Proceedings of the Standing Senate Committee on
Transport and Communications

Issue No. 3 - Evidence, May 17, 2016


OTTAWA, Tuesday, May 17, 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 Dennis Dawson (Chair) in the chair.

[English]

The Chair: Honourable senators, today the committee is continuing its review for the development of a strategy to facilitate the transportation of crude oil to eastern Canadian refineries and to ports on the East and West Coasts of Canada.

We have two panels.

[Translation]

For our first panel, from the Office of the Auditor General of Canada, we have Julie Gelfand, Commissioner of the Environment and Sustainable Development, and Kimberley Leach, Principal.

[English]

We will start with presentations from Ms. Gelfand and afterwards the senators will have questions for you.

Julie Gelfand, Commissioner of the Environment and Sustainable Development, Office of the Auditor General of Canada: Thank you for inviting us here today to contribute to your study on the transportation of crude oil. I'm accompanied by Kimberley Leach, an audit principal in my group and the person who ran the audit on the National Energy Board.

Transporting oil and gas in a safe manner is of critical importance. The Office of the Auditor General has presented several audit reports to Parliament on this issue. In 2013, the Auditor General conducted an audit of the oversight of rail safety.

The Commissioner of the Environment and Sustainable Development conducted an audit of the transportation of dangerous products in 2011 and an audit of oil spills from ships in 2010.

Today I will present an overview of our audit on the oversight of federally regulated pipelines that was included in the 2015 fall reports tabled in Parliament in January 2016.

The National Energy Board's mandate is to regulate pipelines, energy development and trade in the Canadian public interest. In its regulation of pipelines, the board sets the requirements that companies must satisfy to ensure the safe operation of approximately 73,000 kilometres of pipelines. These pipelines are used to transport oil and gas to customers in Canada and abroad.

Our audit examines some key aspects of the National Energy Board's oversight of federally regulated pipelines. Overall, we found that the board had made progress in some areas such as providing more access to information on incidents and compliance. However, we observed that the board needed to do more to keep pace with pipeline project proposals, the corresponding public interest and expectations and the new Pipeline Safety Act.

Our audit concluded that the board did not adequately track companies' implementation of pipeline approval conditions and that it was not consistently following up on companies' deficiencies. Some examples of deficiencies found in emergency procedure manuals included the failure to include descriptions and locations of emergency equipment, of emergency evacuation routes and of procedures for shutting down the pipeline.

The lack of follow-up on the deficiencies was also a finding in our 2011 audit of the transportation of dangerous products. In addition, we found that the board's data tracking systems were outdated and inefficient. We further concluded that the National Energy Board is facing ongoing challenges to recruit and retain specialists in pipeline integrity and regulatory compliance.

[Translation]

Another audit that may interest the committee is described in chapter 4, Implementation of the Canadian Environmental Assessment Act, 2012, of our 2014 fall report. Introduced as part of the government's Responsible Resource Development plan, the Canadian Environmental Assessment Act, 2012, aimed to make the review process for major projects more predictable and timely, strengthen environmental protection, and enhance consultations with Aboriginal peoples.

In our audit, we examined whether the National Energy Board was taking steps to implement the act. An objective of the act was to enhance Aboriginal engagement. Many Aboriginal peoples were concerned that they did not have the capacity to participate meaningfully in the National Energy Board's environmental assessment process. The reduced contribution made by these groups may have diminished public confidence in environmental assessments.

As you know, we provide Parliament with information that can be used by parliamentary committees when they conduct hearings on our reports or on audit-related topics. Attached to this opening statement is a list of questions you may wish to ask department officials regarding our audit of the oversight of federally regulated pipelines. I hope you will find this information useful.

Mr. Chair, that concludes my opening remarks. We are happy to answer any questions you may have.

The Chair: Thank you, Ms. Gelfand.

[English]

Senator Doyle: You mentioned in your 2015 fall report that the NEB had not lived up to, for want of a better term, its responsibilities in tracking the approval conditions of pipelines. Has there been any improvement in those areas since your report in 2015 of the NEB following up on tracking the approval conditions and what have you?

Ms. Gelfand: Unfortunately, we can only speak about what we found during the period of our audit. If there have been any improvements, it's not something we can comment on because we haven't gone in to audit that.

What we found when we went in was that in about 50 per cent of the cases the NEB had not followed up on the approval conditions.

Senator Doyle: Would these concerns affect public confidence in the regulatory process?

Ms. Gelfand: I guess that's a value judgment. We found that, as I said, in 50 per cent of the cases, both for approval conditions and for regulations. There are two sets of rules, if you may. Approval conditions are for individual pipelines, so some pipelines have 25 approval conditions; some pipelines have 200 approval conditions. They are very specific to each pipeline.

There is a set of regulations that apply to all pipelines. We took representative samples of those approval conditions and those regulations to see whether or not the NEB was doing its job of tracking and following up whether or not those approval conditions or regulations were being found. In both cases, approximately 50 per cent of the time we found that the NEB was not doing its job in following up on approval conditions nor following up on company compliance.

Senator Doyle: So is the NEB the proper mechanism to both regulate and enforce its rulings or should there be maybe another agency that might be tasked with the enforcement?

Ms. Gelfand: That's a very interesting question. Right now, I believe it is the mandate of the NEB to set the approval conditions and to follow up and regulate the pipelines. They have approximately 100 companies and approximately 73,000 kilometres of pipelines. There are provincial regulators that exist for provincial pipelines — ones that don't cross either provincial boundaries or Canadian-U.S. boundaries. Essentially the job of the NEB is to set those approval conditions and follow up. That's its job.

Senator Doyle: You mentioned the indigenous groups that were not able to participate in the environmental process. Shouldn't the federal government be making funding available if they need capital to do that kind of work?

Ms. Gelfand: My understanding is that the federal government, in certain circumstances, does provide funding for intervenors and participants to participate in the environmental assessment process.

What we found when we looked at the National Energy Board's public participation guidance was that it didn't refer to the new act. In fact, it applied its own standing test to decide who would participate, so either you could participate or you couldn't and the NEB decided that.

Once they decided that you had standing, you were an intervenor, a commentator or "other.'' This was not in line with the new Canadian Environmental Assessment Act, 2012, and we made a recommendation that they bring their environmental assessment process in line with the new act.

