Environment Committee on Nov. 15th, 2010

[The Chair, Conservative, James Bezan]

We'll call this meeting to order. I want to welcome everyone to our 34th meeting.

As we all know, we're televised today, and we're continuing with our study of Bill C-469, an act to establish a Canadian Environmental Bill of Rights.

Joining us today we have a number of witnesses. From the Shipping Federation of Canada, we have Michael Broad, who is the president. From the Canadian Association of Petroleum Producers, we have Tom Huffaker, vice-president of policy and environment. Joining us from the Canadian Chamber of Commerce we have Warren Everson, who is the senior vice-president of policy, and Johan van't Hof, who is the chief executive officer of Tonbridge Power Inc.

I want to welcome all of you here. As I explained earlier, we do have a ten-minute time limit for your opening comments.

With that, I'd kick it off with Mr. Broad, if you can bring us your opening comments, please.

[Michael Broad, President, Shipping Federation of Canada]

Thank you, Mr. Chairman.

Ladies and gentlemen, members of the committee, thank you for having agreed to hear us today on Bill C-469. You received the English and French version of our short brief several weeks ago already. My intent today is not to reread out loud a document you have probably already looked at.

The Shipping Federation of Canada is federally regulated and represents international maritime transport headed for or leaving Canadian ports. Our members are listed at the end of our brief and they operate ships that carry Canada's international trade. Our industry is regulated by a broad spectrum of regulations that cover all of our operations, whether we are referring to the ship, its equipment, its cargo, its crew, its containment material, processes or management. These regulations are based in large measure on international conventions Canada subscribes to.

The position we wish to share with you today is that of operators who wonder how the new act will impact the stability of the regulatory framework that governs their activities, and whether the new civil action remedy may be invoked against operations that are in full compliance with regulations.

Our concern is that at this time, we still don't know how the two new remedies introduced by the legislation will apply, i.e. the judicial review and the civil action, and what their implications are for federally regulated industries.

Although we have read with interest the speeches delivered by the various political parties when the bill was introduced and discussed at second reading, they have not furthered our understanding of how the new act, and its new remedies in particular, will actually work, nor has the parliamentary library yet produced any background research that would contribute to our comprehension of this bill. We have also read the transcripts of the November 1 hearing before this committee, but the discussion addressed the government's lack of action rather than its regulatory production. As a result, our concern about the impact that the new remedies will have on federally regulated industries such as our own remains as acute now as when we first read the bill. This is why we are here before you today to clarify the legislator's intent with respect to this bill and hopefully find a response to our questions and concerns.

Our fundamental question with respect to Bill C-469 is as follows. Will a federally regulated operator be safe if he complies with all of the relevant federal regulations, or will he remain exposed to the civil action remedy introduced by the bill? Clause 23 of the proposed bill provides that every resident of Canada can seek recourse in Superior Court against a person who has contravened, or is likely to contravene, an act of Parliament or a regulation, if such a contravention has resulted or will likely result in significant environmental harm.

The Canadian Environmental Bill of Rights is an act of Parliament, and clause 9 of the act guarantees the right to a healthy environment. Therefore, Bill C-469 makes it possible for anyone to initiate court proceedings against a federally regulated company and claim that the company infringes on his or her right to a healthy environment. We are especially alarmed by subclause 23(3), which, if we have read it correctly, simply implies that regulatory compliance is not a defence. This is of paramount significance for us, because regulatory compliance is the necessary safe haven for doing business. Without a guarantee that regulatory compliance will make it safe for you to conduct business, business becomes an activity that is too risky to undertake.

Related to this concern is our other question: how reliable will the regulations adopted under the current regulatory process be? Will anybody be able to challenge them at any time under the new judicial review remedy, on the basis that another standard should have been adopted instead? If so, all of the operators who rely on that particular standard would face nothing but confusion and uncertainty. The wording of clause 16 of the bill, which deals with the judicial review process, is so wide that we can easily foresee this section being used to challenge the government on any environmental regulatory standard at any time. This runs exactly counter to the regulatory predictability that is so essential for our industry to operate within.

