Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 30 - Evidence - June 4, 2015
OTTAWA, Thursday, June 4, 2015
The Standing Senate Committee on Energy, the Environment and Natural Resources, to which was referred Bill C- 46, An Act to amend the National Energy Board Act and the Canada Oil and Gas Operations Act, met this day at 8:02 a.m. to give consideration to the bill.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Richard Neufeld. I represent the province of British Columbia in the Senate, and I am chair of this committee.
I would like to welcome honourable senators, any members of the public with us in the room, and viewers all across the country who are watching on television. As a reminder to those watching, these committee hearings are open to the public and also available via webcast on the sen.parl.gc.ca website. You may also find more information on the schedule of witnesses on the website, under "Senate Committees.''
I would now ask senators around the table to introduce themselves, and I will begin by introducing our deputy chair, Senator Paul Massicotte from Quebec.
Senator Massicotte: Good morning.
Senator Sibbeston: Nick Sibbeston from the Northwest Territories.
Senator MacDonald: Michael MacDonald from Nova Scotia.
Senator Patterson: Dennis Patterson, Nunavut.
Senator Boisvenu: Pierre-Hugues Boisvenu from Quebec.
Senator Seidman: Judith Seidman from Montreal, Quebec.
The Chair: I'd also like to introduce our staff, beginning with the clerk, on my left, Lynn Gordon, and our two Library of Parliament analysts, Sam Banks and Marc LeBlanc.
Bill C-46, An Act to amend the National Energy Board Act and the Canada Oil and Gas Operations Act, was amended in the House of Commons and passed on third reading on May 6, 2015. The bill was read a first time in the Senate on May 7, 2015, and referred to our committee on May 14.
Today, it gives me great pleasure to welcome the minister responsible for the legislation, the Honourable Greg Rickford, P.C, M.P, Minister of Natural Resources. The minister is joined today by Jeff Labonté, Director General, Energy Safety and Security Branch, Energy Sector, Natural Resources Canada.
Minister Rickford, I believe you have some remarks, and then we'll go to questions. The floor is yours, sir.
Hon. Greg Rickford, P.C., M.P., Minister of Natural Resources: I do have some prepared remarks, colleagues, but I have to say it gives me great pleasure to be here today to speak specifically to a piece of legislation. As is often the case when we come to committees, particularly on the other side, there are discussions around Main Estimates and supplementaries. You don't often get a chance to speak directly to a piece of legislation and have a fruitful discussion on it.
In this particular case, there's a lot to celebrate. I may repeat these remarks, but for the benefit of the wide audience nationally that may be watching this and, as well, for the benefit of the senators here today, I think the highlights of this piece of legislation really are that we're building on an extraordinary record of pipeline safety in Canada when you consider that with more than 72,000 kilometres of federally regulated in pipeline in Canada, we have a 99.999 per cent safety record. So this brings us to this important piece of legislation and, I think, a collective desire by all of us, rather impressively, as parliamentarians, to build on that safety record in the exercise of building public confidence around energy infrastructure.
It's an opportunity to be here today and talk about a very important piece of legislation that obviously, as pipelines go, has attracted the attention of North Americans in the recent past.
Certainly, for our part, the government recognizes the importance of safe energy infrastructure, which is why we've taken strong actions in the areas of prevention, preparedness and response, and liability and compensation.
Between 2008 and 2013, as I said earlier, 99.999 per cent of all of the oil and petroleum product transported through federally regulated pipelines in Canada arrived safely. That's a remarkable accomplishment.
Allow me to take a few minutes to address the importance of safe energy infrastructure in Canada before I speak to the specifics of this legislation. The first is global energy security.
[Translation]
As recent geopolitical events have made clear, energy is now at the forefront of economic and global security. As we have seen, that has left some of our friends and allies particularly vulnerable to the whims of unreliable and irresponsible energy producers. One only needs to look at Ukraine for an example of this.
We have a responsibility to step up as a secure, reliable and responsible producer and supplier of energy. Over the past decade, Canada's oil exports have grown by 81 per cent. That is almost 1.3 million barrels per day. And our exports are continuously reaching new global markets. Since 2013, Canada has been shipping significant amounts of oil into eight new markets — from Spain and Ireland to Chile and Hong Kong. In Italy, Canada's crude oil exports grew from $230 million to $1.5 billion in 2014.
And we expect these exports to continue to rise as a result of the decision of the European Parliament to treat Canadian crudes the same as other sources.
[English]
Energy market diversification: Nearly all Canadian exports are destined for the United States. In light of this, growing oil and gas production in the United States makes it clear that Canada needs to diversify our energy markets.
Furthermore, global demand for oil and gas is only going to increase, despite the recent volatility in prices. In fact, according to the International Energy Agency, demand for energy around the world will increase by one third by 2040, and 74 per cent of this demand will still be met through fossil fuels.
Countries such as China, India and other emerging nations are fuelling this thirst for energy, but even developed countries, like those in the European Union, are eager to diversify both the types of energy they use and who supplies it to them.
We have a chance to contribute to global energy security while creating jobs, growth and economic prosperity for all Canadians.
