Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 6 - Evidence - February 11, 2014
OTTAWA, Tuesday, February 11, 2014
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5 p.m. to examine the subject matter of Bill C-15, An Act to replace the Northwest Territories Act to implement certain provisions of the Northwest Territories Lands and Resources Devolution Agreement and to repeal or make amendments to the Territorial Lands Act, the Northwest Territories Waters Act, the Mackenzie Valley Resource Management Act, other Acts and certain orders and regulations.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: My name is Richard Neufeld. I represent the province of British Columbia in the Senate, and I'm chair of the committee.
I would like to welcome honourable senators, as well as members of the public with us in the room or listening through the webcast.
I would now ask senators around the table to introduce themselves, and I will begin by introducing my deputy chair, Senator Grant Mitchell from Alberta.
Senator Wallace: Senator John Wallace from New Brunswick.
Senator Black: Doug Black from Alberta.
Senator Sibbeston: Senator Nick Sibbeston from the Northwest Territories.
Senator Ringuette: Pierrette Ringuette, New Brunswick.
The Chair: I would like to introduce the staff we have supporting us from the Library of Parliament: Marc LeBlanc and Sam Banks and our clerk, Lynn Gordon.
Today is the seventh meeting of our pre-study hearings on Bill C-15, the short title of which is the Northwest Territories Devolution Bill. This bill was introduced in the House of Commons on December 3, 2013.
It gives me great pleasure today to welcome, for the first part of our meeting, by video conference from Calgary, our witnesses from the Canadian Association of Petroleum Producers: Mr. Alex Ferguson, Vice-President, Policy and Environment, and Mr. Aaron Miller, Manager, Northern Canada. We have 45 minutes for this section, and then we will go to a video conference for the last hour.
Mr. Ferguson, we have received and circulated a copy of your speaking notes. Please proceed with your presentation, after which we will go to questions and answers. Good to see you again, and the floor is yours.
Alex Ferguson, Vice-President, Policy and Environment, Canadian Association of Petroleum Producers: Thank you very much, Mr. Chair and members of the committee. It is great to be able to give you our thoughts and ideas around Bill C-15. As mentioned, I'm the Vice-President, Policy and Environment, for CAPP. As you may know, we represent Canada's upstream oil and gas sector. Our members find and develop about 90 per cent of Canada's oil and natural gas resources across the country. Together, our members invest upwards of $60 million plus annually and employ more than half a million people across Canada.
We appreciate the opportunity to contribute these perspectives regarding Bill C-15, the Northwest Territories devolution act.
We certainly see this as a historic bill as the people of the Northwest Territories are set to take control of the future path of the development of the abundant natural resources in their region.
I'm going to turn over to Mr. Miller who will lead us through a bit more of the detailed discussion, and we will certainly look forward to any kind of questions or comments.
Aaron Miller, Manager, Northern Canada, Canadian Association of Petroleum Producers: Thank you, Mr. Chair and committee members. As you are aware, this bill was tabled in early December of last year, and, although we, as an association, are still in the process of assessing all of its implications, both in the short and the long term, we can say that CAPP supports the intent and spirit of Bill C-15. We view it as a positive step that will aid northern development.
To date, CAPP has primarily focused its review on Part 4 of the bill relating to the proposed amendments to the Mackenzie Valley Resource Management Act, henceforth called the MVRMA.
The federal government's initiatives for regulatory reform have been a positive step towards improving regulatory efficiency and effectiveness, while, of course, ensuring a continued high standard of environmental performance that Canadians have come to expect. Extending these reforms into the N.W.T. will be an important decision for attracting and enabling investment that creates jobs, economic growth, and prosperity for the N.W.T. and all of Canada at large.
Regulatory processes and bottlenecks in the past have sometimes led to project delays and, unfortunately, outright cancellations, with the resulting adverse impact on the economic and social benefits that could have flown and accrued to those communities from those projects.
Accordingly, CAPP is strongly supportive of the government's objectives to improve the efficiency and the effectiveness of the Northern regulatory regime.
The MVRMA is a core piece of regulatory legislation in the N.W.T., and the proposed changes to this legislation are very important to our industry. For example, the recent amendments could have some very positive impacts. One is that the ability for the minister to give some policy direction to all MVRMA boards, whether it is the land and water boards, the land use planning boards or the environmental impact review boards, should provide for a more cohesive, unified and comprehensive review process. This is one that should be of benefit to all parties involved.
CAPP fully respects existing comprehensive land claim agreements and Aboriginal treaty rights and supports the federal government's protection of these agreements and rights in the proposed MVRMA amendments.
CAPP's view is that the regulatory bodies in the North should be efficient and timely and should also ensure that regional knowledge is appropriately considered in the review process as projects are put forth.
In this vein, CAPP supports the accommodation measure in the MVRMA amendments that requires the chair of the Mackenzie Valley Land and Water Board, MVLWB, to consider the inclusion of regional nominees when these three-member committees are dispatched to assess proposed projects.
This will be particularly important, with respect to the proposed board amalgamation, in order to retain regional representation in their process, and maintaining this regional complexion in the land and water boards was a key issue to our members.
The proposed clarification of timelines for the environmental impact assessment process is also a very positive step forward. The historical lack of predictability of review timelines for project proposals in the central Mackenzie Valley has been a significant concern for project proponents.
Investment and operational decisions benefit by having predictability in the review process, particularly as to review scope and timing. This predictability is essential for being able to manage work activities to fit within limited seasonal operating windows, which is a unique characteristic of operations north of the sixtieth parallel.
Unexpected delays in the timing of authorizations can disrupt project plans, which can then translate to serious delays and, potentially, missed opportunities. Critical path decisions and investment timelines have been a systemic challenge in the North and are especially pronounced when compared to timelines in competing oil and gas jurisdictions. Our industry is global in scale, and Northern oil and gas exploration and development projects have to aggressively compete for limited investment dollars against opportunities elsewhere, not only in Canada but also around the world. Reducing such risks and uncertainties in project review timelines, as proposed in this legislation, will serve to improve Northern competitiveness.
The devolution of federal responsibilities to the N.W.T., coupled with the increased exploration interest in the central Mackenzie Valley, facilitates the opportunity to make the needed improvements to regulatory efficiency and effectiveness. This transition stage, from April 1, 2014, forward, will be a crucial time, and CAPP appreciates the mirroring of federal legislation that is mandated by the devolution agreement, which will, of course, support stability, continuity and predictability of the regulatory regime.
Such a regulatory regime is fundamental to creating a positive environment for investment, which, of course, creates jobs and economic growth and the tax and royalty revenues to government that underwrite the social programs that we all cherish so much.
Industry invested about $600 million in the North over the past three years and is expected to spend an additional approximately $650 million based on existing land acquisition commitments alone. An improved regulatory framework should help to stimulate further investment.
The North is a key area of interest to our industry and an area of vast oil and gas potential, but not without its challenges, which makes regulatory effectiveness and efficiency that much more crucial to success. Being a frontier area, naturally there is a lack of infrastructure, likely the most limiting factor for exploration and development work in this region, whether in regard to physical infrastructure such as roads, pipelines and facilities, or community infrastructure such as housing, recreation and issues around work force and service sector support.
Although there is large resource potential, most of these resources await confirmation as to whether they're economically viable. Timely assessment through exploration will be key to their realization.
I should note that the North is not alone in its challenges. Whether in producing jurisdictions, such as B.C., Alberta, Saskatchewan and Newfoundland, or in potential new development areas such as Quebec, New Brunswick, or other frontier areas, common challenges facing Canadians oil and gas development include access to domestic, North American, and other international markets; competitiveness in the areas of fiscal and regulatory policies; workforce availability; access to capital; and, of course, having the social licence to operate with respect to confidence and trust.
With devolution set to go live April 1, 2014, and the related legislative changes through Bill C-15, there is an historic opportunity for the N.W.T. to start to address these challenges and advance its vision for oil and gas development. There will be ongoing regulatory work to achieve this vision, as it will remain important to ensure timely implementation of related changes to regulations and policies to support this legislative intent.
CAPP certainly supports the federal government in its efforts to improve the regulatory framework in the N.W.T. These amendments have been under development and consulted on for a number of years as part of the AANDC action plan on northern regulatory improvements. These amendments are a positive step forward on the long road towards expanded oil and gas development in the N.W.T. We look forward to continuing to consult with the N.W.T. and the federal government to work together to help this vision become a reality.
Thank you for this opportunity to present to you today. I look forward to your questions.
The Chair: Well, thank you to both of you. We will start with the deputy chair, Senator Mitchell.
Senator Mitchell: Thanks, gentlemen. Thanks for the very informative presentation. I have quite a few questions, but there are lots of people interested in this around the table, so I will get to two quickly.
Mr. Miller, you make the point early in your presentation that regulatory process bottlenecks in the past have often led to project delays or outright cancellations. This is a key issue because some and not an insignificant number of the presentations we have had in the past have related to the whole board structure, superboards versus regional boards, and so on. The argument is made that streamlining is very important.
