Subcommittee of the Standing Committee on Finance on Bill C-38 Committee on May 28th, 2012

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Thank you, Mr. Chair.

I thank the witnesses for the information they have provided to us.

My questions are for Mr. Rees.

You talked about protecting the environment while contributing to the economy. This coincides with what the Commissioner of the Environment and Sustainable Development said to us. He stated that it was possible now to associate sustainable development, the protection of the environment and the economy. Indeed, studies show that several natural resource companies have made profits after having gone green. We are talking about billions of dollars.

You say that there has to be good management of aquatic resources for human beings and the economy to be in better health. I would like to know what you think of promoting and applying the precautionary principle. That means emphasizing and strengthening environmental legislation, and not curtailing it. In fact, in our consultations in Toronto, several people spoke highly of the precautionary principle.

[Terry Rees]

I think we have a long history in Canada of innovative manufacturing and resource extraction. It's often tied directly to leadership by government, whether it's the clean air act or it's the ban on phosphorus, for instance, where technology has been driven by a strong and informed government policy.

I also think on your precautionary question, since there are so many unknowns in environmental matters, that wherever you can take precaution to avoid a future harm, it's always cost-effective to do so.

I guess that would be my answer to that question.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Thank you.

I have another question. Still on the economy, certain European countries, and the State of California, have announced that they are going to limit their purchases of Canadian oil because of its enormous ecological footprint. This points to the fact that Canada should bring in more legislation regarding clean energy, and renewable and traditional energies.

Do you think that all of the legislation and late assessments constitute a problem for emerging projects? The provisions may indeed lead to late notices, assessments and late determination of criteria. This tool will probably be an obstacle for promoters, given that things are not clear. What do you think of this lack of clarity in the legislation?

[Terry Rees]

I think the barriers to trade are something that my other panellists here might have something more to say about. But I know there are certainly opportunities to avoid being cut out of certain markets if our technologies and our leadership on the environmental side tend to lag international standards. Europe tends to lead on a lot of standards, which from my experience in the mining industry drove a lot of Canadian practice and allowed us to continue to access those markets. I also know that the clean technology side of our manufacturing and industrial base is something that we have a huge opportunity to do with our resources. So I think, on both counts, showing leadership allows us to access markets we might not otherwise have access to. In the meantime, it will allow us to take a proactive and precautionary approach to the underpinnings of our environment.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Thank you.

I have one last question and it is related to your first comment regarding democracy and public participation in decision-making. We know that there are going to be fewer assessments and expert analyses done by civil society and expert groups. This will, however, impact the general interest, and the earth, water, and air quality, to mention only those. What do you think of the limits imposed on debate and on the parties that are directly concerned?

[Terry Rees]

One of my colleagues here mentioned the fact that the incremental changes over time have made the processes somewhat cumbersome, but they've also allowed for a lot of long-term public discussion about the implications of public policies and how they interact with various interests. By being hasty with making major reforms to important environmental and industrial underpinnings of our legal system and the laws that guide our development, I think there are going to be a lot of unforeseen costs related to interpretation.

Without the proper public consultation and a wholesome discussion about it, all of these changes...420 pages are a lot to digest. I think the average Canadian doesn't know what they're going to get and is likely not going to appreciate the details, especially since the regulations for all of these in the budget implementation bill are yet to come.

[The Chair, Conservative, Blaine Calkins]

Thank you, Mr. Rees.

Madam Quach, your time has expired.

Mr. Storseth, we have a couple of minutes left in this particular panel, and then it will conclude. We'll suspend right after that for a few minutes to get the new panel in and then we'll resume.

Mr. Storseth, two minutes.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you very much, Mr. Chair.

As a northern Albertan who actually lives and works in and around the oil sands area and has neighbours and family members who also depend on it, I can tell you—as you know, Mr. Collyer—that northern Albertans care more about the environment than most people I know. But they also understand the tremendous strides that the industry has taken in the last several years in reducing its environmental footprint and how important that is to Albertans.

Now, we also understand that you need certainty when it comes to industry, and that the duplicitous regulatory framework of having to do several assessments on the same project can lead to significant setbacks. You've mentioned this, but can you affirm that this current process has delayed and in some cases cancelled projects?

