Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 31 - Evidence - November 6, 2012
OTTAWA, Tuesday, November 6, 2012
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:09 p.m. to examine the subject-matter of those elements contained in Divisions 4, 18, and 21 of Part 4 of Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Richard Neufeld. I represent the province of British Columbia in the Senate, and I am the chair of this committee.
I would like to welcome honourable senators, any members of the public with us in the room and viewers all across the country who are watching on television.
I will now introduce the senators who are members of the committee around the table today, beginning with the deputy chair, Senator Grant Mitchell from the province of Alberta; Senator Daniel Lang from Yukon; Senator Judith Seidman from Quebec; Senator Janis Johnson from Manitoba; Senator Paul Massicotte from Quebec; Senator Vern White from Ontario; and on my left is Senator Pierrette Ringuette from New Brunswick; Senator Nick Sibbeston from the Northwest Territories; and Senator Bert Brown from Alberta. We also have with us our clerk, the able Lynn Gordon, and also from the Library of Parliament with us Sam Banks and Marc Leblanc.
On October 30, 2012, various committees of the Senate were authorized to examine the subject matter, in other words conduct a pre-study, of Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures, introduced in the House of Commons on October 18, 2012, in advance of the said bill coming before the Senate. The Standing Senate Committee on Energy, the Environment and Natural Resources was authorized to conduct this pre-study on those elements contained in Divisions 4, 18 and 21 of Part 4 of Bill C-45.
To be clear for those present and our listeners throughout the World Wide Web and on CPAC, the divisions under study by our committee are Division 4, Part 4, which would amend the Fisheries Act; Division 18 of Part 4, which deals with the Navigable Waters Protection Act, an act that is under the authority of Transport Canada; and Division 21 of Part 4, which deals with amendments to the Canadian Environmental Assessment Act.
The various committees, including our own, authorized to examine the subject matter of particular elements of Bill C-45 must submit their final reports to the Senate no later than November 30.
Last Thursday, November 1, we held our first meeting on the pre-study when we heard from officials from the three primary departments affected by the proposed amendments in these divisions in Bill C-45: the Canadian Environmental Assessment Agency, Fisheries and Oceans Canada, and Transport Canada.
Today I am pleased to welcome the following witnesses, some with us in Ottawa and a couple visiting via video teleconference from Calgary. First, from the Canadian Association of Petroleum Producers, Bob Bleaney is with us today; and Phil Langille is in Calgary. You can see his name on the screen there. We have Jeff Barnes from the Canadian Construction Association. He is with us here today. From the Canadian Energy Pipeline Association, we have Kim McCaig, Vice President and Chief Operating Officer, and he is appearing by video conference also.
I would submit that we proceed with the opening remarks from all three organizations in the order that they are on the agenda followed by a question and answer session. We will begin, please, with the Canadian Association of Petroleum Producers.
Bob Bleaney, Vice President, External Relations, Canadian Association of Petroleum Producers: Good afternoon, Mr. Chairman and members of the committee. I am Bob Bleaney, the Vice President, External Relations of the Canadian Association of Petroleum Producers, or CAPP, which represents Canada's upstream oil and gas sector. Our members find and develop about 90 per cent of Canada's petroleum resources. Phil Langille is also here with us, as was noted, on video conference. He is our manager of federal regulatory and Northern affairs.
We welcome the opportunity to provide CAPP's perspectives on part 4 of Bill C-45 relating to proposed legislative changes to the Fisheries Act; the Navigable Waters Protection Act, which I will refer to as NWPA; and the Canadian Environmental Assessment Act 2012, which I will call CEAA 2012.
As an introductory comment, it is CAPP's view that the proposed changes to the reference divisions of Bill C-45 are largely well aligned with Bill C-38's responsible resource development initiative tabled earlier this year.
Significant progress has been made towards improving Canada's regulatory framework through Bill C-38, and we see Bill C-45 as providing further steps towards this objective. Such improvement remains fundamentally important to our industry as it will attract the investment required by the oil and gas sector to create Canadian jobs, economic growth and energy security in an increasingly competitive global market.
Our industry is the largest single private investor in Canada, investing over $50 billion each year and employing well over half a million Canadians, and we foresee opportunities to maintain or increase that level of investment going forward. However, we will only continue to attract the investment capital required to grow our industry and to access new international market opportunities if we are indeed internationally competitive. Regulatory efficacy and efficiency are both important parts of this equation.
Given the relatively recent tabling of Bill C-45, we are still in the process of compiling member feedback and seeking clarifications on the proposed legislation. Notwithstanding our work is continuing, we are of the general view that it promises to advance and improve the regulatory framework while maintaining Canada's strong record of responsible development.
Our review to date has, however, identified some concerns with the proposed changes to the NWPA that we would like to bring to your attention. These concerns are in regard to potential unintended consequences that might arise without further clarifications or context being provided in the legislation. In particular, the changes introduced under clause 321 of Bill C-45 relating to the insertion of a new section 23 to the NWPA involves the prohibition of the dewatering of any navigable water. We are concerned the proposed prohibition could be interpreted to have very broad application.
Our concerns are threefold. First, there is no definition of dewatering. Without clarity on what is meant by dewatering, there is the potential for the removal of any water from any water body to become subject to this act. Without definition, dewatering might be interpreted to include water withdrawals that do not pose any navigation impact yet could have material impacts on industrial, municipal and private uses of surface waters.
Second, dewatering could be interpreted to apply to any water body, including manmade water bodies, whether navigable or not. The prohibition of section 23 as drafted would not be limited to the listed water bodies identified in the attached schedule to Bill C-45.
Third, the only exception available to the dewatering prohibition is through Governor-in-Council approval. To seek relief through the Governor-in-Council is a significant process unto itself that could result in project delays and additional costs to both project developers and government.
Related to that, section 22 prohibits the throwing or depositing of rocks or similar materials into navigable waters less than 36 metres in depth. This clause may also apply to activities that may not pose any impact on navigation.
I want to reiterate that we are supportive of the stated intent of the NWPA legislation as characterized in Mr. Gorall's testimony on October 31 to this committee where he outlined the first key element of the plan being to narrow the focus so as to focus time and resources on Canada's busiest waterways and that "the requirement of approvals would only apply to works considered likely to substantially interfere with navigation." This stated intent is well aligned with improved efficacy and efficiency of the regulatory process.
However, it seems inconsistent with this intent to have introduced the section 23 dewatering prohibition and the revised section 22 deposit prohibition without additional clarifications to limit the application of these clauses to activities substantially interfering with navigation and to the navigable waters listed in Schedule 2.
Without clarifications, these prohibitions could have unintended consequences for resource development, for activities that would not have any impact on navigation, and respectfully, we suggest that amendments be made to the bill in consideration of these concerns.
With respect to CEAA 2012, we are of the view that the proposed changes are largely administrative in nature so as to better facilitate its implementation. Similarly, the proposed changes to the Fisheries Act appear constructive to facilitating its implementation.
On the subject of implementation, it remains important to note that the full opportunity of resource development initiative will only be realized if the Bill C-38 and Bill C-45 legislation and supporting regulations are effectively and efficiently implemented in a manner that delivers the intended outcomes. It remains important to ensure that adequate federal resources are dedicated to fully implement the intended changes on an aligned whole-of-government and timely basis.
Additionally, collaboration and alignment among federal, territorial and provincial government departments and agencies will be critical to delivering the intended outcomes, particularly as they relate to areas of equivalency and substitution where applicable.
To conclude, we must continue to grow Canada's resource sector for the benefit of all Canadians, providing jobs, economic growth and revenue to Canadian governments. As an industry, we will continue to do this responsibly and with a commitment to continuous performance improvement under regulation that will deliver the outcomes that Canadians expect and that compare favourably with those of other countries with whom we are competing for investment capital. We look forward to less but better process that will deliver more jobs, a stronger economy and responsible regulatory performance.
