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.

[Jeff Labonté]

From a policy perspective, the department would certainly feel that it was a stronger bill. The previous version of the bill limited the liability to $650 million, whereas this bill puts it at $1 billion, so there's a fairly sizeable change. This bill has that liability phased in over time, which is responsive to what some of the stakeholders felt was the need over time to be able to get into the insurance market, to get the insurance required, and to put the fiscal elements in place they would want. That's moving from $75 million to $1 billion over a three-year horizon, starting at $650 million, moving to $750 million, $850 million, and then to $1 billion.

Bill C-22 also more clearly defines psychological trauma, one of the damages that is compensable under the bill, and how that would work over time and how it's associated with bodily injury. It was less clear in the previous versions of the bill. So the longer we officials have had to look at a bill, the longer we have had to try to optimize and refine it to provide as much clarity as possible. As you're parliamentarians, I'm sure you're trying to do the same thing, but time always limits the ability for you to look at everything as much as you can.

Bill C-22 makes explicit that the costs incurred by authorities in responding to an incident are not compensable by the operator. For example, if emergency services of fire, police, or whatnot responded to a potential incident, those costs are not reimbursable to the municipality or the province responsible. They're covered via the emergency services of that particular part of the country.

[Jeff Labonté, Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources]

Thank you, Mr. Chair and members of the committee. It's a pleasure to be here this morning to speak to you about the second part of Bill C-22. This will focus on nuclear compensation and liability.

This morning, it is my pleasure to provide you with some background about the second portion of this bill.

A presentation has been circulated. I hope everyone has a copy. As with previous representations, we will try to move through the presentation fairly quickly and open the floor for your questions and comments and will do our very best to respond to those.

The purpose today is to brief on the nuclear components of the energy safety and security act. In essence, the act proposes to amend the nuclear regime to establish greater legal certainty, and enhance liability and compensation procedures, protocols, and aspects related to the unlikely event of a nuclear incident in Canada.

For background, the act will replace our current nuclear liability regime, which is based on a 1976 nuclear liability act. My legal counsel has reminded me that the act was tabled in parliament in 1970 and wasn't in to force until 1976.

To point out a couple things, the act provided for liability limited to $75 million in the event of a nuclear incident. There are aspects of the act that I think it would be fair to say are outdated and that we would hope to modernize. Certainly it doesn't reflect international standards, nor international conventions that have emerged to manage transboundary and transnational issues related to nuclear incidents in the event that they ever occur. Those are the focal points, to us, in terms of the policy logic for the bill.

I think most committee members may know this, but I'll say it for the record. The bill has been introduced four times before parliament and has not managed to make its way to a vote and to royal assent. That said, I think it's an important piece of legislation that we hope we can help advance, and certainly respond to your questions in a fashion that allows so.

With regard to highlights of the bill, it is really about three things. One is to strengthen compensation and bring it in line with international peers and with other international context. Two is to clarify the compensation definitions and the procedures in which compensation would be provided and how it would be determined. Three is to allow Canada to sign and ratify the International Atomic Energy Agency convention on supplementary compensation for nuclear damage. That is in effect a convention that allows countries to work together to deal with transboundary incidents and to share resources in the event that there's an incident in a member country to the convention.

As well, the bill—similar to the offshore portion of the bill—has elements that are quite consistent with what was proposed in the Commissioner of the Environment and Sustainable Development's fall 2012 report. It looked at liability limits for all of Canada's energy production regimes and natural resource sector areas.

I will now discuss what is found on slide 4 of our presentation.

The nuclear sector is important for Canada's economy. It provides 30,000 direct jobs, of which 5,000 are in the uranium and aluminum sectors, and 25,000 in services and energy production from uranium. In total, over $6 billion in revenues are produced annually in Canada. This is a major aspect of our economic context as well as development.

On the fifth page, I'll cover a couple of key elements of the act in terms of highlights. I'm certain you'll have a more deeper look at things, but there are elements of the bill that focus on improving accountability and looking at the liability aspect.

First, the act maintains that liability for operators is exclusive and absolute. Similar to the offshore portion of the bill, that would mean that in the event there were an incident—and we believe that such an incident would be highly unlikely—the operator of the facility would be absolutely liable. There would be no need to provide fault or negligence to demonstrate that liability.

The bill proposes to increase absolute liability to $1 billion over a period of three years in several steps. It requires that operators have a commensurate amount of insurance or fiscal security that demonstrates they are able to handle the $1 billion worth of absolute liability. It also provides that the government will provide coverage where there is no insurance, and there are several instances where we might find that in this part of our economic sector. One example is small reactors or reactors that relate to research areas. The second example is in areas where the insurance community is not prepared to look at 30-year horizons, for example, for coverage of certain damages.

The act also provides a mandated review of liability amounts every five years so that at least Parliament will have the opportunity every five years to increase the amounts of liability and compensation that are fundamental in the act.

