Proceedings of the Standing Senate Committee on
Transport and Communications
Issue No. 2 - Evidence, April 20, 2016
OTTAWA, Wednesday, April 20, 2016
The Standing Senate Committee on Transport and Communications met this day at 6:45 p.m. to continue its study on the development of a strategy to facilitate the transport of crude oil to Eastern Canadian refineries and to ports on the east and west coasts of Canada.
Senator Dennis Dawson (Chair) in the chair.
[Translation]
The Chair: Honourable senators, I now call this meeting of the Standing Senate Committee on Transport and Communications to order.
[English]
Today the committee is continuing a study on the development of a strategy to facilitate the transport of crude oil to Eastern Canadian refineries and to ports on the East Coast and the West Coast of Canada.
[Translation]
One of the objectives of our public meetings is to study how to best spread out the risks and the benefits throughout Canada.
[English]
I would like to welcome Alan Ross, Partner, at Borden Ladner Gervais LLP. Mr. Ross is a partner in the Calgary office and has co-authored articles on this issue and issues dealing with pipelines.
Mr. Ross, please proceed with your presentation. Afterwards senators will have questions for you.
Alan Ross, Partner, Borden Ladner Gervais LLP: Good evening. My name is Alan Ross. I'm a partner in the national Canadian law firm Borden Ladner Gervais LLP and the incoming managing partner of its Calgary office. I was called to the bar over 20 years ago and have specialized in regulatory and administrative law with a focus on the energy sector for most of that time.
By way of background, my practice includes work on behalf of pipeline and midstream companies, including energy infrastructure approvals and rate regulation. I've appeared before the National Energy Board multiple times as well as provincial energy regulators throughout the country.
[Translation]
In 2013 and 2014, I was seconded to the Government of Alberta, where I held a deputy minister position. In the context of federal-provincial relations, I was responsible for developing market access policies for energy, and for implementing a Canadian energy strategy, which included considering issues related to climate change, environmental assessments and relations with indigenous peoples.
[English]
It certainly is a privilege to be here with you. And, in response to the Senate's invitation, I make this appearance in my own right, and my submissions are not made on behalf of any client or other organization.
These opening statements are focused on the notion of social licence in major project development generally and, in particular, new energy pipelines in Canada, including strategies to facilitate the transportation of crude oil to tidewater.
[Translation]
The three main questions that have a direct bearing on infrastructure, natural resources and energy transportation are as follows. First, what does the expression "social licence'' mean? Second, why is social licence a factor in facilitating the expansion of energy infrastructure in Canada? Finally, what is the federal government's role in securing social licence for new pipeline projects and for the transportation of oil?
[English]
With respect to the first question, what exactly is social licence, at its essence social licence is the demand on and the expectations for business enterprise that emerge from neighbourhoods, environmental groups, First Nations, communities and other members of surrounding civil society. It is not a literal licensing arrangement but rather a metaphor to encapsulate values, activities and ideals which companies must espouse and indeed governments must follow within society to ensure successful operation.
Social licence issues have become part of any sophisticated corporate risk management strategy. The need for a social licence to operate is even more important in sectors with highly visible business activities, long-term horizons, high exposure to global markets or a wide range of stakeholders keen to influence business. The pipeline industry in particular meets each of these criteria.
[Translation]
Of course, the concept of social licence attracts major criticism. For example, it is argued that the term is not well defined, that it is not covered by law or by regulations, and that it is simply a delay tactic. To put it bluntly, there is no office of social licence.
[English]
Turning to the second question of why social licence is relevant to facilitate energy infrastructure development in Canada, historically federal or provincial regulators adjudicated on pipeline projects using general public interest tests enshrined in governing legislation. Pipeline developers could rely on positive regulatory decisions as the primary licence needed to proceed with the development of their projects. And that was certainly the case when I started off in this practice 20 years ago, and I would say it remained so up until the last four or five years and the Northern Gateway experience involving the National Energy Board.
Many stakeholder groups, which increasingly include special interests, or entities not directly impacted, are increasingly lining up against pipeline developers and their proposed pipelines. Many of these stakeholders suggest that a traditional regulatory licence is no longer enough and that a social licence must also be obtained from a broader stakeholder group before a new pipeline can be built in Canada.
The result is that some pipelines are going undeveloped not for the lack of a legal licence but rather for the lack of a social licence. Fundamentally, the rise of the social licence phenomena respecting pipelines is rooted in a growing lack of public confidence and trust in government authorities to regulate business. And this is where the quest for a social licence by pipeline developers interacts with government policy and highlights the role of government in the social licence debate.