Bill C-45's Part 4 proposed legislative changes appear consistent with these broad objectives, assuming that the proposed changes to NWPA with respect to dewatering of and depositing into navigable waters can be clarified to avoid undesirable and unintended consequences or constraints on resource developments. Given the short period of time since the tabling of the bill, it remains early days in our review, and we will continue to examine it and pursue clarifications with officials, particularly with a view to avoid any unintended consequences. However, we trust you will find it useful to bring to your attention the concerns that have surfaced for us.
Thank you for this opportunity to present; I look forward to your questions.
The Chair: Thank you, Mr. Bleaney. Next we will go to the Canadian Construction Association and Mr. Jeff Barnes.
Jeff Barnes, Member, Canadian Construction Association: My name is Jeff Barnes and I am the Practice Leader of Environmental Services in Canada for Stantec Consulting Limited and a member of the Canadian Construction Association. I am a past member of the board of directors of the Canadian Construction Association.
Canada's construction industry employs close to 1.3 million people and accounts for approximately 6 per cent of Canada's annual GDP. It buys goods and services in every region of the country and in every sector of the economy. The CCA is the voice of national non-residential construction industry and represents over 17,000 members in an integrated structure of some 70 local and provincial construction associations. Our members build many of the projects and works that are regulated by this federal legislation.
CCA President Michael Atkinson said in his press release supporting Minister Lebel's announcement regarding changes to the Navigable Waters Protection Act:
Today's announcement recognizes the importance of project certainty for the construction industry. Through the streamlining of approval processes, and eliminating uncertainty in those processes, the construction industry can continue to build the infrastructure that is essential for a healthy Canadian economy.
. . . this strikes the right balance between the regulatory oversight Canadians expect, and the needs of the business community for greater regulatory efficiency.
CCA fully supports and applauds the legislative amendments proposed in Divisions 4, 18 and 21 of Bill C-45 and previously in Bill C-38 with respect to the Fisheries Act, the Navigable Waters Protection Act and the Canadian Environmental Assessment Act 2012. The CCA would like to focus in this presentation on the amended Navigable Waters Protection Act and the Canadian Environmental Assessment Act.
Proposed amendments to the Navigable Waters Protection Act, particularly including its renaming to the navigation protection act, reflect a considered and measured effort by Parliament to fulfil the original intent of the legislation to protect and assure navigation in Canadian waters where it is essential for commerce and clearly in the public interest. The amendments made in the NWPA in 2009 were a good first step, but the amendments in Division 18 of Bill C-45 complete this job in a manner consistent with and complementary to the excellent amendments to the Canadian Environmental Assessment Act and the Fisheries Act in Bill C-38. The proposed act focuses on federal jurisdiction with respect to navigation and, with the amendments in CEAA 2012, precludes Transport Canada from drifting into other matters that are not their jurisdiction or expertise. The red tape has been limited to where it is warranted and appropriate to protect navigation. Where approvals are required, the proposed legislation affords the authority and mechanisms to streamline approvals through regulations and orders.
The CCA believes that the proposed new act is comprehensive and will do much to provide certainty to proponents about which works and waters are designated as requiring approval. It also affords an opting in process for proponents for works on non-designated waters, creating greater certainty where civil matters may be in question.
I will focus now on the committee's study of clauses 425 to 432 of the Canadian Environmental Assessment Act 2012 in Division 21 of Bill C-45. The CCA is concerned that the important and significant improvements made to the Canadian Environmental Assessment Act earlier this year are being undermined with regard to projects undertaken on federal lands by the duties ascribed to federal authorities under sections 66 to 72 of the CEAA. We believe that the amendments proposed by clauses 430 and 431 of Bill C-45, in particular, do not go far enough in addressing this situation.
Sections 66 to 72 of CEAA 2012, as written and as proposed to be amended by clauses 430 and 431 of Bill C-45, require that a federal authority or any body set out in Schedule 3 must not carry out a "project" or exercise any power or perform any duty or function conferred on it under any act of Parliament other than CEAA 2012 on federal lands unless: the authority determines that the carrying out of the project is not likely to cause adverse and environmental effects; and the authority determines that the carrying out of the project is likely to cause significant adverse environmental effects and the Governor-in-Council decides that those effects are justified under the circumstances.
For these clauses of the bill, a "project" is defined as a physical activity that is carried out in relation to a physical work. Bill C-38 established that only "designated projects'" require environmental assessments. "Designated projects" are projects such as large power plants, mines or offshore oil developments, which have the potential to result in significant adverse environmental effects, thereby warranting environmental assessment under CEAA. This definition of "project" in clause 430 of Bill C-45 includes all physical works and associated activities that are not designated projects. The nuance here is smaller physical works and associated activities or small projects. It is our concern that without parliamentary guidance officials will interpret clause 431 of Bill C-45 as requiring an informal environmental assessment for projects on federal lands but with no formal process or time frames.
To the CCA, this sounds like a screening under the old Canadian Environmental Assessment Act. Bill C-38 strove to eliminate the unnecessary assessments of small projects that were unlikely to result in significant environmental effects and to improve process certainty. Bill C-38 also strove to focus decision-making authority within the Canadian Environmental Assessment Agency and, as applicable, the National Energy Board and the Canadian Nuclear Safety Commission. Unfortunately, without further clarification, sections 66 to 72 of CEAA 2012 can be used to undermine this progress.
As an example to illustrate our concern, let us consider the drilling of an offshore exploration petroleum well in Newfoundland and Labrador. Under Bill C-38, such a project is not a designated project and does not require an assessment. There are other processes, such as licensing requirements under the authority of the Canada-Newfoundland Offshore Petroleum Board and the Fisheries Act, that protect the marine environment. Under sections 66 to 72, it is believed that both of these agencies and possibly others relating to marine transport, such as Transport Canada, say, could be mandated to conduct an informal environmental assessment, even though it is not a designated project.
Parliament decided in Bill C-38 not to require environmental assessment for these types of projects, yet, without further clarification, these very clauses can be interpreted by officials as requiring these authorities to undertake such environmental assessments on federal lands. Such assessments would be duplicative and unnecessary as environmental concerns would be dealt with as a part of permitting or other licensing approval processes managed by the board, Fisheries and Oceans Canada and other federal authorities.
The CCA believes that Parliament should consider eliminating the requirements of sections 66 to 72. Failing that, it is believed that Parliament should amend these sections to establish a strict process and rules of conduct for these assessments, including timelines like those that apply to the assessment of designated projects under Bill C-38.
The Canadian Construction Association applauds Parliament for reforming the Canadian Environmental Assessment Act earlier this year, and we believe the aforementioned situation to be a drafting oversight and are hopeful that this committee, in its entirety, will recommend appropriate corrective amendments as part of its review of Bill C-45.
The Chair: Next we will go to our video conference, the Canadian Energy Pipeline Association. Mr. McCaig, if you want to give your presentation.
Kim McCaig, Vice President and Chief Operating Officer, Canadian Energy Pipeline Association: Thank you very much, Mr. Chair. Hopefully you can hear me and the video and the audio is coming through clearly.
It is a pleasure to appear before you to share some of the views of the Canadian Energy Pipeline Association. CEPA President Brenda Kenny has had the privilege of appearing before this group numerous times and sends regrets that she is not able to be here today. I will do my best to fill her shoes and answer your questions.
Canadian Energy Pipeline Association represents companies that transport 97 per cent of all the oil and natural gas produced and used in Canada today. Our membership currently operates more than 110,000 kilometres of pipelines in Canada, transporting over 3.2 million barrels of oil and 14.6 billion cubic feet of gas every day, while employing over 8,000 full-time employees. Pipelines are the only feasible and the safest means of transporting large volumes of crude oil and natural gas over land.
In delivering Budget 2012, Minister Flaherty acknowledged that the natural resource and energy sector are driving economic growth across the country. They are creating good jobs not only directly but also indirectly in manufacturing, clerical work, skilled trades and financial services. Canada's resource industries offer huge potential to create even more jobs and growth now and over the next generation.
