THE STANDING SENATE COMMITTEE ON ENERGY, THE ENVIRONMENT AND NATURAL RESOURCES
EVIDENCE
OTTAWA, Tuesday, February 19, 2019
The Standing Senate Committee on Energy, the Environment and Natural Resources, to which was referred Bill C-69, An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts, met this day at 7 p.m. to give consideration to the bill; and, in camera, for the consideration of a draft agenda (future business).
Senator Rosa Galvez (Chair) in the chair.
[English]
The Chair: Good evening and welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources.
My name is Rosa Galvez and I am a senator from Quebec and the chair of this committee. First I want to thank our guests today because this is our first sitting in this new building and we are trying to find our way. It was a long day. Thank you very much for your patience and waiting for us.
Now I will ask senators around the table to introduce themselves.
Senator MacDonald: Michael MacDonald, Nova Scotia.
Senator Richards: David Richards, New Brunswick.
Senator Woo: Yuen Pau Woo, British Columbia.
Senator Seidman: Judith Seidman, Montreal, Quebec.
Senator Neufeld: Richard Neufeld, B.C.
Senator Patterson: Dennis Patterson, Nunavut.
Senator McCallum: Mary Jane McCallum, Treaty 10, Manitoba region.
Senator LaBoucane-Benson: Patti LaBoucane-Benson, Treaty 6, Alberta.
[Translation]
Senator Massicotte: Paul Massicotte from Quebec.
[English]
Senator Simons: Paula Simons, also from Treaty 6 in Edmonton, Alberta.
Senator Mockler: Percy Mockler, New Brunswick.
Senator Mitchell: Grant Mitchell, Alberta.
Senator Tkachuk: David Tkachuk, Saskatchewan.
The Chair: I also want to introduce the analysts of the committee, Sam Banks and Jesse Good, and to my left the clerk of the committee, Maxime Fortin.
[Translation]
Colleagues, tonight, we are continuing our study of Bill C-69, An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts.
Today, from the Canadian Association of Petroleum Producers, we welcome Tim McMillan, President and CEO, and Shannon Joseph, Vice President, Government Relations.
[English]
Thank you for joining us. I invite you to proceed with your opening statement, after which we will go to a question and answer period.
Tim McMillan, President and Chief Executive Officer, Canadian Association of Petroleum Producers: Good afternoon and thank you for the opportunity to present to the committee.
And as you mentioned, Shannon Joseph is our vice president for CAPP, based out of Ottawa, who is joining me.
CAPP represents the upstream oil and gas industry in Canada, so those that are investing in the offshore in Newfoundland or in conventional production in the Western Canadian Sedimentary Basin or oil sands would be our members.
About 80 per cent of Canada’s production comes out of CAPP member companies, and we are Canada’s single largest private sector investor. We have been building safe and successful projects in Canada for many years under the current regulatory regime and under pre-CEAA 2012 as well. Last year we invested $41 billion into the Canadian economy. And as impressive as $41 billion worth of investment is, it is unfortunate that that’s about half of the investment our industry was making just four years ago. And that’s at a time when global demand for oil and gas is increasing at a dramatic pace, as is global investment. It’s just not happening here in Canada.
Over the last couple of years, our industry has been very engaged in the process to bring the bill which ultimately was Bill C-69 and over the last couple of years as that bill has worked its way through the process. We have been involved in committees. We have presented to panels. We have responded to discussion papers. We’ve met with ministers and presented to house committees. We’ve provided 15 submissions on the topic including one that we submitted last Friday.
We’ve commissioned third party studies. I’d highlight the WorleyParsons study, which compared Canada’s oil and gas regulatory system to the best regulatory systems in the world. Canada ranked at, or the best, regulatory system in the world. We’ve hosted several workshops. And we’ve had hundreds of meetings on the topic of Bill C-69.
We’ve done this proudly on behalf of the oil and gas industry and the men and women that work very hard to produce it safely and responsibly here in Canada. We have been working earnestly to provide solutions to the flaws that we have identified in the bill. We want to be constructive and provide a path to a workable regulatory system.
Through the last several years, we have received many assurances from government that they would address the issues that have been identified. Yet, when the bill came out of third reading with 78 carried amendments, the amendments only served to increase the bill’s complexity and uncertainty.
In response, we got back to work again. We undertook a clause-by-clause review to determine specific amendments to make the bill workable. CAPP has provided a package of the amendments in our submission to this committee, which we submitted last week. And we have been asked what the two or three changes that you want are. We want to be very clear and make sure that the committee understands this isn’t something where you can cherry-pick two or three things and say it’s good enough. We’ve worked hard to put together a consistent package, a system of changes which will work together to ensure this bill is workable. And it’s not as simple as picking one or two or three things.
We have also been told, “Don’t worry about the challenges or the flaws in the bill. We will address that in the regulations.” It has been our belief and our experience that flawed legislation can’t be fixed by regulation and stress the importance of getting the legislation right so that the regulation can enable it. This is crucially important.
When we look at the vision we think it is possible that Canada can and should have a regulatory system that upholds our high environmental and regulatory standard and does it in a clear, efficient and transparent way. The challenges we have identified and have been speaking publicly and engaging with senators on, I will highlight those now and would expect that would frame out much of the conversation later on here this afternoon.
The first area of concern is the unfettered scope and opportunity for litigation. The structure of the bill leaves substantial opportunities for those who want to disrupt the Canadian investment and use our legislative system to impede investments in Canada, even investments in high-quality projects.
The second area of concern is the marginalization of life-cycle regulators. The way the legislation is currently written the life-cycle regulators that have the expertise and the responsibility for these projects over the long term are marginalized and don’t have the ability to chair or have the majority on the panels.
Timeline uncertainty: This is something we have heard substantially from the investment community. We’re already seeing investments leaving Canada and going to other jurisdictions. And this timeline uncertainty has led the pipeline industry in Canada to say, “Unless we can have more clarity about how and when projects get done no major pipeline project will come forward in Canada much less be completed.”