The second part or theme of the bill is really to look at increasing the response capability, so the bill goes quite a ways in expanding the definition of categories of what are the compensable damages. It provides for a limitation period and expansion for bodily injury for claims from 10 years to 30. It provides the compensation of remedial measures to repair and to deal with environmental damages and it establishes authorities to simplify the claims-handling process through a tribunal, should it ever be necessary.

It also allows Canada to enhance its transparency and to join the international community, so the bill provides for Canada to ratify membership in the convention on supplemental compensation for nuclear damage. Once in force, this convention will provide certainty for liability in jurisdictions for trans-boundary and trans-national issues. It specifies how these issues will be dealt with. It provides supplemental coverage should Canada ever need it and it provides that Canada would also contribute to supplemental coverage from another member country, should it ever be needed as well.

In terms of next steps for the bill, it was introduced on the 30th of January. Following royal assent and entry into force, part 2 requires a number of regulations to be established, and we expect to do those in the coming months and, over the next 12 to 18 months, one regulation is to provide for an insurance policy and another is to establish the definition of a nuclear installation.

Once it has come into force, Canada will then formally complete its process to ratify the convention. So we've signed the convention, but it isn't formally ratified until the policy is in place domestically in law and several regulations are in place, and then we're able to actually ratify the convention and become formal members of it. So there are several steps along the path that gets us to being a member. The annex includes the acts that will be amended either directly or consequentially through this process.

Thank you, Mr. Chair.

[The Chair, Conservative, Leon Benoit]

Thank you.

Now we'll get to the business we have before us today.

I want to start by thanking all of the witnesses for being here.

Mr. Labonté, this is two meetings in a row, and we're looking forward to your presentation and your answers to questions by members today.

We are here today to continue our study of 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.

For the first three-quarters of an hour this morning, we have from the Department of Natural Resources Mr. Jeff Labonté, director general of the energy safety and security branch, energy sector. Again, thank you.

We have Dave McCauley, director of the uranium and radioactive waste division in the electricity resources branch, energy sector. Welcome to you, sir.

And we have Joanne Kellerman, general counsel and executive director, legal services. Thank you for being here today as well.

Go ahead, please, with your presentation. Then we'll get to the questions and comments after that. I look forward to a meeting as productive as the last one.

Go ahead, please.

[The Chair, Conservative, Leon Benoit]

Then the other thing that we need to decide is....

First of all, in case the clause-by-clause study goes longer than the two hours, is it agreed that we go as long as it takes to complete the clause by clause of Bill C-22?

Is that agreed?

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Crockatt.

Thank you very much to all the witnesses for being here today and giving your knowledge and expertise in the answers to the questions that were asked today.

We have, from Ecojustice Canada, William Amos. Thank you very much for being here.

We have, from the Canadian Association of Petroleum Producers, Paul Barnes. Thank you very much for being here.

We have, from the Canadian Environmental Law Association, Theresa McClenaghan, executive director and counsel. Thank you very much for being here.

We'll be back on Thursday to take a look at the nuclear side of Bill C-22.

The meeting is adjourned.

[Theresa McClenaghan, Executive Director and Counsel, Canadian Environmental Law Association]

Thank you very much, Mr. Chairman.

Thank you to the committee for inviting CELA to speak to you today about Bill C-22, the energy safety and security act.

CELA is a 44-year-old national ENGO, and when we're looking at conventional sources of energy, the areas we're focusing on are usually around things like liability, safety, emergency planning, and environmental health.

Today I'm going to focus on the liability aspects of the bill. You are focused on offshore oil and gas in your study today and on nuclear energy on Thursday, as I understand it.

First I want to look at the bill as a whole, because there's a significant contrast between the approaches in the two sectors of the bill. The areas I'll address are the polluter pays principle, which we've been hearing about this morning, absolute liability, liability for negligence beyond absolute liability, and supplier and contractor liability.

First of all, with respect to the polluter pays principle, CELA too supports this principle and is very pleased to see it included in several oil and gas statutes as part of their purpose statement, so that it will now be part of the purpose of all of those regulatory statutes.

However, the polluter pays principle is not included in Bill C-22 on the nuclear side of the bill. We would submit that it is poor policy that a bill that espouses the polluter pays principle does so only in respect of one type of energy source in the bill, oil and gas, and not in respect of nuclear.

With respect to absolute liability, both sides of the bill, oil and gas and nuclear, require minimum insurance or other demonstration to show that an absolute liability amount could be paid in the event of an incident. We agree with that, although we also agree that $1 billion is not enough in either sector.

The difference is that in the case of oil and gas, licence holders or their suppliers and contractors may be liable beyond the absolute liability in the case of negligence, as you heard described. That may sound obvious, but on the other side of the bill, negligence and liability beyond the absolute liability are not provided for on the nuclear side. On that side, the billion dollars or whatever the phased in amount is, would be the absolute maximum that an operator would ever have to pay for an incident even if it drastically exceeded the liability of the incident.

