Bill C-46 (Historical)

Pipeline Safety Act

An Act to amend the National Energy Board Act and the Canada Oil and Gas Operations Act

This enactment amends the National Energy Board Act and the Canada Oil and Gas Operations Act in order to strengthen the safety and security of pipelines regulated by those Acts.
More specifically, the enactment, among other things,
(a) reinforces the “polluter pays” principle;
(b) confirms that the liability of companies that operate pipelines is unlimited if an unintended or uncontrolled release of oil, gas or any other commodity from a pipeline that they operate is the result of their fault or negligence;
(c) establishes the limit of liability without proof of fault or negligence at no less than one billion dollars for companies that operate pipelines that have the capacity to transport at least 250,000 barrels of oil per day and at an amount prescribed by regulation for companies that operate any other pipelines;
(d) requires that companies that operate pipelines maintain the financial resources necessary to pay the amount of the limit of liability that applies to them;
(e) authorizes the National Energy Board to order any company that operates a pipeline from which an unintended or uncontrolled release of oil, gas or any other commodity occurs to reimburse any government institution the costs it incurred in taking any action or measure in relation to that release;
(f) requires that companies that operate pipelines remain responsible for their abandoned pipelines;
(g) authorizes the National Energy Board to order companies that operate pipelines to maintain funds to pay for the abandonment of their pipelines or for their abandoned pipelines;
(h) allows the Governor in Council to authorize the National Energy Board to take, in certain circumstances, any action or measure that the National Energy Board considers necessary in relation to an unintended or uncontrolled release of oil, gas or any other commodity from a pipeline;
(i) allows the Governor in Council to establish, in certain circumstances, a pipeline claims tribunal whose purpose is to examine and adjudicate the claims for compensation for compensable damage caused by an unintended or uncontrolled release of oil, gas or any other commodity from a pipeline;
(j) authorizes, in certain circumstances, that funds may be paid out of the Consolidated Revenue Fund to pay the costs of taking the actions or measures that the National Energy Board considers necessary in relation to an unintended or uncontrolled release of oil, gas or any other commodity from a pipeline, to pay the costs related to establishing a pipeline claims tribunal and to pay any amount of compensation that such a tribunal awards; and
(k) authorizes the National Energy Board to recover those funds from the company that operates the pipeline from which the release occurred and from companies that operate pipelines that transport a commodity of the same class as the one that was released.

Pipeline Safety Act

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, it is my pleasure to rise to speak to C-46, An Act to amend the National Energy Board Act and the Canada Oil and Gas Operations Act. The government has chosen to name the bill as the pipeline safety act.

The measures to increase liability for pipelines are long overdue and very much welcome. However, there are some concerns that the measures may be inadequate, which I will speak to.

Crude oil petroleum products, natural gas liquids, and natural gas move through 71,000 kilometres of existing interprovincial and international pipelines. That does not include the three proposed pipelines to be regulated by the National Energy Board.

This bill purports to reinforce the polluter pays principle. It purports to confirm that the liability of companies operating pipelines would, first, be unlimited if an unintended or uncontrolled release of oil, gas, or other commodity is a result of their fault or negligence; and, second, be a limited liability to a maximum of $1 billion for pipelines with capacity to transport a minimum of 250,000 barrels of oil per day if there is no proof of fault or negligence.

The bill purports to obligate pipeline operators to maintain the financial resources necessary to cover potential liability. It also purports to authorize the National Energy Board to reimburse government entities for any costs incurred in a spill response.

It purports to improve responses to abandoned pipelines. That is a new measure, as the National Energy Board previously was not regulating abandoned pipelines. It also expands that responsibility to inquire into accidents involving abandoned pipelines. It purports to grant discretion to the National Energy Board to require companies to maintain funds for abandoned pipelines.

It also purports to empower cabinet to establish a pipeline claims tribunal in certain circumstances. The tribunal would examine and adjudicate compensation claims. It also authorizes spending to respond to spills, to establish the tribunals, and to pay for compensation awards that are issued by the tribunal. Furthermore, it authorizes the National Energy Board to recover funds paid out by the government as opposed to the company.

It expands on the polluter pays principle by imposing liability on operators for losses to non-use value of public resources. However, it limits the power of the federal Crown to pursue those, and there is some concern expressed at how seriously the National Energy Board will pursue that.

Mr. Speaker, I wonder if I could interrupt. The minister is having a conversation with another member and I am having a very hard time hearing myself talk. I wonder if they could be asked to move it outside.

[Some hon. members]

Oh, oh!