Does regulatory compliance still have any relevance and value? Does the regulatory process still have any relevance or value? These are the questions that we cannot answer based on what we have read in the bill.

In view of the foregoing, we respectfully submit that if it is not your intent that the remedies introduced by Bill C-469 be applicable against regulatory standards and regulatory compliance—clauses 16 and 23 respectively—this should be stated explicitly. We have suggested wording towards this end in our brief.

Although our brief focuses on the issue of regulatory standards, because it is a key consideration for federally regulated operators, our reading of the bill raises other questions as well, including its consistency with international conventions on maritime liability. This is a point that was raised in the presentation of the Canadian Maritime Law Association on November 1, which, needless to say, we support.

We hope that your committee will have the opportunity to hear from other witnesses as well, including representatives of the federal departments that produce and administer environmental regulations, and from specialists in public and administrative law.

There is an old saying that the road to hell is paved with good intentions, and we are concerned that the legislator, buoyed by the enthusiasm surrounding this bill, may fail to adequately consider how the act's mechanisms will actually work within the existing statutory framework. Although our testimony is designed to highlight our industry's concerns regarding the relationship between the remedies proposed by the bill and the regulatory standards by which we are governed, we suspect there are other issues that should be clarified before, rather than after, the bill receives royal assent.

Thank you for your attention. We would be pleased to answer any questions.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Broad.

Mr. Huffaker, you can go ahead.

[Tom Huffaker, Vice-President, Policy and Environment, Canadian Association of Petroleum Producers]

Thank you, Mr. Chairman and committee members.

We are pleased to have this opportunity to comment on Bill C-469 today.

I am Tom Huffaker, vice-president for policy and environment at the Canadian Association of Petroleum Producers.

As many of our concerns with this bill are legal in nature, we have provided a separate legal opinion. I am pleased to have with me the author of that analysis, Shawn Denstedt, a partner at Osler, Hoskin and Harcourt. He is available to assist me in answering your questions today.

I will make a few high-level comments on our overriding concerns with the bill rather than focusing on the many points of detailed objection that would arise from a line-by-line review. We provided a copy of our full statement last week, and I will make a slightly shorter statement today.

CAPP represents companies large and small that explore for and develop Canada’s natural gas and oil resources. We are part of a large, growing, and technologically advanced industry that contributes greatly to the wealth of the country, with over 500,000 Canadians directly or indirectly employed in the industry, annual investments of $110 billion, and payments to government exceeding $15 billion per year.

Canadians expect safe, reliable, and responsible energy development and delivery. Meeting high environmental standards is part of that expectation. We embrace those expectations. Canada has among the highest environmental standards in the world. Development is subject to numerous licensing and approval processes. Environmental considerations form part of all the decisions on whether to approve developments that could have an environmental impact. The Canadian Environmental Assessment Act provides a rigorous process for assessing environmental effects.

The provinces where we operate have their own high environmental standards and rigorous regulatory regimes. These standards operate within a careful balance of federal and provincial law. There is no bright line where federal environmental jurisdiction ends and provincial jurisdiction begins. Respect for the rights and responsibilities of the differing jurisdictions is, of course, fundamental in Canada. We need wise and experienced policy-makers and politicians to ensure that a balance and respect for provincial jurisdiction is maintained.

The oil and gas industry, like many other industries here, is regulated from cradle to grave. The regulatory framework is open and transparent. Canadians who are affected by energy projects have robust opportunities to participate in regulatory processes. The National Energy Board conducts itself in a fully transparent manner, and all relevant input and opinion from any person or entity with a reasonable interest is accepted.

This bill is an appeal to the rising environmental sensibilities of Canadians. We are all acutely aware of the importance of environmental performance and the need for industry to meet high standards. However, we frankly do not see what problem this bill is trying to solve. Canadians already enjoy open and transparent environmental decision-making. This bill will only burden responsible development, while providing new avenues for those seeking to discourage development, growth, and job creation.