[Translation]
I will now turn to the third subject of my remarks, namely the role of the federal government in securing social licence for new pipeline projects and for the transportation of oil.
[English]
In the current climate for pipeline development, companies are generally viewed as responsible for obtaining social licence. The role of government is sometimes obscured in that debate. However, governments, as both regulators and recipients of a share of resource rents, have an important role to play.
Both federal and provincial governments' role in the social licence debate arises from their powers to exercise reasonable control over persons and property within their jurisdictions respecting security, environment, health, safety and welfare, among other interests.
The federal government can address social licence by improving regulatory processes that exist to ensure public trust. Alternately, governments and regulators through legislation, public policy or ensuring public trust in institutions can facilitate social licence and the public acceptance necessary for new energy projects. Specific examples of the government's role in the social licence debate are things like mandated corporate social responsibility and enhancing robustness of a public interest test for project development.
In conclusion, social licence is largely untested as a regulatory concept but can be considered a form of regulation by drawing from market forces and norms that encourage certain types of behaviour.
[Translation]
It is very interesting to note that Canadian courts and certain Canadian energy regulators rarely make reference to the notion of social licence. At least, not yet.
[English]
It is nonetheless a de facto form of regulation because there are consequences for failing to comply with social licence conditions, such as reputational damage, delay or ultimately preclusion of a natural resource project. While it does not establish a new legal or regulatory requirement, social licence can push the boundaries of existing ones, such as the National Energy Board's public interest test.
The federal government therefore clearly has a role in the social licence debate. What will be required is a meaningful intersection between regulation and social licence. This may help ensure that a pipeline company does not find itself with a National Energy Board pipeline approval but without the ability to construct and operate that pipeline.
Moreover, it can serve to ensure that Canada itself does not become little more than an energy superpower in waiting, as pipeline developers struggle to reconcile these social and regulatory issues.
Thank you very much. I'm open for questions as you wish.
The Chair: Thank you, Mr. Ross. Before I give the floor to my deputy chair, I would like to introduce the members of the committee.
Senator Boisvenu from Quebec, Senator Runciman from Ontario, Senator Eggleton from Toronto, Senator Mercer from Nova Scotia, Senator MacDonald also from Nova Scotia.
[Translation]
Mr. Pratte, who is our new senator from Quebec.
[English]
Senator Unger from Alberta, Senator Doyle, from Newfoundland and Labrador and Senator Tannas from Alberta.
Senator MacDonald: Thank you, Mr. Ross, for your presentation.
You say the federal government can address social licence by improving the regulatory processes that exist to regain public trust. Can you expand on that? If you were to recommend to the federal government or to suggest to them what they should do, is there something they're not doing that they should be doing to address this?
Mr. Ross: I think I would, among other things, take a look at four fundamental areas. The first thing I would take a look at is an expansion of the notion of corporate social responsibility and being able to enforce it through a regulatory system. A good example of that is a recent determination by the National Energy Board that companies have to provide their emergency response portfolios, and I think that there could be a good dovetailing between the increase of corporate social responsibility requirements at the regulatory level and indeed what's happening at the board at the corporate level.
Increasingly we're seeing greater and greater levels of corporate social responsibility, CSR, if you will, board members, people with those backgrounds going on corporate boards, and I think there could be a regulatory dovetail with some of what's happening at the corporate level. That's first.
Second, I think one thing that could help the existing process is a redetermination or a revision of what the National Energy Board's public interest test is. This is set out at section 58 in particular and Part 3 generally of the National Energy Board Act.
There has been significant confusion as to what the notion of public interest is and what it applies to, and I think some clarity around that may be helpful in determining social licence.
Third, as we look back at some of the changes that took place to the regulatory framework going back from 2012 to 2015, there was a reduction, and I think the intention was probably right, in order to try and facilitate pipeline development and major project development, but there was a reduction in the ability of parties to be heard — the very legal notion of audi alteram partem — and I think what happened in particular was a streamlining of process at the National Energy Board project approval level whereby it limited the ability of parties to be heard in that process to a more narrow, directly affected threshold. I think an expansion of the ability of parties to at least be heard in the process would be helpful.
Fourth, and finally one of the things I would take a look under the current legislative framework, again, put in place between 2012 and 2015, was the deferment to a cabinet approval process for a lot of pipeline development and in particular major project development. As I understand it, that continues to be the policy of the new Liberal government as well.
