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Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources

Issue 46 - Evidence - May 30, 2013


OTTAWA, Thursday, May 30, 2013

The Standing Senate Committee on Energy, the Environment and Natural Resources met this day, at 8:02 a.m., to study the current state of the safety elements of the bulk transport of hydrocarbon products in Canada.

Senator Richard Neufeld (Chair) in the chair.

[English]

The Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Richard Neufeld. I am a senator from British Columbia and chair of this committee. I would like to welcome honourable senators, members of the public with us in the room, and our viewers across the country who are watching on television.

I would now ask senators around the table to introduce themselves, beginning with the deputy chair.

Senator Mitchell: Grant Mitchell from Alberta.

Senator McCoy: Elaine McCoy, an Alberta senator.

Senator Seidman: Judith Seidman from Montreal, Quebec.

Senator Wallace: John Wallace from New Brunswick.

Senator Enverga: Tobias Enverga from Ontario.

Senator Unger: Betty Unger from Edmonton, Alberta.

The Chair: Welcome, senator, to our committee meeting. We look forward to hearing your questions.

I would like to introduce our staff. Our clerk is Lynn Gordon, and our two Library of Parliament analysts are Sam Banks and Marc LeBlanc.

On November 28, 2012, our committee was authorized by the Senate to initiate a study on the safe transportation of hydrocarbons in Canada. The study will examine and compare domestic and international regulatory regime standards and best practices relating to the safe transport of hydrocarbons by transmission pipelines, marine tanker vessels and rail cars. To date, our committee has held 12 meetings on the study. We have also travelled to Calgary for fact-finding meetings, as well we have had site visits to Sarnia and Hamilton, Ontario.

Today, I am pleased to welcome to the first segment of our meeting from the Assembly of First Nations, William David, Director, Implementing Rights; and Daniel Pujdak, Senior Policy Analyst, Implementing Rights. Gentlemen, welcome. It is good to see you here today. If you can make your presentation, we will then go around the table and I am sure there will be some questions.

Thank you and go ahead.

William David, Director, Implementing Rights, Assembly of First Nations: Thank you very much. I am with the Implementing Rights unit at the AFN. The AFN recently reorganized itself, so what we are calling the Implementing Rights unit is a combination of our program files and activities on, predominantly, land rights and also our environmental files. I am from Akwesasne, and I have a background in both environmental engineering and law.

I will structure the presentation with some brief opening remarks. Then I will hand it over to my colleague to cover some other aspects of the presentation, and we will open it up for questions.

To be very brief, we have been preparing a submission. Unfortunately, we did not manage to get it pulled together before today. That is because we are having our open house tonight. I believe all members of the committee should have received an invitation. If not, please feel free to drop by our offices tonight from 3 to 6 for our open house.

I will be relatively broad, because our submission will be a little more in-depth. The core point of our presentation is that the transmission of hydrocarbons and hydrocarbon safety are issues of critical importance to First Nations, and issues related to hydrocarbon safety, particularly the transport of hydrocarbons, impact First Nations distinctly from other individuals and groups in Canada and the United States.

When we talk about impacts on First Nations, there are also impacts that may occur upon other individuals, such as human health impacts. A lot of First Nations can be impacted distinctly because of remoteness, and it can slow down response time.

More important for us are the considerations of rights. Whereas other Canadians — really, all people — have a very close and distinct relationship with the environment, a lot of times it is mitigated and mediated by our lifestyles. First Nations lifestyles, as it turns out, are very close to the environment. When environmental resources are impacted in any way, shape or form, it can impact food security, treaty rights and inherent rights to harvest. Indeed, we have seen precisely that happen over the last several years, particularly in the context of large spills.

As a result, informing communications to our First Nations on response actions, as well as involving First Nations so that First Nations even know what is being transported through their territories, or in some cases through their reserves, is of critical importance.

On that point, one of the issues that comes up predominantly with pipelines, although we do not know the extent to which it occurs with rail and marine, is the use of dilutants and surfactants, particularly to make the transmission of hydrocarbons easier through pipelines. A lot of times, First Nations do not know the nature of the material that is travelling through their traditional territories — the reserves — that could impact their critical resources, which is itself a problem. However, when other chemical mixtures are added into the hydrocarbon product — those mixtures either as individual compounds or in terms of their cumulative effects with the product itself — can have unpredictable, diverse and extremely severe impacts on critical resources for First Nations, predominantly for fisheries and wildlife.

Not knowing what is in there is a matter for governments and First Nations, particularly First Nations as governments, because we do not know how they will react in the environment. Oftentimes, First Nations will never receive any communications on what was actually in those pipes or how it affected their habitats, resources and lands. That is a problem.

The framework we use in this country the AFN would call "prior informed consent." Everybody would at least agree that consultation and accommodation is a robust framework for dealing with resource issues. We are not sure how First Nations can be accommodated or even consulted if they do not know what they are being consulted on.

We do take the position that any kind of new pipeline, a substantial change to a pipeline proposal or, for instance, a change to a marine or rail transport proposal requires the consent of First Nations.

It is one thing to have a passenger rail car passing through the territory, but it is another to have something that is potentially carrying crude or bitumen. We think that proposal to carry crude or bitumen actually triggers the duty to consult.

On that point, and I will turn it over to my colleague in a second, Bill C-38 and Bill C-45 introduced a lot of changes to the National Energy Board Act. One of the more minor ones has to do with procuring standing and intervenor status at the National Energy Board. This is a concern that the Assembly of First Nations raised last year. We have seen how it has been playing out and have now identified that First Nations are, in fact, having problems even getting intervenor status in front of the National Energy Board to raise these issues of rights, consultation and accommodation.

Those standing rules need to be relaxed or maybe we need to be thinking about a completely different regulatory process to deal with First Nations rights because the environmental regulatory process is not open to First Nations right now.

With that, I will turn it over to my colleague.

Daniel Pujdak, Senior Policy Analyst, Implementing Rights, Assembly of First Nations: Given that there are some substantive issues with the actual approvals process that Mr. David was just talking about, after approvals are granted and a transportation network is set up — be it a pipeline transportation network, a rail transportation network or a shipping corridor for hydrocarbon products — there are significant questions as to the current capacity for First Nations to respond in an emergency event.

The issue with response is twofold. The first is that there is insufficient data about current capacity. Transport Canada is currently undertaking a study in that regard. At this time, no First Nations sit on the panel of that study nor has there been any participant funding provided, which calls into question the capacity for that study to fully take into consideration all aspects related to First Nations current capacity to respond.

The other component about response capacity that must be considered is the structure of current programs. Right now, Aboriginal Affairs and Northern Development Canada provides some broad work on emergency management with First Nations. However, there is no dedicated funding at this time for hydrocarbon product response in an emergency event.

In the event that a hydrocarbon product should spill, it raises further questions about aftermath in terms of liability and compensation.

Canada has a fairly robust structure in terms of marine oil spills. Canada goes by three different international funds. The first one is the CLC, the Convention on Civil Liability for Oil Pollution Damage, which permits the Crown to sue ship owners in an event. Should those funds not be sufficient, there are other funds. Canada operates the Ship-source Oil Pollution Fund here domestically. There is a cap to that amount of money and it is only used for certain components such as environmental rehabilitation or loss of income to fisheries. It is not clear at this point, though, if that liability covers cultural damages to First Nations.

For instance, there is an inherent Aboriginal right value to many national resources, be it a fish, wildlife or plants for traditional or medicinal use. It is difficult to value those. It is difficult to place a number on it. Under the current regime, it is not clear if liability extends to damages on that.

Furthermore, at this point, the marine component is only eligible for ship-source pollution, so if there were to be a transport accident, let us say a rail car ends up in a river, there is no way to cover that under the current regime.

Lastly, there are multiple jurisdiction questions in terms of movement of hydrocarbon products. These need to be reconciled, be it a First Nations government jurisdiction in the traditional laws and governance, provincial or federal Crown. Each of these parties has a role in determining jurisdiction and liability. At this point, there is no reconciliation process to determine that component.

At this time, we have put out the substantive basis of our arguments and unless there are further points that Mr. David would like to make, I think we are ready to turn it over to question and answer.

The Chair: Thank you. I will ask you a couple of questions to start with.

You said changes that were made recently, with regard to the National Energy Board, have limited First Nations' ability to get intervenor funding.

Can you tell me on which projects this happened that the NEB is holding hearings? I am familiar with what hearings are going on, but which ones have you not been able to access funding for?