This bill would allow any resident of Canada to go to court, claiming that the Government of Canada has failed to carry out its duty as a trustee of the environment. And courts could grant a wide range of remedies. So the delicate art of politics on which the respect for federal and provincial powers now depends will become subject to rulings by federal courts brought by environmental activists.

Bill C-469 imposes a quasi-constitutional obligation, in our view, on the government to place environmental protection above all else. We embrace the need to place high priority on environmental protection, but environmental protection does not stand alone as a priority. The economy and energy security also rank high. More practically, Canadians want high environmental standards, but they also expect government and regulators to emphasize worker and public safety, jobs, and energy to heat their homes and power their vehicles.

Our own polling confirms that the overwhelming majority of Canadians believe it is not only important to balance environmental protection, energy security, and economic priorities, but possible. This bill threatens the very balance our public demands and believes in, and which is already codified in the federal Sustainable Development Act.

The Canadian legal system is a leader globally in protecting individual rights. However, it is one thing for the law to give me a right to protect the things I own by suing someone who trespasses on my rights, and it is quite another for every single Canadian resident to have the legal right to take environmental questions to court. These are questions of public policy that are for governments to decide through legitimate democratic processes. Every adult Canadian citizen can vote. Can every Canadian adult afford to go to court?

When activists bring cases to court under this bill, can every Canadian go down to the courthouse and ask to have their voice heard, maybe to protect the economic opportunity for their children in the future? Of course not.

This bill would undermine the proper role of elected officials. We believe that we need to pause, and think long and hard before we choose to diminish the ability of our democratically elected leaders, such as those in this room, to address complex problems.

Under this bill, no industry large or small can operate secure in the knowledge that they are on safe ground as long as they comply with the general law and any permits and licences they have been issued. Under this bill it does not matter whether those permits and licences have been issued under federal, provincial, or territorial law.

In a civil action, under clause 23 of this bill as we read it, a Canadian or resident or entity, whether or not they have any direct interest in the matter, need only claim contravention of an act of Parliament alleging significant environmental harm. The entities that can bring such action include environmental organizations that specialize in taking actions to court. All they need to do is open an office in Canada. Where the money to fund it comes from can be anywhere.

Businesses large and small need predictability to invest and provide the jobs that Canadians need. We look to government to provide that predictability, not only through laws and regulations that are enacted but also through the policies that guide implementation of those laws and regulations as well as the practical wisdom that is brought to bear when decisions are made to take enforcement action.

There will be no predictability, in our view, if Bill C-469 becomes law. The carefully balanced policies of government and the wise counsel of public servants will be held hostage to the court actions of single-interest groups. The bill will significantly increase the risks and costs of doing business in Canada, in our view. The result will be a loss of competitiveness for Canada, with reduced investment in economic opportunities and fewer jobs.

Capital is mobile, and while it is drawn to countries that have advanced environmental, regulatory, and legal systems, such as Canada, those systems have to be predictable and reliable for countries to be attractive to investors. We support good policy that holds industry to high standards of environmental performance.

In our view, Bill C-469 is not good policy for Canada. We believe it is fundamentally flawed and we respectfully submit that it cannot be amended into good policy.

Thank you very much. I look forward to your questions.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Huffaker.

Mr. Everson, your comments from the Chamber of Commerce, please.

[Warren Everson, Senior Vice-President, Policy, Canadian Chamber of Commerce]

Thank you very much.

My name is Warren Everson. I'm the senior vice-president of the Chamber of Commerce.

As you know, the Canadian Chamber of Commerce is the organization that is the most representative of business people in Canada. Thanks to our network of more than 400 local chambers of commerce, we speak on behalf of 192,000 businesses of all sizes, active throughout the country.