To me this creates a potential politicization of the National Energy Board process, and having a re-examination of that may well facilitate the notion of social licence. We can talk about what social licence may or may not mean, but if you get social acceptability, then the ability to have parties who are in front of the National Energy Board feel they're not part of a politicized process would probably help to achieve social licence.
Senator MacDonald: When it continues to the arguments about social licence, my perception is that most people who bring up the issue of social licence are using it to stop pipelines because they want to stop bitumen from flowing. But bitumen flows. Bitumen goes by train or by truck. It still gets to market.
You say that you require a meaningful intersection between regulation and social licence. This may help to ensure that a pipeline company does not find itself with an NEB pipeline approval, but without the ability to construct and operate that pipeline.
We've had pipelines in the country for 75 years. If they have NEB approval, why wouldn't they have the ability to operate and build a pipeline?
Mr. Ross: From a purely legal context I think you're absolutely right. Once you get you National Energy Board approval and all the other approvals that you need, either from a federal level, vis-à-vis environment, for example, or at a provincial level, the provincial environmental approvals or municipal approvals, you have the legal ability to go out and build your pipeline, to construct and operate, no doubt about that.
However, increasingly there is such significant pushback from what I would call extra-jurisdictional or extra-legal forces, which are part and parcel of the notion of social licence, and they represent a whole bunch of forces. They represent everything from environmental activist groups all the way through to provincial governments, like the British Columbia government did with its five requirements with respect to Northern Gateway, which the Ontario and Quebec governments have done to a certain extent, and so you have various parties in the process, everything from protesters to provincial governments, lining up as part of that opposition, if you will, delay to try to get major projects built.
I think you are quite right that in a legal capacity you're able to build, construct and proceed, but operationally one may not as a pipeline developer, and we've seen that in various pipeline approval processes. Northern Gateway is a good example of that. Energy East may well be another example of that. Line 9 has had elements of that as well. That's the Enbridge project through Ontario.
Senator MacDonald: I would like your observations on this: The railway, the Rideau Canal, the St. Lawrence Seaway — do you think we could build them today if we had to wait for social licence?
Mr. Ross: I think you'd have a very tough time building today. I think part of the reason they got built, aside from being in a different era, was because they were defended and promoted perhaps as matters of national interest. And I think that today there is a significant amount of provincial interest, local interest, special interest group interest, but fewer and fewer defenders of the national interest for infrastructure build in a way that I would think would make it tougher perhaps even if not impossible for those major infrastructure projects to be built.
Senator MacDonald: I just want to make one last point: You have a defender of the national interest here. Thank you.
The Chair: He's on the record with that, now.
Senator Mercer: Thank you for being here, Mr. Ross. With respect to the national interest, I would suggest that the moving of a product from Alberta and Saskatchewan to tidewater is in the national interest. It's important to us that everyone be able to get their products to the market, if we were to say tomorrow that we were going to leave all the lentils in Saskatchewan because we don't want them go by train to Vancouver to be shipped overseas.
I only had one question, but as you continued to talk I kept scribbling notes here. My question was with respect to social licence: Has the need for social licence on this been somewhat removed if it's presented properly? I would suggest it's not being presented properly. With the tragedy at Lac-Mégantic, have we not removed some of the need for social licence in that it's recognized that pipelines are a lot safer than trains, and we only needed one tragedy to prove that? Unfortunately, many people lost their lives due to that. Do you see that argument as being viable?
Mr. Ross: I certainly do see your argument, but I do think there is still significant opposition to pipelines, if for part of the reason that Senator MacDonald suggested, that there are a lot of people that want to keep oil and bitumen in the ground. That may well be their modus operandi no matter what. I think we still have quite strong opposition to pipelines, and we're seeing that come through in the Energy East proceedings which, as you know, are kicking off; today was the last day for participants to indicate they are going to be active. I think there still is a significant need to address the social licence concept.
Senator Mercer: This may be the first time, but hopefully not the last time, that I agree with Senator MacDonald. I really do believe that many of the opponents of pipelines are not opposed to pipelines but are opposed to taking oil out of the ground. We've got to learn to separate those things.
[Translation]
Senator Boisvenu: Mr. Ross, thank you for being here, and I congratulate you for the quality of your French.
My first question relates to your experience and mandate as deputy minister in 2013-14. I understood from your resume that you worked on indigenous issues. Have you observed any change in attitude since that time in terms of social licence for oil development or transportation in those communities?
Mr. Ross: That is a good question.