[Translation]

Senator Boisvenu: Welcome to the committee and thank you for your report. I have a few quick questions.

In 2013, an audit of oil transportation by rail was conducted, correct?

Ms. Gelfand: Rail transportation, yes.

Senator Boisvenu: Have there ever been audits of land transportation by truck and of transportation by navigable waterways?

Ms. Gelfand: We have not yet conducted an audit of land transportation by truck, but I believe that Ms. Leach conducted an audit of potential oil spills from marine vessels.

Senator Boisvenu: Who conducts the audits, your staff or contractors?

Ms. Gelfand: Our staff.

Senator Boisvenu: From your audits of either rail transportation, land transportation by truck, pipelines or navigable waterways, can you make a finding on the safest transportation method for the environment?

Ms. Gelfand: Unfortunately, we did not conduct studies to compare the different transportation methods. We conducted an audit of the oversight activities for each method and of the implementation for the rail and pipeline systems. However, we can't make findings because determining the safest transportation method was not the objective of the studies.

Senator Boisvenu: Can you make findings on the environmental impact?

Ms. Gelfand: We make findings on the regulator's work to determine whether it is being done properly.

Senator Boisvenu: I can understand that there may be administrative problems concerning the emergency measures, but do you make findings on the environmental impact? Your office deals with the environment. Is your work limited to only administrative matters or does it also involve verifying the environmental impact?

Ms. Gelfand: For the pipeline audit, we examined the conditions of approval and the regulations governing the pipeline companies. Here are two examples.

For one of its pipelines, a company had to submit to the National Energy Board a study of how the possible rupture of the pipeline would affect a caribou habitat. However, 10 years later, we discovered that the study was not on file.

Regarding a regulation, we learned that the National Energy Board audited a pipeline and found a crack with liquid sulfur leaking out of it. The National Energy Board told the company that the crack needed to be repaired, but no follow-up was recorded. The National Energy Board still does not know whether this situation is resolved.

Senator Boisvenu: You therefore do not make findings on the environmental effectiveness of transportation methods.

Ms. Gelfand: We have not yet conducted a study or audit to determine which transportation system is the safest. Up to this point, we have not looked into the issue, but we can still do so.

[English]

Senator MacDonald: Thank you. I have a couple of questions. I want to pick up on something that Senator Doyle mentioned with regard to the Canadian Environmental Assessment Act of 2012. You mentioned that an objective of the act was to enhance Aboriginal engagement. Many Aboriginal peoples were concerned they did not have the capacity to participate meaningfully in the National Energy Board's environmental assessment process.

Why wouldn't they have the ability to participate meaningfully in the process? There is a duty to consult. I'm sure they would be asked to the table. Could you define that better for me? What was the issue?

Ms. Gelfand: One of the issues is the definition of what it means to participate meaningfully in the process. The NEB has not defined that particularly, therefore it becomes difficult to measure against it. We do performance audits, wherein we look at particular criteria and decide whether or not something has achieved that goal.

In that case, we surveyed many participants. We are going back now a few years. My recollection is we surveyed a lot of participants in the EA process, and we were told that they did not feel they had the capacity to meaningfully participate in the hearings.

Senator MacDonald: That's very general. I want you to break that down. When they say they found they didn't have the capacity, what does that mean?

Ms. Gelfand: I think you would have to ask members of the First Nations, Inuit and Aboriginal peoples. You would have to ask them that specifically.

Senator MacDonald: I had hoped that you would have known.

Ms. Gelfand: There is a very serious methodology around audits in terms of what we can and can't do. We have given you as much information as we can in the report on the environmental assessment. We indicate how the NEB sets up its system. It decides whether or not it applies its own standing test and then decides whether or not somebody comments or intervenes.

This is not in line with CEAA 2012. I'll give you an example. CEAA 2012 indicates that the board must hear from those who are directly affected by the project or those with relevant information or expertise.

The NEB Act indicates that the board must hear from those who are directly affected — so it's the same — and may hear from those who have relevant information or expertise. The fact that they "may'' hear and not "must'' hear means that certain groups feel like they cannot participate meaningfully in the process, and that's where the NEB Act is not in line with CEAA 2012.

Senator MacDonald: I don't see anything there that would prevent someone from participating, but I'll go to the next question.

You said the reduced contribution made by these groups may have diminished public confidence in environmental assessments. How was their contribution reduced?

Ms. Gelfand: If they feel like they cannot participate meaningfully, if they have not been given intervenor status, for example — maybe they've only been given commentator status or "other'' status — they feel like they cannot contribute meaningfully. That's a feeling that they have.

Senator MacDonald: That's a very subjective feeling. Anyway, thank you.

Senator Eggleton: Just skimming through your report from last fall, I see after every recommendation the board's response, and I haven't found one where the first word wasn't "agreed.'' They seem to have agreed with everything you recommended.

You've previously reported on the board, I think in 2011. Were there any others?

Ms. Gelfand: I'd have to ask Kim.

Kimberley Leach, Principal, Office of the Auditor General of Canada: Transportation of dangerous products was 2011, and then the 2012 chapter on environmental assessments were the two most recent.

Senator Eggleton: What happens in follow-up here? When you did your report of last fall, were you also following up on the previous reports as to whether or not they had completed the recommendations you made or whether there were still some outstanding?

Ms. Gelfand: I'll let Kim answer in more detail but, yes, normally when we go back to an entity, we try to do some follow-up. In this case we did that.

Can I comment on the board agreeing with most of our recommendations? For the most part most entities that are audited will eventually agree with the recommendations. That's a pretty normal thing.

I will pass it over to Kim in terms of where we followed up.

Ms. Leach: I would also like to add that the National Energy Board developed a very comprehensive corrective action plan. The responses to the recommendations you see in the chapter were followed by a comprehensive corrective action plan and they made progress on that. That's posted on their website as well.

On the issue of follow-up, there was a 2011 chapter we did on the transportation of dangerous products where we looked at the National Energy Board and looked at specific things. We looked at the Emergency Procedures Manuals and looked to see where there were deficiencies.

Companies prepare emergency procedures manuals and submit those to the National Energy Board. The NEB reviews those to see if there are deficiencies, and if there are they are to follow up with the companies to ensure those are corrected.

