Environment Committee on April 25th, 2018

[The Chair (Mrs. Deborah Schulte (King—Vaughan, Lib.)), Liberal, Deb Schulte]

We will commence. We're missing a few people. Hopefully they're going to show up soon.

We're obviously having some challenges today. We very much want to have the agencies in front of us. There is the possibility on Wednesday of next week to pick up some of this if we need to.

We might need to ask you, if you are willing, to come back next week. However, let's see what we can do today.

I'll introduce our guests. From the National Energy Board, we have Peter Watson, chair and chief executive officer; Robert Steedman, chief environment officer; and Jim Fox, vice president, integrated energy information and analysis.

From the Canada-Newfoundland and Labrador Offshore Petroleum Board, we have Scott Tessier, chair and chief executive officer; Dave Burley, director of environmental affairs; and Susan Gover, general counsel.

From the Canadian Nuclear Safety Commission, we have Michael Binder, who is president and chief executive officer.

Mr. Watson, please.

[Peter C. Watson, Chair and Chief Executive Officer, National Energy Board]

Bonjour, and thank you, Madam Chair, for inviting us to appear today.

In the interest of time, I'm not going to read my entire statement, which I understand members will receive copies of. I will just be introducing a summary of some of the key points in it.

Our work regulating energy infrastructure has placed us in the midst of some of the most important public policy debates in Canada over the last few years. It's very clear that Canadians are passionate about environmental stewardship, regional and cumulative effects, and the evolving status and nature of Canada's relationship with indigenous peoples. They have strong and often divergent views on these topics.

We often see that passion in our hearings, which have become a venue for debating some of these contentious issues. Many of these issues are at a regional scale, and one of our challenges is that the National Energy Board hearings are necessarily limited in nature, in that we apply the specific powers and legislative authorities to discrete project applications.

We note that the government is proposing to create space in the Canadian energy regulator act to allow for more transparent direction to the regulator on broad policy matters. Moving forward, the organization could benefit from this type of general, broad policy clarity as the overarching policies and priorities continue to evolve in the future, to ensure that appropriate mechanisms are in place to assess whether a specific project fits into the greater policy framework.

I emphasize that this should entail regional and cumulative effects frameworks built in collaboration across multiple levels of government.

There are many additional proposed changes in Bill C-69, and few are more pressing for us than the integrated impact assessments between the proposed impact assessment agency and the Canadian energy regulator, or CER.

The CER, the impact assessment agency, and other departments and agencies will need to work side by side to capitalize on our respective strengths, expertise, and authorities so we can build a new system that works for all stakeholders.

As a key partner in the new federal impact assessment review process, we bring extensive knowledge and technical expertise on energy markets, on pipeline design, construction, and operation, and on the environmental, social, health, economic, and safety aspects of energy projects. As I said, we also have the knowledge and expertise to assess market conditions and the economic need for the project.

There is need for alignment throughout the system, but with respect to integrated reviews, in three areas in particular. The first is timelines and stop-clock provisions. The next is with respect to the setting and amending of project conditions, because conditions play a critical role in mitigating the risks and harms associated with a project. The last area is with respect to the planning phase of an impact assessment.

We will work together across our agencies to learn from one another and align our respective approaches so that we can ensure that we're providing a single-window process for all stakeholders and that the review processes ultimately result in decisions that are timely, fair, and technically sound.

It's also important to recognize that the Canadian energy regulator act formalizes some best practices that we've already initiated at the NEB.

One final example I want to point out is our work with the indigenous advisory and monitoring committees on the Trans Mountain project and the Enbridge Line 3 replacement program. These committees were co-developed with indigenous peoples along those two routes. They support collaborative, inclusive, and meaningful indigenous involvement in the monitoring of environmental, safety, and socio-economic matters related to those projects over the project life cycle. Bill C-69 would formalize our ability to establish such processes and similar processes for life-cycle oversight on other initiatives moving forward.

In conclusion, I am exceptionally proud of the dedicated public service of our staff and members of the National Energy Board. We are ready and committed to work with our federal colleagues to implement the proposed legislation and deliver processes that are transparent, efficient, and fair for all participants and stakeholders in our process.

Merci beaucoup, Madam Chair.

[The Chair, Liberal, Deb Schulte]

That was very fast. Thank you.

Mr. Tessier.

[Scott Tessier, Chair and Chief Executive Officer, Canada-Newfoundland and Labrador Offshore Petroleum Board]

Good afternoon, and thank you for the opportunity to share our views on Bill C-69.

