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Transport and Communications

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42-1 42nd Parliament, 1st Session (December 3, 2015 - September 11, 2019)
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Proceedings of the Standing Senate Committee on
Transport and Communications

Issue No. 4 - Evidence, June 1, 2016

OTTAWA, Wednesday, June 1, 2016

The Standing Senate Committee on Transport and Communications met this day at 6:45 p.m. to study 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.

Daniel Charbonneau, Clerk of the Committee: Honourable senators, as clerk of your committee, it is my duty to inform you of the unavoidable absence of the chair and the deputy chair. Therefore, I need to preside over the election of the acting chair. I'm prepared to take nominations.

Senator Mercer: I nominate Senator Runciman.

Mr. Charbonneau: It is moved by the Honourable Senator Mercer that the Honourable Senator Runciman do take the chair. Is it your pleasure, honourable senators, to adopt the motion?

Hon. Senators: Agreed.

Mr. Charbonneau: Carried. I invite Senator Runciman to take the chair.

Senator Bob Runciman (Acting Chair) in the chair.

The Acting Chair: Thank you for that vote of confidence. Honourable senators, tonight the committee is continuing 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. Our witness tonight is Ken Coates, Senior Fellow in Aboriginal and Northern Canadian Issues at the Macdonald-Laurier Institute. Mr. Coates, welcome. We appreciate your appearance here this evening. I'll leave the floor to you for an opening statement.

Ken Coates, Senior Fellow in Aboriginal and Northern Canadian Issues, Macdonald-Laurier Institute: Thank you very much, honourable senators. It is an honour to be with you today. In my opening comments, I would like to put a bit of context to what I see happening in terms of Aboriginal engagement of the resource economy, particularly with things like pipelines. We have a lot of press coverage and conversations about Aboriginal protests over everything from pipelines to mines and what have you. There is a critical part of the story that I think does not get anywhere near enough attention: Aboriginal engagement with the resource sector is actually quite substantial.

We have a lot of equity investments coming on-line. We have a lot of partnerships, developments and collaboration agreements. There are more than 400 collaboration agreements in the mining sector alone and even more in the forestry sector. I start with the proposition that natural resources, while there have been protests, to be sure, and some important points of tension and controversy, are the front lines of reconciliation in Canada where Canadian commercial and economic interests are coming together through corporations, governments and indigenous peoples in ways that I think people would find quite surprising overall.

One of the places where this has not occurred to the greatest degree yet has to do with pipelines and, of course, that's the main focus of your conversation. We have to look at what is going on in the pipeline debate with Energy East and others. In the context of a string of Supreme Court of Canada decisions that I'm sure you've been talking about relating to Aboriginal rights, and of the Government of Canada's endorsement of the United Nations Declaration on the Rights of Indigenous Peoples, for very good reasons indigenous peoples feel empowered in a way they haven't felt for a very long time.

As anybody would, any member of society, any region or any government, they wish to exercise those powers. They want to be taken seriously. The starting proposition is essentially that there's a clear requirement for new working relationships with indigenous people. It is one that must start with engagement with those communities from the outset. It cannot be an engagement that starts halfway through or three-quarters of the way through a process. It should include partnerships wherever possible. Those are turning out to be quite effective. There has to be a clear commitment to show that the benefits of whatever development is being considered will actually be shared equally with the region and with indigenous peoples generally.

One of the other things we have learned over the last two or three years is that we exist in a globalized economy for natural resources, and if we slip up, or go too slow, or stop our projects, we'll discover that markets can evaporate very quickly. That has certainly been the case with crude oil and also oil, gas and minerals generally.

I was given a series of questions on which you might be interested in my comments, perhaps as a starting point, for example about how you facilitate social license for crude transportation. I'm a bit skeptical about the idea of social license, to be honest, because it's a vague process. Social license tends to mean that you don't have approval going forward if anyone complains. Unanimity is almost impossible, particularly on issues like pipelines and natural resource development. There will always be people with good, legitimate reasons who oppose these projects. My own view is that the element of social license comes from a general election. It comes, in particular, in the form of the election of a majority government and the imposition of the proper kinds of legislation and empowerment through Parliament — the House of Commons and the Senate.

We do know, however, that there must be public confidence in the robustness and thoroughness of our review process. We can't go off and make decisions as government without due attention to the special provisions we need for consulting with indigenous peoples. These consultations have to start early. They cannot be rushed. They have to be extensive and they have to include a full conversation about compensation, as appropriate.

What does the government have to do? I think government has to set a standard that it will apply to its final decisions on how much support is needed or how much opposition will be accepted. The ambiguity in answer to the standard is actually the greatest risk to indecision that can cause problems going forward. We know that we can come to resolutions on these issues, but we have to be quite careful.

In terms of public confidence in the pipeline review process, I guess I would start with the proposition that most Canadians have a relatively high level of comfort with national review processes, partly because it's not an issue that most Canadians spend a lot of time thinking about. People who oppose pipelines spend a lot of time thinking about it. Indigenous peoples whose lands will be affected spend a lot of time thinking about it. Most Canadians are just glad there is oil and gas delivered to their homes and their automobiles as they go forward.

In order to proceed, we need clear standards for approval. One is the level of risk or disruption that government will accept. We need a full explanation of the review process as it unfolds, and it must be explained very clearly at the outset. I think that process happens now in the technical fora. It doesn't happen well with the public at large, but the resolution and decision-making process must be clearly and demonstrably science-based and evidence-based.

One twist we don't pay much attention to is that there has to be a sustained exercise in public science. People must have an opportunity to follow these complex, technical processes in a manner that will be relatively easy both to follow and to understand in a sort of ready-at-hand process.

We also need to have a far more sophisticated understanding of risk in Canada. Pipelines, like everything else from air travel and automobile travel, carry risks on a regular basis. Of course, there are risks in any of these kinds of things. We need to understand how that will be balanced off. In this last context as well, we need a greater appreciation of what happens to Canada if we don't build a pipeline. What are the implications in terms of government revenues, social programs and other things that are going to follow from there? We are really making a decision based on the balance of risks and benefits. We need to know the full shape of those. Pipelines are good at outlining their sense of risk. I think the public at large needs to know what the other side of the equation actually has to be and that has to be in place.

I said already that I think we need a more robust process for engaging with Aboriginal people. I have been involved as an intervenor and as an expert witness on a series of these processes. The communities always feel they are asked too late and are asked too little. They are asked in great haste and without a lot of resources going forward. These are big projects with a lot of risks and implications. We need to be careful as we go forward.

The question of sharing the benefits of these pipelines and other resource developments is critical as well. Perhaps I'll end with this: We need to keep in mind that for the last 150 years, indigenous peoples have received less than their fair share of the benefits from resource development. In fact, they have borne greater than their share of the costs and implications environmentally, socially and economically of resource production and activity. It's clear that they believe they deserve — and I believe they deserve — a better share in this country's resource prosperity, as we go forward.

Governments were good over the last year, and before that, in making it clear that they see the need for a new partnership with Aboriginal people and that they are open to consultation. Duty to consult and accommodation has been brought into place, and we have endorsed the United Nations Declaration on the Rights of Indigenous Peoples. But we need to go to the next step. Governments and indigenous peoples have to work out clear protocols and understandings. Indigenous people have to be asked for their bottom line. That is, on what basis are they prepared to see pipelines go forward? We need a much clearer understanding and a framing of the questions in order to understand where that important line of mutual trust and confidence actually occurs.

We have to make sure that the next set of pipeline resource projects as we go forward will address the risks and disruptions and make it clear that indigenous peoples have secured, in front of Canadian courts, the Supreme Court of Canada and international law through the United Nations Declaration on the Rights of Indigenous People, legitimate political and legal power. They are determined to exercise it, as they should, but we have to make sure that it means something and that governments in Canada, corporations in Canada and the general public in Canada, understand and accept those obligations. Thank you very much.

Senator Mercer: Thank you very much, Mr. Coates. The simple question I have — I say it's a simple question; I'm sure it's not — is this: Is there a checklist of questions, if you will, of things that we need to do prior to talking with Aboriginal communities and a checklist of questions and things that we need to do as we talk to Aboriginal communities to get their involvement and their support of these pipeline proposals that we're discussing tonight?

Mr. Coates: That's an excellent question. I'm a fan of something I call the coproduction of policy and the coproduction of procedure. We can actually come up with a list of questions we have internal to government, meaning House of Commons and the Senate, or even with the bureaucracy. However, I think we're past that point. I think we're at the point where we sit down with indigenous peoples and create that checklist together.

You're absolutely right. There has to be a checklist. Indigenous communities need to know that the public at large has the need for a bottom line as well. People are often saying to me, "What is it the Aboriginal people want?" My answer in part is to say, "What is it that the people of Canada want?" We have to develop those checklists together.

You also have a complication in that we have many different indigenous groups across the country, as you well know, from coast to coast to coast. There are people who are stridently opposed to pipelines; there are others who want to buy them and manage them themselves. You have this big diversity of opinion, depending on who you're talking to or which community you're dealing with. My simple point would be, let's produce the list together, sitting down with indigenous leaders and with government officials. I think the list comes in part from Supreme Court decisions on duty to consult and accommodate. It also comes from UNDRIP, the United Nations declaration which says indigenous peoples have the right to expect.

If you go back to your checklist question — I will try to give you a direct answer — a lot of it has to do with the process and the standards of decision-making. Does the Government of Canada believe, for example, that indigenous peoples have a veto, that they have the right to stop? Is that what prior informed consent means? I don't think that's what the Government of Canada thinks, but they haven't said it all that clearly yet. Those are the checklists that I would start with. What are the processes we will use to make decisions? What are the standards you will use on the government's side? What are the standards that you were asking the Aboriginal people to pay attention to? I think sitting down with indigenous people and planning this together is the only way to go.

Senator Mercer: You mentioned in your opening remarks about being asked too late and asked too little, but then you summarized your response to my first question, and the word I have written down that probably underscores it all is "respect." There needs to be a level of respect between the negotiators and the Aboriginal people so that everybody knows that we're coming at this to be mutually beneficial to both sides.

I don't know what your response would be, though. You raised the issue of what happens if we get a pipeline approved or a buy-in from everybody except one group. Their land happens to be critical to the successful and economical completion of a pipeline. What would your advice be to the government? Would the government say, well, all of that being said, we're going to go ahead?

Mr. Coates: First, I agree with you completely on the question of respect. We're in a new order because of the powers that Aboriginal governments have. If we can show that respect in the first instance, we will go a long way toward a real partnership. Second, we deal with this question of the right of one person to start a project all the time, whether it's a road or something else. Two different times my family has been flooded out to allow power dams to proceed. My family lived on lands in British Columbia. Twice they were flooded out of their homes and forced to sell their lands. So that bigger question strikes a little closer to home. The issue here is kind of an interesting one. The short answer is that's what we have a court for in the final analysis. Sometimes we actually cannot find an agreement after truly having tried hard and making a real good faith effort.

Let's assume we are talking about a stretch of pipeline that has 15 First Nations stretched out along it and perhaps a Metis community as well and you reached an agreement with all but one. It's completely fair to say, we've done our very best. We can't give you more than we're giving other people, but it is in the national interest. If you have a chance, and maybe you have already done this, read the Tsilhqot'in decision on Aboriginal titles. It states clearly that the Government of Canada still has the right to proceed but it has an obligation to explain to indigenous peoples on what basis it will proceed. The project can't be because you want to build a road to the prime minister's house. You know, that's actually not going to convince the courts that it's a really strong argument in favour.

If you look at something like one of these major pipelines where you're talking about major economic development, flows of revenues to governments in all the provinces and substantial financial returns to the individual First Nations and jobs down the line, it's a completely compelling case for the government to say, "On the basis of national interest, defined according to the following one, two, three, four, five criteria, we feel obliged to go ahead and use our authority as a national government to proceed." I'm actually quite confident that if it's done properly, the Supreme Court would accept that as a legitimate reason and the First Nation would as well.

Senator Black: Mr. Coates, it's nice to see you again. Thank you for the good work you're doing on behalf of industry and Aboriginal groups.

I have a couple of questions for you relating to the here and now. Can you please give us your estimation as to where we are on the Trans Mountain project, the Energy East project, the Gateway project and LNG projects on the West Coast?

Mr. Coates: You're not asking much, sir.

Senator Black: I want you to make it really short.

Mr. Coates: In terms of the Trans Mountain project, there is equal resistance from the non-indigenous population. It's not right to present this simply as an indigenous issue. Trans Mountain has done some good work with many of the communities along the line. You have particular problems at the end point in Burnaby when you get down to the coast. In that particular one, a lot of progress has been made. The opposition is absolutely rock solidly clear. We know that people oppose it very strongly and will continue to do so to the point of blocking pipeline construction. That was the one that I think has the best chance of going ahead fairly quickly.

Energy East is very complicated. I'm not sure if you have all the provinces on board or the municipalities on board. Again, this is not an indigenous issue entirely. There is a challenge here to convince people that this is in the national interest and it is not just in the corporate interest. We have to be able to demonstrate that there is a substantial financial return that goes all the way from the oil and gas locations in the west all the way out to the refineries and transportation hubs. That one is a bit challenging.

Remember at the other end though, particularly in New Brunswick, Aboriginals there have been looking for economic opportunities for a long time. They are among the poorest people in Canada. They want to be engaged and want to be consulted. They are not happy with what has been done so far. You will find more receptivity there than people would anticipate. I'm not sure about the Governments of Quebec and Ontario. The barriers are not entirely indigenous.

Northern Gateway is very problematic now. It's one that you wish you had to do over — that you could go back 10 years and build it up from the beginning. It has people dug in strongly against it. Some communities very in favour of pipelines and very in favour of LNG are nonetheless bitterly opposed to Northern Gateway. A large part of that has to do with the tanker traffic from shipping it offshore and the vulnerability of the West Coast. That group, by the way, feels very much empowered by Prime Minister Trudeau's comments before he was the Prime Minister. He talked about a moratorium and things of that sort. That one is tangled up in everything the West Coast holds dear, which is particularly the sanctity and safety of the water system and developments there.

LNG is more promising. I have always been a tremendous fan of the creativity, intelligence and capacity of the Nisga'a. You may have heard that they put in a request to buy a large chunk of land at the western end of their territories with a view to working with other First Nations and using that site as a potential LNG plant. There are several locations where LNG is possible, including the Haisla First Nation in Kitimat. I think LNG is being driven by market forces or people in China, Malaysia and India who want to buy the LNG that we want to produce. The LNG projects are market driven but I'm not sure they'll go. Trans Mountain is easier, Energy East is possible and Northern Gateway is a real challenge.

Senator Black: In respect of this new committee appointed in the last couple of weeks by the Government of Canada to do further consultations in respect of GHG emissions and consultations with Aboriginal groups, amongst others, could you give your view on the nature and tone of the conversations that you expect that group would have with Aboriginal groups?

Mr. Coates: Two people on that committee have very well-established reputations for working with Aboriginal folks, and who are very happily regarded by them. The conversations for the most part will be very frank. Some people will use those conversations to push arguments we have already heard. I'm not sure how many new arguments we will hear. We've been following these conversations for quite a while. At issue for this committee will be not whether they will find a consensus as there is no consensus to be found. There are people at extreme ends of this particular issue on the Aboriginal side. The question is to ask whether all Aboriginal positions been heard. Have the company responsible and governments looked at all possible alternatives? If there is one First Nation that opposes it, is there a route that would go through somebody else's territory that would allow it to be addressed? Their final analysis is actually going to come down to the question of how the consultation process has been sufficiently robust and whether we are actually taking into account all the needs of the groups along the way.

My only concern is that the extra committee is a situation of second down or third down, so punt and wait to see what happens. You know, we have had fairly robust conversations already and all the people have had a chance to intervene. We're going to hear a repetition of many of those stories, but they will be heard by a committee of three eminent individuals who are good at compromise and we're going to have to come up with a compromise.

Senator Eggleton: You said in your opening remarks that Aboriginal communities need to get a better share of the resources. Are there any particular examples you can point to where you think this has worked well or any particular model you would suggest? We talk a lot about the government and the regulators and the NEB, but this involves companies — the private sector. What do they need to deal with this issue of a better sharing of resources, which I take it from your comments you consider to be vitally important, not everything but vitally important.

Mr. Coates: Let me start at the other end. An Aboriginal community looking at its traditional territories considers a pipeline project that will interrupt hunting and fishing and potentially cause oil spills. They're concerned about this but they're not even getting anything out of it. Nothing substantial would come back. Why would they say yes? On what basis would they say, okay, go ahead. We'll take all the risk and somebody else can take the benefit of it. It's a simple basic truth. Thomas Berger in his famous report said that location was a natural resource. I think there is nothing more than pipelines to prove that to be the case. That is their natural resource. If you want to go across their territory, you're going to have to pay for it. That's called commerce — that's called capitalism — and it works as well for them as for anyone else. Are there good examples? Absolutely.

First, we are going to see a lot more Aboriginal equity. We're going to see Aboriginal people owning parts of these pipelines, perhaps enough so that they actually get a seat on the management committees and on the boards. When the Mackenzie Valley pipeline was finally defeated by market forces, it would have been 30 per cent Aboriginally-owned, and it would have been one of the largest Aboriginal investments in Canadian history and one of the largest in world history.

In fact, one of the plans for an LNG project was for a 100 per cent Aboriginally-owned pipeline. Even Enbridge was offering 10 per cent ownership for Indigenous peoples along the route. So the equity piece is there. The resource revenue sharing has really helped. What you have, as you do in British Columbia, with the mining sector in the Northwest Territories and the Yukon, is where there's a resource project and a return on the profit actually is shared directly with the communities, you get much more receptivity to it going forward. In Saskatchewan we don't have that and so that's caused some really interesting puzzles.

I think the other part is if you look at what are called collaboration agreements, where the companies come to indigenous people and say, "We want the right to work on your territory," whether it's a mine or a pipeline. Looking at these collaboration agreements, they usually come up with three pieces.

First is compensation of the communities. Everybody looks at that and says, "That's $10 million or $20 million, and that sounds like a lot of money."

The second one is jobs and training. They say, "We're going to need a bunch of people to work on construction and maintenance of this pipeline. We're going to train 50 of your people to be part of that." That's really important.

The third one is the one that is the most important, and that is business procurement. Resource companies come along and they say, "As long as you meet quality and price standards, we'll give you preferential access to doing work on our projects." I'm not sure if you've seen, but in Saskatchewan you're way more likely to start a business if you're Aboriginal than if you're non-Aboriginal. There's been a huge boom in Aboriginal business development. We have 250 Aboriginal economic development corporations in this country, some of which have more than a billion dollars of assets, and many of which have assets in the hundreds of millions of dollars that they are then using to reinvest in their communities.

Whether you look at the Inuvialuit up there in Inuvik in the Northwest Territories, Onion Lake, which is an oil and gas reserve, Lac La Ronge in northern Saskatchewan or many others across the country, they are seeing tangible benefits from being involved in the resource sector and they are turning those into jobs and long-term economic opportunity.

So the good news in all of this is that in other sectors — forestry is one of the best, believe it or not — we have seen companies develop, jobs created, opportunities, communities that are healthier and more sustainable than before. If the pipeline projects are done well, the concern here is the construction is very short. You can move through a community fairly fast. Are there long-term benefits that will actually let the Aboriginal people see themselves as real partners in these exercises? Where we've done it, it's been a good return.

Senator Eggleton: Those are some excellent examples, but you did say a better share of resources needs, so I guess there are still a lot of proponents of pipelines, et cetera, that aren't doing this.