Mr. David: It is not a matter of accessing funding. It is a matter of accessing the process. There are two that we have identified. To be clear, we wanted to keep an open mind. We keep an open mind about how the law is interpreted. We think it is possible to interpret the law in such a way that First Nations can access process.

The two we are aware of are Trans Mountain Kinder Morgan, which was an attempt by Tsleil-Waututh First Nation to gain intervenor status. They have since failed. They may proceed to judicial review. The other one is the Line 9 expansion and while it is an ongoing process, the amount of paperwork associated with gaining intervenor status was the subject of some discussion between First Nations and First Nations organizations. Looking at the test that the NEB was proposing, as well as the amount of information the First Nations need to come up with in advance of being able to participate was, in fact, a barrier to First Nations organizations intervening in that.

We have not, and I do not have information on whether or not the NEB denied any First Nations standing in that particular project, but it is the level of effort you have to put in to gain access that is cited as a barrier.

The Chair: Coming from British Columbia, I would be surprised, to be frank, that there would be no funding for the Kinder Morgan pipeline. I believe they just filed their initial papers in the last week. That part is very interesting to me.

Mr. David: Once you get the standing, the intervenor funding is there and I am sure First Nations would raise issues about the adequacy of the funding. However, we have not gotten that far into implementation of the act yet. This is just the ability to access the NEB process itself, not the ability to access the funding.

The Chair: Adequacy I can understand. No one has adequate funds. It does not matter who you are or where you come from, we hear that on a constant basis. I appreciate that.

In March, Doug Eyford was appointed to work with First Nations, especially on energy projects in the West. Can you tell me whether you have met or anyone has met with Mr. Eyford and how has that gone? How have those meetings transpired, and what do you think about it?

Mr. David: I have no thoughts on it, per se. I do not believe that we have met with him yet. I think there has been some correspondence back and forth trying to set up some kind of a meeting, but if I recall correctly, our preference would be for him to meet with the First Nations in British Columbia first.

This is an issue of AFN's own capacity challenges and our own issues about adequacy of funding. We do not have established structures to have in-depth conversations with First Nations across the country, or particularly in B.C., on how they feel about this or about pipelines in general. There is a serious capacity challenge. We can only talk about broad policy issues. That is something I would rather leave to those First Nations that are in B.C. to comment on. I believe the position the AFN has taken to date is it would be better for him to engage the First Nations before coming to the assembly.

The Chair: Do you know if Chief Shawn Atleo has met with him?

Mr. David: That is what I am referring to, yes.

The Chair: You are not sure whether or not he has?

Mr. David: That is correct.

The Chair: Okay. Thank you.

Senator Mitchell: Thanks very much for being here. I am quite interested in the different expression of rights or implications for land-based Aboriginal groups, say with respect to the proposed gateway pipeline, and coastal Aboriginal groups. Jim Prentice, the former minister, gave a speech several months ago and he said the coastal Aboriginal groups have not been consulted at all.

Could you give us an idea of what rights they have in that process? Clearly, the pipeline does not run over their land, but they have the question of spills. How do their rights get expressed in that?

Mr. Pujdak: Under the NEB act, as amended in Bill C-38, the NEB does not have the scope to consider upstream or downstream impacts anymore. This means that downstream coastal nations will not have access to that process, as we were previously discussing. With respect to rights, Section 35 rights are articulated and expressed in many different ways for coastal and inland First Nations.

B.C. happens to have a large amount of First Nations that actively engage in fisheries. Coastal First Nations are very vocal about their fisheries rights in B.C. In terms of that specific pipeline project, though, I am not sure if I, from the AFN, would be the best person to make note of expression of rights in B.C. I think that that is something those First Nations would have to respectfully make.

Senator Mitchell: That is a good point. Maybe you will answer this in the same way. You mentioned the problem of inadequate resources for spills and reclamation on land pipelines, but what about the coastal issue? Are you aware of any of the coastal groups, the government or the pipeline companies themselves actually addressing the issue of response and resources for offshore spills in the process of developing the gateway proposal? These are isolated areas that many Aboriginal peoples live in.

Mr. David: To start, we are not. The only thing I can say that might be related is that I do know that the government, as part of its C-38 and C-45 announcements, did include substantial amounts of funding for coastal-zone safety arising from spills, I believe. However, we do not know anything about that. I would be surprised if coastal First Nations have been engaged on it as well, but they might well have been.

Senator Mitchell: Are there cases where there is a strong working relationship between an Aboriginal group and a pipeline company? Are there lessons learned from that? If there are cases where that is the case — where it does work well — what is it that makes that work well? What could you emphasize in that regard?

Mr. David: Early, serious and frequent engagement. There has to be a deep engagement from the company. I believe that there are such examples out there. There are examples that are out there on any number of development projects, including pipelines.

The only caveat that I would say on pipelines, and one of the things that makes pipelines distinct from other forms of development, is that the pipe itself will traverse a number of First Nations' traditional territories. For the pipe to actually work, the company has to engage all of those First Nations — and all of those First Nations have interest along the way — in order to have a successful project.

I am sure there are individual First Nation/pipeline company collaborations. What I am less familiar with is whether or not there are any companies that actually have the ability to secure that consent all the way down the pipe.

Senator Patterson: Thank you, Mr. Chair. Thank you for the informative presentation. I was a little surprised, Mr. David, that, when you talked about the difficulties that you thought First Nations were having with regard to standing, you suggested, as a preferable alternative to changing the process or the rules around standing, a stand-alone or separate review process dedicated to Aboriginal rights. If it is a problem, I agree that it should be addressed. However, how would you justify a process that would be defined by the stakeholder's interest — in your case Aboriginal rights — as opposed to the interests of landowners, businesses, and others? How would you justify that? Would it not be better to have everybody who is impacted in the same room?

Mr. David: Yes, it would be ideal. That is not how it is developed, though.

This is the crux of most of our submissions on those omnibus acts and the thrust of most of our attempted engagements with the Crown, since then, on regulatory reform and responsible resource development. That would be great if it could be done.

It has not been. It is not something that is unique to the reforms brought on by C-38 or C-45. It has been difficult to get these issues in front of the regulatory process for a very long time.

The way that I would justify it is to say that First Nations' rights are constitutional rights. These regulatory processes are derived from legislation, which, in turn, is derived from the Constitution.

If constitutional rights cannot be informed by a regulatory or a policy process, never mind by a piece of legislation, frankly, I think that maybe an alternative process is something that is worth looking at to vindicate those rights. It is a harsh reality, but it is also true. It so happens that property rights never happened to make it into section 7 of the Charter. Section 25 of the Charter protects Aboriginal rights. Section 35 of the Constitution does as well.

Senator Patterson: Thank you for that. Mr. Pujdak, you mentioned that Transport Canada was doing a study of capacity, but there was no funding for First Nations participation or engagement, nor was there engagement, as I understand it. I have a very simple question. Have you asked to be engaged? Who did you approach?

Mr. Pujdak: We actually found out about the study and got in touch with Transport Canada multiple times before we were invited to participate.

When we had a discussion with Transport Canada with respect to participant funding and to ensuring that First Nations were actively involved with the project, we were told to raise it with the deputy minister. We sent a letter to the deputy minister to flag that as a concern from the AFN. We will continue to flag that as a concern.

Senator Patterson: You talked about the cultural rights and your concern that they might not be taken into account with respect to damages that might be suffered from a spill. You are familiar with the policy of Transport Canada. I believe it is fair to say, generally, that the polluter pays for the full cost of cleanup. I know you mentioned there was a cap. Has there been a situation where the cultural rights — medicine, herbs, et cetera — as you described them, have not been recognized in a process around damage, or is this a theoretical concern that you are raising?

Mr. David: As far as we are concerned, not only cultural rights but also the human health rights of First Nations were not adequately considered with respect to the Rainbow spill, which was just a couple of years ago. Even getting First Nations community engagement was difficult. That is in Alberta.

That was really more of a provincial regulatory issue, but, at the same time, we did not see it there.

The other thing I would caution about with the polluter pays principle is that I believe that there is a recent court case coming out of Ontario suggesting that the principle might not be as robust as we thought in terms of a governing principle for environmental legislation. We are also a little bit leery about that.

I would point out that, when we are talking about Aboriginal rights, and First Nations' rights in particular, if there is damage in such a way that it breaks First Nations' ability to have a relationship with the land, we are talking about damage that not only cannot be compensated but that also actually could be a complete abrogation of First Nations' rights, in violation of the Constitution. Also, it could be the end of a cultural practice and a way of life for a people if the break were sufficiently profound. The stakes here for First Nations are quite high, particularly when we get into massive spills, which I admit are more rare than minor spills but seem to happen with alarming frequency. I do not want to pick on pipelines, because there is a fair share of massive marine and rail spills. The stakes are high.

