Economic Relationship between Canada and the United States Committee on March 4th, 2021

[The Chair, Liberal, Raj Saini]

Welcome, members, to the third meeting of the Special Committee on the Economic Relationship between Canada and the United States.

Pursuant to the motion adopted by the House on February 16, 2021, the special committee is meeting to discuss the economic relationship between Canada and the United States. Given the timelines adopted in the House motion, the focus today will be on Line 5.

To ensure an orderly meeting, I would encourage all participants to mute their microphones when they are not speaking, and address all comments to the chair.

Interpretation is available through the globe icon at the bottom of your screen. Please note that screen captures or photographs are not permitted.

I would now like to welcome our witnesses from Natural Resources Canada: The Honourable Seamus O'Regan, Minister of Natural Resources; Jean-François Tremblay, deputy minister; Glenn Hargrove, assistant deputy minister, strategic petroleum policy and investment office; Mollie Johnson, assistant deputy minister, low carbon energy sector; Jeff Labonté, assistant deputy minister, lands and minerals sector and Beth MacNeil, assistant deputy minister, Canadian forest service.

Minister, welcome. It's a pleasure to have you at the committee today, and we're looking forward to your remarks. I know you're here for only one hour, and we will continue with your officials when you leave after one hour.

Minister, the floor is yours.

[Seamus O'Regan, Liberal, Minister of Natural Resources]

Thank you, Mr. Chair.

It's a pleasure to be joining you all at this committee from the island of Newfoundland, which is the ancestral homeland of the Mi'kmaq and Beothuk peoples, and one of Canada's oil-producing provinces.

The Canada-U.S relationship is like no other. The strength of it has withstood challenges and turbulence, particularly over the past four years.

Make no mistake, though, the U.S. needs Canada. President Biden has emphasized rebuilding and strengthening our bilateral relationship, focusing on our common mission of net-zero carbon emissions by 2050; building a low-emissions energy future that leaves no energy worker and no energy-producing region behind.

It's why the first meeting with a foreign leader was with our Prime Minister, and why we had a high-level summit.

I attended that meeting. My colleagues and our counterparts agreed to follow a road map for renewal, designed to strengthen this relationship; to rebuild our economies while leaving no one behind; and to lead the world in addressing the climate crisis.

Our energy and natural resource sectors are central to that road map. There are no two other countries with such highly integrated energy sectors as ours, with 70 pipelines and nearly three dozen transmission lines crossing the border. There is over $100 billion in energy trade every year and over two million barrels of oil per day. The United States is our single-largest customer.

Now, let me be very clear. We're very disappointed with the President's decision to revoke Keystone XL's permit. We are very unhappy with the decision and we've told the Americans that directly and clearly. The U.S. will still need Canadian heavy crude, and that does not change with President Biden's decision.

Four years ago, in Houston, the Prime Minister said, “Nothing is more essential to the U.S. economy than access to a secure, reliable source of energy. Canada is that source.” It was true then and it remains true today, which brings me to Enbridge's Line 5.

It is a critical energy and economic link. It is vital to Canada's energy security, and to America's. Thousands of jobs, on both sides of the border, depend on it. Thousands of homes, on both sides of the border, depend on it for heating.

We take threats to our energy security very seriously. We raised Line 5 directly with the President and members of his cabinet during our meetings last week. I can assure members of this committee that we are looking at all our options. A shutdown of Line 5 would have profound consequences in Canada and in the United States.

Yesterday, I met with my counterpart, Secretary Granholm, who, I might add, has a link to Newfoundland. In fact, her mother grew up just down the street. I raised Line 5 with her. I raised it as a matter of energy security. I raised it to her as a former governor of Michigan. She understands how critical Line 5 is to that state and to the United States.

I understand Ambassador Hillman will be speaking to this committee later today. Let me take this opportunity to thank her, Detroit Consul General Joe Comartin, the team at the Canadian embassy in Washington, and all our diplomats who defend Canada’s interests every day in Washington, Detroit and Lansing.

There are challenges in this bilateral relationship, involving such things as softwood lumber. Duties imposed are unwarranted; they are unfair; they hurt our workers and they hurt our industry on both sides of the border. We raised that with the President last week.

I believe the windshield is larger than the rear-view mirror because there is more alignment in this relationship now than there ever has been before, not only in terms of the goals of the Government of Canada but also in terms of the goals of the governments of Alberta and Saskatchewan too.