We believe that there is excessive ministerial discretion, and when that is coupled with the other vulnerabilities that we’re highlighting in the bill, the minister will be put in a difficult situation on a regular basis, where her discretion will be the pressure relief valve for a piece of legislation that we could address at this point.
The last thing I would like to highlight is the drowning out of local communities. In this current legislation, there is no ability to prioritize those that are most directly affected by a major project to have their voice heard in a way that’s different from, say, an activist from another country. Ultimately, this would be those who would want to speak in favour of and those who may have challenges that they would want to be addressed. That would put undue stress on the system and on the minister responsible to ensure that the most directly affected should be heard.
To summarize, Canada today is attracting more uncertainty, not more capital. Canada has lost and will continue to lose investment and jobs if we do not have a system with clear rules, clear timelines and decisions that stick.
The livelihoods of Canadian families and communities are at stake. CAPP urges the committee to consider these proposed amendments as a package, as a system, and to restore investor confidence. We know it is possible for Canada to maintain its high environmental and regulatory standards and do it in a way that ensures we can be a supplier of choice for energy products around the world. Thank you and we’d be happy to answer any questions.
The Chair: Thank you very much.
We will have three minutes per senator, starting with Senator Richards.
Senator Richards: I would like your opinion on this. Do you think bill this is more complex and defeatist towards the oil and gas industry than the 2012 bill?
Mr. McMillan: Yes. Our read of the bill in its current form is that it is more complex, doesn’t give the clarity for people who want to bring good projects forward and has legal vulnerabilities embedded in the bill. If past experience is to play out, we would expect that those who want to disrupt the Canadian economy will use the legal vulnerabilities to stall, delay and ultimately kill projects in Canada.
Senator Richards: Thank you.
Senator MacDonald: Thank you for being here today and waiting for us. The Senate had to sit.
Many organizations including your own have suggested that the early planning phase would be improved by adding deadlines or milestones for the agency. Are any of your members concerned that the IAA will not meet its obligations until late in the six-month period being proposed? Can you describe any specific amendments that would increase predictability and investor certainty in the early planning phase?
Mr. McMillan: We do see the challenge you identified. The early planning phase is a good model in principle, but having it clearly structured and defined will be important. Ensuring that all parties are willing to live up to the timelines is also important. I will ask Shannon to speck directly to the specific amendments.
Shannon Joseph, Vice President, Government Relations, Canadian Association of Petroleum Producers: There are decisions which can be made early, so a decision like will this project be subject to an assessment. That shouldn’t wait until the end of a six-month period. There should be amendments within the legislation that require the agency to provide that decision as soon as possible.
There are other decisions that we hope will be made at the end of the early-planning phase, including specifics around what information is required, who will have to be consulted, what is the nature of the consultation and what is the scope of the assessment? We need amendments that reflect the requirements of that early planning phase in legislation, and that it has to be provided at the end of 180 days.
The major decision and information points need to be provided at 180 days, but there are interim things such as whether this assessment going to be happening that should be provided earlier? We have proposed amendments to that effect in your package.
Senator MacDonald: Bill C-69 grants the Minister of the Environment and Climate Change at least 15 opportunities to suspend project reviews. Have your members expressed any concern about this level of arbitrary ministerial discretion when it comes to Bill C-69? Do your members view the new process as depoliticized or are they now concerned that it’s in fact more politicized?
Mr. McMillan: The ministerial discretion is one of our key areas where we think amendments are needed. When you look at some of the other vulnerabilities in the bill — such as the “knowability” for those most directly affected to be heard more than those that are looking from further afield to disrupt the project — that the minister would rightfully want to extend timelines and use that discretion in a way that would be inconsistent with the model that the bill puts forward. If the vulnerability is built into the bill, it really gives the minister no choice. Any other things you would highlight on the discretion front?
Ms. Joseph: Some of the concerns around ministerial discretion go beyond the issue of timelines. They also go to adding things to the project list, kind of halting the process at different stages. Where possible, we proposed various amendments to create a framework around which the minister might make these discretionary decisions to depoliticize them, because without such guidance, it becomes very political.
Senator Cordy: Thank you very much. I was at another meeting and I got lost. This is our first day here. I will look forward to reading your proposed amendments.
I’m surprised to hear about the ministerial discretion. There currently is ministerial discretion within the 2012 legislation, is that not correct?
Ms. Joseph: That’s right.
Senator Cordy: You wanted to eliminate it. It’s tough when the minister is the one responsible and it’s currently part of the 2012 bill which was in the budget.
Ms. Joseph: We’re trying to bring discipline to the review process, so we want to create a bill so there is certainty around when information is required. So at the end of early planning the minister had said this is the information you need to provide, and there won’t be 10 other opportunities for the minister to introduce new requirements for information or consultation, which is possible within this process.
What we’re talking about is certainty. To know at different stages how the minister might make decisions and what might guide those decisions so that we have clarity, as an industry, going into a process to know if there is a way through here or not.
Mr. McMillan: I might add, it’s not all or nothing. It’s what’s reasonable; what’s a good model for the legislation? This is a package. It’s not about cherry-picking one piece or another. If you have multiple flaws in the bill, and the discretion to the minister is the way to circumvent those flaws, we think that’s problematic. There may be times when ministerial discretion is the right thing, but when we put forward the package for your review, it’s really to be viewed as linking those pieces together.
Senator Cordy: After the impact assessment, the minister has 30 days to respond. If it’s not within 30 days, it has to be public as to why she has not responded. That’s a positive thing, because now there is no timeline for the minister to respond. The minister does not have to say why they are responding or asking for more information. That’s a positive thing I noticed when I was looking over the bill.
Mr. McMillan: More transparency and clarity is good. The flaws are the scope of the opportunity for that discretion and how it is used as an off-ramp for other problems in the bill.