Senator Patterson: The reference to that case would be appreciated, I am sure.

Senator McCoy: The preceding questions have gone some way to answering my questions. Your presentation was excellent but I am just trying to get something clear in my head. In an ideal world, what would you have? The options are marine, rail, road and pipeline. There are pre-approvals for projects and there is the spill response. I presume there are also operations. I would imagine that is a matrix of eight or so; although your ask would be somewhat modified in each case. I am not clear what your ask would be.

Mr. David: One way to think of it is as an alternative process for the approvals and, as you are saying, to think about how First Nations are engaged in various aspects. For many of these aspects, such as operations, I would suggest that the engagement is quite limited. Ultimately, I would like to see sufficient recognition of the importance of First Nations inherent treaty rights, the importance of protection of the environment for First Nations cultural continuation, and the space for First Nations to be able to articulate that that is how they want to be engaged.

All First Nations support development, but all First Nations support responsible development. It is the space for each First Nation to be able to articulate what responsibility means and what responsible development means to them through all phases.

Right now, we have a series of government and Crown proposals, policies, regulations and approval processes that are all separate and distinct and run by the government that continually try to interface with what is for us the same core issue: How to secure recognition for our rights from the state; how to relate those rights to our environments and resources; and how to define and articulate a vision for responsible development moving forward. That would be best accomplished with sufficient space, but constructing that space is difficult, given the diversity of government contacts in terms of operations, response and approvals. If I could have anything, that is what I would want.

Senator McCoy: I suppose it would be more complex because of the diversity in First Nations across the country and the physical situation of each instance.

Mr. David: Indeed, you are seeing some of that in our comments here today. It is difficult for us to comment on several particular situations involving First Nations, because it is up to them to articulate what responsible development means to them as well as not only how they view their rights but also how they view their rights being impacted by an oil spill, which in itself is a very technical discussion.

Senator McCoy: We met yesterday with East Coast Marine Emergency Response. We had only one hour with them and, of course, they had much more to tell us than we could fit in an hour. It strikes me that there was no reference to any sensitivity to First Nations issues at all; and yet they must be interfacing with some traditional lands at the very least quite frequently. They cleaned up the spill at Rainbow Lake, for example.

Mr. David: When it comes to response, there is very little. An incremental ask that would be helpful is more engagement with the First Nations. The issue with Rainbow was who engaged with the First Nations and what was the First Nation being told. I believe that discussion was mediated mainly in the press or through organizations like ours. It was a much more political issue than a response issue just because established communications had not been put in place. It is difficult because if you wait until you are in a response situation, there is no time. It is easy to turn what should be a technical discussion into a political discussion.

Senator McCoy: It is all based on long-term, in-depth relationships.

Mr. David: What makes a successful resource project or a successful pipeline project is the same for everything because they all boil down to relationships.

Senator Mitchell: This has been really good. Thanks very much. Mr. David, you mentioned that you are not concerned about passenger trains going across and you made the comparison to a pipeline going across land. What about freight trains carrying bitumen? I guess you have talked around that, but have you given specific consideration to that as compared to pipelines?

Mr. David: Yes. The Assembly of First Nations has a resolution to support a feasibility study for the proposal by G Seven Generations Ltd., G7G that would involve transport of bitumen by railcar, I believe from Hardisty, Alberta, to Valdez, Alaska, to connect to the Trans-Alaska Pipeline System. I am not sure that the AFN supports the proposal, but they want to have a good hard look at the feasibility of transporting by rail. I can see it raising a number of fairly complex technical and legal issues, in particular for those First Nations that are along the route. It is not only under consideration by the AFN but also something that we support more consideration of.

Senator Mitchell: You have not come to a conclusion about whether it is more or less safe than other ways. There is no official determination about, given the choice and everything else being equal, which would be more palatable?

Mr. David: No, we are not close to that. We want to make sure we have a proper information basis upon which to make that decision. To be very clear, that is the kind of decision that would be made by the First Nations along the route. However, it is something we are examining.

Senator Mitchell: I would be interested in your opinion on the following: From what I understand, as a final resort — and it would only be that, I guess — the federal government has the power to expropriate Aboriginal lands if they determine ultimately that they want to do that. That would not be a particularly wise thing to do, but are you aware that that is the case? Could they actually expropriate? Have they ever done that for a pipeline?

Mr. David: I am not aware that they have ever done that; I do not believe they have. My position is that they could not do that.

Senator Mitchell: That gives Aboriginal groups, in the final analysis, a great deal of power in this. They just say, no. What is the recourse?

Mr. David: The AFN's position is clear, and Canadian law is clear: In some cases, full consent of First Nations may be required prior to a development project going forward. It has to be balanced with the concept that floats around out there that there are no vetoes in Canadian law. We take that to mean that First Nations cannot say no arbitrarily. However, if a proposal or a project would have sufficiently deleterious impacts on First Nations cultures and rights, then full consent would be required, and presumably that consent could be withheld.

Senator Wallace: Mr. David, you expressed concerns about the transport of petroleum, which I am sure all Canadians would have concerns about, in terms of understanding what is being transported, the safety aspects and the ability to respond to an incident. Any landowners, including First Nations, would have those same concerns, and the ability to respond to an incident for certain.

Are you suggesting that such information through the approval process, whether for a pipeline or other means of transport, would not be available to First Nations people? My belief is that all of that information would come out in a hearing and be available, whether it would impact private landowners or First Nations people. Is your concern that you are not able to access that information or that it would not be provided in an adequate way through the current process?

Mr. David: It is both. In terms of being able to know the information, that was a problem that was flagged by the state department with respect to the Keystone response. The rationale there was that benzene was being used to dilute hydrocarbon product. There was a spill; first responders came in. Benzene is volatile, which means that when exposed to air it turns to gas. The responders were not aware that there was something volatile in the mix and suffered a number of occupational health issues as a consequence. That was unknown to all of them that that particular chemical was in the mix. Our understanding from industry is that it is a position of industry that those issues, namely, what is used to dilute hydrocarbon product, is a matter of a trade secret. As a result, they do not like to divulge it. We do have concerns about whether First Nations can access that through the process. That is one.

The second one is a major issue in there, and it is more an issue of resources and capacity. Let us say we know that benzene or hexachlorobenzene is being used as a dilutant. First Nations have to be able to understand what hexachlorobenzene is and how it acts in the environment and its ecotoxicology. That is a technical question. Then they have to be able to relate that to their actual rights and how they use those resources. There is also the question of, once armed with the information, can First Nations actually use it because it is so technical. Therefore, it is both issues.

Senator Wallace: That obviously would be critically important if a spill response incident occurred. It would seem to me, though, that it is a concern of all Canadians and all landowners. It is not exclusive to First Nations. I see you nodding that you would agree with that. I take from that the message would be for the purpose of our consideration of the safety aspects of transporting petroleum, that is something we should take seriously in assessing or making recommendations as to the ability to respond to an incident to recover the contaminant and the reclamation of any environmental issues. It is important to understand what is involved in the spill in order to have appropriate response. That issue is not exclusive to First Nations at all.

Mr. David: No, it is not. It is an issue of accessibility of information. In the United States, they would call it "right to know." I am happy to call it just the "accessibility of environmental information." That is something that is shared by everyone. Our only issue is that we then have to relate it to our specific issues. Others would have to do the same for their specific issues.

Senator Wallace: Mr. David, I thought you were suggesting that First Nations people may want to be in a position to respond to an incident and minimize environmental impact, and that is understandable. Again, I think, as we have seen when incidents have occurred, all Canadians have that concern and would want to participate and help as well. However, legally, the fact of the matter is it is the transporter who has the responsibility to respond. They must have the funds available. There are funding regimes available to support that. You have raised the issue of the adequacy of those funds. That is a legitimate question. Would you not agree it is the obligation of the transporter to respond to the incident and implement reclamation as opposed to the landowners, including First Nations people?

Mr. David: You also have to consider that First Nations are not an interest group that is floating around out there.

Senator Wallace: I fully appreciate that.

Mr. David: First Nations are also governments. As a result, one of the things that First Nations as governments are looking for is emergency response capacity. When a spill, for instance, impacts First Nations' resources, a lot of First Nations are seeking and want to have the capacity to be able to respond. That is one point.

The second point is that the governance of the response is mitigated usually by either the federal or the provincial Crowns, neither of which may have the knowledge or the inclination to protect culturally important resources to First Nations, which is the other reason First Nations want to be involved in the governance of that response, if not the actual response itself.