In the case of the negligence side of the bill with regard to the oil and gas sector, the damages would have to be proven. We recognize there are issues with proof, but nevertheless the fact that claims can be brought for proven damages in cases of negligence even beyond absolute liability is entirely appropriate in our view. We would submit that this should be done as well on the nuclear side of the bill.

A section analogous to clause 19 of part 1, which amends the act by changing section 26 of the Canada Oil and Gas Operations Act, should also be included in the nuclear side of the bill.

The other big difference is with respect to supplier and contractor liability. Both aspects of the bill channel supplier and contractor liability to the operator or the licence holder for that absolute liability portion, but only on the oil and gas side is liability ever possible against suppliers and contractors in their negligence. On the nuclear side, that's never possible. The nuclear suppliers to that entire supply chain never have to consider the consequences of the decisions they are making around risk, and on the nuclear side as well as the oil and gas side, decisions are made every day around risk.

The other thing I want to focus on today has to do with the proposed amendments to the bill. In addition to the amendment I suggested, which would insert a section analogous to section 26 of the Oil and Gas Operations Act into the nuclear side, I would also say, with regard to the nuclear side, that in clause 120, proposed section 9 and all of the subsections there that have the words “and no person other than an operator” should all be struck out. Then proposed section 24 should be amended to increase the absolute liability amount similarly on the oil and gas side.

Then a provision like clause 19 of part 1 of Bill C-22, which provides for additional liability beyond the absolute liability in the case of negligence, as I already said, should be included.

To conclude, because I know time is short and you have questions, with respect to this bill, we agree that the amount for the absolute liability portion of the bill is insufficient. We agree that there should be an amount for absolute liability in both sectors. We also agree that there should be liability for negligence beyond the absolute liability. Our submission is that this should apply in both sectors as well.

Thank you.

[Paul Barnes, Manager, Atlantic Canada and Arctic, Canadian Association of Petroleum Producers]

Thank you. Good morning, Mr. Chairman and members of the committee.

My name is Paul Barnes. I'm the manager of Atlantic Canada and Arctic, for the Canadian Association of Petroleum Producers, sometimes referred to as CAPP.

We represent Canada’s upstream oil and gas sector, basically those companies involved in the exploration, development, and production of oil and gas. We appreciate the opportunity to offer our perspectives regarding Bill C-22 today, specifically those sections of the bill related to the offshore oil and gas industry.

Safety comes first in Canada’s offshore oil and gas industry. Offshore operators assess every activity before beginning it, with safety in mind. Similarly, protecting the environment is a key consideration in everything we do. Operations are designed to mitigate potential risks to our people and the environment. To put it simply, our industry is committed to developing offshore resources safely and responsibly.

We are therefore supportive of this bill, which aims to enhance accountability for safe operations and to modernize aspects of the offshore oil and gas regulatory regime so that Canada’s offshore can maintain its world-class safety and environmental performance.

I'll begin by talking about the polluter pays principle and offshore liability.

Bill C-22, as you know, is founded on the polluter pays principle. This principle is supported by CAPP and is consistent with other federal legislation that applies to the oil and gas industry throughout the country.

One of the most significant changes resulting from this bill is an increase in offshore liability limits. It's important to differentiate between absolute or no-fault liability versus liability for incidents where fault or negligence by industry is proven.

In any case where fault or negligence is proven, the industry has unlimited liability, meaning that we are fully responsible for the costs of cleaning up the incident. This has always been the case in Canada, and this bill does not suggest any change to at-fault liability.

The increase in liability, however, that we are talking about or referring to is in absolute liability, meaning the amount companies will be required to pay, even if they are not at fault for an incident. The amount companies must provide to government so they can get unfettered access to use it, if needed, in the event of an incident has also increased.

It should be noted that industry works diligently to prevent incidents from occurring, so it is our hope that we never find ourselves in a position where liability for an incident comes into play. At the same time, we understand and accept the rationale for increasing the absolute liability limits. Likewise, we understand that this bill also brings new requirements for companies to demonstrate that they have at least $1 billion in financial capacity to undertake work in the offshore. Again, we accept the rationale for these changes.

We do wish to have further dialogue with governments and regulators as regulations and guidelines related to financial responsibility are further developed, as industry would like to see some flexibility in some of the financial instruments that are available in the financial market today, such as insurance and parental guarantees, which would be acceptable in order to demonstrate financial capability or capacity.

I will now comment on dispersants.

As I mentioned, offshore operations are designed with a prevention-first philosophy. While our primary focus is on preventing incidents like spills from occurring, it is also important that we be prepared to effectively respond in the unlikely event of a spill.