The responsible resource development provisions of Bill C-38 put in place the enabling conditions to realize these opportunities. We believe Bill C-45 is a further positive step in this direction.
CEPA has been a strong supporter of the objectives behind regulatory reform, namely, improving the efficiency of and environmental outcomes from environmental assessment and regulatory review of major infrastructure projects. We do not believe that environmental protection has been watered down or impaired in any way by these changes. Rather, for the pipeline industry, the processes enabled through 2012 and the amendments to the NEB Act reduce duplication, ensure timelines and allow government, industry and stakeholders to improve outcomes by focusing assessments on key environmental concerns, using best practices to avoid significant adverse effects and allocating resources more efficiently.
These changes have strengthened, focused and clarified the purposes of Canada's environmental legislation and set the scene for enhanced environmental outcomes going forward. Bill C-45 makes a number of further important contributions toward these objectives through changes to clarify interpretation of the new provisions and the transition arrangements of the current review system, all of which will provide greater certainty for all parties.
There are many elements to these changes, but I would like to take a few moments to talk specifically about the repeal of the Navigable Waters Protection Act and its replacement with the new Navigation Protection Act. We have seen a lot of commentary on this change and I would like to speak briefly about how it affects the pipeline industry.
In Bill C-38 an important amendment was made to give the National Energy Board responsibility for assessment of navigation-related impacts of pipeline water crossings during the review of pipeline projects. The Navigation Protection Act completes this change by updating the definition of water bodies that require permits and clearly acknowledging the consolidation of responsibility with the NEB for water crossings on pipelines under their jurisdiction as the primary regulator for the sector.
CEPA believes this is a positive step to create a more efficient permitting process but will also help create a better outcome by reinforcing accountability with a single regulator and building on the industry's record of safety and performance in construction and operation of watercourse crossings. An integrated approach to navigability assessment, taking into account the full range of safety and environmental concerns of a pipeline watercourse crossing, will allow both industry and the regulator to work together more effectively in achieving better results.
Canada has been fortunate in weathering the economic troubles that have challenged the rest of the word. This is due in large part to the role that the resource and energy industries have played in the economy. The process set in motion by the government to reform the regulatory system is important to ensure Canada can retain and attract the investment necessary to development pipeline infrastructure. This infrastructure will support growth in the natural resource sector and the diversification of Canada's markets.
Commitments made by the federal government to ensure that these regulatory changes are effective and fully implemented to deliver better environmental outcomes and that regulators have the necessary resources and tools to perform the roles are important steps to make this happen. These steps are supported and reinforced by our industry's commitment to safety and environmental protection and performance. Last year our member companies spent over $600 million to ensure the safety of their pipelines and the communities in which they operate.
Pipeline operators monitor their pipelines 24 hours a day, seven days a week. Over the past 10 years, from 2002 to 2012, CEPA member companies have averaged three significant incidents per year on both oil and natural gas pipelines. This translates into a reliability factor of 99.985 per cent. No incident is acceptable, in our minds, and our member companies work towards that.
One of the ways in which we are trying to improve the safety record is through our recently announced CEPA Integrity First program. This program is an industry-wide initiative based on sharing best practices and the application of advanced technology. Our member companies' first priority will be to focus on programs and processes related to the safe operations of their pipelines and also steps involved in responding to a potential pipeline spill or rupture. Our member companies are committed to learning from the past and improving their practices in a more open and transparent manner. They will continue to work closely with all stakeholders to ensure that Canada's energy pipeline network remains amongst the most environmentally sound and safest in the world.
For the pipeline sector, the regulatory changes the Government of Canada has made express confidence in the ability of our industry and our regulator to manage the environmental issues that challenge us as we continue to build Canada's energy highways for the 21st century. Through these changes we will pursue opportunities to work with Aboriginal and stakeholder groups to create positive environmental outcomes that build from rather than end with regulatory compliance.
Thank you very much for this opportunity to speak with you, and hopefully we can address any questions you may have.
The Chair: Thank you very much, Mr. McCaig. We will begin with questions. I have one short one to start with and then I will defer to the deputy chair.
In your notes, Mr. Bleaney, you talked about the second problem you had. The first was dewatering. The second was that section 22 prohibits the throwing or depositing of rocks or similar materials into navigable waters more than 36 metres in depth.
For our clarification, because I understand what you are saying, but perhaps you could give an example of something that would be negative to the industry with this clause.
Mr. Bleaney: I point out, first of all, that sections 22 and 23 are somewhat unique in that they are not captured with a regular reference throughout this act where it speaks to being listed on the attached schedule. These are definitely situations that do not have any restrictions in terms of being on the listed schedule.
A situation that could arise, I do not know many rivers more than 36 metres deep, so the concern is if there were activities on the edge of a river bank or whatever related to a development project and there was the movement of soils or rocks on the perimeter. Someone might argue that you are dropping rocks into a body of water less than 36 metres deep, and you are potentially off side with this act's prohibition of putting rocks into shallower bodies of water. It may not have anything to do with navigation or interfere with navigation. However, it might be caught by this kind of phrasing, being read literally under the act, to argue that any depositing of product into a river of that nature would be a problem.
Similarly, you could have a man-made water body, like a tailings pond. Trying to drop materials into a tailings pond is a normal process of business in oil sands activity. Someone might challenge that you are putting materials into a shallow water body that is prohibited under the act.
Those are the kinds of questions that surfaced for us. In all fairness, I do not know that these are intentional; we are just concerned that they might be a mechanism to trap some of these processes.
The Chair: Thank you very much for that explanation. That helps a whole bunch.
I will defer to the deputy chair, Senator Grant Mitchell.
Senator Mitchell: Those were very interesting presentations.
Mr. Barnes, one of the things you mentioned that certainly stuck me and would strike many people as startling is that the drilling of an offshore petroleum well in Newfoundland and Labrador is not a designated project and would not require an assessment. Then you went on and seemed to lament — and I am not being accusatory — the possibility that there might be some basis upon which an informal assessment could be done.
Is it possible that somebody could drill an offshore well off Newfoundland and not have to do an assessment? That is almost incomprehensible.
Mr. Barnes: Under the new Canadian Environmental Assessment Act, an offshore exploration well would not require one. A production well would require one, but an exploration well is not a designated project.
Senator Mitchell: That surprises me.
Mr. Barnes: I realize that may seem a little startling on the surface. However, the essence of this is what we see in the amendments to the Canadian Environmental Assessment Act and that is that we have an offshore petroleum board that has a very stringent regime for licensing. It looks at every aspect of how an exploration well will be drilled to assure safety and enforce appropriate environmental regulations around the discharge of cuttings, oil and accidents.
Also, there are pieces of environmental legislation in place like the Fisheries Act if there were to be effects on a fishery. There is also the Canada Marine Act and other acts in the marine environment that very nicely regulate these things in a routine and thorough way.
We have drilled over 200 exploration wells in the offshore of Newfoundland since the 1950s or 1960s. We have a good understanding of this. There are industry standards. The board has strict rules. We are confident there are not likely to be significant adverse environmental effects. That is why it is not on the designated project list. To do an assessment in that regulatory framework would be duplicative.
Senator Mitchell: There are two things, then. Are you simply saying that any informal environmental assessment that might be triggered under section 66 to 72 would duplicate this effort of the offshore drilling board?
Second, you mentioned fisheries as a way to protect the environment. However, what do you say about all the marine wildlife that has nothing to do with the commercial, recreational or Aboriginal fishery? Who is protecting that?
Mr. Barnes: The Fisheries Act includes marine mammals and so on, and a fish is a marine mammal for the Fisheries Act. That protects all marine mammals, not just some of them.
The Species at Risk Act protects various listed species, such as whales, that are endangered or threatened. There is a regulatory framework around that. You cannot harm the critical habitat of these animals.