Could you give us some idea of what kind of bottlenecks and what has caused the bottlenecks? Is it capacity? Is it other things? What has caused the delays — lack of leadership?
Mr. Miller: Let's talk about oil and gas development in the North vis-à-vis exploration licences.
You have limited operating windows to operate in up North, by virtue of climate, geography and infrastructure. Let's talk about early, very benign exploration work. Let me walk you through what that first term of five years looks like. I will give you a rough idea of how comprehensive this really is.
In year one, essentially, you are negotiating access and benefit agreements, compiling existing geological and geophysical well data, developing a petroleum systems model, acquiring potential field data, doing pre-disturbance and heritage studies so you can get permits to engage in seismic acquisition. The requirement to negotiate access and benefits agreements before fuel operations can be conducted on a granted exploration licence can take more than one year alone. Again, that was year one. In year two, of course, you acquire process; interpret new 2D seismic data, conduct pre-disturbance and heritage assessments and also permits for 3D seismic acquisition. In year three, you acquire process and your next steps with your 3D seismics. In year four, again, you are conducting pre-disturbance and heritage assessments and permits for exploration wells. In year five, if possible, drill and test your exploration well. Now, if you get bumped to an environmental assessment, it could take two years. In the best of circumstances, the critical path is very tight in those exploration licences.
Back to your question, I think it is balancing the realities of the North with the regulatory process, and having a regulatory process that will be conducive to allowing explorers to actually explore.
Senator Mitchell: Thank you. My next question addresses how the relationship between the superboard and the kinds of processes you are discussing now relates also to the duty to consult. Who do you see fulfilling that duty? I'm talking about the constitutional duty to consult. Would it be the board? Would it be the industry? Would it be members of your association? Have you given that some thought?
Mr. Miller: With regard to the superboard, that's been the most controversial issue — that is, the amalgamation of the local land and water boards. We all know that. That was one thing CAPP and our members were cognizant of. Our members worked very hard to establish relationships with those said local land and water boards.
Again, that was a very important issue to our members. Whatever forms these boards or board — plural or singular — again, our number one issue was let's retain the regional complexion of the land and water board or boards. We were happy to see in the said amendments that the chair of the Mackenzie Valley Land and Water Board will have the ability, in his groupings of three committees, to inject local knowledge into those subcommittees of the superboard. That was the number one issue with us with regard to the board amalgamation.
Mr. Ferguson: Senator, if I could —
The Chair: Make it quick, because we're going to run real quick on time. Go ahead.
Mr. Ferguson: CAPP is an organization where all of our members have a very strong commitment to engagement before we apply, before we conduct our business across the board, whether it is communities, public engagement, and particularly First Nations and Aboriginal engagement.
Notwithstanding the processes that will be required under agreements and legislation, CAPP itself and all of our members spend a lot of energy on up-front consultation ourselves.
Senator Mitchell: Thanks.
Senator Black: Mr. Ferguson and Mr. Miller, it is nice to see you both again. Thank you very much for that tremendous presentation.
If you were to recommend to this committee any improvements to the legislation, can you tell us what those would be, please?
Mr. Ferguson: I will certainly start, and then I will turn to Mr. Miller for a few specific points.
We certainly look at the early stage for our sector in the North. This is about exploration trying to find a commercial opportunity. We see this as an excellent first step. We have a firm belief, wherever we work, that the regulatory model needs to be a continued improvement type of cycle because our industry does move and accelerate new technologies, new development patterns, moving from conventional exploration and development to the unconventional. We see the need, first and foremost, for a regulatory model that is able to respond to the changing public, First Nations, technology industry pressures that are there. We see that starting to formulate and look forward to seeing that get stronger as we move ahead here.
Mr. Miller, do you have any specific point?
Mr. Miller: Yes, thank you for that question, Senator Black. I would add, in terms of section specifics with regard to the MVRMA, our members still have concerns regarding sections 124 and 125. With the way the legislation is worded right now, it is very easy for a premature environmental assessment to get invoked. Specifically in section 125, where there are two tests that have to be met, there has been some concern regarding the public concern test, which does not have a lot of parameters around it. Again, it can be very expansive in its interpretation. I would love to talk about that at a later point, but I know we're getting tight on time.
Senator Black: Your point there, then, Mr. Miller, is that we should have a look at the concept of public concern to make sure that it is not completely subjective?
Mr. Miller: Yes. That is correct.
Senator Black: Thanks very much. Last question ever so quickly, if I may, Mr. Chair. Is that acceptable?
The Chair: Yes.
Senator Black: We have heard in these hearings that there's a differential between investment in the Yukon and investment in the Northwest Territories. Are you able to comment on why you think that might be the case as it relates to your presentation today?
Mr. Ferguson: Certainly, senator. The differential in investment patterns right now between the two jurisdictions is primarily related to the resource and the quantification understanding of the resource. There are some activities in the Yukon that are quite similar to some more maturing data available in places just to the south, in British Columbia. There's also a bit of a stronger pattern on the natural gas conventional side that they're playing off on some of those opportunities in the Yukon.
I think the patterns of investment that we're seeing with our members in the N.W.T. are probably going to accelerate — I would suggest maybe at a faster pace — because of the opportunity around the tight oil play that's in the region. I think it is a significant opportunity, and if you look at the markets, it's an obvious driver.
Senator Black: You would suggest it is a technical reason that the Yukon is enhancing their investment as opposed to a regulatory concern? I don't want to put words in your mouth, but we have heard that.
Mr. Ferguson: Certainly at this initial point — recall we're at the exploration side — there's just a bit more maturity of data and opportunities right now in the Yukon, but I don't think that pattern will necessarily stay that way.
Senator Black: Thank you very much.
Senator Sibbeston: This bill is pretty positive for the people of the North, particularly those of us who have been involved in the struggle for responsible government in the North. This bill is going to give control of lands and resources to the people of the North, so in that respect, it is very good.
But there are still some concerns. It seems on the one hand the government is handing over responsibility and jurisdiction of the lands and resources, but on the other hand, there is retention of some control in Ottawa. I notice that you applaud the fact that the minister in Ottawa will still have binding policy decision making and direction with respect to all MVRMA boards, and you applaud that as a good thing.
Are you saying that the minister sitting in Ottawa handling the levers of decisions in the North and you sitting in Calgary in boardrooms is a positive situation for the people of the North? Is it because you are more comfortable in dealing with the federal government, or is it that you don't have any confidence in the people of the North to make decisions in this matter?
Mr. Ferguson: Certainly, senator, I can understand the interpretation of that.
First of all, we separate policy direction in its intent from the implementation and guidance through the regulation part. It is good to have a separation there, we believe. CAPP has also been fairly consistent for many years in that we prefer to be regulated by those closest to the land.
So we are looking forward, certainly in the transition, that there might be a need for some good policy direction, to make sure we're staying with the intent and with why we're doing this devolution piece. At the end of the day, we see a tremendous opportunity as the North gains, certainly in our sector's presence, in terms of investment but also in terms of capacity growth in regulatory models and experience with our industry in the North. We're looking forward to less control from Ottawa, less control from Calgary and more control from the Northwest Territories.
Senator Sibbeston: When you say, as you do, that CAPP fully respects existing comprehensive land claim agreements, Aboriginal treaty rights and so forth, do you just say that, or do you really mean it? When you consider the fact that Aboriginal groups in the North are against the amalgamation of the boards because it takes away from their present board powers, where there is a regional board set up to deal with the environment, this legislation amalgamates all the boards and puts powers in a superboard, rendering the regions into panels in instances where it is reasonably possible, and then they will have somebody from the region.
When you consider that, do you mean it when you say that you support land claims and Aboriginal treaty rights? Because it seems to me that the act is lessening these powers and these rights.
Mr. Ferguson: Thank you. First of all, I guess our response is that we deeply respect the intent, the substance and the direction of those land claims and treaties.
We would suggest government have those discussions with government. If there's an opportunity to streamline the processes so that we can spend more time on the substance and character of our interaction and engagement on that land base, that's where we see the opportunity coming from with any kind of streamlining or amalgamation of those boards.
It certainly doesn't preclude the need to make sure that we pay attention to the individual and collective interests on that land. We are suggesting that if there's an opportunity to streamline process, we can spend more time on substance.
The Chair: Thank you, Senator Sibbeston. I was remiss when I did the first introductions. We have two past premiers of the Northwest Territories on our committee. One of them is Senator Sibbeston, whom you just heard from, and we will now have the other former premier of the Northwest Territories, Senator Patterson, ask some questions.
Senator Patterson: Thank you, and welcome to the witnesses.
I did review the transcripts of the house committee in Yellowknife last month, and I want to mention that I was, frankly, appalled at the way your representative was berated at the committee by one member. That's not the way parliamentary committees are supposed to work, so I'm really glad you were willing to appear before this parliamentary committee.
I have just a couple of quick, short questions, hopefully.
I know that you participated in the development of this legislation, and we thank you for that. I know a concern was raised by industry organizations in the earlier draft of the bill about the rigidity of development certificates. There are provisions that now allow for reconsideration of development certificates. I wonder if those provisions are satisfactory. Maybe you could address that earlier concern that was expressed.