Senator Cordy: I did some research and some work on the early engagement and planning. You have said there could be some hiccups, but many people are very pleased to have the early engagement and planning because it gives them a better sense of what they will be encountering as time goes on. Do you think there should be no early planning?
Ms. Joseph: Many of our members engage in early planning right now. You’ll hear from many of them that they see this as a positive thing that aligns with current practices.
What we’re looking for in the bill is what comes out of early planning. You’ll see in the first amendments that we provided, we’re asking for specific things to come out of early planning. So when we get that notice of commencement at 180 days, we want it to describe, specifically, the information and consultation requirements. That stuff is not spelled out in the legislation and can be expanded as time goes on.
We’re asking for discipline in the process. Early planning is great. Let us know as early as possible what we have to do, but we need the bill to actually say that and it doesn’t say that now.
Senator Cordy: My understanding is that you’re absolutely right. Many companies, who are trying to do the best job they can, are going to do the early planning, but this bill actually puts it in the legislation. I will look at your proposed amendments later on, probably not tonight, but tomorrow. It has been a very long day. I will come back.
Senator Neufeld: Thank you very much for staying here. We appreciate it very much.
You said that Canada has the best regulation system in the world. Was the study you did on CEAA 2012?
Mr. McMillan: Yes, that was WorleyParsons looking at our current regulatory system.
Senator Neufeld: So our current regulatory system, according to an outside source which had no connection to the oil and gas industry, said nothing is perfect but we are right at the top of the heap around the world.
Mr. McMillan: They compared Canada — not to the Saudi Arabias or the Nigerias of the world — to the North Sea, England, Norway, the United States, countries that share our values and beliefs in a higher environmental standard. Across multiple different tests, we were either the top or at the top with others, so it was a positive review of Canada.
Senator Neufeld: The current Prime Minister, prior to the election, was talking about Canadians having lost trust in the NEB. That, over time, became the mantra of the Liberal government; Canadians lost trust in the NEB. I’m a Canadian and I didn’t lose trust. I think it’s a very good process.
You folks represent the oil and gas industry. Did you receive any letters from average Canadians or anyone that would say, “We’ve lost trust in the National Energy Board process and we’ve lost trust in you”? Has there been any documentation of any kind? If there has been, would you mind sharing it with us. I don’t ever recall that until it came out in politics, to be perfectly frank.
Mr. McMillan: What we have seen is activists, groups, many of them American-funded, have taken a very deliberate approach at targeting Canada and our institutions.
I would point you to something called the Tar Sands Campaign, where they lay out a plan for taking on our institutions. I haven’t seen that translated into broad society. “Tim Hortons talk” is rarely about the National Energy Board, but certainly those groups have used social media very effectively and lobbied governments voraciously to get changes that make it more difficult for Canada to attract investment.
Senator Neufeld: When you brought suggestions to the House committee of issues that you’d like to see dealt with, after spending years with groups appointed by the government to develop a new plan, did they accept any of your suggestions? Did they change anything that you asked?
Mr. McMillan: Shannon might correct me, but we worked earnestly to look for solutions. We had identified several areas of concern. Through the amendment process, we saw three of the 100-plus amendments that were brought forward that we thought were moving the ball in the right direction. Ultimately, 87 were passed, and three of them were moving in the right direction. The others were either neutral or made it more complex and convoluted.
Senator Neufeld: Just quickly. The regulations, they say, “We’ll fix it in the regulations and you’ll have an opportunity to change the regulations.” I would assume you’re a little bit from Missouri on getting any changes in the regulations, if that’s what you experienced when you did the bill. Would that be correct?
Mr. McMillan: I think, just on a principled basis, a flaw in the legislation should be fixed in the legislation. We should not rely on regulation ever to fix legislation. It’s the practice of good government, and I think that’s our opportunity at this point.
Senator Woo: Thank you, witnesses, especially for the very detailed input you’ve provided, including the specific proposed amendments to the bill.
I am a little concerned about your statement about not cherry-picking. You’re essentially saying take-it-or-leave-it. There may be symmetry in our agreement on the need for changes in thematic areas, but it might be challenging for us to agree to the entire package as presented. I hope there will be some opportunity for discussion on different ways of achieving similar objectives.
I have so many questions, including specific questions on amendments that seem to me to not address the problem that you are trying to solve. I want to jump on the WorleyParsons study because it was referenced by my colleague. You did quote from it in a very favourable way, but in fact your testimony says something very different. Your testimony says that we have one of the most expensive and time and resource-consuming EA processes in the world. That’s what you chose to highlight. That presumably refers to CEAA 2012.
The WorleyParsons study also recommends, in its review results — and this is from your direct submission — a number of measures in a new approach to impact assessment, which includes establishing agreements between overlapping regulators, using cumulative assessment and, essentially, the regional assessment and strategic assessment process that’s in Bill C-69. It recommends undertaking early and meaningful consultation, essentially the pre-planning process that’s in the bill. It recommends implementation and integration of effective social and health impacts. In other words, broadening it beyond environmental issues. And it recommends — this is again straight from WorleyParsons — stakeholder involvement in scoping and analysis of alternatives.
My question to you is: Why have you not highlighted these findings? Can you comment on the extent to which either CEAA 2012 or the current bill takes up these recommendations from the consultant you hired to review Canada’s assessment process?
Mr. McMillan: The WorleyParsons report identifies the standard that Canada is at and we show very well. It does point some of the flaws that under CEAA 2012 — it is more expensive, more time-consuming than our peers. If we don’t get substantive changes of Bill C-69, it will make things even worse.
We’re not starting from a place of strength.