[English]
I think that there have been some changes with respect to the status of the law during that period. We've seen the Tsilhqot'in decision, among aspects from the Supreme Court, reinforcing the need for consultation requirements. I think we've seen a reinforcement of the fact that there has to be a need to connect our First Nations communities with our natural resource development in this country.
One of the areas that maybe has evolved, even in that time frame, is a bit of a refreshed view — and I would view this positively — on the ability for First Nations to be involved in equity stake types of opportunity and to be engaged financially. Not necessarily through direct payments — although that's part of it — or access or impact benefit agreements, but through some further discussion on how to engage financially First Nations groups in natural resource development.
I would say, in that context, that I think there can be a role for the government to play in things like potentially taking on a role in reinforcing the ability of Aboriginal groups to tax not only property but be able to tax natural resource development in a way that is financially creative. There is a history, at least in the federal government, of discussing how to make capital accessible to First Nations groups, and that goes back to the Mackenzie Valley experience and Justice Berger's review way back in the 1970s.
I think that the ability to provide access to capital or facilitate that, potentially through backstop agreements or financial guarantees at the federal level, has probably been discussed more over the last couple of years.
To sum up, there are two areas: One, we're seeing a reinforcement at the legal level of the need to consult, very much after the Tsilhqot'in decision; and second, a broader discussion about creating the opportunity for capital for equity investment, with or without government involvement.
[Translation]
Senator Boisvenu: Are relations with indigenous peoples more difficult for the natural resource companies or for regional or provincial governments? Is the government-community relationship different from the company- community relationship?
[English]
Mr. Ross: I think that it is. One thing I find very interesting is how different our First Nations communities are straight across the country with respect to natural resource development. I come from the Alberta experience, where there has actually been a reasonably good — quite strong, in many cases — working relationship between natural resource companies and First Nations.
For example, we've seen strong impact benefit agreements, and we've seen very good examples of subcontracting to Aboriginal groups. Alberta has the benefit, of course, of being somewhat more settled in terms of its treaty obligations vis-à-vis Treaty 8, whereas other parts of the country — B.C. in particular — are more unsettled, frankly, in terms of their treaty obligations.
I think part of it, to your question of what are the dynamics between corporate versus political parties and regions of the country, is that one of the most important is probably regions of the country and the desire of First Nations groups to be commercially involved or to oppose, as is more the case in British Columbia.
[Translation]
Senator Boisvenu: Have you followed the debate in Quebec over the Energy East pipeline?
[English]
Mr. Ross: Yes, I have. Not from a professional level but from a media level. I did follow, for example, the proposed litigation on environmental matters involving the Quebec government. I followed with interest the potential role of the BAPE with respect to the jurisdictional aspects of what it may do in Quebec, and then some of the media with respect to opposition to the terminal at Cacouna, which then of course was a pivot to Saint John.
[Translation]
Senator Boisvenu: I see that you have followed it closely. How could the federal government get involved in this file, when the mayor of Montreal is against it?
Certain small groups oppose the project, but they are targeting oil exploitation rather than transportation. Their objection to the pipeline is simply a means of demonstrating their opposition to the exploitation of the oil sands. However, when a mayor as powerful as Mr. Coderre opposes the project, how can the federal government get involved in what I would describe as a sort of Pandora's box? I'm trying to understand how the federal government could get involved in this project to facilitate the obtention of social licence.
[English]
Mr. Ross: By its nature the federal government is involved. The National Energy Board has jurisdiction over an interprovincial pipeline, so in that capacity the federal government is there, and they have to be there.
But to your specific point, part of the issue is to what extent the federal government becomes a cheerleader or supporter of a pipeline, and we had recent experience of that in this country. We've had it with Northern Gateway and, albeit in a different context, with Keystone XL, and I would submit that there are probably some dangers in the federal government becoming a proponent of a pipeline because they may well get cross-threaded with their regulatory obligations as an arbiter, if you will, of whether to give approval or not to that pipeline through the National Energy Board.
All of that said, I think that there are probably things the federal government can do in the overall context of discussing pipelines and the overall context of discussing our energy resources in this country in a way that, for example, promotes education about what the economic benefits of natural resources development are to this country, straight across the country.
One might look also, for example, to something like the Canadian —
[Translation]
Senator Boisvenu: Do you believe that the public has been made sufficiently aware of the economic benefits generated by this industry in Canada? I sometimes get the impression that the federal government does not play a major role in this area. I wonder if my perception is accurate.