[The Acting Speaker, Conservative, Bruce Stanton]

Order, please. I realize there are several conversations going on in the House. Obviously, when a member has been recognized and has the floor, we ask the indulgence of all members to bring their attention to the speaker who has the floor, who at the moment is the hon. member for Edmonton—Strathcona. Therefore, I would again ask all members who wish to carry on conversations if they might leave the chamber and carry on outside in their respective lobbies.

The hon. member for Edmonton—Strathcona.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, thank you very much. I asked for your intervention because I believe this is a very important piece of legislation and it is important for us to understand what the bill is and is not doing.

As I mentioned, the bill expands on the polluter pay principle, a welcome intervention, by imposing liability on operators for losses to non-use value of public resources, but it limits the power to the federal crown to pursue compensation for those impacts, and there is some concern that the National Energy Board would not necessarily seriously pursue compensation.

It expands the National Energy Board's powers to order actions by the companies where there are risks to safety or security of the public, to the company employees, or to the pipelines or abandoned pipelines, and for protection of property or the environment.

However, it may noted that the recently tabled estimates for 2015-16 provide for reductions in the budget of the National Energy Board for the regulation of pipelines contributing to the safety of Canadians and the protection of the environment. So much for the touted equal attention to supporting resource development and environmental protection. No additional resources will be allocated for the ongoing mandate and no additional resources for the added mandate of the NEB for abandoned pipelines.

Natural Resources is also apparently being cut by $320 million across the board, or 12.6% of its budget. Surely, given the potential payouts under Bill C-46, this is not the time to be paying down the deficit on the backs of the communities impacted by spills.

There would be greater confidence in the commitments of the government to address the impact if a contingency fund were set aside. That will become apparent later in the discussion of the bill, as taxpayers may be left holding the bag under this law.

The Canadian Environmental Protection Agency is also forecast to be cut by $13.6 million or 44% of its budget. A significant portion of its budget has previously gone to supporting aboriginal consultation. Many of these pipelines go through first nation lands, which are already designated as these lands or are being claimed.

Given the number of resource projects proposed and the fact that the NEB does not adequately deliver on public participation in decision-making, it is impossible to understand how the government will fulfill its duty to consult indigenous peoples and how any project will obtain the social licence needed to operate.

Yes, we recognize that these budgets may well be supplemented through the supplementary estimates, but it is astounding nonetheless that at the same moment we are debating a bill touted to improve pipeline safety, the government tables estimates providing no increased funds to deliver on the expanded mandate of the National Energy Board, the tribunal, and for the government to address spill compensation, let alone the coverage of spill clean-up costs.

This is troubling on a number of fronts. The scale of potential risks and the potential impact from major increased daily volumes have increased, in particular given the nature of the products proposed to be piped, in other words, diluted bitumen. First, the Enbridge gateway pipeline proposes 525,000 barrels a day. The Kinder Morgan Trans Mountain expansion would add 890,000 barrels a day, and the TransCanada energy east pipeline, if approved, would add 1.1 million barrels a day.

One can only hope that the intent is to retroactively apply these higher liabilities for pipelines already approved prior to the passage of this law. This law should be triggering significantly enhanced inspection and capacity to respond to breaks and spills as well. This is important given the poor record by the National Energy Board and the pipeline operators in detecting pipeline breaks and spills or in seeking compliance.

The majority of pipeline accidents of late in my province of Alberta and in the Northwest Territories have been discovered and reported, by and large, by citizens or aboriginal hunters and trappers out on their lands, not by the National Energy Board or provincial regulatory agencies, or by the companies themselves. For example, there was the incident in Wrigley.

I had an opportunity to see this when attending a Dene gathering in Fort Providence a couple of years ago, where a hunter came to the meeting and revealed that when he was out on the land, he was sitting down by a marsh and suddenly a bear appeared. There did not seem to be anything he could do to make the bear go away. He would scare the bear away and the bear would come back. So he finally decided that he would investigate what was happening with this strange behaviour of the bear. He discovered a major break in a pipeline and a massive spill. That is one example where the operators are simply not detecting, reporting, and apprising the people on the land of accidents.

In addition, in this case, we had to step in and demand support for the first nation community, which was trying to address the impact of this spill. If we had not done that, the National Energy Board would not have stepped forward.

I could go on and on about the incidents with pipelines in Alberta. For example, there was a spill from the Plains Midstream pipeline near Sundre, Alberta, into a river, then into a drinking water reservoir. It was not reported to the impacted landowners.