I've had the privilege of leading a world-class safety and environmental regulator since 2013. For over 30 years, the C-NLOPB has served as an effective agent of independent joint management of the Canada-Newfoundland and Labrador offshore area. Safety and environmental protection are paramount in all board decisions.

We've reviewed Bill C-69 and have been discussing with governments our role in the new legislative framework. I'd like to begin, though, with a brief summary of the board's recent experience in this area.

Since 2003, the board has completed 57 environmental assessments and an additional eight strategic environmental assessments or SEA updates. Public comments are invited at several stages in these processes and, in the interest of transparency, relevant documents are posted publicly. The C-NLOPB is currently updating our strategic environmental assessment for the Labrador shelf, an initiative co-chaired by the Nunatsiavut government.

In our submission to the expert panel on environmental assessment processes in the fall of 2016, we expressed support for the Government of Canada's interim EA principles. Similarly, today I can confirm our support for the objectives of Bill C-69.

The C-NLOPB recognizes that legislative renewal can provide opportunities to improve the delivery of our mandate. Section 6 of Bill C-69 speaks to the principle of joint management. We're pleased that the government has expressed its recognition of the importance of the Atlantic accord. We're also pleased to see in related documents that projects with potential for smaller effects in areas of federal jurisdiction may be subject to other regulatory processes under life-cycle regulators like the C-NLOPB.

That said, our analysis has identified specific areas of concern and inconsistency between Bill C-69 and the accord acts that governments have been made aware of and appear open to considering. I'll also speak briefly to our initial input on key issues in two related discussion papers, which we've reviewed in conjunction with the legislation.

Our first area of concern is with respect to the single-window approach, in the spirit of joint management and “one project, one review”. In addition to being a product of the Atlantic accord, having an integrated regulator was one of the recommendations of the Ocean Ranger commission report. The C-NLOPB's single-window approach has worked effectively for over 30 years in one of the world's harshest offshore environments. It ensures all relevant information is available and integrated, allowing us to make fully informed decisions.

Bill C-69 contains provisions respecting the appointment and powers of enforcement officers—whom I'll call EOs—which could deviate from that one-window approach and overlap with C-NLOPB officers. If an EO were to order work to be stopped or conducted independently of the C-NLOPB, that could result in safety being compromised. I should note that this potential also exists under CEAA 2012, and relevant agencies are working on it. However, Bill C-69 itself is silent on such matters of potential conflict between regulators, and the C-NLOPB would be concerned should decisions affecting offshore safety be made without our input.

A second issue is with respect to the role and authority of the C-NLOPB. We want to ensure we have clear legislative authority in any area in which we take on responsibility. Bill C-69 continues to designate the C-NLOPB as a federal authority. I've been advised that back in the mid-1990s when it originated, this designation was intended to permit substitution of review processes under the accord acts. Bill C-69 does not enable such substitutions.

At this point, there are no consequential amendments for cost recovery or to section 138.1 of the accord acts related to environmental assessments. There are also no provisions mandating the C-NLOPB to carry out duties and functions under Bill C-69, or to collaborate or otherwise incorporate the obligations enumerated in section 21 of Bill C-69 into the accord acts. It's also unclear what role the new Canadian energy regulator will play, given the offshore area in Bill C-69 includes by definition the exclusive economic zone and the continental shelf. Greater certainty is required to clarify the potential respective roles of the CER and the C-NLOPB for oil and gas and for renewable energy when it comes to physical activities within the Canada-Newfoundland and Labrador offshore area.

We did note Minister Carr's comments to this committee on March 22 about the possibility of amending the accord acts to provide offshore boards with additional responsibilities if renewable energy is generated in the offshore. Ideally, the C-NLOPB should have commensurate regulatory authority with the CER for the Canada-Newfoundland and Labrador offshore area, and one solution would be to mirror provisions in Bill C-69 and the accord acts to ensure consistency in statutory interpretation.

A third point in our review is the fact that Bill C-69 requires that the minister refer to a panel any physical activities that are designated projects and regulated under the accord acts. Our development plan approval process includes an environmental impact statement, a socio-economic impact statement, a benefits plan, and other plans specified by the board. It may also require a public review with hearings.

This raises the question of when the C-NLOPB's development plan process should commence. We'll need to decide whether we should wait until we have the decision report in hand from the impact assessment agency process.

The C-NLOPB recognizes that we'll have an opportunity to provide our expertise in the panel process. However, the decision-making at the conclusion of the panel appears to be exclusively federal, and that final outcome could conflict with the accord acts.