To your earliest comment about the cherry-picking, something we have worked very hard on — because I understand that it is a challenge to sit in front of senators and to say, “We have thought about this a lot and here’s a package.” We did a lot of work to work with other industries. We worked with the pipeline industry and their technical folks. We’ve worked with people from the power industry. Even the mining industry and the mining association on the issues we’re seeing, are they seeing similar ones. Pretty much across the board different industries are going to have different stresses, but we’re all identifying the same areas. For the most part, we’ve even identified the same path to resolution. Some go a little bit further, but I hope that when you are discussing this with other industries there should be a pretty strong consistency of a path forward.
Senator Woo: Can you address the question on the WorleyParsons recommendations on how our environmental and impact assessment process can be improved, specifically by doing a number of things which appear to me to be incorporated in Bill C-69? I won’t go over it again. All senators can look at the handout, the last page of the so-called review results of the WorleyParsons study.
Ms. Joseph: For example, and I think you make an important point, senator, but if we look at the recommendation around strategic planning, Bill C-69 has measures, something called strategic and regional assessments, but there is nothing in the bill that specifies how these are used and how these are used in the decision process. One of the concerns we have raised is that we don’t want policy debates to take place in the context of projects.
In discussions with government, the strategic planning and the regional planning have been positioned as ways to address some of that, but that’s not written into the legislation. So you’ll note that we have amendments related to sections 94 and 95 that would actually make that happen in the legislation.
Similarly, in terms of agreement overlap and resolving those agreements, you’ll note that in Bill C-69 for the offshore, for example, any offshore projects will trigger the maximum review, which is a review panel, and won’t allow for substitutions or deferral and evaluation by the offshore board. What we are proposing in here, I think, would get at the intent of WorleyParsons, which is MOUs that would allow the federal government, the new agency and these local agencies to agree on ways to avoid overlap and things like that.
To the extent that there’s intent in the legislation to address some of those things, we do recognize that, but I think you’ll note from the amendments we’ve actually put forward, the bill doesn’t get there. That’s why we’ve proposed the amendments we have with respect to strategic assessment and with respect to the offshore boards. I could name other examples but I think you get my point.
The Chair: I have a question. Looking at your concerns, concern number 2 is marginalization of life-cycle regulators. I don’t know if you are following our hearings, but we did hear from life-cycle regulators. They didn’t express these concerns. On the contrary, they said that the expertise won’t be lost, that they will be there and available for the government, officials and proponents with their expertise.
I want to better understand your concern number 2 and why it is a concern and why the regulators haven’t expressed it.
Mr. McMillan: I haven’t seen the presentation the regulators made. One of the life-cycle regulators that we work regularly work with are the offshore boards for Atlantic Canada. They have the expertise in Canada when it comes to offshore exploration and production.
For them, who then will be responsible for a project, if successful, for the next 10, 20, 40 years, they obviously will have the expertise and they will contribute in whatever way. Their intent and their purpose is to serve Canadians and to be a regulator.
However, to instruct in the legislation that they can’t chair is a missed opportunity and intended to be exclusionary. The structure of the panel can’t have a majority of people with that expertise. Again, it seems potentially that would be something you would want in any given assessment. Being that the legislation precludes it, it seems onerous or counterintuitive to the outcome that we would want.
Senator Massicotte: First, let me thank you for being here. Your suggestions are very specific. Actually, with the intent of being fair, I compliment you for the work you’ve done in presenting these ideas, many of which we share, and obviously we’ll have further discussions about it.
I don’t want to spend too much time, because I’m not sure whether it’s relevant whether or not we’re better off than in 2012. You have a book that comes out in Alberta every three months, and three very senior people in the industry made a study of how long different types of projects took. Their bottom line is that for 22 years we’ve had immense problems getting projects approved. OECD confirms that we’re number 34 or 35. We have beautiful principles, but it doesn’t work, including 2012. Bottom line, we have a problem that we have to fix jointly with the industry, and we seek your help.
Just to take away any misunderstanding. If people are thinking there is a plan, you seem to be saying we are better off today than with these amendments. Could that suggest that you hope that we exhaust the reference but not arrive to amendments and the proposed deal dies? What’s your keen interest? What do you expect to see?
Mr. McMillan: We have been very purposeful in our approach — and going back two and a half, three years to the public hearings to start developing this bill — to work with the government and bring forward solutions to challenges. Even after it was introduced in the house and after third reading, we have continued down the path to work constructively and earnestly to bring solutions to the government as they were developing this bill. We are still committed to getting meaningful changes that can make this bill workable.
Senator Massicotte: You have one CO this week or last week making comments that suggest otherwise. A major industry player made the comment, “Unless it gets implemented, we would rather see it die.” You’re saying that’s not the industry position; you think we can get amendments done, and it’s important to you?
Mr. McMillan: I can tell you that our members and the horsepower that has gone into going through this bill line by line and coming together to have consistent amendments has been some of the hardest work we have done as an industry association in the last several years.
Senator Massicotte: Having said that, we start from scratch. We’re not experts. You are the expert. Obviously, the typical approach of all of us is the logical one: Is there a model? Are there people doing things right?
There have been a couple of studies looking at best practices around the world. You made comments earlier. In Canada, B.C. has a strong reputation for getting these things right. Ontario and Quebec have a strong reputation for getting things right. In that quarterly review magazine, some people are making studies, saying why does it work in some places and not others? It’s not only the outlining of the principles; it’s the culture. Are you happy with B.C.’s approach and their impact assessment approach to future projects?
Ms. Joseph: We also take as a starting point that projects are best reviewed locally. I think part of B.C.’s success is driven by their understanding of the local context and their ability to build on the work they have done, whether it’s with Indigenous communities or other stakeholders, to get a review process that works.
We’ve had a positive experience with the Alberta regulator and with the offshore regulators. I think the challenge is when these project reviews become politicized. Even B.C.’s decisions related to certain projects are being challenged now and being called into question as to whether they needed federal review in addition.
Senator Massicotte: Are you happy with the amendments? They passed a bill recently on impact assessments in B.C. Are you happy with that bill?
Ms. Joseph: We have concerns that that bill makes some of the mistakes that are present in Bill C-69 and that it might take B.C. away from the successes they’ve had in the past.