There are opportunities to make this relationship even stronger, and it’s a relationship that is bigger than one project or one piece of energy infrastructure.

Yesterday, with Secretary Granholm, we spoke at length about some of the opportunities that we have to deepen our collaboration and advance transformational technologies like critical minerals and carbon capture. The U.S. wants to work with us on critical minerals because we have 13 of the 35 minerals that they deem essential, and we want to ensure resilient supply chains that prevent Chinese dominance. They want to work closely with us on CCUS, speaking with a unified voice and seeing it as an opportunity to have oil and gas workers lead decarbonization efforts.

The road map for a renewed U.S.-Canada partnership presents us with a plan to protect our highly integrated energy infrastructure like Line 5 and to maintain the security and resiliency of supply chains, like Canadian crude heading southbound.

It is a plan to renew and strengthen existing bilateral agreements on critical minerals and to advance nature-based climate solutions, to harmonize standards and regulations, to increase competitiveness, and to provide an even playing field for our companies.

It's about people. It's about workers and ensuring that no worker is left behind, and ensuring that no energy-producing region or province like mine is left behind. We will need the ingenuity, determination and hard work of our energy workers in our energy-producing provinces to build our low-emissions energy future.

Mr. Chair, as I said at the outset, this is the single most important bilateral relationship for Canada. We've got to get this relationship right, and I should say that we got it right with an unpredictable president over the past four years. We will get it right and make it even stronger with a predictable one for the next four, to the benefit of workers in Alberta, Saskatchewan, Newfoundland and Labrador and right across Canada.

I’m joined here today by my officials: Jean-Francois Tremblay, deputy minister; Mollie Johnson, assistant deputy minister, low carbon energy sector; Glenn Hargrove, assistant deputy minister, strategic petroleum policy and investment office; Jeff Labonté, assistant deputy minister, lands and minerals sector; and Beth MacNeil, assistant deputy minister, Canadian forest service.

We welcome your questions.

[The Chair, Liberal, Raj Saini]

Thank you, Minister, for your opening comments.

We will now go straight to questions. The first questioner will be Mr. Strahl, for six minutes, please.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you, Mr. Chair.

Thank you, Mr. Minister, for agreeing to participate here today.

I wanted to start with how we talk about how we're getting the relationship right. The irritants have continued here, and I'd say they're more than irritants when they affect tens of thousands of jobs. We have Keystone XL, Line 5, softwood lumber, buy American and vaccine distribution, to name a few. There are obviously a number of challenges that remain, regardless of the change of administration in Washington.

I wanted to talk first about Keystone. I have a statement here from Canada's Building Trades Unions, who say they “are dismayed by the decision made by the Biden Administration to rescind the permit for Keystone XL—a project creating more than 15,000 high-paying union jobs across Canada and the United States”.

We've heard from organized labour unions on both sides of the border that are extremely disappointed in this decision, and I think they were extremely disappointed, as we were, to hear the Prime Minister this weekend on Meet the Press on Sunday. When he was asked by the host, “Does this mean you're done asking for...are you going to stop advocating for it here?” and “Do you feel as if the Keystone pipeline is now dead?”, the Prime Minister replied, “I think it's fairly clear that the U.S. administration has made its decision on that, and we're much more interested in ensuring that we're moving forward in ways that are good for both of our countries.”

I think he made it fairly clear that he's done fighting for Keystone. Given that the decision was made based on the U.S. position on Keystone XL, the Prime Minister essentially said that fight is over.

There's now a decision that has been made by the Governor of Michigan, who is extremely close to President Biden, was considered for being his running mate and was a key cog in the wheel in the electoral college to ensure that President Biden is the president. She is very close to him. Why would the nearly 30,000 workers in Sarnia, southern Ontario and Quebec who are affected by this have any confidence that your government would fight for Line 5 jobs when Keystone XL jobs were written off as being a decision that the U.S. administration had made and were no longer worth fighting for?

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

With regard to Keystone XL, from the moment the President was elected, our governments, the governments of Alberta and Canada, started working hand-in-glove together. I, Alberta's envoy in Washington, James Rajotte, and Minister Sonya Savage, the Minister of Energy for the Government of Alberta, started meeting at least once a week, sometimes more than that, in order to make sure we had our ground game right.