An extreme example in terms of a fairly large project would, on the surface, seem to be a bit alarming as you described. However, let us take a simpler project, like some ocean dredging and disposal that will involve a permit under the Canadian Environmental Protection Act. There is a permitting process for that and there are considerations such as environmental effects, contamination, sediments and where the sediments go. However, that is one of these physical activities that are described by this. Environment Canada, in administering that duty, may feel the obligation to demonstrate that there are no environmental effects that could be significant.
The issue I would like to draw to your attention is that there are many little projects, particularly in the marine environment, that go on every year. In doing this environmental assessment process, there would be no rules; there are no rules described for it. It is looking at very small project, in fact. There is no limitation on size. However, as you recall in the old CEAA, there was an exclusion list and inclusion list for activities that had potential for effects. Those were problematic and we have gotten rid of that, yet this clause aims to deal with that.
The bigger concern is that we have a number of federal authorities who had staff who used to do environmental screenings under the Canadian Environmental Assessment Act. I understand that many of these are seeing section 66 to 72 as their salvation, as they have a new duty to fulfill, and they are looking at ways in which they can be doing CEAA-like screenings to fulfill their responsibility.
Senator Mitchell: One of the things that concerns people about these changes in Bill C-38 is this idea of the diminishing triggers. It used to be that a navigable waters requirement would automatically trigger an environmental assessment, but some of that is gone.
Let us take an example. You are building a bridge. It is not necessarily a designated project. You could put a piling right down the middle of a sockeye salmon habitat. What would trigger an assessment of that? Who would even bother to look? If it is not designated, why would someone care? It is most 36 metres deep, so you cannot see to the bottom. Who comes out and says, "There might be a problem here"?
Mr. Barnes: There are two aspects. First, for your sockeye salmon, let us say it is a habitat issue. There is the Fisheries Act and you need an authorization if you will affect fish within a fishery, as amended. The Department of Fisheries and Oceans has the authority to step in and say, "You need an authorization for that." If it was a navigable water or a "minor water" in the new act, there would be a requirement for a navigation permit, if it was a navigation issue.
I would point out that in most provinces there is a water course alteration permit and authorization process. The provinces look at matters around water quality and a broad range of issues. Therefore, the regulatory framework in which we now live is well established in the 21st century.
I think the amendments we have made to the Canadian Environmental Assessment Act with Bill C-38 recognize and acknowledge that the early application of the EA, when there were not so many laws and regulations, has been obviated by the complex regulatory environment we have.
Senator Lang: I would like to go a little bit further here. First, Mr. Bleaney, I believe you mentioned at the beginning that there has not been a lot of time to really make an assessment of the changes brought forward. You presented your brief in a manner where, if it is interpreted in this way — specifically dewatering — then there is a problem. You go on to describe what the problem could be. Have you had an opportunity to sit down with the officials of the department to clarify their position regarding these particular sections?
I ask this because we had a very good session here last week, and it is clearly not the intention of this act to do what you have indicated you think it might be doing. Again, have you had an opportunity to sit down with the officials who drafted this piece of legislation and go through it to understand where they are coming from and why it is drafted the way it is?
Mr. Bleaney: We have not yet had that chance to fully go through it. We have touched base with a few officials to express a question in this area, and we have received some feedback that would suggest there may be options to examine how to address these concerns, perhaps through other regulatory or administrative means, but at this point we have not had a chance to get clarity on how that would work or understand how that would work to mitigate the face-value concern that shows up in the act.
Our concern is that the way it reads to the layman, it could be challenging, and we do not understand how that could be remedied and we have not had the chance to have that detailed discussion yet.
Senator Lang: Following up on that, that is certainly not the intention of the bill. As you pointed out in your presentation, the intention of the bill is to bring us looking ahead into the future so that we can streamline these projects and do them in an orderly manner and yet, at the same time, meet our environmental responsibilities. If the government, through the officials, can satisfy you that your concerns can be met through other means, whether by regulatory or administrative process, would you be satisfied? Amending this piece of legislation is a huge request at this stage of the legislative process.
Mr. Bleaney: Your question is if we could get to that level of comfort, yes, we would probably not have this concern any more, but we have not yet had a chance to get to that level of comfort.
Senator Lang: Mr. Barnes, you referred to informal environmental assessment. What exactly do you mean by "informal environmental assessment"? If there is nothing in the legislation that clearly outlines that there is an environmental assessment and how it will be implemented and how it will be structured, I do not understand how you think that the bureaucracy will have the ability to dictate that there will be an informal assessment.
Mr. Barnes: I think that bureaucracy is, in fact, looking at this already, which is where my concern arises from.
It is in the legislation, and I used the term "informal assessment" because I am not sure how to describe it. In CEAA 2012, there is a formal process for designated panels and so on. Section 67 of the act as amended in Bill C-45 basically says that an authority must not carry out a project on federal lands unless the authority determines that carrying out the project is not likely to cause significant adverse environmental effects. That is one of the main factors in conducting an environmental assessment of a designated project, whether or not there are significant adverse environmental effects. Decision making hinges on that fact. I say informal because, from a due diligence perspective, I am not sure how a federal authority could demonstrate that they had come to a reasonable conclusion in respect of that requirement without having conducted an environmental assessment. You cannot just say, "Well, there are no significant environmental factors."
Senator Lang: I want to follow this through. It is kind of what if, what if, what if. I do not mean to be confrontational, but it would seem to me that it has been clearly outlined by the government that these are the projects that will be under a regulatory process. You are saying to me that we are coming in through the back door with an amendment to do that for other projects. Once again, it goes back to an interpretation of the section that we have before us, because it was clearly put to us, as a committee, that that is not the intent of this bill or this amendment.
Mr. Barnes: I agree with you absolutely. If that was a question, I think the point is that I do not believe Parliament intended that we go off and do assessments. I believe this is a due diligence clause that Justice probably recommended be included to say that in making the amendments and excluding small screenings in the amendments to the environmental assessment, the government does not wish to cause significant harm to the environment. This is a checkmark, if you will, for that responsibility. It is not an abdication of responsibility. However, in doing so, I believe it has opened the door that requires some diligence around demonstrating on federal lands that any little project or activity requires that it not result in significant adverse environmental effects. I can assure you that the bureaucrats who are not so busy any more doing CEAA screenings are looking for something to do, and they are quite imaginative.
Senator Johnson: Could you tell me a possible scenario where the current bill's provisions would hold up a petroleum project?
Mr. Bleaney: Is that directed to me?
Senator Johnson: Yes.
Mr. Bleaney: As I would interpret a situation that could arise with respect to section 23 where it says no person shall dewater any navigable water, period, and the term "dewatering" not being defined and the term "navigable water" being broadly defined, I could imagine a situation if a project was trying to move forward and wanted to withdraw water from a water body for its purposes, that someone could challenge whether that was in fact dewatering of a navigable water body. If that were to occur, the process to resolve that is one that seemingly would require some debate and might even require an order-in-council. Just read literally, and this is not reading it with the knowledge of perhaps particular processes or protocols that might be put in place that would otherwise somehow define dewatering below the act, but at the surface, I can see someone challenging whether an activity was in effect dewatering a navigable piece of water, and we could be challenged with the situation of trying to defend against that delay.
Senator Johnson: How long does it take to get an order-in-council to exempt a body of water?
Mr. Bleaney: I personally have not been through that process, but I am generally led to understand that it takes a considerable time because the departments would want to be sure that they were understanding the request thoroughly before they elevated it to the cabinet.
Senator Massicotte: I would like to go a little bit further with Senator Lang's question. I understand from your comments that you are concerned that the amendment being proposed will cause an environmental review that was not intended to be caused, and in this act there is no structure or criteria. It is very loose and broad, and in the other act there are at least procedures and time frames. I gather that is where your concern lies. Have you expressed your concern to the minister and his staff, and what has been the response to that concern?
Mr. Barnes: We have, in fact. The Canadian Construction Association has written a letter to the minister just today on the subject, and we have not had a discussion with the minister's staff on that.