We are encouraged that the federal government, through the bill, is taking the steps necessary to enable the use of spill-treating agents in Canadian waters in the event of a spill. Industry has been advocating for the acceptance of dispersants as a viable spill countermeasure in Canada for several years. Several recent reports and reviews have also recommended that Canada facilitate dispersant usage where there is a net environmental benefit, including a recent report by the Commissioner of the Environment and Sustainable Development from the Office of the Auditor General of Canada.

Dispersants are a common spill countermeasure in other offshore jurisdictions. In fact, over 75 countries around the world identify dispersants as a first- or second-response option. These proposed changes in the bill bring Canada in line with other countries and current global practice.

The key to effective spill response is having access to a variety of tools that can be used in a particular spill scenario. Dispersants provide another tool in the tool box to spill responders, thereby improving our capacity to respond effectively to a spill and minimizing environmental impacts.

I also want to point out that this bill supports the concept of the offshore petroleum boards in Newfoundland and Labrador and in Nova Scotia as the best-placed regulators for the offshore industry in Atlantic Canada.

Industry has always advocated for a single-window regulatory approach for the offshore, meaning a regulatory structure that has industry engaging with one primary regulator. This approach ensures cohesiveness and clarity in the regulatory model, and is in line with the original intent of the Atlantic accord acts.

Bill C-22 provides additional authority to the boards in the areas of environment, and health and safety, and makes the offshore petroleum boards lead regulatory authorities under the Canadian Environmental Assessment Act. In our view, the boards are the best-placed regulators for conducting offshore environmental assessments, so we are pleased to see this authority being granted to the boards. It also brings them in line with the National Energy Board, which was granted this authority many years ago.

The bill also provides additional authority to the boards to release environmental reports and other documents to the public. Generally, we are supportive of efforts to improve transparency. In fact, in CAPP's own annual “Responsible Canadian Energy” report, we voluntarily published performance data related to environmental safety. However, further dialogue is required as the bill does not define specifically what documents will be released, and some information could be commercially sensitive. We look forward to having some further dialogue with governments and the boards as they develop regulations and further information about the release of these documents.

To conclude, I want to reiterate CAPP's support for Bill C-22. The bill demonstrates government's commitments to ensure public safety and environmental protection, and is in line with industry's own commitment to develop resources safely and responsibly.

Thank you for the opportunity to present to you today, and I look forward to questions.

[The Chair, Conservative, Leon Benoit]

We resume our committee meeting with witnesses on Bill C-22.

We have three witnesses with us.

First of all, here in person from Ecojustice Canada, we have William Amos, director, Ecojustice Environmental Law Clinic at the University of Ottawa. Thank you very much for being here again. We've had you before the committee a couple of times, I believe. Welcome.

By video conference from St. John's, Newfoundland and Labrador, from the Canadian Association of Petroleum Producers, we have Paul Barnes, manager, Atlantic Canada and Arctic. Welcome to you, sir, and thank you for being with us today.

We have by video conference from Toronto, from the Canadian Environmental Law Association, Theresa McClenaghan, executive director and counsel. Welcome to you. Thank you very much for being with us today.

We'll have the presentations, for up to five minutes, from witnesses in the order that you are listed on the agenda.

We will start with Mr. Amos from Ecojustice Canada.

Go ahead, please, sir, with your presentation. Again, thank you for being with us today.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Mr. Labonté, you can take notes, because I have some questions for you.

You mentioned the polluter pays principle. Does that principle apply in your department as a general rule or did you decide to apply it to this specific bill?

You said that you used certain accidents to determine the level of liability. The Piper Alpha accident in the United Kingdom cost $1.2 billion. If you consider inflation, that comes to $2.83 billion. For Ixtoc 2, the cost was $3.4 billion. Those amounts exceed $1 billion.

Which accidents did you use to determine the costs of liability? Would recovery operations in the Arctic, in Canada’s far north, cost a lot more? Did you include those operations in your scenarios and your calculations?

The legislation has not been changed for 30 years. We are presently studying Bill C-22 so that we do not have to amend the legislation for a while. So why does the bill not provide for an annual indexing formula for the liability amount so that we can avoid a situation whereby another 30 years might go by without the amount being indexed and with it no longer reflecting reality? Would it be possible to include an indexing formula in the bill? If so, what would you suggest?

[Jeff Labonté, Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources]

Yes, indeed.

Thank you very much for the opportunity to be here this morning and to discuss the elements of Bill C-22.

There is a presentation that's been distributed by the clerk in French and English.

You can have it in the language of your choice.

Let me begin by appreciating the chance to come and speak to you about the bill and hopefully be able to answer the questions you may have, and to be followed by other stakeholders later today.

Today's focus of the presentation would be on the offshore components of the energy safety and security act, an act that amends the petroleum regime to enhance incident prevention response capability, liability, and compensation.

Just as background, the offshore legislation was developed by the Minister of Natural Resources in collaboration with the Minister of Aboriginal Affairs and Northern Development, the Minister of the Environment, and the Minister of Foreign Affairs.