Now let's shift to pipeline safety, more particularly. This legislation, colleagues, is the next step in the continued process of strengthening Canada's pipeline safety system. The bill fulfills our commitment in the Speech from the Throne to enshrine the polluter pays principle into law. It will deliver on our pledge to enhance efforts to ensure that we have world-class energy infrastructure, ensuring the safety of Canadians and protecting the environment.
The proposed pipeline safety act, simply put, builds on Canada's already impressive safety record to ensure that we maintain a world-class safety system, and there are elements of this that I would put forward to you that are world- leading.
That's why this legislation mirrors the approach that we've taken with marine, rail and offshore safety. In fact, I would submit nuclear as well. Our approach is built on three key pillars: incident prevention, preparedness and response, liability and compensation. Let's break that down.
Prevention: Our government understands that responsible resource development demands that we take every precaution to prevent incidents from occurring. We have proposed amendments to the National Energy Board Act to further improve the transparency and operation of the board. Bill C-46 also builds on previous improvements over the past two years, including increased annual inspections and audits by the board, as well as new authority for the board to levy administrative monetary penalties.
This new legislation also adds to current preventive measures by providing greater clarity, particularly when the board's permission is required before the ground near pipelines is disturbed. This is important to help prevent potentially life-threatening accidents or damage to both property and the environment.
Of course, prevention also depends heavily on the design and construction of our pipelines. That's why I recently asked the National Energy Board to provide guidance on the use of best available technologies in pipeline projects. This includes materials, construction methods and emergency-response techniques.
Next is preparedness and response.
[Translation]
Second, the pipeline safety act would ensure a robust response in the event of an accident. It does so by requiring pipeline operators to have a minimum level of financial resources and to keep a portion of these resources readily accessible for rapid response. This bill allows the National Energy Board to take control of an incident response or clean-up. This is essential for those exceptional circumstances where a pipeline company is unable or unwilling to do so.
[English]
Liability and compensation: As I mentioned earlier, this legislation enshrines the polluter pays principle into law. We fundamentally believe that polluters, not Canadian taxpayers, should be held financially responsible for any cost associated with an incident.
For all pipelines, we have added "absolute'' or no-fault liability for major pipeline companies. The amount is $1 billion. Such liability requires the company to clean up, remediate and respond to an incident regardless, I repeat, regardless of who caused the incident. In instances where companies are proven at fault, the liability limit remains unlimited.
The pipeline safety act will also require polluters to compensate for damages to the environment, and this includes after a pipeline has been abandoned.
In conclusion, colleagues, we can position Canadians to succeed not just for a year or even a decade, but for generations, by creating and protecting jobs through the responsible development of our resources. This pipeline safety act is another important way for us to do it, which is to fully embrace and engage the exercise of building public confidence around our energy infrastructure.
My name is Greg Rickford. I'm the member of Parliament for the great Kenora riding. It's a privilege and an honour to serve my constituents and in my capacity as the Minister of Natural Resources to serve and account to you to. Thank you for this opportunity.
The Chair: Thank you very much minister. I appreciate those remarks. I will go to questions and begin with the deputy chair, Senator Massicotte.
[Translation]
Senator Massicotte: Mr. Rickford, thank you for accepting the invitation to appear before our committee. This is a very important discussion. To be honest, your program, objectives and bill have a lot of merit to them. I don't have many objections. I just have a few technical questions.
I think that there is a more important issue here, perhaps of a more macroeconomic nature. In your presentation, you talked about our country's potential in terms of natural resources. Canadians are highly educated, and we have very promising economic potential going forward. However, as you noted, we are dependent on the United States when it comes to natural resources, and our labour market depends heavily on the international market.
However, to achieve these objectives, we have to find ways to build new infrastructure, pipelines in this case, to access those markets. If we consider the political or environmental movement over the past five or ten years, we see that there is a great deal of resistance, and we have many obstacles to overcome. I must say that I sometimes get discouraged when I think that the trend is against us, and I am very worried that our country may not reach its full potential in terms of the environment.
Yesterday, Mr. Mulroney made a speech before the Quebec Bar to share the same concerns. Without strong, without national leadership, we cannot do this. We have to a play a leadership role to make this a priority for Canadians. Am I being too pessimistic? Are there things I do not understand? In 20 years, will it be said that we missed an amazing opportunity? Will our country become, like many others, very ordinary?
[English]
Mr. Rickford: Thank you for that question, senator. We could spend a lot of time talking about this.
I have taken the opportunity to speak around the world, but more heartily with the private sector here in Canada, with my provincial counterparts and, importantly, in the United States on this very topic.
I'm not sure how many people come from a solid business background here, but having one customer isn't a great business idea. I think that we've learned in the recent past that when there are political conditions with our neighbor, the United States, there may be challenges with respect to our product.
While we appreciate moving our energy products, we know that demand will continue to increase, but to say that market diversification is a priority is probably an understatement; it's an imperative.
I've talked about a medium-term window that Canada has to move forward with its provincial counterparts and with industry to meet a demand that politically and economically is being asked for. I was in the Pacific Basin in Japan and in China. I have had discussions with my European counterparts in the G7. Subsequent to that, senator, I can tell you there is a demand not just for our products, so oil and gas, but also to have a relationship with a country that has solid economic fundamentals in place: balancing budgets; low tax environment for businesses to thrive; but also in the context of energy security, which has now been elevated at the G7 level as one of the most important discussion points as compared to any foreign affairs matter.