Senator Massicotte: While your brief was not specific, you are speaking on behalf of the CCA.
Mr. Barnes: I am speaking on behalf of the CCA.
Senator Brown: Mr. Bleaney, I am somewhat mystified because of this dewatering thing. It seems like you could be under the gun for a bucket of water or a land slide of water. Is that what you are worried about? You want a definition of the size or amount of water that can be turned.
I spent six years on an irrigation project as a director of one of the irrigation things in southern Alberta. We had pipelines drilled underneath our irrigation canals. We had muskrats that dug holes. We had water coming out of the canals. We went through a lot of different water, but I have never seen anything less tied down than this idea of dewatering. I have no idea what that could be. Can you give us any hope as to how you would project that if you could do it yourself?
Mr. Bleaney: Yes, I would be pleased to do so. Again, it is early days for us, and there might be a more elegant solution that could come forward. However, if we were to define dewatering as the removal of water from a body of water that was allowed unless you created a significant impediment to navigation, there are lots of activities, as you are aware, that go on today where people are taking water out of relatively shallow river systems for commercial, municipal or even recreational use, like for golf courses. If all of those kinds of activities came under a scrutiny test, you would say, "Well, you cannot dewater any navigable body of water. The stream is navigable by canoe or whatever, so you are in conflict." However, if you were to put into that a condition that says that you have to materially impact navigation by dewatering before you trigger this clause, I think that would go a long way to ameliorate that concern.
Senator Ringuette Mr. McCaig, I do not want you to feel that you are not party to our meeting. My first question is how many members do you have in your pipeline association?
Mr. McCaig: Thank you very much for the opportunity to answer that question, senator. We have 12 full members. They are pipeline operators. Basically, I would describe them as highways of pipe. They connect the producers with distributors. There are not that many because it is a large asset, and it requires significant financial resources in order to build and operate these pipelines.
Senator Ringuette: Last week, when the officials from the Department of Transport were before us, they indicated — and I am new on the committee — that we had 161 listed waterways. In one pipeline that one of your members would have, how many of these listed waterways would they have to deal with? How many unlisted waterways would they have to deal with?
Mr. McCaig: That is a huge question, senator. I would not be able to give you the exact data on what a typical 1,000 kilometre pipeline might have to deal with. With the Navigation Protection Act that is being proposed, these NEB- regulated pipelines would be exempt from any permitting for these waterways under the new act. In the next few months, the NEB, by the OIC, will be delegated from Transport Canada, under that Navigation Protection Act, authority to deal with the crossing of all bodies of water on all pipeline projects.
This does not mean that requirements will be waived as a result of this change. It means that it will be integrated into the assessment under one regulator. We have one full lifecycle regulator, the National Energy Board, looking at it from start, from the preliminary planning to retirement. You have a very informed regulator looking at all the activities, including navigable waters.
Senator Ringuette: Whether or not they are listed?
Mr. McCaig: That is correct.
Senator Ringuette: When they were before us, they indicated that one of your members, for instance, could opt in and request the designation or the listing of an unlisted waterway. What do you think about that proposal?
Mr. McCaig: I think that under a full lifecycle regulator you would have a more fulsome discussion around why you would want to list something versus have it unlisted.
The key thing is that changing the definition of navigable waterways to those that are truly navigable really means that you would focus where necessary. In other words, we would not be looking at those that are what I call seasonal channels, things in farmer's fields and those types of things that are seasonal. You would be focusing, for the purposes listed waterways, on things like the South Saskatchewan River, the St. Lawrence River or the Fraser River, the bodies that you really need to focus on and ensure that you really understand the impacts to them.
Senator Ringuette: I guess you must be familiar with the concept of opting in; I suppose that Transport Canada officials have talked to you.
Would it be opting in for the duration of construction, or would it be opting in for the duration of the construction and the operation of the pipeline?
Mr. McCaig: I think it would be for the full lifecycle. It would totally cover construction and operation.
Senator Ringuette: I have two more questions with regard to this issue.
Over the last five years, how many of your 12 members have been subject to civil litigation? Maybe you know; maybe you do not.
Mr. McCaig: Civil litigation? In what manner, senator?
Senator Ringuette: Due to pipelines that they own, whether it be with regard to construction or operation.
Mr. McCaig: Again, I do not have any specific data around that. I could get that for you if you would like.
Senator Ringuette: I would very much appreciate that because when the officials were here last week they indicated that opting in to the listing of a waterway would enable the builders to not be subject to civil litigation. That would mean not subject to civil litigation during construction and during its entire life of operation.
From my perspective — and I am very new to this committee — I can certainly identify an issue. I think, gentlemen, it is a major issue that an opting-in provision in the Navigation Protection Act would prohibit, as the officials told us, any civil litigation during the construction and operation of a pipeline if any one of your members wants to opt into the listed waterways. That is huge with regard to current and future impacts for the next 50 or 100 years, depending on the life cycle of the construction infrastructure that you do. This is of major concern to me for sure.
Mr. McCaig: Senator, I am not sure the context of the discussion that you had with the Transport officials, but I would say that pipelines operate in one of the most highly regulated industries of any in Canada. The construction and operating standards and our compliance with those regulations are ensured through that one lifecycle regulator.
If there is a time where there is non-compliance or pipeline companies are doing something not according to regulations or not according to operating standards and practices, the full area is open for litigation because you have to be in compliance with those.
Again, I will have to go back to the context of that conversation with Transport Canada in order to understand what they were really trying to say with opting in or opting out.
The idea of listing is to ensure that you are identifying the navigable waters you are talking about.
Senator Ringuette: Yes, but it was also clear through my questions that by listing the waterways it would protect the builders — and I am using their own terms; I have it written down here — from being subject to civil litigation.
Mr. McCaig: I will do further investigation on that. I am not aware of that.
The main thing around listing these things is more to ensure we understand what we are impacting and what standards or regulations we have to live up to in order to construct and operate by and was it a means of trying to shift liability for any type of work we were doing.
Senator Ringuette: Then we can certainly propose an amendment to remove any kind of civil litigation protection in this section. Would you be in agreement with that?
Mr. McCaig: My member companies would always want to live up to those standards and regulations put in place to ensure we conform with all existing legislation. That is not an issue for us.
Senator Lang: I put this question to Mr. Barnes in respect of this part of the discussion Senator Ringuette has raised. It is my understanding that the purposes of these amendments are to make it very clear that they apply to where navigation is part of a major waterway and a very major concern of a waterway that has been designated and subsequently could go to another waterway that is not designated. In other words, this does not apply from an environmental point of view; it is from a physical, navigation point of view so that navigation can happen on a waterway.
That is the problem we are in. When we look at the questions that are being put, the way I see it, we have so many pieces of legislation that apply to these waterways that it becomes confusing as to exactly what applies to what circumstances. I understand this is what is being clarified in this particular act.
I would like to ask this question of Mr. Barnes because he seems to have good familiarity with the bill itself and the old bill. It was in 1882 — that is how long this legislation goes back — in respect to navigation and this opting in and out clause. Maybe you have a comment on that.
Mr. Barnes: As I mentioned in our presentation, senator, we support this bill because we believe it focuses consideration of navigation where navigation is important to the commerce of Canada or where it is well established and an intensely used recreational area, things like that. It clarifies that the act focuses on navigation. It is no longer a trigger for other considerations like environmental assessment.
As a consequence, the various aspects of the act around orders and regulations provide a rational and sensible framework, including timelines, for approvals in those designated waterways. I could foresee for certainty reasons where there will be people who will navigate streams that someone may want to opt in to assure that they understand that they are not interfering. They would take advantage of the expertise of Transport Canada to advise them to ensure that they do not interfere with navigation, even if it is not in a designated waterway. I see an advantage of that.
Senator Wallace: Mr. McCaig, there is no question that pipelines are very topical in this country and in North America. It would seem to be that there are tremendous opportunities for our country if certain pipelines are expanded. As you well know, there is a lot of activity focused on that right now.