In 2011, we took a sample of 30 manuals and looked to see if the deficiencies had been corrected. We found that only 1 in 30 had been corrected. In this audit, we followed up and took another example of 30, and we found in this case that 15 had been corrected.

Senator Eggleton: Is that 15 out of 30?

Ms. Leach: Sorry, it was 20 out of 30, so there were still 10. One-third were still deficient. That's why we can say there was progress, because previously there was just one.

Senator Eggleton: Several years later.

Ms. Leach: There was progress, but we still view that as a concern.

Senator Eggleton: Who do they report to in terms of their implementation plans? You say they have implementation plans. Do they report to the minister responsible for energy?

Ms. Gelfand: My understanding is they would report to the Minister of Natural Resources.

Senator Eggleton: To the minister or to Parliament?

Ms. Gelfand: Through the minister to Parliament.

Senator Eggleton: I guess in this latest report they would not have reported on anything yet. It is not even a year old.

Ms. Gelfand: I don't know. They already have an action plan.

Senator Eggleton: They do have an action plan coming out of the report of 2015?

Ms. Leach: That is right. It's publicly posted on their website, and I have one here.

Senator Eggleton: Their progress report is publicly available?

Ms. Leach: Publicly available, that's right.

Senator Eggleton: When you go in a year or so later and find 1 of 30, or 20 of 30, does the ministry also oversee the implementation? Is the board, because of its independence, not required to do that?

Ms. Gelfand: My guess is it's up to us to go in and oversee it. Nobody else would be doing that, would be my understanding. They probably have an internal audit function, most entities have that now, but in terms of external auditors that would be the role of the commissioner or the Auditor General.

Senator Eggleton: Can I ask the clerk to get this report to see how they are implementing these things, because a lot of them are relevant to safety and public engagement. They are very vital issues in this whole matter.

We also may need to have the National Energy Board in. I know it's sensitive — we don't want them to talk about the hearings — but we want them to talk about the implementation of the auditor's report. Perhaps we should consider having them in because it's vital that they up their game here, as is suggested by the auditor.

The Chair: First of all, has it ever been done before? We have to address where we would stop on the questions. We'll talk with the steering committee.

Senator Eggleton: Just the audit. To go beyond that would be improper.

Senator Runciman: The audit focused on the follow-up as opposed to the review process itself. I guess there is no suggestion that there is a more exhaustive process or more onerous conditions with respect to the review process. You didn't have any comment on that at all.

Ms. Gelfand: Are you speaking about the environmental assessment review process?

Senator Runciman: Yes, the NEB process. This is what we're talking about, right?

Ms. Gelfand: There are two different audits.

Senator Runciman: The comments we are dealing with here are with regard to the follow-up. Through the course of this study, were you looking at the review process itself or the follow-up on the recommendations that came out of the NEB?

Ms. Gelfand: In the report that we tabled in the fall of 2015, we did follow up on the emergency manuals, but we also looked at whether or not the NEB was doing its job in ensuring compliance with conditions of approval for pipelines and with the general regulations that pipelines have to follow.

Senator Runciman: And you felt they were lacking?

Ms. Gelfand: That's correct. We took representative samples of approval conditions and regulations where they had already found deficiencies, and we went to see if they had done the proper follow-up.

Senator Runciman: As part of that, did you also determine whether the applicants had complied with the conditions?

Ms. Gelfand: Interestingly enough, we found that in most cases the applicant had complied but the NEB had not been able to show that to us.

Senator Runciman: They didn't check it off, but they had followed the conditions set?

Ms. Gelfand: For example, the study on the effects of the caribou, the NEB didn't know that it didn't have that study. The company had it, but the NEB had to phone up the company to get that study.

In the case of the sulphur leak, the NEB asked the company to fix it but never went back to check that it was actually fixed. Likely it was fixed, however there was no follow-up by the NEB to make sure that it was fixed.

Senator Runciman: I appreciate that. My point was simply that, as far as we know, most of the conditions were complied with.

[Translation]

Senator Boisvenu: I would like to go back to your audit work. Are the people on your staff who conduct the audits engineers or specialists in the pipeline or oil transportation field?

Ms. Gelfand: Our employees are auditors and have expertise in a number of fields. They must all have expertise in a specific field, but we also have consultants and we often hire contractors to provide outside expertise. We always have two or three consultants. In this case, they are people who have experience in the pipeline field. They give advice and help us conduct our audit.

Senator Boisvenu: Does your audit also take into account the best possible technology and comparisons with other countries using pipelines to transport oil? I realize that we would like to live in an ideal world, but is this audit only administrative? You have a mandate as the environment commissioner. Do you make findings on the environmental impact of oil transportation by pipeline? It is clear to me that since, as the office of the environment commissioner, you do not assess the qualitative aspect of this transportation method and strictly limit yourself to regulatory compliance, a large piece of the puzzle is missing.

Ms. Gelfand: According to the commissioner's mandate, at the Office of the Auditor General, I conduct audits and report the results of my audits to Parliament.

Senator Boisvenu: Who establishes the framework for the audit? The commissioner's office? The act? The framework can be very limited or very broad.

Ms. Gelfand: Absolutely. We establish the criteria and obtain the approval —

Senator Boisvenu: So the auditor establishes the framework for the audit.

Ms. Gelfand: Yes. We also always obtain the approval of the people being audited so that they can assert that the audit criteria are acceptable.

Senator Boisvenu: However, findings still are not made on the use of pipelines as a transportation method from an environmental protection perspective.

Ms. Gelfand: In this case, you are right. We make findings to determine whether the National Energy Board did the job it is mandated to do, which is to ensure compliance with the conditions of approval and the regulations. That is its job.

[English]

The Chair: Ms. Gelfand, Ms. Leach, thank you very much for your presentations.

If members agree, while waiting for the next witness we could take a minute to have an in-camera meeting on the date of the tabling of the report.

(The committee continued in camera.)

(The committee resumed in public.)

The Chair: Our next witness is Mr. Phil Benson from Teamsters Canada. This is Mr. Benson's fourth appearance before this committee since 2006.

Welcome back. Mr. Benson, you may begin your presentation, and afterwards the senators will have questions for you.