Mr. Miller: That particular concern wasn't at the top of the list of our members. Again, with our CAPP members, it was a critical path with timelines. Primarily, as I alluded to with Senator Black, there was the potential for premature environmental assessments at the early exploration stage. But, senator, that particular issue was not at the top of our list.
Senator Patterson: I have another short question. There is a regime in the bill that addresses the development of oil or gas fields that may straddle onshore territorial jurisdiction and offshore federal jurisdiction in the Beaufort Sea and in the Inuvialuit Settlement Region. I understand it proposes the parties would work together to ensure that a field like that is developed as a single operation — or ``unitized,'' I think is the term.
Is that going to work well for the industry? Would you have a comment on that provision?
Mr. Ferguson: We have a similar situation in Newfoundland right now, for example, with that straddling between offshore and onshore on some resource plays. Certainly from an industry perspective, we don't have any problems collaborating and cooperating between members to make sure resource development occurs appropriately.
So we would suggest the same system — namely, by talking with two of the jurisdiction leads. It would be similar in the North to what we have working successfully, hopefully to conclusion, in Newfoundland right now.
Senator Seidman: I think I missed the introductions, as there was a traffic accident outside and I was a few minutes late. I'm Senator Judith Seidman, and I'm from Montreal, Quebec.
You talked about the challenges facing the North and, as a result, challenges that would impact CAPP organizations from development in the North. One of the challenges you mentioned is having the social licence to operate with respect to public confidence and trust.
Could you elaborate a bit on that particular challenge, and how, or if, there are any mechanisms in the current bill that would facilitate?
Mr. Ferguson: I'll start with a broad statement around our social licence phrase and how we look at that as CAPP among our members. It's really about our performance and our ability to communicate and make people aware of our performance — I would suggest good or bad. We like to think ``good'' for the most part.
In terms of the opportunity around gaining the social licence, our industry has its own accountability and obligations to undertake programs, public awareness, community engagement — all of those things — to be able to do our part towards gaining a social licence for developing those resources.
We look to a strong, effective regulatory agency to provide some level of comfort to the public and people living in those jurisdictions such that they have the correct oversight of our activities.
The bill itself provides some opportunities in terms of government and regulatory oversight that we think are positive. We see a similar rigour for that kind of oversight in other jurisdictions. As the nature of our activity changes from exploration to, hopefully, production in a development environment, that capacity and oversight will continue to grow along with our industry.
Mr. Miller: I would add that when you look at components of social licence, first, there is a robust and rigorous regulatory process. Second, long before these amendments came around, our members were already engaged in very robust community consultation and stakeholder engagement plans, and, in aggregates, those are the essential ingredients of social licence.
Senator Wallace: Gentlemen, in your presentation, you've made it clear that you're supportive of Bill C-15 and its aim, and I think you believe it will improve regulatory efficiency and effectiveness and that will lead to investment in the North, jobs and all that goes with that.
But as you point out, it's also necessary to have environmental matters properly provided for in that process. I noticed in your presentation you make a statement that you believe the environmental issues relative to the North will be protected and that the bill will ensure an effective environmental protection.
In the bill, what would you point to? What do you base that statement on?
Mr. Miller: First and foremost, before these amendments, there already was a very rigorous and robust environmental assessment process and environmental impact review process.
This bill will streamline some issues that will allow the regulatory bodies to hone in on these processes and engage in, quite frankly, more scrutiny and more review in a more unified, cohesive template model.
When you say ``environment,'' I take it you are talking about environmental protection. Let's maybe talk a bit about the macro environment of the North with regard to infrastructure. I assumed you were also alluding to that component of the term ``environment''?
Senator Wallace: Yes.
Mr. Miller: With or without these amendments to the MVRMA, those critical infrastructure components of the equation north of the sixtieth parallel don't go away. That's why it's so crucial to have these improvements in the MVRMA. Whether it's physical infrastructure or community infrastructure, there are systemic challenges to getting over the hump north of 60. Although these legislative changes will help matters, it's still a long road home.
Senator Wallace: As all witnesses who are supportive of the bill and supportive of development in the North have said, new investments are continually needed, as is the creation of new jobs.
We've had witnesses appear before us who have spoken about the regulatory issues and how, at times, they can detract from further investment. The comment was made that the larger firms have a greater ability to work through the maze; it takes time and money, and it may add to frustration, but they have a greater ability to work through that than would be the case with smaller firms.
The objective, though, is to increase investment and job creation at all levels, so that smaller and mid-sized businesses would also have opportunities in the North.
From your own experience, do you see the existing maze of the regulatory framework having particular negative impacts on the smaller business investments that are discouraged at times or prevented from occurring and that would otherwise have the opportunity to be encouraged to proceed if Bill C-15 were to pass?
Mr. Ferguson: That's not unique to the North. We see the same kind of challenges, not just from our sector, but from any sectors.
The one opportunity that presents itself with the oil and gas sector is that we provide a fairly rich opportunity spectrum for businesses to be part of our overall industry. It's much richer in terms of those kinds of opportunities than probably many other sectors. All of the service industries — all of those things — rely heavily on the initial emphasis or capital coming in from those larger players, as you suggest.
That will happen over time. Right now, we're heavily into an exploration model at this point, so we haven't got that scale piece working to our advantage yet for those small and medium-sized companies to come in and start to develop and flourish under that kind of model.
That will happen over time. If we prove the commerciality of some of these resources, I think you will see a huge opportunity for those small and medium-sized businesses to come in.
Exploration, by its very nature, is high risk, so there is limited opportunity in a pure exploration play for small oil and gas companies to find the capital to take that kind of risk.
I think the tremendous opportunity and benefit the N.W.T. has is that there are some very large companies that are able to get through the process to demonstrate that there's a commercial opportunity or not.
Mr. Miller: That was an excellent question because smaller and more nimble entrepreneurial companies, whether in the oil and gas sector or any industrial sector, have a key critical role to play in the economy. Again, often they have a higher degree of manoeuvrability, and they can engage in maybe a little more risk at times. I thought your question was very prescient because, again, whether it's oil and gas or any sector, having them on the playing field, I think, is critical.
Senator Ringuette: You've indicated to us that industry investment has been about $600 million in the North in the past three years and is expected to be another $650 million based on existing land acquisition.
Now, are they big-business investments, or are they smaller-business investments? I'm supposing that this is strictly in exploration. If I'm wrong, correct me, please.
Mr. Ferguson: Exactly. Just to clarify, the $650 million are commitments that the companies have made through their land acquisition process. Now, that's a lot of money, frankly, and even some of the smaller companies that are involved in leading some of those explorations and taking those land acquisitions have partnered and are working with other companies behind the scenes to gather that kind of capital. That's a particular feature of the oil and gas industry anywhere in the world. A lot of partnerships and joint ventures occur in order to take on that higher risk on the exploration side.
The opportunities, on the spending of that $650 million, if things proceed as planned, include the pure exploration work, but you can imagine some of the follow-on work, whether it's hotels or restaurants or any of those kinds of induced business opportunities that would naturally occur because you're bringing a bigger pot of investment into the jurisdiction. Certainly, some supplies, purchases and contractors will come from elsewhere. The companies have a pretty strong commitment to hire locally as much as possible, and I think that's pretty consistent across the country, wherever our members work.
In short answer, it's very much a mix of small and large companies that will be spending and gaining benefit from that investment.
Senator Ringuette: I have a special interest in regard to labour. What is the percentage of locally hired workers to work on the exploration fields in comparison to temporary foreign workers?
Mr. Ferguson: I can answer specifically in the North. With the operators that are up there at an exploration stage, the people they have are pretty specialized. You can imagine it's high-risk in terms of commerciality and proving that there's something there. I think some of the employees that you see up there locally are probably support services, administration, stakeholder and engagement-type people. Some of our members have people staffed in the different locations in the North as well, but there's no question that at this early stage, if we're looking for a specialist, say, a geologist, for example, they're probably coming from somewhere else if there's not somebody locally. That will grow over time.
To our knowledge, there are no temporary foreign workers under the federal program working for our members in the North on any of those, and it's primarily because of the nature of the business. It is still a struggle, I will tell you, to find skilled workers and trades, no matter where the operations are, but given the need to prove the commerciality of these, the companies are putting a lot of effort into it.
Senator Ringuette: I suppose that the companies operating are also talking with the stakeholders and the local communities in regard to training people for the future investment of your members in the North.
Mr. Ferguson: There's no question that the companies have been very active in engaging with as many people as they can in the North. It's certainly our experience, based on entering other jurisdictions that are less familiar with our sector, never mind less familiar with the type of development we're looking at there. I think you'll find, if you talk to any of the individual operators up there, that they have quite a bit of dedication to getting out and talking with communities, the public, First Nations — everybody. It's just the nature of exploration.
The Chair: Thank you, Mr. Ferguson and Mr. Miller. That ends our time. I appreciate your input. Have a good day, gentlemen.
Welcome to the second half of the meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. We are continuing our examination of Bill C-15, the Northwest Territories Devolution Bill.