When you look at Bill C-45 — and, again, the focus is on the change to navigable waters — does that have any practical implication for your industry in terms of quality of construction, materials that are used in pipeline construction, leak detection that would be included in any pipeline construction, or spill recovery equipment that may be in the vicinity of pipelines? It is that practical side of it.
These changes define different bodies of water, and some would be considered to be navigable and some not. Doing so will apparently streamline the process. Setting that aside, in practical terms, does it mean anything to your industry in terms of the quality of the construction of pipeline projects in this country?
Mr. McCaig: I will give you a simple answer and then a little longer one. The simple answer to you is no. The quality of the projects will continue to go as they are, and they will even get better with new technology and higher skill development.
As to the overall idea that somehow there will be a change in the construction techniques and those types of things as a result of this legislation, I would say no. However, it does help us in other ways. It goes back to when we were talking about the environmental protection and whether that has been watered down at all. I believe strongly that Parliament is providing more focused assessment at the right points in time.
What I mean by that, in CEAA 2012 the objective is to reduce the number of EAs from about 3,000 down to 50 but focused on the major projects. This will help give more clarity around the types of projects assessed and what that will look like. The full life cycle of the environmental protection will continue under that one life cycle regulator. You are housing all the expertise in one body so one can effectively share information. That way you are avoiding duplication and not asking the same question three or four times. This is a much better way of providing environmental oversight.
Senator Wallace: Back to the construction details again, the construction components of any pipeline project, do I take it from your comments that whether Bill C-45 is enacted or not, the same construction components, the same considerations that go into each pipeline project would be the same? Of course, from the public's perspective, that is the concern. The integrity of these lines, will they do the job? Is the environment at risk? I am trying to get a sense, is there anything in Bill C-45 that will change the approach you are taking today and would otherwise take in the future in that regard?
Mr. McCaig: I do not believe for one second it will change the approach because the pipeline companies have a fairly well-regimented program they have to put together in order to put these applications before the National Energy Board as the current regulator. It will change how they review a project, and the whole environmental assessment under that one house will strengthen the oversight and provide, I think, even better decision making, asking better questions that will challenge these companies to ensure they have the answers so people can make informed decisions.
Senator Wallace: In terms of pipeline construction, the quality of pipeline construction and the requirements that pipeline companies have to meet in Canada, is it a common standard throughout North America whether it is a line extending within Canada or across the border through the U.S.? Are the American requirements for construction, for leak detection, thickness and types of materials that are used in construction common to both countries or are there significant differences? You do not have to get into what those are because this is for my general knowledge about the quality of pipelines that we have in this country.
Mr. McCaig: That is a fairly large question that you have asked me. Keep in mind that engineering standards in Canada and the U.S. have been built over a long period of time. The base from which they have been built is very strong. Our regulatory systems are a little different between the two countries, so the processes of how we arrive at decisions and those types of things are a little different. The same objective is apparent in both systems, which is to have safe, reliable pipeline systems built and operated. The engineering standards are pretty similar, but the climates we face and those types of things are different, so construction techniques and other things may vary depending on the terrain where you are building.
Senator Wallace: How would the standards that have to be met by pipeline companies in Canada compare in terms of quartile? Are we in the top quartile in worldwide pipeline construction? In other words, do we have the sense that we are getting the best of what the world has to offer in terms of technology and engineering in our approach to pipelines?
Mr. McCaig: I can answer that in two parts. Obviously, you will get a biased response from me, which I say up front. I have been in this industry for close to 35 years and have seen substantive change as we have gained higher skill levels and new and improved technology. The bottom line answer to your question is that Canada is second to none in the world in how we build these systems. You can tell that from the data indicated.
As well, I referenced in my presentation a reliability factor of 99.986 per cent. I beg you to show that anywhere else in the world. I would compare the data on the degree of safety both from a people perspective and a facility perspective with data from anywhere in the world. If you are asking the simple question: Is the Canadian pipeline system a world class operation? I would say, absolutely.
Senator Sibbeston: Mr. McCaig, I noticed at the end of your presentation that you said you were optimistic about your dealings with Aboriginal peoples and other stakeholders about the positive environmental outcomes that you can have in part because of the changes in environmental regulations and so forth. You thought that the NEB coming under one jurisdiction in respect of all waterway crossings was a positive thing.
Do these changes help you in your quest to build pipelines, such as the gateway from Alberta to B.C.? I see it as a tremendously big challenge. There is a certain amount of opposition to the pipeline in B.C., in particular, with a fear of pollution damaging the waters. The pipeline would have many water crossings. Does this help you in your quest to succeed in getting the project supported and eventually done?
Mr. McCaig: I will give you two streams in an answer, senator. The first stream is more focused around the dialogue, when we talk about Aboriginal consultation and Aboriginal dialogue and stakeholder dialogue across Canada. Part of what has happened over the last couple of years, especially around major projects, is that there is a much more rancorous type of discussion going on and there is a lot of fiction mixed with the facts. It is challenging for us to have an informed dialogue so that we can start where people have a basic set of facts, then build from that and make informed decisions. Part of the industry responsibility and our member companies' responsibility as well is to get out there and continue to have those dialogues, even though there is a lot of conflict. It is important to have the dialogue in a transparent way.
I mentioned earlier the industry association announcing the whole Integrity First Program, which is part of building a more transparent dialogue and having people come together to challenge each other on that information. That will help people to reach informed decisions.
The second stream goes back to the essence of your question: Will it help having a full life cycle under one regulator look at it? Will it help in the decision-making process? I believe it will do that in the sense that now all Canadians know where they need to go in order to have that discourse. It is not spread out over 10 or 15 different government departments but is in one life cycle regulator. Whether people are farmers or living in town or in an Aboriginal community, or working in industry, they will know where to focus their thoughts and views and where to get information. One regulator with a full life cycle approach will help to ensure that you have a better conversation, which can lead to better decision-making.
Senator Sibbeston: There has been criticism of the government and the industry to a certain extent such that all these regulations are creating less scrutiny of the projects, of which the government is very supportive. Basically, one can even say that the government is in bed with the industry. There is some concern by the public as to whether the same amount of criteria and scrutiny exist today as existed in the past, even though it was very clumsy.
One thing I have said is that these processes to date have been necessary, in particular because they have given Aboriginal peoples in our country, people who otherwise do not have much influence, an opportunity to express their concerns. The processes up to now have been useful. Now, we propose to eliminate a lot of this and leave it in the hands of the National Energy Board. Maybe you are not a good person to ask, but is there any merit or substance to the thinking in Canada that as a government we are more interested in the project succeeding for the sake of the economy and less conscious of the possible environmental adverse effects?
Mr. McCaig: From an industry perspective, I fundamentally do not believe that a thousand dialogues done badly are better than 10 dialogues done well. It is not the number of dialogues or the number of processes you build in order to have a conversation. Rather, it is more that you should be focused on what the conversation is that needs to take place and how you can make it better. From a pure industry perspective, I do not see that we should be focused on saying that these proposed legislative changes will somehow weaken or eliminate the dialogue. If we do this right, we will strengthen it. We hope to make those dialogues much better.
The best way to describe this to you is from a pure and selfish industry perspective. The partnerships in the future with these changes will create better templates and better best practices. Industry needs to play a better role in having those conversations with all the different stakeholders so we can understand each other's needs and criticisms of activities. If we can build templates and best practices that meet the majority of what we are trying to do, they will help far more in building consensus than any manner of regulation or legislation. I believe that the dialogue needs to be focused.
Senator Seidman: I will continue in the same vein as Senator Ringuette, Senator Lang and even Senator Sibbeston, in a way, to clarify what we understand about the Navigation Protection Act.