Mr. Coates: Well, it's changing a lot if you look at some of the best ones. These range from Cameco, a big uranium company in northern Saskatchewan, which does excellent collaboration agreements. You probably all know this, but the deal with English River was $600 million over 10 years. Those were very substantial returns. We have a lot of examples, like seven generations of an oil and gas company in northwest Alberta.

We have a lot of companies that are doing well. The other companies are learning from them. You've been around this game for a while. Go back 15 or 20 years and tell me how often you heard of a kind of Voisey's Bay agreement they have with the Inuit in Labrador. These are job creation, future creation and business creation opportunities the like of which we've never seen.

There aren't that many companies that are resistant. Interestingly, in places like Yukon and northern B.C., there have been a lot of Chinese companies coming in, and foreign-owned companies. One of the first things they've been doing is hiring really good, long-standing resource negotiators to help them work with Aboriginal communities, because the Aboriginal communities basically know what the bottom line is now. They know what they can reasonably expect, and so if a company wants to be resistant, they're not going to go very far.

But if you want another positive example, just get the search engine set up so you get the stories from Trans Mountain when they announce another agreement with another First Nation along the pipeline route. That's a company that sends senior executives — not junior functionaries — to sit down CEO-to-chief to talk about what should actually be done and what kind of partnerships they can receive. Quite frankly, you know, I know I get disappointed with the slowness at times, but on a global scale Canada is actually leading the world in those kinds of relationships.

Senator Eggleton: Thank you very much.

Senator Unger: Canada's leading the world in discussions, but we're sure behind when it comes to getting things done, it seems.

I'm wondering what possible pipelines are there left to be developed. And I'm also wondering about the United Nations Declaration on the Rights of Indigenous Peoples. It affirms a number of collective rights including, of course, free prior and informed consent. In your view, how, if at all, should the federal government incorporate the principles of UNDRIP into the pipeline review process, and what might be the impact on the timeliness of pipeline reviews if this is incorporated?

Mr. Coates: Thank you for a nice series of questions.

Actually, Canada's doing pretty well at getting things done. Not talking about pipelines for a second, but if you look at the forestry and mining sectors, for example, and even hydro-electric development, we have a bunch of hydro projects coming on with full Aboriginal partnership, so we're doing better. These are not Site C kinds of projects; they are run-of-the-river kinds of initiatives. We are learning as we go and we are getting better at taking these things forward.

You asked very specifically about UNDRIP. That is an area of great uncertainty. The Prime Minister, before and immediately after he was elected, said the Government of Canada would implement UNDRIP. The Premier of Alberta did exactly the same thing. The problem we have here is nobody knows exactly what "implement" means. You can implement by putting it into your Constitution, but that's not likely to happen in Canada. You can implement it by passing legislation that says, "As of now UNDRIP is a governing document that should influence all of our rules and regulations."

But anybody who's spent any time with UNDRIP will see it as a very complicated document with a huge number of uncertainties built into it. So what we actually need, relatively quickly from the government — hopefully done through that co-production process I talked about before so that indigenous peoples don't have it imposed on them — is a national declaration of what UNDRIP means to Canada.

Because if you look at the words one by one — free, prior and informed consent — does that mean a veto? Many people involved with the process said it did not mean that, but many Aboriginal people think that it does. No criticism, but the Prime Minister said the Government of Canada reviews and the communities decide. And if that's the case, then you're taking a multi-million dollar project of long-term economic impact to Canada and potentially turning the whole thing under the control of a community of maybe fewer than 500 people. Is that in our national interest? Is that appropriate and is that how we really want to go?

I think there's a middle ground there. If you listen carefully, as I'm sure you must, to National Chief Perry Bellegarde, he will tell you over and over again that his primary emphasis is on closing the gap between the Canadian population that's number 6 in the world in terms of quality of living and the First Nations who are 64. Chief Bellegarde, who I know from Saskatchewan, has many, many times said it is going to be properly managed development that takes us there. We have to be owners. We have to be businesspeople. We have to be employees.

Indigenous communities know that they have to be part of the resource frontier. There's no other choice. So the question on UNDRIP is whether we can get a mutually-acceptable definition of where UNDRIP sits within the legal framework. You asked the question of the inquiry process. As far as Aboriginal people are concerned, it is part of the process right now. They are using it as their standard. It has to be free. It has to be prior. It has to be informed consent. They are using that as their standard, so it is, de facto, the standard. Does consent mean a veto?

And second, how do you ascertain consent? Does that mean the elected band council? Does that mean you have a community meeting and get a 50 per cent plus one vote, or is it 60 per cent required? There's a whole bunch of those questions unresolved, so the answer about timeliness has a lot to do about the answer to that. Can we clarify UNDRIP quickly? Can we then make sure that we actually apply that standard in an appropriate sort of way?

I don't think the majority of Aboriginal people believe that they now have a complete veto over any resource project in Canada, but I can assure you there are some Aboriginal leaders in some communities who do believe that.

So we need to use our powers of reconciliation and co-production of policy and standards to actually resolve that issue, and do it very quickly.

The Acting Chair: You mentioned in your opening comments the United Nations Declaration on the Rights of Indigenous Peoples, and I was wondering how you view that, how you believe the government is interpreting that and how it will impact discussions surrounding energy projects going forward.

Mr. Coates: I'll start by telling you that I was one of those people who thought there was no way in the world that the United Nations would ever pass that document. I thought it was too vague and too comprehensive at the same time.

The four holdout countries — the United States, New Zealand, Canada and Australia — waited for three years after it was initially passed to endorse it in the first instance. They resisted it because they saw it as interfering with existing law.

Canada said — both the previous government and the government before that — that they thought UNDRIP could potentially put at risk our modern treaties and some of our Supreme Court decisions, and they didn't want to see it doing that.

I was one who thought that it was way too general. Then people talked about it as an aspirational document and said, "All it does is it lays out the fact we want a better world, and we want indigenous peoples to have the right to aspire to full partnership and equality. We can get comfortable with that." That's why I think the previous Conservative government sort of went along with endorsing it, saying, "Okay, as long as we accept it's aspirational." Now it gets to the technical point, when you start looking at it in a very specific way.

Let me, if I could, go off pipelines for one second. If you look at the qualifications of UNDRIP, the articles in UNDRIP that talk about language, they put forward a standard that Canada will find almost impossible to meet because they talk about the fact that the indigenous languages should survive, that people should have the right to education in their indigenous languages, even if they are no longer living in traditional territories.

We have 60 indigenous languages in the country. Only five of them are likely to last until 2050. The others are at risk of dying in front of our eyes, quite frankly.

If we wanted to do something about that, it would cost billions of dollars, and UNDRIP says that. Does that mean we're going to do that? I don't think so. The first budget makes it clear that the government doesn't think so either.

I think UNDRIP is going to stay there as sort of a moral code. It's going to be there as a guide for us to say, "Are we doing the best we can to support indigenous peoples in their culture, their language, their traditions and their socio- economic circumstances?"

On so many areas we fall down on that line, and as a moral code, UNDRIP is very powerful. This is one of these things on which we need to have a clear statement from government, and preferably from government with indigenous peoples, on what it actually means and says. In the absence of that, we're basically going to throw it back once again into the court system, where indigenous communities will argue that UNDRIP gives them certain powers, and we will sit in there and hold our breath for a couple of years and wait to find out what the courts say.

The courts could well say UNDRIP is part of Canadian law based on what the governments have said. I don't think they will yet, but we need a resolution and clarification of this, and it has to be done in a non-partisan way in the sense of government can't do it by itself; indigenous peoples can't do it by themselves.

Without that, we're just going to be awash in a field of misunderstandings and conflicting expectations. On pipeline projects alone, that by itself could just slow everything down tremendously.

The Acting Chair: One of the things that you have recommended in the past, looking at some of your writings, is that the government avoid policies or pronouncements that contribute to uncertainty. Where would the government's announcement with respect to changes in the regulatory framework fall into that — the concern that you've expressed — because it seems to me that the uncertainties we're talking about — upstream greenhouse gas emissions and the other parts of that framework — have not been identified to this point in time. I guess that conflicts with your view in terms of avoiding policies or pronouncements that contribute to uncertainty.

Mr. Coates: Very much so. We have to be very careful.

I'm sure that as members of the Senate you're more aware of this than I am, but the global resource economy is a very delicate place. Money flows across vast distances. It can move from here to Kazakhstan and from Kazakhstan to Norway very quickly.

Canada's strength has often been the clarity of our regulatory and legal environments. We might think that's a problem because we have so many Aboriginal court cases going through the system, but the institutions in Canada are very robust and very strong. When we have uncertainty on major items, we actually take away that robustness and that solidity that is such an important part of our regulatory environment.

We need to clarify those things fairly quickly. We can't leave them hanging out there. One doesn't very often express great sympathy for multi-billion dollar corporations — they look after themselves — but on the other hand, we're asking companies to put up sometimes billions of dollars in efforts being made to get simple approvals for a project. We saw that with Keystone pipeline. We saw that with Northern Gateway. We're seeing that now with other enterprises.

At a certain point we push too far. And all of a sudden we'll become a far less attractive place for investment, for resource development and for the revenue-producing activities that have made Canada one of the wealthiest nations on the planet.

I'm very much in favour of regulatory clarity and regulatory simplicity. We can get those rules down clearly, quickly, precisely and then move forward. If we keep leaving floating balloons around, whether at the provincial, federal or territorial level, we'll only add to the uncertainty and delay things even more.

The Acting Chair: You talked about more receptivity in New Brunswick — I think you referenced that in one of your responses — with respect to Aboriginals. I think that's what you were referring to.

I'm wondering what you base that on, because we had earlier witnesses who felt that that was going to be the wall, and we weren't going to be able to get beyond New Brunswick because of resistance from Aboriginal groups in New Brunswick. You seem to have a much more optimistic perspective on that, and I'm just wondering what you base it on.

Mr. Coates: On the one hand, I'm an optimistic person by nature, but I spent two years being sort of a consult- adviser to the Government of New Brunswick on Aboriginal issues. I had some good conversations with Aboriginal folks in the area.

New Brunswick is one of those places that has a lot of history and not very much in the way of resolutions. They have a peace and friendship treaty that goes back to the 18th century. They don't have a historic treaty, a 19th century treaty. They don't have a modern treaty. The communities there are very small, very isolated and very poor. New Brunswick, as compared to other provinces, is not a very wealthy province either. So you've got a situation where all the conditions are ripe for misunderstanding, envy, conflict and things of that sort.

In the time that I was in New Brunswick, I was actually really impressed with the willingness of Aboriginal people to put their positions forward with firmness and clarity. They had high expectations. Government at that time was a little more open to resource development. The current government has extended its moratorium on fracking and shale gas development. The previous government was in favour of that and was having conversations with First Nations on the basis of a very aggressive resource development sort of strategy.

The issues around First Nations involvement in New Brunswick are appropriately complex. They're not ones that are going to be addressed in five minutes and they go way beyond pipelines. There are a lot of issues there of Aboriginal engagement, the economy and government funding for services and that sort of thing.

I hope I'm right, but I think it will require, on the part of both the federal and provincial government, a willingness to work carefully with First Nations.

I will tell you that compared to British Columbia, where they have had at least 20 years of modern land claims negotiations, impact and benefit agreements and all those other kind of arrangements, New Brunswick First Nations have been politically marginalized for a very long time. If we can get them politically engaged, I think you'll see more receptivity.

The Acting Chair: I hope you're right. The most recent memory, though, is the police cars being set on fire. I believe it was over the development of shale gas in New Brunswick, but in any event, perhaps there wasn't much consultation with respect to that.

You talked about the economic benefits, and we've heard a lot about that from industry representatives and others during this study. We had one witness here from the industry who brought a few specific examples rather than the broader issues with respect to national benefits, but talked about specifics and how they could help communities, help provinces.

They talked about two LNG plants that would result in a half a year's production at Algoma Steel in Sault Ste. Marie, Ontario. The company, as you know, is almost on its knees; and the Ontario government is looking at either a second or third bail out of that steel company. I asked if they had ever been to Sault Ste. Marie and delivered that message to that community or the MPP who was a Liberal cabinet minister in the provincial government. They also talked about over 100 some businesses in Quebec that benefit from the energy industry. Those kinds of messages simply aren't getting out there. I am wondering what your connections are with the industry.

I've been encouraging their representatives to get their act together and work as a unit in terms of getting those kinds of messages out, not just in the broader scale in terms of the overall billion-dollar benefits but what it will mean to their part of Canada. What is it going to mean in terms of jobs for their kids and grandkids and keeping the rinks operating and so on in their communities. Those down-to-earth, into-the-weeds kind of messages need to be heard by more and more Canadians so they are aware of what the impacts of this industry can and should be. I don't know if you have a role to play there but if you do, I'd certainly like to hear your views on it.

Mr. Coates: Well, I hope I have a role. I continue to talk to industry and Aboriginal groups all the time about these kinds of issues. We have a real misunderstanding in Canada of the national benefits of oil and gas development and pipeline development. We see these as Alberta-centric and Saskatchewan-centric undertakings.

I lived in Ontario for six years. I was he Dean of Arts at the University of Waterloo. I was always frustrated by people making harsh comments about Alberta and Fort McMurray. At the time, I had the numbers at my fingertips and asked how many tens of thousands of jobs in Ontario are directly tied to the oil sands activity and how many direct jobs in Quebec are directly tied to these enterprises. We have a much more integrated economy than people think. Whether you're talking about raising money for mines in the TSX or talking about engineering companies out of Quebec that have big contracts on these projects, a huge integration of work goes all the way across from the East Coast to the West Coast.

The Acting Chair: Mr. Coates, I'm sorry to interrupt. How do you get those messages out? We have heard those messages. We are continuing to hear those messages. But every day Canadians aren't hearing them in terms of how they impact their lives and their kids' lives. That's the question I was posing.

Mr. Coates: I guess I'm not doing my job well enough. We have to take that one very seriously. Part of the interesting thing is that the oil and gas industry and pipelines have been so politicized that we haven't had the frank national conversations. I agree with you completely that that story has to be told.

The Acting Chair: Thank you.

Are there any additional questions from members of the committee?

Well, sir, thank you very much. That was a very informative contribution to the committee's study, and we very much appreciate your being with us this evening to offer your insights. Thank you again.

Mr. Coates: Thank you very much for having me.

Senator Black: I have a question arising from the meeting we had with Mr. Emerson yesterday. I would like to propose that the committee give consideration to doing a letter from the committee to the Minister of Transportation to say that we heard from Mr. Emerson and we note that he made some recommendations. I would focus on two or three things. He focused on the need for the Canadian Transportation Agency to have more authority. I'd focus on two or three things and urge that they show the report some love.

The Acting Chair: Shall we ask our analyst to prepare a draft?

Senator Black: The analyst or the clerk if the committee thinks the idea has merit. I don't want to lose what we heard yesterday.

Senator Mercer: It's a good idea to prepare a draft that we can discuss at our next meeting. It should be referred to the steering committee as well.

The Acting Chair: All right. Refer to steering initially before it comes back to the committee. Okay.

Senator Black: To assist you in that, because I asked him the question, I asked what his priorities are, if he could do only two or three things. The first thing he talked about was around amendments to the CTA. He said they are hamstrung in that they react to complaints but they can't do anything beyond dealing with the complaint.

Senator Greene: Look at the mandate as well.

The Acting Chair: Anything else before we adjourn? Just to let you know, next Tuesday morning we will hear from officials from Transport Canada and National Resources Canada. On Wednesday, we will meet with the Assembly of First Nations.

Meeting adjourned.

(The committee adjourned).

OTTAWA, Tuesday, June 7, 2016

The Standing Senate Committee on Transport and Communications met this day at 9:30 a.m. to study 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 Michael L. MacDonald (Deputy Chair) in the chair.

[English]

The Deputy Chair: Honourable senators, this morning 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 and West coasts of Canada.

We have two panels of officials. For the first hour, we will hear from Transport Canada. During the second hour, the panel will have officials from Natural Resources Canada.

For our first group, I would like to introduce officials from Transport Canada: Laureen Kinney, Assistant Deputy Minister, Safety and Security; Brigitte Diogo, Director General, Rail Safety; and Benoit Turcotte, Director, Regulatory Affairs, Transport of Dangerous Goods. Please begin your presentation. Afterwards, senators will have questions.

Laureen Kinney, Assistant Deputy Minister, Safety and Security, Transport Canada: Good morning, honourable senators. It is my pleasure to be here today and to have the opportunity to speak about rail safety and the transportation of dangerous goods by rail. As mentioned, I am accompanied by Brigitte Diogo, Director General, Rail Safety; and Benoit Turcotte, Acting Director General, Transportation of Dangerous Goods.

Transport Canada's mission is to serve the public interest through the promotion of a safe, secure, efficient and environmentally responsible transportation system. As the regulator, the department oversees the transportation of dangerous goods for all modes under the Transportation of Dangerous Goods Act, 1992, and the safety of federally regulated railways in accordance with the Railway Safety Act. Transport Canada has a rigorous and robust oversight regime in place to monitor compliance with rules, regulations and standards through audits and inspections and to manage safety issues on an ongoing basis.

I should note that railways are normally the most effective way of transporting heavy bulk goods across long distances; and in many cases the shipping of bulk goods is the only way to move them. Thus, access to safe and reliable rail service is critical for economic health and growth of industries, communities and cities across the country. The rail sector is a key factor in the economy and the safe transportation of dangerous goods helps to strengthen the economy further.

As rail traffic volumes continue to increase, we recognize that Canadians expect both industry and government to take further action to mitigate the risks associated with the movement of goods by rail through their neighbourhoods. Many municipalities in Canada were established because of the railroad, and our communities have grown around the railways over time.

Following the tragic events almost three years ago in Lac-Mégantic, the issue of rail safety has taken on greater meaning. Our recent initiatives build on numerous actions that we have taken since this tragedy and are designed to enhance safety and address the concerns of communities.

For example, Transport Canada has brought forward new classification requirements that require a shipper to provide proof of classification. In addition, the department has also launched research projects on crude oil, with a focus on its chemical composition and properties as well as its behaviour during fires.

Transport Canada has removed the least crash-resistant DOT-111 tank cars from dangerous goods service and has developed the TC-117 standard to make the next generation of tank cars for dangerous goods stronger and safer. The standard also provides a phase-out schedule for DOT-111 tank cars, with the first deadline for crude oil transport scheduled to be phased out May 1, 2017.

Transport Canada has extended the emergency response assistance program to include flammable liquids, such as crude oil, gasoline, diesel, aviation fuel and ethanol. This means that municipalities have access to additional industry resources to deal with an incident involving these dangerous goods.

As of April 28, railway companies are required to share even more data on dangerous goods movements with municipalities, their emergency planners and first responders to improve planning, risk assessments and training. This requirement, contained in Protective Direction No. 36, also provides that municipalities are given information that can be shared directly with the Canadian public and accelerates the frequency of sharing information from yearly, to semi- annually, to quarterly by the end of summer 2018. This protective direction will also require Canadian Class I railways to provide a top-10 list on their websites of dangerous goods transported through a province each year.

The Minister of Transport also released the 2016 Emergency Response Guidebook and a set of competency guidelines for first responders. These tools provide important safety information, including product and incident-specific competencies for first responders when responding to an incident involving the transport of flammable goods by rail. They also help trainers and curriculum developers identify specific training content.