It gives me great pleasure to welcome our second panel of witnesses, some with us here in Ottawa. We're hoping that those who are going to come to us by video conference arrive by video conference. If they don't, we're still going to get through the second half of the presentation; Ms. Ramin has agreed to do the whole presentation.
Mr. Stanzell, we're going to start with you first, and I know the technical people are working on the video conference. If not, thank you very much, Ms. Ramin, for agreeing to present the prospector's part of the presentation. I appreciate that very much. We're sorry that took place, but we will try in the meantime.
So, Mr. Stanzell, would you start, please?
Allen Stanzell, 1st Vice-President, Northwest Territories Chamber of Commerce: Thank you, Mr. Chair. Just for the record, I'm Allen Stanzell. I am a resident of Yellowknife and 1st Vice-President of the Northwest Territories Chamber of Commerce.
Mr. Chair and committee members, thank you for providing us with an opportunity to speak with you today. The N.W.T. Chamber of Commerce is the largest business organization north of 60, and we've long been a champion of devolution. We firmly believe that the closer the authority is to an affected jurisdiction, the better the overall decision making.
As a part of our preparation for this address, we polled our members to get a collective opinion regarding our position.
With few exceptions, members of the chamber network, from Hay River to Inuvik, support the points we wish to leave with you today.
First and foremost, the business community in the Northwest Territories supports the legislation as a whole and wishes to congratulate the federal government and our Aboriginal and territorial governments for their hard work and foresight in moving related agreements and this legislation forward.
Is Bill C-15 perfect? No. Nothing visionary is ever perfect, but, in our view, Bill C-15 is indicative of the vision shared by the people of Northwest Territories. To reinforce that statement, I wish to refer to a poll conducted in early March 2013. The research was commissioned by an independent third party and conducted by an independent research firm. The methodology included interviews with 400 N.W.T. adults, balanced between larger centres and small communities and between Aboriginal and other people.
The key finding of that research was that nearly 7 in 10 respondents were either in favour of the devolution agreement or not opposed to it, while fewer than 2 in 10 were opposed. Clearly, devolution of resource, land, and water authorities is a vision shared not only by the N.W.T. business community but also by the vast majority of N.W.T. residents.
We know some groups would have you roll back the hands of time and leave things as they were. While we respect their voice and thank them for their contribution, we disagree. We believe it's time for the N.W.T. to make meaningful progress toward its maturity as a larger, more important contributor to the nation that is Canada.
We also support the overarching spirit of the proposed amendments to the Mackenzie Valley Resource Management Act and believe they are a positive step toward development and resource management in the N.W.T. There is more work to be done and challenges to be addressed if the Northwest Territories is to fulfill its potential.
We rank very high in resource potential but very low with regard to mining and oil and gas investments because of regulatory infrastructure and other issues.
In short, Mr. Chair, we have a lot riding on the success of devolution and the efficacy of regulatory reform.
I think we would all agree that it's difficult to optimize devolution of authorities without effective legislation and regulations. Therefore, in the limited time we have, we'll focus on the five key points of MVRMA reforms that we hope will be addressed by the federal government.
The N.W.T. Chamber of Commerce advocates for clear criteria to define projects of public concern and subsequently advocates for the N.W.T.'s regulator, rather than Ottawa, to make that determination.
Specifically, there need to be statutory criteria for the expansive interpretation of what might be of public concern in section 125 of the MVRMA. Clear criteria do not exist for determining public concern, and that leaves the regulator with an open-ended obligation to accept such interventions without regard for merit.
There is an underlying belief that AANDC doesn't have the authority to amend section 125 because it may violate land claim agreements. We believe that that section can be amended without contravening land claim agreements and in a manner that would better align the MVRMA with those agreements.
The critical point here is to establish criteria for defining projects of public concern or thresholds that limit interventions to those of merit.
Just as important, we believe the determination for defining a project of public concern should continue to reside with the territorial regulator, which would filter interventions through the new criteria. The N.W.T. Chamber of Commerce advocates for more specificity with regard to the referral of projects to preliminary screening in section 124 of the MVRMA. None of the amendments to the MVRMA addresses the issues related to preliminary screening of applications. Too often, proponents are ordered to undertake environmental assessments regardless of the scale of projects.
We are aware of simple exploration drilling applications being referred to environmental assessment. When the process costs more than the project, proponents have no choice but to withdraw their applications. Such actions only drive investors out of the N.W.T. For a variety of reasons, we're already one of the most costly jurisdictions in the country in which to undertake exploration and project development. It makes no sense to burden resource investors with process costs that are unwarranted.
To be clear, we are not advocating for elimination of the environmental assessment process. We are advocating for a more reasonable definition of project referral to an EA, perhaps based on the scale of projects.
The N.W.T. Chamber of Commerce advocates for environmental assessment, environmental impact review decision-making caps of not more than one year for simple applications including brown fields projects and not more than two years for green fields projects.
We are aware of projects taking far too long to get to approval. The De Beers Gahcho Kué project took seven years to receive approval. In fairness, the proponent slowed the application process during the global recession of 2008.
However, the uncertainty related to regulatory decisions in the N.W.T. is one of the major concerns of mining and oil and gas executives around the world. Capital goes where it can grow, so investors move on to other jurisdictions that provide greater certainty. We're fortunate that De Beers is committed to northern projects and is very well capitalized. Other investors would not take the chance on a regulatory process that has no defined decision-making caps.
The duration of cost of the decision-making process affects every applicant, including the Crown. It took more than two years for the Northwest Territories Power Corporation to receive a water licence renewal for the Taltson Power Plant. The plant has been operating since 1965. The corporation filed for a 15-year licence renewal, which is standard. The facilities were not being altered. Stream flows were not being altered. Yet the Crown corporation was subjected to a costly two-year process, a cost that ratepayers had to pick up.
The current legislation and regulations need to be tightened up so that common sense may prevail. In our view that begins with decision-making caps. The Yukon Territory provides applicants and investors with decision-making certainty through the Yukon environmental and socio-economic board. The N.W.T. must absolutely provide the same degree of certainty.
The N.W.T. Chamber of Commerce supports the creation of a single regulatory board for the entire N.W.T. We realize this is a point of contention. However, in our view, federal legislation enables the government to create a single board with overarching authority. Notwithstanding that local boards have some merit, we don't believe that the volume of applications in the N.W.T. warrants multiple boards. Smaller boards don't have the capacity to review complex applications. A single board would afford appropriate resources.
When powers were devolved to the Yukon, the Yukon Environmental and Socio-economic Assessment Board was created as the central decision-making body for the territory. YESAB retained a local presence by establishing six designated regional offices which act as entry points for applicants. The same could happen in the N.W.T. where regional boards exist today. In that manner, a local presence and community ties are maintained while reviews take place in a central organization with a technical capacity to manage them efficiently.
The N.W.T. Chamber of Commerce advocates for a single-window application process for the N.W.T. resource exploration and development projects — one-stop window for land and water use permits as well as licences.
When powers were devolved to the Yukon, the right to issue mining licences remained with the federal government. In discussions with industry in the Yukon it appears that was an oversight. We have the opportunity here to ensure that the authority to issue licences resides in the N.W.T. We're advocating for a single application window. In simple terms, when an application arrives for a resource exploration or development project, it triggers the system to address all aspects of the application concurrently including all related federal and territorial authorities.
This model is employed elsewhere in Canada. It creates vast efficiencies relative to the current system where federal and territorial authorities work in a disintegrated fashion, which leads to inconsistencies and regulatory duplication.
In the past 30 years, the transfer of responsibilities to the Government of the Northwest Territories has taken place for several programs and services, including the delivery of health care, social services, education, administration of airports and forestry management.
In our view, Bill C-15 is the next logical and biggest single step forward in the devolution of powers to our territorial government in history.
We are a resource-based economy. Managing our resources effectively and creating a healthy investment climate will support a strong local and national economy and provide significant benefits to all communities and to all residents. Bill C-15 is a new beginning for the Northwest Territories.
That concludes on our remarks. Again, thank you for the opportunity.
The Chair: Thank you very much, Mr. Stanzell. We have actually made connection with our video conference.
For the next presentation, we have present with us Ms. Vida Ramin, Director, Lands and Regulations, Prospectors and Developers Association of Canada. And by video conference from the Northwest Territories and Nunavut Chamber of Mines, we have Mr. Tom Hoefer, Executive Director in Yellowknife, and Mr. Mike Hardin, Legal Counsel in Vancouver.
I leave it with you, Ms. Ramin and Mr. Hoefer; I don't know who is going to start first. Mr. Hoefer, the floor is yours. We are very happy you are there.
Tom Hoefer, Executive Director, Northwest Territories and Nunavut Chamber of Mines: Me, too. Thank you very much, Mr. Chair and senators. It is a pleasure to be here today, albeit by teleconference for two of us. We thank you for that indulgence. It's a pleasure to see our two Northern senators again, and I trust I will see them again in the ongoing discussion.
