Bill C-22 (Historical)

Energy Safety and Security Act

An Act respecting Canada's offshore oil and gas operations, enacting the Nuclear Liability and Compensation Act, repealing the Nuclear Liability Act and making consequential amendments to other Acts

Part 1 of this enactment amends the Canada Oil and Gas Operations Act, the Canada Petroleum Resources Act, the Canada-Newfoundland Atlantic Accord Implementation Act and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act (the “Acts”) primarily to update, strengthen and increase the level of transparency of the liability regime that is applicable to spills and debris in the offshore areas.
More specifically, Part 1, among other things,
(a) expressly includes the “polluter pays” principle, which is consistent with the notion that the liability of at-fault operators is unlimited;
(b) increases to $1 billion the limit of liability, without proof of fault or negligence, to which certain operators are subject in the event of a spill or damages caused by debris;
(c) provides that an applicant for an authorization for the drilling for or development or production of oil or gas must demonstrate that it has the financial resources required to pay the greatest of the amounts of the limits of liability that apply to it;
(d) establishes a regime in respect of the development of transboundary pools and fields;
(e) provides for new circumstances in which information or documentation that is privileged may be disclosed;
(f) establishes a legal framework to permit the safe use of spill-treating agents in specific circumstances;
(g) harmonizes the environmental assessment process for projects for which the National Energy Board, the Canada-Newfoundland Offshore Petroleum Board or the Canada-Nova Scotia Offshore Petroleum Board is the responsible authority, as defined in the Canadian Environmental Assessment Act, 2012, with the requirements of that Act, including by establishing timelines for carrying out environmental assessments and creating participant funding programs to facilitate the participation of the public in environmental assessments; and
(h) creates administrative monetary penalty regimes.
Finally, Part 1 makes amendments to remove certain discrepancies between the English and French versions of the Acts, as well as to modernize the language in the Acts.
Part 2 of the enactment repeals the Nuclear Liability Act and enacts the Nuclear Liability and Compensation Act to strengthen the liability regime applicable after a nuclear incident. It also provides for the establishment, in certain circumstances, of an administrative tribunal to hear and decide claims and implements certain provisions of the Convention on Supplementary Compensation for Nuclear Damage. It also makes consequential amendments to other Acts.

The House resumed from March 25 consideration of the motion that Bill C-22, An Act respecting Canada's offshore oil and gas operations, enacting the Nuclear Liability and Compensation Act, repealing the Nuclear Liability Act and making consequential amendments to other Acts, be read the second time and referred to a committee.

Second reading

[Wai Young, Conservative, Vancouver South, BC]

Mr. Speaker, it is my great honour to be speaking in front of this learned House today. I understand that we are speaking on Bill C-22. As we know, Bill C-22 is the energy safety and security act. This bill would enhance environmental protection. It is part of our responsible resource development plan. Our Conservative government has been clear that the development of our natural resources will only proceed if it is safe for Canadians and for the environment.

Over the past year, our Conservative government has initiated a series of new measures to ensure that the development of our natural resources offshore is balanced with the protection of the environment. For example, we have already taken major steps toward enhancing the environmental protection of Canada's maritime domain through an increased number of tanker inspections, mandatory use of double-hulled ships, and improved navigation tools and surveillance offshore.

Our Conservative government has worked closely with the governments of the Atlantic provinces, Nova Scotia, Newfoundland and Labrador, to ensure that Canada's offshore oil and gas regime remains world class. In each province, offshore oil and gas projects are closely and jointly managed by the federal-provincial offshore boards, namely the Canada-Nova Scotia Offshore Petroleum Board and the Canada-Newfoundland and Labrador Offshore Petroleum Board.

Bill C-22, the proposed energy safety and security act, would build on this work and provide world-class—

[Some hon. members]

Oh, oh!

[The Acting Speaker, Barry Devolin]

Order, please. I regret that I must cut off the member for Vancouver South, but she will have 18 minutes to resume with her remarks following question period.

The House resumed of the motion that Bill C-22, an act respecting Canada's offshore oil and gas operations, enacting the Nuclear Liability and Compensation Act, repealing the Nuclear Liability Act and making consequential amendments to other acts, be read the second time and referred to a committee.

Energy Safety and Security Act

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Mr. Speaker, I will be splitting my time with the member for Calgary Centre.

It is a great opportunity to speak to this very important piece of legislation that would update the liability limits for nuclear and offshore oil and gas sectors. As part of our government's responsible resource development plan, we are enshrining the polluter pays principle into law, and certainly this makes for a very important piece of legislation.