I also point out that although it is true that you would want the company to be responsible, it is also true that a lot of federal-provincial-municipal governments do have and do use emergency response capacity in any number of situations, including in a spill response, and they can recover that from the cost of using it from the company. First Nations would be looking, I would think, for that sort of treatment as well.

Senator Wallace: As a committee, we should obviously be giving serious consideration to the quality of the response and the ability to respond in an effectual way.

Mr. David: Yes. I would also suggest there are ancillary benefits to First Nations having emergency response capacity. Pipelines are not the only environmental issue that is floating out there. For instance, there are legacy issues like underground storage tanks. If you have response to deal with a hydrocarbon issue in one situation, you have response in others. The thing is that those kinds of issues do fall into a jurisdictional gap where it is unclear whether or not the federal or provincial government has the responsibility for those kinds of issues, hence the other reason why First Nations would want it, but any kind of emergency response capacity which is capable of responding to First Nations' rights, interests and needs would be appreciated.

Senator Massicotte: I would like to educate myself a little bit. You responded earlier to some questions about your expropriation. I am not too aware of that. You also said that, in your interpretation, your approval must be obtained if it is reasonable, obviously, on any project or any pipeline right away. I know there is a difference between treaty rights and non-treaty rights and I can appreciate your interpretation, but give me a rundown. I know the whole issue is consult. We have not interpreted that legally as to what extent, but where does that fit in? "Consult" seems to suggest consult, not necessarily to get approval. How do you differentiate the two and how does that all fit in?

Mr. David: The duty to consult came from a couple of cases that did not really involve treaty rights; they involved efforts by First Nations to establish their rights, and they had not been established yet. Establishing recognition for First Nations' rights can take a lot of time, either through treaty or through litigation.

The court recognized that it would be unfair to First Nations to allow development to occur without any involvement from those First Nations and their territories while the status of those territories was still the subject of negotiation or litigation. It could render victories by First Nations pyrrhic. What the court decided to do, and that is where the law of consultation and accommodation comes from, is to provide some kind of interim remedy to force dialogue between First Nations and the Crown as to how lands are to be used, which is subject to claim. That line of reasoning of forced dialogue has been extended into treaty rights as well. When we talk about consultation, we also talk about accommodation, so it is not enough to talk to First Nations. It has to be a good-faith discussion. If the Crown or if the First Nations' claimed rights or interests are strong enough, the Crown has to do certain things to accommodate the future exercise of those rights, again, to prevent a later pyrrhic victory or to prevent a First Nations culture from being more or less eradicated before it can be recognized in a claim. It would be paradoxical to do so.

We think of a spectrum of consultation and accommodation requirements. On the one hand, where First Nations have a weak claim and a loose or tangential interest, maybe all that the Crown needs to do is provide notice and listen to what the First Nations have to say. At the other end of the spectrum, where it is a core right that First Nations are looking at, something that is central to their culture, maybe First Nations' consent is required.

That is what the court has said. The international law is very clear on this as well. The free, prior and informed consent, as they say, of the First Nations is required if, in this case, the Crown is contemplating any kind of development on their lands, territories or resources that could result in environmental contamination.

Senator Massicotte: The conclusion, from what I heard, though, you are using the word "consult" and you are defining it depending upon the degree of merit. I can agree with that, obviously. Everything is relative to your argument and the substance of your argument. The conclusion, though, is that if the Crown consults appropriately — let us not define that; everyone can disagree with that — the Crown does have a right to get a pipeline through even treaty lands if it properly consulted.

Mr. David: If First Nations have identified specific issues with any project, including a pipeline, and the Crown has sufficiently accommodated those issues in the eyes of the courts, the courts will allow the Crown to proceed.

Senator Massicotte: It does not mean you have to agree, but if there was sincere discussion, proper merit and consultation, they would get that right.

Mr. David: The court has been very clear about that as well. That is where the courts stand. Where First Nations stand is, in our view, any kind of development over any of our territories requires the consent. There are a variety of reasons for it, not the least of which is that the cumulative impact of environmental degradation, development and cultural assaults on First Nations has left most First Nations with very little. Any kind of impact on a lot of First Nations' inherent or treaty rights is vigorously defended.

Senator Massicotte: I appreciate that, but I think the conclusion is that the courts have basically said if consultation is adequate, you have a right to do so.

Mr. David: Yes.

Senator Unger: Mr. David, I think you made a comment that First Nations would support a proposal by rail from Hardisty to Valdez, Alaska. Was that your comment?

Mr. David: No. At our assemblies, First Nations can bring resolutions forward for consideration by the entire assembly, which is simply all of the other First Nations chiefs from across Canada. They can bring forward resolutions to ask the AFN to do something. They can bring forward resolutions to support initiatives by other First Nations.

One of our First Nations chiefs brought forward a resolution requesting that the Assembly of First Nations support a feasibility study for rail transport of hydrocarbon product. We are not conducting the study; we are supporting the conduct of a feasibility study.

Senator Unger: Which route would that be?

Mr. David: It would traverse northern Alberta; I believe maybe — or maybe not — part of British Columbia; the Yukon; and then it would extend into Alaska.

Senator Patterson: Would you consider the Mackenzie Valley?

Senator Enverga: I understand there is ongoing discussion or negotiation with the First Nations. Where are we right now? Are we just starting it or is there development? On a scale of 1 to 10, where are we right now in the negotiation? Would you comment on that?

Mr. David: Are you speaking in terms of the negotiation of First Nations' rights generally?

Senator Enverga: That is right, yes.

Mr. David: Canada passed the Constitution Act in 1982 which called for recognition and affirmation of First Nations' rights. It also called for three constitutional conferences to define those rights. To the best of my knowledge — and you have to forgive me; I am too young to have been there — those conferences were held, resulting in at best an ambiguous outcome in terms of where First Nations stand in this country in defining section 35.

I came of age in the court era, so after those constitutional talks ended, First Nations turned to the courts. The courts have articulated and defined a series of theories and a number of rights. I do not want to be too pessimistic, because one of the things that the courts have mandated and that governments have acted on more or less in varying degrees of good faith is the requirement for dialogue. There has always been an ongoing dialogue. Treaties continue to be negotiated on a bilateral basis. Treaty implementation strategies continue to be negotiated, but there is a long way to go. I think it would be a severe mischaracterization to say that even where there are treaties that the work is done, because then we have issues with how treaties are being implemented.

Senator Enverga: Would you consider the pipeline? Are you referring to that specifically or are you referring to general treaties?

Mr. David: In general, I am referring to the treaties, but the specific treaty rights are the ones that will determine the level of consultation that is required, whether or not consent is required, and the impact of those pipelines on the rights guaranteed pursuant to those treaties.

To come back to your question, even when we talk about the most fundamental issues of First Nations' land rights, still today there has not been a formal recognition of the inherent land rights of First Nations. In other words, the only land rights that First Nations have are those that are explicitly recognized through the political arm of government.

There is a case that is working its way through from British Columbia, which may actually be the first time that a court says that the inherent and pre-existing land rights of First Nations continue to exist and actually mean something in Canadian law.

We are not there yet. Until we get there, negotiations will continue to be slow because there is a fair amount of uncertainty, I think, to be fair, from the Crown's side, in terms of what it is they are dealing with. First Nations clearly articulate what we think we are dealing with, but I would say there is a gap, and maybe even a chasm, between where we stand and where the Crown stands.

Efforts to bridge that chasm occur, and they occur sporadically. In an overbroad sense, I would say we are pretty far away, despite the fact that these discussions are ongoing.

Senator Enverga: Have we made any progress at all?

Mr. David: Individual First Nations and First Nations groups have made progress on treaties. Treaties do get concluded. From time to time, treaty implementation strategies are developed, but in terms of the broad sense of where things stand, again there are ongoing discussions. There are ongoing discussions right now about treaty implementation strategies, about comprehensive claims strategies. Those discussions always continue.

The difficulty is the ambiguity created because those discussions have not been completed, I guess, to impact development and resource development. Most of it is mitigated through the lens of consultation and accommodation.

Senator Enverga: Have we established any timelines here?

Mr. David: No.

Senator Patterson: I do want to say briefly I am old enough to have participated in all three of those Aboriginal rights conferences. They were fascinating because there was a genuine attempt to find a meeting of minds in what was a very formal federal-provincial-territorial Aboriginal process.

I want to follow on Senator Massicotte's questions. I was interested, Mr. David, in your statement: We are not against development. I want to verify.