I'm the executive director of the N.W.T. and Nunavut Chamber of Mines. I'm joined today by my associate, Vida Ramin, from our national organization sister organization, the Prospectors and Developers Association of Canada. Both industry associations are the leading advocates for exploration and mining in the territories and in Canada. Our review of Bill C-15 was also done in collaboration with the Mining Association of Canada, who I believe has already spoken to the committee. Thank you for allowing us to combine our presentations today, which we felt could reduce duplication.
We are also joined today from Vancouver by our legal counsel, Michael Hardin, who has helped us with our submissions and has a wealth of northern regulatory knowledge, having worked with us for more than 20 years.
We submitted to the committee a detailed brief and also a slide deck. My colleague Ms. Ramin and I will take you quickly through the deck. All three of us will then be pleased to take your questions.
Before we speak to the deck, let me start with some general comments. Bill C-15 is a huge milestone for us in the North. Many of us northerners like to believe we are ready to strike out on our own. We have many tools and opportunities before us and we are ready to take control. Our industry interest, too, supports devolution and, therefore, we will not speak to those aspects of Bill C-15. Our industry's interest in Bill C-15 lies specifically in the regulatory improvements proposed to the Mackenzie Valley Resource Management Act, and we will focus our comments on that act.
From the highest altitude viewpoint, the proposed amendments to the MVRMA will be a good thing for the N.W.T. Since it is the key piece of the legislation that governs our minerals industry, the positive changes are welcome.
We would like to thank the minister of AANDC and his staff for their consultations with us and for their very detailed response to the concerns and suggestions we have raised. Although we did not get everything that we were hoping for in Bill C-15, we are thankful for the improvements being proposed. We also wish to acknowledge the minister for his assurances that we will continue to be involved in the ongoing processes to improve the MVRMA, including the development of new regulations.
Let me now turn to our deck. The first few slides speak to the tremendous value created by our industry. Over the past 80 years of mining history, we have produced some $60 billion in mineral wealth in the N.W.T. The value of mining in the N.W.T. continues to be significant today. Slide 5 shows that our four mines generate well over $1 billion annually and on several occasions have generated more than $2 billion in annual production value. You will also see that the value of the mineral production in the N.W.T. is many times greater than the value in Nunavut and the Yukon.
In fact, the N.W.T. is now a globally significant mining jurisdiction and the data on slide 6 show that we are the third most valuable producer of diamonds in the world today.
Our mines translate that tremendous value of production into significant benefits to northern and Aboriginal residents and businesses, as shown on slide 7. This has been a real game changer for the N.W.T. and today we have unprecedented levels of Aboriginal employment and Aboriginal business activity — in fact, some of the highest in the country. Given all of these benefits, slide 8 shows that the minerals industry is the largest private sector contributor to the N.W.T.'s gross domestic product.
The unfortunate reality of the mining industry is that even the most productive mines don't last forever.
As you will see in slide 9, we have been very fortunate to have a healthy, 20-year mine life for each of our three diamond mines — Ekati, Diavik and Snap Lake — and although the expected mine life for the tungsten mine is less, we hope that additional ore will be found.
You will see that our first diamond mine, Ekati, is currently scheduled to close in about 2019, unless the mine is granted the permits and licences needed to develop additional deposits. Just such a proposal is the subject of a recently launched environmental assessment.
If Ekati closes as projected in 2019, it will bring a loss of 1,500 jobs and be a significant hit to the N.W.T. economy.
To summarize, now that we have successfully established strong levels of mining benefits, it is critically important for the future of the N.W.T. that we find ways to sustain them. If we are to maintain the mining cycle outlined in slide 10, we need to be attracting ongoing and significant investment in mineral exploration. This is where our current situation becomes worrisome.
If you turn to slide 11, you will see that N.W.T. exploration investment is lagging far behind the levels of exploration spending that our neighbouring jurisdictions, Nunavut and Yukon, have attracted, especially over the past 10 years. I draw your attention to the N.W.T. in blue. Note that exploration spending is weak and has essentially flatlined for many years. Over the same time period, Nunavut and the Yukon have been very successful in attracting investment.
Since the N.W.T.'s mineral potential is at least equal to that of our neighbours, the data reveals that something is structurally wrong in the N.W.T. Explorers tell us it is a lack of investment certainty created in no small part by the current regulatory environment and the MVRMA.
Let me emphasize why we are so worried in the next slide. The chart on slide 12 clearly reveals a steady decline in the competitive position of the N.W.T. and our loss of Canadian market share. Action is needed to turn this around.
Let me now hand the microphone over to my colleague, who will speak to the remaining slides.
Vida Ramin, Director, Lands and Regulations, Prospectors and Developers Association of Canada: The search for economic mineral deposits is already a risky proposition. Studies show that only one in 1,000 grassroots exploration projects will result in an economic deposit. Fewer still will become mines. All other things being equal, the odds are stacked against mineral explorers, irrespective of where they choose to invest.
In the Northwest Territories, there exist a number of site-specific challenges summarized on this slide that hinder the overall attractiveness of the investment climate. When faced with these additional barriers, mineral explorers will choose to invest their scarce dollars outside of the Northwest Territories.
The remainder of our presentation will focus on the ability of Bill C-15 to address industry concerns related to the existing regulatory regime, which serves as a significant deterrent to investment in the Northwest Territories.
The mineral industry supports devolution. Devolution will make local control of land and resource management a reality and enhance the territorial government's ability to be more responsive to industry concerns, increasing the potential to unlock the Northwest Territories' significant mineral endowment.
In addition to giving legal effect to devolution, Bill C-15 proposes a number of encouraging amendments to the Mackenzie Valley Resource Management Act. They're expected to improve the overall enabling environment for mineral exploration and mine development by establishing a more simplified, streamlined, predictable and efficient regulatory regime. These encouraging amendments include the introduction of legislated time lines for environmental assessments and environmental impact reviews; expanded ministerial authority to issue policy directions; the introduction of development certificates and the ability to amend the same; and the consolidation of regional land and water boards.
With respect to board consolidation, the mineral industry is supportive of the overall concept. However, we would like to remind both AANDC and this committee that a simple act of structural reorientation does not necessarily result in increased effectiveness and efficiency.
Industry support of the consolidation concept is, therefore, contingent on a number of conditions: The consolidated board will need to maintain a strong regional presence; the new board will need to have the requisite financial, technical and administrative capacity to successfully undertake its expanded mandate; mechanisms will need to be established to ensure that positive working relationships between proponents and the regions are maintained; and the board chair is authorized to appoint a representative from the region that hosts the project under review.
We are encouraged that the minister has indicated that AANDC will take these factors into consideration and that a one-year period has been allocated to facilitate the implementation of this significant change.
The mineral industry offers its broad support for Bill C-15 but believes that further reforms are necessary to balance economic and environmental interests and to truly unlock the potential —
The Chair: Excuse me a moment. Can I get you to slow down just a little bit? Remember, this is being interpreted into French and actually written at the same time. You talk very quickly. If you could slow down, we would appreciate that.
Ms. Ramin: Sure. To start from slide 17, the mineral industry offers its broad support to Bill C-15 but believes that further reforms are necessary to balance economic and environmental interests and truly unlock the mineral potential of the Northwest Territories.
I will now spend some time discussing each of the issues outlined on this slide.
The practice of referring early-stage, grassroots exploration projects to a full environmental assessment after preliminary screening is unique to the Northwest Territories and puts it at a significant disadvantage when competing for exploration dollars with other jurisdictions.
Up until now, the Environmental Impact Review Board has conducted 61 environmental assessments. Of the 61 EA referrals, close to 90 per cent were projects in unsettled land claim regions, and almost half were for public concern alone. Twenty-four of the 26 public concern referrals pertained to grassroots and advanced mineral exploration programs as well as production initiatives.
The mineral industry believes a number of actions can be taken to ensure that only projects that truly require an environmental assessment are made subject to that process. This will lead to efficient permitting processes and will ensure that the expenditure of human and financial resources is proportional to the magnitude of potential impacts and the level of public concern.
As such, we suggest modifying the phrase ``public concern'' with the word ``significant'' by amending section 125 of the Mackenzie Valley Resource Management Act.
We also recommend consideration be given to establishing regulations that clearly identify reviewable and assessable activities. This type of regulation already exists under a number of environmental assessment regimes in Canada, including the B.C. Environmental Assessment Act, CEAA 2012 and the Yukon Environmental and Socio- economic Assessment Act.
Our last recommendation is the expeditious settlement of land claims in the Dehcho and Akaitcho regions. The EA regime cannot and should not serve as a vehicle to address all of the outstanding issues and concerns between First Nations in these regions and the federal and territorial governments, as is regrettably often the case at the present time.
Another industry concern is the absence of proportionality and balance during the review process. There appears to be little difference with respect to the way in which projects of differing nature, duration and intensity of impacts are assessed. Here, we believe that two solutions are possible.
The first is the inclusion of a clear statement within the MVRMA encouraging regulators to make assessment requirements and time frames proportional to the nature and intensity of potential impacts. Our other recommendation is the issuance of a policy direction, under the minister's expanded authority, which sets out matters to be considered during the environmental assessment process and requires that the level of rigour associated with environmental assessments be proportional to the proposed project's potential impacts.