So right back here at home that means building energy infrastructure. However, that can't be done where and if it was to, at all, compromise the health and safety of Canadians and/or their communities.
I believe that this piece of legislation manifestly takes us a step further in assuring that notwithstanding our record of pipeline safety for federally regulated pipelines, there will be no compromises on the safety elements of it, the standards, as I talked about — prevention, preparedness and response.
I would add that the pipeline safety act makes considerations for community-level participation, particularly with First Nations, and, furthermore, takes us a long way, I believe, in a liability and compensation regime that stands with the best of them anywhere in the world. In fact, elements of the liability and compensation regime are world class.
Those have to be in place before this can advance. I feel confident, senator, that within the medium-term there will be major pipeline infrastructure in place, but it certainly speaks to the importance of this piece of legislation to ensure Canadians that there are no compromises on the safety side in advancing our energy infrastructure projects.
Finally, as you know, a couple of major projects have been before the NEB. This is an arm's-length organization. I can't speak to the ones specifically that are before the NEB. But I can tell you that we've made decisions where conditions have been placed on major pipelines, and the expectation is that those conditions would be met, in many instances, before shovels even go in the ground on that pipeline infrastructure.
Senator Massicotte: How do we get the First Nations on side, which is more political than legal? I guess some would say legal. How do we get them on side so that we can proceed in haste?
Mr. Rickford: Respectfully, senator, I actually believe we have more on side than not. If you take a look at the Northern Gateway, a significant majority of First Nations had signed impact and benefit agreements and business agreements with the proponent or the company to advance it.
There are many instances where First Nations, in particular in British Columbia, are actively involved, not just directly, in the business of pipelines, but also in the potential for all of the induced economic opportunities and jobs that come with it.
I feel very strongly, as somebody who has spent a lifetime living and working in First Nations communities across Canada, particularly in my own region but also in British Columbia, that when it comes to things like pipeline safety and marine safety, this is one the first places that we should be fully engaged.
On marine safety, having lived on the northern B.C. coast, I have seen firsthand the tremendous contributions they make. So I know that when a young First Nations person feels integrally involved in the environmental assessment process and in the National Energy Board's processes — that we have increased resources to for this kind of participation — when we build pieces of legislation like this that demand their involvement or necessitate their involvement, those young people will be able to say, even to their own leaders, "My job, the one that pays me, is to monitor a segment of pipeline for its safety for the benefit of my community and to provide for my family.'' It's that level of participation that is the proxy for success on the ground.
We have, in Alberta in particular, examples of success. I think we need to build on that, and I think there is a great opportunity.
I have made it my business — and I know the time is probably up, Mr. Chair — with respect to, say, the major project management in British Columbia, in Vancouver. We have had tremendous success in engaging First Nations communities on a number of key aspects that I think open up the discussion on how we can best advance energy infrastructure for their economic benefit and their full participation in the environmental and aggregate impacts of energy infrastructure development.
Senator Mitchell: Thank you, minister, for taking the time to be with us.
The premise really underlying, in one sense, this piece of legislation is building credibility, which leads to social licence so that the public will allow us to build pipelines. My feeling is that, with climate change, the pressure is building. We need to use the money we're making from energy now to develop a different kind of renewable, at least partly renewable, energy future.
But there is another way to build on this initiative to build social licence, and that's being promoted now by Steve Williams, CEO of Suncor, the largest oil company in Canada, who is calling for a carbon tax. What is your response to Mr. Williams?
Mr. Rickford: Pointedly, we don't agree or accept that a federally applied carbon tax is something that we think is a solution for some of the opportunities that you've talked about.
Furthermore, senator, respectfully, I share your view on the growth potential for renewables. I just returned from Mexico, where we talked in the context of the western hemisphere. Even our counterparts in the United States would love to double their energy supply as a function of renewables, and it still wouldn't be as good as Canada's.
The Americas farther south look to Canada as a leader, and in fact around the world, Canada has the second fastest growing clean energy market in the world. So I share your view.
I would add finally, senator, that I don't use the word "social licence.'' I have listened closely, for example, at the Quadrennial Energy Review that the United States performed right here in Canada. We heard from academic experts and people in the industry. This is a matter, for me, and from what I heard from them, of building public confidence. Some folks perhaps, such as yourself, may use "social licence,'' but I believe it has another legal dimension to it and a political dimension. It may be difficult to understand, for the average Canadian, what we're trying to achieve here. They ask that if energy infrastructure is going to be advanced, that it's going to be safe, that there are mechanisms in place by law for prevention, preparedness and response in the rare instances, certainly for federally regulated pipelines, where there has been an accident, and that if one occurs, liability and compensation are at the forefront in two important regards: one, they're world class; and, two, they demand that the polluter pays.
Senator Mitchell: Thank you.
Back to pipelines, one the major reasons for failures of pipelines is people who dig where they shouldn't and pop them. In Canada, although that issue is largely a provincial jurisdiction, the NEB is very concerned about it. I'm actually developing legislation right now that would be sort of the counterpart to the Ontario legislation, which is the only jurisdiction that actually has legislation now, that would cover the federal lands and federal NEB pipelines.
