Economic Relationship between Canada and the United States Committee on March 30th, 2021

[Bronwyn Eyre]

I'll just add that I believe there are only a certain number—I believe four amicus briefs—that are being filed and that are legally convenient to be filed, as per the judge's request. It's probably preferable—that's the understanding—that it be a federal government amicus brief in support...with provincial backing, obviously, which we are happy to do, in spirit and every other way, as is evidenced by our appearance here today.

The 1977 treaty is certainly an interesting one, untested so far in terms of having come up in a situation like this, but I would say pretty relevant, if you're going to look at legal, diplomatic and other arguments for why this is something that should apply to that 1977 treaty. That arose under different circumstances, but under a democratic president, in 1977, to transport oil from [Technical difficulty—Editor] . It's certainly an interesting historical [Technical difficulty—Editor].

[Sonya Savage]

I agree with a team Canada approach. Our government is working with the federal government, with your government, on this.

However, I think there's a whole approach here: One is, diplomacy is best. Enbridge is in mediation on the litigation, but if that mediation doesn't go well, we need to look at litigation. That's why we're working with a team Canada approach on having one amicus curiae brief filed. Obviously, the 1977 treaty is relevant and should be utilized, should we not achieve diplomacy or results in litigation.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Housefather.

Mr. Savard-Tremblay, you have two and a half minutes.

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

Thank you.

I'm going to come back to you, Mr. Walker.

Still on the subject of the Great Lakes, I'd like to know if you were in contact with the Michigan government on the protection of the Great Lakes even before the Line 5 dispute took place. Were there any discussions specifically related to the state of the Great Lakes?

[Bill Walker]

Thank you, Mr. Savard-Tremblay.

We, of course, share that water body. We share the health and safety of our fellow citizens on both sides of the border. There are a number of different agreements, and a number of different agencies and bodies that interact on a very regular basis. Certainly my hope here would be, as we've talked about most of this afternoon, that you will see diplomacy, you will see what [Technical difficulty—Editor], and we will continue to look at those agreements.

I think the treaties, the amicus ability to look at those and ask how we resolve this, how we come to the table as partners.... We are the greatest partners in the world that share borders, share water bodies. At the end of the day, I think we can come to a resolve if we take that mindset that it's about the people and we never lose sight of it—it's about the benefit and the viability of people now and in the future—and we continue to come to the table with open minds, with diplomacy, and try to work together for a resolution that can work for both sides.

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

Since we're talking about diplomacy, I'd like to ask you how this dispute affects the relationship between your government and Michigan's.

[Bill Walker]

Like family members, I think you can have differences of opinion, but you still have to come back to the table and find a way to break bread and ensure that you can continue. We have interconnected trade in all capacities that we have to be wary of. There are families, again, who are going to be impacted on both sides of the border, whether it be jobs that are impacted, the environment or health and safety.

Again, if both sides come to the table with a willingness to look at the realities of today and what we can do to build the future collectively and collaboratively, then I believe we will come to a resolve that can suit and benefit both sides of the border and, most importantly, the people on both sides of those borders.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Savard-Tremblay.

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

Thank you, Mr. Walker.

[The Chair, Liberal, Raj Saini]

Mr. Blaikie, you have two and a half minutes, please.

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

Thank you very much, Mr. Chair.

In my earlier round of questioning, I was talking about the difference between an expansionary approach in terms of more extraction per day in the oil and gas sector.

I want to talk a bit about the value-added component, because we've seen the federal government, for instance, commit to a project that is likely to cost over $15 billion. That's the TMX pipeline. We saw the Alberta government invest considerably—billions of dollars—in Keystone XL. When we talk about trying to get more value out of the oil and gas that we extract—not in terms of price on the international market but in terms of jobs for Canadians—the obvious gap there is doing more refining and upgrading work in Canada. When we talk about that, what we hear is “oh well, that's a market decision” and that obviously there isn't a business case or companies would already be doing it, but when it comes to a pipeline, governments seem quite prepared to invest taxpayers' dollars in those kinds of projects.

I want to ask Ms. Savage what she sees. We're not just hearing this from environmentalists. We're hearing this from very serious international investors who are talking about the reality of climate change and the importance of addressing climate change. It seems to me that in that context there is a transition away from oil and gas happening within the market itself, not just driven by governments. It's going to be important to get more value and do more value-added work in the sector for the extraction that Canada continues to do, but we don't see investment in that value-added piece.

I want to know why that is. Why is it that the Government of Alberta, for instance, is willing to support a pipeline, but we don't see an equal emphasis put—and it's the same for the federal government—on the need to do this? We've actually lost refining and upgrading capacity in Canada over the last 20 or 30 years or so, as the oil and gas industry was booming. Where is the plan to get Canadians doing more of the value-added work in the oil and gas industry?