[English]
Mr. Ross: There is probably more from an educational perspective that the federal government can do in terms of speaking to what our energy resources mean to the country and our overall economic base. I think there are things the federal government can do as well on a factual basis by speaking about the environmental protections we have at both the federal and the provincial level, namely, that we do have a strong regulator and processes in place, that among the world's major energy producers Canada, by any measure, is at the top of that list in terms of environmental protections, operational safety and a robust, regulatory process. I think those things are lost.
There are probably two things the government can do from an educational perspective. One is to speak a bit more about the role of natural resources within the country and what it means, but equally speak to our processes for the development and transportation of it. In that context, I might point out something like the Canadian Energy Strategy concept. This was brought forward mostly by the provincial governments rather than the federal government. It spoke to Canada's energy diet and Canada's energy production as a broader whole to say energy isn't simply an Alberta issue, or an oil sands issue, or a bitumen issue. We have an energy issue that takes into account run-of-river in British Columbia or renewables in Quebec, for example, and we view our overall energy economy in a broader sense and take from that how important it is in a broader sense rather than single out bitumen, oil sands or other aspects of energy development specifically.
Senator Tannas: Mr. Ross, I know you have spent a lot of time thinking about social licence. You have been sideswiped by it in the early stages, and you are seeing it develop. Do you think about what happens if social licence isn't achieved and that is where the pipelines all flounder? Do you see that as being the momentum that has those folks next declaring that social licence has been lost to transport crude oil by rail? Is that a scenario that you worry about?
Regarding this concept and these issues in other countries, have you seen emerging examples of good things or bad things that you might want to comment on?
Mr. Ross: To your first question, one of the concerns I have is a bit of what we have have seen in existing projects — Northern Gateway is a good example of that, among others in the country.
For the record, social licence is not simply a pipeline or an oil and gas issue. It applies to the mining industry, to roadways and to all sorts of major infrastructure development and major resource development.
To your point, one of the biggest concerns I have is the notion that social licence has won out because it hasn't been accepted or approved and is part and parcel of do our processes work or will we be mired in delay. Will we be mired in a regulatory process that is dysfunctional? Are we unable to tap into the economic resources of this country because we are unable to build anything? To me, that is where the rubber hits the road on the social licence question.
To your point on whether we are seeing interesting things in other countries, Canada is such a unique country because we have a variety of different interests. We are quite regional in nature. Our provincial and federal system works in particular ways jurisdictionally, and we have a fair bit of energy and natural resources that we have to get to tidewater over a fairly long distance, which makes some of the risks and benefits of it disproportionate or viewed disproportionately throughout the country or challenges us to have a solid national interest or initiative to bring our resources to market.
One of the countries that have done some interesting work — and this is to Senator Boisvenu's point — is Australia. They have taken a number of initiatives on the educational level to try to reinforce what natural resources mean to that country. Their federal government — and I am by no means an expert on this — has promoted a lot of literature and study into the issue of social licence and how to get their messaging across.
To give an example of a country that is a bit of a parallel to us and that has done some interesting work on the education side, I might look to Australia and to the Australian federal government.
Senator Runciman: Senator MacDonald referenced the St. Lawrence Seaway earlier. If the project was proposed now, I would fight it tooth and nail. It has done so much environmental damage and it has never met its economic objectives.
I was curious about a number of things here. My point with the St. Lawrence Seaway is that none of us wants to be seen to be proposing efforts that in some way do harm environmentally or otherwise. You referenced earlier the corporate social responsibility and emergency response provisions that the NEB is now incorporating, I gather, in their public interest test. I think that is appropriate.
You talked to Senator Boisvenu about the Montreal mayor and about other mayors in the province, but Quebec has also said the project can't go ahead without passing a provincial environmental assessment. It is creating a duplicative process. I am not sure what is happening in that regard, but I would be interested in hearing your views about the uncertainty that that generates, basically on the validity of that position as a lawyer.
Mr. Ross: There is no doubt that the National Energy Board has jurisdiction over interprovincial pipelines and, in particular, whether to approve or deny, as a condition of that, pipeline approval.
Within that context, however, there is some role for provinces — Quebec, as well as Ontario. The Ontario Energy Board did a significant review of its own in respect of Energy East. There are areas where there is provincial jurisdiction — that is, things within provincial borders — such as operational safety within the context of a particular province and environmental requirements.
Notwithstanding this one-window approach clearly at the federal level, unique environmental aspects within a particular province would be things that would be subject to provincial jurisdiction, notwithstanding that the overall approval of a pipeline or cross-border infrastructure would rest with the federal government.