What role you have considered or could consider playing in encouraging the other nine provinces and even your own jurisdiction to legislate penalties or requirements for calling or, as it's now becoming, clicking before you dig?
Mr. Rickford: For the national audience that is no doubt watching us right now, the first thing I need to say, Senator Mitchell, is call before you dig. I promised the Gas Association that I would do that at every turn.
There is no question that the ground disturbance provisions affect everyone, whether it's landowners, farmers, companies or individuals. The purpose of the ground disturbance clause is to ensure the safety and security of pipelines by providing clarity on what constitutes ground disturbance near pipelines. Essentially someone needs to say, as I will say again, "Call before you dig.''
The depth is specified in line with the depths specified in provincial statutes in British Columbia, Alberta, Saskatchewan and, I believe, Nova Scotia, in the ground disturbance and fisheries acts, if you would like me to comment further on that.
Federally, this is part of the Industry Canada portfolio. It might be worth fleshing out something on that. But not all pipelines operate in areas in Canada where the Fisheries Act applies. So we're hoping to address ground disturbance not just in this piece of legislation, but frankly in the ever more expansive agenda items and importance of the relationship and coordination between the federal government and its pipeline legislation and the provinces. To that end, Senator Mitchell, you have my assurances that later this month we will be looking at those very items, like ground disturbance, with our provincial counterparts.
Senator Mitchell: Thank you and I will send you my legislation.
Mr. Rickford: Thank you. That would be great. I'd love to see it.
Senator Seidman: Thank you very much, minister, for being here.
Ensuring pipeline safety is a complex collaboration among several levels of government, corporations and organizations. We have heard a certain level of concern expressed by the municipalities around their partnership in emergency response planning. Could help us understand this particular aspect, the involvement of municipalities, and their concerns, as you can imagine, in the kinds of issues that they could be involved with?
Mr. Rickford: I would first say, senator, you won't hear me use the word "issues'' very often. I'm a glass half-full kind of guy. But, frankly, haven spoken extensively on this subject matter, this is as much about an opportunity as it is an issue. This is an evolving discussion point that's taking place in communities across the country and they're very important. I think when municipalities speak on this issue, it's then a clear signal that they want to be involved in all facets of it. That's what this pipeline legislation serves to do, quite frankly.
In addition to the additional resources to the National Energy Board to accommodate for consultation, I believe that's importantly where a lot of those discussions should take place. The National Energy Board is an arm's-length organization outside of other levels of government that may have a very strong interest in advancing a given pipeline for energy security and/or economic opportunity reasons. It bases its decisions on science and facts, and the people that are most closely impacted by it, positively and/or potentially, with some consequence to the extent that there would be a rare instance of an accident. So that's the first place that it has to occur.
I think what the legislation speaks to and what you have raised is this: Is there a desire to be involved in the decision- making process as to whether energy infrastructure should advance or not, and the recommendations and conditions that they opposed? Northern Gateway was a good example. Two hundred and nine conditions — more than half of them had to be imposed even before a shovel could go into the ground to build that pipeline. That speaks loud and clear that we have listened to community consultations and that we'll make the tough decisions around whether they should advance. They reflect how it implicates dozen of communities and the concerns echoed by the senator early on, particularly the instance of energy infrastructure projects that I would describe as national in scope, and that's not just because they pass over one provincial border, but ones that significantly get us to ports to meet the market diversification. It makes perfect sense that they would be involved in the notion as to whether they should even be considered, how and why they should be considered, and what elements of safety, prevention, preparedness and emergency response they can be and would be involved in in the event that those projects actually come to fruition.
Senator Patterson: Thank you for being here with us. I welcome this bill, but I would like you to help by hopefully clearing up, for the record, a concern that was brought to our committee earlier in our hearings on this bill by an assistant professor at the University of Calgary Faculty of Law. It's about the environmental damages provisions for civil liability. Professor Olszynski suggested that they should be simplified and enhanced. As I understand it, proposed section 48.12(1)(c) refers to damages in that category as covering "non-use value.'' It was recommended to our committee that this category of damages should also include an additional subsection defining environmental damages. We were told that this would not only simplify this section, but correct what the professor said appeared to be an error or an oversight in the current bill to make it consistent with what was in Bill C-22, the Energy Safety and Security Act, which includes loss of use value, as well as loss of non-use value. Could you kindly comment on that please?
Mr. Rickford: There are three pieces to the environmental damages climate change piece to this legislation. They would be compensation for environmental damages; clarity for non-use value damages, which you identified; and then, more broadly speaking, climate change.
On the two that you have raised, namely compensation for environmental damages and clarity for non-use value damages, they kind of weave together at some point. Bill C-46 creates the ability for governments to pursue environmental damages expressed as a non-use value in compensation for loss in the case of a pipeline spill.