I would like to focus on the fact that the proposed act would play a very central role in advancing our government's northern strategy. I will be limiting most of my remarks to that aspect of the bill, although it would also affect the Atlantic offshore region of our country. When much of the attention has been focused on the impact of the legislation on the Atlantic offshore, it would be equally valuable to northern residents, industry, and taxpayers, as it would extend the same provisions and protections to the Arctic offshore.

We know that Canada's north has tremendous resource potential. Approximately 38% of Canada's remaining marketable resources of natural gas are located in Canada's Arctic, as well as 35% of the remaining light crude oil at over 11 billion barrels of oil. These figures do not include unconventional resources, such as shale oil and gas.

Canada's Arctic petroleum, found primarily offshore in the Beaufort Sea, accounts for one-third of the country's unconventional oil and natural gas reserves.

The responsible management of Canada's immense petroleum and mineral resources in the region supports our northern strategy goals: more predictable, timely environmental reviews; reduced regulatory burden and duplication; improved environmental protection, which is always important; and meaningful aboriginal consultation making provision for that. No one likes duplication just for duplication's sake and this would harmonize a lot of the regulatory burdens and ensure that they are far easier to follow.

More specifically, Bill C-22 would provide the clarity and certainty industry needs to ensure its developmental plans protect the environment while promoting economic development in Canada's north. The energy safety and security act would also help ensure that any future development occurs in a way that respects aboriginal communities and safeguards the environment for the benefit of future generations. All Canadians can be assured that our government is committed to the safety of Canadians and the protection of the environment.

Once passed, the new legislation would enshrine in law the polluter pays principle that I referred to earlier. This would fulfill our commitment in the Speech from the Throne. It would mean that oil and gas companies operating in both the Atlantic and Arctic offshore would be subject to one of the strictest liability regimes in the world.

Under the proposed act, before any offshore drilling or production activity could take place, the proponent must provide evidence that it can cover the financial costs and damages that may result from a spill. Absolute liability for the environmental costs and third-party losses in the unlikely event of a spill in the Arctic would increase from the $40 million that is there today to $1 billion. Of course, the regulators may require higher amounts if they deem it necessary.

A proponent found at fault for a spill would continue to be completely responsible for cleanup and compensation costs.

However, we are saying $1 billion for strict and absolute liability. Whether they are responsible or at fault or not, the liability would be there. Of course, anyone found at fault for a spill would continue to be completely responsible for cleanup and compensation costs, as I mentioned.

This would standardize northern and southern oil and gas regimes across the country.

In addition, Bill C-22 would demand that industry provide regulators with direct and unfettered access to $100 million in funds per project or a pooled fund of $250 million. This would give regulators immediate access to money in the unlikely case they need to take direct action to respond to a spill or compensate affected parties.

There would be an immediate short-term provision, there would be a longer-term provision, and there would be a significant increase in the amount of liability under strict liability and an unlimited amount otherwise.

The energy safety and security act would also establish the right of governments to seek environmental damages. This means that they would have the power to pursue operators for any damages to species, coastlines, or other public resources. These measures would build on a sound system overseen by strong regulators to ensure world-class standards for Canadian offshore and nuclear industries. They would further strengthen safety and security to prevent incidents and they would ensure swift response in the unlikely event that a spill takes place. Prevention and response and then, in the unlikely event, damages would ensue.

It would also build on recent legislative initiatives to complete our government's action plan to improve northern regulatory regimes by ensuring a predictable, timely regulatory system across the north that supports economic growth in the north while ensuring environmental stewardship. A prime example of such an effort is the Northwest Territories Devolution Act, which received royal assent on March 27, 2013. It gives northerners more control over their own land and resources and will help ensure Northwest Territories residents benefit from the responsible development of the region's great resource potential.

Apart from having strong regulators, Canada has a responsible industry with a solid record of safety and security. With the assurance of these strict new requirements, northern communities can proceed with resource development projects with confidence. We need only consider the benefits the energy industry has already produced for northerners to appreciate its potential to generate even greater impacts for Arctic communities when these energy resources are responsibly developed. Responsible development is key in all areas, but particularly in the north.