In April 2011, there was the largest pipeline spill in history, again by Plains Midstream, with 4.5 million litres of oil spilling northeast of Peace River. Again, that was detected by the Dene Tha' First Nation and not the operator. They ended up having to close the local school because of the fumes from the petroleum. The first nation was deeply concerned about the impacts on the waters, fish, birds, and wildlife they relied upon, and concerned about the many abandoned wellsites and pipelines. That, of course, is an example where, if the first nations are not able to seek compensation for impacts on the waters, fish, birds, and wildlife they rely upon in their habitat, it will become an issue if the government does not step up to the plate.

Again, I remind this place of the Wabamun derailment and spill. Yes, it was not a pipeline, but it took a week for the federal agencies to actually come forward and assist the first nations directly impacted by that incident.

What are some of the concerns that have been identified with the bill? There are some additional concerns with respect to many of the reforms in Bill C-46, including expanded powers and new rights.

The reforms themselves are welcome, including expansion to abandoned well sites, expansion of liability, and the increase in the liability to $1 billion. However, there are some concerns with the way the bill as drafted; for example, with the adequacy of the upper limit of $1 billion. We can all recall the Kalamazoo bitumen spill cost $600 million merely to clean up the spill, and that was before any compensation was given to any of the communities or property owners who were impacted.

Ecojustice has stated that the bill would fail to prescribe mechanisms to actually assess the risk, taking into consideration either the type of materials shipped, whether they are more corrosive, for example: the potential for environmental, and, I would add, health, damages; an accident or compliance history; and the age of the line and, I would suggest, also the maintenance record.

There is no provision in the bill specifying what the National Energy Board is supposed to consider, or the tribunal once it is established.

Second, concerns have also been raised about bankruptcy implications. There is a concern that the polluter pay provisions may be superseded in the case of bankruptcy of a pipeline owner or operator, as bankruptcy law prevails. That is something that merits discussion at committee.

Third, there is concern with the level of discretion vested in the National Energy Board and in the tribunal. There appears to be a discretionary, potentially politically influenced, process. For example, the company must first be designated before the tribunal may review.

It is also not clear whether there would be a permanent tribunal and whether its members would simply sit around, waiting for a pipeline to be designated, or a company designated, or whether it would only step forward at the time that there is an incident and compensation claims are required.

This would also only occur in a situation where the cabinet, in its discretion, has determined, on the recommendation of a minister, that a company does not have sufficient resources to pay costs or clean-up, or the company has failed to comply with an NEB order.

The National Energy Board could then directly reimburse for the impacts or the costs incurred, and the payment could be directed from a pooled fund. The costs could be recovered as a debt, but that is unlikely from a bankruptcy.

The tribunals would be established only, as I said, where a company is designated; in other words, for each incident, not permanently designated.

Proposed subsection 48.18(2) is a little confusing. It states that the Governor in Council, in other words, the cabinet, could only establish a tribunal if it is in the public interest, somehow factoring in the extent of the compensable damage. It is unclear if the concern is with too small a claim or a very large one.

The tribunal would be granted total discretion in how to notify the public. It has been suggested by a number of parties who have participated in other tribunals that there should be clear guidance on who is actually supposed to notify the public that they can seek a claim for damages and how they would go about doing that.

There is also the query of why only the appointment of retired judges. In many cases in these tribunals, it is perhaps more appropriate to appoint people with a technical background who understand pipelines, the impacts and so forth.

The reason this issue has been raised is because the staffing and expertise for the tribunal is at the discretion of the National Energy Board. However, there is no certainty that there will be some form of secretariat with the appropriate expertise to assist the tribunal in its determinations.

It is encouraging that the cabinet may make regulations authorizing the tribunal to award fees, travel and other costs for claimants to present their case. However, that will be by regulation, and it is not clear what the timeline is on the issuance of those regulations to set the guidance.

It is noted that the regulations could fix a maximum compensation, but we do know what factors that is based on, as mentioned earlier. Perhaps it would be a good idea to actually provide criteria for calculating the costs of the impacts.

The imposition of fees, levies and charges for payouts can be drawn from the consolidated revenue fund. However, there is the issue and concern of how seriously the funds will be pursued from the operator or whether there will be reliance on public funds.

The National Energy Board would be empowered to issue regulation-setting rates, but there is no mention of consultation with either the pipeline operators or the public on how it will set those rates for the levies and fees. It will be important for the National Energy Board to report regularly on its efforts to recover the debts incurred or spill cleanup for compensation. However, there is no mention in the bill to that effect.

Regarding cost advances to file claims, it is unclear if the law would allow for the payment of advanced funds to address or cleanup a spill, or if it would also allow for advances to people who would seek compensation to hire lawyers, experts and so forth, which is very important in procedures before a tribunal.