The non-use value provisions build from a Supreme Court decision, British Columbia v. Canadian Forest Products Ltd. and obviously case law in Canada. So the approach taken in Bill C-46 is consistent with that taken in Bill C-22, which you raised, the Energy and Safety Security Act. More specifically on the clarity for non-use value damages, Bill C-46 creates the ability for governments to pursue, in the case of a pipeline spill, environmental damages expressed as non-use value and compensation for loss. In fact, it lists the categories for recovery, and they would include actual loss or damages, costs and expense incurred in responding to an incident, and loss of non-use value relating to a public resource that is affected by the release.
Senator Patterson: That's helpful. We were given an example of damages from a pipeline spill that could affect a wetland. We were told the value of a wetland includes things like water purification, providing habitat for water fowl, and mitigating flood damages to urban centres. Those values, we were told, would not necessarily be captured in the lost income of any of those groups' non-use values. I am wondering if you could comment on that?
Mr. Rickford: I understand that comments were made about loss of value and a number of scenarios were presented. There were lawyers in this room who could create all kinds of different fact patterns, but this is captured under the first category of recovery, actual loss or damages in this particular instance.
In Bill C-46, we will also be able to make claims for loss of non-use value as this refers to public resources. They would include national parks, national symbols, for example, and a species like a polar bear, just to bring context home from your stomping grounds.
The current approach in Bill C-46 would allow, then, the courts to develop a body of precedents in the award for non-use value damages.
Senator Sibbeston: I have two questions. The first is a follow-up to the question that Senator Massicotte asked regarding getting First Nations on board on such major projects as the Northern Gateway Pipeline. Is progress being made, and is the federal government taking initiatives to really work with First Nations to get them on board with respect to a project like the Northern Gateway project?
Secondly, is your department or the federal government in any way looking at alternatives to the Northern Gateway Pipeline going through B.C.? In the Northwest Territories, I know that the territorial government has opened itself to the possibility of transporting oil up the Mackenzie River toward the Beaufort Sea. Is your government looking at that seriously at all, or is that really dependent on industry if it were to arrive at the point where they think it is feasible?
Mr. Rickford: Those were some whopper questions. Thank you. Let me just say a couple of important pieces. It's difficult to stay confined within the timelines with the particular professional passion and background I have with respect to First Nations communities.
The work around energy infrastructure — in fact natural resources more broadly speaking — has been guided by, as you no doubt have an understanding of, the Eyford report. We have embraced many, if not most, of the key recommendations that have arrived from their report. For me personally, it has guided many of the considerations I have made in the design of this legislation and the opportunities that arise out of it. You have this piece of legislation built on key elements that we believe — we've heard from communities First Nation and non-First Nation — that they want to engage and be consulted on, and of course we know the legal obligations around consultation and accommodation. Those are in fact enshrined in the Constitution, and I don't want to go off too much on those.
But in a more pragmatic way, senator, I would have to say, frankly, that we have made robust efforts, particularly in British Columbia and the Northwest Territories, around our major project management offices. These are, effectively, clearing houses that do two important things.
One, they address regulatory questions or concerns and put First Nations communities on a critical pathway to understanding what new legislation or regulations or processes, like environmental assessments, that they can, should and would participate in, including the National Energy Board. They have been a tremendous source of technical information on how to be involved.
Secondly, the major project management office in Vancouver, for example, has addressed a number of other issues that are, shall we say, potentially collateral to or long-standing that have made it very difficult for First Nations communities to focus more on the specific points of a piece of energy infrastructure and/or a project.
For example, Musqueam First Nation has long said that with increased tanker traffic in the lower mainland, they have a desire to protect what is the last of 51 salmon spawning beds in the Vancouver Lower Mainland. You know what, senator? In addition to having spent eight years of my life living and working in First Nations communities across the country, in addition to being a passionate fisherman and having a particular love for the lower mainland, I agree. So the major project management office was a place that Musqueam First Nation could go to get resources for a study that would put into play two important things: one, a plan to look at the research required to support the maintenance of that last spawning bed in the Lower Mainland; and, two, potential for a full partnership between other levels of government, potentially industry and the Musqueam First Nation community, to have a research centre down there.
I want to manage expectations, but I can tell you that if you go down to that small apron of land. They have a magnificent facility that already documents the historical significance of that spawning bed and their traditions. Take a look at other First Nations communities in and around the area who have come to the major project management office, including Carrier tribal council in the Interior, for fish habitat restoration. We're addressing some long-standing issues that have been at least contentious and that go to some of the things they want to protect before they involve fully and completely or engage questions and or processes around energy infrastructure. We think that, in the simplest of terms, this is helping to clear out all of the other matters that will provide them with a better opportunity to engage comprehensive environmental assessment processes and/or things like the National Energy Board because they can talk more pointedly about specific pipelines, knowing full well that we've addressed fish habitat restoration in the Carrier area or that we have worked lockstep with them to protect the spawning bed in the Lower Mainland, particularly with respect to the Musqueam First Nation.
I'm not sure if there were any other questions. I think there was a third point you had there, and I forget because I just get off on a tangent.
Senator Sibbeston: The other point was the Northwest Territories.
Mr. Rickford: Oh, yes.
It would be difficult for me to comment or speculate on new pipelines. I can assure you, senator, that right now we're plenty busy with the proposed pipelines, ones that are obviously before the National Energy Board and/or for which we have decided and accepted recommendations on pipelines proposed, new and/or expanded. Certainly if the economic opportunity presents itself and there are other levels of government and the private sector that have ideas about new pipelines, they're welcome to develop those and put them before the National Energy Board.