Bill C-469 would create a Canadian environmental bill of rights. The intention of the bill is to safeguard the right of present and future Canadians to a healthy and ecologically balanced environment. That's a laudable goal, but this bill is not the correct approach. In our view, it would fundamentally change the nature of environmental protection in Canada, increase uncertainty, invite litigation, and create a new barrier to investment.

We oppose Bill C-469 in principle and we have numerous specific concerns with the bill. In particular, the principle is that Bill C-469 dismisses decades of work done by parliamentarians to establish national agencies to protect the environment. It proposes to replace a predictable process, whereby the provinces and the federal government are responsible for environmental regulation, with an endless litigation process brought by private parties. It would in effect turn the Federal Court into an environmental protection agency.

The new rights afforded to the bill do not have to be exercised for environmental purpose. They could be used for commercial benefit. They could be used to impose a private agenda onto a large population's agenda.

Currently, the federal government has broad discretion to balance the needs of environment with other societal concerns. This bill would take away that discretion and permit the courts to continuously challenge the decisions made by government or even by Parliament. Not very many people would want to invest in a situation in which any resident or entity could take them to court even if they were following all the rules.

Mr. Chairman, as I mentioned to you, I have a brief and a whole series of specific issues with the bill, but in light of the fact that I was able to persuade one of the members of the Chamber of Commerce who has direct involvement with these matters to testify, I'd like to just very briefly conclude and then submit my brief to the committee for its use and introduce my colleague.

It will come as no surprise to the committee that my conclusion is that Bill C-469 should be set aside. People can certainly take issue with environmental laws and they can say we don't have enough of them or that we're not enforcing them adequately, but if that's the case, then citizens should be dealing with Parliament, not going around the legislative process to the courts.

The bill before you today seems to us to be a statement of frustration with current process. What it is not is a working law. It's a blank cheque and it asks the Federal Court to fill in the blanks. Courts have said over and over again in the past that it's not the job of the court to make policy, and you politicians have said many, many times that it is not the prerogative of judges to make law in Parliament's place.

Thank you very much.

[The Chair, Conservative, James Bezan]

Mr. van't Hof.

[Johan van't Hof, Chief Executive Officer, Tonbridge Power Inc., Canadian Chamber of Commerce]

Mr. Chairman and honourable members, thank you very much for taking the time to hear me.

My name is Johan van't Hof, and I am the chief executive officer of a publicly traded company on the Toronto Stock Exchange called Tonbridge Power Inc. My role here as a CEO is to talk to you briefly about my experiences in getting permitted a 214-mile power line that connects Lethbridge to the United States. It may come as a surprise to you that Alberta is not connected at all to the United States from an electricity perspective, which is a bit of a paradox, given that it is the energy province of our country.

I also speak to you as someone who has worked for 10 years in about 23 countries doing infrastructure finance, where many of those countries became failed countries. I pondered long and hard as I was going through this why that was, because it's very relevant to our conversation today.

I noticed that the countries that accelerate and create wealth so they can do the right things for their citizens have a stable currency, an independent judiciary, proper infrastructure that works and can be relied on, education, and a lack of corruption. Most importantly, they have a rule of law, you know what it is, and you can count on it to be enforced, so you make decisions on a risk profile that is known. In several of the countries I worked in, those factors were no longer the case. That is the case in our country, and that is one of the challenges I have with this particular bill, because it would make the test that people like me have to meet terribly opaque.

Our project is a 214-mile power line that will connect 600 megawatts of wind power to the grids in both the United States and Alberta. It is funded under the Obama stimulus bill--$161 million--and it is creating 400 jobs on both sides of the border. We are in construction now, but in order to do so we had to meet the tests of six permits, including from the National Energy Board, the Alberta Energy and Utilities Board, and the Western Electricity Coordinating Council. We had to get a presidential permit from the Department of Energy. We had to meet the NEPA and EPA standards. We met with the Montana Department of Environmental Quality, the State Historic Preservation Office, and on and on. There were over 16 agencies we had to meet.