We have also strengthened rules for securing trains to further reduce the risk of runaways and have introduced new rules for trains carrying dangerous goods. They impose new speed limits for trains carrying dangerous goods, require increased track inspections and establish more robust key route risk assessments with the incorporation of municipal and local government input. Transport Canada also continues to work with industry, municipal stakeholders and first responders to explore emergency response solutions for greater public safety for Canadians.

The department has taken numerous measures to improve our rail system over the past few years but, as our minister has stated, more must be done. We are committed to continuously improving railway safety for Canadians. Strengthening rail safety and the safe transportation of flammable liquids, such as crude oil, remains a top priority for Transport Canada.

I would also note that Budget 2016 supported this priority by providing $143 million relating to railway safety and the transportation of dangerous goods. This includes several measures to increase inspection capacity; improve training to strengthen oversight across the country; enhance systems used to test, classify, register and map dangerous goods and their movements; increase federal contributions for local investments in safer railway crossings; and provide first responders with additional tools and information to respond to accidents. More will come on that very soon.

I appreciate the invitation to speak with you today. Together we can strengthen our transportation system and maintain a safe, secure, efficient and environmentally responsible transportation system. I look forward to your questions.

The Deputy Chair: Thank you, Ms. Kinney. We will start with questions.

Senator Doyle: Thank you for your presentation. We have seen a lot of disagreements on the issue of what form of crude oil transport is safer. Is it safer by rail or by pipeline? We might be tempted to think that the pipeline mode is preferable, just on the sheer volume of the product moved. If we have to move the volumes of crude oil involved, say, in the oil sands, is not a pipeline the only way to go? Do you have any thoughts on that?

Ms. Kinney: Transport Canada is responsible for the movement of dangerous goods by railways and other modes of transportation, but not including pipelines. I don't have good information and analyses on the comparative assessment. Probably some of your other witnesses would be better placed to answer that.

I would note that, of course, as part of our work in monitoring the safe movement of oil by railways, we look at the movements and where they are going to and coming from. Certainly, there is an evolution where sources of petroleum are changing. Sometimes they change more rapidly, and some of the uses where refineries are being retrofitted to use new sources of crude as well have an impact on where the goods need to be transported. There is an element an immediacy that railways serve. We commit to and have in place a robust, safe system for transporting all dangerous goods and regular types of heavy goods by rail. We feel that we have a safe system.

Senator Doyle: Including crude?

Ms. Kinney: Including crude oil.

Senator Doyle: An individual who appeared here a couple of weeks ago from Teamsters Canada recommended to the committee that railway cars be crash-tested like cars, buses and airplanes. In particular, he recommended that rail cars be crash-tested with oil onboard. Is there any reason that railcars are not crash-tested at this time?

Ms. Kinney: That's an interesting question. A significant number of tests and requirements are place for the various elements of the tank cars. If you set up a crash-testing system, which we have for automobiles, for example, you're looking at the standards that you work to, what speeds, what volumes, what type of terrain, and there is considerable variation in railways for that.

To date, the focus has been on the elements of the car and where weaknesses have been demonstrated, so top fittings, bottom fittings and valves. Some of those areas are where history has shown us that there are weaknesses in the car, so the strength of the steel, et cetera, its susceptibility to penetration, et cetera.

Those are the elements that the North American industry and regulators, working with our U.S. colleagues, have focused on in improving the tank cars.

Setting up a formal crash-testing program would be a complex endeavour and the outcomes of that would perhaps not always be applicable to general set-up of tank cars. It is something to think about.

Part of the Canada-U.S. work that we will be doing in terms of research is to look at some of these elements in time through some experimentation and some demonstrations for first responders. Some elements of that will be addressed in some of the plans currently in place.

Senator Doyle: How many inspectors does Transport Canada currently have on staff? Is that number sufficient for the department to perform its oversight role?

Ms. Kinney: Each year Transport Canada assesses our needs and looks at our inspection programs, oversight and the types of follow-up that you need to do to make sure you're following up on areas where there were compliance issues or questions. We currently have 135 rail safety inspectors on staff and people who do oversight in that area.

That is what we feel is appropriate at this point in time. There is work under way to look at further and future needs. That will be addressed shortly, but at this point — since the terrible events at Lac-Mégantic — we have done this type of yearly adjustment and we recruited staff as needed.

Senator Doyle: Thank you.

Senator Eggleton: First, let me ask you about Protective Directive No. 36, which is now being put into place. I think it's important, in terms of developing public confidence, that this information be made available and you've recognized that. You're going to bring it down to a quarterly basis where it would be released to the public.

What about the information that goes to first responders? Will it go in a timely fashion? Will they know what's coming down the track or will they just have a generic list of possibilities?

Ms. Kinney: This has been a key issue for us all along, and we have worked closely with the Federation of Canadian Municipalities who has brought together some of the views from first responders. In addition, we set up an emergency task force that brought together the first responders and all of the other parties involved in the transportation of crude oil and have been working with them on how we can improve the system and what type of information is needed. Out of that, we have made continuous improvements to the previous protective direction that required certain specific timeliness of information to be shared.

I would say at this point in time we have a good system in place. It has been continuously improved as people have raised issues from municipalities and first responders. At this point in time there are two main forms of access to the actual contents of a particular tank car. One is through a railway application called AskRail. That has been made available to first responders so that if an accident were to occur they can go in and actually get information on the train consist, which is the overall manifest and the tank car individual components.

A second area of opportunity to obtain this information is through our CANUTEC, a 24-hour service, which has trained chemists sitting ready to answer calls from first responders. They also get information from the railways immediately after an accident — within minutes normally — and look at that and are able to provide information not only on individual cars but if, for example, a set of cars has been derailed and they may be having product mixing going on they can give advice on evacuation, distances and that type of thing.

From our information and our feedback at this point, we have good systems in place to provide the necessary information. With the further improvement of twice per year of that information when the railways have the database capability called for in PD 36, we should be able to address most known problems.

Senator Eggleton: Sounds good. The first responders, then, will know in a timely fashion. They get an alert that there has been a derailment, let's say, and they can immediately go online and find out what is there so they can respond in a timely manner?

Ms. Kinney: Yes.

Senator Eggleton: Okay. The public information, I take it, comes later. It's after all of this, and did you say it was going to move to a quarterly basis?

Ms. Kinney: There are two forms of information: the information for municipalities, first responders, and the planners for the first response. That information has much more detail and more volumes and types of dangerous goods. That will be made available to municipalities and their members twice a year by 2018.

The information to the public is currently being made available on the top 10 list of dangerous goods being moved through the community, but not necessarily broken down by specifics of when, where and by what volume.

Senator Eggleton: That sounds very good.

Let me ask you about fatigue management. Why isn't fatigue management dealt with for railways? We do it for airplane pilots and truck drivers. It's an issue that their union representatives have raised and given us all sorts of anecdotes of things that are rather unsettling because it could lead to further accidents.

Why don't you do fatigue management and put hours of restrictions?

Ms. Kinney: I will answer in general and, if you would like more details, we can turn to Brigitte Diogo, who is the director general responsible.

Right now we have in place two areas that particularly speak to this. We have work/rest rules in place that set limitations and requirements, and we can go into more detail if you like. The second area is in the new Railway Safety Management System Regulations that came into force last year. Under that there is a requirement for the railways to consider fatigue management science and fatigue management principles in developing the schedules for their workers. That is just coming into force as this new regulation has come into place and we will be looking at how it is being implemented, how well it's working and the effectiveness over the next year.

In general, as we've looked at the very many elements that go into making for safe transportation, we have looked at the physical issues, train securement, tank car standards and many other areas, as we've talked about and as you're aware of, but the areas of fatigue and the implications that that may have to the human factor is certainly an area of continued interest and an area we will be doing more work on and bringing focus to.

Senator Eggleton: I would like to know a bit more detail, because we found certainly in Lac-Mégantic that you can't always rely on the railway companies, on a volunteer basis, to get everything right. There have been other incidents as well. We regulate it, though, in terms of air pilots. Why wouldn't we regulate these as well?

Tell me what you are doing and how it helps, versus what we would be doing as a straight-out requirement?

Brigitte Diogo, Director General, Rail Safety, Transport Canada: Maybe I can talk about what we will be doing. We are indeed looking at this issue. It's a very complex issue and we need to gather some information to have evidence- based regulation or a policy.

In September we will be bringing the industry and the unions together under the Advisory Council on Railway Safety. One of the items on the agenda will be fatigue.

We've been trying to address this issue over the last year under that heading. There was a working group set up, but they could not agree on what recommendations needed to be brought forward.

Transport Canada will be going back in terms of the evidence, how we can gather that evidence and compare it with other industries: What is happening in other modes and what can we learn from that? As well, Transport Canada will look at how we compare with other jurisdictions or countries, so learning from all the work that is happening in the U.S.

In the meantime, the safety management system has a component on fatigue. Starting in the next few weeks, as part of our audits of the safety management system, we will be looking at the fatigue management plans.

Senator Eggleton: What other countries have fatigue management? What do the United States, the United Kingdom or some of the other European countries do?

Ms. Diogo: I don't know so much about the other countries yet, however we know there are studies happening in the U.S. Our counterpart in the U.S., the Federal Railroad Administration, has just issued a call for a proposal on sleep apnea, et cetera.

We will be taking a look. I think there are some institutions in Canada in terms of what is being done at certain universities. So how can we bring all that knowledge together and move forward in a constructive way?

Senator Eggleton: Please expedite this. I think it is important.

Senator Mercer: I was surprised at the answer to one of Senator Doyle's questions about the comparison between pipeline safety and rail. While pipelines are not regulated by Transport Canada, one would have thought there would have been a comparison of that, particularly following the tragedy at Lac-Mégantic. That is a comment more than a question.

I also want to talk about Senator Eggleton's first question. You talked about a system that is in place for first responders. How often is the system tested?

Ms. Kinney: That's a good question. The individual municipalities have their own emergency planning and exercise processes. We have worked with the first responders, through the Emergency Response Task Force, to look at how can we assist with some of those training and exercise opportunities. The railways have exercises as well.

I don't have a frequency, offhand. I am sure there is overlap between the different sources of exercises.

Senator Mercer: It would seem to me, though, that Transport Canada should be monitoring and making sure that they have been tested, that there is a minimum amount of testing going on and that there are first responders on the ground who are properly trained and aware of this system.

I can't think of an incident right now, but we know that there have been instances where good systems have been put in place. If the people haven't been trained and are not aware of how the system works, it doesn't matter.

Ms. Kinney: I hope it doesn't sound like moving off the issue, but one of the reasons that the Emergency Response Task Force was established was to bring forward and bring in the Federation of Canadian Municipalities, the Canadian Association of Chiefs of Police, Aboriginal volunteer firefighters and the people who do emergency response on behalf of the shippers, railways and many others, because many of these issues do not rest under the jurisdiction of Transport Canada.

Municipal first response capability is not part of what we regulate or require. However, it is an area where we can help and show leadership. By bringing everyone together, we would then propose this type of work be done. We help with it by developing exercise protocols and training standards with this larger group of people, but we need to bring everyone who has responsibility to the table.

Senator Mercer: I guarantee you that if another Lac-Mégantic happens and the local people have not been properly trained, Transport Canada will be in somebody's sights. I am just saying that. I think you need a better system of training.

I don't know if you are aware of a document called Canada's Top 10 Barriers to Competitiveness for 2016, produced by the Canadian Chamber of Commerce. In it they list a number of things that need to happen, but number 4 on their list of barriers is "Canadian resources cannot get to world markets."

I won't quote the whole document because it is a page and a half long. It says:

Canada's . . . future economic prosperity depends upon its ability to provide reliable infrastructure to allow Canadian energy resources to fuel Asian economic growth at world market prices.

The fundamental problem here is that Canadians sometimes think that we sell our gas and oil to the Americans. We do: at a discount. I'd like to sell it at full price to people elsewhere in the world. Let's get the true market value.

Are you aware of this document? It deals directly with the transportation of dangerous goods.

Ms. Kinney: I think the people best placed to speak to that particular issue would be Natural Resources Canada.

I would like to mention — and it goes back to your initial point when you opened your remarks — that Transport Canada is concerned and responsible for making sure that even if one crude oil tank car is moved on the tracks that there is a regime and training in place and that it is moved safety.

There were crude oil transports before 2012 and before the great increase that occurred at that point, and there would continue to be, likely, some level of crude oil transport regardless of how many pipelines there were and where they were. Our role is to focus on making sure that all of those are safe, and we are not implicated in the issue of how that energy gets to market.

Senator Mercer: Thank you very much. You have a tough job. I don't want to sound critical. I am trying to sound supportive.

Senator Black: Thank you for being here. As my colleague Senator Mercer indicated, thank you for the work you do. It is very important for Canadians.

As you know, we are looking at — and I am putting this for the purpose of the record — "a strategy to facilitate the transport of crude oil to eastern Canadian refineries and to ports on the East and West coasts of Canada." I would like to focus, please, on the availability of rail to get product from principally Fort McMurray to the West Coast and the East Coast of Canada.

If I have a carload of oil that I want to get to either the East or West Coast, can you confirm for me that that can be done today?

Ms. Kinney: It's a different way of looking at how we do this work. To be frank, it is more on our economic analysis side and policy side of the department. To my understanding, it is possible now. There are many routes that can be taken and many relationships between different carriers that can be connected.

It is my understanding that that may be possible, but I haven't looked at that question so I am not in a good position to answer that, sorry.

Senator Black: Fair enough. Would any of your colleagues be able to address that?

You are saying maybe we would be able to get it here, put it on another short line and somehow get it to the main line and get it there.

Ms. Kinney: If there is railway there, it should be able to be moved on the railway.

Senator Black: But you don't know whether that's possible today?

Ms. Kinney: No, I don't.

Senator Black: Whereas a pipeline from Fort McMurray to the East or West Coast, we know it would get there. You would agree with that?

Ms. Kinney: Pipelines go where they are going.

Senator Black: Absolutely. I am a little surprised that your department doesn't have a view on whether or not pipelines are a more efficient and safe way to transport crude oil rather than rail, because there is a great deal of data on that point. We have heard a great deal of data here. I would just observe that I'm surprised you don't have a view on that issue, but you don't.

Ms. Kinney: As I said, our role is to look at the transportation on the modes that we are responsible for: marine, aviation and rail, in this particular case. It is important to us that every carload be moved safely. That is really not an issue that particularly is addressed to Transport normally.

Senator Black: Very well. I can appreciate that.

As you know, we are hearing a lot of conversation in the public, and certainly through the media, about driverless cars. I am interested to know your department's thinking around the role that innovation can and should play in the transport of dangerous goods by rail.

Ms. Kinney: I think it would be generally held to go largely, without saying, that innovation is key. Technology and other innovations have made tremendous steps forward in the safety of movement of people and goods over the next number of decades, and there have been very significant improvements in that area.

Some of the improvements in safety have come from work we have done through regulations and other things, but some of those regulations require innovation and new technology. Certainly that is a key element that we need to go over in the future to continually improve the safety record.

Senator Black: Tell us specifically what your department is doing in respect of innovation. Let's take the excellent questions my colleague asked on fatigue.

If we had driverless trains, there would be no fatigue because there would be no drivers. One could argue that they could be safer. Tell us what you're doing specifically around innovation.

Ms. Kinney: There are various areas we're working on now. We have a small organization that focuses on research and development and works with the rail industry and others to look at future investigation of types of braking, wayside detectors and other types of new innovation in rail track management and rail operation, track assessment types of new ultrasound and radars, et cetera. That is one area of work going on with a number of projects under the research and development group.

There's research going on substantially both within the transportation of dangerous goods group that is looking at the properties of crude oils and volatility, as well as looking at some areas in terms of testing and ensuring that we have the right methods for testing and classification. There are bigger and broader studies we are working on with the United States on those areas. We work as well with universities and others doing more research.

Senator Black: That's great to hear. We've heard a fair bit of conversation here and in the public around the concept of a northern corridor. The concept is for an infrastructure corridor to be established likely 300 to 400 kilometres or miles north of the U.S. border. We have a corridor now that is about 150 miles from the U.S. border. Canada would establish a new corridor, where there would be a rail link from coast to coast. Do you have any view on that?

Ms. Kinney: It would be premature to express any views on that. It's something with a lot of study yet to do be done.

Senator Black: We have heard suggestions that a better way to regulate rail transport in Canada, rather than being so prescriptive — and you know what I mean by that — would be to change the tack altogether. An expectation that the following result will be achieved, and railways you figure out how you're going to get that done. What's your view on that?

Ms. Kinney: That's an important facet of how we need to look at the regulations and the appropriate steps to take. Transport Canada does use prescriptive or detailed requirements, such that you must do X or have fences this high; and in some areas we have a broader approach.

We also have management-based regulations where we set out a framework and you have to follow the framework. That's the technical name for Railway Safety Management System Regulations in place now. They say how to manage your safety, do risk assessments and do something about it. We do not say what to do but that you have to have a system in place to properly manage. Also, there are performance-based regulations where we talk about the outcome. We believe there are benefits to performance-based regulations. Where appropriate, that's an approach we take.

Senator Black: What do you think the preferable route would be?

Ms. Kinney: My view as a regulator, and through the work we've done across various modes, is that you have different kinds of regulations that are well-suited for different kinds of objectives. In some cases if, through experience of incidents, accident reporting and investigations, you know that this type of equipment is the essential piece to promoting safety, you can do a prescriptive regulation and say, "This is what you must do."

However, if there are a number ways to achieve that outcome, four or five different ways, and you want to leave flexibility to be the most effective and efficient for an operator, then you can use performance-based regulations. It goes to the kind of objective you're trying to achieve.

Senator Black: Is there a trend?

Ms. Kinney: There has been a trend to move toward more performance-based regulations and certainly the management-based regulations, which we call "safety management systems." Those are added to the base of prescriptive regulation. I wouldn't want to suggest that we would not need prescriptive regulations. It's typically a layering of types of regulations that get at different kinds of problems.

Senator Unger: I would like to go back to an earlier discussion with regard to first responders and whether they are being trained. I believe they are being trained, because a few months ago in Edmonton on talk radio there was a discussion about first responders being involved with new regulations. I listened because I was interested, and it sounded to me as if that process had started.

You also mentioned that an advisory council was established but that they couldn't agree. On what could they not agree?

Ms. Kinney: I'll just point out that, yes, a lot of work is being done in association with first responders and municipalities. The rail and shipping companies also do a lot of training and provide a lot of opportunity on that. The work of this task force that we set up has allowed the first responders to have a direct voice in the development of some of the regulations, some of the emergency assistance response program and how well that works, and what competencies are required. We had an Exercise Vulcan that brought together a large number of first responders, et cetera. That work is well under way and is incorporating the needs and views of first responders.

In terms of the advisory council, I can ask Ms. Diogo to respond.

Ms. Diogo: There is the Advisory Council on Railway Safety. The council established a working group on fatigue. That working group was to study the issue of fatigue and bring back recommendations on how we can address this issue in the industry going forward.

The group did some preliminary work but came to a stalemate because they could not come up with recommendations for considerations on how to address that fatigue.

Senator Unger: Do you know what that stalemate was about?

Ms. Diogo: There were a number of reasons they could not make further progress. As such, Transport Canada decided to dismantle the working group and bring forward its options on how to move forward.

Senator Unger: You then established the Emergency Response Task Force.

Ms. Diogo: These are two separate issues. The fatigue side is rail operations; and the emergency response side is transportation of dangerous goods and how to respond in the case of an emergency.

Senator Unger: Ms. Kinney, you talked about new flammability tests. However, do you agree that the crude carried in those rail cars in the Lac-Mégantic disaster were from the United States and known to be highly flammable and that cannot be said, for example, about Alberta crude?