Mr. Gorall, Director General of the Navigable Waters Protection Task Force, was here last week. He said in his presentation that there was nothing in these amendments that altered the roles and responsibilities of other federal departments and agencies, or those of the provincial, territorial or municipal governments. Therefore, it is fairly complex. We have to understand that there are many government agencies involved, both at the federal, provincial or territorial levels.
Given that none of these amendments would alter what already exists in terms of the environmental responsibilities that are overseen by the federal, provincial and territorial governments, it seems clear to me that we cannot assume that we will not have safeguards that already exist. Will these amendments, while respecting the environmental safeguards that already exist, help us make things more efficient and more effective, ultimately? That is really the bottom line.
Mr. Bleaney: I will take a stab at some of the answers to that.
It is my understanding on reading this — and admittedly I am more of a layman — that a lot of the changes proposed to the new NPA are very much focused on trying to zoom in on the bigger streams and the bigger navigable waters to deal with real, material navigational considerations.
That is why they have listed all of those bodies of water on the list. Much of this legislation makes reference to that list, so that much of the work that is being talked about is in the context of that list. If you are on that list, you will have to go through a process and some review to get things done; that is a requirement of the act. However, by having reduced the vast number of other water bodies off the list, you will have more resources to apply to study those significant water body crossings that need to be looked at.
The circumstances of the act, though, are not that everything falls on that list. There are a few clauses where they have not identified the actions that are talking about being subject to the list, and those are the ones I referred to earlier. They are broad ranging; they do not have constraints.
However, for the vast majority of the work being talked about here, they have very much focused on the more material pieces of business that are more important in terms of managing navigational concerns. I think they are set up to make more resources available to work those things more diligently and effectively.
I think it is going in the right direction; that is my overarching comment. I think the vast majority of the proposed legislative changes are going in the right direction to improve the efficiency and the efficacy of the regulatory process.
Mr. Barnes: I would like to add that I agree. To get at the essence of what you are saying around whether we are losing environmental considerations, which was some of the dialogue that you referred to, I do not believe so. You need to look at this new Navigation Protection Act, in concert with the changes made to CEAA.
They remain for a large project like a pipeline that we have been talking about, which is likely to be a designated project. If it crosses boundaries of provinces, it will be an NEB-regulated environmental assessment. That is very strict consideration of the concerns associated with the project and in the broadest socio-cultural, economic and environmental context. I think we can be assured in that. If it was not an NEB-regulated pipeline but say a smaller one within a province, provinces have regulatory processes both in environmental assessment and the management of a pipeline as a utility.
I do not think we are losing anything, but we are gaining focus on what Transport Canada is an expert in, and we are focusing those resources on things that matter for our commerce, related recreation and so forth on the important waterways. It does not mean we are totally abandoning the protection of navigation rights even on non-designated waterways. There are laws and civil rights around access and things like that.
I think we have a good legal framework within which to assure the rights outside of the jurisdiction of the new NPA.
Senator Seidman: Mr. McCaig, what about your perspective?
Mr. McCaig: I would agree with my peers, senator. We are not losing. Even in your comments, you prefaced them by saying there are other bodies that have regulation and process that we must follow. This is why, when you look at the National Energy Board on federally run pipelines versus the provincially run pipelines, they also have bodies they have to comply with.
The bottom line is that this is a highly regulated industry. What you are proposing here is not eliminating what I would call that oversight; you are making it more efficient. You are putting it in the right "houses" with the right looks at the right time. The whole thing around just operating the pipeline does not disappear. Those regulations we have to follow, those operating standards and maintenance practices are still there and will be there tomorrow after all these legislative changes are done.
Senator Mitchell: This has been an interesting discussion. I think Senator Seidman's question, and others, get to the heart of a new reality in all this process and approval; namely, if companies will get the chance to build these projects, they will only do it if they get social licence and get people on side. I think we are learning that with Gateway and to some extent Keystone. They will only get people on side if they are good on the environment.
Therefore, anything that sends a message like shutting the spills office in Vancouver when the biggest problem that people had with that pipeline was offshore spills sends a negative message about the environment and begins to erode the possibility of getting that. It is important. There are some of us who believe that Bill C-38 really did damage the environmental review process.
Mr. Barnes, I asked somebody if you were a lawyer because your analysis is good. To reassure me when I asked you about who will look after the environment when they drill this exploratory well, you said there was the offshore board and also the Fisheries Act.
However, when I read your document, you go on to say more: "However, under section 66 and 72 it is believed that both these agencies and possibly others, like Transport Canada, would be mandated to conduct an informal environmental review assessment." That seems to contradict the idea. On the one hand, you are saying they will take care of it and on the other hand, you are implying you would rather they would not.
Are you referring back to the National Energy Board and the CEAA in the previous paragraph?
Mr. Barnes: These departments like the Department of Fisheries and Oceans or boards like the Canada- Newfoundland Offshore Petroleum Board have a regulatory mandate to review these projects and fulfill their mandates. In the case of the board, it is very broad — social, as well as environmental concerns. Then Fisheries and Oceans has their fisheries mandate. Environment Canada has a mandate with respect to species at risk, and Transport Canada has mandate around navigation in the marine environment.
My point is that if these sections also require an environmental assessment, it means that all of those federal authorities now also have an obligation to do this environmental assessment.
Perhaps one of the amendments might be that in fulfilling their duties, they are providing the supporting evidence that there are not significant adverse environmental effects. However, the act as written is silent on how this will be done.
Senator Mitchell: Help me here. It seems to me that on the one hand you are saying, "It is okay, Senator Mitchell; you do not have to worry about that exploratory well because the offshore board will ensure it is okay." On the other hand you are saying, "Sections 66 to 72 will ensure it is okay," and you are saying that is a problem. I am missing something here.
Mr. Barnes: There is uncertainty around how these federal authorities will fulfill this responsibility because there is no prescriptive process.
As a recommendation, one possibility is to eliminate those sections of the act because they are duplicative. However, if it is the intention of Parliament to make sure, from a due diligence point of view, that we are not allowing projects to proceed when exercising federal authority, the result and significant effects, in that situation we should provide some clarification on how that will be done.
Basically, there are 75 authorities that would qualify as a federal authority, or more, if I recall correctly, whatever the number is — by the way I am a geographer, not a lawyer.
Senator Mitchell: I know; I understood that. I thought you were a lawyer.
Mr. Barnes: In any case, if we could clarify the intention of Parliament and outline the process, then it eliminates the uncertainty that some federal authority might take this seriously and develop an elaborate process that I would argue is duplicative to what will already be done.
Senator Mitchell: Was it you or somebody else who suggested the reason this has been put in is to cover the gap created constitutionally or with federal jurisdiction when they hand off/delegate environmental reviews to the provinces, for example? They are kind of covering themselves?
Mr. Barnes: I may have given you that impression, but I think my suggestion was that I can only presume that, in drafting these sections, the drafters were looking to say: "Well, we are not doing all these small screenings on federal lands anymore except for designated projects. As a government, we are responsible for Crown land and we cannot abdicate our responsibility to ensure we are not doing bad things to the environment, so we have written these clauses." I think inadvertently, in not providing some process and clarity around that, who knows what these groups will do.
I am hearing rumblings on the street about some departments actually trying to undertake CEAA-like screenings in spite of the fact that I think that is not the intention of Parliament. Some clarity around this would be very helpful, either through guidance, regulation or amendment.
Senator Mitchell: No one consulted you on this before proceeding?
Mr. Barnes: Not me personally or the association, to my knowledge. I certainly raised this issue with staff at the agency when Bill C-38 was before the house. It was very early on and it is a complex piece of legislation. Their response was, "Well, we will have some kind of informal process." That does not satisfy me.
Senator Mitchell: It does not satisfy anybody.
Mr. Barnes: The risk of uncertainty in the process is where we were before the amendments.
Senator Lang: You are a geographer. I am glad you are not a lawyer because you would present a pretty good case.