This piece of legislation was also developed in collaboration with the provinces of Newfoundland and Labrador and Nova Scotia, both of which share management of the offshore with the Government of Canada and have mirror offshore legislation, both of which will be presenting similar bills in their legislatures in the coming months.

Here are some highlights of Bill C-22: Its focus is to strengthen the safety and security of our offshore and nuclear energy industries. It ensures that Canadians will continue to have a world-class offshore regime that is accountable and responsive, and both works to prevent incidents from occurring as well as provide for the compensation and liability in the event of an incident.

This piece of legislation builds on the government's agenda for responsible resource development by ensuring that we have an equally responsive regulatory regime to support responsible resource development.

The Commissioner of the Environment and Sustainable Development recognized the government's intentions previously when at committee and has found that these pieces of legislation are consistent with the fall report that made mention of the need to raise liability and compensation in the offshore sector among other stakeholders across the country.

From an economic point of view, the offshore petroleum sector is fairly significant, representing 28% of Newfoundland and Labrador's GDP and 3% of Nova Scotia's nominal GDP. There are about 13,000 jobs or 5.8% of total employment in Newfoundland and Labrador. There has been about $9.2 billion in royalties to Newfoundland and Labrador, and $2.4 billion in royalties to Nova Scotia over the past 15 years. That is to say that the energy sector and the offshore for Atlantic Canada is quite significant and important from an employment and revenue point of view.

Regarding key features of these particular amendments that are proposed for the offshore, there are themes within the bill.

If you look at one theme about improving the accountability of the regulatory system, there are proposed amendments in the bill to enshrine the polluter pays principle into law; to reinforce in statute the unlimited liability at fault or when negligent; to increase the absolute liability amount to $1 billion, up from $40 million in the Arctic and $30 million in the offshore and everywhere else; to establish in statute that operators are liable for contractors; and to allow governments to seek compensation for environmental damages.

In terms of enhancing prevention, the bill will provide for the requirement to set a minimum of $1 billion in financial capacity for operators of the offshore and create an ability for regulators to levy administrative and monetary penalties for infractions and regulatory incidents.

Moving to the sixth slide, the third element of the bill is to increase response capability and transparency. Here the bill clarifies authority for use of spill-treating agents when there's a net environmental benefit. It provides the regulators direct access to $100 million per project or a pooled fund of $250 million if the operator is unwilling or unable to respond to a spill and the regulator needs to step in.

The act will require the boards to make emergency plans, environmental and other documents public. It will also create in statute a cost recovery regime that requires industry in law to provide payment to government for the regulatory services that are provided. Currently, there's a 75% cost recovery in Newfoundland and Labrador, and 50% in Nova Scotia under voluntary agreements. This therefore puts in statute the current agreement.

The final point would be to establish the authority to manage resources that straddle two or more administrative areas in the Arctic region, particularly as we look at different opportunities and different collaborations that are happening north of 60.

In terms of next steps, the bill was introduced, as you might know, on January 30. The government and the department are currently working on regulations in the statute or in the proposed amendments that are imposed over a timeline.

Provincial versions of the bill are in development. We are working closely and collaboratively with our provincial counterparts so that mirror legislation will be introduced. We expect that to happen in the early fall in Nova Scotia's case and shortly thereafter in the cast of Newfoundland and Labrador. The entry into force of the bill will be determined with the provinces once they pass their legislation and all of the regulations are completed.

There's a small annex that identifies which of the federal acts are impacted by part 1 of the energy safety and security act and where the amendments apply.

[The Chair, Conservative, Leon Benoit]

Good morning, everyone.

As you all know, pursuant to the order of reference of Thursday, May 29, 2014, we are studying 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.

In our study of this legislation, we begin with departmental officials who will be dealing with the offshore section of the act. I welcome you to our committee this morning. Thank you very much for coming on such short notice.

We have with us from the Department of Natural Resources, Jeff Labonté, director general, energy safety and security branch, energy sector; Samuel Millar, senior director, frontier lands management division, petroleum resource branch, energy sector; and Jean François Roman, legal counsel, legal services.

From the Department of Indian Affairs and Northern Development, we have Michel Chenier, director, petroleum and mineral resources management directorate, natural resources and environment branch, northern affairs.

We have three-quarters of an hour with these witnesses, and we will start immediately.

Do you have a presentation to make, sir, to start our study of this bill?

Energy Safety and Security Act

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I am very glad to have an opportunity to put some questions to the hon. member for Skeena—Bulkley Valley because, unlike the hon. member for Red Deer, I suspect he may have read Bill C-22 and knows there is nothing in the bill that has anything to do with tankers or a safety regime for shipping oil in tankers. I mean no disrespect to the hon. member for Red Deer. I think he was handed a speech he had not written that spoke to a lot of measures that have nothing to do with Bill C-22.