[The Chair, Liberal, Raj Saini]

Minister Savage, we will have a short answer, please.

[Sonya Savage]

Sure.

One of our key strategies for the economic recovery strategy in Alberta is a natural gas strategy, and one of the key planks of that is value added. That's to ensure we can add value to our natural gas. That includes creating hydrogen, which of course is a lower-emitting source of energy, which the world is looking for as we look to lower sources of energy. Another important part of the value added for natural gas is petrochemicals.

We're taking a lot of steps to ensure that we get the full value added for our resources as we come out of economic recovery, so I hear you there. We want those jobs in Alberta to the extent that we can have them, to the extent that we can create that type of opportunity, and that's a key plank of our economic recovery strategy post COVID-19.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Blaikie.

On behalf of the committee, I really want to thank Minister Savage, Minister Eyre and Mr. Walker for taking time out of their day, spending some time with us and trying to help us focus on the importance and the advantages and disadvantages of what this discussion or this decision leads to. On behalf of the whole committee, thank you very much.

Colleagues, I want to suspend for a few minutes so that we can do the sound checks for the next panel.

[The Chair, Liberal, Raj Saini]

Welcome back.

I would also take this opportunity to welcome our witnesses, who I know will add to our discussion and, hopefully, help elucidate certain issues with Line 5. I would like to personally welcome the City of Sarnia, with Mike Bradley, mayor; the Sarnia Construction Association, with Andrew Pilat, general manager; and UA Local 663, with Scott Archer, business agent. A warm welcome to all of three of you.

We will begin with you, Mr. Bradley, for opening comments for five minutes, please.

[Mike Bradley, Mayor, City of Sarnia]

Thank you very much, first of all, to the committee.

I am so glad that you have provided a vehicle to us that we would not have had in the past. I hope this committee continues because, as a long-time border-city mayor, I can say that there are many issues that come and go, and they don't get the attention they need until they become too inflamed and then it's firefighting to put them out.

I do want to just make a couple of points about Sarnia. Others have spoken about it, about the industry and the value of the industry to Canada. What I'm really delighted about is that finally the industry is getting some respect. We've been the Rodney Dangerfield of industries for many years. What the petrochemical sector provides is needed in every aspect of Canadians' lives. In everything they do, they need the petrochemical sector, from the moment they get up to the moment they go to bed. That value has often been ignored, and as views on fossil fuels change.... I want to make this point to you: Sarnia is leading in the change from fossil fuels. We have the biggest ethanol plant in Canada here, the first one. We had the largest solar farm in North America here. Bioindustrial Innovation Canada, a federal agency, is located in Sarnia at Western-Sarnia-Lambton Research Park. Lambton College is number one in the country in applied research.

It's not like this community and the industry haven't said we need to change. It is still our bread and butter as an industry, and it employs a lot of people. It also is evolving and it knows it needs to get to a better place environmentally.

Where Line 5 comes into play—and it has gotten across to people—is that until we get to a better place where we think we can do more for the environment, we still need what comes through Line 5. We saw a perfect example of that two years ago with the shortage of propane in Ontario and Quebec. You know what? If a year ago I had said to you, as elected people, “You know what's going to bring this country together? It's going to be a pipeline”, you would have laughed in my face. The reality is that it has brought political parties together in a non-partisan way. It has brought Ontario and Quebec together, and that has given us the synergy to move forward on this issue.

I've been dealing with it now for two years, with very little recognition of what was going on here. Now, it's reached a point where we have the federal government involved. I do believe there are two paths: As you all know, there's the legal one, and there's the political one. I think we should try both.

I do want to point out that $90 billion in trade goes back and forth, over the two bridges just north of the city hall here, between Ontario and Michigan, between here and Windsor. Plus, we have the Paul Tellier CN rail tunnel, in Sarnia, the main gateway between Canada and the United States.

I do not understand the thinking behind the governor's actions. I understand the environmental issues. I've had issues with [Technical difficulty—Editor]. Of all the means of transportation for oil and propane and gas, they're the safest. Our record here shows that. There are 30 pipelines that come into this city, mainly from the west, and we've had very few incidents over the years. We have not had issues with Line 5, and it did have an upgrade at St. Clair just in the last year or two.