You brought up thoughtful concerns — and I thank you for that — about the shortfalls in engagement, even in operations. I think that is bad business, myself, on the part of the companies, the perceived barriers to participation in the regulatory process, including the need to review the rules regarding standing and the paper burden. You also complained that the First Nations should be involved in the emergency response plans. It is your land, and you are closest.

I share that concern and am encouraging the rangers to be available for this in my region in Nunavut. If we address those three things, let us say — and I think we have noted them — is it fair to say that First Nations would approach any development project relating to hydrocarbons with an open mind? That is what you said. Is that stated AFN policy?

Mr. David: To be very clear, AFN does not direct First Nations; it is quite the opposite. First Nations give us positions to bring forward. We would not have policies on that.

I can only give you my experience. To be frank, for some First Nations, hydrocarbon development is a very difficult sell. For some First Nations, uranium development is a very difficult sell. For some First Nations, hydroelectric development is a very hard sell, in the sense that they have had experiences or heard about experiences with particular forms of development that have either utterly or almost destroyed their communities.

Not every First Nation will be wide open to hydrocarbon development. However, my career working on environmental issues with First Nations has left me with the distinct impression that First Nations leaders are almost always willing to consider development projects, and that is because First Nations have to deal with a polycentricity of issues including health, employment and environmental issues.

If companies engage First Nations in good faith early and often, I think they would find a very fairly receptive audience. I do not want to begrudge industry, because I do not think industry is really the problem. The challenge is more on the side of the Crown. First Nations have a pre-existing relationship with the Crown that will continue, and not necessarily with those companies, although the companies can develop that relationship. The problems with the regulatory process are more problems with government policy and less issues of corporate policy or corporate relations.

I think there is more willingness there than many people believe, but I also think that the general regulatory scheme and the continuing non-recognition of First Nations treaty and inherent rights is a serious barrier in terms of both policy process and corporate relations. I feel for corporate representatives who show up in First Nations and have to deal with a gamut of issues, most of which have little to do with their project. They are asked by both First Nations leaders and the Crown to be a panacea for many of those problems, because it is the only thing they can grasp.

The Chair: Thank you, Mr. David and Mr. Pujdak, for your presentation.

I would like to make a correction for the record. When Senator McCoy asked a question, we named the wrong organization. We met with the Eastern Canada Response Corporation.

We are now pleased to welcome, from the Pembina Institute, Nathan Lemphers, Senior Policy Analyst, Oilsands.

Please proceed with your presentation, after which we will go to questions and answers.

Nathan Lemphers, Senior Policy Analyst, Oilsands, Pembina Institute: Thank you for the opportunity to present to your committee. I have prepared a slide deck, and I will walk through that for the presentation portion of this discussion.

I want to introduce the Pembina Institute to you quickly. The Pembina Institute is a national non-profit think tank that advances clean energy solutions through research, education, consulting and advocacy. It is sort of a hybrid organization. It is not a traditional NGO in that we are not grassroots. We do policy research and also fee-for-service consulting with the private and public sector. Fifty per cent of our income comes from consulting with traditional energy companies and clean energy companies, the financial services sector and three levels of government.

As the third slide shows, we have over 20 years of experience in the oil sands area working in a variety of engagement methods, from multi-stakeholder groups to intervenors in regulatory hearings, to consulting with companies, governments and communities. We have published over three dozen research reports, which are widely read in policy communities in Canada, the U.S. and the European Union.

I want to share Pembina's perspective on responsible oil sands development. We are not against tar sands development; we do not want to shut it down. We are for responsible oil sands development. In our understanding, this means that the current environmental impacts are addressed so that they are a known commodity through monitoring, that science-based limits are established, that any sort of development through innovation and technology is able to operate underneath those thresholds for the local environment, and that the prosperity generated from oil sands development is used to transition to a cleaner energy source.

As a matter of introduction, there are growing concerns, clearly, of how oil sands are developed and transported. Canadians and our downstream markets are increasing their expectations at a time when more oil is transported on older pipelines and older rail lines. It is critical for government and industry to respond with improvements in policy, regulation and legislation, rather than to marginalize the critical voices in this environment.

From what I understand, Pembina Institute is the only environmental group that is formally consulted for this study. There are many other views and experts from the environmental community that should be sought as well. I cannot be an expert on everything and I am not going to be speaking to natural gas transport or tanker safety or pipeline integrity in any amount of detail. However, I will be speaking to a number of other factors.

That said, the Pembina Institute has published a number of reports on pipelines. I have testified at the Enbridge Northern Gateway Joint Review Panel in the fall, and I am the institute's lead analyst on pipelines and oil sands research.

This presentation will look at the science of bitumen behaviour, the transparency regarding the bitumen spill data, spill preparedness and response, shipping bitumen by rail and the link to upstream oil sands development.

There is clearly the need for more studies on the fate and effect of bitumen in the natural environment once it leaves the pipeline or rail car. Most knowledge we have is from lab experiments, which do a poor job at mimicking the conditions found in the natural environment. There are different levels of degradation from the light. There is cold water, saline water with currents, storms, winds and waves, which are very difficult to mimic in laboratory experiments. All of these factors impact the ability for bitumen to float. In fact, they all cause it to sink at a faster rate.

There have been a number of reports by Enbridge, or by pipeline associations, which show that we do not have to worry about bitumen sinking. Largely those reports are, again, lab-top experiments and they do not necessarily reflect the conditions that found, say, in British Columbia's north coast. In that environment, approving pipeline and tanker traffic through areas like B.C.'s north coast, without knowing about the fate and effect of bitumen spills, is not responsible oil sands development.

We also have concerns around the transparency of bitumen spill data. As a public interest researcher, this has been quite challenging for me as an individual and us as an organization to come to a position on things like pipeline integrity. Does bitumen cause additional oil sands spill?

From our research, there is no differentiation in the spill records between types of crude oil. It is not required through the National Energy Board's onshore pipeline regulations, through Alberta's pipeline regulations or the CSA standards as well. They consider all crude oil types to be the same. As we are learning from recent bitumen spills, for instance, in Marshall, Michigan, bitumen does behave differently once it is outside the pipe. It is important to look historically at what has been the different spill record and attempt to differentiate between the two. Oftentimes the pipelines that bitumen is carried on are multi-phased. They carry different products, including refined products or lighter, sweeter crudes as well.

There needs to be more data on bitumen spills to have a grounded, facts-driven conversation that is publicly available, free and on-line. We should not need to rely on industry, the media, or NGOs like the Pembina Institute for information and analysis. That should be done in the public interest by the government. It took an eleven-month investigation, which cost Global News tens of thousands of dollars, to be able to access spill data for the past 10 years. It is a project I did not have the time or the resources for and Global News did it for the country. However, it would be nice if that could be done by regulators like the National Energy Board.

I also wanted to touch on spill preparedness and response. The spill preparedness and response of companies need to reflect the nature of bitumen when it leaves the pipe. It is not in public interest to simply pretend that all oils are the same types of oil. Clearly, diluted bitumen as it is transported in pipelines is a different substance. As Mr. David noted, there are benzenes in it, which are highly carcinogenic. There are always polycyclic aromatic hydrocarbons, heavy metals and high amounts of hydrogen sulfide because it is a very sour form of crude. These all have acute and chronic toxicity issues associated with them that have immediate impacts for first responders.

First responders had to be called off the scene in Marshall, Michigan. Due to benzenes and hydrogen sulfides, they had to evacuate hundreds of households in the area because of the exposure to the hydrocarbons that they would not have been expecting if it was just a standard crude oil. It also sinks faster than conventional oil.

The use of traditional cleanup technologies like sea booms and skimmers, which clean up the oil on the surface of the water, does not do a very good job on land. When the oil is submerged it is quite difficult. That is a lesson we learned both in Marshall, Michigan and in the Gulf of Mexico. That submerged oil is very difficult to clean up and, in fact, incredibly expensive. The Marshall, Michigan's spill, from Enbridge, is not the most expensive pipeline spill in history in the U.S., cresting $1 billion right now. Three years later, the EPA says it is not cleaned up.

There needs to be the proper tools, technologies, regulation and management to reflect the task at hand. It needs to be done proactively. We do not need to wait until Canada has a Marshall, Michigan spill or a BP blowout like in the Gulf to be able to have robust and precautionary management regimes for handling bitumen.

There is also the transport of bitumen by rail. I will speak about that shortly. In general, we are not opposed to rail, just as we are not opposed to pipelines as a rule. There are ways in which the safety can be improved on them. I will get into that.