The third concern that we would like to highlight is the potential for a four-year timeline for the approval or rejection of a development proposal in cases where an environmental impact review is required. This protracted review period may act as another important deterrent to exploration activity in the Northwest Territories.
We have reviewed the relevant provisions of the land claim agreements and the one court case that is directly on point. This review leads us to the conclusion that the MVRMA can and should be amended to ensure a more efficient and common-sense approach, especially given the important similarities between the two sequential processes.
In order to expedite the overall review process in cases where an EIR may be required, we recommend that the MVRMA be amended to allow the Mackenzie Valley Environmental Impact Review Board to order an EIR at any time during the EA process.
The need to clarify the scope of Aboriginal consultation and the division of labour among the proponent, the Crown and the Mackenzie Valley boards has been front and centre in our past submissions to the federal government. The proposed regulation-making authority is a step in the right direction.
However, based on discussions with AANDC in October 2013, these regulations will likely not be in force for at least another two years after Bill C-15 becomes law. This means that ambiguity and uncertainty around Aboriginal consultation will continue to deter mineral investment in the Northwest Territories until the proposed regulations take effect. We recommend that in the meantime the minister issue a policy direction clarifying the division of labour among the project proponent, the Crown and the Mackenzie Valley boards.
With respect to proposed cost-recovery regulations, the exploration and mining sector appreciates the need for a user-pay approach for government services. We would, however, caution the government to take a measured approach to cost recovery in an already very costly jurisdiction in order to avoid having cost recovery become yet another barrier to investment in the Northwest Territories.
As such, we recommend that a careful cost-benefit analysis be undertaken before making a final decision to implement a cost-recovery regime. If this analysis shows that the adverse impacts outweigh the potential benefits, AANDC should consider not using this regulation-making authority or, alternatively, limit cost recovery to environmental impact reviews. This practice is already employed by the Canadian Environmental Assessment Agency under CEAA 2012.
We also urge government to involve industry early in regime design if a careful analysis shows that the benefits outweigh the potential adverse impacts. The Minister of AANDC has committed to industry consultations in this regard, which we appreciate and look forward to.
In summary, mining is the largest private sector contributor to the economy of the Northwest Territories. Mineral investment in the Northwest Territories has been declining steadily since 2001. The long-term sustainability of the minerals industry in the Northwest Territories depends on restoring investor confidence in the environmental assessment, permitting and licensing processes. As such, further regulatory reform is essential to stimulate much- needed exploration investment.
The mineral industry supports devolution and is encouraged by the proposed amendments to the MVRMA. The proposed amendments, however, do not go far enough and do not address some key industry concerns. We seek the committee's support for additional changes that are needed to ensure the mineral industry will continue to foster the sustainable development of the Northwest Territories' significant mineral potential for the benefit of Northerners, in particular, and that of Canadians, generally.
Thank you.
The Chair: Well, thank you, Ms. Ramin and Mr. Hoefer, for those presentations.
We will now go to questions, and I will begin with the deputy chair.
Senator Mitchell: That was very interesting. My first question is to Mr. Stanzell. You mentioned the pivotal role and the concern you have about the definition of ``public concern'' — we've heard that a couple times. I'm not a lawyer; I don't know whether you are. But could you give us some idea about your organization's thinking about how you would define ``public concern'' — what criteria — or has any progress been made anywhere on that?
Mr. Stanzell: Senator, we could come up with examples of preliminary work on a project that has been slowed or hampered by undue process. If a resource development company looking to invest in our territory is feeling that the process is greater than the preliminary work on their project, they're going to look elsewhere.
Investment in resource projects is competitive. If it's easier to work somewhere else, or if it's clearer or more certain what the process is somewhere else, then that's where their money is going to go; that's where their investment will go.
Senator Mitchell: My next question is to the Prospectors and Developers Association of Canada. This is going to sound more aggressive than I mean it to be, but one could argue that there's kind of an inherent contradiction in your position on the process and the process changes. On the one hand, you have four clearly successful operations up there and they have been through the process, so one would argue that it didn't impede those projects. What is it about your experience in the development of those mining projects that somehow has led you to the conclusion that we need the changes that are being contemplated with respect to greater authority in the minister's role, or a superboard instead of regional boards?
I would like to say that I was aware of your point about the need for, perhaps, sub-regional boards at least.
Ms. Ramin: My experience in the Northwest Territories is kind of limited, but in terms of the projects that already exist — we don't know how many didn't end up occurring. All we can see is the current state, and those four mines are there.
What we know, and what I've heard from our industry members as well as members from the Chamber of Mines is that quite a few companies are walking away from the Northwest Territories right now because of the complexity, the inefficiency and the costly nature of navigating the regulatory regime.
So although we appreciate and can see that there are four existing mines, and they have navigated the regulatory process historically, we don't really know how many more could have navigated that process and how many more mines could have been there.
Mr. Hoefer and perhaps Mr. Hardin have a lot more experience, and they can speak to the existing mines, but I also believe that the regulatory regime has evolved; it was quite different initially in the 1970s and 1980s. I think Mr. Hardin can speak to that.
Mr. Hoefer: I will quickly speak first. You should know the Ekati Mine went through the old Environmental Assessment and Review Process guidelines or perhaps FEARO guidelines, which predate the MVRMA and all the other processes. It went through the CEAA process.
The Gahcho Kué project is the only one that went through the MVRMA process. As Ms. Ramin alluded to, it was one that started back in 2006 and actually resulted in a court case on trying to determine clarity around EAs and EIRs, so it started to spell out some challenges within the MVRMA.
Mr. Hardin may want to add to that.
Mike Hardin, Legal Counsel, Northwest Territories and Nunavut Chamber of Mines: I don't have much to add beyond what Mr. Hoefer and Ms. Ramin have said, except to point out that, as Mr. Hoefer emphasized, at least two of the existing projects that delivered considerable economic benefits to the N.W.T were, in fact, regulated and approved to the pre-existing regimes: the Environmental Assessment and Review Process Guidelines Order in the case of Ekati and Diavik was under a comprehensive study under the CEAA.
It is an apples-to-oranges comparison if we try to distinguish between projects that might be in place right now and those that were developed on a historical basis.
Senator Frum: You made it clear that the board of commerce supports a single board, and you acknowledged a point of contention. To illuminate for the people who feel the elimination of the regional boards is problematic, is there anything in Bill C-15 as it is written now that you think can alleviate their concerns, as you see them?
Mr. Stanzell: It is always tough to take something away from somebody. It can be a very emotional issue for people. The key is to kind of strip away the emotion and look at it objectively.
There is room for regional representation on the board. We think that's positive — absolutely positive. The regional flavour should be maintained and it can be maintained.
We're also advocating for a physical presence in the regions — offices where the applicants can file the applications and apply the process that the new board needs to apply.
If there are other suggestions for maintaining some regional flavour but not compromising on improving the process, then we would absolutely consider those, senator.
Senator Frum: You make the case that the single board will be more efficient and will have the greater capacity, so can you cite any real-world examples or can you think of anything where the local boards were unable to handle the applications that came through?
Mr. Stanzell: I don't think it's a question of their not being able to handle it. I think it's a question of having a clearly defined process that industry can understand and that northern residents can understand, so that they can expect to know how long something will take and, clearly, what the process is.
I do think our territorial government has limited options for growing revenues. The demands on government are endless, so the territorial government is probably expecting more development opportunities to come up in the North.
The regulatory system we have needs to be contemporized and to keep pace with the political evolution that comes with devolution, because there's going to be greater interest. Greater capacity and more efficiency in a single body make sense to us.
Senator Seidman: Ms. Ramin, you mentioned in your presentation the Aboriginal consultation regulations, and there is now, of course, a statutory consultation obligation in Bill C-15. However, as you said, this won't take force for two-plus years, and, as a result, there seems to be some confusion or lack of clarity regarding the responsibilities of the Crown, the board, and the project proponents.
This was also put to us in a written submission by the president and CEO of the Mining Association of Canada.
Could you tell us what exactly the lack of clarity and confusion is and how we could help to clarify the responsibilities of each of the groups involved?
Ms. Ramin: Sure. Just from my experience, and Mr. Hoefer might add some stuff, but the lack of clarity is about the expectations of proponents and the role that they play and what, if any, aspects of the duty to consult obligation of the Crown is delegated to proponents. So it's just about understanding what they need to do in the regulatory review process and how that relates to the overall Crown consultation process. At the end of the day, if that clarity isn't there and people don't have a good understanding of their roles and responsibilities and the First Nations or Aboriginal people in the Northwest Territories don't feel that those Crown consultation obligations have been met, the project is the one that's in the middle.
It's important to have clearly defined roles and responsibilities. I would say that's probably the most important thing.
There are examples across Canada where various jurisdictions have put out guidance to proponents that does lay that out. Saskatchewan recently released guidance for proponents that laid out what aspects of the overall Crown consultation process proponents were responsible for, so I think there are examples across Canada that the Northwest Territories can look to and that the government can look to for enhanced clarity around those roles and responsibilities.