The Chair: Thank you very much, Senator Massicotte.
Senator Simons: Thanks very much. I have read the amendments. I’ve read them over and over. Now I think I need a higher degree of progressive lenses, because you make them in teeny, tiny type.
I have a couple of questions arising from them. In your suggested amendment, 62.1(1), you’re proposing a hard cap, if I can use that term, of 730 days. Are you at all concerned that that could prejudice a proponent who might need to stop the clock? How are you calculating 730 days? Where does it start and end? Does it make allowance for proponents who need to call a time out?
Ms. Joseph: I’m not sure if you’re looking at our October version of the amendments.
Senator Simons: I’m looking at the one that we got just this week. I think I have four different sets.
Ms. Joseph: You’ll note that proposed section 62.1 says that on the proponents’ request, the minister may extend the time limit.
I think there’s been recognition and experience that sometimes the clock does stop because of the situations with the proponent. But we want the principle to be that we’re aiming to complete this thing in two years and the proponent is committed to working towards that. If there are mitigating circumstances, we do leave flexibility to the minister to work with the proponent to address that case, should it come up.
Senator Simons: Just to clarify, is it two years from the start of the pre-approval? When does the clock start?
Ms. Joseph: It’s two years from the notice of commencement. It becomes a two-and-a-half-year process.
Senator Simons: I want to look at your amendments to clauses 93, 94 and 95 of the impact assessment act, because this is always where my eyes start to cross. Can you explain to us, who did not go to law school and who are not energy regulators, how your proposed amendments to clauses 93, 94 and 95 would change the bill?
Ms. Joseph: I’m starting to see the issue you raised with me earlier. It needs to be chronological. That thing is coming.
The purpose of the strategic and regional assessments were to clarify how climate change is going to be dealt with in this region and how species management is going to be dealt with in this region. It would provide a framework for a proponent to look at and say: I know from a policy standpoint whether my project fits or not.
The legislation needs to enable that. It needs to direct the agency to use those studies in that way. Right now it doesn’t do that. Even if, in conversation with government and others, they say that’s the intent, it’s not actually written that way.
So we’ve tried to clarify, both in clauses 92 and 95, what the purpose of those reviews are; and then we clarified in clause 22 the need to reference those, when dealing with things that look to industry like policy questions, that those policy things have been dealt with in this way and that these are actually tools for that.
Senator Simons: From a cart-and-horse perspective, who puts that cart before that horse? Who is responsible for making sure that those —
Senator Massicotte: It’s the other way around.
Ms. Joseph: Who is responsible for getting the regional assessment done?
Senator Simons: Yes.
Ms. Joseph: It would be the federal government. One example I would give is the offshore now. There’s a regional assessment going on there to provide clarity around climate and other sustainability factors. That’s been presented as a mechanism again to have certainty. We wouldn’t need, for example, a maximum type of review on exploration wells or things like that.
We have heard the intent to do that, and the government is doing that in the case of the offshore. But again, the legislation needs to be written in a way that actually enables what the intent is, which is not the case.
Senator McCallum: Thank you for your presentation. I want to go back to concern number 1, where you had said that people can use the legislative process to impede projects. Can you give us some examples of that happening?
Ms. Joseph: Sure. In the current framework — and one of the things we’ve observed in the legislation — is the possibility for the minister to be appealed to, to potentially stop the clock and add requirements for information. We are concerned in the legislation that there are more opportunities for litigation. So anywhere it says “must consider” all these things or “must” do these things or “must” hear from all these people, there isn’t discretion within the legislation as it is written now to enable the agency to triage things, to make decisions about relevance and to determine the scope of participation. All of those things become base for future litigation. Someone can challenge how that hearing was done. Someone can challenge whether all the factors were considered.
A lot of our projects now are failing in courts. They’re not failing in the review process, necessarily. I would say that the legislation itself is where there are additional opportunities to slow down the clock and appeal to the minister. Then there are also things in this legislation that increase litigation risk, which would also either slow down a project or ultimately stall it.
Senator McCallum: When that happens, what are they looking at? Is there a concern about the environment or consultation with First Nations? Is any of that involved in what you’ve just said?
Ms. Joseph: Sometimes there is. I would say that our companies have their own experience with consultation and do early consultation, for example, with Indigenous communities, but I would also say that they are guided by the requirements of the agency. They are told how many First Nations to consult with and they try to follow that. One of the things we point out here and one of the experiences we had with TMX was even sometimes the government itself isn’t clear on how to do those consultations properly and would not necessarily be clear in how to instruct industry.
I don’t think it’s a matter of bad faith from industry. Our companies are committed to following the rules. They want to have high standards. They want to work with the communities where they operate, but it needs to be clear. Those decisions around who should be consulted and what information is needed need to stick. Right now, there are many opportunities for them not to stick.
Senator Mitchell: Thanks to both of you for being here. I want to pursue a bit further the questioning of several of my colleagues about whether you want to go back to CEAA 2012.
I noticed in a document, Mr. McMillan, that you gave us — you didn’t refer to it in your opening comments — you say that we need a solution to the uncertainty that exists in Canada’s current project review system. You also talk about dealing with the uncertainty that projects like the Trans Mountain expansion has faced.
It seems to me, when I look at this bill, that the timelines in every single category are significantly reduced. One timeline goes from 450 days to 300 days. Another goes from 700 to 300. Another one goes from 720 to 300. Another goes from 720 to as much as 600. You’ll say yes, but there’s a 180-day planning period. Ms. Joseph has just said companies plan, but in fact, it’s just not made official. This planning process adds something but not really because you’re already planning.
In every single timeline, it is significantly reduced. Ministerial discretion is not more. It’s actually less. In fact, the minister that you seem to be worried about, the environment minister, won’t be making any decisions on any energy project. In fact, the people who make those decisions will have reduced discretion because they will have to tell you why they’re doing it.