Ms. Kinney: That's a very complicated question to answer.

I would say that at the time of the Lac-Mégantic incident, there was not the broad awareness of the level of volatility of crudes that come from the Bakken field, from this particular location. I would note that the Bakken fields and some of those types of crude do come from fields in Canada, so this is not limited to the U.S.

One question we had after Lac-Mégantic and some early work that was established was for the dangerous goods group to do a sampling survey and look at the components of the crude across Canadian sources, the volatility, how that worked and, in particular, how our testing methods capture the gases that may be present in those liquids. I won't go into the technicalities, but there is a significant question because the standards set were based on an international assumption that most crude oils are consistent and similar, like refined products.

In fact, however, crudes are highly variable, so our testing methods needed more work. That work has been done in conjunction with the U.S. We found that there are very different levels of volatility, levels of sulphur in some and some other areas of interest and concern in Canada. That research is now feeding into determining how we should approach that.

Senator Unger: But that train was carrying —

Ms. Kinney: North Dakota crude.

Senator Unger: Yes, thank you.

With regard to this study that has just been completed, is that information available?

Ms. Kinney: I believe the initial results of the sampling, which was a small number of samples, is available on our website. We could probably provide that link and, if not, we can provide the committee with a summary of that information.

Senator Unger: I would appreciate that.

Would you say there was a lack of communication with regard to first responders? Would that be one of the issues in the extensiveness of the Lac-Mégantic disaster? Was there a lack of coordination? Do you know that? Have you studied it?

Ms. Kinney: I would not necessarily draw that conclusion. I think the overall conclusion, based on the information that we found by bringing together all the parties in this, was that there was a significant amount of training being provided by both shippers of the oil products, for example, and the railways as well. There was a good amount of training being provided, and each municipality did their own training.

One issue that did come into play, looking at Lac-Mégantic and the incident at Plaster Rock, where you had, if I recall correctly, a volunteer fire department, was the level of the standard of training and how it was being provided.

We went at that from several different areas. One was to require emergency response assistant programs to say that the shippers of the goods need to bring in the specialists to help the first responders with very specialized areas that it wouldn't make sense to train them on. Then we established, through the emergency task force, the standards and competencies needed by first responders. That work has been forwarded to the North American body responsible for setting those standards. We hope to see those come out well.

The question of how support could be best given to these smaller organizations on a regional basis is one that has been addressed fairly significantly in the last two to three years, and certainly with the work of this task force.

Senator Unger: Thank you very much for being here, and thank you for your answers.

[Translation]

Senator Boisvenu: Welcome to our witnesses. I apologize for being late, Mr. Chair; I was on another committee this morning.

Mr. Turcotte, since your name is not on the list provided, please tell us what your role is at the department.

Benoit Turcotte, Director, Regulatory Affairs Branch, Transport Canada: I am the Director of Regulatory Affairs, Transport of Dangerous Goods Directorate.

Senator Boisvenu: Okay. Since I am a senator from Quebec, you can appreciate that the Lac-Mégantic file is very important to me, especially since I live in that area. I am very concerned about the tragedy that struck this region.

My question is for Ms. Kinney or Ms. Diogo. The Transportation Safety Board of Canada made five recommendations following the Lac-Mégantic disaster. We learned recently, from a media interview, that one of the recommendations had been implemented, that three were in the process of being implemented, and that one had not yet been examined.

Can you give us an update on where we are at with these five recommendations and tell us what the implementation schedule is for them?

[English]

Ms. Kinney: According to Transport Canada, we have responded immediately after those recommendations. The minister came out with a formal response and made specific commitments to those individual recommendations. All of those responses and the implementation of new items have been done and put into place. We have implemented the emergency response action plans for crude products, for example. That one is noted as complete by the Transportation Safety Board.

In terms of the other four recommendations, they have all been fully acted on and fully implemented, from putting into place a new regime, for example, for train securement, through an emergency directive very soon after the recommendation was made. It has been improved over time with new issues of the emergency directive as we learned more and as we understood better how to fine-tune a complex technical regulation that comes from high-level recommendation, which is completely appropriate.

In terms of evaluations of the Transportation Safety Board, those were put forward on their March 2016 evaluation. It is for them to speak to that, but in general what they are raising is that there are areas where the effectiveness of putting in place an entire new regime needs to be demonstrated. As you look at the evidence over the next year or two, for example, with train securement and as we see the examples that go on in terms of the industry, we will be able to see whether that's fully effective. Until they see that, there is not an ability, in their view, to say it is fully satisfactory or finished.

In some other areas, like the tank car standard recommendation, a new tank car standard was put into place and an aggressive schedule was put into place to phase out those tank cars. The point that the Transportation Safety Board refers to in its assessment is that itis still a lengthy period of time where the risk continues and that they think it's important — and we agree — that intermediate interim mitigation measures continue: things like the key routes, track assessments, train assessments and risk assessments that are being done. It's not a matter of whether Transport will take steps on those recommendations. We fully agreed and fully implemented them. Their effectiveness and whether all the risk has been completely reduced is a question that, in some cases, needs a little more time to deal with.

As we looked at the implementation of each of those, from the time the recommendations were made through these less-formal processes of emergency directives and protective directions, we worked closely with our inspectors to see what our inspection information tells us, with the Transportation Safety Board, to see what their more recent information from new incidents tells them. We have adapted all of those requirements and will continue to do that as the Transportation Safety Board or our information amends some of the information and we can do more, train securement being a good example.

One of the areas we found through our inspections is that some of the very small-level issues that we identified with the new train securement rules relate to the training and understanding of the railway employees. Part of what we're looking at is how they are trained and whether they have enough training. The regime may be appropriate and fully effective if the people completely understand it, so we're looking at that element to be 100 per cent sure that's addressed.

These are issues that will continue to be addressed over time.

[Translation]

Senator Boisvenu: With respect to the use of double-walled cars, which are safer for transporting dangerous goods in Canada, the risk level is very random and varies with railway geography. The rail cars that cross the Eastern Townships, in particular, between Maine and Montreal, for instance, go through mountainous terrain and have to climb very steep hills. That is what happened with the accident in Lac-Mégantic. The car broke loose down the hill between Nantes and Lac-Mégantic, where the slope is very steep. The rail line through the heart of Lac-Mégantic also has a very dangerous curve.

For the specific routes that have a very high risk of derailment or loss of control, are you thinking of planning safer routes, flat ones, such as the ones in Sherbooke, with very straight lines and a lower risk of derailment? For the short term, are you looking at using safer rail cars for high-risk routes than for lower-risk routes?

[English]

Ms. Kinney: That's a good question and an important part of how the elements of what we have done both in terms of dangerous goods and railway safety come together in a complete system.

There is a part about what the tank cars themselves need to be built to withstand and then there's the aspect of the rail operation to prevent a derailment in the first place. One of the elements put in place — and more work will be done as we monitor and see the effectiveness, which goes to your point — is the rule on key trains and key routes.

What was put in place on an initial basis and has been improved and expanded on, and which we will continue to monitor, is a requirement that each railway company that is moving high volumes of crude oil, for example, must do a risk assessment of the route. I believe there are 28 factors that they need to look at — exactly the points that you're raising: What is the curve? What are the slopes? What are the types of products? What are the local impacts? Important to the municipalities, as well, is the question of whether a curve of a railway track over a bridge is going through a wetland or a water supply source for a community.

These key route and key train risk assessments are an important part of this, and we will monitor that to ensure sufficient action is being taken. If that needs a different set of rules for particular high-risk areas, that's something we would be looking at.

[Translation]

Senator Boisvenu: A number of Lac-Mégantic citizens have called for a criminal investigation further to the release of the report on the accident in 2013. Is the Transportation Safety Board of Canada considering a criminal investigation?

[English]

Ms. Kinney: Normally at the beginning of an incident or accident investigation, the Transportation Safety Board makes those kinds of determinations of what kind of investigation they can do within their mandate. They would be the best placed to speak to that.

Transport Canada did immediately begin an investigation on regulatory compliance, from both the side of the Railway Safety Act and the Transportation of Dangerous Goods Regulations. Charges have been laid under the Railway Safety Act in that particular case, and we are considering that issue under the transportation of dangerous goods. Transport Canada has taken action to carry out an investigation and lay charges under the acts within our authority.

[Translation]

Senator Boisvenu: No criminal investigation is being considered.

[English]

Ms. Kinney: The Sûreté du Québec, as you know, has laid criminal charges, and I believe those are still working their way through the courts.

The Deputy Chair: I would like to thank the officials from Transport Canada for being with us this morning.

Our next panel is from Natural Resources Canada. I would like to introduce Terence Hubbard, Director General of the Petroleum Resources Branch; Lisanne Bazinet, Deputy Director of the Pipelines Gas and LNG Division in the Petroleum Resources Branch; and Timothy Gardiner, Director General of the Strategic Projects Secretariat in the Major Projects Management Office.

I invite the officials to begin their presentations. We will have questions from senators afterward.

Terence Hubbard, Director General, Petroleum Resources Branch, Natural Resources Canada: Thank you for the opportunity to appear before the committee. We have a short presentation that we will walk through quickly. I think copies have been distributed. The presentation is simply intended to outline some of the context we're dealing with around the development of energy infrastructure these days.

Canada is among the world's largest crude oil producers, with 3.9 million barrels per day of production in 2014. Canada has an extensive crude oil pipeline network, which is highly integrated with the United States. All told, there are almost 1 million kilometres of pipeline in Canada, with 73,000 kilometres regulated at the federal level. Federal responsibilities are largely the interprovincial and international pipelines, the large transnational pipelines.

Canada's pipeline network is generally operating at full capacity, with about 200,000 barrels per day of oil also transported by rail.

There has been a fundamental shift in recent years in global oil markets. The U.S. has been our primary export market; in 2014, 97 per cent of our crude oil exports and 100 per cent of gas exports went to the United States. While the U.S. will remain an important market, it has become increasingly self-sufficient in both oil and gas production as a result of the shale boom. To maintain our current production, let alone grow the oil and gas industry in Canada, Canada will need to diversify its markets, particularly to access growing markets in the Asia-Pacific region.

It is also worth noting that, even under the most optimistic climate change scenarios, our colleagues at the International Energy Agency expect global oil demand to continue to increase through to 2040. Canada has the potential to be a reliable, stable and sustainable supplier of energy in the global markets as we move forward over this time frame.

Turning to slide 5, recent pipeline capacity constraints have resulted in an oversupply of crude oil in North American markets. This has resulted in significant price discounts for Canadian crude oil over the past several years. Despite the recent decline in oil prices, Canada's oil production is expected to increase over the next five years, even if no new pipelines are built.

Without new pipeline infrastructure, reliance on rail will continue to grow. To keep up with production, approximately 1 million barrels a day of new pipeline capacity will be required by 2020, and 2 million barrels per day by 2030. In the current low-price oil environment, the difference between sending oil by rail or pipeline significantly impacts project economics. We're talking about the cost differential of about $5 dollars per barrel more to the West Coast, $6 per barrel to the East Coast and as much as $10 per barrel more to the Gulf of Mexico. We're talking about $30 per barrel for oil is a significant reduction for producers.

Turning to slide 6, building new pipeline capacity would reduce transportation costs and assist companies in advancing production projects under development. More broadly, the Conference Board of Canada has released some recent studies that estimate the broader economic benefits of proposed oil export projects, both the benefits of construction and operation of these projects.

The development of a pipeline to tidewater would improve access to markets for our Canadian oil producers and strengthen Canada's long-term energy security.

Turning to slide 7, private-sector proponents are advancing a number of proposals to develop new pipeline export capacity out of Western Canada. It includes a number of projects that the government will need to make regulatory decisions on in the coming year or two. This includes Kinder Morgan's Trans Mountain pipeline expansion, Enbridge's Line 3 Replacement Program, as well as the Energy East project that would run from Alberta to Eastern Canada, which the NEB is expected to start its regulatory review on in the coming weeks.

Turning to slide 8, pipeline development is at the nexus of public debate over the development of our natural resources and concerns around protection of the environment. The reality is that, as Minister Carr has noted on a number of occasions, it is not an either/or proposition: we can do both.

Turning to slide 9, a clean environment and a strong economy can go hand in hand. The Prime Minister's mandate letters to the Minister of Environment and the Minister of Natural Resources signal the government's commitment to developing our resources in a sustainable manner, respecting the rights of Indigenous peoples and supporting the development of a more resilient natural resources sector. Without public confidence in the regulatory environmental processes, proposed projects simply will not move forward.

That is why the government has announced its intent to modernize the National Energy Board and review federal environmental assessment processes.

On slide 10, while this work is underway the government has announced a transition strategy on how it will make decisions on projects currently under review. The strategy will enhance our engagement of Indigenous peoples, provide opportunities for Canadians to express their views and ensure that decisions are based on science and the facts.

There will also be an assessment of pipeline projects' upstream greenhouse gas emissions, which will be carried out by our colleagues at Environment Canada. These principles underscore the commitment to work in partnership with Indigenous peoples and ensure that the impacts on their rights and interests are understood and reflected in decision making.

Turning to slide 11, we are moving forward with changes now to improve the performance of our pipeline safety regime. The Pipeline Safety Act, which will come into force on June 19, will ensure that Canada maintains a high standard for pipelines across the country. The health and safety of Canadians and the protection of the environment are at the heart of this legislation. The act will further strengthen Canada's pipeline system in the areas of spill prevention, preparedness and response and liability and compensation. More specifically, it will enshrine the "polluter pays" principle in statute, holding companies absolutely liable, regardless of fault, up to $1 billion to respond in the event there is an incident.

On slide 12, in conclusion NRCan recognizes that pipeline development will support the development of a more sustainable, resilient oil and gas industry. The development of these resources would create jobs and support economic growth and can proceed in an environmentally sustainable manner. The government's commitment to modernize the National Energy Board and review environmental assessment processes will support and address some of the concerns that have been identified with respect to infrastructure development and ensure that any projects that proceed are safe for the environment and for the public.

The Chair: Thank you for your presentation. We will now move to questions.

Senator Mercer: Thank you very much for being here. We appreciate your time.

I will refer to a document you may or may not be aware of, but I recommend it to you. It is a document produced by the Canadian Chamber of Commerce called Canada's Top 10 Barriers to Competitiveness in 2016. Their number 4 barrier is "Canadian resources cannot get to world markets." I won't read the whole thing, but I will quote this. The government "should seek partnerships to establish a common fact base surrounding the options for market diversification so project risks can be properly and transparently evaluated."

First, are you familiar with the document and, second, how do you feel about what they have said in that one statement? They said a lot more.

Mr. Hubbard: I am familiar with the document. It has been some time since I have gone through the details of it, but I understand. It's not just the chamber, but a number of institutions have identified access to tidewater for our natural resources as being a significant opportunity to strengthen the competitiveness and the economy of Canada going forward.

Senator Mercer: They go on to say under their subheading, "The way forward," that we should: "Invest and develop key energy infrastructure, including the exploration of all responsible options to enable tidewater access for Canadian energy resources."

I think we are part of that process. They didn't suggest it, but we're part of the process in having this discussion.

Does the department have an opinion about whether pipelines, east or west, are the safest, fastest, most economical way of getting our petroleum to market?

Mr. Hubbard: Pipelines are recognized as one of the safest and most economically reliable means of moving large volumes of petroleum products or crude oil over long distances. That said, other modes of transportation also play an important role in our overall distribution network, whether it be rail or truck infrastructure as well. Pipelines are an important component of our energy industry.

Senator Mercer: Interesting. Transport officials who were here earlier didn't have an opinion on pipelines, but you have an opinion on transportation by rail, truck, et cetera. I find that interesting.

You mentioned a million barrels a day. I am sorry, I might have missed what you said about that. Could you refresh my memory on that?

Mr. Hubbard: Canada produced about 3.9 million barrels per day of oil in 2014. The National Energy Board's latest forecast predicts we will grow our resources by approximately a million barrels per day by 2020, 2021. Given that our crude oil pipeline network is already at full capacity and that we are already utilizing rail to move our oil, we will need to expand our pipeline network during that time frame or will increase our reliance on rail.

Senator Mercer: Have you done an economic analysis of the impact of the construction of pipelines? Obviously, that means that you are taking about pipelines east and west. In going west there are several options. Have you looked at the economic impact that would have? The other economic impact is the change in the price of crude oil if we go tidewater versus north-south. If we go south with our product, we are selling it at a discount to the Americans. If we go to the rest of the world, we are selling it at world prices.

Mr. Hubbard: On the first question, there have been a number of studies done by private-sector firms on the economic impact of pipeline infrastructure. It's essentially a private-sector decision to put forward these proposals, and the economics of whether or not they work are up to those private-sector investors. They have put forward a number of different proposals.

If you look at the magnitude of some of these investment decisions, as much as $15 billion for some of these infrastructure projects, it would have a significant impact on the economic development of the country going forward.

In terms of differential between Canadian crude oil production and global crude oil production, that differential has largely disappeared over the last year due to a number of factors, but there is a risk of that differential widening again, as our production continues to increase in North America, if we don't find ways to expand our infrastructure capacity to get oil to tidewater.

There have been a number of studies over the years looking at what those impacts of that differential between Canadian prices and global prices could be, and it's significant depending on the analysis.

Senator Mercer: The other analysis that needs to happen is if Canada were able to get to tidewater, both east and west, with our crude oil and with the volume that we can produce — and this may be beyond your scope; I don't know — it seems to me that historically, when there are troubles in the Middle East, the price of oil goes up. That's not just in downtown Halifax, that's around the world. Our being able to get to tidewater east and west could help contribute to price stability around the world, because of our ability to produce the volumes that we could produce if we had the proper pipeline facilities.

As I said, it may be beyond your scope, but I'm disappointed that you referred to "private" studies as opposed to departmental studies and departmental analysis of private studies.

Mr. Hubbard: The government has done some studies as well in terms of the economic impacts of infrastructure proposals and of the decline or the differential between Canadian and global prices. Our colleagues at the Department of Finance often include this analysis as part of their fiscal updates, given the importance that the oil and gas sector plays.

Senator Mercer: Would you have involved Global Affairs Canada in that analysis?

Mr. Hubbard: They would be aware of that analysis as well.

Senator Mercer: "Aware" is not involved. "Aware" is reading it in the newspaper. Would they have been involved in an analysis or input into what the analysis should look at?

Mr. Hubbard: I can't say specifically who the Department of Finance has consulted in carrying out that analysis. I know we have regular conversations.

Senator Mercer: What about your department, though?

Mr. Hubbard: Our department has regular conversations with the Department of Finance and shares information.

Senator Mercer: What about Global Affairs?

Mr. Hubbard: With Global Affairs as well. We have an interdepartmental working group that has been established at the assistant deputy minister level that meets on a bi-weekly basis to share information on oil market developments, given the important impact they have on both the industry and the broader economy as well.

Senator Mercer: I would suggest that those meetings, hopefully, will take an important turn soon.

Senator Unger: In the crude oil pipeline network, where do the refineries in Atlantic Canada get their oil from?

Mr. Hubbard: There are two refineries in Atlantic Canada: Irving in Saint John and the Come By Chance refinery in Newfoundland. Both of those refineries are primarily reliant on foreign crude oil, but the refinery in Saint John also has railway infrastructure that has been developed and can access North American crude oil as well.

Senator Unger: My question was: Where does that oil come from for the Irving refinery, for example?

Mr. Hubbard: I don't have the complete list of countries, but it comes from a large number of global crude oil producers. Given their access to tidewater, they have the opportunity to purchase oil from any producer.