Mr. Hoefer: Might I add something to that?
Senator Seidman: I would appreciate that.
Mr. Hoefer: I think one of the aspects we could talk about is scalability. If you have a very small project, how much Aboriginal consultation is required for that in comparison to a much larger project?
That was actually challenged in the North Arrow case by the Akaitcho, so a very small, five-drill hole program, which in our industry is a very small project, was challenged on insufficient Aboriginal consultation, and in that case, the Aboriginal group won and that proponent went away.
That same group, when they took control of what they thought would be sufficient consultation, asked companies to sign exploration agreements and said, as part of that agreement, ``You have to come meet with our community, and it's going to cost you $25,000 for a meeting.'' So for a proponent with a small project that is maybe worth just over $100,000, they said, ``This is a little bit unrealistic because you're asking for a big portion of our budget just for one meeting.''
So where do you go for that guidance and what's sufficient? As a result, we have companies that simply say it's just way too difficult, complex and uncertain in the N.W.T. and they take their business elsewhere.
Senator Seidman: Could you give me a concrete example of how one could clarify the responsibilities of the Crown, the board and the project proponents, which is pretty much what you're suggesting here? In a concrete way, how could one clarify that?
Mr. Hoefer: Well, one could say that the Crown could actually take the lead on Crown consultation and actually manage the meetings so that they do occur. In the case right now, it's left to industry to figure out how to do that. In fact, it's left to industry to figure out which groups to consult with, although there are some recommendations, but it's a bit unclear. So it's a real shotgun approach on who you talk to.
Ms. Hardin: One of the sources of confusion on this area is the difference between what we call ``community engagement,'' which is a quasi-voluntary process that the proponent is required to undertake, and ``Crown consultation,'' which we all know is a constitutionally required obligation of the Crown, subject to limited powers of delegation.
Unfortunately, in the now 10 years since the Haida case was decided by the Supreme Court of Canada, the extent to which the Crown is entitled to delegate so-called procedural aspects, whatever they may be, with the greatest of respect, hasn't been clarified. So proponents go through the process under the mistaken impression that the community engagement activities that they undertake, as required notably by the Mackenzie Valley Land and Water Board, amount to consultation. Not surprisingly, Aboriginal organizations and governments are quick to point out in many cases that community engagement does not fulfill the Crown's duty to consult.
There's an overall lack of clarity, certainty and detail in the regulatory aspect of consultation, which people in the industry take very seriously because of the times in which an absence of consultation has caused dissension, unhappiness and litigation. There's a great need here, I think, to look at the entire landscape and bring some greater certainty and clarity to the various steps that the various parties are required to undertake.
The Crown sometimes, perhaps, doesn't give as much leadership in the area as proponents would like to see.
Senator Patterson: I'd like to welcome the witnesses and thank them all for their participation in the long period of consultation on this bill, which I know wasn't completely satisfactory.
We've heard from critics of the bill, Aboriginal governments, that everything is working fine now, and ``why fix it if it ain't broke'' was the type of sentiment that we heard. But I think your presentations have made it clear that when you look at the exploration spending in the N.W.T., alongside the current impressive production, as you've said, there are fears going forward about whether these big projects will be replaced.
You have said, and I'm quoting from the Chamber of Mines and the Prospectors and Developers Association of Canada, PDAC, that risks in the N.W.T. flow from a complex, uncertain and inefficient regulatory environment.
The chamber talked about regulatory issues as contributing to low potential for resource development.
You gave some specific examples for delays: the Gahcho Kué project, the N.W.T. Power Corporation water licence renewal. I know there are real concerns about the bill that Newfoundland spelled out very clearly, but would you say that Bill C-15, if it's passed, will make a difference in investor confidence for exploration and development, particularly in the N.W.T., and could I direct that to the chamber and PDAC specifically, please?
Mr. Hoefer: I think Bill C-15 will make a difference. I think the installation of timelines, for example, has been long overdue. That will be a powerful statement. It will actually bring us up to par with the Nunavut, YESAA and other jurisdictions.
I think the aspects of the minister having power for policy direction, those things that we outlined in our presentation, will make a difference. Will it solve all of the problems? No, it won't, as we've pointed out, and so we think there's still more work required there. We think there are some simple fixes, which Mr. Hardin can speak to as well, that you folks could make, if at all possible, with the house. We believe that we're going to have to continue our work afterward too, working with Aboriginal governments and with the N.W.T. government to make it even better.
Ms. Ramin: I think I would just echo Mr. Hoefer's comments, but, from our perspective, one of the most important things to address is the issue of unwarranted EA referrals and a lack of proportionality in the EA process. As I mentioned, there are a number of environmental assessment regimes across Canada, including the YESA Act, that do have or make provisions for a regulation that lays out what activities are reviewable and assessable. It provides some parameters and some scope for the EA process that we can bring into the N.W.T. regime, fully understanding that we have to appreciate the North and that it is very different from the South. I leave CEAA and BCAA out but kind of look to the YESAB because it also went through devolution and also flows from land claim agreements. I think it can be used as a model to deal with some of the more important or significant investment deterrents.
Senator Patterson: We know that the regulations for this bill will have to be developed. I know you've been engaged closely with the department and even had some correspondence with the minister.
Are you satisfied that you'll be involved in consultation in the development of regulations? Will you have an opportunity to provide perspective on policy direction provided by the minister? Are you confident that you'll be involved in the discussions leading up to the five-year review?
Mr. Hoefer: If we look back at the correspondence that we've received from the minister, it's a very lengthy piece of correspondence. We're thankful to get such an in-depth response. In it, he provides us with assurance that we will be involved in the regulation-making aspects, both cost recovery and Aboriginal consultation, but there is no discussion, if I recall correctly, on policy direction. I don't know how that process will evolve.
Senator MacDonald: Mr. Hoefer, in your remarks you mentioned that you're pleased with the advances under Bill C-15. You did not get everything you wanted in the bill. I'm just wondering if you could elaborate on that a bit and on what particular omission you're referring to that you think would make a big difference in making the bill better.
Mr. Hoefer: We've been involved in trying to make the MVRMA a better act for many years. Most recently you may be aware of our input, starting with the McCrank study back in 2007. We provided input. In all of those, we've been asking for clarity on Aboriginal consultation.
For example, we were hoping to get that clarity here, but what we're being told is that now we have to wait for regulations to be made. We'll be part of that, but it wasn't an instant response there for us, for example.
Senator MacDonald: In terms of these omissions, how much of an impact will the lack of clarity on the Aboriginal aspect have on your negotiations and your timelines?
Mr. Hoefer: I think Aboriginal consultation is one of the most critical aspects of getting a project approved in the Northwest Territories today.
Mr. Hardin, would you like to weigh in?
Mr. Hardin: I would support that. I think the overarching issue remains unwarranted referrals to environmental assessment. The impression has been created in the exploration community that, as we've said several times in today's proceedings, minor grass roots programs are routinely made subject to environmental assessment for reasons of project concern. Although it's not contained in the written brief that was submitted to this committee and to the house standing committee, we've given a great deal of thought to how section 125 of the MVRMA might be amended to bring a more rigorous, disciplined and consistent approach to defining public concern.
We recognize the importance of that factor in its role in determining whether or not EA should go ahead, but right now, the way the legislation is written, any level of public concern, on the bare words that are in the statute, is sufficient to warrant a referral to environmental assessment, no matter its validity, the number of people who hold it, where it comes from or its content.
At the very least, adding the word ``significant'' in front of the two words ``public concern,'' which would mirror the treatment given to environmental impact in section 125, would make a huge difference.
We've also suggested other amendments to section 125 in our detailed submissions, starting as far as back as the McCrank report on February 28, 2008, in a letter to the minister in May of 2012 and again in the submissions that the three associations made to Aboriginal Affairs and Northern Development in October of 2013.
Aboriginal Affairs disagrees with our proposals for amending section 125, but, thus far, they haven't offered an alternative. So that, I think, is probably the biggest difference that would turn things around for the N.W.T., a more rational, common sense and typical approach to the kinds of projects that are made subject to an environmental assessment.
Senator MacDonald: I have one more question, chair. I couldn't help but notice in the presentations here, the information we've been given, that the four organizations that spoke today are all generally supportive of devolution and regulatory improvement, but the Prospectors and Developers Association of Canada is neutral on devolution, as was the Canadian Association of Petroleum Producers.
I am just curious whether there's any particular reason you're neutral on devolution. Is it because you don't have an informed position on it, or because you prefer not to speak to it?
Ms. Ramin: I don't believe that that submission is correct. We've said we support devolution. I said it in the second half of this presentation. We are fully supportive of devolution and the control that it brings to the territory to be able to make land and resource management decisions and to be more responsive to industry concerns. So, yes, the Prospectors and Developers Association and our members are fully supportive of the devolution process.
Senator MacDonald: Thank you for clarifying that.
Senator Sibbeston: The witness has given information that 90 per cent of the reviews that have come about or been requested have come from the two unsettled claims in the Dehcho and Akaitcho and a Metis area in southern N.W.T.