I can go on, but you seem not to be focusing on all of those things that actually advance the case over what you’ve got. I know you’re holding to a very hard line. You have to because you’re here it advocate, but you’re not telling us you really want to go back to CEAA 2012, are you?
Mr. McMillan: As far as maybe an explanation on the timelines, I would ask Shannon to make a couple of comments about that. It’s what I’m here to talk to you about, but it’s also the people who are investing in Canada telling us this, and they’re making it very clear. We have seen over the last few years that capital is flowing to other places that we’ve gone from over $80 billion in capital investment in Canada to $41 billion. There is room to improve the current system, and I make no bones about that.
When we hear the pipeline industry say, “If this bill goes forward, we don’t have clarity on how we get a project done,” no major project will come forward for consideration if the bill is passed as it’s currently written.
We’re hearing from international investors that Bill C-69 in its current form would make Canada a place that is increasingly uninteresting at a time when the investments in oil and gas around the world are increasing dramatically. We’re missing out on that opportunity. As far as the specifics on the timeline, Shannon?
Ms. Joseph: Senator, we’re not here to talk about whether CEAA 2012 is good. We’re here to try and fix Bill C-69.
There’s the matter of legislated timelines, but then there’s the issue of whether you can get it done. You can’t get it done if you don’t have discipline within your process. So every proposal we have in here is about ensuring that you can actually respect those timelines. The clarification of the information requirements early in the process is going to be really important to respecting your timelines.
The clarification of public participation so that it’s not everybody and anybody from all over the place, that’s going to be important to respecting your timelines. The removal of clause 15 because it’s kind of a duplicate assessment before we even get into the assessment, we see that as an unnecessary step. That’s also going to help you respect those timelines.
Our members have a lot of experience with these types of reviews, and there’s a difference between theory and practice. They look at this and say, “If you really want to respect your timelines, if we really want this to be shorter, these types of measures need to be built into the process to ensure discipline, clarity and certainty.” I think that’s the main message.
Senator Mitchell: On a very technical point, are you aware of the amendments in the bill that came across from the house that point out there has to be an opportunity to participate meaningfully for people who appear before impact assessments or even the CER processes within the time period specified by the agency? Those would be those timelines. That’s my first question.
The second technical question, you did infer that somehow the Mining Association of Canada, or MAC, is with you on these concerns. That’s certainly not my impression. In fact, there are members that you share with MAC — Teck, for example — that have been very outspoken about being largely in favour of this bill. So I just want to clarify that. Maybe you could specify for us why you’re drawing that conclusion.
Mr. McMillan: I want to be clear that I only speak for the oil and gas industry. I was referencing that we have looked at what the pipeline industry, the electricity industry and the mining industry have said and that there is some consistency among some of our industries. That consistency is very close. With some, like MAC, they have recognized a few areas where they’d like to see changes, and where they identify the changes they’d like to see, they line up with what we go for as well.
Senator Mitchell: MAC certainly doesn’t want to amend clause 15. They do not want to do away with clause 15.
Mr. McMillan: I wouldn’t want to either.
The Chair: Okay. Thank you.
Senator Mitchell: It has other parameters.
The Chair: Thank you very much. Before the break, we had the regulators from Alberta appear, and they told us something interesting. They said that last year, which they considered a very slow year, they received 40,000 applications. They treated them in one year, and it averaged almost 200 projects per day. At that point, they said that 95 per cent of the projects have been approved and that the process is done by a program. We also learned that in situ projects for the other type of oil sands are not included in the process right now.
I think there is room for improvement. In this case, when we hear these types of things, we really think there is a lot of room for improvement. Can you please comment on that?
Mr. McMillan: Sure. I’ll give you a couple of comments. I didn’t follow the presentation that the regulator gave you, so if I’m not hitting on the right tone, probe deeper.
The Alberta regulator, some of their approval process is automated. If you meet these criteria and you can do the automated system, that is a great improvement over what we have had in the past.
There is still opportunity to improve the regulatory approval process in Alberta, and there is active work to find efficient regulatory changes there as well.
When it comes to in situ, that today is done by the Alberta regulator. They have the expertise. It’s projects that are wholly within one province. We would be very firm in our belief that it should stay with the Alberta regulator, where that expertise is.
We do have concern, and we have heard that the federal government was considering taking control of what was traditionally provincial regulatory space and making it a federal regulatory requirement. That we have been quite public about. We don’t think that would be appropriate, and nor are they best positioned to regulate the in situ.
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Senator Carignan: You are proposing amendments to the appeal process. You are proposing to appeal directly to the Federal Court of Appeal on questions of law and jurisdiction.
I wonder about the reasons for going directly to the Federal Court of Appeal. I understand that you want to save time and that you don’t want the cases to drag on in court. However, while the Federal Court of Appeal normally reviews questions of law, a lot of work hearing witnesses and evidence is done at the trial level. Even if you want to appeal questions of law only, there are questions of jurisdiction that often require evidence. There will be matters that affect the rules of natural justice—whether you have been heard, whether you have made your point of view known, and so on. All those pieces are evidence, which includes witnesses. I wonder how all this will work on appeal. Without having the privilege of a trial to carry out that part, are you aware of any examples in Canadian law that show that it works when you go directly to the Court of Appeal? Where does the suggestion of going directly to the Federal Court of Appeal come from?
Ms. Joseph: First, I think the recommendation comes from our lawyers. I think the underlying principle is that there should be some deference to the agency’s decisions on issues such as who will participate and how, and what information will be required. We are actually trying to strengthen those decisions, in terms of this legislation, so that the court’s decisions do not ultimately deal with those issues. That is the first principle.
Second, the proposed amendments seek to introduce discipline into the way these issues are presented in court after a certain period of time, as soon as possible after decisions have been made, again to provide greater certainty about the process.
