluate it thoroughly because the evidence might suggest that there is no way to fully mitigate that significant effect."
To my knowledge, never in Canada's history has there been a finding of significant environmental effect on a pipeline. However, it is very reasonable that you have a regulatory construct such as this that would say, should we bump into a significant effect, one should not count on a mid-level bureaucrat to make a choice for the country about whether or not that effect is either worth undertaking and risking or, conversely, just blindly saying no to it without taking into account the other effects. We sometimes get into a corner with any regulatory decision making that creates sort of a false impression that it is a binary decision of "if we just say no, all will be well." Sometimes saying yes to a project is actually less injurious to Canada's national interests than saying no.
Ms. Laurie-Lean: As Ms. Kenny said, the concept of significant adverse effects has always been there. The change that I see coming with Bill C-38 is that environmental effect, the significance and adversity of which are being tested, has been more clearly defined and narrowed. The problem in the past where disagreements and confusions have arisen is from this concept of cumulative.
Looking at what the environmental effects are of a particular project is fairly straightforward. It is when you get into the concept of the cumulative with things that have already happened or that will happen in the future, and that puts the proponent in a really awkward situation of attempting to establish the effects of all the other activities in the area or their competitor who is proposing a project across the river. That is where it gets really complicated and where under the current CEAA the boundaries around what is an environmental effect have been relatively fuzzy and open-ended. This has sometimes resulted in a kind of debate about what effects should be looked at and are they or are they not adverse and significant.
I think Bill C-38 promises to make it much clearer as to you are looking at the direct impacts of the project; these are the areas you are looking at, and that is where you have to test for the significant adverse cumulative effect. That should be a big improvement.
Senator Wallace: I take from your answer that it is not a matter of lowering the environmental level or lowering the bar, the standard that will be applied, but it is clarifying for applicants the standard that has to be met; is that correct?
Ms. Laurie-Lean: Basically, yes.
Senator Brown: We are giving assessments much faster and licences are much easier to get. In return for that, I would like to see if we are preparing boots on the ground, you might call it in an army context, but I would like to see more valves protecting pipelines so that if we do have a break somewhere we do not lose a few miles of oil before it is stopped. I think we need something more solid. Rather than just working with words, we should say we will actually put these things into place to make it safer than it is now.
I would like to also see regulations related to deep pit mining on the side of mountains. I would like to know what the future is supposed to be of the spillage from those mines when they are mined out. Are we trying to backfill them and put the overburden back where it belongs, or are we just creating miniature lakes on the side of a mountain? I have seen quite a few of those in the United States. I do not know if we have many of those in Canada, but I would sure hate to see mountainside destroyed and not reclaimed in some way, to put trees on it or something to make it back to where it was.
Those are some of my interests in return for lowering the 10 years of paperwork to get on with a job down to two or three years, to have some solid things that are able to leave the environment in better shape than it was when we started mining.
I would also correct something else. This last week we had some environmental people in here, and they were asked how many jobs they had done away with. They said that it was only 200 and they were all overlapping jobs. They did not need those 200. When they started to look at it, they had enough coverage that they did not need those 200. Someone said there were 1,750 jobs taken out, and that is simply not true. The environmental people themselves said it was only 200 jobs out of the whole Environment Canada workplace.
The Chair: Did you have any questions you would like to add into that testimony?
Senator Brown: No. Like I said, I would like to see something concrete when it comes to improvements in return for faster licences and assessments.
Mr. Gratton: In response to those comments, in Canada today, and it has been the case now for a couple of decades, you cannot build a mine without demonstrating that you have the wherewithal to close it and reclaim it, and provincial governments and the federal government north of 60 have bonding requirements where companies have to post financial assurance in advance of starting the operation. In the event that the company, for example, were to leave or to go bankrupt, the government would still have the capital in hand to clean up the site. That is the law of the land in Canada today. It is not how the business used to be years ago, but it is how it is today.
Ms. Kenny: Thank you for raising the question about valve spacing on pipelines. Clearly, as you pointed out, on a liquid pipeline, the space between the valves will indicate the overall volume that could spill should there be an incident. With the changes in the legislation, they support the actions that have been under way and continue to advance in ensuring that any given segment of pipeline is evaluated appropriately with an eye to the risks involved. The emergency response, the appropriate design, the ongoing monitoring, and certainly as a sector we are committed to evaluating our own operating practices and best practices in a very systematic, risk-based manner.
Improvements on the technologies and on the practices, valve spacing just being one of a plethora of safety components that go into protecting the environment, is ongoing and facing ongoing improvements to the overall performance. That needs to be noted.
Senator Brown: Thank you for those comments. My concern is the fact that we have a couple of pipelines like Gateway and Keystone that will be really big and very long pipelines, so if we are going to use the same kind of pipes that we have over the years, I am saying that we need to try to protect against breaks, because these will have really big pipes. If we can protect and ensure there will not be a humongous spill, I think it is worth the trouble.