In earlier phases of exploration, more than 1,500 wells were drilled, which led to abundant discoveries. Some discoveries were developed for production to support local energy consumption in the north. Imperial Oil's Norman Wells installation, for instance, has contributed to the town's energy supply and economic development. For several decades now, it has also sustained the surrounding communities in terms of jobs, businesses, and infrastructure. It has generated a large revenue stream to government with a percentage of revenue contributing to resource revenue sharing with aboriginal groups in the Mackenzie Valley under the provisions of their land claims.

We know that the Beaufort Sea has incredible potential to produce even better results in the future. There have been more than 60 discoveries to date. In addition, several companies hold exploration licences with cumulative work commitments of over $1.8 billion. Oil and gas companies are planning work and have filed extensive drilling proposals with the National Energy Board. The proposed drilling is a first for Arctic deep waters, and the first after the release of the National Energy Board's 2011 report on offshore drilling in the Canadian Arctic. That report confirmed that the National Energy Board's regulatory regime can address matters related to the safety of northerners, workers, and the environment.

Environmental stewardship is and always will be a key consideration in resource management. Achieving this objective requires accurate environmental and other scientific, social, and economic data to support good decision-making. Oil and gas exploration development creates unique opportunities to advance Canada's knowledge of the north. As part of the northern strategy, we are looking for innovative programs to advance responsible development and increase our knowledge of the north. One example is the Beaufort regional environmental assessment initiative, or BREA for short. Our government is providing $21.8 million over four years to ensure that governments, Inuvialuit, regulators, and industry are prepared for renewed oil and gas activity in the Beaufort Sea. Northerners play a prominent role in BREA and the Inuvialuit Regional Corporation is part of the national executive committee, while the Inuvialuit Game Council and representatives of the hunter and trapper committees are members of various committees and working groups.

The north's resource potential is a key asset for Canada, though still largely unexplored and untapped. Oil and gas exploration development essentially offers an opportunity for economic and social development through investments, jobs, and training and infrastructure, as well as revenues from resource development.

Given this world-class potential throughout the Arctic, it is imperative that exploration continue responsibly and that northerners actively participate and benefit from that development. Bill C-22 is designed to do just that, as it complements and advances the northern strategy, which promotes the same goals.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Mr. Speaker, this is another example of how the Conservative government refuses to act quickly and even meet international standards, which are much higher than those it is proposing.

I want to know whether the member opposite is prepared to ask his government to raise the standards to match the standards that exist elsewhere in the world, which are much tougher than the ones his minister is proposing.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Mr. Speaker, as I mentioned earlier, this particular legislation would raise the standard considerably in terms of the amount of liability and the amount that developers must put together. It would raise the liability amount from $30 million or $40 million, depending on the location, to $1 billion, and there are provisions beyond that. When we compare that to the amounts and the standards in the world, we certainly meet or exceed the top countries involved in this particular type of regime.

This legislation is leading in its own way, and it would be a standard that others would use and apply in the future.

[Frank Valeriote, Liberal, Guelph, ON]

Mr. Speaker, I am saddened by the fact that the member's speech is full of the same bluster we hear in the Conservatives' remarks about their efforts to reduce greenhouse gases. Everyone in the world—not just in Canada, but the world—knows that Canada is an outlier when it comes to its efforts with respect to its environmental record. The Conservatives are not even expected to meet their very low 2020 expectations under Copenhagen, and that is an extreme disappointment.

With regard to bluster, BP spent almost $8 billion trying to clean up the Gulf of Mexico after that oil spill, yet the member for Souris—Moose Mountain touts $1 billion as being an adequate amount of liability. Could he possibly tell me from his investigation how the $1 billion limit of liability was set, when we all know that costs are going to be well beyond $1 billion if there is ever a spill?

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Mr. Speaker, as we all know, the nuclear liability portion of this particular piece of legislation would ensure that we have continuous production of clean energy, particularly in Ontario, and that member is from this particular province.

In my riding we have the carbon capture and sequestration project, which takes care of emissions generated in other types of electrical production, so we have gone a long way in ensuring clean energy and in dealing with that aspect of it.

The present liability portion is $30 million to $40 million. This would be increased substantially. Not only would it be increased substantially, but the bill makes provision for additional funds to be put in place by the operators for immediate concerns and immediate purposes. Additionally, depending on which part of the legislation, the matter can be brought back to the House as well.

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

Mr. Speaker, I appreciate the member's contribution to this debate and the important work he is doing for his constituents.