Despite what the rail industry may say, rail is a marginal transportation option for oil sands crude right now, even though it is booming according to the newspapers. It conveys only 4 per cent of Western Canada's oil supply. It costs two to four times more per barrel than to ship bitumen by pipelines. In the narrow economic window, where there is a high differential between heavy crude and light crude and different prices in coastal markets versus inland markets, pipeline companies are able to arbitrage between the different markets and actually gain profit. As there are more linkages between inland markets in the U.S. Midwest and the U.S. Gulf Coast, you will begin to see, as you are seeing now, those differentials close in. If there is a large scale pipeline like Keystone XL, it would really be a game changer for the economic viability of the transportation of bitumen by rail.

There are also concerns about whether or not rail companies can transport oil sands safely. There have been recent spills in Jansen, Saskatchewan and White River, Ontario as well, which have brought it into the media's light. Those are relatively small spills, to be honest.

If you look at concerns raised by Transport Canada and Department of Transport in the States, both have raised concerns about a certain type of tank car — the DOT 111 — which comprises around 69 per cent of America's tank car fleet. They have had long-standing concerns about the ability for that tank car to prevent leaks once there is a derailment.

Therefore, given that there are these long-standing, well-known concerns, and there is potentially the opportunity to scale up transporting bitumen by rail, there is a clear opportunity to strengthen the requirements for rail companies so that Canadians and the environment are protected.

I have often been asked by other environmental groups and the media to say which is better — is rail better or are pipelines better? Again, it is very difficult for me to be able to analyze which is actually better. There is contradictory information coming from different places. Pipeline companies will say their transportation method emits three times less carbon than rail; whereas rail companies will say they are two times less than pipeline companies. They are completely talking past one another.

There is also a difference of frequency versus volume of spills, where rail will tend to spill more frequently but in smaller volumes, and pipelines will spill less often but can have a much larger volume because they are large-scale pipelines, and at pressure as well.

It is very difficult, in all of that methodological noise, to come out with a clear-cut answer as to which is better than the other. Both have risks, and the risks of both can be mitigated.

Regardless, rail still results in potential oil tanker traffic and additional oil sands development.

Slide 11 is courtesy of the Canadian Association of Petroleum Producers. The dotted line is the Canadian oil supply and the dark box is the existing pipeline capacity out of Western Canada. The story it tells is that, right now, we are facing an impending pipeline bottleneck within the next few years. Unless more pipelines are built, there will be no way for the oil to get out of Western Canada, aside from rail or truck traffic. In that environment, any additional pipeline capacity will cause a corresponding increase in oil sands development. The oil sands producers will not produce oil if they cannot get it to market. That production will be shut in.

Essentially, pipeline or rail will act as a gas pedal for the oil sands industry at this point in time.

The next slide shows Environment Canada data that look at greenhouse gas emissions, both historical and projected out over the next decade. The information shows that if industry growth predictions are correct, greenhouse gas emissions and carbon pollution from the oil sands will double in 10 years.

Slide 13 again shows data from Environment Canada. This shows the absolute change in emissions from 2010 to 2020. The top of the bar, national total, is where our emissions are headed; it is well over a 50 megatonne gain. Our national target requires us to reduce emissions by well over 80 during that time period.

You see the reason why we are not meeting the national target: In this case, it is the oil sands. It is the outlier on the right-hand side of the graph. That is despite strong gains from passenger transport and coal power from new federal climate regs and Ontario phasing out coal power.

In this growth scenario for the oil sands, they will be the reason why Canada fails to meet our international climate commitments, unless something is done about that.

If you flip to the slide 14, given the climate emissions trajectory of the oil sands and lack of climate plan, it is challenging to make the case that oil sands development is responsible. When it comes to transportation of oil sands, climate change is the unifying concern, from the west coast, to the east coast, to the arctic coast and to downstream markets in the U.S. and the EU. If you do not address upstream issues, the concern for oil sands transport will become more vocal.

I realize this study is about hydrocarbon transport; it is not about hydrocarbon production. I am trying to make the case that the two are linked, and they need to be considered when you are looking at hydrocarbon transportation, as well.

This study represents an opportunity to find out how Canada can improve safety when transporting hydrocarbons in the oil sands. However, it could help shine a light on what it will take for the pipelines to regain their social licence to operate. In our view, this includes additional science on bitumen behaviour, improved transparency on oil sands spills, tailored rail and pipeline spill preparedness response plans and technologies, understanding the link between bitumen transport methods, and downstream tankers and upstream extraction.

Thanks for your patience. I am now available to take questions.

Senator McCoy: Thank you for an excellent presentation. Let me concentrate on this transparency aspect. I am thinking of the new monitoring regime that we have in Alberta for the oil sands, which is administered by an independent, stand-alone body. It has committed to and is, in fact, doing what it has committed to; it is implementing real-time publication of the monitoring data — not interpretations, but data — online.

I have dabbled very slightly to see how that portal works. I am curious, since you are more the expert than I am. Have you had an opportunity to explore that facility?

Mr. Lemphers: Yes, I have. There are two, in fact. Alberta has their oil sands information portal, which started up a few years ago. They consulted us quite well at the Pembina Institute. Over the course of a year, we had several meetings regarding what data would be helpful for us as public interest researchers to know, because we often bug them for data that are not released.

They were able to come up with the portal, which is quite effective; it saves us a lot of time, and it is able to be used by the public, as well. Therefore, we think the Alberta portal is quite strong, and they are working to improve it, which is a great step forward in terms of understanding the impacts from the oil sands.

A few months ago, a joint federal-Alberta group released an information portal, as well, based on similar technologies, and this is new information coming in from the joint Alberta-Canada oil sands monitoring program. These are the new data that are coming off; they are not data that are historical or that look at permits and things like that, which the Alberta data do.

That is a work-in-progress. Full implementation of that monitoring program will not be in until 2015. However, there is new research, looking at actual pollutants of concern. The previous monitoring system did not consider surface and groundwater interactions; it did not consider contaminants a concern — contaminants like naphthenic acids or benzenes in the water downstream. This new one does, and it does provide real-time data, which is a great step forward.

The comments I was making were around bitumen spills. Both of those platforms do not address hydrocarbon transport. It is just for the oil sands monitoring itself.

Senator McCoy: That is where my next question is going. The spills are all recorded now; they are reported, are they not?

Mr. Lemphers: Yes. There are different thresholds. The ERCB has thresholds of around 1,000 litres; whereas, for the National Energy Board, anything under 100 litres, you do not have to report. Alberta has a different threshold. However, they do not have to report what type of oil is contained in the spill. As borne out in the Marshall, Michigan example, the type of oil spilled has direct impact on human health.

Senator McCoy: What would you think of using the existing portals as a model for reporting spill information from any mode of transportation for bulk hydrocarbons?

Mr. Lemphers: I think it is a good model to base it off of. It is geo-referenced, so it looks like a Google Earth screen; you can manipulate it the same way, and it is highly interactive. It is a good model to work from. I mentioned the investigative report Global did and it is the same sort of format where you can enter in your postal code and it shows where the spills have been for the last 15 or 20 years, what it spilled, how much, things like that. That is a good model to work off, and a clear opportunity for the government to show transparency and accountability as well.

Senator McCoy: It would build on B.C.'s example that you were involved in, in listing the chemical content of the materials used in fracking for shoal gas, for example, making all of that transparent.

Mr. Lemphers: Yes. Right now you sometimes have to use Access to Information to access the data, and oftentimes you still get it in paper copies. It is difficult to have facts-based discussions about these sorts of things or for landowners to find out if they have anything they should be concerned about. It is clearly a low-hanging fruit that could be improved on.

Senator McCoy: For the examples you have given us, would you forward the URLs for the various digital portals that we have been discussing to the clerk?

Mr. Lemphers: Sure.

Senator Massicotte: Thank you for being with us and thank you to your institute for the work you do. I think you are an important organization in this whole process.

Can I get more information on some of your presentation? Page 13, for instance, is relative to the effect of the oil sands. You mentioned verbally this is from 2010 to 2020.

Mr. Lemphers: That is right.

Senator Massicotte: The next 10 years. You start from zero in 2010, and you see a percentage increase, decrease.

Mr. Lemphers: Those are absolute increases.

Senator Massicotte: Relative to each sector?

Mr. Lemphers: Yes.

Senator Massicotte: You are unconvinced that the Government of Canada will meet its targets as committed relative to its point of reference.

Mr. Lemphers: Yes. The government has noted that as well.

Senator Massicotte: The government also says they are halfway there. You do not buy that?