The only thing that I can say, bringing us back to this piece of legislation, is that no pipeline project or energy infrastructure can or will advance if it is seen to compromise the health and safety and/or communities here in Canada.
Senator Sibbeston: Are you aware of any activity or attempt to get First Nations involved in a pipeline like the Northern Gateway, such as equity or ownership, so that if a pipeline eventually goes, the First Nations people of our country will have a business interest in the pipeline?
Mr. Rickford: There are a number of examples of where this is occurring. As I said earlier, with respect to Northern Gateway, the good news is that more than 26 First Nations communities, if I'm not mistaken, have entered into different kinds of agreements, ranging from IBAs — I'm not aware of the specific details of what's contained in there. But on the Alberta side, I know there are examples of different kinds of participation in the business aspects of pipeline development for the medium- and long-term success and benefit of First Nations communities. Obviously you can appreciate that the federal government isn't directly involved in the business aspects of this.
I will say that it has been a challenge for First Nations to raise capital to be able to participate in these projects. There are programs, both in the mining sector and forest sector, that I think have helped to develop that, but I think I will park that with the private sector's desire. If they want these pipelines built, the business relationship with First Nations communities is another dimension. I'm concerned about pipeline safety, and that's why we're here today.
Senator Ringuette: We heard from both the industry representatives and from the trade unions that there seems to be an issue with regard to retaining expertise at the National Energy Board. It seems to be a concern, and probably rightly so, that once an engineer or a particular expertise has been at the National Energy Board for a few years, the level of salary in comparison to what is paid in the industry is lacking. So therefore they're leaving the energy board. It seems to be a concern up to the point where the industry indicated that they would welcome, if need be, an increase in their levies in order to compensate and make sure that the level of expertise was there at the National Energy Board. How do you respond to that?
Mr. Rickford: There are a number of items in that question that are worth addressing.
My starting point would be this: The public servant benefit packages and wages, particularly in the context of the National Energy Board, I believe are competitive. There are other advantages for being involved in that. There are people who are in industry, at various stages of their career, who take up opportunities in regulatory boards, particularly provincial and federal, to get a greater understanding of how regulatory frameworks affect the job they had and the one they intend to go to, somewhere down the line, with respect to energy and energy infrastructure development. I'm not a career planner, but I can tell you the National Energy Board is a pretty important place for a lot of professionals stop in and work so that they can better understand the regulatory framework and how the law interfaces with the development of energy infrastructure. There are a number of competitive advantages on the human resource side that justify working for an organization like the National Energy Board.
Now moving on to the financial side, which is making the National Energy Board an arm's-length organization that can be competitive for the people who are in its employ and have the tools and powers of effect and enforcement. This was something we addressed significantly a couple of years ago in strengthening pipeline safety by enhancing the NEB funding to the tune of some $13.5 million over two years. This was focused on increasing the number of inspections of oil and gas pipelines from 100 to 150 and doubling the number of comprehensive audits from three to six.
Last year, in 2014, we committed to enhancing the review process by providing $28 million to the National Energy Board over two years to review applications, given the scope and volume that were before them.
Then, in Canada's last version of its economic action plan, we announced $80 million over five years for safety and environmental protection and greater engagement with communities. I think I spoke to that a little earlier in response to Senator Seidman.
In sum total, and you may not have been here for my opening remarks in whole or in part, just so we're clear, and I take great pride in putting this to the Canadian public, the National Energy Board has a record of 99.999 per cent safety for the 72,000 kilometres of federally regulated pipeline in this country. I think that tells us that the National Energy Board does important work and does it very well, frankly. Anything we can do to ensure that they're a competitive environment that people want to work in. There are opportunities for engineers, auditors, people in the technical aspects of safety, prevention and preparedness response and people in tech innovation, which I know our chair is a big supporter of. They are now built into Bill C-46, and the resources are there.
Yes, Deputy Chair Massicotte, there are even opportunities in the National Energy Board for lawyers. Imagine the important contributions that lawyers can make — and I'm one — to the important public confidence exercise of pipeline safety.
Senator Ringuette: In response, minister, to my question, I gather that you have no plan in order to look into the potential of providing incentives to retain expertise within the National Energy Board?
Mr. Rickford: We absolutely do. I just listed the budgetary components of what the National Energy Board has at its disposal to be a competitive environment where employees — I'm not the human resources manager, as I'm sure you can appreciate, but specifically, Bill C-46 modernizes a number of important pieces that the National Energy Board does, in addition to clarifying the role of the NEB, clarifying the audit and inspection powers, and ensuring a number of key processes that the National Energy Board engages in its work. There is a tremendous opportunity for talented people to work there. It's a competitive environment for them both financially in terms of benefits and compensation and, as well, for a greater understanding of how the regulatory bodies work in the context of energy infrastructure development.
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Senator Massicotte: I would like to ask a more technical question. I actually have three questions related to the testimony of the Union des producteurs agricoles, and I will try to summarize their concerns.