[David Collyer]

There's no question that it has delayed.... I can think of a couple of examples.

There was a Shell project that I believe came forward in 2007. Their most recent mining development is still waiting for or I think just got terms of reference for the environmental review. In the meantime, the provincial review has been completed.

There's also the Total Joslyn project. I would acknowledge that the proponent there made some changes. That project took six years to get through the regulatory review process. There's no way you can attribute that length of review to the changes the project made.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Six years?

What effect does this have on your union workers, Mr. Smillie? On real people on the ground, what effect did these delays have for you?

[Christopher Smillie]

If there isn't other oil sands construction at the time or if there isn't other oil sands maintenance at the time to go to work on, it could mean essentially that those in the hall who I met in Calgary would potentially have to look elsewhere. Albertans, for one, might have to look elsewhere to find employment. If there's a surplus of 500 boilermakers or 300 welders and 700 carpenters, those folks are going to have to get on a plane and go work in Ontario or wherever.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

As you said earlier, this affects—

[The Chair, Conservative, Blaine Calkins]

Mr. Storseth, I'm sorry, your time has expired.

Thank you very much to our witnesses here: Ms. Carpenter, Mr. Rees, Mr. Meyers, Mr. Collyer, and Mr. Smillie.

I'll get that pronunciation right eventually, Mr. Smillie.

Colleagues, we're going to suspend for a few minutes. I would like to be ready to resume with the second panel no later than.... Well, let's just go for 9:30. Thank you.

[The Chair, Conservative, Blaine Calkins]

Colleagues, the sooner we start, the sooner we can go home and get some sleep, and it might just be before midnight.

This is the second hour of our panel here at our second meeting of the subcommittee of finance. From the Canadian Construction Association, we have Ward Prystay; from the Mining Association, we have Mr. Pierre Gratton, president and chief executive officer; and from the Saskatchewan Association of Rural Municipalities, we have Ray Orb.

We're simply going to do the same as we did last time. We'll go with ten-minute presentations from each of you. I will start with you, Mr. Prystay, and then move to Mr. Gratton and Mr. Orb.

[Ward Prystay, Principal, Environmental Services, Stantec Consulting Ltd., Canadian Construction Association]

Thank you, Mr. Chairman.

Good evening. My name is Ward Prystay. This evening I am here to provide testimony on behalf of Canadian Construction Association, or CCA, on part 3 of Bill C-38 regarding responsible resource development. I am a principal with Stantec Consulting, which is a member of CCA. I have 20 years of experience as an environmental professional, with the past 18 years as a fisheries and environmental assessment consultant.

The CCA represents 17,000 members across Canada working primarily in the non-residential construction business. As an industry, construction employs over 1.25 million Canadians and accounts for just under 7% of our overall GDP. CCA members are supportive of strong environmental assessment and permitting processes and believe they are an important contributor to sustainable development in our country.

With regard to the proposed changes of Bill C-38, I would like to comment on the amendments to the Canadian Environmental Assessment Act and the Fisheries Act.

During the parliamentary review of CEAA in November last year, CCA presented membership concerns to the House of Commons Standing Committee on the Environment regarding the efficiency and effectiveness of the administration of the act and the lack of certainty and predictability in its implementation. In particular, CCA raised concerns about uncertainty regarding triggering and timeliness of the process, the wasted resources applied to the assessment of projects and activities that have very little environmental risk, and the duplication of effort and process when both federal and provincial environmental assessments are triggered.

The changes to the Canadian Environmental Assessment Act in Bill C-38 address the concerns that CCA raised last November. I would like to touch on these.

With respect to uncertainty regarding triggering and timeliness of the process, the current CEAA framework triggers an environmental assessment by one of four mechanisms: when the Government of Canada is the proponent of a project; when it will transfer lands to facilitate a project; when it will provide funding to enable a project; or when it issues a permit or authorization identified in the law list regulations.