The tanker methods and measures that were mentioned by the hon. member for Red Deer, such as double-hulled tankers, which are not in Bill C-22, have been required globally since 1978. I think there should be a statute of limitations on how often this administration can announce a global standard that has existed since 1978, but which, by the way, is not mentioned in Bill C-22.

Let us talk about Bill C-22, which is a regime for liability for drilling in the offshore. That is what it is about. It sets limits that, as the hon. member for Skeena—Bulkley Valley has pointed out, will do absolutely nothing to deal with a major disaster such as may happen if they go ahead and drill a deepwater oil well called Old Harry in the Gulf of St. Lawrence, where no one should be drilling for oil.

I want to ask my hon. colleague one specific question, because I find it fascinating. On page 35 of Bill C-22, we find this wonderful statement about violations of the act. It states, “The purpose of the penalty is to promote compliance with this Act and not to punish”.

What does he make of that?

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, it is a pleasure to join the House tonight in the debate on Bill C-22, a bill the NDP believes should at least get to the committee so that we can hear from the experts and witnesses who know something about this issue of liability when it comes to nuclear projects as well as about what happens in the offshore.

I need to make some passing comment on what my friend just said recently about Canada's state of regulatory protection for the environment and for communities. Systematically, often through omnibus bills, these massive bills the government has been using, it has been pulling out and destroying pieces of that very same environmental protection law the government says is the best in the world.

The government keeps ripping out pieces of the environmental protection laws we have in place, such as the Fisheries Act and the Canadian Environmental Assessment Act, and then continues to say that it must be the best in the world. Then it rips out some more and says that its is global-leading environmental protection. Then the government rips out some more and says that it must all be great. That is, of course, not the case. The government has been enabling the speedy approval of oil and gas projects over the last number of years with very little public oversight of any little stipulations.

We can all recall that it was the Prime Minister who got up after getting elected to government and said that within a short time, Canada would become a global energy superpower. That was in 2006. Eight years on, how are the Conservatives doing? Oh, my goodness; they are yelling at the U.S. president because they do not like his delay. They cannot get Enbridge northern gateway past the communities and gain the social licence they need. They have controversies on every single energy project they propose and demand that Canadians just accept them.

When Canadians raise any questions, this is the government's approach to this point when it comes to oil and gas projects. It calls Canadians who raise objections foreign-funded radicals. The Conservatives call them enemies of the state. This is the Conservative attempt to woo Canadians to oil and gas development in Canada. It has had the opposite effect.

It is no wonder that the oil lobby, CAPP, the Canadian Association of Petroleum Producers, just a couple of weeks ago broke away from the Conservatives' public relations strategy, because it was toxic. It was hurting the industry so much that it said it could no longer be associated or in line with the Conservatives' strategy when it comes to speaking to the public. It is going to go its own way. It took them a number of years, but the oil lobby is pretty smart and has a lot of money.

Let us talk about the specifics of the bill. This is of incredible importance to me because I represent northwestern British Columbia, and we are in the target zone. We are ground zero for a bunch of the Conservatives' more misaligned schemes when it comes to energy development.

Liability and limited liability, as in this bill, are of great interest to us. There is a curious thing I hear, both from progressives and from very conservative constituents, when it comes to who pays the costs when there is an oil disaster. Both from the right and the left, there is a curiosity as to why there is a liability placed over top of oil companies at all.

When a limit is put on the liability to which a company is exposed, what the government is effectively saying is that the company can be sued, but only up to a certain point, and beyond that, there is cap and it cannot be held responsible or made to pay compensation beyond that cap.

One would wonder, of all the industries in the world, why the oil and gas industry would be the one to receive what is in effect a subsidy from the public. It is a subsidy because any cleanup costs beyond that cap are picked up by the Canadian public.

It makes no sense. It does not happen to other industries, except for nuclear, which is also included in this bill, but it happens for oil and gas. Why is that? It is because the oil and gas industry has really good lobbyists. One told me a funny little joke the other day. I guess it is a joke within the oil lobbyist circle. He said that when the oil lobby wants the Conservative government to know it wants something, it does not phone; it just rolls over in bed and whispers in the government's ear.

While I thought that image was a little disturbing, it seems to be true. When it comes to the Conservative government, whatever oil wants, oil gets.

With the liability question that is front of us, let us take nuclear for just a second. Let us step away and look at the process we are under. We see that this bill, which has massive implications for the Canadian people, is under time allocation. That means that the government has decided to restrict the debate.

All through the back and forth on this restriction of debate, the Conservatives have said that they want to show up to work, and yet the Conservatives have missed 11 speaking spots so far. That is 11 shifts they have not shown up for.

In most Canadian workplaces, if workers have a shift that they do not show up to, there would be some sort of consequence. I know that as an employer, I would be somewhat suspicious of employees who said they wanted to work hard and yet did not show up to work, and so be it.