I think beyond the Line 5 issue, which you're going to hear about from the other two speakers, I'm also delighted to have the other two speakers on this panel for this reason: Sarnia was in desperate shape 30 years ago. We knew we had to change. We had to evolve. We had to work together. What we did was to bring business and labour together, and you'll see perfect examples of that in a few minutes. Business and labour work together. You want to build a new plant in Sarnia? Labour gets to vote on it; you get a guarantee of no strikes, and everyone wins from it; and never has one been turned down. There's a highly co-operative business-labour relationship. It's not that they don't have disputes on occasion, but they are together on this issue and on many other issues.

What really bothers me, as a border-city mayor, more is the damage the governor is doing to the overall relationship. Where the hell are our other economies here—agriculture and tourism—going to be when we get through COVID? Why would we not want to co-operate on some of the great initiatives? There are major tourism events that take place out of this community, and the governor—and I'll say this with respect but with disappointment—will not respond to anyone. She won't respond to a call from the Premier of Ontario. I've written more letters to the governor than St. Paul wrote to the Corinthians, and I've gotten no responses back. What really bothers me—and that's why I think this committee is such an ideal committee—is that I see other issues developing, retaliatory issues, which is terrible.

We don't want trade wars. With $90 billion going back and forth between Michigan and Ontario here, that is the wrong direction for both places.

I do applaud everyone, from Premier Ford to the leadership of this committee. In particular the Minister of Natural Resources has kept in touch and has been very helpful as have our MP, Marilyn Gladu, and our MPP Bob Bailey, all together, despite being of different stripes.

Their politics happen to be wrong, in my view, but that's their right in Canada, right?

The fact is, we have to repair this relationship. I would prefer a negotiated settlement rather than a legal one, because you know what it's like when you have a legal settlement. There's always pain and bitterness after it. We need to repair that relationship. I do not understand why that governor wouldn't at least talk to the leadership in this country and say, “These were my reasons.”

I would not be supporting Enbridge if it weren't for the fact that they're pledging half a billion dollars, which will be spent in Michigan and will be employing labour in Michigan to build this coverage that is needed. It is a puzzle to interpret. I don't ever like to interpret people's motives or impugn them, but I'm very puzzled. If the governor even knows the damage she has done to the relationship with border cities and with Ontario, and now Ohio.... Ohio has passed a motion objecting to the State of Michigan's position.

This is growing. I just hope we can bring it to an end, because I worry about our own economic development. We have three major refineries here and we have other groups that we're dealing with. Yes, someone said that we need more refinery capacity. We do, but will we get it here when there's this instability with Line 5? With the present situation, I highly doubt it.

I want to close by saying that I thank the committee. I do hope that as part of your mandate when we move through this issue you will stay in place to deal with the border issues and to deal with those Canada-U.S. relations issues that never go away. They go to different levels, but they never go away.

I thank you for your service on this committee. I hope we can work together to resolve this issue sooner rather than later.

[The Chair, Liberal, Raj Saini]

Thank you for your comments, Mayor Bradley.

I would now like to invite Mr. Pilat, general manager of the Sarnia Construction Association, to give opening comments for five minutes, please.

[Andrew Pilat, General Manager, Sarnia Construction Association]

I'd like to thank the committee again for affording us the opportunity to address it on Enbridge's Line 5.

I'll tell you a little about the association, just so you know. What I'm afraid of here is that you're going to hear a lot of the stuff that you've heard before, but I think it's important that we do repeat this.

The Sarnia Construction Association is a local mixed-trade association. It represents the construction industry in Lambton county. We have 68 unionized contractors—they're all union members, all union contractors—and 23 associate members or suppliers that provide construction services to the multinational petrochemical refinery companies located and operating in Sarnia's Chemical Valley. These facilities mainly produce gas, diesel, jet fuel and other related by-products that result from the refining process. We also have petrochemical plants, of course.

You've heard this number before because I heard it previously: the Chemical Valley is responsible for creating 4,900 direct jobs and another 2,400 indirect jobs in Sarnia-Lambton. Simply put, one-third of the population of Sarnia-Lambton relies on the Chemical Valley for employment. This includes our locally based, skilled manpower workforce that works in the construction industry. That workforce is approximately 6,000 skilled tradespeople working and living in Sarnia-Lambton.

Consider this: approximately six million to seven million man-hours are generated annually in construction work in the Chemical Valley. These are highly paid, unionized, skilled tradespeople. This represents a payroll of approximately $325 million annually. That's based on 6.5 million man-hours at $50 an hour. These dollars are injected into not only the economy of Sarnia but also the economies of Ontario and Canada. This number simply shows payroll generated in construction.

What about all the spinoffs? Man-hours have been as high as 10 million to 15 million worked in Sarnia in the past. The Sarnia complex is very important to the industrial base of Ontario and Canada. These facilities generate wealth and, ultimately, tax dollars to governments.