Senator Unger: Like Saudi Arabia?

Mr. Hubbard: It could be Saudi Arabia, it could be Venezuela, it could be the United Kingdom or Norway as well.

Senator Unger: And the United States? American oil, probably the same oil that we sell to the U.S. at a discount, is transported and is effectively being processed and comes on the water to these refineries for processing; is that correct?

Mr. Hubbard: I would have to get back to you with the precise numbers, but we have seen an increase over the last several years of exports of U.S. crude oil into Eastern Canadian refineries, yes.

Senator Unger: Okay. You talked about the National Energy Board being modernized. How long do you think that will take?

Mr. Hubbard: It will take time to consult and engage Canadians on changes and reform efforts going forward, but we are moving forward as a department with changes now. Minister Carr has announced the interim strategy, which will deal with how we review projects that are currently under way.

At the same time, Minister Carr has announced his intent to launch an appointment process as well for recruiting new members to the NEB. As I indicated in my presentation as well, the Pipeline Safety Act will be coming into force in the middle of June, which will strengthen our pipeline safety system as well.

While we will do a broader review of the National Energy Board, we are moving forward with changes now.

Senator Unger: Might it take months or years? Can you speculate?

Mr. Hubbard: It would definitely be on the longer side of months to years, given that, as you look to engage Canadians on these changes and get into potential legislative reforms, it takes time to move through that parliamentary process as well.

Senator Unger: I have a question about this "polluter pays" principle being enshrined in law.

Was it such a problem previously that it now needs to be enshrined in law? For the last several years I've been hearing that it's almost an accepted norm. Was it such a problem that it needs to be enshrined in law?

Mr. Hubbard: My colleague might have more to add on this from his experience in individual reviews, but we've never seen a specific incident where a pipeline company has walked away from its liabilities in the event of an incident. However, we have heard from Canadians over the years, in the context of some of these reviews, that the concern is there that if a company were to default or walk away from this incident that the public or taxpayers could be left to pay those costs of cleanup. This specific change is to put in place a system to avoid the potential for that to happen.

Senator Unger: Do the shippers not have to have a billion dollars in insurance in the event of a casualty, or is it more now?

Mr. Hubbard: That is one of the measures that will come into force with this legislation. They currently don't through legislation. The National Energy Board has imposed some conditions on individual projects as part of their approvals, but broadly across the industry it will be through this new legislation that we will have new financial requirements imposed on those companies.

Senator Unger: Do they have it in principle now?

Mr. Hubbard: In principle now companies have unlimited liability if they are proven at fault or negligent. The changes being introduced will put in place that billion-dollar liability regardless of fault so that that money is available right away to pay costs of cleanup.

Senator Unger: There was a comment that Canadians need to be consulted. We had a witness come a couple of weeks ago who was of the opinion that every single Canadian should have input into this if they so choose. To what extent will Canadians be consulted?

Mr. Hubbard: On potential reforms going forward, those processes are still being defined but the government has made some broad commitments about being more inclusive in its consultations and engagement going forward. Tim can probably speak to some of the examples of how this is being implemented for individual projects now.

Timothy Gardiner, Director General, Strategic Projects Secretariat, Major Projects Management Office, Natural Resources Canada: Is there an interest in getting into specific projects?

On the Trans Mountain expansion project, for instance, as part of the interim principles that were announced in January the government took action in May and announced a ministerial panel. Three eminent Canadians will consult and engage communities along the pipeline route and will also solicit and interpret feedback from the public through a website that we're setting up on the Natural Resources Canada website. They will report to the Minister of Natural Resources in November.

That is part of the government's commitment to consult more broadly with Canadians.

Senator Unger: Thank you for that.

As you can see, I'm from Alberta; Edmonton specifically. I haven't heard this figure recently, but two or three months ago it was that $30 billion in future investments in Alberta, specifically in the oil sands, have been cancelled. That certainly is giving Canada, I think, a bad reputation. We are not reliable, and now we have more red tape, more delays and more restudies.

In your opinion, Mr. Hubbard, which of the proposed pipelines is most likely to succeed and when?

Mr. Hubbard: What I would say to this specific question is that we are not in the position of picking winners in terms of individual infrastructure projects. We have a regulatory process and system in place. If these projects can meet those requirements, then the government will take a final decision on them going forward.

Senator Unger: Of course.

Mr. Hubbard: I would say that each of the proposals has its strengths and weaknesses. Those are being discussed and reviewed as part of the broader project reviews under way on each of those.

Senator Unger: If more regulations and more onerous taxes upstream continue to be piled on, it is likely that some of these companies will pull out and go somewhere else.

Mr. Hubbard: Canada operates in a competitive investment environment. Industry makes investment decisions based on where they can earn the best return. A lot of that relates to time and the certainty that they can make these investment plans within a certain time frame, so quite cognizant and moving forward with reforms that certainty for industry is an important principle. At the same time, a number of other broader objectives are out there that these regulatory systems are put in place for as well.

Senator Black: I am also a senator from Alberta and, like Senator Unger, I spend time every day on this file.

I want to start by thanking each and every one of you for the work you do on behalf of Canadians. In my view, you are working on the most important file in terms of Canadian prosperity. By virtue of the document that you tabled today and your comments, you clearly understand the file. I am very appreciative that you are doing what you can to advance this important matter.

Before I get to the substance of my questions, which relate to LNG so you can start to think a bit about that, I want to confirm for the record that you have made two points that align with my point of view. First, you have indicated clearly that Canada will need to diversify its energy markets. We all agree, but it is very important that we hear that from the Government of Canada.

Second, you have confirmed what I think we all understand: that the demand for oil globally will continue to increase until at least 2040. I want to confirm that you have made those two statements clearly.

Mr. Hubbard: That is correct.

Senator Black: That is very helpful.

Your department is doing what it can to move this forward. That is my view, which I take publicly all the time. I want to know from you what you think this committee should do to ensure that we get the result we need. There is no secret that we are looking to ensure that we can get oil from Alberta to the West and East Coasts. What should this committee do to assist you in advancing this file?

Mr. Hubbard: That is a very good question. You are already doing it in the support of facilitating a fact-based dialogue around the development and transport of our resources. It's important that Canadians engage in this discussion and ground their understanding and debate around these issues in the facts. Your study and its results will help to contribute to that dialogue going forward.

Senator Black: If you have any other ideas let us know, because we want to be constructive on this dialogue.

We haven't had an opportunity to talk much about LNG. My view is that because it tends to start on the far West Coast of our nation and so much of the oxygen has been taken by the pipeline debate, I think Canadians, and one hopes not the Government of Canada, are overlooking the stunning potential opportunities that LNG offers to Canada in terms of an industry, as we all know.

I want to ensure that the viewers at home know that we have a number of proposals now, and two very important ones: PETRONAS and LNG Canada. Combined, they are $80 billion in private money. There is no government money, but $80 billion in private money. This is something that I strongly believe would be a good thing for Canada.

I want to know what the Government of Canada is doing to ensure that this happens. I don't know where to look.

Mr. Hubbard: First, you are right in that a lot of the public debate is focused on the need to diversify our markets for Canada's oil production. It is equally important and relevant, and probably more so, to diversify our markets for our natural gas production. With the shale boom in the United States, projections are that they will become self-sufficient in their natural gas production as early as 2017. Over 60 per cent of Canada's natural gas production is currently destined for the U.S. market. If they no longer need our gas, it will not be about growing our industry but about maintaining the industry we have. LNG would play that important role in providing new markets for that tremendous resource we have in Canada.

In terms of what we are doing to support that industry going forward, LNG development is primarily regulated by provincial jurisdictions. Our colleagues at the Major Projects Management Office are working closely with federal colleagues around the environmental assessment and regulatory processes for those projects and the required federal permits to ensure that those processes are managed as expeditiously as possible.

Also, we are working closely with the Province of British Columbia and looking at some of the other issues and requirements that will help to facilitate this development activity going forward, such as the development of a regulatory regime for projects developed on port lands. The federal government has been actively engaged in those issues as well as the relationship and discussions with Canada's indigenous peoples that are impacted by those projects.

Senator Black: I would observe that is all tremendous work. I know you are doing that work and it is good work, but the clock is ticking quickly. PETRONAS, Shell and the partners in Shell have options globally, not only in respect of LNG opportunities but also other places to put their money.

I am interested in your view on the following: Should the Government of Canada not send a very strong signal from the top that these projects matter to Canada and that Canada will do what is required, appropriately, to ensure that these projects come to fruition? It will not be good enough to tell leadership that we're working with the Government of British Columbia, having further consultations with indigenous peoples and working on regulations. This has been going on for close to a decade. These companies need assurance that these projects matter to Canada. I want to know what you would recommend your masters do to ensure this.

Mr. Hubbard: I mentioned previously that there is a tremendous economic opportunity from LNG development going forward. You are right that it is a competitive global market, and companies will make decisions on where to invest their capital going forward.

We have tremendous opportunities and advantages in developing that industry in Canada. At the same time, we have a regulatory regime and requirements in place that companies must meet before they will get the "go" or "no-go" decision. We need to clear that before we can provide outright support for any individual project to ensure that they can meet and satisfy the requirements we have put in place in Canada.

Senator Black: Could you not take the position that Shell and PETRONAS, assuming that A,B, and C happen, you need to know that we are extraordinarily supportive of this initiative, as opposed to appearing to be in the back row of the bleachers in a very large stadium.

Mr. Hubbard: It's a tough place for a government to be.

There are arguments on both sides but, at the end of the day, when regulatory decisions need to be made, it's tough for a minister or cabinet to be cheerleaders on those projects when they need to make those tough decisions based on the facts before them.

Senator Black: The NEB has approved the PETRONAS project. Correct?

Mr. Hubbard: The National Energy Board approved an export licence for the PETRONAS project, yes.

Senator Black: PETRONAS would have the regulatory authority from the Government of British Columbia? All we're waiting on, as I understand, is CEAA.

Mr. Hubbard: We are waiting on a final federal environmental assessment decision on that project.

Senator Black: I understand that with regard to the Shell project, we're waiting on nothing except Shell and its partners. Is that correct?

Mr. Hubbard: There may be some outstanding permits associated with that development.

Senator Black: If I don't know it and you don't know it, we can assume they're not major, correct?

Mr. Hubbard: My understanding is that they're working towards a final investment decision at the end of the year and are on track to make that decision, but we'd need to talk with our colleagues at Shell about that.

Senator Black: My suggestion to you is, if they move that forward, that participants need to know that the Government of Canada supports this initiative.

I think it could be argued, respectfully, that we are seen to be in the back row of the bleachers in a very large stadium. I don't want to be at a hearing a year from now asking the question, "What went wrong? What should we have done at this time?"

Senator Eggleton: I want to ask you about the situation with the United States. You say that currently about 97 per cent of the crude oil exports and 100 per cent of gas exports go to the United States, but you point out that the situation is changing partly, certainly, because of the shale boom.

Where do you expect the numbers to go in the next year from where they currently are, and will this shale boom last? There has been a lot of controversy over some of the environmental impacts of it, like earthquakes and such.

Look forward a bit in how you see this situation evolving.

Mr. Hubbard: A number of factors go into these things. I would certainly be happy to share some of the most recent production forecasts from our colleagues at the National Energy Board that could give you precise numbers around this.

As I mentioned, on the oil production side of things, based on projects the currently under construction, we anticipate that Canadian oil production will increase by around 800,000 barrels per day over the next five years, minimum. It could be more if prices increase and support further decisions.

On the gas side, it will be dependent on whether we develop an LNG industry here in Canada. Without the development of an LNG industry, our gas production will be, at best, flat if not declining going forward given the huge increase in production in the U.S.

Regarding the development of shale resources and whether it's here to stay or not, it's a huge technological innovation that has been pioneered by oil and gas companies here in North America. They're very innovative and they will continue to find ways to develop these resources, both more competitively but also reducing the environmental impacts around it going forward.

The U.S. has brought on line about 4 million barrels per day over the last four years from shale production. The recent decline in prices reduced their projections over the next year by about 1 million barrels per day, but as we see prices start to rise again we expect that production will start being developed again.

Senator Eggleton: Any other additional information you can provide to the clerk would be great.

We've had a number of people come here and talk about the concept of social licence. Are you engaged in the conversation about that? How do you apply it to the development of your programs and policies?

Mr. Hubbard: We're very familiar with the term. I'm not sure if that's the precise term we use internally. Often, in our internal discussions, we refer to it as building public confidence in the development of our resources.

There's a significant amount of work underway to address these issues. I think it's really at the heart of one of Minister Carr's mandate commitments around the development of a Canadian Energy Strategy and working with the provinces in this regard, and building public confidence will be a big part of that objective going forward.

Senator Eggleton: You might have even said that a couple of years ago before social licence became part of the jargon. What's different?

Mr. Hubbard: I think expectations are growing amongst Canadians to be involved in these decision-making processes going forward.

Energy development used to be a quiet issue not that long ago. I remember the first expansion of the Trans Mountain project back in 2007 and 2008, when I think there were fewer than 10 intervenors who signed up to participate in that project. There is a very different scenario currently under way.

It goes to the heart of energy and environmental issues being high on the public agenda here in Canada, needing to engage Canadians and ensuring that we're making decisions based on science and the facts.

The Deputy Chair: I have a few questions while we're here.

My first one is with regard to the proposed pipelines and their effect on GDP. You mentioned the Conference Board of Canada estimates that the Trans Mountain expansion and Energy East projects will generate $77.6 billion in additional GDP for the Canadian economy. If you take line 3, the Northern Gateway and Keystone XL, what does that do to those numbers? Would it be unrealistic to suppose it would double them?

Mr. Hubbard: I would hate to hazard a guess, but by adding those projects up you'd be talking at least another $25 billion of capital investment which would have downstream impacts.

The Deputy Chair: So we're probably looking at close to double that number if these projects are approved. That's a lot of revenue and economic development for the country. I want to put that on the record.

Something else I wanted to mention is that the refineries on the East Coast get their oil from various sources. For some, like the refinery in New Brunswick and some in Quebec, it comes by rail, but most of the product arrives in ships' bottoms.

Do you have an exact amount of how many barrels of oil a day go to all the refineries on the East Coast of Canada, including Quebec and Atlantic Canada?

Mr. Hubbard: I would have to get back to you on that, but we have those numbers.

The Deputy Chair: I would think it's in excess of something like half a million today.

Mr. Hubbard: It would be in excess of that if you're adding the Quebec and Atlantic refineries.

The Deputy Chair: When it comes to the safe transportation of petroleum, it's not hard to make the point that petroleum going through a pipeline is substantially safer than petroleum arriving in ships' bottoms.

Mr. Hubbard: Pipelines do have a strong safety record in Canada. I think over the last number of years we've proven that we can deliver and transport resources safely through pipelines but I think we can, as well, through other methods of transport if we have the appropriate requirements in place.

The Deputy Chair: As somebody who lives on the coastline, I don't think we hear enough from any government the argument of advisability and importance of using pipelines to move petroleum to our refineries as opposed to going through our waters. I think the people of Atlantic Canada would appreciate that. The Government of Canada should be cognizant of that reality, because I don't hear ships' bottoms discussed when it comes to the movement of petroleum.

Mr. Hubbard: It is one of the issues that is top of mind to Canadians during these project reviews. The safe transport of these resources, whether it's pipeline or marine, is top of mind.

The Deputy Chair: You mentioned the complex decision-making landscape. There is nothing new about concerns around risks and impacts of pipeline spills. That has been around for 75 years. That is always something to deal with.

You mentioned here that the provinces have established their own pipeline conditions extending beyond regulatory processes. We all understand that anybody can come to the table and express a concern, but neither the provinces nor municipalities have jurisdiction when it comes to pipelines. Decisions, when it comes to pipelines, are completely within the purview of the federal government; is that not correct?

Mr. Hubbard: The federal government primarily has jurisdiction over federally regulated pipelines, but it does not absolve those infrastructure projects from undergoing provincial authorizations that may apply to those projects as well.

The Deputy Chair: It's fair to say that they don't primarily have jurisdiction, they fully have jurisdiction. They have to consult, obviously, but the jurisdiction and the final decision making is with the federal government.

Mr. Hubbard: The final "go" or "no-go" decision would primarily rest with the federal government.

The Deputy Chair: I want to thank you for being here today. We very much appreciate your time.

This meeting is adjourned.

(The committee adjourned.)

OTTAWA, Tuesday, June 14, 2016

The Standing Senate Committee on Transport and Communications met this day at 9:30 a.m. to study 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 Michael L. MacDonald (Deputy Chair) in the chair.

[English]

The Deputy Chair: Honourable senators, this morning the committee is continuing 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.

Our meeting today will have two parts. For the first hour, we will hear from a researcher from the University of Ottawa. During the second hour, we will hear from the Assembly of First Nations.

Our first witness is Professor Monica Gattinger of the School of Political Studies at the University of Ottawa. She is also the Director of the Institute for Science, Society and Policy. Her area of expertise includes energy policy and governance.

In the past few days, we have had a few changes in our schedule, and I would like to thank Professor Gattinger for her flexibility. I now invite her to begin her presentation. Afterwards, honourable senators, we'll have questions.

Monica Gattinger, Associate Professor, School of Political Studies, University of Ottawa, as an individual: Thank you. As was mentioned, I'm the director of the Institute for Science, Society and Policy at the University of Ottawa. I also chair an initiative called Positive Energy at the university, which I'll speak to in a moment.

As director of the institute, one of our areas of expertise and interest is evidence-based decision making, and I would like to congratulate the Senate committee for undertaking this very important study and looking to the evidence around these key issues regarding Canada's energy future.

It's an honour to be here today. I thank you very much for the invitation. My presentation will be made in English.

[Translation]

If you have questions in French, I will be happy to reply in the language of your choice.

[English]

The title of the presentation, as you've seen, is "Public Confidence in Energy Development in Canada, "with the somewhat unusual subtitle of "Elephants, Horses and Sitting Ducks." I'll speak to that metaphor in a moment, but it is a metaphor we have found in our research is quite useful for thinking through some of the issues that pertain to public confidence in energy development.

The context for this presentation is the Positive Energy project, which I'll speak to in a moment, and then I'll dive straight into discussing public confidence, looking at some of the drivers underpinning public confidence and beginning to think through a diagnostique. Why are we seeing some of the challenges that we're seeing in terms of social opposition to energy development, and this is where we get into the metaphor of elephants, horses and sitting ducks. I'll end off with some ideas around a prescription for how to strengthen public confidence.

Positive Energy is an initiative at the University of Ottawa that uses the convening power of the university to bring together key energy players to strengthen public confidence, and those players are policy-makers, regulators, industry, environmental NGOs, indigenous groups and academia. But we do more than just convene. We do what I refer to as convening plus, which means we also take solution-oriented applied research to inform dialogue and action.

Today's presentation is drawing on a framing paper that I'm currently writing on public confidence, which will be released in the coming weeks. In essence, this paper aims to connect the dots when it comes to the challenge of garnering public confidence in energy development. It draws on our research to date and on other research that's being undertaken by a variety of other organizations in this sphere. A summary of this paper, a summary version of it, was used as a discussion paper at a stakeholder workshop last week in Winnipeg in the lead-up to the Energy and Mines Ministers' Conference this year in Winnipeg.

The overarching message, and my overarching message today, is that public confidence and the development of public confidence in energy development is a multifaceted challenge. There are many strands to this issue, many moving parts, and there is a really important and extensive need for collaboration and coordination across governments, policy and regulation.