For private sector projects, it is usually a permit or authorization that triggers an environmental assessment. As a result, proponents must invest in a high level of engineering design at the planning stage of their projects to trigger CEAA. For environmental screenings there is no timeline for receiving formal confirmation that the act applies. The 2011 timeline regulations for comprehensive studies have been a distinct improvement, but they still allow three months for a decision on whether the Environmental Assessment Act applies. They also allow the agency to suspend the 365-day review process whenever a question is asked of the proponent.

Under the proposed changes, environmental assessments will be triggered based on project-specific thresholds identified by regulation when there is a direct linkage to federal areas of responsibility. This list-based approach of deciding which projects require an assessment was a recommendation of CCA last November, and it is fully endorsed by the membership. It removes uncertainty about the need for environmental assessment and will improve project planning. It will also free up federal resources from a bureaucratic interdepartmental coordination process that has no value from an environmental protection perspective.

The concern CCA raised regarding timeliness of the process is also addressed by the proposed changes. The key steps to triggering an environmental assessment are clearly defined in the new legislation, as are timelines for each of these steps. This will bring certainty to proponents at the early stage of the process. There are also timelines for reviewing the environmental assessment and for making decisions. This will provide significant certainty in project planning, regardless of the type of environmental assessment.

I have an important comment on the proposed changes to CEAA in regard to the beneficial use of government resources. Today there are 3,040 environmental screenings, 36 comprehensive studies, and 11 review panels active under CEAA. Many of these screenings are mere checklists for legislative compliance—they're not true environmental assessments. The new project-based threshold approach is expected to eliminate the majority of the small screenings that pose little to no environmental risk. In addition, the consolidation of responsibility for conducting environmental assessments—under the authority of the Canadian Environmental Assessment Agency, the National Energy Board, and the Nuclear Safety Commission—will result in the Government of Canada making one common decision for a project. It will no longer make the same decision five or more times for a single project through various departments.

With respect to duplication of effort and process where both federal and provincial environmental assessments are triggered, the proposed amendments will allow the federal assessment requirements to be addressed by provincial processes where they're equivalent. This will bring to life the philosophy of one project, one assessment.

Together, these changes will simplify scoping, improve the timeliness of assessments, and free up government resources to focus on assuring resource projects are constructed, operated, and decommissioned in an environmentally responsible manner.

We would like to raise one minor concern regarding section 67 of the proposed legislation. We are concerned that intervenors may use this clause as a basis for legal challenges against the federal government. In this section, where the federal government carries out a project that is not a designated project under the act, there is a requirement to confirm that the project is not likely to cause significant adverse environmental effects before proceeding, or if it would, that the Governor-in-Council would decide if the project is justified.

We believe this determination cannot be made without an environmental assessment that meets the standard of CEAA. We believe this is not the intention of Parliament, and we recommend considering an amendment that clarifies the basis and scope of this determination.

CCA has also reviewed and supports the proposed changes to the Fisheries Act. Specifically, CCA agrees with the addition of a purpose section of the act; revisions to the pollution prevention and fisheries protection provisions; changes that allow a single authorization to be issued addressing both fish and habitat together; and inclusions of a framework for improving the timeline for review of applications.

Together these will provide clarity on interpretation and application of the act across Canada, and will ultimately improve the efficiency of the approval processes for projects.

In conclusion, Mr. Chairman, CCA views the proposed changes within part 3 of Bill C-38 as a positive step forward. We believe the changes to CEAA will establish a regulatory framework that assures one project, one assessment. This will minimize duplication of process, improve timelines, and free up federal resources to tackle projects with the potential for greater environmental consequences.

In addition, the changes to the Fisheries Act will clarify the intent of the legislation to protect fisheries and ensure greater consistency in application of the act across Canada.

Together, these will provide greater certainty on the regulatory requirements and timelines for projects without lowering environmental standards.

Once again, thank you for inviting CCA to share our membership views on the changes to Bill C-38.

[The Chair, Conservative, Blaine Calkins]

Thank you, Mr. Prystay.

Mr. Gratton, for up to 10 minutes, please.

[Pierre Gratton, President and Chief Executive Officer, Mining Association of Canada]

Thank you, distinguished members of the committee, clerk, staff, and observers, for the opportunity to appear before you today in the examination of this important piece of legislation.