I want to build on this discussion about liability. While I would find it otherwise irresistible to respond in some way to the previous member's question about greenhouse gases, and I am proud to say that this government has delivered a net reduction in GHG emissions for the first time ever, I need to talk about liability, because it is more to the point of this particular debate. I am concerned about the NDP's proposal for a nuclear liability amount that would not take into account the real capacity of insurers.

Could my colleague tell me how Bill C-22 would balance the need for operators to be responsible for the costs of an incident with the need to be realistic while protecting Canadian taxpayers? It is a tough but fair question at this time in the debate.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Mr. Speaker, Bill C-22 does address the need for operators to provide adequate and appropriate compensation—and I have referred to that—without burdening them with exorbitant costs for unrealistic amounts of insurance against events that are highly unlikely to occur in this country. The $1 billion that I spoke of strikes a proper balance between providing adequate compensation for citizens for a nuclear incident and holding companies to account in the event of an accident. In all of these matters we must have that balance.

The amount is also well above the liability limit imposed on nuclear operations in many other countries and is in line with the limits that have been proposed in the EU, so in a lot of ways we have set a standard and in a lot of ways we have done what other countries have been thinking about doing.

Of course, when we look at what the present regime is compared to what we propose it would be, we see there is a substantive and significant increase to ensure that there is adequate protection at the same time that we protecting taxpayers as well. This is a balance that I think has been appropriately achieved in this bill.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Mr. Speaker, I am very excited to be getting up to speak on Bill C-22.

The energy safety and security act should actually boost Canadians' confidence in what is already a very world-class safety and regulatory regime for our offshore and nuclear industries.

Bill C-22 is important, and it is important to the marine environment that we all love. It demonstrates here today, with concrete proof, that our government is committed not only to protecting the safety and security of Canadians but also to protecting our environment.

Let us make no mistake: we are the only party in this House of Commons that is looking out for our environment and for our sustainable energy development. This energy development pays many of our bills, bills for education, pensions, and health care, things that vastly increase all Canadians' quality of life.

As we have said, under our responsible resource development plan, the development of our natural resources will proceed only, and I highlight this, if it is safely done in a way that is safe for Canadians and safe for our environment.

I want to give a little background.

Management of offshore oil and gas in this case is carried out jointly by the Government of Canada, the Province of Nova Scotia, and the Province of Newfoundland and Labrador. The Government of Canada has been working very co-operatively with these two provinces to create a really strong offshore safety system for oil and gas exploration and operations, and it is world class.

That is not just rhetoric. In fact, an independent consultancy group, PFC Energy, rated Canada, the U.K., Norway, and Australia as the world leaders in offshore regimes, in contrast to what the NDP was trying to feed us a few minutes ago.

This is based on our unique combination of extensive regulations and processes. Bill C-22 is going to take those even further. The energy safety and security act reflects the continued collaboration with the provinces and really strengthens regulations in three main areas. Those are prevention, response, and accountability.

Today, given my limited time, I am going to focus on response, and pollution response specifically.

Bill C-22 enhances our response capability by adding what we are calling a new tool to the emergency response tool kit in the very unlikely event of a spill. That tool is spill-treating agents.

I will address what spill-treating agents are, why they are a very effective response option, and the stringent safeguards this bill puts in place so their use is environmentally safe.

I am sure all members in the House would agree with me on one thing, which is that in a world-class response regime, it is critical to have the capability to respond in the most effective way possible if there is ever an incident. A key component of Bill C-22 involves giving responders the very best technology and scientific advancements available so that they can have that swift and effective response.

Spill-treating agents are scientifically determined to be the best way to mitigate the environmental effects if there is a spill. Of course, our aim is to prevent any spills, and Canada does have an excellent track record. In fact, the vast majority of spills are under one litre. That is right: under one litre. I think it is important that Canadians know that so they can put this issue in context.

Our largest spill, regrettably, was 1,000 barrels at Terra Nova in 2004. The next-largest Atlantic Canada spill was just 38 barrels. That lets people know what we are dealing with here.

No spill, of course, is one we want to see, but when used appropriately, generally within the first 12 hours, spill-treating agents can reduce the impact of an oil spill on the environment. When these substances are applied to the oil spill, they change the behaviour of the oil so that they can help control the path that the spill is going to take and they can mitigate the effects of the spill on the coastal or marine environment. They will also assist in the natural process of biodegradation.

Spill-treating agents are not new. In fact, they are an accepted part of the offshore oil and gas safety regime in a number of countries with regimes similar to Canada's, including the United States, the United Kingdom, and Norway.