The facilities that generate the wealth and, ultimately, tax dollars are three refineries located in the Sarnia region. Consider that these refineries, along with the Nanticoke refinery, produce gas, oil and jet fuel for consumption in Ontario only. Almost half the oil used in the refining process comes [Technical difficulty—Editor].

Should the oil [Technical difficulty—Editor], the impact on Ontario, central Canada and the west would be unquantifiable. To maintain these operations, oil would have to be sourced through other means. None of these means are as safe, environmentally, and as sound as the pipeline. [Technical difficulty—Editor] trucked, shipped or moved into the [Technical difficulty—Editor] disaster or explosion increases exponentially.

Enbridge has offered a solution to the Government of Michigan to reduce concern over potential environmental [Technical difficulty—Editor] exceptional one, and it will continue to meet the needs of our industry, including the energy needs of the midwestern [Technical difficulty—Editor].

Line 5 is an important economic link between Canada and the United States. Imagine what would happen if we reduced the flow of oil to our refineries by 50%. That would most likely [Technical difficulty—Editor] Ontario and Quebec would see significant retractions in their economies and standards of living. We believe that Enbridge has offered a safe and viable alternative to current pipelines situated on the lake-bed of Lake Michigan.

We urge Canada, the State of Michigan and the United States to work jointly to build a better and growing economy in both jurisdictions.

Given our concerns, we support Enbridge's Line 5 plan to build a tunnel to safely deliver oil and natural gas to Canada and the United States.

I read that, but I want to make one comment just so everybody knows...and Mike touched on this. Our association has formed a committee with labour, with the building trades, and we've been meeting not only with Enbridge but also with local, provincial and national politicians.

Our industry has support. We have the support of the Council of Ontario Construction Associations, which probably represents 37,000 or so contractors. We have the support of the Canadian Construction Association, which supports our position. We have the support of the building trades—6,000 tradespeople locally. We also have the support of the provincial building trades, which probably represents another 200,000 or so tradespeople, and we have the support of the Canadian building trades. If you total all that, we probably have 500,000 Canadian building trades supporting our position on Line 5.

This is an issue that affects everybody in the country, not just the Sarnia area. We may be what I would consider the largest industrial centre, in Ontario anyway, and Line 5 in our industrial centre affects everyone. It affects the west, where we get our gas. It affects the economies of Ontario, where people have to drive to work. It affects other provinces to the east of us.

It is very important that we look at this seriously. We need to work with Michigan; I truly believe that. I think we could find the solution. I think Enbridge has offered that solution, so I'm hoping we can get this resolved so the uncertainty is removed from the economy.

[The Chair, Liberal, Raj Saini]

Thank you for that, Mr. Pilat.

For our last witness, five minutes will go to Mr. Scott Archer, please.

[Scott Archer, Business Agent, UA Local 663]

Thank you, Mr. Chairman and committee members.

I'm Scott Archer, business agent of the UA Local 663 pipefitters union of Sarnia, Ontario. I represent our 1,600 local members and the nearly 6,000 family members who depend on them to provide a comfortable, middle-class lifestyle. Additionally, we're part of the UA's Canadian membership, which is 53,000 strong, and its 370,000 members across North America.

To start, I'd like to express our thanks for being afforded the opportunity to provide some insight into Line 5's vital importance to the Sarnia-Lambton area's 100,000 residents; to infrastructure, transportation and manufacturing in the provinces of Ontario, Quebec and Alberta; and to the entire midwestern U.S.

Line 5 is truly the lifeblood of the central region of North America and essentially the spinal cord of Ontario's infrastructure, supplying Alberta crude feedstock to numerous refineries throughout Ontario, Quebec, Michigan, Ohio and Pennsylvania, as well as providing fuel to major international airports in Toronto, Montreal, Quebec City and Detroit. Line 5 also supplies gasoline, propane and diesel for transportation, construction and agriculture. Additionally, over 60% of the propane used to heat Michigan's upper peninsula this past winter, which wreaked havoc upon the state of Texas and ultimately caused Governor Whitmer to declare an energy emergency in Michigan because of a feared shortage of propane. Well, that very same propane that kept the upper peninsula warm and safe was refined in and shipped from Sarnia, Ontario, facilities via Line 5. We are the solution to Governor Whitmer's problems, not the cause of them.