Mr. Lemphers: They will be halfway there in 2020. It is a nuance that is not necessarily shared with the public. Halfway there in 2020 is still a failing grade, and will not be enough to meet our international commitments.

Senator Massicotte: Compared to its commitment as this government or compared to some other reference point?

Mr. Lemphers: No. This is what was agreed to by the current Conservative government in Copenhagen.

Senator Massicotte: When I look at the oil sands, what percentage is that? What percentage of the total CO2 is that when you look at that trend? What is it today percentage-wise in 2010, what will it be in 2020?

Mr. Lemphers: I would hate to give you the wrong numbers. I believe right now it is around 9 per cent.

Senator Massicotte: Of the total GHGs?

Mr. Lemphers: For the total greenhouse gases. It is not the largest form right now, but by 2020 it will be the largest source and will eclipse things like passenger transportation as well.

Senator Massicotte: You think now it is 9 per cent and it will go up to what?

Mr. Lemphers: Thirteen or 14, I believe, but again I will to get back to you on those numbers. What is clear is that it is the fastest-growing source of greenhouse gas emissions in Canada. Where you have some sectors marginally increasing and some marginally decreasing, it will be the reason why Canada fails to meet its climate commitments as well.

Senator Massicotte: I jump to the page on intensive emissions later on, the greenhouse gases. People have disagreed upon whether that is a better test intensity or efficiency, relative to energy producers and others. Is that the right measure, to measure intensity versus an absolute volume?

Mr. Lemphers: The only number that really matters for the environment is the absolute emissions. You could be 10 per cent better per barrel, but if you are producing five times more barrels, it is inconsequential.

Senator Massicotte: Could you not argue that the world or Canada needs a certain amount of energy and coal or oil and gas producers, and if it is more efficient to be more intense, we should be less bothered about one component increasing a lot if it produces more efficiently energy compared to another component? China, as you know, used the same argument. It seems to me efficiency would be relevant and not only absolute sum, presuming there is a fixed quantum need for it.

Mr. Lemphers: Yes. I am not saying it is irrelevant. It is an opportunity. You can see on the slide that says oil sands GHG intensity; they have decreased by 26 per cent by 1990. However, you can see that they have stalled or moderately increased recently. That is because all of the low-hanging fruits have been accomplished by the oil sands industry. They have reduced the temperature in which they wash bitumen from 80 degrees to 40, put in natural gas cogeneration at their mine processing plants, which has been quite a bit a help. Given the current suite of greenhouse gas regulations provincially — there are none federally — it is hard to make the business case to do any better. When you have oil sands production projected to double in the next decade, these emissions intensities are easily eclipsed by the absolute growth in the carbon emissions.

Senator Massicotte: I agree. Look at 1990, with 136, 138 and the average over the last couple of years, maybe 84, 85. That is 35, 40 per cent improvement in intensity. It depends on what the enumerator, denominator is, but it is quite significant.

Mr. Lemphers: Twenty-six per cent is the number I have, and I happen to agree.

Senator Massicotte: Using a different number, a different starting point.

On the intensity stuff in Canada, we are replacing. The government is pushing hard, and rightfully so — including the United States — for reducing the coal-fired electrical plants. That energy replacement has to come from somewhere. You can argue it makes sense the oil sands would produce more because we have to produce more energy. That energy and effect on the environment is significantly less than the coal produced electrical plants. Would that not be considered in your calculations? Yes, because it is a lot more intense, efficient, less polluting than coal.

Mr. Lemphers: They have different uses. There are some metallurgical uses for coal, but it is predominantly electricity in this country. Oil sands is used mostly for transportation fuels and petrochemicals. It is a bit of apples and oranges, but there are certainly opportunities in other sectors, such as coal. That is the easiest sector in which you could see significant reductions in greenhouse gas emissions. As Ontario is finding out, it is an easy win to start phasing out coal and putting in natural gas, hydro, other non-emitting sources as well.

Senator Massicotte: Let me go to your next page. You talk about deterioration of the greenhouse gas effects coming from in situ, the two next pages. You say the emissions in situ will surpass that of mining by 2015. When I look at that graph, obviously in situ is going up dramatically, but also because the volume has gone up dramatically. Am I correct? Barrel for barrel, relative to open mining of oil sands, is in situ not more environmentally friendly and more intense than open mining?

Mr. Lemphers: The oil sands industry likes to make out that in situ oil sands, that is where you steam in place, there is no tailings ponds or open mine pits, that it is the greener alternative to mining. That is disingenuous. There are different environmental impacts from it. As you can see from the graph, it is two and a half times more greenhouse gas intensive. When it comes to acidifying emissions, it is three and a half times more per barrel. When you look at spatial extent, it is significantly larger. The area for mining is relatively small compared to in situ. In situ is 30 times greater in terms of area in northeastern Alberta. In terms of impact on threatened wildlife species like caribou and things Canadians are quite concerned about, like climate change, in situ is a worse performer than oil sands mining itself.

Senator Massicotte: You do not buy into what came out in the last couple of weeks. The government has basically decided to reduce the implication of environmental reviews for in situ, arguing that it was less impactful. You obviously do not agree with that. You think it is a significant error.

Mr. Lemphers: Yes, I think it is quite a significant error. I wrote about it. Hopefully, I am getting an op-ed on the subject in the Citizen tomorrow. Under the Canadian Environmental Assessment Act, 1992, in situ was not really considered either. The CEAA in 1992 had its own issues. Through C-38 and C-45, there was an opportunity to strengthen Canada's environmental assessment regime and consider things like the cumulative effects from in situ. Now, we are finding out that it is officially off the list of what can be considered for environmental review. That is deeply troubling for organizations like the Pembina Institute and many other environmental organizations.

Senator Wallace: Mr. Lemphers, you highlighted the difference in the characteristics and behaviour of bitumen versus conventional crude and how those characteristics might change spill response and the effectiveness of a spill response compared to conventional crude. As you pointed out, a lot of the information and knowledge available now comes from lab experiments.

I am wondering, though, if you are aware of or have looked at studies that resulted from real life experience when bitumen incidents have occurred. How effective was the response? Was there a need for additional or varied types of spill response capability to deal with bitumen versus conventional crude? Are there any real life experiences and studies that you have looked at?

Mr. Lemphers: There are studies coming out of the Marshall, Michigan spill. As well, the National Transportation Safety Board has done a review of that incident. The Pipeline and Hazardous Materials Safety Administration in the States, the PHMSA, which is like their National Energy Board, is also conducting a study, which should be out in a few months, from what I understand. I have not seen, to my knowledge, very many studies that have looked at it in the natural environment. What we are finding out, in places like Marshall, Michigan, is that it is quite different.

Senator Wallace: Different in the sense that your understanding would be that different types of spill response equipment and techniques might be needed to respond to a bitumen incident versus a conventional crude one?

Mr. Lemphers: Precisely. That is not to say that you cannot have better laboratory experiments. You can mimic wind and wave patterns and colder temperatures in lab experiments that mimic what you would get in the Douglas Channel on B.C.'s north coast, although I have not seen those studies. It is important that, when you are putting in those scopes, they reflect the realities of Canada's climate and our weather conditions. There is a role for the federal government to help out in the scoping of those activities and not necessarily to just leave it for industry to narrowly scope those sorts of studies. The same has been done for things like pipeline integrity, where you are saying: Is bitumen more corrosive than conventional crude oil? If you are bounding the study comparing diluted bitumen, which is heavy and sour, with conventional heavy and sour crudes, you will not find that big of a difference. However, if you are comparing it to light, sweet crudes, for which most of North America's pipeline system was designed and around which the regulations were built, you would see a significant difference. It is a matter of what frames you put on the studies and who is able to have input into those framings. That has been problematic for pipeline integrity studies, as well as for studies that look at the fate and effect of bitumen.

Senator Wallace: Back to the issue of the appropriateness of spill response equipment and techniques. As you might or might not know, Venezuela, for a number of years, has produced Orimulsion. It is a heavy crude. It is bitumen. In a lot of ways, it is quite similar to oil sands bitumen. Orimulsion was imported into Canada and used in Canada. I am wondering if you are aware of that and of any studies that might have considered Orimulsion and all of these issues we are talking about in terms of spill response and that could be useful in considering oil sands bitumen.

Mr. Lemphers: I believe that some Venezuelan Orimulsion has come into Eastern Canada. I have not looked into the studies for Venezuelan Orimulsion. They could exist.

Senator Wallace: I know there was concern about those very issues.

I have one other quick question, if I may. You highlighted a concern about the transport of bitumen by a particular railcar. Could you give us the details? It seemed to be a very technical reference you had. There was a particular railcar. Could you just give us that reference again?