Increasing concerns are being expressed within communities and first nations with the approach to regulating pipelines arising from failed spill prevention, failed detection, failed response to spills and the failure of the National Energy Board or other government agencies to require pipeline proponents to disclose their emergency and spill response plans for public review and scrutiny.

This certainly has arisen in the review of the Kinder Morgan proposed trans mountain pipeline expansion. People along that line are very concerned that they are not getting access to the emergency spill response plan.

The same is the case with the Athabasca Chipewyan First Nation with a review of a pipeline in Alberta. It eventually pulled away from an Energy Board review because it was denied access to that emergency spill response plan for a pipeline and then given less than 24 hours to review the document.

The Alexis First Nation in Alberta has also been demanding greater access to information on the spill from breaches of mines.

The preference of Canadians is the prevention of harm to their communities, the environment, and not mere compensation after the fact. As the expression goes, “Mieux vaut prévenir que guérir ”.

The improved measures provided under Bill C-46 will be welcomed and will offer succour to those impacted by major spills. However, that is unlikely to be sufficient to restore trust in the government or in the National Energy Board in the wake of denied access to potentially impacted communities and first nations of emergency spill response plans, the downgrading of federal environmental and fisheries laws, and the diminished opportunity for public first nations to participate in pipeline reviews.

Frankly, in the National Energy Board and provincial energy reviews, there have been many concerns raised. I gave the example of the Athabasca Chipewyan First Nation, which is extremely disturbed that the pipeline will go through its traditional lands, not having access to major documents.

The change to the National Energy Board intervener rules would limit participation. I gave the example of where the previous minister of Natural Resources dubbed “interveners” in the review of pipelines as “radical groups” who “hijack our regulatory system to achieve their radical ideological agenda”, merely because they sought to intervene to raise concerns with pipeline projects.

Concerns have been expressed by the Commissioner of the Environment and Sustainable Development in his 2011 report regarding the long-standing failure by Transport Canada and the National Energy Board to ensure compliance or corrective action, and the failure of the NEB to review emergency procedures of 39% of regulated companies. Absent of increased resources, there is little confidence this will be addressed in a timely manner.

Yes, Canadians recognize that they rely on fossil fuels for use, benefit from revenues from sale and export, and that pipelines are needed to transport the fuel. However, it is reasonable for Canadians to expect their government to regulate the sector in a manner that ensures the protection of their health and environment.

[Greg Rickford, Conservative, Minister of Natural Resources and Minister for the Federal Economic Development Initiative for Northern Ontario]

Mr. Speaker, one would think that one's hypocrisy could only go so far, but it appears not. That discourse was not only free of statistics and quantitative and qualitative evidence, it was fact-free as well.

It is worth pointing out that in the past decade more than 72,000 kilometres of federally regulated pipelines boast a safety record of 99.999%. These pipelines account for 6,000 jobs and $7 billion in annual sector revenue.

It is even more astonishing coming from that member. Here are some interesting facts. The member voted against increasing pipeline inspections. She voted against doubling the number of comprehensive audits. She voted against implementing fines against companies that would break the law.

In fact, I would bring to the attention of the House the comments she made during her speech regarding the Plains Midstream spill. That company was fined by the National Energy Board on February 12.

Why did that member vote against the very things she has tried to advocate for in her speech.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I welcome that question. The hypocrisy is all on the side of the minister.

As he well knows, the measures to improve the environment to better regulate the oil gas and sector were included in the government's omnibus budget bills. No matter how many times we requested the division of those bills so they could be debated and voted on separately, they were refused. The hypocrisy is all with the government.

Our party has continuously called for improved measures and greater seriousness in delivering on what the government calls responsible resource management. It professes that it gives equal attention to environmental protection as it does to resource extraction, but that is far from the truth and far from the matter before us.

As the House is aware, I simply quoted the flaws and the problems identified by the Commissioner of the Environment and Sustainable Development. I rest my case, and the response needs to be to the commissioner on the failure to adequately follow up.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I thank my colleague for her excellent speech. I am honoured to serve with her on the Standing Committee on Natural Resources.

I will have the pleasure of giving a speech on Bill C-46 this afternoon, but I would like to ask my colleague a question about liability. The bill limits liability to $1 billion in the case of a disaster caused by a pipeline where there is no proof of fault on the part of a company. Why did the government choose that amount? In Kalamazoo, in the United States, costs have already reached an estimated $1.2 billion, and only a tiny proportion of the mess has been cleaned up.