At present, spill treating agents are not used here in Canada, but in 2013 the tanker safety expert panel, an independent panel that was commissioned by Transport Canada, recommended that the government approve the use of these spill treating agents. Therefore, with this bill today we are accepting that recommendation. We believe it really does make sense. I should stress that these agents would only be used if their use would result in an overall net environmental benefit.

With that in mind, there are four conditions we have put in place in the bill. These agents could only be used if the conditions are met. First, the spill treating agent must be on an approved list prescribed by the government. Second, the spill treating agent must be included in the operator's spill contingency plan, which must be approved by the offshore regulator before the operator begins operations. Third, the regulator's chief conservation officer, who is an individual with a wide range of powers, has to determine that the use of the spill treating agent is really likely to achieve this environmental net benefit. Fourth, the spill treating agent has to be used in conjunction with the regulations and conditions that are imposed by the chief conservation officer I just spoke about.

I will just explain these conditions in a bit more depth. The first condition states that the spill treating agent has to be on a prescribed list. The minister of the environment, not the minister of natural resources, would actually establish this list based on scientific evidence regarding the potential for these agents to provide an environmentally beneficial effect. It is setting that bar very high.

The second condition is built into the operating licence. Every operator has to submit a contingency plan in order to actually obtain an operating licence. If the operator wants to use a spill treating agent, it has to be included in that plan. The regulatory bodies here are the Canada-Nova Scotia Offshore Petroleum Board and the Canada-Newfoundland and Labrador Offshore Petroleum Board. Unless one of these two boards determines that the use of the spill treating agent is likely to achieve this net environmental benefit, it would not be accepted as part of the spill contingency plan.

The effect of all this is to require really careful consideration of whether the spill treating agents are actually appropriate and environmentally beneficial, both at the front end of the planning process, as well as later on in the planning process when an event might actually happen. This planning would also allow for informed decisions to be made quickly, because in the event of a spill we want to act fast, so that we can contain it.

The third condition, that the offshore board has to determine that the use of the spill treating agent must be likely to achieve an environmental net benefit, is a way to verify that the response options that are put into that plan at the beginning are actually going to be appropriate on the scene, as every spill has different conditions. It would be assessed on both ends. There are a lot of variables that can be present at the time of a spill that might make the agents appropriate or not. They are things like waves and tides and how much the product might be dispersed.

The fourth and final condition is that the spill treating agent would have to be used in accordance with the regulations and any additional conditions that are imposed by the chief conservation officer. This gives some flexibility to further fine tune the conditions on the scene as our use of scientific and technical know-how evolves.

In conclusion, spill treating agents are part of a comprehensive toolkit of spill response techniques. Responders have indicated that they want them in their toolkit. Currently, the mechanical techniques they are using that we are most familiar with, booms and skimmers, can be quite effective but superior results can often be gained by using these spill treating agents.

Bill C-22 provides numerous checks and balances, which I have gone through, to ensure they would only be deployed when their use would be of a net environmental benefit. The commissioner of the environment and sustainable development, in his fall 2012 report, supported these measures.

Bill C-22 is one more reason Canadians can have confidence that their government is diligently protecting all of our interests in developing offshore oil and gas and protecting our environment every step of the way. I ask my hon. colleagues opposite to join us in supporting Bill C-22 at second reading so it can move on to committee.

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Speaker, I know that the member for Calgary Centre dealt primarily with oil and gas, but my concern is about the nuclear side of this bill.

One of her colleagues earlier suggested that the amounts proposed in this bill would bring Canada in line with Europe. However, our limitation would be $1 billion for a nuclear accident, while the U.S. limitation is $12.6 billion and Germany, Japan, Sweden, Finland, Denmark, Austria, and Switzerland have unlimited liability. There is no liability.

Is putting a liability cap on something that is potentially so dangerous not a way of subsidizing an industry? Is that not a negative consequence for the Canadian taxpayer?

[Joan Crockatt, Conservative, Calgary Centre, AB]

Mr. Speaker, I am very surprised to hear the NDP worried about the taxpayer, but I am delighted to answer the question.

I have a particular interest in the nuclear industry, because I covered it as a natural resources reporter. I can tell members that this $1 billion is the right balance between providing adequate compensation for citizens if there is a nuclear incident and also holding companies to account.

We are moving to the polluter pays model. This limit is well above the liability limits that are being imposed on nuclear operators in many countries.

The NDP is never happy until it can actually shut down all of our industry in Canada.