So what drives public confidence? I'm on slide 5 now here. We can think of three key drivers that influence and impact public confidence. Certainly governments, policy approaches, regulatory approaches; but also industry, notably industry performance in the energy sector, as well as society. People look to what NGOs are saying about energy development. What are the responses of local communities, whether those are local communities or indigenous communities, to energy development? People also of course listen to their friends and think through their discussions with friends and neighbours as well when it comes to their level of public confidence in energy development.

If we turn to slide 6, this is really where we get into the diagnosis. Why are we seeing such high levels of social opposition to energy development in recent times? I think it's important to underscore that this is not exclusively a challenge for fossil fuels. While pipelines and oil and gas development are often the flashpoints for social opposition to energy, we can think about renewable projects as well. Large-scale hydro and wind farms are also in many instances recently facing social opposition.

In this presentation, we will look at a number of interlocking factors that are helping us to try to understand why we see social opposition and reduced levels of public confidence in energy development.

If we look at the outer circle, the first is social and value change. This is social and value change across all sectors, but certainly having an impact on energy development. Then when we get into the energy space, we can look at a number of policy gaps, and I'll talk about those in a moment. Public authorities also have responses to these policy gaps, whether that's policy-makers or energy regulators. Then there are also, of course, project proponent practices.

In this presentation, I'm just going to focus on the first three of those circles: social and value change, policy gaps and public authorities' responses.

This is where we get into the animal metaphor. I'm on slide 7 now, social and value change. We have come to think of these issues as horses that have left the barn. There have been fundamental changes in society and in social values in the post-war period, and I will point to five of them here that are having a significant impact upon public confidence in energy development.

Across Western industrialized democracies, we see a decline of trust in institutions, whether that's governments or industry, and a decline of deference to authority and expertise. One of the consequences of that is that we are also seeing a reduced trust in the evidence, whether that evidence is being prepared by governments or by expert scientific bodies and the like. There is a reduced level of trust in evidence. That's a challenge for energy development.

Second is a desire for greater public involvement in decision making. Citizens want to be involved in decisions that affect them, but one of the consequences of this is that we're increasingly seeing tensions between participatory democracy and representative democracy, participatory democracy meaning folks wanting to be involved in decisions that affect them and representative democracy meaning elected officials at the end of the day needing to make decisions.

Third, we're seeing a shift from communitarian to individual values. The line of sight for folks' interest is increasingly at the individual level rather than at the community, regional or national level, and one of the consequences of this is that appeals to the national interest are gaining less traction.

Fourth, there is a rise of what can be thought of as anti-corporate values, so less confidence in big business and a preference often for smaller scale, locally owned projects over larger scale "big business" projects.

Finally, there is a decline in risk tolerance, so lower levels of trust that governments or industry can properly identify risks related to energy development and can actually mitigate those risks.

The bottom line is that we aren't in 1950s Kansas any longer. The horse has left the barn on these issues. Social and value change is very much a new reality when it comes to energy decision making.

So what about the elephants? What are the elephants in this metaphor? The elephants are the policy gaps that have an impact on public confidence in energy development. In the paper, we're using the metaphor of many elephants in many rooms, and I'm going to point to three of those here.

The first is climate change. In the absence of, from many folks' perspectives, meaningful movement and adequate forums for grappling with climate change, we're beginning to see much more opposition to individual energy projects for broader policy reasons related to climate change than to the individual project per se.

The second is reconciliation and indigenous concerns when it comes to energy development. As we know, many of these issues go far beyond energy. It's about clean drinking water, appropriate housing, education and murdered and missing indigenous women. Many of these issues are finding themselves washing up on the steps of individual energy project proposals.

And finally, there is a lack of mechanisms to address the cumulative effects of successive energy projects or to plan regionally around projects. Many of these elephants, these policy gaps, are exacerbated by silo-ization both within and between governments, hence the call that I mentioned at the outset of the presentation for greater coordination between governments.

What is the impact of this? This is where the sitting ducks come in. In this context of social and value change and of policy gaps, energy decision-making processes have been at some level sitting ducks in that context. Many of these unresolved policy issues, as you will see on slide 9, are actually beginning to be played out in regulatory processes for individual energy project proposals. Some of the reactions that public authorities are having to this, whether it's trying to reduce the level of involvement of people in regulatory processes or whether it's trying to reduce timelines around regulatory processes, are actually serving to further undermine public confidence.

So what to do in this context? This is where the presentation will leave off.

There are four key things that I'd like to point to. The first is to accept the horses, accept that social and value change, those fundamental changes, mean that we are in a very different context for energy development than we were in, let's say, the 1950s. If you look at the pipeline sector, the last time we had this many major pipeline proposals, either on the books or before regulators, was in the 1950s. At that time, a royal commission was struck to try to sort through how to address these various issues, but again, fast forward to 2016 and a very different context in terms of social and value change. We can't turn back the clock on it. We have to think through how to you do energy in that context.

The second is to befriend the elephants. We have a number of policy gaps that governments would do well to address, notably, as I mentioned earlier, around climate, around reconciliation and around cumulative and regional effects of energy development.

The third is to get the sitting ducks back on their feet. How can we go about strengthening energy decision-making processes and strengthening confidence in energy decision making? That's not only in terms of the substance of decisions, so ensuring that decisions are made in ways that are seen to be fair, that are made based upon the best available evidence, but also focusing in on the process of energy decision making as well, ensuring that there is access for individuals to be involved in energy decision making and that information is available for those who are interested, whether it is individuals or groups or communities, and have the capacity to be engaged in energy decision making and also ensuring that those processes are seen to be representative.

The final thing I will end on is that I'm actually cautiously optimistic, and I think there's a very exciting opportunity for Canada to move from the bleeding edge to the leading edge of this issue. As a democracy, we are facing these challenges, as are many other western industrialized democracies with large resource bases. I think Canada has a real opportunity here to think through how you do energy decision making in the 21st century.

The Deputy Chair: Thank you, professor, for your presentation. We will now turn to the senators for questions.

Senator Doyle: Thank you for your presentation. It was very interesting.

In our committee hearings, we have had many references to social license as it applies to pipeline projects. Depending on who you talk to, that concept can mean anything from genuine consultation with interested and affected groups to groups who could very well have a de facto veto power over the project, and somewhere in the middle of all of that you have the national interests. In your view, are these two concepts closely related? Are they mutually exclusive of each other?

Ms. Gattinger: Thank you very much for the question.

There's been a good deal of debate within energy circles about the utility and value and appropriateness of the concept of social license. It's important to recognize that that concept emerged in the mining sector as a social license to operate, and it applied exclusively, and still does, to individual mining companies and their operations with respect to a particular project.

As some of the challenges around energy began to become more salient, folks were looking for a concept that can help us to think through these issues, and that concept of social license came also to be applied to the energy sector. My view on the way that it's been applied in the energy sector is that it hasn't necessarily been helpful in advancing a productive conversation around these challenges because it's been applied in such a way that rather than focusing exclusively on individual company's practices, it has actually been applied in a way that extends across the entire decision-making processes, including policy-makers and regulators.

Taken to the extreme, it's precisely as you mentioned, senator, and I thank you for the question. One could look at this concept as actually conferring a veto on any individual or group that opposes a particular energy project. I don't think that's a direction that we want to go in. I think what we need to think through, in a democratic context again, is how you balance participatory democracy, people being involved, with, at the end of the day, representative democracy and governments, whether it's regulators or politicians, needing to make decisions.

I think strengthening confidence in that process of energy decision-making is where we should be focusing our efforts. In our work, we have very consciously not used that concept of social license for precisely that reason. We've either spoken to public confidence, as I have today, or social acceptance and support for energy.

Senator Doyle: We've also heard that certain pipeline projects have achieved considerable buy-in by groups in whose territory a given pipeline might be slated to go. In your view or experience, what is a buy-in? Does it include a sharing of resource revenues and pipeline jobs and even consultation with groups long after the pipeline has been finished?

Ms. Gattinger: This very much again comes to what I mentioned earlier in the presentation, social and value change and individuals wanting to have a say in decisions that affect them, and increasingly that the line of sight for interest is at the local or community level.

For these large, linear infrastructure projects, it's very important to think through not only what our decision- making processes look like for those projects, ensuring that we've got good opportunities for individuals to be involved, ensuring we've got decision-making processes in which there is public confidence, but also to think through, and we're doing some early work around this, what fairness looks like in the 21st century.

If you look to the United States, some of the jurisdictions that are developing shale gas where hydraulic fracturing is being undertaken in fairly extensive ways have begun to think through how you can try to ensure that the distribution of benefits and costs around the development of that resource is done in such a way that it's perceived as fair not only at, let's say, the state level but also at the local level as well.

In some instances, that has actually meant a funnelling of severance taxes, roughly equivalent to royalties here in the Canadian context, to local communities in a very direct way, so that those communities can see the direct benefits of that development to their community. These are some of the balances that we need to try to strike in the current environment.

Senator Unger: Thank you very much, Ms. Gattinger, for your presentation. I'm from Alberta and we certainly know a lot of these issues.

Going back to your slide about what drives public confidence, you mentioned that industry has a role. I wonder what your opinion is of how industry — and I'm talking about the hydrocarbon industry — has performed.

Ms. Gattinger: It would be difficult to answer that question in a blanket way. As you would well know, there are many different companies, each with different cultures, histories and practices.

One of the challenges that we're facing currently — and I didn't mention it in the presentation, but I think it's important to recognize — is that, as a result of the "shale revolution," we're really seeing a transformation in North American energy markets. Changes in the ways, the directions, the destinations, where the producing areas and the consumption areas are — those have meant significant transformations in energy infrastructure, including in pipelines.

As I mentioned a moment ago, you would have to go back to the 1950s in the Canadian context to see this many major pipeline proposals either on the books or before regulators. Pipelines are getting attention in a way that they have not had attention for many years and, again, in a social context that has been fundamentally changed.

As I mentioned earlier, we've got increasing concerns about climate change, so many pipeline projects are actually being targeted over concerns about climate rather than concerns about the individual project per se. We have pipelines transiting through areas, or proposed to transit through areas, that perhaps have not had pipelines before — again, in a context of increasing recognition and rights for indigenous peoples and concerns over reconciliation.

I think industry is grappling with how to function in this very different context.

I would imagine you have had witnesses before you who would say that when it comes to the performance of the pipeline sector, 99.999 per cent of the time— add however many 9s the pipeline sector is able to calculate to — it is able to deliver its product safely and without incident. What we do see, though, is that when there is an incident, it receives a tremendous amount of attention.

Industry is grappling with these issues and trying to think through how to develop greater levels of confidence in our industry in a context, again, where social and value change is such that people will more often remember the pipeline spill than they will the 99.999 per cent of product that makes its way to its destination without incident.

Senator Unger: Just to comment about Alberta and the oil stands, there are more than 1,700 Aboriginal people in permanent jobs at the oil sands. Over the past 14 years, Aboriginal companies have earned over $8 billion in revenue through working relationships in the oil sands. In 2011 and 2012, oil sands companies contributed more than $20 million to Aboriginal communities in that area. I think that Alberta has done extremely well in working with Aboriginal people.

But I have a different question, and this one is about the NEB. In a summary of the white paper that you co- authored, one recommendation is to make changes to the NEB Act to be sure that the NEB is unconstrained in its ability to regulate appropriately and has public confidence in its mandate and decisions. I would certainly agree with that. Can you elaborate on how the NEB is currently constrained, and what specific changes you feel are necessary in order to free the NEB from that controversy?

Ms. Gattinger: I appreciate the information relayed about indigenous communities and the benefits that many indigenous communities are seeing from hydrocarbon development. We often hear the negative side and not necessarily the positive side, so I thank you for that..

With respect to the white paper, as you mentioned, I was a co-author on a white paper on "social licence" that was spearheaded by the University of Calgary's School of Public Policy. It's important to note that paper was the work of multiple academics. It was a wonderful experience to be involved in, but I think it's noted in the paper that it's not a work of consensus. As with many issues, including this one, there are tremendous levels of debate around what the appropriate diagnosis is and what prescriptions should be. I wanted to give that rather lengthily caveat to say that what I am about to share with you is my own view and not necessarily reflective of the others who were involved in preparation of that white paper.

Again, to come back to the presentation that I've just made, one of the reasons that we're seeing such tremendous focus and controversy in the regulatory process has less to do with regulation and energy regulation per se and far more to do with the policy gaps — the elephants in the room that I mentioned earlier in my presentation. It's so important for us, when we're thinking through what kind of changes we might make to regulatory systems, notably the NEB, to ensure that we're working with an accurate diagnosis of the problem and not focusing exclusively on one area.

Changes to the regulatory system are necessary, in my view. Strengthening public confidence in that system is absolutely essential, but it's a necessary but insufficient condition when it comes to strengthening public confidence in energy decision making for all the reasons that I mentioned a moment ago.

We need to really look carefully at the relationship between policy-makers and regulators and, again, reinforce that important role that the regulatory process plays in terms of an evidence-based, neutral, objective, expert-based assessment of individual project proposals. That may very well mean thinking about how we do a better job of ensuring information, access and representation in that process.

But, again, in the absence of dealing with some of these elephants in the room, with strengthening public confidence in energy development, you can only go so far with changes to the regulatory system.

Senator Mercer: Thank you for your presentation. It's very interesting.

I wanted to clarify a term you used, because people watching may not understand it, and I'm not sure I do. Under your horse of social and value change, you said shift from "communitarian to individual values." What is "communitarian"?

Ms. Gattinger: "Group values" is an easier way of putting it. It is shifting from thinking about society writ large and interest with respect to society writ large toward a greater focus over the last number of years — the last number of decades — we've seen toward individual interests. It is line of sight when it comes to thinking through support for an individual energy project or energy policy frameworks, much greater focus at individual and local levels over the group. It could be society, regional, provincial or national level.

Senator Mercer: One of the issues I see is the fact that we're not looking at this from a national perspective. Well, we are in the case of my Province of Nova Scotia. We're talking about getting oil and gas from Alberta to my province. But one of our main purposes here is about getting oil from Alberta and Saskatchewan to tidewater, so we can export it to other people around the world at prices higher than we are selling it to the Americans, because the Americans, of course, take a discount. This is the issue.

I get to your other heading of what to do. You say getting the ducks back on their feet, strengthening confidence in energy decision making, substance of fairness, evidence-based, et cetera. How do you do that?

Ms. Gattinger: That is a tough question; thank you for it.

We have undertaken public opinion polling research. As you would probably know, if you poll Canadians about their levels of support for energy development, whether it's oil and gas or renewables, the majority of Canadians support oil and gas development, support renewable development, even support further development, so increased development in those sectors, including in oil and gas. What we do see, though, is that Canadians are also looking for a balance between the economy and the environment, looking notably to the federal government around climate change and movement on climate change.

Where sometimes we see that level of support that is there sort of in the abstract sometimes break down is when it comes to individual project proposals, where it's almost like citizens think with two sides of their brain. On the one side, they think about what is in the interest of the country writ large in sort of an abstract way, but then, when there is a project in front of them that will have an impact on their community, whether it's traversing through their community or ending in their community, then there is a little bit more focus on what the local interests are and what their individual interests are.

What we need to think through at that national level how we put in place a framework that people can have confidence in and that not only delivers for the economy and society and the environment writ large but also is perceived as fair when it comes to the distribution of benefits and costs across the country. I think linear infrastructure, back to Senator Doyle's question at the outset of this session, is particularly challenging in that respect, given the way in which costs and benefits are distributed on those projects. What does "fairness" look like in the 21st century? We are going to have to give that some pretty serious thought.

Senator Mercer: I appreciate that. I really think that one of the issues that we have is that Canadians are not looking at the benefits that are happening in downtown Toronto because of the export of crude oil from Alberta and Saskatchewan. They somehow have missed the economics lesson that says what is good for Alberta is good for Toronto.

How do we link that? Senator Unger tried to do a link to the Aboriginal community, and we're going to hear from some Aboriginal people later today. I really think that we need to do a linkage here of how exporting bitumen from Alberta is good for every community in Canada. As we say in Atlantic Canada, high tide rises all boats. This is a very important high tide that we are talking about.

Ms. Gattinger: It is, and, in that context, it is all the more important to try to identify what drives lack of confidence in these projects and what drives supporter opposition to these projects. Research that we have done to date suggests that — and, again, I mentioned it in the presentation, but I will come back to that for this particular question here — there are a variety of different drivers of support and opposition. Some of those can be economic. So where is the benefit for my community? Yes, there, perhaps an economics lesson is in order. However, some of the other concerns are much more about the way in which those resources are being developed and looking at the environmental impacts, in this case, of oil and gas development, specifically of oil development.

To return to the public opinion polling data, the public opinion research that we have undertaken, Canadians are confident that Canada can develop its energy resources in ways that respect the environment. What I think they have been missing up to this point is a plan. How are we going to do that? What is that going to look like?

Again, public opinion polling data that I am aware of from other organizations suggests that Canadians want to see a transition toward a cleaner energy future. They may think that transition can be undertaken more rapidly than is actually feasible in economic terms, in environmental, in market terms, et cetera. However, putting in place some sort of framework that would demonstrate to Canadians that the country is moving in the direction of a cleaner energy future might actually take some of the pressure off of some of these individual projects.

Senator Mercer: Buying all of that, who is responsible for building that confidence in Canadians?

Ms. Gattinger: I wish I could say it was a single entity that was able to undertake that relatively easily. As I said at the outset, the main message of my presentation today is that this development of public confidence is a multi-faceted challenge. It requires a lot of collaboration and coordination across governments.

I think there is a window of opportunity right now, and I am cautiously optimistic on this. There is a window of opportunity right now with a number of different decision processes that are ongoing. We have the First Ministers' meeting around climate. That is a wonderful opportunity to demonstrate movement in the country on that important issue.

We have the Council of the Federation meeting around the development of a Canadian energy strategy. The federal government has been invited into that process. If all of that can be worked out, again, it is a wonderful opportunity to look at what Canada's energy future looks like.

Third, we have the Energy and Mines ministers process, which, this year, is focusing on public confidence as its key theme. That is an opportunity to look at what can be done to strengthen public confidence at that level of regulation and issues that are within the mandates of energy and mines ministers.

All of this to say, multiple actors need to be working together in a strategic and coordinated way.

Senator Runciman: Going through this process, it's nice to hear you are cautiously optimistic, because I am not. I wonder if you could talk about the implications of the United Nations Declaration on the Rights of Indigenous Peoples with respect to how that may impact. There are a couple of elements here that I saw.

I am looking at a note here, dated not too long ago. It was this month.

. . . 130 First Nations, led by the Yinka Dene Alliance signed on to the Save the Fraser declaration in British Columbia, in direct opposition to the Northern Gateway . . . . The pipelines are a no go," said Stuart Phillip, grand chief of the Union of British Columbia Indian Chiefs . . . ."

He was arrested, obviously, over the Kinder Morgan Mountain project.

Then, we see the NEB approved Trans Mountain twinned pipeline, an existing pipeline. Automatically, people are jumping to their feet, including the mayor of Vancouver, who showed up in Ottawa here last week to lobby the government on not approving Trans Mountain, even though the NEB has approved it and set up over 100 conditions, I believe.

Perhaps I can first ask your reaction to the UN declaration and the seemingly rigid resistance of so many in the Aboriginal communities, and then I have another issue that I want to raise with you.

Ms. Gattinger: The cautious optimism, I suppose, in part, is borne of a personality trait.

That said, there is no question that this is going to be hard. There is no question that we are facing a variety of challenges. Some of those policy gaps I mentioned on climate, on reconciliation, on cumulative effects and regional planning are really hard slogging to address.