We acknowledge the commitment of the Government of Canada to conduct a regional assessment in eastern Newfoundland, which could be used to inform and guide environmental assessments and regulatory decisions related to future offshore exploratory drilling projects in the area.

As Minister McKenna indicated to this committee on March 22, there's an opportunity to avoid the need for a separate impact assessment for project-specific offshore exploratory drilling activities where a regional assessment has been carried out. This approach could avoid the need for lengthy panel reviews on exploratory drilling projects, for which impacts and mitigations are well known and well established.

The C-NLOPB is working collaboratively with the Canadian Environmental Assessment Agency, along with our colleagues in the federal and provincial departments of natural resources, in the design of the eastern Newfoundland regional assessment.

A fourth area of uncertainty stems from clause 9 of Bill C-69, under which the minister may designate a physical activity that is otherwise within the duties and powers of the C-NLOPB to be a designated project, as she or he could under CEAA 2012. In theory, this could apply to any delineation well or geophysical program, both of which typically have not been designated projects in the past.

In the spirit of joint management, our expectation is that this ministerial discretion would be exercised minimally and such decisions would be taken in consultation with the Government of Newfoundland and Labrador and the C-NLOPB, if the project in question is in the Canada-Newfoundland and Labrador offshore area.

Our final area of observation deals with coming into force dates.

Any amendments to the federal accord act cannot come into force without mirror provisions being made in the provincial version. How the provincial statute would be amended to reflect many of the changes contemplated by Bill C-69 and the timing to do so while upholding the principle of joint management remain uncertain.

We're also unclear as to how the C-NLOPB will be expected to reconcile our existing obligations under the accord acts with Bill C-69 once it comes into force, given the precedence provision in section 4 of the accord acts.

Finally, our staff have reviewed two Bill C-69-related discussion papers released for public comment, and I'm pleased to briefly share our initial input today.

Regarding the “Consultation Paper on Approach to revising the Project List”, the C-NLOPB supports the criteria-based approach to revising the project list. To reiterate another point I made earlier, we're supportive of the plan for projects with potential for smaller effects to continue to be subject to other processes, such as those under life-cycle regulators.

With respect to the “Consultation Paper on Information Requirements and Time Management Regulations”, the C-NLOPB stands ready to assist the impact assessment agency in its review of documents, which project proponents would be required to provide in the early planning phase. We can also support the agency in its engagement and consultation efforts, given our familiarity and relationships with stakeholders. We can provide expert input on documents the agency intends to provide to proponents in cases where an impact assessment is deemed to be required. The C-NLOPB supports providing proponents with certainty, via regulation, when the clock could be stopped for legislated timelines.

In summary, the C-NLOPB supports the objectives of Bill C-69, with due consideration of coordination with the Atlantic accord regime and the C-NLOPB's oversight, which includes environmental protection and safety.

If the legislation takes into account the necessary considerations that are relevant to offshore petroleum activity, and if the required Atlantic accord act amendments are made, the changes could improve regulatory coordination and contribute to a more stable and effective regulatory system, including post-assessment monitoring and enforcement.

Thank you again for the opportunity to present. My colleagues and I look forward to addressing any questions you may have.

[The Chair, Liberal, Deb Schulte]

Thank you very much.

Mr. Binder.

[Dr. Michael Binder, President and Chief Executive Officer, Canadian Nuclear Safety Commission]

Good afternoon, Madame Chair and members of the committee.

Thank you for inviting me to appear before you today to provide comments on Bill C-69.

Under our enabling legislation, the Nuclear Safety and Control Act, the NSCA, our mandate is to regulate the use of nuclear energy and materials to protect health, safety, security, and the environment; to implement Canada's international commitment on the peaceful use of nuclear energy; and to disseminate objective scientific, technical, and regulatory information to the public.

The CNSC is a unique regulator. It is unlike any other energy regulator in Canada. As committee members surely know, in nuclear, an accident anywhere is an accident everywhere. That is why Canada established a nuclear regulatory framework that is based on international obligations and treaty-level legal conventions. In my submission, I provide you with a list of key conventions.

The key requirement of the international nuclear safety and security regime is for the countries to have an independent nuclear regulatory body whose decisions are based on the best available scientific and technical information, not subject to government or political review. Further, to ensure compliance with international legal commitments, Canada must regularly report its regulatory performance, undertake peer reviews, and undergo scrutiny by the United Nations International Atomic Energy Agency, IAEA. I've provided the list of peer reviews recently undertaken in Canada in my tabled remarks.