My name is Pierre Gratton. I'm president and CEO of the Mining Association of Canada.

MAC represents the national voice of the mining industry. We have members active in every jurisdiction in Canada, except for Prince Edward Island and the Yukon. We've been actively supporting the mining sector since 1935. We have members that produce a whole range of products, from base metals to gold and precious metals, iron ore, steel-making coal, diamonds, uranium, and oil from the oil sands. The industry in 2011 contributed some $36 billion to the gross domestic product and employed over 300,000 workers.

For the record—this was not put in my remarks for the purposes of today, as we always include it—the industry accounts for more than 50% of freight revenues on Canada's rail system. Obviously we need a rail system that functions.

We represent over 21% of Canada's goods exported and about 3% of gross domestic product.

Our industry is also enjoying a period of some growth and prosperity. Notwithstanding the troubles in Europe and the slight slowing of the economy in China, we continue to enjoy commodity prices that we have not seen in many years, leading to new investments in every region of the country. We've estimated that some $140 billion in new investments have either already been commissioned or could be commissioned within the next decade. For example, in Newfoundland alone we've seen mining production quadruple in the past decade. Quebec is poised to have the largest investment, at over $4.6 billion this year, leading Canada in new mining investment in 2012.

So it is a pan-Canadian industry supporting communities across the country. That is why having an efficient and effective regulatory system that enables this industry to continue to grow and invest is important to us.

We also place a high degree of importance on responsible development. Through our Towards Sustainable Mining initiative, which is an award-winning program, we commit to public reporting on performance and third-party assurance. It's guided by a national advisory panel made up of representatives from many different walks of life across Canada.

Turning to our views on Bill C-38, note that our comments are based on preliminary analysis of the legislation. Certain questions remain regarding the bill's overarching impact, and we're still seeking clarity on them. With that caveat, I'll reflect our members' reaction to the bill.

As an industry that operates outside of urban Canada, we are pleased that Bill C-38 recognizes the importance of aboriginal consultation. A tremendous opportunity for mutual benefit and success exists and is being realized through the partnerships the Canadian mining industry has formulated and continues to develop with our aboriginal partners. Open and honest consultation is a cornerstone of developing those partnerships.

On the new CEAA, we do not expect it to have a dramatic substantive effect on mining projects. As we told the House of Commons Standing Committee on Environment last fall, great improvements in the process for mining projects came from the 2010 amendments. They cut out delays in starting federal assessments and allowed the federal process to start at the same time as provincial assessments.

These amendments, you may recall, addressed comprehensive studies—that level of review within the Canadian Environmental Assessment Act that represents the lion's share of mining assessments in Canada. Nevertheless, CEAA 2012 does promise additional significant improvements in clarity and predictability, as well as a reduction in duplication of process. As an association serving a diverse group of members, an important feature for us is that we will have an act that we will be able to explain for the first time since CEAA was created.

CEAA 2012 can be summarized on a simple flowchart. The current Canadian Environmental Assessment Act cannot be explained simply; the complex interplay of definitions and triggers and exclusion list and inclusion list left most people confused.

CEAA 2012 includes the features that we have been calling for, including one clear responsible authority; a clear and predictable process with defined timelines; sufficient flexibility to make common sense decisions; the screening process and the safety net process should ensure that unforeseen situations can be resolved; authority to initiate and to engage in regional studies, which was one of our recommendations last fall; substitution and equivalency where warranted; and an obligation on federal authorities to provide timely information.

There are, of course, some features of CEAA 2012 that will require careful implementation, such as enforceable decision statements. It will be important that the agency ensure that these are clear and feasible. None of these changes will affect the substance and quality of the assessment process. In fact, in our view, they will enhance it.

I would, however, flag one disappointment. Given that the projects where the Canadian Nuclear Safety Commission, CNSC, will be the responsible authority includes uranium mines and mills, the benefits of the positive regulatory reforms should be available to uranium operations to the extent possible, in our view. A uranium mining or milling operation has more in common with a gold mine, yet this industry continues to be treated as more akin to a nuclear reactor. As a result, the uranium mining and milling sector has been exempted from some of the most beneficial measures announced in the new CEAA, including equivalency, substitution, and screening out.