On the environmental impact statement we had to do--and this is in an area of our country and of the United States--we do not cut down one tree. It is the plains. The spans for our poles are 1,200 feet, and the poles are only four feet in diameter, so the impact is almost minimal. The environmental impact statement was 1,100 pages. We had several dozen open houses, and we received all of our permits in 2008. We did not receive certainty on this point until the matter was resolved by the Supreme Court of Canada, because our opponents literally tried to litigate us into the ground. That is essentially where I have this issue.

It's not that we don't need environmental laws; we do. I am a proud Canadian, and I want to have a society and a country of which I'm proud when I go global. The issue is that when we look at economic growth, that means impacts. The more growth we have, the more electricity we need; the more electricity we need, the more power lines people like me have to put in. We don't put them in because we want to; we put them in because they're demanded, because people buy more televisions.

But here's the point, honourable members. Without knowing what the rule of law is, unless people like me know what the tests are--I'm happy to meet them and I'll put the capital in to meet them fully and exceed them--where the sidelines are, that they will be enforced, and I can count on them to be enforced, we're not going to go into it.

So to conclude, my concern with this bill is that it would facilitate and enable 20 years of litigation glue. Merely the threat of that litigation glue will mean that nothing gets done or proposed, because precisely the lack of legal clarity will chill any investment consideration.

A fundamental precondition of commercial development, wealth creation, and economic acceleration is that there is a rule of law that can be enforced and counted on so participants know what they have to meet, and that if they meet it they are acceptable. That is what we're asking for. We just want to know reliably what tests we need to meet. In my judgment, this bill fails that test completely.

Thank you.

[The Chair, Conservative, James Bezan]

Thank you very much.

I want to thank all our witnesses for staying well under the time limit.

We'll go to our first round of seven minutes. Mr. Scarpaleggia, please start us off.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Thank you.

You're correct, Chair. It was very efficient testimony, I thought.

Mr. Broad, I was reading your brief last week. I'm curious about the interaction between domestic regulations and the standards under international conventions, and how this bill would change that interface or undermine the efficient functioning of that interface. You did talk about it in your brief.

There's one thing that I didn't understand, though, and it's where you say in relation to this point about international conventions that Canada's internal standards tend to be higher than the international standards under conventions. Given that, how would that put Canada in a compromising situation if our standards are already higher than international standards? That's one question.

The second has to do with the situation with the State of New York at the moment in regard to ballast water. I wonder if you have any thoughts about that as a kind of case study of what could happen if this bill were adopted. As you know, the regulations are so stringent for docking in New York State in terms of treating a ship's ballast water that if the regulations aren't changed they're saying there would be no traffic into New York State.

If you could just start by answering those two questions, I'd really appreciate it.

[Michael Broad]

Thank you.

With respect to the first question, in international shipping, as it is described, the ships go all over the world and trade all over the world, so they need to be assured that the laws are fairly standard throughout the world. Through a UN agency called the International Maritime Organization, there are laws made about the operation of ships and the like, and the Canadian government follows the international laws and comes out with their own laws to go along with the international laws.

I guess what we're saying is that if we sign an international treaty, this bill, if it goes through as is, may go against the international treaty. The only problem we have is that you could have a situation whereby international law dictates that you must have a certain process or machinery on your ship, we agree to it, and then a month later some other process or equipment comes out that is a bit better. After you've just spent millions of dollars reconfiguring your ship to put on the new stuff, this other equipment becomes available. Could a citizen come up to us and say, “Well, you didn't use the best available technology”?

You get into situations where you're following international law and following Canadian law and regulation, yet if something changes in the marketplace so that a month later a process comes out that might be a bit better, you can't afford to just change it overnight. I guess that's what we're getting at in that point.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Is it possible that using the new technology that appeared after the international regulations were made or international standards were set would put you in conflict with international standards?

[Michael Broad]

Absolutely.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Okay.

In terms of the New York State situation, do you have any comments?

[Michael Broad]

Yes. Well, that's a situation where the United States federal government has certain regulations that follow international law and unfortunately the State of New York decided to come out with a regulation on ballast water that was different from the federal and international standards.

