Economic Relationship between Canada and the United States Committee on March 16th, 2021

[Anthony Housefather, Liberal, Mount Royal, QC]

My main question now, based on all of these facts and evidence, is this: What can the committee and its membership—not the Government of Canada now, but the committee and its membership—best do to help Enbridge in its desire to continue operating the line? How can our membership be useful with respect to talking to reps in Michigan? Just let us know.

[Vern Yu]

As I referenced in my prepared remarks, it's very important for us to engage with all members of U.S. governments, whether state or federal, to make sure people have a clear understanding of the facts you've just raised: that the pipeline should be regulated by the U.S. federal government, that the pipeline is in compliance with all U.S. federal regulations, and that the regulator has signed off on the safety of the pipeline numerous times, including very recently. The pipeline has operated for over 65 years with no incidents.

The pipeline is critical to the energy security of the entire Great Lakes region. A shutdown of the pipeline would cause great economic harm to citizens in both the United States and Canada.

At Enbridge we are committed to building the Great Lakes tunnel as quickly as we can, and we will do that a hundred per cent with private money. We understand the importance of safety; we understand the importance of preserving the Great Lakes, and we're committed to doing both of those things.

[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]

Good afternoon, everyone.

I thank our witness for being with us today.

Mr. Yu, I'd like to ask you a question that I have asked at past meetings of this committee, because unfortunately we have never received a clear answer to it.

Do you have any specific numbers on the potential job losses in Quebec that could result from shutting down Line 5?

[Vern Yu]

I don't have the specific job losses for the industries that would be affected in Quebec. I think that should be answered by Suncor and Valero, which are the primary operators of the refineries in Quebec. Obviously, there's also the chemical industry in eastern Montreal, which would be affected as well. Those companies would be in a better position than I am to comment on the closure of Line 5, which would have grave implications for Line 9, which today flows crude into the province of Quebec.

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

Let me ask you about Line 3 as well.

It has been reported in the media recently that the construction costs for Line 3 are rapidly increasing. The Canadian portion has been built, but the U.S. portion remains to be done, I believe.

Can you explain why construction costs have gone up so much?

[Vern Yu]

Line 3 is a replacement project for a pipeline that was built in the late 1960s. In 2014 we got approval from the Canada Energy Regulator and our customers to go ahead and replace that pipeline in Canada. Then we've just recently gotten approval from the State of Minnesota to replace the portion of that line in that state.

It's a $10-billion project on both sides of the border. It provides the latest technology and significantly enhances the safety and reliability of that pipeline.

When we got approval to build the pipeline in Minnesota, it came with some very stringent environmental conditions regarding how we'd do that pipeline replacement. Those environmental conditions, coupled with the fact that we're building a pipeline in the winter as opposed to in the summer, have caused the cost of that pipeline to go up relatively significantly.

The costs were also impacted by the fact that there was about a two-year delay in the regulatory process, for multiple reasons, in the state of Minnesota. Obviously, time costs money. There were really three big factors that caused about a $1-billion cost increase for building a roughly 300-mile pipeline in the state of Minnesota: winter construction, regulatory environmental oversight and a two-year delay.

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

Thank you for the explanation.

Do you currently have a specific timeline for what happens next? Also, do you expect any other cost increases?

[Vern Yu]

In Minnesota we are operating and constructing as we speak. We will finish sometime in the summer, and hopefully we'll be able to have the pipeline up and running by the start of the fourth quarter. At that time we'll be able to let people know whether our cost estimate was close or whether it has changed since the numbers we provided recently.

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

Let's come back to Michigan and the good old Line 5. You said earlier to one of my colleagues that the governor of Michigan's fears were completely unfounded and that you had conducted studies to prove it. I assume that you have shared the studies with the governor.

How is it that they did not break the impasse, if you are quite certain it is scientifically proven that Line 5 presents no danger and there is nothing to worry about?

[Vern Yu]

We've done numerous studies on the safety of Line 5. So has the U.S. pipeline regulator, PHMSA.

The administration of Governor Snyder, prior to that of Governor Whitmer, commissioned a third party to look at the safety of the line. That study confirmed the safety of the line as well, so we've done it. The U.S. federal government has done it, and the prior state administration in Michigan has done it as well, so multiple studies have concurred regarding the safety of the pipeline.