Phil Benson, Lobbyist, Teamsters Canada: Thank you very much, Mr. Chair. It is wonderful to be here, as always.

Teamsters Canada is, of course, Canada's transportation union. In the case of your inquiry today, we have the Teamsters Canada Rail Conference, which represents almost every running trade — that is, locomotive engineers and conductors in Canada — with very few exceptions. One, sadly, was the Lac-Mégantic disaster.

We have Teamsters Canada Construction/Pipeline Division which, of course, by the title, lets you know they are part of the crafts that build pipelines.

Directly in Fort McMurray, we have a few thousand members doing various works in the projects. Recently, with the great disaster in Fort McMurray, a lot of our membership is, of course, out of work. Some are getting back to work. One of the most poignant pictures I saw was of Sister Angela Pelger from Local 362. Her day job is to drive buses and workers to and from Fort McMurray to the projects. In this case, of course, she was driving evacuees. The picture is of her standing beside her bus wearing the only clean clothes she had — her PJs. We hope they get back to work soon. Our hearts and minds go out to them.

First, we support the government process in determining the future of these pipeline projects. We support that process. We believe in the protection of the environment and public safety, respect for First Nation and Metis. The projects would be good for Canada and, most importantly, to develop a social licence that is needed to continue with the projects. I thank you for having these meetings, because these are the kinds of meetings that, hopefully, will help to build the social licence that is needed.

Starting with crude oil, you probably have heard this before, but crude oil is conventional oil. It has a UN designation number. It comes in various colours, from light to heavy, sweet to sour. This is the traditional oil you would see moved through pipelines or by rail.

In Canada, we also have Syncrude, synthetic crude. Synthetic crude is a premium product. It sells at a premium price. Because it is so clean, it is in demand for the low-sulphur products that we want to see in diesel and in cars.

The second would be fracked oil. Fracked oil is, of course, a new creation, a creation of the fracking process. It is different from conventional oil or synthetic crude mostly because it has a lot of gas, or at least some of it does.

When they tested after Lac-Mégantic for how much gas was in it, it basically broke the needle on the machine — so much gas, in fact, it can't be transported by pipeline unless it is degasified. We saw what happened in Lac-Mégantic with that product.

The next one is bitumen. Bitumen is tar, basically. It is a product of the oil sands. It is inert and can be safely transported.

The last is diluted bitumen, or "dilbit.'' They add naphtha or a product to make it more liquid so they can transport it by rail or pipeline.

From Lac-Mégantic, in some of the committees we sat on, we had a bit of concern about the diluted bitumen. We focused on fracked oil. The feeling was that diluted bitumen would not explode or burn. Of course, after Algoma, we understood that is not correct. Diluted bitumen, because of its constituent nature, can have bad results. In Algoma, northern Ontario, it was just a few kilometres from a city.

On the rail side, we talk about the three cars. We have the DOT-111s. They're the older models, being phased out in part. DOT-111s can still carry a lot of products. They can probably carry conventional crude oil, mostly because you might have an environmental problem, but the chances of it burning are pretty small.

After Lac-Mégantic, they created a DOT-112. Before the committee in the other place we expressed our concern that it would not be sufficient if there were an accident. Of course, in Algoma and elsewhere, it proved that was true — that the DOT-112s, in fact, are still insufficient to contain some of these products. The new ones will be TC-117s, and we will also express our concerns.

We crash test cars, buses and planes. We crash test everything. We don't crash test the railcars; we simply rely upon the engineering. We think that is a mistake. That was the reason why we thought DOT-112s would perhaps be insufficient: in fact, when they crashed, they were.

For the rail industry as a whole, the major problem in rail continues to be the rail companies' self-governance and self-regulation. We are conducting a review of safety management systems and fatigue in the other place, the other transport committee.

The problem with SMS continues. If you remember the committee on the "Safer Railways Act,'' we talked about safety management systems. The reason we had the 2011 amendments was because Transport Canada actually went out and inspected, and they found out that basically the results were very bad: 100 per cent of rail, 67 per cent of crossings and 28 per cent of locum engineers were defective. That is not what the companies were telling them.

The way that Transport Canada was doing it was simply to audit. They took the government information check boxes. Sadly, testimony by the union that represents inspectors before the committee in the other place indicated that today that is precisely how they are checking railways; they sit at their desks checking boxes.

The best way to keep safe the movement of oil products by rail is to make sure they stay on the track. We need government oversight to do much more than check boxes and do audits.

I have talked to you extensively about fatigue. Recently we had the anniversary of the Hinton disaster. We have talked extensively about it. All of the concerns that this Senate committee expressed in 2011 about fatigue with the Rail Safety Act, I will tell you that nothing has happened — nothing.

In the other place we're pushing strongly to have the same kind of regulatory rule setting that is done in trucking and for pilots. We just completed the pilot study two years ago and they just went into effect.

Because of Hinton they left these things to collective bargaining, and you can't deal with it there. No public safety or health and safety of workers issue should be left to collective bargaining. We need those rules to be put in place and we hope to move forward with it.

As for pipelines, they are incredibly safe, as we know. It is the safest and most inexpensive way to move products. Having gone to some of the presentations, there is a lot of criticism about issues that I think people have problems understanding, like waterways. People don't realize, for instance, with Energy East on the St. Lawrence — and it would be the same elsewhere — that they actually do horizontal tunnelling to bury the lines underneath the bedrock, they have safety check valves, and on and on. I am sure the pipeline people can fill you in on that.

It is an interesting analysis, when you hear the presentations, on the lengths they go to for safety. The failure rate or problems in Canada was 0.185 per cent. Europe was 2.82. It is very small. Most of the spills are small. Certainly on the oil side we're not going to have explosions or any problems like that.

The other thing that is bothersome for us is the lack of understanding of the role that this sector plays in Canada. People call it the driving engine. I will not go that far. I will say it's an important part of our economy. We can see that from the brief shutdown of the oil sands in Alberta because of the disaster of the Fort McMurray fires. Basically, this quarter will be lost, and perhaps the next quarter.

I will call your attention to the CMHC stress test. This is not an oil agency. It is the Canadian Mortgage and Housing Corporation. They looked at what would happen if oil was $35 a barrel for five years. The result: 26 per cent reduction in house prices and unemployment at 12.5 per cent — cold, dark depression.