I find it difficult to believe, because there is not a regulatory process set in place and set into the legislation, that any government can just arbitrarily go with an informal environmental assessment without a mandate. I would argue the converse: There is nothing in legislation, so subsequently you do not have a mechanism that you can say is the law and this is how I will go about my business.
I want to go back to the conversation earlier, and it has to do with the question of civil litigation and the fact that if you are under the legislation and you walked in, then you would not be subject to civil litigation. My understanding is that would apply in respect to the question of navigation and whether or not you had met all the stipulations by Transport Canada and subsequently went by their guidelines and finished your project. Therefore, subsequently you are not responsible as the builder or owner for that particular project for navigation.
The area I want to get clear on the record is that does not alleviate the fact that you are still subject to the Fisheries Act and are still subject to the various other federal, territorial and provincial acts as far as environmental laws are concerned if you do not abide by them. Perhaps you could clarify this for the record. It is important for the public to be aware that environmental laws do apply and will continue to apply during the course of operation or anything else with these projects.
Mr. Barnes: Certainly the new Navigation Protection Act does not in any way affect any federal environmental laws. You still have to get your permits or authorizations.
Senator Lang: You have to abide by them.
Mr. Barnes: You do have to abide by them, so it has no effect on that at all. It has no effect on other jurisdictions such as provincial environmental regulations and laws. It is pretty clear to me that that is the case.
Mr. McCaig: From the pipeline perspective, I would agree with my peer and would go further with what you said when you opened this conversation. You are on that listing because you are complying with what Transport Canada wants you to do. If you did not comply with that, you would open yourself up. All full civil recourse would be available.
The assumption is that you have done everything required of you by Transport Canada and you still have to follow all the other legislation and laws, both provincially and federally, when it comes to the environment. There is no free ride where you can do whatever you want.
Senator Ringuette: To further clarify, when the officials from the department were here with regard to civil litigation I specifically asked them what the penalty would be under the current environmental legislation with the Navigation Protection Act, and they said the maximum is $50,000 a day. Of course, if a project goes wrong either during construction or during its operation lifetime, in the grand scheme of things, especially the grand schemes of these projects, weighing a civil lawsuit or a maximum $50,000 a day penalty says a lot.
I have one final question, and I need Mr. Barnes to clarify this for me. You indicated quite a few times that the definition of "project" in clause 430 includes all physical work. You said that you understood that there is a need for due diligence. However, in your mind should it be the builder or should it be the different government agencies that have the responsibility to do the due diligence in regard to the environment?
Mr. Barnes: In fact, in the Canadian Environmental Assessment Act, it is the Government of Canada that is doing the environmental assessment.
Senator Ringuette: For designated projects.
Mr. Barnes: For designated projects, but in this case the federal authorities will be doing that. As in the case of environmental assessment, I believe the reality is that the proponent writes environmental impact statements to feed the information and the basis for that assessment and decision making by government. I think in this "informal" process we would see proponents being asked to provide information and analysis to support that process, as we do in a formal environmental assessment of a designated project.
Senator Ringuette: Would not a builder be doing this due diligence, data gathering, anyway in order to assess if a permit or an environmental assessment is required? I would suspect that a builder does due diligence regardless.
Mr. Barnes: Yes, they do. Wearing my hat as an environmental consultant who does these things for proponents, the proponent would look, with their team, at what laws apply and what assessments have to be done.
In the case of this particular set of clauses, I would be advising proponents that I was working with this risk and an uncertainty. We do not understand what will happen because there is no guidance, no clarity on who will do what. Is there an application? How long does it take? What do they consider? What is the timeline? These are the things that I think we need to clarify. If it is the intent of Parliament to do these informal assessments, let us apply the same level of rigour that we have to the review of designated projects.
Senator Ringuette: That would not entail any additional services from a person like you with regard to environmental assessment and due diligence from a company?
Mr. Barnes: Probably not, not substantially. I would be concerned mainly because this is a risk, and the risk is something that I have not spoken about. The government may say, "Oh, no, we did not intend that, Mr. Barnes. In fact, that is something we wrote in there to ensure that we are not abdicating our responsibilities. It means that a clever person who hires a lawyer and does not like a proponent's project will look at this to see whether the minister of the federal authority did in fact undertake some analysis to come to this conclusion. If they cannot produce credible environmental evaluation — due diligence — then the minister would likely be ordered by the courts to go back and do that work." Therein lies the risk and uncertainty to business.
Senator Ringuette: I am trying to get my head around this new legislation. Are you assuming that, even though the industry — you or the builder — would submit their own due diligence, it would probably not be sufficient?
Mr. Barnes: Let us use the example of an exploration well that I referred to earlier. If a proponent did that, they would file a very large application to the offshore petroleum board, which gets shared with Environment Canada and Fisheries and Oceans. In that application would be an incredible amount of due diligence, as you referred to it, around the effects of the project and the things that the proponent will do to manage those effects. That process elicits the kind of information that you need, so there is no extra work to be done.
However, outside of that licensing process that the board pursues or the permits that are issued by DFO or another agency, there is still this Canadian Environmental Assessment Act requirement that needs to be fulfilled from a due diligence perspective. I would like to know what the government will do, because it is not clear to me.
An Hon. Senator: I have often asked that.
The Chair: We asked it, for many years, of a certain government.
Senator Brown: I am interested in your first page on CEPA. You talked about 110,000 kilometres of pipelines in Canada, transporting 3.2 million barrels of oil and 14.6 billion cubic feet of gas every day. Then we come down to where you are telling us your percentage, which is apparently 99.9985 per cent. You are not satisfied, as you say, that no incident is acceptable to you or your member companies.
Mr. McCaig or Mr. Langille, can you tell me whether I am right or wrong in figuring that that fifteen one-thousandths of a per cent that causes problems is probably not really the pipeline but whether somebody is trying to cross it with something else, large bulldozers or something? I am not trying to pin down any industry, but I am trying to find out whether I am right or wrong about a large percentage of the fifteen one-thousandths being caused by accidents and not by the pipeline itself. Am I right or wrong? That is all I need to know.
Mr. McCaig: I will give a bit of a mixed answer because there are things other than third party damage. However, the biggest risk that faces the industry today actually is third party damage. The incidents that might cause leaks or ruptures tend to happen from things that are what I would call engineering in perspective. Through our pipeline integrity initiative, we have programs set up to evaluate those and continue to build in best practices, along with technology that will help to reduce those even more over time. Where we have the bigger risk is on the third party side primarily because a lot of people in Canada do not know, for example, that there is no mandatory one-call system anywhere in Canada. Recent legislation in Ontario has started to move that a little, and we will see a mandatory one- call system. However, the bottom line is that without a mandatory one call system, without an enforcement perspective around damage prevention and without the education component, incidents will occur. Those are the three pillars that I look at when I look at effective damage prevention. That continues to be the biggest risk area in Canada.
If I look south to our neighbours in the United States, this is one area in which they have made significant improvement. There is a ton of data out there that shows you that those states that have those three pillars in place have seen the overall number of incidents reduced by more than 300 per cent. One thing that Canada needs to have quick action on is an overall, effective damage prevention program. That would go a long way to resolving what you have just raised senator.
Senator Brown: I want to say that you are agreeing that I am right about the fifteen one-thousandths of a per cent. I think you said in there something about people who would actually follow the pipeline on a regular basis and look for problems like that. Is that right, or did I just make that up?
Mr. McCaig: No, our pipeline integrity programs for these pipelines are very intensive. The programs that have been set up are based on historical information and also look to the future. In terms of overall pipeline integrity, these programs are constantly looking to try to see where the gaps are, what we need to improve on, whether it be technology or skills, and whether we are analyzing the data in the best way to make informed decisions around what we need to do next. Those systems are monitored 24 hours a day, seven days a week.
The Chair: Thank you, Mr. Bleaney and Mr. Barnes, for being here, and thank you Mr. McCaig for being with us from Calgary. We appreciate your time and your testimony very much. It was good to listen to it, and it gives us a little bit of food for thought.
(The committee adjourned.)