[English]
The UPA raised three issues that are somewhat technical, but I will try to be as brief as I can to get some clarification. They had three concerns.
The first relates to ground disturbance, whereby the proposed legislation makes it such that you cannot cultivate land more than 45 centimetres deep and not have it surpass 30 centimetres in depth without the approval of the NEB. They say that's contrary to existing practice. They don't want to be caught. For instance, the roots of alfalfa or hay go beyond 30 centimetres. The concern is that they don't want to be caught contravening NEB policy. They say, "Why after decades of existing practice are we introducing this element?'' Could you comment on that?
The second one is with regard to paragraph 86(2)(d) of the existing act. As you know, this pipeline act is amending the existing act. It makes it very clear that when any pipeline company does a deal with a landowner, then that agreement must provide for what I call a "hold harmless clause'' and not hold the landowner responsible unless there is gross negligence on behalf of the landowner. But proposed subsection 48.12(1) of the bill makes it very broad by saying that any owner will be held liable to the extent that they caused damage to the pipeline. It looks like there is a contradiction of responsibilities. It's not clear to me to say which of those paragraphs overrides the other. Frankly, I think there is a "notwithstanding'' missing in those amendments. But if you could go on the record and make it clear what the intent is and seek clarity if there is a contradiction, eventually that could satisfy.
The third point they raised concerns proposed section 48.12, which basically says that there is a limitation to seek damages by a landowner from the pipeline company, six years after the leak. But with most legislation and to be consistent with the current contractual law, I would say it is common sense that it should be should be six years from the time you are aware of a leak. If you're a farmer or a First Nation and you're sitting in a muskeg somewhere in Never Never Land, it's possible you will not see the leak for many years. It seems to me that they should not be prevented from seeking damages from the time they become aware of the leak and not from the time that the leak may have occurred.
Could you clarify those three points, minister?
Mr. Rickford: Sure. Here you go; I make an anecdotal remark about lawyers and a lawyer comes after me with the technical questions. I deserve that, don't I?
Thank you for those technical questions, senator.
We talked earlier about ground disturbance. In particular, I would say that the clause doesn't prohibit activity such as planting crops, but requires checking in with the NEB as a safety precaution.
I have gone over much of ground disturbance, but on the 30 to 45 centimetres, as I said earlier, the purpose of this proposed section is to ensure the safety and security of the pipeline by providing clarity on what constitutes ground disturbance and some very specific language around two things: one, the need to call before you dig; and, two, the importance of aligning those with provincial standards.
In the case of Quebec, they don't have a statute specifying ground disturbance depths in relation to pipelines, but I believe the added clarity protects both people and their property by letting them know they need to check in with the National Energy Board.
On the second piece, landowner liability, I think it was proposed section 48.12(1).
Senator Massicotte: That's the third one, but that's okay. We'll do that one first, if you wish, the six-year limitation.
Mr. Rickford: Sorry, I thought the second question was on landowner liability.
Senator Massicotte: Yes, 86(2).
Mr. Rickford: Section 86(2) comes into play when a company wants to build a pipeline over someone's land. The section sets out the mandatory elements of a land acquisition agreement. One such element is that the pipeline company indemnifies the landowner from any damage occurring from pipeline operations. The exception would be where the landowner is at fault through negligence or willful misconduct.
Proposed subsection 48.12(1) creates absolute liability for the pipeline company, holding them liable regardless of fault or negligence. We talked about that earlier and of course the amount, $1 billion, for operating major oil pipeline.
Proposed paragraph 86(2)(d) does not shield a landowner from their own gross or intentional fault, while the absolute liability provision holds a pipeline company liable regardless of fault or negligence.
On the limitation period for claims to courts — I think that was the other piece — the approach taken for a limitation period in Bill C-46 is consistent with other federal legislation, as well as the approach taken in the Energy Safety and Security Act. The limitation applies to the absolute liability provision, senator. Beyond the six-year period, a claim for compensation will require proof of fault or negligence. The limitation period does not limit the ability for landowners to seek compensation.
Senator Massicotte: Can I just say, for the record, eventually, any law, any contract, if there is a dispute, the question all the time is the intent. So let me repeat what I think I heard for the record and make it very clear.
Relative to the 30 or 45 centimetres, as you know, you can cultivate your land, but you cannot cultivate further than 45 centimetres. The 30 centimetres applies to plants, including the root system. I gather that what you're saying is that if a farmer plants alfalfa or hay and the roots go beyond 30 centimetres, they will need to get NEB approval every year. Is that what I heard?
Mr. Rickford: The clause does not prohibit activities such as planting crops, but requires checking in with the NEB as a safety precaution.
Senator Massicotte: So every year, the alfalfa farmer must call the NEB to get approval to plant alfalfa or to let hay grow on that piece of land.
Mr. Rickford: The clause does not prohibit activity such as planting crops, but requires checking in with the NEB as a safety precaution.
Senator Massicotte: Okay, I think I understand exactly.
On the second point, just to make it clear, 86(2)(d) basically says, "Mr. Landowner, Mr. First Nation, Mr. Farmer, you're all going to be held harmless unless you're grossly negligent,'' But under 48.12(1) now being proposed, it basically says that not only is the pipeline company held responsible, but anybody who causes damage will be held liable.