Along with this level of transparency and scrutiny at the international level, we apply rigorous domestic standards and regulatory requirements that we report on. The CNSC is the only energy regulator that publishes annual regulatory oversight reports that assess the safety performance of all its licensees.

All of this brings me to the proposed Bill C-69.

The CNSC has extensive experience in working on environmental assessments. Since 2000, the CNSC has conducted over 70 EAs and appropriately assessed the environmental impacts of all proposed projects. In every case, in the past and in moving forward, one thing remained constant: the CNSC was and always will be the responsible authority for nuclear safety and security.

It seems to me that the notion of environmental assessment as a planning tool has been forgotten. The implementation and operations of a nuclear project may take many, many decades. It is important that the nuclear life-cycle regulator has the tools to make all the improvements and adjustments, including environmental considerations, throughout the life of the project.

Following its review of Bill C-69, the CNSC identified areas of the proposed impact assessment act that could benefit from increased clarity. We understand that the objective is to have one project, one assessment, and we agree. At the same time, to recognize the independence of the CNSC's regulatory decision-making, there must be a clear separation between the impact assessment and the licensing phase of a nuclear project. Furthermore, all conditions under an impact assessment should flow to the CNSC so they can be effectively managed throughout the project's life cycle.

It has been our experience in regulating uranium mines that harmonization with provinces in the licensing of uranium mines has been beneficial and efficient in avoiding duplication. We believe the new impact assessment regime should allow for co-operation and even substitution with provinces. We also are working with the government on implementation processes and timelines.

It is important that we all know, from the get-go, the length of time to get project approval. From our experience, industry can accept a quick “yes” or “no” decision. What is unreasonable is to get a “maybe”. As an example, it has now been more than 15 years since Ontario Power Generation started discussions with us about a deep geological repository, DGR.

A joint review panel was set up under CEAA 1992. Extensive public and indigenous consultations and hearings were held, and a report was submitted to the government in May 2015. A decision is still outstanding. Situations like this need to be avoided in the future.

We are also participating in helping the government in coming up with an effective and reasonable designated project list. In our view, not all nuclear activities and facilities need to undergo a review panel process. For example, an isotope cyclotron in a hospital, a small research facility or refurbishing a nuclear power plant to make it safer—all such projects should be left to the CNSE to regulate under the NSEA.

I would like to close by affirming that the CNSE supports the Government of Canada's proposed changes to policy and legislation to announce the impact assessment process. We look forward to further collaboration with the new Canadian Environmental Assessment Agency to clarify requirements and effectively implement the act.

Thank you and I will be glad to answer any questions you may have.

[The Chair, Liberal, Deb Schulte]

Thank you very much to all of you for your patience in condensing your words to fit within the 10 minutes.

I also want to thank you for providing your comments and statements in both English and French, so we can distribute them to the committee. It's always helpful to have that. People can make notes as they're going along and put down the questions they want to ask.

We'll start the questioning with Mr. Rogers.

Before I do that, I just want to welcome MP Cooper to our committee today.

Go ahead, please.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

Thank you, Madam Chair and welcome, panellists. I appreciate the presentations.

Taking into account the time, I'm going to keep my comments very brief and get to some questions. Some decisions made under the proposed CERA must consider any adverse effects that the decision may have on the rights of indigenous people. Similarly, recommendations made by the commission must take into account the interests and concerns of the indigenous peoples, including with respect to their current land and resource issues for traditional purposes. In your view, Mr. Tessier, would the proposed CERA have any impact on how industry takes the interests and concerns of indigenous people into account when planning a project?

[Scott Tessier]

I think we're already seeing an evolution in the industry in terms of its engagement with indigenous people. The federal government has certainly taken an expansive view and placed a high priority on reconciliation with indigenous people, and the industry is following in that vein. We're already seeing a considerable increase in the amount of indigenous engagement, and I suspect that would continue under the new framework, perhaps with a more formalized legislative and regulatory framework surrounding it.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

In jurisdictions like Norway and the North Sea, exploratory drilling permits seem to be approved much faster, at least that's what we're told. Are you confident that this legislation will lead to a faster process, in which the C-NLOPB, as a licensed regulator, will have authority over smaller projects like exploratory wells? Similarly, once the CEAA has completed the strategic environmental assessment, do you feel the timelines in the bill are adequate? Should they be lengthened or shortened?