We knew the President had made a significant campaign promise, and I think most members of this committee can understand that when you make a major campaign promise, it has weight. Certainly, it seemed to for the President. However, we fought the battle because we believed in Keystone. We believed, as the Prime Minister had said to the Premier of Alberta, that the Keystone XL project of 2015 and the Keystone XL project of 2020-21 are very different.

I was very proud to advocate for Keystone XL. TC Energy had done everything right, to my mind. It had an operational net-zero pipeline that was using renewables at their pumping stations, wind and solar. It was working with unions on both sides of the border, working with native Americans and working with first nations on our side of the border. It had ticked all the boxes. We found out on the morning of the inauguration that the President would be rescinding the permit on the day of his inauguration. I found out very early here in Newfoundland, and I had to inform my colleagues, the ministers of energy of Alberta and Saskatchewan, of the fact. Those weren't easy conversations, because we had put a lot of work into it.

I also raised that exact point, in almost exactly the same way I worded it to this committee, to Secretary Granholm yesterday when she and I met. Her first international call was to me, in keeping with what the President's cabinet has been doing, reaching out to Canadian counterparts. I also made it clear that Line 5 was seen in that same light.

As I said in my opening remarks, there is a tremendous amount that is aligned, not only between the Government of Canada and the Biden administration but also, I believe—and I've said this to Ministers Eyre and Savage—with provincial governments as well. We need to work together—

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Sorry, Mr. Chair, but I just want to make sure.... I do have limited time here, so I appreciate that—

[The Chair, Liberal, Raj Saini]

You have 50 seconds left.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

It sounds an awful lot as though the plan to advocate for Line 5 is a carbon copy of the plan to advocate for Keystone XL. We know, according to the Prime Minister, that he's been advocating for that project with President Biden. If you're doing the same thing to advocate for the jobs impacted by Line 5, why are you expecting a result that will be different from what you got with Keystone XL?

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

These are very different. Saying that is not to diminish the fact, Mr. Strahl, that 1,000 people received pink slips on the day of the President's inauguration, on the day he rescinded that licence. We are fighting for Line 5 on every front, and we are confident in that fight. It is an operational pipeline that not only employs people in Ontario and Alberta and Quebec, but also provides energy security to those provinces and to U.S. states as well.

We are fighting that on a diplomatic front, and we are preparing to invoke whatever measures we need to in order to make sure that Line 5 remains operational. The operation of Line 5 is non-negotiable.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Strahl.

We'll go now to Mr. Housefather for six minutes.

Go ahead, please.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you very much.

Minister, it's great to see you here before the committee. Thank you for coming, and congratulations on improving your French.

I have a couple of opening comments following those by Mr. Strahl.

Did President Biden commit, during the campaign, that he would end Keystone XL?

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

He did, in May.

[Anthony Housefather, Liberal, Mount Royal, QC]

Did President Biden commit, during the campaign, that he would end Line 5?

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

No, he did not to my knowledge.

[Anthony Housefather, Liberal, Mount Royal, QC]

I see a big difference there already.

I have some questions on Line 5, but before that I'd just like to ask you something else. You were the first foreign cabinet minister to meet with the newly confirmed Secretary Granholm. We have a lot in common with the new Biden administration on climate change. Could you talk to me a little bit about whether or not you discussed climate change with former Governor Granholm, and whether or not you see some ways we can work together with the United States to achieve our Paris objectives?

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

Indeed, we had some small talk at the beginning because her mother is from St. John's, was born on Newtown Road, which is down the road, and is a parishioner at a church just at the end of my street. Those are good things. I think I put it to her that if you're half Newfoundlander, it means you're a very practical person.

We had a good first meeting, I would say. I wish it had happened earlier, because we're all eager to get to work, but of course, she was confirmed by the U.S. Senate only last week. As I said, I raised Line 5 and I raised Keystone and I expressed our disappointment with that decision. I expressed our serious concerns about threats to our energy security. But this relationship is much bigger than just those two issues, with the 70 pipelines that criss-cross the border as well as the three dozen transmission lines.

Secretary Granholm brings a lot of enthusiasm to the file. I believe we will work very well together to the benefit of workers and to the benefit of our natural resource sectors.

There is significant alignment, as I said, not only with the goals of the Government of Canada but also with the goals of the governments of Alberta and Saskatchewan on things like critical minerals and on CCUS. I had a conversation yesterday morning with Minister Savage and Minister Nally of the Government of Alberta to discuss CCUS and my raising of that with Secretary Granholm and how important that is to North America.