[The Chair, Liberal, Raj Saini]

You have 15 seconds left, Mr. Savard-Tremblay.

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

I won't have time to ask a question in 15 seconds, so I thank our witness.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Savard-Tremblay.

We will go to Mr. Blaikie, for six minutes.

Go ahead, please.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

We've found already so far in this study that there's pretty widespread agreement around the table that whatever our positions around transitioning to a different kind of energy economy might be, suddenly shutting off a significant amount of the current supply is not going to go well, not just for the industry, but for all the people who work in that industry and the people who depend on that product for their business and heating their homes and wherever else that product ultimately lands.

This committee has been struck. We've been tasked with reporting on this Line 5 issue on a very short timeline, but given the amount of agreement around the table so far in terms of what Canada's position should be, and given that it seems that it is in fact the position of the Government of Canada, I'm just wondering.... It takes a lot of resources to have a committee and a study like this. Is there anything the Government of Canada, in your opinion, ought to be doing or should commit to doing that it's not already doing? Is there anything this committee ought to be doing or could do in order to impact a decision that is ultimately clearly within the jurisdiction of the United States at whatever level, whether that ends up being at the federal level or the state level?

[Vern Yu]

It's very important that the Canadian government and the provincial governments of Ontario, Quebec, Saskatchewan and Alberta make it very clear that Line 5 is a critical piece of energy infrastructure for Canada, for all the reasons we've talked about already.

It's very important for the Canadian governments to make the U.S. governments, both state and federal, understand that this is a very important binational issue, that the energy security of both the states in the U.S. Great Lakes region and of Ontario and Quebec relies on this piece of energy infrastructure, and that we need to find a diplomatic solution to resolve the differences we have today with the State of Michigan.

It's very important, even though everyone seems to be in agreement about this, to continue to work this file as vigorously as we can. We need to make sure we put our best foot forward at the federal court and that we continue to lobby all governments in the United States to have a dialogue and come up with a diplomatic solution to the problem we face today.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

As I say, that seems to be something that people on the Canadian side are pretty committed to. Are you concerned that there's any particular government that isn't undertaking to advocate in the way you suggest?

[Vern Yu]

At this point, everyone is, and as I mentioned in my opening remarks, we're very thankful for the support we have from team Canada. I think it's very important that we not take our foot off the gas.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

In terms of things the committee might be able to recommend above and beyond what has already been committed, are there any extant initiatives that the provincial or federal governments might take from within Canada in order to try to arrive at an outcome that would see Line 5 continue to operate until a replacement pipeline is built?

[Vern Yu]

It's important to reiterate that we need to keep the diplomatic channels open; we need to file all the briefings we need to file in court, and we need to ensure that we let Canadians know that all of us collectively are looking after their best interests.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Am I to understand, then, that the decision about whether or not this pipeline will continue to operate will come down to an application by the State of Michigan for an injunction, and it will be a judge in Michigan who decides whether or not the pipeline will continue to operate?

[Vern Yu]

We believe that this will go through the U.S. federal courts. We believe there will be reviews at multiple levels at the U.S. federal court, and that this review will take many years, so it's essential that we try to come up with a mediated and negotiated diplomatic solution that takes us out of the hands of the court and provides a reasonable outcome for everyone involved.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

I am curious to know what role the indigenous peoples on either side of the border have in this process. Can you speak to what kind of standing they have and what kinds of positions they have taken in respect of what Enbridge is asking for?

[Vern Yu]

In our history of operating the largest pipeline network in North America, both natural gas and crude oil, we have had a proactive approach in engaging with indigenous people. We want to make sure we're aligned with them as we operate across their traditional lands.

A great example would be the work we did in Canada with the first nations in Saskatchewan and Manitoba as we built the Line 3 replacement. We provided significant economic opportunities and had alignment with them as well. That's also true in Minnesota as we're working through the Line 3 replacement there. We're engaging with the tribes in Michigan on the tunnel, to provide economic opportunities for tribal businesses and tribal members to work with us as we build this new tunnel, which will make the safe pipeline that much safer.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Blaikie.

Thank you very much, everybody. We will now start the second round.

Mr. Hoback, you will be leading the round. You have five minutes, please.