On nuclear liability, for example, the Conservatives previously attempted to raise the liability cap to $650 million, and the New Democrats were the only ones in this House—and I remember, because I sat on the committee—who said that $650 million might be a little low. We suggested $1 billion just as a good place to start. The Conservatives and Liberals at the time said that was outrageous, that we would kill the nuclear industry in Canada, that we would make it unaffordable, that it was irresponsible.

Then Fukushima happened. Does it not often seem an unfortunate reality that significant and painful disasters have to occur before governments suddenly snap awake and realize? As of today, current costs of that one disaster in Japan have hit $58 billion.

The Conservatives will wave this bill around and say they are being tough and that $1 billion is just an extraordinary amount of money for a company to hold. However, when things go wrong at a nuclear plant, they go really wrong. People die and get exposed to radiation, and all sorts of serious consequences happen to people in the area.

The idea that the public would pick up the cost beyond $1 billion is one that we found questionable. We raised this before, and the Conservatives and the Liberals said it was a terrible idea. Then suddenly they adopted that terrible idea. They now call it a great idea. I guess that is how ideas transform from “terrible” when they come from the opposition to “great” when they come from the government.

Let us move over to offshore oil and gas liability, because that is also discussed here.

To put it in context, the cost of the massive and disastrous spill that happened in the gulf as a result of BP's actions is at somewhere near $28 billion in damages so far. I was just looking this up online, and some of these estimates may double or triple that amount, approaching $70 billion in compensation for damages because it was such a terrible thing. One of the regions the government wants to drill in is the high Arctic and the Beaufort, and one of the stipulations that sits on the books in Canada right now is that the company that is drilling must have the capacity to drill what is called a “relief well” in the same season.

It was only a relief well, as people will remember, that was ultimately able to stop that terrible disaster in the Gulf of Mexico. The workers tried absolutely everything to stop the oil from coming up, but it was only by drilling a second well and then going below where it was being released that they were eventually able to get enough cement and solids in there to be able to cap it.

In the Arctic, the oil companies came to the current government and very quietly and secretly said, “Let us get rid of that stipulation”. Why did they want to get rid of the stipulation in the Arctic in particular? It was because having the capacity to drill a relief well in the same season is not possible. The government and industry know that, yet they want to drill in the Arctic.

This is a strange irony that because of the results of climate change and inaction from governments like this Conservative government, we have seen Arctic ice melt and recede at an incredible pace. More of the Arctic is becoming exposed, which has a compounding effect. As we all know, the more ice retreats, the worse the situation gets.

The Conservatives' reaction to such a disaster and its impact on such a sensitive region as the Arctic was to celebrate. They said, “Now we can go and drill. Is that not so exciting?”, thereby adding insult to injury by pulling more oil up out of the ground. We know we have left behind all the cheap, accessible, and relatively safe oil in the world. We have moved over. We are now dealing with very expensive and much more dangerous oil that is harder to get at.

It is unfortunate that it requires a disaster, a significant news event that people cover from around the world.

The idea that we maintain is that if the profits are being held and enjoyed by the private sector, then why, for goodness' sake, would the risks be taken on by the public? The Conservatives want to privatize the profits but socialize the risks.

We argue this on the issue of temporary foreign workers and we will argue it on this issue as well. The free market has a call and response. The oil game is sometimes a bit of a risk and a roulette wheel, and if the companies want to play this game, if they are going to risk our environment, our communities, and our economy, then they should bear the cost of that risk. The public should not be picking up the tab.

[Earl Dreeshen, Conservative, Red Deer, AB]

Mr. Speaker, having listened to some of the debate earlier, I recognize the fact that this will be going to committee and there will be more discussion. We can take a look at the absolute liabilities we have. We have talked about the Atlantic offshore and the $30 million there for absolute liability and the $40 million in the Arctic, where the member comes from. It is clearly unacceptable that this is the rate it is. With Bill C-22, we would raise that so that it would cover the kinds of concerns people have.

There are a couple of points I would like to mention to the member.

With regard to Canada's responsibilities and the way it handles regulations, I remember that about six or seven years ago, when I was just getting started in politics, I had a chance to talk to some individuals. These people had been around the world, and they said that the best place for regulations and protection of the environment is Canada. The only place that came close was Australia, and that was because it was taking the regulations Canadians had.

[Earl Dreeshen, Conservative, Red Deer, AB]

Mr. Speaker, I am pleased to speak in support of Bill C-22, the proposed energy safety and security act, which would provide a world-class regulatory regime for Canada's offshore and nuclear industries while strengthening protection for Canadians and the environment. Bill C-22 would ensure accountability from these industries and protection for taxpayers if an incident or spill results in cleanup costs and compensation.

The Governments of Canada, Nova Scotia, and Newfoundland and Labrador have worked together over several years to update Canada's offshore safety regime. Bill C-22 reflects this extensive collaboration by focusing on three main areas: prevention, response, and accountability.

Allow me to summarize a few of the key points in each of these areas.