It's difficult for me to emphasize how important Line 5 is to our community. The city of Sarnia has grown and prospered around oil refineries since the mid-1800s, when Imperial Oil set up operations there. The city has continued to grow, along with industry, to include three refineries and numerous chemical manufacturing plants in the area, mostly fed by Line 5 and employing a full third of the city's population as well as many skilled tradespeople from all around the country during new construction projects, maintenance turnarounds and expansions. This is to the tune of $300 million to $500 million in revenue annually. Line 5 provides the means for working-class families to prosper and enjoy a standard of living that embodies what it is to be proud, strong Canadians.

I'm now going to present to you a long list of problems that the closure of Line 5 will present, followed by a very short list of solutions.

If Line 5 is shut down, you can guarantee the following.

There will be immediate fuel shortages at the pumps province-wide for consumers; massive increases in fuel costs, possibly up to triple according to some experts; and 800 or more additional railcars daily, creating drastic increases in rail traffic and unnecessary risks to residents and the environment. The Lac-Mégantic and Mississauga cases are painful, tragic lessons learned.

There will be 2,000 or more trucks overloading already crowded critical arteries of transportation such as Highway 402 and the Blue Water Bridge, which is second only to the Ambassador Bridge in international traffic volume, with dangerous congestion proven to cause serious traffic accidents and fatalities and with unacceptable increases in vehicle emissions.

There will be costs incurred by returning empty railcars and trucks to their point of origin. Pipelines send product without this hindrance, without increasing the carbon footprint and without the safety and environmental risk of derailment or vehicle crash.

The amount of feedstock going to refineries will also be greatly diminished, resulting in economic devastation for tens of thousands of families across Canada and the U.S.

There will be sweeping unemployment and closures across industries as diverse as oil and gas, electronics, agriculture, cosmetics, sporting goods, pharmaceuticals, automobile manufacturing and medical supplies. This is not to mention the tens of thousands of small, privately owned support businesses locally.

In short, shutting down Line 5 will effectively kill my hometown and displace its families, as it will do to many more cities and towns like it in Canada and the U.S. This is not an exaggeration; it's a cold hard fact.

In the category of solutions, we need to keep Line 5 open to support Canadian and U.S. infrastructure. There is no workable replacement for Line 5. Thirty years down the road I'm sure we'll have many more options open to us, but without a cohesive unifying national energy policy, we as Canadians are left divided and vulnerable to situations exactly like this one.

In closing, I'd like to issue a challenge to Prime Minister Trudeau and the federal government. This is a call to action. It is non-negotiable. You need to take a stand to protect Canadian families, businesses and industry.

Exercise your power through the transit pipelines treaty to stop this attack on Line 5—which is an attack on hard-working Canadians—in its tracks.

Thank you, Mr. Chair and committee.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Archer.

We will now proceed to questions.

For the first six minutes, I have Ms. Gladu, please.

Go ahead.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Thank you, Chair.

I want to warmly welcome our witnesses today and say how proud I am that we are taking a team Canada approach with all of the stakeholders working so hard: from Mr. Archer, who brought forward e-petition 3081 with over 10,000 signatures, which I was happy to present in the House, to all of you who have participated in the email and writing campaign to Governor Whitmer and also to the Prime Minister, calling on him for action.

Mayor Bradley and I have both had meetings with the natural resources minister on a number of initiatives. Our MPP, Bob Bailey, who's not here, has really raised the awareness at Queen's Park and has testified on committees in the Senate in Michigan.

It's nice to see everybody working together.

I'm going to begin my questions with you, Mr. Archer. Having brought this petition down, why did you think it was important to call on the Prime Minister to intervene?

[Scott Archer]

Based on the transit pipelines treaty, it seems that ultimately he's the one who has the power to stop this in its tracks.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Very good.

Mayor Bradley, I know that when we've had our conversations it has been great that the natural resources minister has said that Line 5 is critical to our energy and economic security. I did call on the Prime Minister to raise the issue with President Biden, which he did, but President Biden to date hasn't taken any action. Do you agree that a leader-to-leader discussion is needed and that the Prime Minister must get President Biden to intervene to keep Line 5 open?

[Mike Bradley]

I'm just a humble mayor, and that's a different league from the one I'm in. My belief is that at the end of this there will either be a negotiated settlement with the State of Michigan and Enbridge and/or it will be a Biden-Prime Minister discussion. As you've indicated, I have spoken to the minister a couple of times. He has been very helpful and came out very strongly after one of our last discussions. I think that was the day he came to this committee.

It's going to reach that level if we can't solve it, but I do not want this to drag on too long. As I mentioned earlier, I'm really worried about not just the economic impact if it does close right now, but the chilling impact it's having on us in trying to get new development in here when we have a primary pipeline that's in jeopardy.

It's not in my league, but I will say this. It should be number one and at the top of the list for the Canadian Prime Minister and the Canadian government—and sooner rather than later.