I am certainly not a legal expert. I am an engineer, not a lawyer, so I wouldn’t be able to tell you whether there are other examples elsewhere where an agency’s decisions go directly to the Court of Appeal. We could certainly get back to you on this issue, if possible, so that I can have an opportunity to find more information.
Senator Carignan: Could you please ask your lawyers to send us documents on this issue? Already, you are suggesting that decisions be final, and we are talking about specialized courts. There is already a deference that higher courts could have. Have your lawyers thought about suggesting a privative clauses?
Ms. Joseph: Yes, there are actually privative clauses in a number of our amendments. For example, in the section on stakeholder engagement, it was written that the agency’s decisions are final with respect to this selection. There are other decisions like that in relation to section 22 that deal with the various considerations related to project assessments, once again stating that the agency’s decisions are final as to the scope of the analysis.
So there are privative clauses, but I think what we learned from the TMX trial is that sometimes there is a lack of deference to the technical issues that should be managed by the agency. We want to clarify that aspect with the privative clauses, but we also want to clarify it in terms of the process of addressing the court.
Senator Carignan: We would appreciate it if you could get more information from your lawyers. I understand that a final decision is a sort of privative provision, but it is partial. There is certainly a way to provide for much more comprehensive privative provisions than that, and I would like your lawyers to send us examples.
Ms. Joseph: Yes.
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The Chair: If you would send your answers to the clerk, we would appreciate it.
Ms. Joseph: Sure.
Senator Patterson: I will try to get three questions in. The Minister of Environment and Climate Change has said that Bill C-69 will create a transparent and predictable process for designated projects.
The designated project list, she said, “. . . aims to make it easier for everyone to understand when the new rules will apply, providing certainty that both Canadians and companies need and expect.” Do you know what the criteria are to name projects to the designated projects list?
Ms. Joseph: We don’t, no.
Senator Patterson: Would it help the confidence of your members in Canada if they could view the designated projects list and its associated regulations before Bill C-69 becomes law?
Ms. Joseph: Yes.
Senator Patterson: Do you know whether the government has indicated to you or your members that in situ oil sands projects will be excluded from the designated projects list?
Ms. Joseph: We don’t know what projects.
Senator Patterson: Has the government indicated to you or your members whether offshore exploration drilling will be excluded from the designated projects list?
Mr. McMillan: I would say on both in situ and offshore, we have heard discussion about their inclusion. In both cases, we have said that both would be inappropriate, and that in the case of the offshore, to have that on the designated projects list would be extremely detrimental to the opportunities in Atlantic Canada and would not be justified for the environmental or safety requirements that we hold as a high standard in Canada.
For in situ, the same thing. Again, as with offshore, the expertise for offshore and in situ lies wholly in the regulator within the offshore board or the AER. So again, it wouldn’t be appropriate for that to be included, but until we have clarity that they are not included, we will continue to raise this as a concern.
Senator Patterson: So, in fact, subclause 32(b) of the impact assessment act actually forbids the minister from approving substitution of any designated project regulated under the Atlantic accord acts.
Is this an example of marginalization of life-cycle regulators that you were referring to?
Mr. McMillan: Yes, that would be an example of it. We have heard in both cases that potentially they would be included but exempted out if the jurisdiction met certain requirements of the federal government. I don’t think it’s appropriate that we have to go back to first principles of who is the best positioned regulator to regulate these types of projects, and it isn’t the federal government.
Senator Patterson: Do you think this provision will have an effect on competitiveness and investment in the Atlantic offshore oil industry?
Mr. McMillan: If they were included, it most certainly would.
Senator Seidman: Thank you for waiting two hours for us. I will try to be quick.
I’d like to ask you about your amendment to subclause 22(1), because that subclause has been fairly controversial. There have been a lot of questions about it. There is a lot of concern about the lack of specificity of the factors. It involves the 20 factors that will be used in impact assessment, some of them are social issues or gender. Some people have said that there’s a lack of definitions, transparency and precision around how these factors are going to be measured.
You make a very specific amendment to subclause 22(1). Can you explain it to us? Because you use language in a somewhat different way. You take out “must take into account” and you put in “consider.” Can you explain the rationale for this? It would be helpful.
Ms. Joseph: The rationale is that everything on that list will be relevant to every project. The legislation should not be written in a way that binds the regulator to have to consider them all, and so we’re trying to introduce that flexibility.
Senator Seidman: So you do that by saying consider the following factors, as opposed to take them into account.
The legislation says now “must take into account” the following factors and you’re changing that in a very significant way. Okay, I think that’s a really important issue and I appreciate the clarity that you try to put forward. Thank you.
The Chair: Senators, we had agreed to a one-hour panel and we are there. Can you stay a little bit longer?
Mr. McMillan: Absolutely.
The Chair: We will finish with the members of the committee, and if there is room we will ask some senators that are not from our committee to ask questions. Then we have to close because we have business to do.
Senator LaBoucane-Benson: Thanks for coming, and thanks Shannon for walking us through on February 1. We got into the weeds on amendments and I appreciate that.
Often in committee we focus on the worst case scenario, but I know that within your membership there is expertise and best practice. I want to focus on the duty to consult and real community engagement.
One aspect of risk to litigation is around the duty to consult. From your experience and knowledge of best practice, does Bill C-69 provide the framework needed to ensure that the federal government and proponents consult, accommodate and mitigate in ways that really find a win-win for communities and for the proponent? Do you think this bill provides that framework?
Ms. Joseph: Our assessment is that there’s an intent around including Indigenous knowledge, there is an intent around early consultation, but there is nothing in this legislation that says what a consultation should look like, what scope it should have or which Indigenous communities are relevant to a particular project. The things that matter in terms of properly consulting and ensuring that we’ve done the right thing by the communities we’re supposed to engage with, it’s not in here. That’s what I can say about that.