First, with regard to prevention, the bill would raise financial capacity requirements for offshore operators to a minimum of $1 billion. It also would provide authority for offshore boards to impose fines for regulatory contraventions. In the nuclear sector, Bill C-22 would increase absolute liability for compensation for civil damages from $75 million to $1 billion.

In the area of response, Bill C-22 would implement a number of measures to improve spill prevention and response capability. The bill would provide industry with the option of establishing a pooled fund of at least $250 million, and it would permit the safe use of spill treating agents where there is a net environmental benefit.

As far as accountability is concerned, our government is delivering on its promise to enshrine the polluter pays principle in law. Further, we are also clarifying jurisdictional responsibilities for occupational health and safety in the offshore.

These are not stand-alone legislative improvements. Rather, they are part of a comprehensive and ongoing approach to achieve environmental protection in resource development throughout Canada. Our government has been clear. Projects would only be approved if they were safe for Canadians and safe for the environment.

That is why our government has introduced a series of new laws and regulations through our plan for responsible resource development to strengthen environmental protection. For example, we have worked to ensure that the National Energy Board has the necessary resources to increase pipeline monitoring and inspections, so that companies are held accountable. These measures include increasing the number of full audits of federally regulated pipelines, and we have put forward new, significant fines as a strong deterrent against breaking Canada's rigorous environmental regulations.

Our government's record on ensuring that Canada has a world-class safety regime is proven with each of these measures. Yet the opposition voted against each of these improvements.

Offshore, we have taken major steps to enhance the protection of Canada's marine environment. Our government has increased tanker inspections, required the use of double-hulled ships, and improved the navigation tools and ship surveillance used in our coastal waterways.

In addition, a tanker safety expert panel has reviewed Canada's current system and is proposing further measures to strengthen it. After many consultations with stakeholders and aboriginal peoples on the panel's report, last month the Minister of Transport announced our government's next steps in strengthening Canada's world-class tanker safety system.

Many of these new safety and environmental measures are currently being enshrined in law. For example, Bill C-3, the safeguarding Canada's seas and skies act, would strengthen oil spill response, set new requirements for energy facilities, establish new standards for pollution prevention, and introduce substantial monetary penalties to deal with offences. While our current marine safety regime has served Canada well, these new initiatives would help make Canada's shipping standards truly world class. We are working hard to develop support and enforce these standards.

On our east coast, the Government of Canada shares offshore management with two provinces, Nova Scotia and Newfoundland and Labrador. Offshore oil and gas projects are accordingly regulated by the appropriate offshore board, either the Canada-Nova Scotia Offshore Petroleum Board or the Canada-Newfoundland and Labrador Offshore Petroleum Board.

Each offshore board ensures that operators exercise due diligence to prevent spills from occurring in Canada's offshore. With this in mind, we work closely with these two provinces to update and expand legislation to ensure that Canada's offshore rules are among the strongest in the world.

The accord act gives the offshore boards the legal authority to regulate oil and gas activities. The boards evaluate each drilling application for completeness and compliance with federal regulations. As a result, drilling cannot occur unless the responsible board is fully satisfied that drilling plans are safe for workers and for the environment.

Providing a liability and compensation regime to protect Canadians and create stability for this important industry falls under federal jurisdiction. The Government of Canada has a duty to all Canadians to assume its responsibilities in this area, and we are committed to doing so. Bill C-22 would increase the amount of financial capacity companies operating in the offshore must have to meet all liability obligations and it would increase the amount of the deposit companies must provide prior to receiving an authorization for drilling or production. In other words, before any offshore drilling or production activity could take place, companies would have to prove that they could cover the costs that could result in the unlikely event of an incident.

Canada has long depended on the shipping industry to move products from our coastal ports to world markets. On any given day, about 180 vessels operate in Canada's coastal waters. Energy is a big part of this trade. Each year, 80 million tonnes of oil is shipped safely off Canada's coast. On Canada's west coast, tankers have been moving oil safely since the 1930s.

With the phenomenal growth of the oil and gas industry in B.C. and Alberta, marine shipping on Canada's coast will increase substantially in the coming years. We are preparing for this future growth through our efforts today to bolster Canada's safety regime for the maritime environment. Our government is ensuring that the many opportunities for economic growth and prosperity that Canada's natural resources offer are available to all Canadians throughout the country, including aboriginal peoples. Our government's plan for responsible resource development will help achieve this by creating greater certainty and predictability for project investors while at the same time strengthening environmental protections, as Bill C-22 demonstrates.

In conclusion, these are just some of the ways in which our government is taking action to ensure that Canada continues to have world-class environmental protection in resource development. As all members can appreciate, Bill C-22 would provide a solid regulatory framework to safely govern the offshore and nuclear industries in Canada for decades to come. Bill C-22 would ensure that Canada's vast resource wealth can be developed responsibly by putting public safety and environmental protection first.