What they're asking for is that by 2012 any ship transiting New York waters must have equipment on board that's 100 times more efficient than the existing standards out there. Unfortunately, there's no equipment that is 100 times better than the existing standard: what you've got is what you've got. Even if this equipment were available, you could not measure the efficacy of the equipment. You just need too much water.

So a state government has come out with a law that is contrary to the federal law and international law, and that will essentially block trade in the Great Lakes for ships going up the Great Lakes. Basically, it's preventing trade in Ontario ports and all Canadian ports up the lakes. It's preventing ships from going up there and trading. Unless that law is changed, it's going to have a tremendous effect on Canada's trading lanes.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Thank you.

Mr. Huffaker, you operate under the Ontario Environmental Bill of Rights, I guess. Your industry would operate under that bill of rights, so I wonder if you could tell us if that bill of rights has been detrimental to the oil industry in Canada.

[Tom Huffaker]

I think the key point we would make is that we don't see it as having the same kind of structure and being the same kind of law or the same kind of provision. I can't cite a specific example where it has been a problem in Ontario, but I can say it's clearly much narrower in the sense of being provincial only and not applying, obviously, across the entire country.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

But does it give any citizen, any resident of Ontario, the right to call into question a regulation the way this bill does? Is it as aggressive that way?

[Tom Huffaker]

If I may, let me ask Mr. Denstedt if he would be able to provide a further answer to that.

I have no further answer to that, really. I am sorry.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

I understand your point about democratic processes and so on, and the fact that money from outside of Canada could come in to finance court cases against the Canadian economic interests. In that case, would you agree to applying the principles of election financing, if you will, to the financing of environmental court cases? In other words, if you're not a citizen of Canada, you can't finance an action by an NGO in Canada against the Canadian economic interests.

[Tom Huffaker]

I would not presume to be an expert in deciding exactly how the financing should be structured, but that is one of a long list of reasons why we see it as fundamentally flawed.

[The Chair, Conservative, James Bezan]

Thank you; your time has expired.

Mr. Bigras, you have the floor.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

Thank you very much, Mr. Chairman.

I also wish to thank our witnesses.

I liked what Mr. Huffaker had to say in reply to Mr. Scarpaleggia's question. He pointed out that there could be differences regarding environmental law and the right to a healthy environment, whether under Ontario law or under this legislation. In this legislation, the right to a healthy environment is being created, which is a good thing. I don't see a problem with that principle. There may be a problem insofar as civil actions are concerned.

Perhaps the matter needs to be researched, but according to what I've understood, where these rights exist in the provinces, they are subject to more guidelines than the provisions of the bill before us. It might be interesting to conduct a comparative analysis of this bill and what exists in the provinces, such as in Quebec. Quebec adopted a comparable model.

That said, there are two groups of witnesses before us and I believe I understand that according to one group, we are being urged to throw the bill overboard. However, one witness said that it might be possible to work with the bill, among other things by clarifying subclause 23(3).

The Shipping Federation of Canada said in its brief that the simple fact of alleging environmental harm will be sufficient to trigger procedures, and that is the problem. I think that that is an important point.

If all of this were subject to limits and guidelines, namely as to the grounds that could trigger legal action, do you think it would be possible to improve the bill? My question is addressed to all of you.

[Michael Broad]

After listening to Johan, I don't think so. But if I understood the question correctly, I think what we focused on was what we thought were the big problems for us in this bill. We're not saying we're for the bill, and we're not against it, but we're only saying that this bill will provide problems for us in knowing where we stand, knowing where our operators stand.

[Tom Huffaker]

I think we feel broadly that effectively granting everyone a standing to sue over almost anything, anywhere, is such a fundamental problem to certainty in the investment climate, such a fundamental problem to federal-provincial relations, and ignores, as I said, the balance of rights and responsibilities that we all think are important, we see it as fundamentally flawed.