Why did the government peg liability at $1 billion? Would it not be better to set a higher amount? That seems to me to be nothing more than a round number.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I would like to thank my colleague for the terrific role he plays as the critic for natural resources. It is a pleasure to work with him in that role.

I can not answer why the government has chosen $1 billion. Canadians will be pleased that we have gone from, I think, $50 million before to $1 billion. Simply doing it as a one-off for offshore activity, shipping and so forth is inadequate. We are glad the government is coming forward with a larger sum to potentially recover after a pipeline spill.

There is a measure in the bill wherein the discretion of the cabinet could opt to increase that amount, but again there is no criteria given for when it might opt to increase that amount. Again, that topic merits discussion at committee. There is potential for an amendment to the bill to provide criteria either by regulation or within the context of the legislation in those incidents where we would require more than $1 billion, not only to clean up the spill but to provide compensation.

[Michelle Rempel, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, with regard to the question just posed to the member, there is a bit of a false dichotomy in terms of the comparison. In the example that was cited, the operator was found to be at fault. This legislation enshrines findings that have been put forward in case law to ensure there is unlimited liability in cases where things are found at fault.

Therefore, would my colleague clarify that this example is not a correct application of what she has put forward?

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, as I mentioned in my speech at the outset, there are two approaches to liability under the statute. One is unlimited, if it is unintended or uncontrolled release of oil, gas or other commodity as a result of a company's fault or negligence. In the second, it is limited to a million dollars if there is no proof of fault or negligence. Those are often complicated matters and it may well be that the government simply relies on the $1 billion because of a difficulty in proving fault or negligence.

What would probably happen in those scenarios and what the community that would be impacted really would want to have happen, if in an isolated area, would be an immediate cleanup. What will happen is the taxpayers will incur the costs of that more immediate, direct cleanup and eventually try to recover that. It may end up in complicated litigation over whether there was or was not fault or negligence.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I thank my colleague for her speech.

With this type of issue, whether we are talking about a pipeline spill or a tragedy like the one we saw in Lac-Mégantic, my constituents in Sherbrooke often tell me that they are concerned about the company responsible for the spill. When the company goes bankrupt and the government is trying to find money to clean up the mess the company has caused, what happens next?

That is the kind of question I have heard many times from the people of Sherbrooke. Can a company default on its obligation when it is responsible for a spill? We could be talking about a pipeline in the case of the bill we are debating today.

People are wondering whether there is a way to prevent a company from defaulting on its obligations if it is responsible for a spill. I wonder whether the bill we are studying today addresses the concerns of the people of Sherbrooke.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I did note in my speech that there was some growing concern about the factoring in of bankruptcy. That of course would particularly arise where there were abandoned pipelines, as is the case in my province where there are tens of thousands of abandoned well sites. In some cases in residential development of suburbs we discover, after the fact, that there are abandoned well sites and someone has to move in to clean that up. It may be companies have disappeared or may have been bought by another company, and there is the issue of who is liable.

What the relationship would be in the case of bankruptcy and the powers under this legislation to recover the costs are matters that need serious discussion at committee. Particularly what it does is send a wake-up call that time may lapse and the company may be bankrupt. This follows on the Commissioner of the Environment and Sustainable Development 's report on the failure of the National Energy Board to move quickly enough to ensure compliance or action to address what it has issued in its orders.

We need measures in both ways. We need to look to the resources and the intention of the NEB and where its priorities lie. We also need to ensure we have dealt with this in the bill.

[Michelle Rempel, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, I have quite enjoyed the debate this morning, because we are talking about what the right balance is in terms of this particular set of regulations.

We have had some debate earlier this year in the House around how government should approach regulations, just as a whole, with regard to the red tape reduction act, and I think it is worth bringing some of that to the front end of my speech, just to get some context for my comments.

With regard to this regulation, we are trying to ensure the health and safety of Canadians. We are trying to ensure a high degree of environmental integrity with regard to transport of energy products, and we want to make sure that the regulations are based on fact, historical analysis, statistically proven probabilities, and consultation with industry and with first nations and aboriginal communities; and we also want to ensure, when we were talking about balance, that the fact-based analysis and the desire to ensure the highest degree of public safety are also contextualized within an opportunity cost calculation, making sure there is stability, transparency, and predictability for industry.

If we talk offline to anyone in industry or even in the NGO community, I would like to think there is a cognizance of the importance of the energy sector to Canada, which I will speak to in a moment. However, really what I think the bill has done, and why I am speaking in favour of it, is balance those three points.