Mr. Lemphers: That is the DOT-111 tank car, which makes up the majority of the tank car fleet. They carry a variety of different commodities in it, and it has not been tailored to the specific needs of bitumen, not that it needs to be. There have been long-standing concerns about it, from regulators in the United States and in Canada, regarding its safety once there is a derailment.

Senator Wallace: Are you aware of any incidents that occurred where bitumen was transported by this DOT-111 and where there were consequences, or is it a theoretical concern as opposed to one that is based upon a practicality?

Mr. Lemphers: No. There are accidents that have involved this tank car.

Senator Wallace: And highlighted these concerns?

Mr. Lemphers: Absolutely, and I could send you those references if that would be helpful.

Senator Wallace: If you could, that would be great.

Senator MacDonald: There are a few issues that I want to go into, but I will try to reduce them to a handful. In terms of the oil sands themselves, what is your basic philosophy on them? Do you want it to be developed, or do you want it to stop? Do you, in the organization, want us to stop developing the oil sands? I want to know that. Is that the goal?

Mr. Lemphers: No, not at all. As I mentioned in the beginning, we are not about stopping oil sands development. We think that it can be developed responsibly and that, right now, it is not being developed responsibly. However, there are opportunities and solutions out there to improve how the oil sands are extracted.

Senator MacDonald: That is fair enough. That is a starting point. We have something to work with. I am not sure of the exact percentages, but I think it was Edison who said that discovering or inventing something was 10 per cent inspiration and 90 per cent perspiration. If I could throw another old saying in there, you cannot make an omelette without breaking a few eggs. If we want to develop the oil sands, we have to be constantly going at it and improving technologies and methodology. I think they have done that. We know that Canada emits about 2 per cent of the world's carbon emissions. We are a cold country. We need energy. We also need energy to provide and keep our lifestyle and give Canadians the type of benefits they have come to expect. I believe strongly that these oil sands have to be developed. Can you elaborate on your concerns about the way they develop and where they are being remiss? I certainly have sympathy for the position that, if we are going to be exporting this stuff around the globe and around North America, we have to put it in pipelines that are very anti-corrosive and safe. In terms of the development of the oil sands themselves, what would you propose?

Mr. Lemphers: I am glad you asked. A report called Solving the Puzzle, which we put out two years ago, sets out 19 different recommendations for how to improve environmental management within the oil sands. One of our major concerns with status quo oil sands development is the pace and scale of development. Right now, we are at about 1.9 million barrels a day of oil sands production. Given the vast size of the resource at 169 billion barrels in the ground, we have only exploited less than 4 per cent. It is only just the start, potentially, of developing this. It is important to get things right. In the meantime, even before federal and provincial streamlining for environmental assessments, we already have 5.2 million barrels a day of oil sands production and up to 9 million barrels a day in the development cue. The challenges we are seeing — the concerns raised by Canadians and downstream markets around how the oil sands are managed — will only get louder unless we address some of these upstream concerns now. That is one of the fundamental reasons that we have concerns.

There are opportunities, such as providing clear signals for companies to be able to improve how they manage. They need a clear business case to make these decisions. Pembina Institute is Alberta-based. I grew up there and have done lots of consulting for oil and gas companies in Calgary. They want to do the right thing too, but they have to be accountable to their shareholders and to make the economic case for it. If it is not economically profitable to put that additional scrubber in their stack or to improve the efficiency of their mine fleet, they will not do it, unless they and their competitors are compelled to do it through regulation.

There are opportunities to improve through a climate plan that enables Canada to meet its climate targets. For example, a caribou management plan could see oil sands development occur and prevent the woodland caribou in the region from going locally extinct. There are opportunities for the federal government to act in both areas, whether species at risk or carbon pollution, but we see no one behind the wheel right now.

Senator MacDonald: You mentioned Canada's obligations internationally to meet certain targets. Politicians do funny things with targets. The NDP government in Nova Scotia passed regulations a couple of years ago. They wanted green energy in Nova Scotia with renewable energy going from 20 per cent to 40 per cent by 2020. Everyone thinks that is great because it is green, but what they are not saying is that it is expensive. We have four coal burning plants in Nova Scotia — three in Cape Breton and one on the mainland. They petitioned the federal government to extend the life of these coal-burning plants so they could keep the price of power down. On the one hand, they are saying that they are going to be greener, while on the other hand, they are artificially extending the life of these coal plants to level out the price. Things are not always what they seem in terms of setting artificial targets.

Are you familiar with the history of the Cape Breton tar ponds, a product of the steel plant?

Mr. Lemphers: Yes, I have published on mine financial security programs in Alberta, so I certainly use the Sydney Tar Ponds as an example of what not to do.

Senator MacDonald: Are you also familiar with the southern California oil fields in Kern County?

Mr. Lemphers: I do not know that example.

Senator MacDonald: The southern California oil fields are among the oldest oil fields in North America, producing for almost a century. They have the equivalent of 1,500 tailings ponds in that area. These are the same people who marched to Washington to advocate blocking the Keystone XL pipeline to try to stop the development in Canada. These are the things that I find very difficult to swallow — this type of hypocrisy. The worst environmental mess in North America is in southern California. I have not heard one thing said about it in this country and about the people trying to block or stop pipeline production or oil sands production here.

It would be much easier for me to be more sympathetic — and I do have some sympathy for the work you do, because it is important — if I could see institutes like yours take on a more activist role and look at some of these comparisons to see what is going on in the rest of North America.

Senator Unger: Does the Pembina Institute apply for participant funding to contribute to NEB hearings?

Mr. Lemphers: That is a good question. No, we have not done that. I appeared before the Gateway group as a witness for a coalition of environmental groups that received intervenor funding, which was applied for before the C-38 and C-45 changes.

Senator Unger: Where does most of your funding come from?

Mr. Lemphers: As I mentioned, 50 per cent of our funding comes from our fee-for-service consulting work with the private and public sectors. An additional 10 per cent comes from individuals and 40 per cent comes from foundations that are primarily Canadian.

Senator Unger: Primarily Canadian, not American?

Mr. Lemphers: That is correct.

Senator Unger: I am sure you are aware that a lot of funding — I cannot give you an exact percentage — for environmental opposition to the oil sands comes from American foundations. Would you comment on that?

Mr. Lemphers: There is a long history of foreign direct investment in Canada from the United States to the public sector, the private sector and the non-profit sector. It is no different for environmental groups. Many Americans are concerned about how energy is developed. The oil sands are an outlier in terms of global energy productions. They draw a lot of attention and people have a lot of concerns about them. Those are some of the reasons that they are funding this.

There is also considerable funding coming from American foundations to conservative groups in Canada or to other organizations that promote oil sands development. The environmental NGO that receives the largest amount of foreign funding in Canada is Ducks Unlimited, by far and away. Most people would not consider that group to be under the influence of their American patrons.

Senator Unger: I find this fairly recent phenomenon really odd. A lot of funding is coming to Canadian groups that oppose mainly the oil sands. To Senator MacDonald's point, as a lifelong Albertan, I am curious about why the Pembina Institute does not look at other examples of blatant disregard for areas that might warrant your attention.

Mr. Lemphers: We are a Canadian environmental organization with a national mandate. We do not focus internationally in our efforts, but we bring up international examples. For instance, we just released a report in April that looked at carbon pricing approaches in a variety of different jurisdictions, including California, Norway and Australia. We do comparative approaches in some instances, but it is not typically how we approach things.

The Chair: I have a couple of questions. We do not have time for a complete answer, but maybe you could give the information to the clerk of the committee, who will pass it along to each member.

This adds a bit to Senator Wallace's question about the difficulty of transport safety with certain railcars. In my life, I have become quite familiar with railcars. We have met with New Brunswick Southern Railroad, CN, CP, Transport Canada, and the Transportation Safety Board of Canada. In no way and at no time that I can recall was that mentioned to us. I might be wrong, but I will go back and look at our questions and what they presented to us. I do not think they ever told us anything about a difficulty with a certain kind of car; and I am familiar with that kind of car, by the way.

As well, I would like the information on slide 13, where you have gone from zero to plus and minus. I am not disputing your chart, but I would like the working papers you used to come up with that information and those numbers. It is just to find out where you came from, if you do not mind giving those to us.

Mr. Lemphers: It is an Environment Canada report, so I can pass it on to you.

The Chair: Thank you. There was a good presentation and there were good questions. I appreciate that, Mr. Lemphers. We will adjourn.

(The committee adjourned.)