Senator Runciman: When you look at provinces, I think you mentioned British Columbia, Ontario and Quebec. Perhaps I am misjudging this, but with respect to British Columbia and Northern Gateway — and I think Premier Wynne has made comments about this — what's in it for us? How do you view that approach and what kind of deterrent does that present?
Mr. Ross: From a legal perspective, some of those "what's in it for us'' statements are extra-jurisdictional or are not within a legal context. Those are certainly very live political pressures. They are pressures that I think can be brought to bear, especially if there is a provincial element that has to be looked at underneath a federal approval. In and of themselves, provinces can intervene in a National Energy Board hearing; they can certainly intervene in the court proceedings that might follow them on appeal. However, there is no aspect under the National Energy Board legislation that says that the NEB has to consider what's in it necessarily for British Columbia. In fact, in some ways it's the reverse, where they have to look at it from a broader national perspective to determine whether or not a cross- border pipeline is of interest to the country.
Senator Runciman: We appreciate that, but if the provincial government remains adamant, that presents challenges, I would think, in terms of how you proceed.
Mr. Ross: Yes; it does.
Senator Runciman: I want to quote something that ties in with what is happening at the federal level. I think this is from your blog. It states:
It is the Government's view that it is only by regaining Canadians' trust in the regulatory process that any resource project will be approved.
I'm attributing that to you, but perhaps you're not the author. However, it's from your firm.
Mr. Ross: We have some very good articling students who probably wrote that.
Senator Runciman: With respect to the government's view on regaining Canadians' trust in the regulatory process, has there been any polling on that that you're aware of? Do you have any sense of the broader Canadian public with respect to the fact that there has been a real effort to persuade them that they should be concerned? I'm just wondering if there has been any measurement of how significant those concerns are.
Mr. Ross: There probably is, but none that I am aware of.
One of the things I would say in defence of our federal and provincial regulators, energy or otherwise, including the CRTC and others, is that in this country we have a robust regulatory oversight system and good regulators. My view of the National Energy Board is that they are excellent. They are highly technical people and have processes in place that ensure excellence. Without doubt, notwithstanding what a poll or special interest group may say, we have excellent regulators in this country, both in energy and in other industries.
For some reason, and it hinges on this concept of social licence, and there may be other things baked into it — for example, the Internet has a role to play in disseminating opinions or views that may or may not be accurate — I think some generational shift is happening. There is some general distrust going back to Occupy Wall Street and one- percenters and all that stuff that works against corporate project development generally. I think there is a broad array of factors whereby there are challenges out there or people that think that the regulatory system may not necessarily work for them.
Senator Runciman: I know you were responding to Senator Boisvenu about the fact that the government can't be seen as a cheerleader, and I agree with that sentiment, but in terms of public perceptions, I don't think the government can play a significant role here in explaining to the Canadian public how significant the impacts are in terms of the future economic well-being of this country.
It seems to me that the people who do have an interest in this should get together and start delivering those messages that we saw during the free trade debate where industry played a significant role in that election campaign in terms of getting the message out about the benefits of free trade. I have talked about this before at this committee in the sense of foreign funding. We know that significant foreign monies are flowing into this country to ensure that the oil never gets out of the ground. It seems to me that it is incumbent upon the folks who care about this country and care about seeing the economy prosper and grow to look at being more activist in getting their side of the story out to all Canadians.
Mr. Ross: I think that is right. The free trade example is a good one. I think there are fine associations that do work in this area. CAPP is a good example, and the Quebec Oil and Gas Association is another one.
Senator Runciman: They are doing it individually, though. With free trade, they got together.
Senator Unger: It is very interesting but, I will admit, more than a bit depressing.
Senator Runciman touched on a question that I intended to ask, which was whether you would comment on the role that the U.S. foundations have played in funding environmental activists and the subsequent devastating impacts on the industry and, in particular, the oil sands.
Mr. Ross: That's probably beyond the scope of what my co-written paper spoke to, which was largely legal in nature.
When we are looking at social licence and opposition to energy projects, increasingly, to your point, we live in a very global world where we have people over the Internet organizing in various parts of the world, be it a financial organization or Earth Day, which was just outside us today. As with many things, we live in a very global world. As policy-makers, regulators and lawyers working within that context, we have to realize that we don't just live within our own country anymore when it comes to some of these very sensitive issues.
Senator Unger: Has that globalization led to increased resistance to projects like this?