[Scott Tessier]

In terms of the question as to whether things will be faster, I don't know. I think there is certainly opportunity for improvement, but that would be conditional on processes and roles and responsibilities being streamlined. It's a question of how well resourced the regulatory agencies are going to be, and there's a fair amount of work left to be done in terms of sorting out those roles and responsibilities and resources in terms of federal agencies and ourselves as the life-cycle regulator.

The question of timelines is a tricky one. Again, whether it will be faster or slower and whether it will be better or worse, I'm not in a position to say at this point because there are some details to follow in terms of how the agencies work together. I think there is opportunity to have a streamlined and robust process, but again, that's conditional on the resources provided and the mandates and marching orders of those providing the regulatory oversight and the decision-making.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

Again, I'm asking the questions of you, Mr. Tessier, because, being from Newfoundland and Labrador, I'm obviously concerned about the legislation in terms of how it might advance the process or interfere in some way, looking at all sides.

What aspects of the proposed impact assessment act would most affect the board's day-to-day operations and mandate under the accord implementation act?

[Scott Tessier]

There will be a fundamental reset of our working relationship with the federal government, and the establishment of the impact assessment act and the impact assessment agency is going to change our day-to-day operations. We'll work more closely with those federal agencies, and we'll continue to work closely with subject matter experts in other federal line departments and agencies.

There will certainly be an increase, in terms of our day-to-day interface, of environmental and impact assessments. Beyond that, as I mentioned in my remarks, for something like our development plan approval process, we're going to have to sit down and figure out how to best streamline our accord implementation act responsibilities with the new working relationships that are being created under Bill C-69.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

I understand that there's a commitment to move forward with the regional assessments of the offshore, starting with a pilot in the eastern Newfoundland region. Again, from the board's perspective, what is the importance of regional assessments going forward, and what can the board contribute to this process?

[Scott Tessier]

Regional assessment offers the potential to be highly beneficial for governments, proponents, indigenous groups, stakeholders, and us as the regulator. I'm excited about the potential for a regional assessment to be evergreen, as opposed to our strategic environmental assessment, which has to be updated periodically. We're talking to the agency about some sort of digital format, but we haven't moved past paper in our strategic environmental assessments. That offers great potential in terms of everybody involved in this space.

A regional assessment also offers the opportunity to streamline and reduce the burden on everybody I just mentioned. There is a real risk and a danger of fatigue, not only on the part of those on the regulatory and government side but also for proponents and those we consult. We want to minimize consultation fatigue, and the chance to do things more collectively and robustly at the same time has great potential. The caveat or the condition is the governance. We've have to get the governance right. We want to be inclusive but not overly cumbersome.

[The Chair, Liberal, Deb Schulte]

That sounds great.

Next up is Mr. Sopuck.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

Thank you.

To the C-NLOPB, I'm on your website here, and it appears to me that you're a regulator but also a development agency, because you talk about Canada-Newfoundland and Labrador benefits, and you facilitate the exploration for and development of petroleum resources.

How many jobs in Newfoundland and Labrador depend upon the offshore oil industry?

[Scott Tessier]

We aren't a development agency in the context that's commonly known in Ottawa, such as a regional development agency. We do have a broad mandate that includes resource management and industrial benefits, just to clarify that for the record.

In terms of employment, I want to say it's 3,000 direct and 7,000 to 10,000 indirect, but there are people in the room who would have those numbers either in their brains or at their fingertips and who could correct me if I'm wrong.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

It's safe to say that the industry that you're a part of is a very significant and important employer in that region.

[Scott Tessier]

It's something in the order of 16% to 20% of the provincial economy, even now, and it has been as high as a third in the past.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

Does the industry there depend on annual investment from outside to continue or to form companies?

[Scott Tessier]

Yes, the typical offshore operator is part of a global enterprise, and there is a competitive element within those global enterprises for investment. They have investment opportunities all over the world, and certainly a priority of governments is to make the Canada-Newfoundland and Labrador offshore area as competitive as possible.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

That very nicely leads into my next point, and I can assure the rest of the committee that this was—

[The Chair, Liberal, Deb Schulte]

Can I just stop you for a minute? The bells have started ringing, so I just want to make sure I have the unanimous consent of the committee to continue.

Thank you.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

I very much appreciated your last point, because it leads into my next question.

The Canadian Association of Petroleum Producers, when they were in front of us, said:

Unfortunately, today Canada is attracting more uncertainty, not more capital, and we will continue to lose investment and jobs if we do not have a system of clear rules and decisions that are final and can be relied upon.

Unfortunately, CAPP and the investment community today see very little in Bill C-69 that will improve that status.

Is CAPP correct in their assessment?