It remains to be seen the way in which the government will implement the United Nations Declaration on the Rights of Indigenous Peoples. Returning to a prefatory remark by Senator Doyle, one of the concerns is: Would that be implemented in such a way that it would confer a veto? If that is the case, it could be quite challenging for any of these projects moving forward. Our federal government definitely has its work cut out for it in thinking through the way in which it will implement that declaration.

On some of the broader issues, there is an opportunity. I certainly see this in terms of federal-provincial relations. Post-1980 and the National Energy Program, provinces actually coming together to collaborate around energy rather than competing and conflicting with one another was relatively challenging. We have seen significant movement on that through the Council of the Federation with the Canadian Energy Strategy. If the federal government is able to get engaged in that in a productive way, again, avenues are there, but it will take significant and careful thought about what key issues need to be addressed, who needs to be at the table, what some of the areas are where participatory democracy may be coming into tension with representative democracy, and where and how governments will identify the appropriate balance points between those tensions that we increasingly see.

Senator Runciman: The other element, and I'm sure there are many others that make me less than optimistic, is the third party opposition out there seemingly to any development in the energy sector. We have heard the Mayor of Vancouver being very vocal; and the Mayor of Montreal, with other mayors supporting his position, who wants no pipeline through Quebec, despite the fact that they import from countries that have terrible environmental controls and horrific human rights records. In any event, that is their position.

Organizations like the World Wildlife Fund and the Suzuki Foundation don't want anything coming out of the ground. Some of them are well funded, some by U.S. money, which is ironic because the U.S. has sort of beaten us to the punch, if you will, in terms of development of the energy sector as they now export oil.

In any event, I made the point to representatives of the industry here that there has to be a more strategic approach on the economic side of this as well. You see the advertising. I have seen the television ads on the broader economic impacts to the country; and we have heard that kind of testimony.

We heard a witness who talked about a couple of more specific things that I think should be approached not just by the industry but also by third parties, such as Canadian chambers of commerce and Canadian manufacturers. He talked about Algoma steel in Sault Ste. Marie, which is on its knees in terms of production. He said that two LNG plants in British Columbia, which would represent one half of a year's production out of that steel plant, could rescue them. They have been rescued already a couple of times by government. He talked about over 100 businesses in Quebec that are dependent on the energy sector.

I asked him whether he had been in Sault Ste. Marie. They happen to have a cabinet minister representing that area in the province of Ontario; and the provincial government has not been terribly supportive. Have you been there and talked to that community so they can make an impression on their MPP? Have you been to those Quebec communities? There has to be that kind of effort as well. You can put big messages on television, but we will be watching the hockey game or whatever and they will not sink in. However, if you can go into a community and say that you can assure them of jobs for them, their kids and grandkids going forward, those are the kinds of messages that balance these other issues we have been talking it.

There needs to be a more strategic approach to getting the message out to Canadians at a more familiar level, if you will — to the households and the communities rather than these big picture messages. That's a strategy that they should look at. They have to draw other people who will benefit from this — the provinces and communities — but I don't see that happening yet.

Ms. Gattinger: Thank you very much for those remarks, which generally I would be very much in agreement with.

Certainly there is a place for some of those broader communication messages around economic impacts. Many of the things we see in our research as well speak to exactly what you said: the importance of engagement at the community level and connecting with people where they live and work and connecting at the local level in terms of thinking through the impacts of energy and other projects on their daily lives.

There is no question as well that the debate has tended to be quite polarized. If you were to look at public opinion polling data, you would see that the majority of Canadians are not on either tail, if you will, of those polarized debates. The majority of Canadians are in the centre and looking for some sort of plan to know where we're going with Canada's energy future.

I appreciate that there is no question of it being a challenging issue, and I think the elements are there. We need to look at this as a coordinated, multi-faceted issue. There is not a silver bullet for this one.

Senator Eggleton: Thank you, Professor Gattinger, for your presentation and drawing our attention to your metaphor of elephants, horses and sitting ducks.

You are right in saying that people are looking for a balanced plan or framework. For example, if there is to be further accommodation of pipelines, people want to know what the plan is for climate change overall and how we're going to reduce our dependency on fossil fuels. You have raised a wide range of issues and a wide range of stakeholders that need to be involved with all of this.

With the breaking down of silos, it seems the federal government, in consultation with the provinces and territories and industry, will have to do a lot of that if it is to gain general public support and understanding of the direction that this whole matter is going in terms of energy development.

Let me try to take some of the things you talked about and relate them to what is going on in terms of the National Energy Board hearings. They're trying to determine who would best represent the various interests involved before their hearings. Perhaps you're suggesting something that would be broader. Should all Canadians have an opportunity to be exposed to that hearing? You can't obviously have them all come to a table and sit here like we are here or like the National Energy Board might conduct its meetings, but there are various social media methods and new technologies that perhaps could be used in that regard. What would you envision in terms of how the National Energy Board might play a role in this because they will have a role in terms of licensing and environmental assessment of the matter?

Ms. Gattinger: That is the question of the day in many respects. As we know, the new federal government put in place a number of conditions and has now undertaken a subsequent consultation process following the NEB process. It's a tough issue. I say that because the NEB was set up in the first place as the result of the Borden commission in the 1950s. It was very much about depoliticizing the process of decision-making for energy projects. This is why we set up arm's-length, independent, quasi-judicial regulatory bodies, whether in energy or other sectors. The governments set the overall policy framework — that is, what we are going to do around climate change, reconciliation and cumulative effects, et cetera — and then confer on a regulatory body a mandate within which they operate to either approve, not approve or approve with conditions individual projects that come before them.

The approach that we are seeing right now concerns me a bit, I must say, in that I can understand the government's desire to expand the opportunity for Canadians to be engaged on these issues, to be engaged on individual projects and put in place these post-NEB consultation processes. However — and we will see — if individuals engaging in those processes are engaging on issues that are outside of the NEB's mandate — for example, climate reconciliation — it's not clear to me how that will actually help the government make a decision about an individual energy project.

In the absence of a policy framework that addresses those issues within which a regulator then makes decisions about individual projects, we wind up with this sort of half policy, half regulatory process. I will put this in a very extreme way, using climate as an example: I don't think it's a good idea for Canada to make climate change policy one pipeline at a time.

Senator Eggleton: I take it what you are suggesting by all of this is that federal and provincial governments and industry need to get out in front in terms of developing a balanced view of this framework before actually getting down to specific details of specific projects at the National Energy Board. In other words, do you think we have put the cart before the horse by rushing off to the NEB in a very limited fashion without having addressed all these other issues?

Ms. Gattinger: I don't know that there has been much of a choice for governments in that sense, simply given where a number of these project proposal processes are at. That said, governments are in a tight spot. They are facing timelines with respect to individual projects, but some of these broad elephants — policy gaps around reconciliation and climate — will likely take more than six months to sort through. There are some challenges there, to be sure, but I would generally agree with the way that you framed it.

Senator Greene: Thank you very much for your presentation. I missed the first part, but it was excellent, and I wish that I was here, actually, and I don't say that all the time.

Like you, I am cautiously optimistic about this whole project and what we are doing. I think the reason I am is that I simply believe it would be an historic mistake not to bring petroleum to tidewater via pipelines.

I really like your phrase, "building public confidence." I certainly prefer it to "social licence." If you were put in charge of building public confidence, what are the one, two or three things you would do that we are not doing now?

Ms. Gattinger: Thank you for that question. That's a wonderful question, would that be true.

Given the social and value change that we have seen, namely declining levels of trust in governments and in industry and declining trust in experts and expertise, it really does begin to point to thinking about how we could do energy differently, and that process becomes extremely important. Yes, there is the substance of the decisions at the end of the day, but there is also the question of the process to get to those decisions and whether people can have confidence in that process.

On the broader questions that Senator Eggleton raised, I don't know that I would call it a royal commission, but I would put in place some sort of third party, independent commission body that would be seen to be representative and credible. It would have representation from industry, ENGOs and indigenous communities and, at the local level, engage municipalities rather than see them as a problem, which is often the case that we are seeing right now.

Put in place a process that would then have some confidence from members of the public and that could begin to sort through and hash through some of these issues. That could very well include robust consultation processes and commissioning studies that would be relevant in terms of decision-making for Canada's energy future, and I would call it something to that effect — that is, a blue ribbon panel on Canada's energy future, or something to that effect.

Again, I think that would take a bit of time, but it would put in place a mechanism that could begin to develop some confidence in Canadians that governments are taking this issue seriously and that they are engaging in a way that is seen to be representative and that folks can have some confidence in.

At the end of the day, recommendations could come out of that body which might be recommendations that would be difficult for governments to get to in intergovernmental processes but might be easier for them to adopt had they been developed through a robust process in which folks had confidence. That would be number one from my perspective.

Senator Greene: Good. Thank you very much. That could be a recommendation in our report.

The Deputy Chair: Professor, our time is up. I want to thank you for your participation.

Senator Mercer: Sorry to interrupt, chair, but before our witness leaves, she mentioned she was releasing a paper later this week, and I was wondering if perhaps we could get a copy of that paper for the committee.

Ms. Gattinger: Most certainly. It is coming out in the next number of weeks. Absolutely, I can follow up with that.

Senator Mercer: Good. Thank you very much.

Senator Unger: Professor, given the participatory democracy, which I translate as activists who, as my colleague referenced, are funded by U.S. interests, and the fact that right now the U.S. is exporting oil to Eastern Canada — and, of course, their oil is coming from these countries with horrible human rights records — and the fact that I am reading more and more that Canada is lagging seriously behind in this race, how is this fairness? Can this balance ever truly be restored? Canadians are looking for balance and you offered suggestions, but is this really a fight that we have maybe lost? I know you are optimistic, but I wish I could be.

Ms. Gattinger: Thank you for the question. I think it's very important to draw a distinction. At the outset of the presentation, I had a number of drivers of public confidence, and one of those drivers was society, including NGOs, local communities, indigenous communities, friends, neighbours, et cetera. It's so important to draw a distinction between the concerns being expressed by local communities, residents and groups at the local level and what concerns are being addressed and raised by regional, national or international nongovernment organizations, notably on the environment.

We are actually undertaking some work right now to try to tease out those distinctions. I think they are very important to make because some of the more polarized elements of the debate are with the latter groups rather than with the former groups.

Senator Unger: Thank you very much.

The Deputy Chair: Professor, thank you again for your participation here today.

Continuing our study on the development of a strategy to facilitate the transport of crude oil, I wish to welcome our next witnesses. From the Assembly of First Nations, we have Perry Bellegarde, National Chief; Craig Makinaw, Alberta Regional Chief; and William David, Senior Policy Analyst, National Chief's Office.

Chief Bellegarde and Chief Makinaw, thank you for attending our meeting. Please begin your presentations. Afterward, senators will have questions.

Perry Bellegarde, National Chief, Assembly of First Nations: Good morning to the senators. I am going to turn it over to my colleague, Chief Makinaw, for his formal piece. He's going to read that into the record officially, and I'm here to assist and help with questions. As national chief, I get to hand out portfolios. With regional Chief Makinaw, this is his job. I will turn it over to him first, and then we'll open it up.

Craig Makinaw, Alberta Regional Chief, Assembly of First Nations: Good morning, senators. Greetings, and my thanks for this opportunity to share some thoughts and perspectives with you this morning.

First Nations, federal, provincial and territorial governments are all considering the issue of moving oil to tidewater. For all of us to get to a regime that promotes cooperation, there are several realities to keep in mind.

First, in all resource development, decisions are made on a project-by-project basis, and First Nations are neither always for nor always against development. We have perspectives on all sides of the debate, just as there are nationally and globally about where the balance lies between environmental protection and economic development.

Second, First Nations occupy a particular place in regard to individual project approvals and the broader dialogue because of our inherent jurisdiction over these lands and our right to self-determination.

Third, no government's jurisdiction is absolute. Our inherent jurisdiction is not absolute. Neither is the Crown's assumed sovereignty absolute. In other words, the international human rights system recognizes that, as peoples, First Nations authority exists alongside that of the Crown, equal and not subservient to it.

The Crown must recognize and respect the right of each nation to say "yes" or "no." It is an aspect of our right to self-determination. Like all rights, the right to self-determination stands in relationship to the rights of other peoples and to our responsibilities as humans to the lands and waters, and to future generations.

First Nations can, and many do, choose to benefit from oil and gas production, and that's a critical point. First Nations export oil and gas resources, because Canadian law is informed by and must respect the right to self- determination.

There are First Nations with serious and well-founded concerns about the safety of pipeline and rail transport through their territories. Spills impacting First Nations harvesters and First Nations communities are not uncommon incidents. These incidents only highlight the need for processes to approve and regulate pipelines, as well as to respond to emergencies and compensate for possible damages, and to include First Nations rights and interests.

Today, I will highlight deficiencies of the current federal regulatory regime. These can be summarized by saying: One, First Nations have been sidelined in the federal regulatory decision-making process for approving and regulating pipelines. First Nations are treated as bystanders. The current system for approving and regulating energy infrastructure in Canada does not serve anyone well. One reason is that First Nations are treated as bystanders in all aspects of regulation relating to transport of oil and gas products.

The current process for approving pipelines is a process between companies and the National Energy Board. Neither the National Energy Board Act nor the Canadian Environmental Assessment Act, 2012 permit environmental assessments to consider the rights of First Nations, only environmental effects. In our view, the scope and range of environmental effects is under-inclusive of First Nations rights.

Procedurally, the only opportunity for First Nations to engage in that process is through the general provisions for public involvement. Environmental NGOs and First Nations have both identified severe failings with the ability to appear and bring evidence to National Energy Board hearings.

Once a National Energy Board hearing is complete, the National Energy Board then drafts recommendations for approval by the minister. Only if a proposal is approved can First Nations rights become relevant to the regulatory process. In fact, the only way for First Nations to assert their rights in the approval process is to challenge the validity of the process in court.

The National Energy Board process is a regulatory regime that, at times, compels First Nations to litigate to have our rights even heard, much less respected. The National Energy Board has been found not to have the jurisdiction to even carry out a treaty-infringement analysis. Such defects necessarily require First Nations to challenge approvals that ignore treaty and inherent rights. This kicks off a separate legal process between First Nations and the Crown, where the proponent becomes a bystander.

The current regime also over-delegates the Crown's legal obligations to proponents, contrary to the principles of the Supreme Court decision in Haida Nation.

The interim principles introduced by the current government do not change the fact that First Nations are bystanders in the regulatory approvals process and that proponents are bystanders in the consultation and accommodation process. The interim principles are a partial step in the right direction, though, by ensuring the decision maker is privy to all relevant information prior to making a decision.

First Nations must be full partners in the approval and regulation of pipelines, and you need us to help to redesign the current broken system.

The same could be said for the rules promulgated under the Pipeline Safety Act. First Nations rights currently receive no consideration under the Pipeline Safety Act, further eroding First Nations trust in the process of regulating pipelines in Canada.

Consider some First Nations perspectives: A company approaches a First Nation and tells them that it is planning some kind of project, but some First Nations don't see a project. What they see is an undertaking that will interfere with First Nations rights. Sometimes this interference is temporary or minor, and sometimes this interference is serious and permanent.

The government or the proponent will ask the First Nation to explore opportunities to lessen the impact of the project on rights and, in extreme cases, to waive its rights. This is a free, prior and informed consent, the ability of First Nations to say yes or to say no to development that would otherwise be impermissible under the law.

From this perspective, consent is really an opportunity for First Nations to say yes to development. When First Nations do not provide consent in Canada, it means that they will undertake a lengthy and costly series of court battles to ensure respect for First Nations rights.

Instead, we find many in industry are focused on a no. What does it mean when a First Nation says no? It means that, from the perspective of the First Nation, that project is too risky and will have too much of an impact to be able to go ahead. If a court determines that the impact of the project on First Nations rights would be too great, a First Nations no simply means that an otherwise impermissible project remains impermissible.

This is not a new and not a radical concept. Consent is already a firmly established concept in Canadian law. What the declaration adds is that consent must be free, prior and informed. For Canada, this shouldn't be revolutionary either. Of course, consent isn't valid if it's obtained by coercion. By the same token, Canadian law already recognizes that consent must be obtained prior to Crown action.

Consent must be informed. What First Nations need, and what Canadians need, is a regulatory approvals process that ensures that First Nations can make informed decisions about development and that the information provided by proponents and by the Crown is relevant to the rights, interests and aspirations of First Nations. A system that requires this information to be exchanged is one that will improve meaningful dialogue between First Nations, proponents and the Crown and improve First Nations trust in the regulatory process.

Such a process should also be viewed as one step towards implementation of the First Nations right to self- determination. We need to move beyond yes and no. We need a system that fully recognizes the jurisdictions of First Nations, a regulatory jurisdiction that stands on equal footing with other jurisdictions and a jurisdiction that is clearly part of the broader Canadian constitutional framework, a jurisdiction that achieves reconciliation by mobilizing First Nations principles of sustainability and prosperity with broader Canadian principles, such as rule of law, nondiscrimination and cooperative federalism.

That's the presentation.

The Deputy Chair: Thank you, chief.

Does anyone else have any comments to make before we go to questions?

Mr. Bellegarde: I think, for me — and I just speak; I put aside notes and everything else — when you start talking about transportation, trying to get the oil and gas resources to market, my colleague talked about the need to respect indigenous licence and the right to self-determination, meaning yes and/or no. You have 634 First Nations in Canada. You have 130 of them saying very clearly no, but you also have some others saying very clearly yes. So it is about balancing, respecting that right to say yes and/or no.

I think the most important thing is to have processes and systems set up between the federal government, provincial governments, industry and First Nations governments to create space for that dialogue to happen, to find common ground. That's the objective. It can't be an either/or. Are we going to choose the environment over the economy or the economy over the environment? It's finding balance, finding balance. That's the most important thing.

Processes have to be established on this whole issue because it's really creating divisions, and there are many divisions. You have to create the space to find balance and dialogue and make sure that indigenous peoples' rights are respected as you go through with this process.

The regulatory review process: I'd like to see indigenous people on the National Energy Board. I'd love to see indigenous people on the Supreme Court of Canada. My position has always been: Wherever decisions are being made that impact on First Nations people, inherent rights or treaty rights, you have to have our people around, right? It's as simple as that. Around decision making tables, you need to involve indigenous people so that the voices can be heard so that you find that balance, find that space. That's what it's all about.

On an international level — this is my own personal thought — we're too dependent on fossil fuels. Greenhouse gas emissions, climate change, there are so many things coming down, and we have to really, as human beings, the two- legged tribe, if you will, decrease our dependence on fossil fuels and start making key strategic investments in alternative, green energy. I think that's the path forward.

It's a phased approach. We're not going to stop driving cars tomorrow morning, and neither are we going to stop flying in planes. We're not going to do that, but there has to be a very planned out, key, strategic, phased approach to this as we go, and those are my thoughts on it as National Chief of the Assembly of First Nations. It's all about balance.

The words I'll use are "indigenous licence," which is very key as well, not just social licence but indigenous licence as well. That's a key concept because it's not only about public confidence in social licence, it's indigenous licence, especially in light of free, prior and informed consent and Canada's recent monumental position about supporting the UN Declaration on the Rights of Indigenous Peoples without qualification.

I just wanted to share that.

Senator Mercer: Chiefs, thank you for being here. We really do appreciate your time and your input.