Mr. Ross: I would say it certainly may have. Other parts of the world may view energy development differently than we do. They may not have a vested interest in it in the same way we do. It may be that we are seeing the result of influences from other parts of the world or just a broader conversation internationally about what's happening in Canada. However, there may be other parts of the world that are viewing, for example, our new commitments to greenhouse gas or what we're doing on environmental safety and have done for many years in a positive light as well. It may cut both ways, too.
Senator Unger: One last question going back to social licence, and I thought about this a lot and wondered about its genesis and where it started. I would like you to comment. A previous witness spoke about the great challenge in dealing with First Nations. Chief Helin, who is part of the group proposing the pipeline north from Fort McMurray and then across the territories, I believe, to tidewater, discovered to his frustration that there may be competing voices within his own community who do not recognize his right to speak as their chief or even the current council. The advice was it would be helpful to have a joint monitoring arrangement, subject to a prior vote at the community, where the leaders are authorized to speak, and the chief, essentially, can't be cut off at the knees.
This is taking social licence to a point where if I were in the business, I would say, "I have had enough; I can't do this anymore.'' I am afraid that is what is happening.
Mr. Ross: First, by no means am I a First Nations legal expert or First Nations community expert. My thoughts on it ought to be viewed with that value.
I have a couple of things to say, though. It reinforces a lot of the complexities in First Nations communities that are reflected in many other kinds of communities in terms of views on infrastructure and natural resource development.
With respect to Aboriginal communities in the context of social licence, there is a difference. Aboriginal communities do have constitutional rights. They do have rights of consultation that are well established in courts. Therefore, that scenario is different than social licence, which is purely an extra-legal or extra-jurisdictional question. That is not to say the interest of Aboriginal communities don't flange up with other people that want transparency or safety or a number of things that would fall into social licence concerns. I think it is a point worth raising, that there is under Canadian law different requirements on consultation and a different constitutional framework for First Nations groups.
Senator Unger: How do we put that genie back in the bottle?
Mr. Ross: The social licence genie back in the bottle?
Senator Unger: Yes.
Mr. Ross: I think there are a couple of fundamental ways. One is to try to take a hard look at what is and is not working within our regulatory system and how it might be impacted. Some of that was a bit of a conversation with Senator MacDonald and me about reinforcement of rights to be heard and of corporate social responsibility principles and a re-examination of cabinet approval. Those kinds of things may help.
It is also an educational piece. Senator Tannas and I talked about what other countries are doing. I think part of that educational piece is not just that we have robust systems but what our energy industry means for the country across the country.
Senator Eggleton: A previous witness before the committee said that recent changes mandating the National Energy Board to consider upstream greenhouse gas emissions might be a stretch of federal authority. However, in 2005, based on its power to regulate toxic substances as an aspect of criminal law, the federal government added six greenhouse gases in Part 1 of the Canadian Environmental Protection Act.
First, do you agree with that assumption, that it might be a stretch of federal jurisdiction?
Second, with the inclusion of greenhouse gas emissions in the NEB process, how do you think that will affect the issue of social licence or social acceptance?
Mr. Ross: Thank you, senator. I would absolutely agree that it would have a jurisdictional impact, and this refers to the interim rules of the current government that came out I think it was January 27th of this year or something along those lines. As I understand it, their proposed approach is to look not just at direct but also upstream greenhouse gas impacts of a project. I think that would be problematic from a jurisdictional perspective. Upstream projects are within the purview of provincial regulators. Take, for example, an upstream oil and gas facility in Alberta. It is very much within the ambit of the Alberta energy regulator to review that project, to make a determination on that project, so there would be an overstepping of jurisdiction, in my view, almost certainly.
Senator Eggleton: Even though the toxic substances approach was taken by the government?
Mr. Ross: That's under the Criminal Code, which would be a bit of a different approach.
Senator Eggleton: But it resulted in an amendment to the Canadian Environmental Protection Act. Okay, I just want to make sure —
Mr. Ross: I think the federal government at the time was probably able to do that because it was within the scope of federal legislation, but, if the National Energy Board were to start taking a look at upstream greenhouse gas on projects that have already been approved by the provincial regulator, I think that would be an overstepping of jurisdictional bounds.
Senator Eggleton: As they are now putting it into the NEB process, how will that affect the social licence, do you think?
Mr. Ross: I suspect they are going to get a number of jurisdictional challenges and spend a lot of time in court before we get to the question of whether it impacts social licence.