Regarding the use of oil going forward, there are a couple of interesting studies that I have seen reported in Reuters. One was a study on the OECD's use of oil. They say it flatlined in 1985, and from 2005 it has been declining.

Another study predicted that the peak oil will be 2030, about 50 million barrels a day and thereafter declining. We can see that even in Saudi Arabia, looking at a post-oil economy.

That said, we are sitting on the third largest oil resource in the world. I cannot see a day when that will not be used. If not for transporting people in cars or otherwise, it will be a resource we will be using for a long, long time.

Before we get to questions, there is one thing I find cuts me to the quick. It is one of the criticisms I hear all the time: "It's just short-term work.'' When people are sitting in their homes at their computers, they have to realize that their house was a "short-term work'' for a construction worker. The bridge they go across was a "short-term work'' for a construction worker. This building was a "short-term work'' for a construction worker. It's the nature of the beast. You work to put yourselves unemployed by building the building. You work to put yourself unemployed.

Right now we have thousands of Teamsters and there are many thousands of other crafts. They are hoping this process will work its way through and, if it all comes together right, that they will have a chance to go out and work on that short-term project to earn the money to pay their mortgage, save for their kids' education and save for retirement.

With that, I will open up and hopefully answer as many questions as I can. As always, if I can't I will endeavour to get you the answers.

The Chair: Once again, Mr. Benson, thank you very much for your presentation.

Senator Eggleton: The last time you were here you talked about fatigue with respect to the railway operations. I was going to ask you about that but you answered that. You said there was no progress.

Let me ask you about something newer. Just last month the government put Protective Direction 36 into effect which deals with providing municipalities and first responders in those different municipalities and communities right on the lines, with information about the transportation of the dangerous goods.

Tell me how you and your union members see this. What is your take on it? Is it being implemented smoothly or are there problems?

Mr. Benson: I think the answer, whether it is smooth or sufficient, would be an answer for the first responders.

Of course, first responders are the people on the train who are taking their lives in their hands going back to see why it came off and what they are carrying.

Our position on the safety management systems and all this information is that it should be public. Basically, the safety management systems are quasi-regulatory: they are part of an act. Yet, if you ask a bureaucrat here, "What does it say?'' They say "We can't tell you. It's a secret.''

Part of social licence is information and transparency. We think these types of things are a good start, but I think a member of the public has a right to know what's going through their backyard. I think you have a right to know what's going through the backyard. I think you have a right to know what safety management says about how it's going to be handled. I think you have a right to know what the ERAP looks like. For politicians — and this is part of the oversight issue — how can you conduct oversight of something if you can't get any information on it because it's a "corporate secret?''

Senator Eggleton: Nobody disagrees with providing it to the municipalities and first responders. The counter argument is — and I'm not saying I agree with it — that you may not be transporting any dangerous goods if the public finds out what's going through lines in advance and there is the fright factor from that. What is your thought about that?

Mr. Benson: I think it's a bigger fright factor when people put up a straw man. When there is a lack of transparency, a lack of openness, it allows the straw man to win the day.

These types of projects have a lot to do with the transportation of products. If you look at Mississauga, since Mississauga there has been almost absolutely no problem. If you start with the car, it's a wrapped-coil tank car, something we thought the gas/oil should go in. It's too small and not economically viable, but it's the safest way to transport that type of product.

I think people need to realize that they have knowledge, and with that knowledge comes social licence. Without that, it becomes a constant fight. You can never beat a straw man when your arm's tied behind your back and you can't explain the total package.

All that's left is, "It's safe because we say it's safe, because we told you it's safe.'' In the modern world, that isn't good enough.

Senator Runciman: I agree with your comment regarding the position of the union with respect to informing first responders. I may be wrong on this, but 20 years or so ago, for example, the chemical industry had response teams. In eastern Ontario, for example, DuPont had response teams if there was nitric acid, ammonia or whatever dangerous goods it might be.

In my part of the world, those plants are no longer there. You wonder about those industry response teams. Where will they be located now? They don't have the industry they used to work for in many parts of the province that I represent. That's another reason why I would think the first responders should not only be informed but there should be some training, and perhaps the industry itself. How you would go about doing that, I'm not sure, but they should be supporting that kind of training for smaller communities.

I live in Brockville, which is not too far from here, a city of 20,000. A year and a half ago we had 26 cars derail on the western limits of the city. I think 13 of them had residue jet fuel. You think of what could have happened. A lot of residents were phoning me, people I have known for years and live along that rail line and were concerned about safety.

I would like to talk to you about safety. We had witnesses here before us saying that these are cost efficiencies that have not jeopardized safety. However, as someone who just sits at a rail crossing once and a while and looks at the length of these freight trains today, they are about three times longer than they uses to be and there is less staff on them. You no longer have cabooses on them. You see them going through at 80 miles an hour and weaving like this because of the length of them.

I would like to hear your comments with respect to the risk of tripling the size of these freight trains. I understand the cost efficiencies, but it seems to me there should be a safety issue there as well.

Mr. Benson: First on the ERAPs. We have been working extensively through the TDG directorate on that. In fact, there is an ongoing working group.

Congratulations to the government. In the budget I think there was $143 million, and part of that is for ERAP and training. If I am incorrect I apologize, but I understand the industry ERAP teams are still in place. That's moving along in a much better way.

Yes, regarding the length of the train — and as I have talked to some of the locomotive engineers and conductors — you can't see the end of it. There is that issue. The second issue is pure weight on the tracks. Our maintenance of way division looks after the tracks and CP most of the short lines. The problem is getting on the track to do the proper maintenance is an issue.

I would put it this way: I had an interesting discussion in the yard where they were building the trains about a problem with chlorine. I said, "What do you do? Do you have safety equipment?'' The answer was, "No, I guess we run like hell.'' The second one was for a conductor. A train came off the track. The conductor's job is to get off and walk back to see what it is. He does know what is on the train. I said, "Do you have any safety gear for chlorine?'' He said, "No, I just hope the wind is going the other way.''