What you seem to be saying is that the intent of 86(2)(d) of the existing act is really the dominant intent. In other words, in spite of 48.12(1), 86(2)(d) will override, and nobody will be held accountable unless they're grossly negligent. Is that accurate?
Mr. Rickford: Section 86(2) comes into play when someone wants to build a pipeline over someone's lands, senator. We've gone over that. The section sets out the mandatory elements of a land acquisition agreement.
In sum, 86(2)(d) does not shield a landowner from their own gross or intentional fault, while the absolute liability provision holds a pipeline company liable regardless of fault or negligence.
Senator Massicotte: But the latter part holds them liable. That's under the absolute liability sense.
Mr. Rickford: They complement each other.
Senator Massicotte: It seems to me they compete with each other. Let me use an example. A farmer does something and it causes damage to the pipeline, but it's not gross negligence; it's just an error, cultivating land possibly. He has this land agreement, this pipeline agreement so enumerated under 86(2)(d). Who pays?
Mr. Rickford: The pipeline company.
Senator Massicotte: Not the farmer, not the First Nation.
Mr. Rickford: If there is an assessment by the pipeline company as to the degree of fault, that's a question for the courts subsequent to that. I don't think that's unreasonable.
Senator Massicotte: But the land agreement with the pipeline company, which holds them harmless, I presume would override.
Mr. Rickford: The section sets out the mandatory elements of a land acquisition agreement.
Senator Massicotte: On the last point under 48.12, just to be very clear, I got your answer. But let's say there's a leak on First Nation land and there's a lot of land. It could be farmland. A small leak has been going on for 10 years. He only notices it 10 years after the leak commences and then becomes aware of it. Can he hold the pipeline company responsible for repairing any damage caused by that leak, in spite of the fact that the leak has been going on for 10 years?
Mr. Rickford: Respectfully, senator, this came up earlier. Given your impressive legal background, I'm sure it would be very easy for us to talk about a myriad of fact-pattern examples that could emerge. The best efforts of this legislation are obviously to make reasonable efforts to contemplate any kind of circumstance that would arise.
You just asked a question about a scenario where both the absolute liability and the more limited liability regimes would interface, so I would suggest that in all elements around landowners' liability, I think this piece of legislation is as clear as it possibly can be with respect to providing the mandatory elements of a land acquisition agreement and the important element of how a pipeline company indemnifies a landowner, for example, from damage occurring from pipeline operations. Of course, the exception would be where the landowner is at fault through negligence or willful misconduct.
Senator Massicotte: Therefore, 10 years later, if he made all reasonable measures to find out but is not aware of it, he will be compensated.
Mr. Rickford: That's a summary statement that you're making, obviously. I think this bill addresses the key elements of "at the time'' and "thereafter.''
The Chair: That ends our questions, minister. Thank you very much for your presentation and your answers. We appreciate it very much.
Honourable senators, as you know, we have heard from a variety of witnesses about this proposed legislation. We are now at a stage where we will begin by going through the bill clause by clause. Before we do this, I would like to remind all members around the table that if at any point a senator is not clear where we are in the process, please ask for clarification.
As the chair, I'll do my utmost to ensure that all senators wishing to speak have the opportunity to do so. For this, however, I will depend on your cooperation.
Finally, I wish to remind honourable senators that if there is ever any uncertainty as to the result of a voice vote or show of hands, the cleanest route is to call a roll-call vote, which provides clear results.
Before I start, I will ask if there are any questions around the table; if not, I believe we can proceed. Thank you.
Is it agreed that the committee proceed to clause-by-clause consideration of Bill C-46, the proposed pipeline safety act?
Hon. Senators: Agreed.
The Chair: Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Shall clause 1, which contains the short title, stand postponed?
Hon. Senators: Agreed.
The Chair: In the interests of time, I'll ask the members around the table if they're agreeable to grouping the clauses of the bill according to the parts of the bill. If so, I will carefully announce which groups we are considering, from which clause to which clause, and the page numbers.
Hon. Senators: Agreed.
The Chair: Shall the clauses dealing with the National Energy Board, clauses 2 to 38, pages 1 to 40, carry?
Hon. Senators: Agreed.
The Chair: Agreed.
Shall the clauses dealing with the Canada Oil and Gas Operations Act, clauses 39 to 46, pages 40 to 44 of the bill, carry?
Hon. Senators: Agreed.
The Chair: Agreed.
Shall clause 47, the coming into force clause, carry?
Hon. Senators: Agreed.
The Chair: Agreed.
Shall clause 1, which contains the short title, carry?
Hon. Senators: Agreed.
The Chair: Agreed.
Shall the title carry?
Hon. Senators: Agreed.
The Chair: Agreed.
Shall the bill carry?
Hon. Senators: Agreed.
The Chair: Senator Massicotte, you have your hand up already.
Are there any observations that anyone wants to attach? For that, we need to go in camera.
Senator Massicotte: Let's do that, then.
(The committee continued in camera.)
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(The committee resumed in public.)
The Chair: Is it agreed that I report the bill to the Senate?
Hon. Senators: Agreed.
The Chair: Thank you.
(The committee adjourned.)