This indicates, in some respects, the benefit of land claim agreements that we've had in the Northwest Territories. Since 1984, we've had the settlement of claims, with the Inuvialuit and then the Gwich'in, the Sahtu and, more recently, a number of years ago, the Tlicho, but these claims give the Aboriginal people in those areas control over land, resources, some money and the establishment of boards so that they can control development.
So, in those areas, where claims have been settled, Native people, in the last decade or so, have enjoyed control of their lives, control of development and so forth. It's been a very positive thing for the North. I gather that in those areas of settled claims, the boards have been working very well, and I think the industry has had good relations with the Aboriginal people in those regions. I wanted to hear you on that because about two weeks ago, when the house's committee was up in Yellowknife, there was uproar with most of the Aboriginal groups. They said, ``We supported the devolution agreement, but we were all surprised by the fact that the government has attached a regulatory provision.'' So they are somewhat upset.
How difficult is it going to be now to work with the Aboriginal people that are really against all these revisions and changes and establishing a superboard and kind of doing away with the boards that they've enjoyed up to now?
Mr. Hoefer: The position that we put forward I think reflects some of what Senator Sibbeston is speaking to in that we can understand the elegance of having one board for the North rather than a patchwork of boards and a patchwork of processes.
As the senator has said, our members have done very well with boards, in particular the Wekeezhii Land and Water Board, which is the one where we see most of the mining activity in. They reflected to us that they don't want to have unintended consequences of this amalgamation of boards in that if the communities lose the trust that they've built with their current board, they lose that capacity, then industry could be the meat in the sandwich that gets caught by it.
We're supportive of a single board, but based on the principles of keeping some way to keep the community trust strong and also to keep the capacity there.
Mr. Stanzell: Trust is so critical — and, senator, you're aware of this — in these types of situations. It's incumbent on everybody going forward to try to find again or re-establish levels of trust.
There are groups that will line up and firmly challenge what's happening in court. We know that. I don't know how to do that, but it is critical that trust be there. Again, as a chamber of commerce, we're a membership-based organization. We're not trying to focus on tactic or anything like that. On balance, we believe Bill C-15 is a huge step forward for the territory. Fraser Institute surveys of mining companies and oil and gas companies shows that companies are not secure investing their dollars in our territory. In Yukon they feel more secure about it; in Nunavut they feel more secure about it. They feel more secure about it in some countries that aren't even democracies. Statistics like that are important to weigh as well.
Senator Sibbeston: It's an evolutionary type of process. In the Northwest Territories, we had Esso that came into the North in 1921, and the whole development of oil and gas in the Norman Wells area. That company has not given one cent to Native people and, in the course of their time, never hired Native people; never encouraged Native businesses. That process before there were any boards and land claims was a disaster for Native people.
In our area, the Dehcho, for example, it has taken seven, eight years from the time a proponent for a mining company, for example, when Canadian Zinc came in — it's taken all these years.
Mr. Chairman, I'm the senator for the Northwest Territories and it's important I say this if you don't mind being patient with me.
It's taken all these years for the local people to become comfortable with a mining company coming to the area. Initially all the communities were against the Canadian Zinc project, but through time, with a company assuring them jobs, employment and business opportunities, they have come on board now to the point where most of the communities in our Dehcho area are supportive of that mine that could go ahead, but it's taken time. It's an evolutionary process.
When Aboriginal people feel they have their resources to participate and that their concerns are considered and recognized, then there's that willingness and confidence to take part in the project.
That's been the process. Do you feel in any way that that has been the process? Do you recognize that process and do you think the future bodes reasonably well for the future of mining industry in the North?
Mr. Stanzell: I think the business community generally in the Northwest Territories is optimistic. We've talked and on a previous panel there was discussion of constitutional obligations for consultation. Then there's the other side, the social licence. Both are critical for the overall health of relationships and the overall advancement of economies.
We have to be optimists. We can't help but be optimists, senators.
Ms. Ramin: There is something quickly that the senator picked up on. Although it doesn't relate directly to Bill C- 15, it will reflect on the implementation of it.
One of the things he did mention was the lack of settled land claims in the southern part of the Northwest Territories. That's an important distinction to make. I think it empowers Aboriginal communities in the southern portions to feel like they have a voice and an ability to participate in the decision-making process. I think that's one of the reasons why so many projects are elevated to environmental assessment in those regions, because they don't feel empowered in other ways to participate in the overall development process.
In comparison, for example, in the Yukon, 11 of 14 First Nations have settled land claims. In Nunavut, a single land claim covers the entire territory. That greatly simplifies the regulatory regime and deals with a lot of issues that I think Bill C-15, in terms of the MVRMA, can't. Once those land claims are settled, I think the application of the MVRMA will be a lot better in terms of its ability to move forward and build and sustain that trust, because the First Nations and Metis communities in that southern part of the territory will feel empowered to be involved in the process.
The Chair: Thank you very much. The last questioner is Senator Wallace.
Senator Wallace: Ms. Ramin, some of the information you've given us really strikes a chord with me, in addition to the other points that have been discussed and the questions asked.
Page 12 of your presentation provides the percentage of total Canadian mineral exploration in the Northwest Territories that's occurred over the last 15 years. If I'm reading this correctly, it seems rather alarming.
Fifteen years ago, about 24 per cent of the total mineral exploration occurring in Canada was in the Northwest Territories; in 2013, it's at 5 per cent, and for the most part it's been on a steady decline since 1998 forward. Obviously, that's of concern to the mining industry. On a more personal level, that should be, and I'm sure is, of concern to the employees of the mining industry.
You also indicated in your presentation that mining is the largest employer of Aboriginal people in the territories, and of the total person hours of employment, 50 per cent of those hours reflect employment by Aboriginal people.
What strikes me when I look at those two statements together is that something is going in the wrong direction here. I'm sure, as has been pointed out today, there's more than one reason for that, but to the extent that the current regulatory process is discouraging investment in the North, and to the extent it can be improved — and we all recognize that it has to be improved — is there a concern that with the current trend that's occurring, unless something new, some change is taking place that responds to what is required to increase investment now and in the future, when the current projects run their course, the negative impacts of that will be felt disproportionately by Aboriginal people — that is, people who have the least ability to find other opportunities?
I'm wondering if you care to comment on that. What is the circumstance of our Aboriginal people, and why is this so important to them?
Ms. Ramin: Sure. I would say in terms of the total exploration dollars and that steady decline, it really is an issue of overall competitiveness. A lot has happened with the Yukon and, for example, Nunavut in those years that has pulled money away from the Northwest Territories and into those two jurisdictions. I previously mentioned the settlement of land claims, which is obviously important to bringing certainty and predictability and to refine the regulatory regime so it is more simplified and empower First Nations to be involved in the development process. A lot of other things have happened in the Yukon and Nunavut. The Yukon went through devolution, which we support and think is a great idea. It will create increased opportunities to grow and develop the mineral potential of the Northwest Territories.
I would just reaffirm our collective message that from a mineral industry perspective, mineral exploration is a very important part of the mineral development cycle, so anything that can be done to create more certainty, predictability and efficiency for the industry is welcome.
We do broadly support Bill C-15. We support devolution. There are a number of items that we think need a bit of work, and we're happy to work with AANDC and anybody else to make those things happen. But I think more than anything, we just have to make sure that we deal with things like the unwarranted EA referrals and the lack of proportionality and make sure that we get the N.W.T. to a place and a regime that is similar to the Yukon and Nunavut. The three territories have very similar geological potential, so there's no reason why the N.W.T. shouldn't be seeing more investment in their jurisdiction. Dealing with some of the things that we discussed today I think will get us there.
Obviously, in turn, that will mean that more mines get developed. So the more exploration projects there are, despite the odds of success, the bigger the chances are that we will develop mines and have those opportunities for northerners and Aboriginal communities.
Senator Wallace: Doesn't all of that mean that something has to change? With the current trend in terms of the exploration that is occurring or not occurring in the North, something has to change. And if it doesn't change, aside from the mining industry directly, those that are going to be potentially most greatly impacted negatively would be our Aboriginal people who rely upon those jobs. Is that not correct?
Ms. Ramin: Yes, that's totally correct. Something has to change, and I think this bill is a first step to that. I think devolution will help things along. Some of the proposed amendments to the MVRMA will help things along. Hopefully addressing more industry concerns will help things along. Settling land claims in the southern part of the Northwest Territories will also help things along.
There are some deficiencies, and I think government, both the federal government and the Northwest Territories, the territorial government, for example, is working with the Chamber of Mines and has recently released the Northwest Territories Mineral Development Strategy. Things are moving in the right direction; we just need to be vigilant to make sure that things continue to move in the right direction and that we all work together for the benefit of northerners.
Senator Wallace: Thank you.
The Chair: Thank you, Ms. Ramin, Mr. Stanzell, Mr. Hoefer and Mr. Hardin for your presentations. Your answers to our questions are very much appreciated. I hope you have a good evening.
(The committee adjourned.)