In terms of the impact to the views on whether environmental concerns are being taken into account, I think environmental protection legislation, safety legislation, thinking, for example, of the Pipeline Safety Act enacted in 2014 — I think the Pipeline Safety Act, in terms of its approach to pivot towards a polluter-pay, longer limitation periods, those kinds of things, might be a question of, did that facilitate social licence or not? I think the jury is still out on that, but I think some of those increased protections in the Pipeline Safety Act, which I understand the current government will be keeping in force, largely, are the kinds of things that might help.
Senator Eggleton: I can't remember which government put it into the effect, whether it was the last government or the one before.
Senator MacDonald: I want your opinion or your advice on something, Mr. Ross. As a proponent of a pipeline, I see that moving bitumen by pipeline provides royalties to the provincial governments and tax revenue to the federal government. It generates employment and economic growth. I'm sure you're aware that there is a lot of discussion lately about contracts to Saudi Arabia. It would give us the opportunity to move Saudi oil from Canadian refineries, which would meet our human rights concerns. These are just some things, off the top of my head, that I think are advantageous, besides the obvious safety advantages of a pipeline. Is there anything you would add to that list? If you were advising the federal government and trying to expedite this process, what would you advise? What would you add to this list?
Mr. Ross: I think you've probably hit on the things that are topical in terms of some of the advantages of having a pipeline in place. As I've said, I think there are educational, promotion types of things the federal government can do.
There is an understanding, more broadly, of the energy industry, how it's regulated, how safe it is, that would be part of that discussion as well at the federal level.
The Chair: Before giving the floor to Senator Pratte, I would like the members to stay around. We're going to have a short in camera meeting to talk about future business and the agenda for the next few weeks.
[Translation]
Senator Pratte: With regard to social licence, there is something that I still cannot fathom despite hearing about it for some time, and that is how we define the presence or lack of social licence.
[English]
It seems to me that when we rapidly conclude that there is no social licence, that is when there is a lot of noise and controversy over a project. So in the case of a pipeline, it's sort of obvious that environmental groups will be against a pipeline, an oil pipeline, for obvious reasons. They have their reasons, and it's their right to be against the pipeline. We know why they are against the pipeline, and they will go in front of the NEB and make their case very intelligently. They will convince part of the population, and we will see that in the polls.
But does that mean there is no social licence? What does it mean that we say there is no social licence? Does it show in the polls? What is the result that we will see in the polls that will show that there is no social licence or that there is social licence? Does the provincial government in Quebec or in B.C. define that there is or there is not? Is it 50 per cent plus 1, or is it 30 per cent or 35 per cent? Or is it the mayor of a large city, in Montreal, that decides that there is or there is not? The answer to that is crucial in my mind, because then it also changes the role of the national government, for instance, because, of course, if we say that only the environmental groups or the mayor of one or two small cities are against the project, it could make a lot of noise, but the federal government could decide that the project is in the national interest and decide that it has a right to decide that the pipeline will go ahead.
But, if it's 60 per cent of the population in a province or two provinces, then it changes the game. So what is the standard? Is there a standard that is defined somewhere that says social acceptance is granted or not?
Mr. Ross: Senator, if only it was that easy, then we could get 50 per cent plus 1 or —
Senator Pratte: It could be a complicated standard, but is there a standard somewhere?
Mr. Ross: I'm not sure there's a set standard in any academic research or anything like that, but I guess I would revert to Senator Unger's point: Is there a cause for optimism in this? One of the things that is indicative, perhaps, of social licence is the fact that, for a long time in Canada, we've had a lot of natural resource towns and communities right across the country. In Quebec, there are a lot of mining communities. In Alberta, we have communities, notwithstanding where the economics are now, that have had a very successful community relationship with natural resource production in terms of overall acceptance of it, overall community build around it. Part of social licence is less a question of whether it's 50 per cent plus 1 or 68 and a half per cent or 39.2 or whatever, but whether you are having communities that are engaged and operationally accepting what's happening. I think that may well be true. It's harder to do on a linear project because you have resource in one part of it and maybe less engagement or less interest in a linear project in other parts of the country, but I do think that that sort of broader notion of optimism about the ability of communities to at least be accepting of projects is probably more where I would view any positivity around social licence, rather than whether we need to get to a certain threshold. I think there is probably an element of that, too.
The Chair: Thank you, Mr. Ross. The committee appreciates your sharing your conclusions with us. We thank you for your presence with us.
Members, I would really appreciate maybe two minutes to go in camera. It will only be a few minutes, depending on how much you want to debate future business.
(The committee continued in camera.)