Ms. Kenny: Yes, senator. I agree with you. In any of the designs and retrofits on existing systems, those factors are taken into account, such as valves on either side of sensitive waterways or wetlands or rivers, et cetera. Also, I think it is important for context to recognize that while these proposed pipelines are large, such as the Gateway pipeline, which was mentioned, or the proposed Kinder Morgan expansion, we already have existing in Canada across the country over 100,000 kilometres of pipeline that today will be moving over 2 million barrels every day, which is far greater than any incremental addition of a given pipeline, and these operate safely and very well. I would stand behind any of the spill responses. Tragically, there are occasionally incidents. One final note is what we observe on cleanup, should there be an incident, is that the recovery is extremely high, and the water quality is tested and followed up on. They do return to a very natural state very quickly. The design has to address those issues, and I completely agree.
Senator Lang: I would like to go back to Ms. Kenny with regard to the question of trade. You referred to it in your comments earlier in respect of the United States being our largest customer and, in some cases, our only customer. We just returned from Washington, a number of us around this table, and it has been very clear that the United States is well on its way to becoming self-sufficient in natural gas, to some degree, and also more oil is being discovered as well in the continental United States, so subsequently they will become more and more self-sufficient.
My concern is the question of the urgency of what we face as Canadians in respect to finding other buyers for our product in the very near future. We attended also a seminar that your colleagues put on in respect of the natural gas that is being discovered around the world as well. We have many competitors. It is not just Canada and Australia. You might want to comment in respect of the urgency that we as Canadians face for finding an additional buyer for our energy, because if we do not, the results will be we will sell less and there will be less government revenues and less jobs in Canada, if that were to occur.
The Chair: I give you great latitude, Senator Lang. I am having trouble bringing it under the umbrella of Bill C-38. It is good for our energy study. Did you have a way to tie it in?
Senator Lang: It ties in with the timelines for the environmental process. With these dates, decisions will be made.
Ms. Kenny: I will contain my comments to that context. Certainly, timeliness is important. Canada is but one player on a global stage. While we have huge resources, our incremental production is relatively small compared to overall quantities around the world. For example, every day around the world 90 million barrels of crude oil are used by people getting on with their lives, and we currently produce about 3. It is important to put that into context. We are entering a global market on oil and natural gas that needs to have certainty of timeliness, and we are competing with a large number of other countries. Some of the transactions are day by day, but on a global level many are long, long-term contracts from countries that want to secure long-term energy options. We are competing against Australia and Qatar and others to ensure that we can be in that queue. Timeliness matters to Canadian interests very much. That is not to say, with respect to this bill, that in any way, shape or form we should rush things and not look at evidence appropriately. The timelines proposed in here are ample for evaluating evidence of concern and are important to put a boundary around them so that we can be competitive as a nation.
Senator Munson: I have just one question. I am curious about this. Is there any type of project at all that will no longer require environmental assessments when these new regulations come into effect, or are there any current projects as an example?
Mr. Gratton: I am glad you asked that question, because I could have answered it. I forgot to make this point earlier when you were asking if we think this legislation strengthens environmental assessment. We think there will be some brown field in the mining world, brown field mines, which are mines that are being built on previously disturbed mine sites. Sometimes the best place to look for new ore is where the old ore was. Typically, brown field sites have not been reviewed under federal EA. We think now there will be a greater chance that they will be. There may be more mines subject to federal oversight in the future than in the past. That is probably not the answer you were expecting. As a result of the other changes in the act, it may well be substituted to the provincial government, et cetera, but those brown field sites may well end up being captured according to how the list is ultimately defined.
Senator Munson: You are saying that for every new mine, old mine, reconstructed mine, pipeline, there has to be, in every project in this country, an environmental assessment?
Mr. Gratton: I am only speaking for the mining sector. Based on what we think the list will look like, and again we do not know for certain, we think there may be more sites that fall under this than has been the case in the past because some brown field operations may be captured. We are not raising an objection to that because of the rest of the legislation and the efficiencies therein. Those same brown field sites are captured under provincial legislation, so they will do an environmental assessment one way or another. With this new legislation, it will be a more efficient process, so that is fine.
The Chair: If there are no further questions for the witnesses, I will thank Ms. Kenny, Mr. Gallinger, Mr. Gratton and Ms. Laurie-Lean. We have had a very good exposé from your points of view about how this legislation will have a positive effect on the industries you represent. You can rest assured that we will follow up on a couple of the points you made, in particular the anomaly on section 35 and the fisheries section. There were one or two others from the Barreau du Québec. I have now received the letter, and we will get to work on that.
(The committee adjourned.)