But most of the chlorines and the stuff today, because of the kind of containers they are in, unlike the concerns we have with the DOT-112 and the DOT-117. They have been crash tested in the real world, and they seem to be doing an excellent job. For the length of train, I guess that's a business decision. I know a lot of our engineers would like to see something smaller, easier to control but, again, as we know, they push for every nickel, whether it's driving people to fatigue to keep going or other issues.

Senator Runciman: How many members do you have in the union across the country?

Mr. Benson: Teamsters Canada or Rail Conference?

Senator Runciman: Teamsters Canada.

Mr. Benson: About 125,000.

Senator Runciman: Those can be not just rail but employed in one way or another in the oil industry. You mentioned a few thousand in Fort McMurray, shipping oil, transporting oil.

Mr. Benson: I imagine over 20,000, 15 to 20. We also have a tank haul division, trucking and tank haul. So a lot of the gas you see running down the delivery of gas is related. At airports, we do jet fuel, topping up planes, things like that. We're horizontally and vertically integrated.

Senator Runciman: A pretty significant component of your membership.

Mr. Benson: Overall. On the pipeline and on the rail side, I imagine 12, 13, 14,000 just there.

Senator Runciman: I wrote a couple of things down. You said that the pipeline is incredibly safe, an important part of our economy. You cited the CMHC findings. What, if anything, is your organization, your union, doing to get the message out to Canadians more broadly with respect to the importance to the economy and the safety of pipelines?

We see this fight. Most of what we read and see is pretty negative for the most part. I've been talking to industry reps and others. You have an interest here, and I think you care for the broader Canadian interest. I just wonder what, if anything, you are doing.

For example, the Ontario government — they may be moderating somewhat — was opposed to Energy East coming through the province. Have you or any of your organization sat down with the Ontario government and talked about the negative impacts to the province going forward if we don't recognize a way to do this safely but do it?

Mr. Benson: As the Teamsters, of course, we are also part of building trades of various organizations. The answer is yes, not us personally but certainly through our affiliates and our various people.

It's a bigger issue than just us talking to people. One of the biggest problems, just like with rail and pipelines is that, through the last administration at least, there was the idea that the pipelines were going to go. It gave an opportunity for a huge straw man to be set up.

I'll give you an example, when I talk to my friends in British Columbia — I grew up there; I still have property there — if you look at the existing Kinder Morgan pipeline, it has been transporting oil out of the harbour for years. What they don't understand is that a pipeline is just a conduit; it's just a pipe. What goes into the pipe? In the case of Vancouver, that's where their gas, diesel and home oil comes from. Shut it down, and I guess you're going to have to bring gas in on barges and something else. Even for Energy East, it would carry conventional oil. It would carry Syncrude, and, yes, it would carry diluted bitumen. It depends what the customer wants to put in it.

The biggest issue with this is not oil at all. It's the issue of CO2, climate change and dealing with the oil sands in general. When you see actions, for instance, of the Ontario government yesterday, the leaked release of whatever they are doing, if you look at Mr. Trudeau's government moving forward with climate change action in a real way, I think it's a bigger picture than just these projects and these jobs. I think the industry as a whole has sort of stood back and not taken the lead in that.

If you look at people like Trans-Canada, they have a huge investment in renewables: nuclear, which is not a renewable but is carbon free; solar; a huge generator of wind power. It's a way for them to balance off the carbon footprint of what they are doing.

To me, there have been a lot of lost opportunities, lost leadership, but it's that big picture when you see people talking.

I'll give you another example. I always laugh about this one. I'll ask all of you: Syncrude is an open pit mine. I was up there last year, and it's the size of Prince Edward Island, right? It's the size of New Brunswick. It's 100 square miles. Ten square miles have already been reclaimed.

To give an example, Montreal, Toronto, Ottawa, Edmonton are like 1,300 to 1,700 square miles. That's how big they are. This 90 square miles that is producing Syncrude oil, which is very clean and desirable, would fit inside a suburb. At Syncrude — that's the Canada oil sands — they have this huge tailing pond, and I know a few ducks died. Eighty per cent of the water is reused, and most of the rest goes up the pipe. That's the steam you see. So when people claim it's a huge use of water, there may be other ones. I don't think they've told their story very well. That's part of the problem.

When I was up there what impressed me was that they had a real good story to tell, but they don't seem to be expressing it well. I always laugh when you see the stars go up. It looks huge but, in reality, it's the size of a suburb in any of the cities you live in. We have gotten a billion barrels of oil out of there so far, hundreds of millions of person hours working. I think we have to do a better job of telling the story of what actually happens.

Senator Runciman: Agreed.

Senator Doyle: On rail safety, you mentioned fatigue management, and you talked about it here at committee before. A few of us are new members to the committee. Can you give us an overview of what your concerns are?

Mr. Benson: Thank you very much, Senator Doyle.

Basically fatigue science, and I've done the trucking and pilot, so I'm somewhat familiar with it. You have 24 hours in a day, and you need between 10 to 12 hours to rest, to get your 8 hours' opportunity to sleep, which leaves you between 12 to 14 hours a day to work. There is a lot more to it; this is bare bones. So any time that's exceeded, you start building up fatigue. The science is quite clear that, within a few days, your performance goes down. In fact, within a few days your reaction times and thinking are somewhat equivalent to a drunk. In the long run science shows that you develop obesity, diseases and you die younger.

We are doing a study now that can't be done in Transport because it's not in their silo, but we are arranging it through academics. A study of truckers in the States showed that they died between 12 to 17 years earlier than the general public. With fatigue, when you look at the pilot world and the trucking world, by regulation, we've set the maximum hours that you can work, taking into account circadian rhythms, taking into account the time of day you start. There are regulations. Those regulations were set after the inquiry resulting from the Hinton disaster over 30 years ago. The rest was left to collective bargaining. Quite simply, these matters should never be left to collective bargaining, and they can never be resolved by collective bargaining for two reasons.

If we take the rest provisions that exist today, the companies violate them — these are contractual agreements — 1,000 to 1,400 times a month. Workers can wait 10 hours to get a call out and then be expected to work 12 to 14 hours. They can go to bed for 3 hours and get called out to work for 12 hours. You simply cannot do that.