How do we get everyone to the table, and how do we get everyone to agree that the basis of coming to the table is how we maximize the benefit for all communities? In your case, obviously, you want to benefit the indigenous community, but I know that your interest goes beyond the indigenous community. You want to benefit the larger community, too, because what is good for everybody is good for you. How do we do that? How do we get people to the table?

Mr. Bellegarde: Basically establish intergovernmental processes, whether you call them bilateral or you call them trilateral. For example, you have the Council of the Federation coming up. Last year, when they announced their National Energy Strategy, I was the national chief saying, "What? Give me the who, what, where, when and why." We weren't involved in developing or designing anything. If you want to design a national energy strategy, you make sure you have the proper processes in place.

It's a simple message: Before federal governments and provincial governments or industry try to build anything, build a respectful relationship with indigenous people. That will create economic certainty.

I heard you earlier talking about a blue ribbon panel. I'd look more at bilateral processes where indigenous people are involved every step of the way in the development, design and implementation and delivery of any program going forward. That can happen with the great political will we have federally, working in concert with the Council of the Federation. We can design those processes going forward so that we find that balance between the environment and the economy. Whether you call them tables or intergovernmental affairs processes, those should be established sooner rather than later. That's what I would recommend.

It's enlightening as well to see the Canadian Association of Petroleum Producers has adopted something very fundamental to Canada. They've also endorsed the United Nations Declaration on the Rights of Indigenous Peoples— a powerful statement. Industry is starting to get it, and they're beginning to focus on more than just the simple P for profit because the planet and the people are to be considered also — the three Ps. There are powerful movements to create those spaces for balance.

Senator Mercer: Involving indigenous people in all steps sounds ideal. If we could flip a switch today and say that it will happen, would it slow the process?

Mr. Bellegarde: Rightly so, and it should slow it down. Yes, again, you don't want to do anything rushed. You don't want to do anything that's going to leave anyone out. We might be 1.5 million people in terms of numbers in Canada, but 4.5 per cent of Canada's population is indigenous people; but I always say that we're not ethnic minorities. We are indigenous people with inherent rights, one of which is the inherent right to self-determination because we have our own lands, our own languages, our own laws, our own identifiable people and our own identifiable forms of government. Those rights need to be respected and can't be infringed upon. It's a matter of creating space to bring everyone to the table.

Senator Mercer: We continue to talk about the bad examples or the lack of good examples. Is there a project we can point to that was done right — that properly involved indigenous people to the point where a project went from concept to fruition with the full involvement of indigenous people? Has anyone done anything right on this file?

Mr. Bellegarde: Are you talking specifically about pipelines?

Senator Mercer: No.

Mr. Bellegarde: Are you asking about any relationship with industry?

Senator Mercer: I'm suggesting that the model could be transferable to discussions on pipelines.

Mr. Bellegarde: Let's take it in terms of the private sector. I'm from Saskatchewan and a small reserve called Little Black Bear in the southern part. I have held up Cameco in the northern part where they're mining uranium. They have a number of First Nations people on their board of directors. They have a number of First Nations people in entry level positions and middle management and senior management. They have resource revenue sharing back to indigenous peoples. In fact, 54 per cent of their workforce is indigenous people.

It's because of a simple requirement before any provincial government issues any licence or permit to any private sector business operating within provincial boundaries. We always recommend that before they're issued a licence or permit to operate, a private company or industry operating should develop and have a plan in place for First Nations engagement regarding employment, procurement and any benefit sharing back.

If a company has those three things in place, it will be granted a licence. If it doesn't, it won't be granted a licence or permit to operate in Quebec, B.C., Alberta, N.W.T., Manitoba, or Saskatchewan. You will see key strategic partnerships in place; and I think that's a simple policy change going forward.

I'll just use Cameco as one example, and there might be others; but I'm not an expert in industry operations, but I will give a shout out to Cameco for doing it in a good way.

Senator Mercer: That's one thing we need to think about; and that's a good example. It's a different industry, but it's also the same process as we develop.

Mr. Bellegarde: When I was Chief of Little Black Bear First Nation, Tim Cutt was the President of BHP Billiton, a multibillion-dollar potash company. They were potentially expanding a potash mine in Melville, Saskatchewan, half an hour away from my reserve. He spent the whole day with me, visiting my elders and my community. We were in ceremony together. He was building a relationship. That's an example of how industry can come out and really build a relationship. That is another example to build upon. Before you try to build anything, build a respectful relationship with indigenous peoples and governments.

Senator Mercer: I couldn't agree more.

In your presentation, you also mentioned the overdependence on fossil fuels by all of us. I find it interesting that we're now talking about how we involve our indigenous people properly and respectfully in the process of the pipeline. We can also see, at least my granddaughter can see, the end of our reliance on fossil fuels as technology changes. We're bringing our indigenous people to the table at the end of the process, not at the beginning of the process, in many ways.

What happens beyond oil and gas? Is this model that you're talking about transferable to other industries that might be developing, say, in mining? You gave the example of your community. Is it a transferable model?

Mr. Bellegarde: I'll make some quick comments and perhaps Chief Makinaw may have some as well. When we talk about a relationship with industry and developing the natural resource wealth, it is all about balance. In terms of the pipeline issue and the transportation of oil and gas, some First Nations say, no, no, while others are involved, so we're trying to find the balance.

I can point to the chiefs that say no. I work with 634 chiefs who are the rights and title holders. It's not the Assembly of First Nations that is the rights and title holders; it's the chiefs and the people out on the land on the ground. That's why we talk about the right to say yes or no. Some say yes and some say no.

Some who support the pipelines are oil and gas producers — 14 chiefs are oil and gas producers and want to get their product to market. Then you have some chiefs who want to look at equity ownership in pipelines. Some chiefs say that the pipelines will cut across their traditional territory lands so they're looking at a tax to add to the business operation cost and plan going forward. Some are engaging in that system while others are simply saying no. It's a balance with respect for the right to say yes and the right to say no.

If it's transferable, we have to start looking to greater investments and technology for clean green energy, no question. We have to start putting more energy and effort into creating less dependency on fossil fuels. Even clean energy, hydro for example, can impact on rights. I'm going to give one example from Northern B.C. Site C is a major billion-dollar hydro development that will affect the rights to hunt, fish, trap and gather. That's a major issue.

Even if you're going down the path of clean green energy, if we're not involved every step of the way in those multibillion-dollar projects as indigenous people, it still could hurt inherent indigenous and treaty rights. I just give that as an example. Could it be transferable? Sure — no question.

It's a simple thing: Make sure indigenous people are involved every step of the way in the design, development, and delivery of any program or policy going forward. It's a simple thing.

Senator Eggleton: Thank you for being here. You have made a valuable contribution to this approach with your remarks.

Let me start with Chief Mackinaw in terms of your statement about being bystanders in the process. In particular, I am thinking of the National Energy Board process and how we might improve that. Chief Bellegarde has suggested there should be indigenous people on the National Energy Board, in the hearing process, and that's a good point, but let's see what else we can do to improve the National Energy Board process.

They say they have developed an enhanced Aboriginal engagement initiative that aims to provide proactive contact with Aboriginal groups that may be affected by proposed projects that require a public hearing.

They have also engaged in "oral traditional evidence." They say it's one of the ways for them to gather information in the process and that they have attempted to do this, or have done it, they say, as part of their process for the Trans Mountain pipeline expansion and the proposed Northern Gateway Pipeline, as well as the Energy East Pipeline.

Have you noticed these kinds of improvements? What would you say about them?

Mr. Makinaw: I do know they did a few hearings in B.C. on Trans Mountain, like you said, and Northern Gateway. I am aware of that. They are trying to improve on the process, but it will take a while before things improve.

Years before, to use my band from Alberta as an example, we took the federal government to court on the oil and gas in the eighties. We were one of the two bands that took our money out of trust here in Ottawa; that was us and the Samson band. I am familiar with the legal aspect of how the IOGC, Indian Oil and Gas Canada, and the federal government deal with oil and gas.

I am glad that it is shifting to a different way now where there is more discussion and meetings with us to develop a better process. I am glad that is happening, and I am hoping down the road, like the national chief has been saying for the last year, that they try to work with us. I see that as a positive and I hope we head that way and have more of our people involved all the way through.

Once that happens, I can see where things would work better for everyone and down the road we will address the concerns on each project as it comes through. I hope we keep working on that until we get to the point where we will have a process that everyone agrees on.

Senator Eggleton: That is very good and valid, but you are still talking as if you are bystanders. Is there anything else you think could be done that would take you from being a bystander to more a central part of the action, where you are more aware of what is going on and where your input garners more respect?

Mr. Bellegarde: On that one, senator, respecting First Nations jurisdiction, establishing their own environmental regulatory review process is one key thing.

I think of the Ajax gold mine in British Columbia. Chief Wayne Christian and the chiefs in the Kamloops area set up their own environmental regulatory review process with their elders and community members to determine whether or not there should be a gold mine next to a lake. It is so close. That went on for two or three weeks. This is self- determination in action. We don't know what that decision will be at the outcome of their own process, but the industry was part of that process. That is one thing: Respect First Nations jurisdiction when, where and if they establish their own regulatory review process. That is in addition. Then you will have your National Energy Board regulatory review process. That is something else.

Senator Eggleton: You need to dovetail those.

Mr. Bellegarde: Yes, you could dovetail it, but I am saying to respect that First Nation jurisdiction over a process that is ongoing. That is one example.

Senator Eggleton: Let me ask you about different ways of engaging indigenous peoples that we have been hearing about in our hearings here. Certainly, as a sharer of the revenues, they could be revenue sharing agreements, collaboration agreements, co-ownership of projects and something called corridor coalitions, which seem to deal with both environmental and resource sharing possibilities.

My colleague asked you about specific companies, but is there any one particular model that you think is best to focus on?

Mr. Bellegarde: All of the above, senator: On revenue and benefit sharing, there is no question, as well as equity ownership of the pipeline. It comes out as safety. First Nations people want to be sure that if there is a spill, do you have the capacity for quick cleanup? You want to make sure that capacity is there. That is a big piece.

There might be merit to that corridor area piece. Where is it going? To work collectively on that, if it is to move forward, again it goes back to the point of and/or yes or no as it comes back through traditional territories and ancestral lands.

Three things that are key are benefit and revenue sharing, equity ownership in the pipeline and making sure safety is fundamental going forward in that corridor. We all know this is where it will happen. Those are three key things that you have to keep pushing and supporting.

Senator Eggleton: In terms of industry's approach to your communities on this, there are the pipeline proponents themselves — the people who are going to build the pipeline — but then there is also the industry in Alberta, or wherever, that wants to get their product to market. Are they reaching out? Do you get much sense that they are reaching out to tell their story to you and consult with you? You mentioned BHP. Is that happening very much in the oil and gas industry?

Mr. Bellegarde: I think Greg will answer that and I will add to his remarks at the end.

Mr. Makinaw: On the Alberta side, there has been a lot of consultation on all the projects with all the bands in Alberta, so it has been done. I think a lot of the bands are waiting to see what will happen with these pipelines, too, because the producing bands are the ones that are especially affected. They are waiting to see what is happening with the decision that will be coming down later this year.

Another example to look at would be in Alberta right now, where they are looking at solar energy projects. Companies are coming in and discussing revenue sharing stakes in the company with the bands. That process is going on right now. A lot of the bands in Alberta are looking at that alternative energy initiative as an option. They are looking at that at the same time as this is happening.

Mr. Bellegarde: The only other thing to add is that the old divide-and-conquer tactic has been overused a bit. Industry will come out and cut a deal with my fellow chief here, but he can't share it with me because there are confidentiality agreements. He might have cut a better deal than I can get. The whole industry is doing a little bit of that, and then we can't come together as a collective.

For me, it's always that we have to extend our jurisdiction beyond our Indian reservations. He is from Treaty 6, and I am from Treaty 4. We exert our jurisdiction throughout our treaty territories and ancestral lands. You have to look at every territory across Canada. If you start doing that, then there should be a Treaty 6 tax or a Treaty 4 tax. We have done that, in one instance in Treaty 4: When one pipeline was cutting across, all 34 First Nations got compensation.

Yes, it's there. They are reaching out because they know now that they have to partner with us. They know now the UN declaration has been endorsed and there are section 35 rights coming in and they know now of the Tsilhqot'in case. Again, that is out there, and now there is this furor about free, prior and informed consents, and I am saying, "Don't be alarmed. The sky is not falling. All we need to do is find processes to sit down and talk about this now." "Is it vetoed?" "Don't even talk about veto. Put that on the shelf over here." "Indians have a veto and will be saying no all the time." That's not helpful for the dialogue. Put that to the side and create proper processes where we can respect and find common ground. That's going to be the objective.

The answer is yes and no, industry reaching out, getting away from divide and conquer, looking at collective rights as well.

Senator Eggleton: Thank you.

Senator Unger: Thank you, Chief Mackinaw and Chief Bellegarde, for being here. A lot of my questions have been addressed, but I would like to start by talking about the area of the oil sands in northern Alberta, primarily the regional municipality of Wood Buffalo. It is home to the oil sands and several Aboriginal communities. I think you have been referencing them, including Anzac, Conklin, Fort Chipewyan, Fort MacKay and Janvier, all home to multiple First Nation and Metis people. More than 1,500 consultation meetings were held between First Nations and industry on oil deposits, pipelines, forestry and other resource developments between 2011 and 2012. Chief Mackinaw, I think you addressed that as well.

I'd like to say a couple of things about greenhouse gas emissions. Between 1990 and 2011, GHG emissions associated with every barrel of crude produced in the oil sands have been reduced by 26 per cent. The source of this statistic is Environment Canada.

Another statistic is that Canada, which has 0.5 per cent of the world's population, produces 2 per cent of GHG emissions. Oil sands account for 7.8 per cent of Canada's GHG emissions and just over 0.14 per cent of global GHG emissions. The source for this information is Environment Canada — that's 2012 — and the United Nations statistical division.

I think it would be a wrong argument to try to say that the oil sands are responsible for affecting climate change any more than, say, the emissions from cars in Toronto or some of our big urban centres. Would you agree with that?

Mr. Makinaw: From Alberta's point of view, as you are all aware, our NDP government is putting in carbon tax levies, which will start in January of next year. All of the companies are going to be working toward reducing their carbon emissions. It is especially going to affect Syncrude. It is going to be interesting to see how industry will be working to achieve these goals. With the meetings coming this fall, COP22 coming up, Alberta has to meet those emission goals. I see that as something that is going to be of benefit to the environment.

I'm hoping that, as we are moving along, they will have our people involved through the whole process, right from the beginning until everything is established. We have a lot of environment people, especially in the Treaty 6 and Treaty 8 area, out by Fort McMurray, that have been working in the oil sands area, and they could be of benefit for future work, with regard to the environment, with Syncrude.

Mr. Bellegarde: The only thing, senator, I would add on that is that, in northern Alberta and all the developments up there in the First Nations, lots have been benefiting economically. At the same time, there are a lot of cancers being known. The animals are getting sick. Those are also evidence of something happening because of industrial development.

Again, it is not an either/or. I go back to always continuing to balance, to make sure that things are not affected in a bad way, not only for my children or your children but for future generations yet unborn. There is only one world. We all need air to breathe, and we need water to drink. Yes, we need to drive cars. It's not a quick fix.

My point being, there is a need for a national energy strategy, no question, and there is also a need to involve indigenous peoples every step of the way in the development of that strategy. COP22 is coming up in Morocco in November. There is a provincial meeting with the feds in October, and indigenous peoples will be there: I will be sitting there as well, hopefully, bringing these issues and concerns forward. We have four working groups now that Catherine McKenna set up on the environment. In the next five months, we have to get our heads around this strategy going forward. Is it cap and trade? Is it a carbon tax? Is it carbon capture? The whole dialogue is lowering from 2 degrees to 1.5 degrees. Yes, that is going to have an impact on industry. We know that.

When you start talking about all of these statistics, I am not going to debate the statistics because you are reading them, and you have evidence. Everything moving forward should be evidence-based.

My whole point is finding the balance. I am not trying to harm what is going on, but it's making sure that there is balance, because I know that there are chiefs up there and their people who are concerned about the sicknesses that are happening. Something is happening, and there is not enough study done to find out what is happening. Again, back to balance.

Senator Unger: Speaking to balance and, specifically, to lung cancers or cancers, in your opinion, to this point in time, has there been any study or any investigation at the University of Alberta looking into the causal factor of that? Another statistic that has not been attributed to any particular thing is that Alberta has the highest incidence in Canada of multiple sclerosis. Yet, there is no medical accounting for that. I think we need the medical/scientific community to certainly become more involved, but, at this point in time, you can't specifically say that this is why. These things are occurring, and there are many questions, correct?

My other question is on a different vein. You referenced the carbon tax — Chief Mackinaw did — that will affect industry. Already, $30 billion in future investment in Alberta has been withdrawn. Are you at all concerned that, at some point, the companies will say, "Enough. We will finish the work we are doing, and we are out of here?"

Already, Canada — and I have been reading articles written about this — has dropped significantly in the global perspective of an oil-producing or-hydrocarbon producing country. We are being left behind. The reason is that Canada can't make up its mind. All they do is study and debate. I am not saying that study and debate is a bad thing. I think good things have been accomplished through it and, certainly, with your involvement in the process. But, if we are losing ground, five years from now, we could be sitting here still talking about this, and it will not matter.

Mr. Bellegarde: I would say, senator, with all due respect, as indigenous peoples, our worldview is simple. We don't see colour. When we go to ceremony, we are all the two-legged tribe, if you will. We respect our relatives, the four- legged ones, the ones that fly, the ones that swim, the ones that crawl. We acknowledge those four cardinal directions of beings that sit there. We acknowledge Mother Earth, Father Sky, Grandmother Moon, Grandfather Sun. We are connected. We also acknowledge those grandmothers that protect the waters — seawater, freshwater, rainwater. When water breaks, life comes. We are all connected and part of that.

As to why I say it in this way, I come back to the importance again: There is only one world. What are we leaving for our children, grandchildren and those children yet to come — seven generations down the road?

I believe in my heart, mind and soul that we are too dependent on fossil fuels. There are a lot of employment and economic opportunities if we start phasing toward green energy and looking at alternatives. I sincerely believe that the jobs that will be lost in the oil and gas sector could be made up in alternate energy technologies, if there is enough research and development, and innovation and technology.

That is what I believe, because we are all part of this — not only in Canada but the world. That is what I see. Even if we are losing ground, where is the strategy and plan, nationally and internationally, to bump that up?

Follow the money. Look at the other countries in the world that are really turning their efforts to clean energy and green energy, millions upon millions of jobs and employment created. I think that is something we can look at.

We know Canada is rich in resources; there is no question about that. It's balance, balance, balance. If we are to look at it, the economy is a 100-per-cent-owned subsidiary of the environment. That's how I look at it. It is balance going forward.

Again, I will not be saddling my great-great-grandchildren with a big headache because we didn't do things correctly in terms of policy, legislation and strategy going forward. No way.

Senator Unger: You referenced the Council of the Federation and how they left you out of their discussions, and you said, "we are now working with," so does that mean you will be at the table when the next discussion comes up?

Mr. Bellegarde: With your help and lobbying assistance from all these noble senators around, and messaging the premiers, you make sure the indigenous peoples are there, especially the Assembly of First Nations — and we should be there.

Senator Unger: I am all for it.

Mr. Bellegarde: That's it. Thank you.

The Deputy Chair: With that, our session has come to an end. I would like to thank Chief Bellegarde, Mr. Makinaw and Mr. David for being here.

Honourable senators, at our next meeting, we will be hearing from Peter Forrester from Kinder Morgan.

(The committee adjourned.)

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