Senator Mockler: Thank you for waiting for us, being here and sharing. There’s no doubt that there’s something wrong with Canada’s vision. We’re not building infrastructure in your industry. I live about 1,000 feet from the State of Maine. I travel to Boston and New York, so I’m aware of what they’re doing in their country. I see with your presentation and others, there’s a need to have clarity. There is a need for transparency, accountability, and to give certainty to Canadians and investors. There’s a need to invest in Canada if we want to create jobs and modernize our society and if we want to look at buying other alternatives from your industry.
Do you feel that the government has had proper or completed proper consultation with First Nations and also with Canadians at large? I have a second question.
Mr. McMillan: In regards to this bill?
Senator Mockler: Absolutely.
Mr. McMillan: I can’t speak to the First Nations issue. I have heard concern from First Nations leaders that they don’t feel that they have been consulted on this bill as much as they would like. I’ve had First Nations leaders talk very specifically about Bill C-69 and the effects that it will have on their communities.
I can speak more knowledgeably about Canadians at large. We most certainly are seeing Canadians at large standing up and wanting to be heard. It’s the type of Canadian who may never have been to a rally in their life. Today here in Ottawa, there was a truck convoy that started in Alberta and Atlantic Canada and converged here. There were licence plates from Saskatchewan and Ontario, people that were focused around the oil and gas industry, people that are hurting, and families that are unemployed. They look and see the rig they were working on two years ago has now moved to Texas or Oklahoma. The company they used to work for has sold their assets in Canada to invest in the Middle East or in offshore Brazil.
They feel that if the next barrel of oil or gigajoule of gas heating a home in China comes from Canada, the world is a better place than if it comes from Qatar or Azerbaijan. It doesn’t seem fair. They want a regulatory system they can trust and operate within to become productive and to contribute globally. Right now there’s a lot of frustration.
Senator Mockler: What do you want this committee to do? I would like you to walk me through the impact this will have in Atlantic Canada. I know the division we have across Canada. Such a bill impacts on the livelihood of Canadians.
Mr. McMillan: Canada is such a complex country. To be specific about offshore development and the barriers to future offshore development if this bill is not amended in a way that makes it as efficient as possible, we’ll see increased investments in offshore Brazil or offshore North Sea. Those opportunities should rightfully be going to Atlantic Canada with the talent that is there.
When we look at pipeline potential to tie western Canadian resources to eastern Canadian consumers, today Atlantic Canada imports billions of dollars of oil from the Middle East that could be coming from Canadian producers. Natural gas rates in Atlantic Canada are incredibly high and will get higher. We just saw Sable Island wind down its operations at a time when pipeline capacity could make costs on everyday Canadians in Atlantic Canada lower.
Maybe the last point is the integrated nature of our economy. My hometown is just outside of Lloydminster, Saskatchewan and I grew up knowing people that grew up in my neighbourhood. In my thirties, I got to know many people from Atlantic Canada. They are now good friends of mine because Canada is the type of country where we can travel freely, we engage easily and there are opportunities. It’s good for all of Canada. If this bill isn’t amended appropriately, that sort of opportunity for all Canadians, back and forth, will be challenged. We’re already seeing that investment going other places.
Senator McCoy: Thank you for coming and for still being here. Thank you for putting all this effort into trying to improve what we all had hoped would be improved, and that is CEAA 2012.
We’re very close, I think, to the goal. There are a few things that can still be polished.
It has been a 20-year case that we have in Alberta observed a lack of discipline in the process at the federal level, and so decisions get delayed or they get second-guessed or there are five decision makers or there are 16 people who can come in at what you thought was the end of the process and say, “Now we want you to think about this.” So it just dragged on and on.
With that preamble, I want to say I’m sympathetic to that view. And in terms of extending the timelines, that’s one of the things that can get you in trouble or asking for more information. I noticed there are two clauses that I had flagged. You might have reasons for this, and if it doesn’t come to you today maybe you can provide them later. In subclause 52(2), a review panel may require additional data collection and studies, even after the planning phase, which heightens uncertainty. And in clause 56, the minister may at any time before referring a matter to cabinet require additional information or studies, adding uncertainty I think in both cases.
I couldn’t find those in your amendments and I wondered whether that was deliberate. If you want time to consider that and provide an answer later, that would be fine too.
Mr. McMillan: Do you remember the deliberation we went through on those two clauses, Shannon?
Ms. Joseph: I don’t remember the deliberation on those two clauses, so I’m not sure why we would not have changed those specifically.
Senator McCoy: Why don’t we leave that? I can have another question, if you promise to give an answer after you’ve had some chance to look back on what you did say.
My second question is actually related to the point that you’re making about the over politicization of the process. Of course I’m mindful of the fact that for most of our lives in the energy regulatory business in Alberta, which started with the Oil and Gas Conservation Act in 1932, I think it was, the final decisions were not made by a minister or cabinet. And then some time in the 1990s they made a change to put the minister and cabinet into the final decision. And then with the new Alberta Energy Regulator, they’ve gone back to taking the ministers and cabinet out of again. So we then had, what was traditional at least, politicians felt that these decisions should be made on evidence and science, and they should not involve the cabinet, which was not in a position to understand all the technicalities.
Did you wish to comment on changing Bill C-69 to remove ministerial and cabinet final decision-making? I don’t think I saw that in your amendments.
Ms. Joseph: We have put forward, I think it’s in clause 65 and other clauses that deal with the minister’s powers, changes that we would hope would mitigate some of the politics around this. I would say that some of our proposals are informed by our conversations with government and what they would be open to, so I think we went as far as we could in some of these changes. And to speak to some of the discussion and Tim’s comments earlier about why this is a package and why the changes have to be made, there are a lot more changes potentially that could be made, but these are the most important ones. And certainly what you’re raising is a concern to us.
The Chair: I really appreciated your visit here and your statement. Thank you very much for this important and interesting discussion, for your questions and your answers. Now we’re going to adjourn. There is no second round, sorry. Don’t go far. It’s going to be a very short meeting.
(The committee continued in camera.)