Second, fatigue management is the icing on the cake on top of the rules. As far as I can tell, there is no fatigue management in the rail industry. In 2011, I was told by a bureaucrat working on a study that they went to a rail company and said they wanted to see the company's fatigue management plan. The rail company representative walked over to a cabinet, took it out and handed it to him. The bureaucrat said they wanted to see how the rail company implemented it, and the company representative said, "You said we had to have one. You didn't say we had to implement it.''

It's not humane, and it's not just a public safety issue; it is a health and safety issue. It is a cost to Canada's health care. There is a social cost to their families. That is part of the reason why, in the other place, we were calling for a few things.

One is to have these rules put in place. The second is to have Health Canada, Transport Canada and the Labour Program conduct a study so that we can look at how much it actually costs society in terms of health care and people, not just for rail workers but for all transportation workers.

The third is to stop this silo that occurs between the Labour Program and Transport Canada. All workers under the federal sphere fall under the Labour Program, except for people running trades: pilots, truckers, locum engineers and conductors. They are dealt with by Transport Canada. At those meetings, when we're setting the hours and I ask that we look at the health and safety consequences, the answer is that they can't because it's not in their mandate.

This government made it clear that they want to use science-based evidence rule making, but you cannot do that if you are not willing to look at the science. If the silos stop you from looking at the science you will end up with stupid rules.

Today, we have people who are exhausted. Internal studies showed 67 per cent of people admitted to falling asleep on the job, never mind the social consequences like divorces and effects on peoples' kids' lives. You cannot expect to have that public safety mandate fulfilled if workers are so tired that they can't do their jobs properly.

Senator Doyle: In your opinion, have there been any improvements since Lac-Mégantic?

Mr. Benson: Nothing. Are you talking about fatigue?

Senator Doyle: Rail safety generally.

Mr. Benson: The answer is yes and no. We have full respect for then Minister Raitt; she was doing her best. I'll give you an example of what the trouble with the industry is. After Lac-Mégantic — and God bless all of those people — Minister Raitt came out with a set of rules. Believe it or not, under the Rail Safety Act — section 20, I think — the Railway Association of Canada, the lobby group for rail, gets to propose rules. After Lac-Mégantic, they proposed a set of rules and changed the minister's directives to what we regarded as business as usual.

Of the DOT-111s, 5,000 were taken off the chain. This was a good move. If you take a look at the number of DOT- 111s in the field and take their normal attrition rate — the rate at which they are retired at the end of their lifespan — it works out to 5,000. Did we do stuff? Yes, we have done a lot of things on ERAPs, but what we haven't done is anything that would cost the railway company a nickel, and it saddens me a bit.

It's the same with fatigue management. It will cost a nickel, so they can't do it. I have no idea why rail companies are treated differently from airlines or trucking companies, especially after the situation in Mississauga involving chlorine. At the end of day we get, in our opinion, half measures and insufficient steps.

Senator Doyle: I think you had concerns that sections of Bill C-52 would allow the Railway Association of Canada to seek changes to the rules.

Mr. Benson: It has been there forever, Senator Doyle. When we reviewed the act we made many amendments and changes and, I'll be honest with you, I think it was a big improvement. Some of the key changes that were needed were making the government inspect rather than not, making the SMSs more transparent and open, getting rid of the private police force and to eliminate section 20 so they can no longer ask to propose rules.

In the trucking world, I can ask for changes to the rules. I would go to the advisory council, I would seek changes to the rules and if there is consensus we advise the minister that we'd like changes made to the rules. But I can't go directly to a minister under the act and say, "Here are the changes we want.''

Even under the rules that you passed, we are supposed to be part and parcel of the creation of SMSs, but so far there has been nothing. There are supposed to be risk assessments on major changes, but we have not seen those yet. Part of the problem is that the rules you passed in 2011, which again in a minor sense were improvements, weren't enacted. The companies didn't want them, in my opinion. They weren't enacted post-Lac-Mégantic, and then Minister Raitt pushed them. They are just coming into effect now. We spent five years waiting for regulations to pass.

There is a lot of work to do, senator, and I'm more than happy to see you privately and work on some of them together.

Senator MacDonald: Thank you, Mr. Benson, for being here again.

Before I ask my couple of questions, I want to make a point though because I think we both have the same goal here. I enjoyed your breakdown of the movement of oils and your description of different oils: crude, Syncrude, fracked oil and bitumen. I always want to make the point to people, when they mention the term "tar'' in relation to bitumen, tar is a coal derivative, and we should always use the word oil in because it is an oil derivative.

I was intrigued when you mentioned that the railcars have never been crash tested. Why don't they crash test them? Should they? Do they do so in other countries?

Mr. Benson: First, on crude oil, Syncrude, fracked oil and diluted bitumen aren't crude oil. We do not have a UN designation for them yet. We would like to get one, but I understand that it won't happen unless Canada wants to do it because they only exist here.

On crash testing, we raised this with representatives at the Teamsters Canada Rail Conference. First, they're not expensive. I thought they were expensive units, but I understand these types of oil cars are only $100,000 and change. They just have never done it because it would cost money, and they don't want to spend it. That's the only thing I can think of.

I have seen tests where they have done exploded charge tests to get rid of gas, et cetera. I think they should be crash tested, because the DOT-112s were supposed to be safer following the changes to the DOT-111s to make them thicker, et cetera, yet failed disastrously when they crashed them in a real location.

In Algoma, you were two kilometres away from a major incident. There was one in West Virginia that was, I think, 800 metres away from a town.

It seems to me if we're going to carry this stuff, it goes to the public confidence Senator Runciman or Senator Eggleton talked about. The public confidence and transparency and do everything we can to show the public that we have done everything we can and, if there is an accident, it was an accident that we couldn't foresee.

I think they should be crash tested. I think they should take them out, put some diluted bitumen or fracked oil in them, crash them into a wall or take them off a deck to see what happens. See if it's safe to do it.

Senator MacDonald: I think it's a reasonable proposal, frankly. But it also highlights, again, that pipelines are a well-established and proven delivery system for petroleum. They are safe, reliable and economically efficient. Here we are; there are absolutely no regulations in this country to stop the cross-provincial border transportation of petroleum by rail or truck.