It has a very high degree of regulation in terms of health and safety for Canadians, which of course builds on the responsible resource development package that we put in place in budget 2012. It also would ensure that fact-based analysis were used to develop some of the criteria and some of the amounts for liability that were included in the bill, but then it would also ensure that it is reasonable: it could still receive those high results but also be reasonable in terms of industry expectations to operate, so it has that economic balance.

First, I think it is worth starting at the bottom end and talking about the economic importance of this industry to Canada, because sometimes I find that the policy debate around energy infrastructure and energy policy tends to say, well, maybe we should not have this industry at all; maybe it is something we should completely scale back or, through different types of regulations, seek to curtail. I think what we should be doing with our regulation is acknowledging the importance of this industry and encouraging it to grow, but in a framework of sustainability, both for the health of Canadians and for sustainability of the environment.

I want to start by making my position and our government's position very clear, which is that we do believe that the energy sector is very important to Canada's economy. There is no doubt about this. It creates hundreds of thousands of jobs. I know the figures that are regularly put out are roughly in the neighbourhood of 500,000 jobs. That is not just through direct employment; it is through secondary sectors like manufacturing and services. Certainly, we hear about this from excellent groups like the Canadian oilwell drilling association. It has a huge impact on the economy in terms of job creation.

It also has a huge impact in terms of government revenue. Many of our social programs and our innovation programs are funded by revenues that come in from the energy sector.

We have to go into this debate saying that this is a cornerstone of the Canadian economy. It is important. How do we develop it, and how do we ensure, in this case, the transport of energy products in a healthy and sustainable way?

I should also say that we need energy. That is something we do not talk about here. Sometimes when we talk about the importance of the energy industry, we are remiss in not talking about the fact that we need the resources that are produced here, both for our own energy security and because we need energy to do things.

It is essential to have natural gas delivered to our homes, to fire furnaces on cold winter nights like we are experiencing this week, and it is certainly important in terms of looking at a viable, safe, secure source of energy that encourages manufacturing companies to invest in building Canada, that encourages our agricultural sector to grow, and that encourages mobility.

I do not think we can divorce this conversation from the fact that we need this sector from an economic perspective both in the sense of direct economic impact and also in the sense of energy security and being able to see the economy grow through that.

If we need energy and it is important to the economy, how do we transport it? That is the rub. That is why we have the pipeline safety act in front of us today. This bill acknowledges these things: that we have a demand for energy and that it is important to the economy. An interesting statistic is that, according to the International Energy Agency, the world will need 37% more energy in 2040 than it consumes today.

How do we transport it? Pipeline companies are currently moving about three million barrels of oil every day. If we were to turn off those pipelines tomorrow, we would have to add about 15,000 tanker trucks on our roads every day or put another 4,200 rail cars on our railways every day just to meet existing demand. These alternative modes of transportation consume more energy, which of course increases our greenhouse gas emissions. This is an important discussion in the context of our debate on how Canada responds to the issue of climate change. Pipelines offer a clean and efficient way to deliver the energy we need on a daily basis.

Industry knows this, and we know this. It is why we have put this bill forward in this place, to address some of the concerns around what is already a very safe track record. My colleague, the Minister of Natural Resources, talked about a 99.999% safety rate with regard to federally regulated pipelines. When we look at international best practice, we certainly have that here in Canada in terms of health and safety regulations for pipelines. This would take it to the next level.

Going back to the front of the speech, the three components we are seeking on the balance of regulation among health and safety, fact-based analysis, and ensuring that economic balance are the following: incident prevention, preparedness response, and liability and compensation.

Looking at prevention, this particular bill speaks to a number of things. I am going to give some examples of some of the things that are happening in western Canada, which may not be addressed by this bill directly but are important for the context of the discussion. My ministry, Western Economic Diversification, in part seeks to look at the strength of some of our primary industries and ask how we can use the strength in there—through both highly qualified personnel and economic opportunity—to create secondary industries that develop diversification opportunities. It is interesting, because by some of the regulations we have put in place through our responsible resource development package in 2012, we have incented innovation and new industries by creating opportunities for industry to respond to those.

There are two specific examples I want to speak to with regard to preparedness.

The first is a very interesting centre with which Western Economic Diversification has engaged in funding, and that is C-FER Technologies in Edmonton. I want to spend just a bit of time on this because I know in the previous round of debate one of the questions that were asked by my colleague across the aisle was what is industry doing now.