I more or less paraphrased things I noticed Secretary Granholm saying long before she was a nominee—that there's a threefold mission: to have net-zero emissions by 2050, lowering emissions wherever and whenever we can; to have an economy that continues to grow and prosper, which is pivotal; and to have no one left behind, no energy-producing region, like mine, and no energy workers left behind. That's what we're working on for the benefit of workers on both sides of the border.

[Anthony Housefather, Liberal, Mount Royal, QC]

That's excellent.

Now let me ask you a couple of questions about Line 5, if I may. Being a lawyer, I have to ask a little bit about our legal position, because I think our legal position helps us understand our diplomatic position and how strong we can be in negotiations.

Does the Government of Canada believe that, given bilateral agreements or international treaties with the United States, the attempt by Michigan to remove the easement on Line 5 is a violation of either those international treaties or domestic agreements with the United States that we have signed?

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

I'm going to be very careful about what I say here in order not to give away our legal strategy here, with great respect. Suffice it to say that one of the most important things we learned from NAFTA 2.0, CUSMA, is that you have to be careful about negotiating in public. I think that what you heard from the assistant deputy minister from Global Affairs is absolutely true. We are looking at every option. We are working with a whole-of-government approach, as we hear all too frequently, but I can tell you in this instance that is not an exaggeration. We are working closely with Global Affairs and Justice to make sure that we are well equipped in every instance.

This is a dispute, if you look at it in the most literal sense, between proponents, between the operator Enbridge and a state. That being said, there's a lot at stake for our provinces and our nation, and therefore the federal government is watching this like a hawk. I will say that we are watching on an almost minute-by-minute basis and we will be absolutely prepared and ready to intervene at exactly the right moment.

[The Chair, Liberal, Raj Saini]

Mr. Housefather, you have 45 seconds. Please make it short.

[Anthony Housefather, Liberal, Mount Royal, QC]

I will. I think I will finish by saying, Minister O'Regan, that I very much appreciate that. I think, though, that while it's clear you don't want to negotiate in public, the legal position of the Government of Canada is core to this committee's understanding of our strategy on Line 5, and whether it has to be in camera in a private session or in a public session, I would like to see the legal adviser to the Government of Canada come before this committee and explain the legal position of Canada to the committee.

Thank you very much.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Housefather.

Mr. Savard-Tremblay, you have the floor for six minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

I want to greet all my colleagues, and I thank our witnesses for being here.

First of all, I would like to ask a question about Line 5.

Has an impact study been done on job losses in each province?

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

A formal impact study.... I'm not entirely sure of that, to be blunt with you, but we know very well how many jobs are at stake. We know very well its impact on energy security. We know how vital it is, for instance, in Sarnia, to the workers there and to the local economy: 5,000 direct jobs and 23,000 indirect jobs in Sarnia.

It's the source of 53% of Ontario's crude and 66% of Quebec's via Line 9. We're talking about four refineries that are supplied by Line 5 in Ontario and two in Quebec—in Montreal and in Lévis.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Do you think Suncor and Valero would be unable to obtain their supplies from other sources?

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

It's a hypothetical, and one that I'm very confident won't arise, but it is worth exploring that, just so we all understand what's at stake. People aren't going to go cold. It just means that the energy, those molecules, are going to have to be transported by rail, by truck or by marine transportation. But they will have to get to source, because people will not be kept cold, that's for sure.

I draw attention to the editorial that was written last week in The Detroit News and seemed to be singularly directed to Governor Whitmer. It said that one of the reasons why Michiganders remained warm when in so many other bordering states people went cold, particularly farther down south in Texas, was because of Line 5.

Line 5 supplies 65% of the propane needs of Michigan's upper peninsula, 55% of the statewide propane needs and 28% of the feedstock for production for jet fuel at the Detroit airport. This is significant for them and for refineries in Michigan, in Ohio, in Pennsylvania—all dependent on that line for their continued operations. Two refineries in Toledo, Ohio, are at risk of shutting down if Line 5 shuts down. You're talking thousands of direct and contracted skilled trade jobs at risk and $5.4 billion in annual economic output.

A shutdown of Line 5 would cause an over 14 million gallons a day supply shortage in the region. Michigan alone would face an over 750,000 gallons a day propane shortage. That's significant.