I guess I want to ask you the position of the Teamsters in regard to the overall transportation of goods by rail and by truck. I'm one of those people who would like to see more and more petroleum as much as possible go by pipeline, but I'm also one of those people who would like more trucks off the road and more of this stuff on rail. There is so much heavy truck on the road today. What is the position of Teamsters Canada on that?

Mr. Benson: It might surprise you because we are a transportation union: we do truck, we do rail, we do everything. We see it as complement; we don't see it as a supplement. One of the problems in trucking, even though their hours of service, because of the way they're set up protecting the circadian rhythm that even the pilots don't have and the rail, forget it, is probably still a little long. You're always going to need truckers for the last mile, the last 10 miles, or the last 40 miles, and at least they'll be home at night.

I understand there are a lot of hotshots and lots of stuff you have problems moving and you have to use trucks long distance to do it. I just think it's a matter of the business case. I know that rail is using, as you can tell, mile-long trains with material on them, containers, et cetera. I think that would be a great study and a great question to figure out what the problems are because at the end of day there is work for all. It all has to be moved somehow.

For instance, we do car haul at our car haul division and in the old days we used to take them off the line and drive them to the lot in Toronto. That's how we started. We move a lot by rail and a lot by truck; it just depends on where it's going.

That should be the issue when moving stuff. If it's coming out of Vancouver a lot of it is going onto train because there is nowhere to put a truck. Out of Montreal, rail uses a lot of intermodal from Montreal and from Halifax. I guess it's just a question of business decisions, when people want things, and it's also this idea of when they deregulated trucking. We called it sweatshops on wheels, but the truck itself was the warehouse. They used to have a warehouse and they made the truck the warehouse direct from the consumer.

You can see, from even Wal-Mart going down, that kind of model is starting to fade a bit. We assume over time a business case will develop, but I'd love to see a major study. I would love the Minister of Transport to look at that whole idea. If they're looking at greenhouse gases and climate change, it's certainly one the significant users of diesel and producers.

Senator MacDonald: I'm glad I brought it up now and I'm glad you responded the way you did. Thank you.

Mr. Benson: It's a win-win situation at the end of the day.

[Translation]

Senator Boisvenu: Mr. Benson, please excuse me for leaving the room earlier. I had a commitment.

Congratulations the job you do advocating for workers in the energy sector. I would like to note that these workers provide a very important contribution to Canada's economy.

I found your presentation very useful. Your assessment of the use of pipelines seems very positive in terms of safety and the export of resources. The pipeline will play an essential role in exporting resources to other users in the country and will improve Canada's trade balance.

You made a direct link between the workers' qualify of life and resource development. I am from Abitibi, in northern Quebec. The use of resources is directly tied to the workers' quality of life, during both their working life and their retirement.

As an organization, how do you promote resource development and the use of pipelines as a transportation method? You don't make many public statements.

[English]

Mr. Benson: The best thing we can do at this point is to support the process the government has undertaken. I think that was something that was missing and lacking, especially for us. We are older, we are used to people making decisions and us sort of agreeing with them, but as a baby boomer I feel sad that we are not the most important group and picked-on group anymore as millennials.

Two things about millennials: they really care about these issues, and they are not people who just say, "You made a decision; that's okay.'' Third, look at their overall power to move everything, from social media to the Internet to how we distribute news, the total disruption of everything from cars to newspapers, and on and on, it's the process of gaining that social licence and getting people on board.

I was proud and pleased to see the government signing the UN Declaration on the Rights of Indigenous Peoples. If you look at the Supreme Court decisions that have come down, especially in British Columbia and elsewhere, the respect for our First Nations and how we deal with that is critical, as well as how we get these younger people on board and understand that this is part of their future too.

A lesson for us is to eat a little bit of humble pie and sit back and let them try and meet those expectations. We could be thumping the deck and talking about the thousands of people who will get work and we're very appreciative if and when it happens, we hope it does, but we have to meet all the other expectations and needs to get that licence. We will never convince everybody, but hopefully there will be enough people.

[Translation]

Senator Boisvenu: Recently, the Union des producteurs agricoles came out against the pipeline. I don't want to rub salt in the wound, but I remember when the Harper government was very unpopular with the unions. The unions were very effective at criticizing some of the Conservative government's actions. I thought that the unions could contribute to the public debate on this particular matter by highlighting such issues as jobs, the workers' quality of life and economic development in Canada. However, you have not been heard promoting the use of pipelines.

[English]

Mr. Benson: The one thing to remember, senator, is that we have a lot of skin in the game. One of the criticisms our organization, or any organization like us would face from the public or from the people who are certainly very opposed to this, is that you have skin in the game.

Our members not only have skin in the game but our members are like the overall general public. If we polled our members in Quebec, they are concerned about protecting the environment, they are concerned about protecting public safety and they are concerned about respecting First Nations and Metis rights. They're concerned that it's good for Canada in the long run, and that's how we're addressing it.

We're trying to meet those expectations. Otherwise, like I say, the days of standing up and going "rah-rah,'' it's like when I talked today about the criticism of short-term work. I came out of construction. My first craft is tradesperson. You work to put yourself out of work. It is all short-term work. When people say that short-term work is bad, well, that's how I make my living.

The way we express it to people, we have to be respectful, we have to be informative and as helpful as we can through this process to transparency, honesty, eliminating opaqueness and talking about the good and the bad. That's a better way of addressing it than attacking anybody. It's not productive any other way.

Hats off to the Senate: I have always said that the Senate is one place I can come to talk about these issues that is not politically charged. They are the kinds of studies that you do so well, and that is why I appreciated so much to be able to come today to speak on this.

We have to be respectful and thoughtful. We have to answer the questions. It's not attacking the straw man; it's trying to explain things that people had not thought of.

My friends in B.C. didn't realize that the pipeline coming down, yes, sends oil overseas, but it delivers all their gas. They had no idea. That is what we have to explain more and more rather than just tell people, "This is good for the country; it's great for work; just build it.'' I think we have to meet those expectations, and it's much harder to meet expectations than it is to get angry, and I think that's how we are approaching it — at least it's how I am approaching it.

The Chair: It's reciprocal, Mr. Benson. We appreciate your presentation. You will always be more than welcome at this committee.

Tomorrow we will be meeting exceptionally at seven o'clock because we are meeting with Safe Rail Communities, and it will be here in this same room.

(The committee adjourned.)