What I really like about this particular organization is that it focuses on facilitating the use of leading-edge technology by oil and gas pipeline operators in the development of challenging resources. The component of this particular bill that we are trying to push is the creation and adoption of best available technology. Best available technology is something that is changing and growing every day, and our government has been working to fund it. A project that has been recently completed is a facility-expansion program, which includes leasing and operating a new facility in the oil and gas sector and the design, construction, and installation of high-capacity loading testing systems, upgrades, and instrumentations. Basically this centre allows industry a place to test new technologies that pertain to pipeline safety. That includes different widgets that could be deployed in a pipeline to sense leaks. It is very high level technology.

I have been there and I encourage colleagues across the aisle to go and visit this facility. Again, it is a demonstration centre so that new technologies can be translated from the bench into the market. This does two things: first, it encourages long-term safety for these pipelines; and second, it creates jobs because we are taking intellectual property from the bench and commercializing it in Canada. It is an absolutely astounding centre, and I am very proud that we have supported it.

The other component I want to talk about is SDTC Canada, Sustainable Development Technology Canada. This is a group that has been supported by our government, which is involved in the development and commercialization of clean technology, using industry as a driver. As a Calgary MP, I want to bring up Pure Technologies, a very innovative little company in Calgary that has been working with SDTC. It has developed a robot device for pipeline inspection, of which I have a diagram. It looks like a ball. It is a very complicated, technological ball that goes into the pipeline and, based on fluid dynamics, can sense minute fractures in pipelines so that leaks can be detected and dealt with ahead of time.

Again, we are looking at ways to ensure that there is prevention with the best available technology. This is another way our government has been working with industry to strike that balance between health and safety and economic development. It is really cool to look at some of the technologies coming out in the development of a secondary industry around clean technology for pipeline safety.

Looking at the second component of this bill, preparedness and response, I will speak from my notes, but then I want to speak about another project that has an economic diversification angle with regard to this particular aspect of the bill.

The pipeline safety act would ensure a robust response in the unlikely event of an incident. We talked about that 99.999% success rate. The new legislation would require companies operating pipelines to have a minimum level of financial resources. It would also require that these pipeline operators keep a portion of that money readily accessible for rapid response should an incident recur.

The bill would also give the National Energy Board the authority and resources to take control of an incident response or cleanup if, in exceptional circumstances, the company is unable or unwilling to do so. This means the government would provide a financial backstop so that the board has the resources needed to complete the cleanup and take necessary action. Any funds provided by the government would be recovered from industry, again adhering to the government's polluter pays principle that we have talked about so many times in this place.

I would like to draw attention, though, talking about preparedness, to the importance of training people on the job. Sometimes this can be difficult for the energy sector, given that it is in remote northern conditions. We have been looking to work with industry and some institutions on best practices to ensure that training can be delivered.

A couple of weeks ago, I announced a project with the Justice Institute of British Columbia. The Justice Institute is a world leader in providing training and leading thought on safety training. It is actually launching a project that is going to have commercialization benefits, called Praxis, by which it puts simulated situations in web-enabled training. It is working with industry to have rapid response.

The interesting thing is that the intellectual property in those simulations can actually be commercialized into different software packages. Again, we are seeing economic spinoff on the service provision and commercialization on the new technology side and ensuring that companies have the preparedness and incident response requirement built into their companies. It is a great project and something I hope people look into, because it is really great and it is happening here in Canada.

With regard to liability and compensation, the third pillar of the bill, as I said, which would enshrine the polluter pays principle into law. There are two components, which I will speak to very briefly, as I know that the criteria around this will be examined more at committee. First, for unlimited liability, right now this is in practice through common law, but this bill would clarify unlimited liability when companies are at fault or negligent. This would be put explicitly into law in Canada. With regard to absolute liability, it would put an amount in place irrespective of fault or negligence for all companies operating pipelines, and it would set that amount at $1 billion.

I know that some questions have come up with regard to that particular amount, such as why this amount would be in place, how it was arrived at, and that it is not enough. When we talk about how we develop regulations, that fact-based analysis, historical analysis examples demonstrate that this level of absolute liability and financial capacity would provide world-class coverage. The average cleanup costs of major pipeline spills in North America result in costs in the range of $20 million to $50 million in the case of absolute liability.

With the time I have remaining, I should probably talk a bit about our government's response to climate change, because invariably the energy sector and climate change are a linked discussion. Certainly that has been the case this week with regard to some decisions made by our neighbours to the south on energy infrastructure.

It is important to talk about what we have done on this file, because the theme of my speech is how we develop balanced regulations. We need to talk about the same thing with respect to our response to climate change.

We have taken a sector-by-sector regulatory approach whereby we work with industry to set targets that produce tangible reductions in greenhouse gas emissions. An example is the light-duty passenger vehicle sector, where these regulations will eventually result both in lower fuel costs for consumers and in reduced greenhouse gas emissions, which is a win-win for all. We have worked closely with the coal-fired electricity sector. Both of these sectors were major sources of emissions, and we have seen those emissions reduced. That is a huge accomplishment of this government.

With respect to international action, we have said that in order to see real reductions internationally, we need an agreement that sees all major emitters commit, not just a small percentage of them. We have been working toward that goal through our participation in the Conferences of the Parties.

Also, we invest heavily in research and development with respect to not only climate change adaptation and working with communities to respond to climate change but also in researching new technologies, monitoring standards, and best practices. We are researching new technologies through the Canada Foundation for Innovation and the Natural Sciences and Engineering Research Council of Canada. We commit quite a bit of funding, through the Natural Sciences and Engineering Research Council, to climate change research through the climate change and atmospheric research program. This also builds on basic research in other areas as well that feed into the specific domain .

In the few minutes I have left, I want to go back to the start of my speech and talk again about balance and pragmatism in putting forward regulations.

This is about seeing action in climate change. It is about ensuring that we have health and safety for Canadians, but it is also about ensuring that these regulations are based on fact-based analysis of what we have seen happen in the past and what is likely to happen in the future and do not put a shock on industry. These proposals were developed hand and foot with industry. They were developed in consultation with first nations groups. We want to make sure that when we put regulations forward, they achieve that balance.

I would be remiss if I did not talk about my opposition colleague's response in this area, which I found to be not responsible. I will speak specifically about the Liberal Party.

I have watched the Liberals' comments on pipelines with some curiosity. On June 19, 2004, their leader said, “I'm also supportive of the idea of a west to east pipeline.” Then on May 29 he said, “I am very much in favour of the west/east pipeline”. Then on the 13th he said that the energy east oil pipeline is not socially acceptable.

I think it is reasonable to have a debate in this place that looks at what the liability limits are, how we are achieving that balance, and what would cause a shock to industry, a necessary shock that would see a health and safety component put in place, versus just an ideological happenstance discussion that really does not serve industry, the public, or health and safety.

I am encouraged by some of the debate that occurs. I hope that my colleagues opposite will put this bill forward to committee. It can be studied in greater detail in terms of some of the assumptions about the facts and statistics put forward to calculate some of the specific liability limits and rules. However, I hope that it will not devolve into a flip-flopping debate, as we have seen from the leader of the third party.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I listened with great interest to that commentary. It is regrettable, given the seriousness of this bill, that the hon. member gave little attention to talking about the significant measures in this bill or to cogent recommendations on how we can further strengthen it.

I am a little bit troubled that the minister is saying that when we are talking about compensation for spills from pipelines, we should be balanced and take a pragmatic approach in regulation. That is deeply troubling.

This specific bill is supposed to be about pipeline safety and about putting in place significant measures to genuinely offer a way in which people can be compensated. This bill is not about the mumbo-jumbo that we are hearing about what our energy policy should be. I hope that when we get to committee, we will have a discussion about the specific measures under the bill.

I did find what the minister talked about very interesting. I do follow up with these projects that Western Economic Diversification Canada supports. If the minister is genuinely concerned about acting on climate change, I would be happy if her agency gave greater attention, or at least equal attention, to supporting the renewable energy sector. She has continuously rejected it when it applies to invest in jobs in Alberta and in exporting clean technology to the rest of the world.

I look forward to her response about when the government is going to move from further research and dialogue about addressing climate change and the regulation of the fossil fuel sector and actually take action to address the impacts of the oil and gas sector.

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

Mr. Speaker, to be clear, this is why I was trying to talk about balance. What I define as pragmatism in regulation is putting forward a target for health and safety that is absolutely stringent and world-leading, which we have done in this bill, and then, with this bill, ensuring that the liability limits cover it.

Enshrining unlimited liability in law when it comes to fault or negligence being proven is excellent. That is a very good best practice. Having $1 billion of coverage required for absolute liability in law takes that coverage in Canada one step further.

My colleague asked questions regarding my portfolio, Western Economic Diversification Canada. I am very proud to say that this year, with deep consultation with industry and different community groups, we put in place five very clear priority areas for our ministry. They are innovation, ensuring the acceleration of economic opportunities for first nations and aboriginal peoples, skills training, trade and investment, and the ITP program. We now have a comparative-based call for proposals model for our fund, which ensures that opportunities are evaluated in an investment portfolio model. I encourage everyone to apply for these funds. We have just closed the last round of applications, and evaluation is going to be based on a very clear and transparent evaluation framework.