Furthermore, the timelines specified in the transitional provisions do not impact the current comprehensive studies where the CNSC is the responsible authority, when the same is not the case for those led by the National Energy Board. We have difficulty reconciling the different treatment in this regard.

We are less advanced in our understanding of the changes to the Fisheries Act. The incorporation of means for better federal-provincial cooperation is valuable, as is the incorporation of a larger tool box for dealing with the act's absolute prohibitions, such as the possibility of regulations for section 35.

However, at this time, we are not clear about how the fisheries and pollution prevention provisions, sections 35 and 36 of the act, will work together in practice. Section 35 has been significantly amended; section 36 has not. As some members may recall from our visits in November of last year during our mining day on the Hill, we expressed concerns about the lack of clarity and consistency in how sections 35 and 36 worked together. For the mining industry this issue appears to be made murkier by the amendments. We are working with officials in both Environment Canada and Fisheries and Oceans to develop, we hope, greater clarity through regulations and guidance.

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

[The Chair, Conservative, Blaine Calkins]

Thank you very much, Mr. Gratton.

Mr. Orb, you have up to 10 minutes, please.

[Ray Orb, Vice-President, Saskatchewan Association of Rural Municipalities]

Thank you, and good evening.

My name is Ray Orb, and I am the vice-president of the Saskatchewan Association of Rural Municipalities. I am also the reeve of the Rural Municipality of Cupar, in Saskatchewan.

I would like to begin by thanking the subcommittee on Bill C-38 of the Standing Committee on Finance for inviting me here to present our views tonight.

SARM represents all 296 rural municipalities in Saskatchewan and acts as the common voice of rural Saskatchewan.

SARM serves as the principal advocate in representing the municipal governments of the province on priority issues, including the changes to the Fisheries Act being proposed through this bill.

Distinction of waterways. SARM applauded the federal government for the changes to the Fisheries Act that were announced in April by federal fisheries minister Keith Ashfield. The changes to the act provide the long-awaited distinction between vital Canadian waterways that support fish populations and smaller bodies of water that do not house fish. It is our understanding that the amendments to the Fisheries Act will focus protection rules on significant threats to fish and will set clear standards for routine projects concerning smaller fish-free water bodies.

Currently the Fisheries Act applies the same protection to rivers and streams as municipal drains and farmers' irrigation canals. This adds unnecessary costs and extended timelines to routine municipal road construction projects. For example, in 2011, in my municipality, we were involved with a culvert replacement project in a non-fish-bearing area. DFO required us to attain a permit, which caused a time delay, and the overall cost was increased significantly. The culvert accommodated drainage for farmland. There were no fish in the area, but the project was treated as if there were.

If DFO clearly defined waterways to allow an RM to determine whether or not they needed to consult with the department, it would expedite projects where DFO approvals aren't required. This will save RMs time, which is a priority in Saskatchewan, with its short five-month construction season.

In many cases, municipalities have been required to install larger culverts to accommodate the passage of fish when constructing roads around all bodies of water, regardless of whether fish were present or not. The rules need to be clarified to support municipal governments while continuing to protect fish habitat where fish are present.

The changes to the act are welcome news if they translate into allowing routine municipal road construction projects to proceed without unnecessary costs and delays in the future.

Avoiding duplication. SARM is also encouraged by the proposed changes to the Canadian Environmental Assessment Act of 2012, which will establish a new federal environmental assessment regime. We understand that for larger-scale resource projects this will mean that firm timelines will be placed on reviews, requiring that they be completed within two years. We hope these changes will foster increased cooperation between the federal and provincial governments when it comes to the environmental assessment process.

The province of Saskatchewan is experiencing rapid growth with our natural resource sector; therefore, allowing for a more streamlined approval process could mean increased economic activity to our province, which will benefit our members, the province, and the country as a whole.

SARM would hope that in the future a similar approval process could be implemented for municipal infrastructure projects as well. This will reduce the regulatory burden, which will help all levels of government.

Public cost share. SARM would also like to take this opportunity to express our concerns regarding the costs associated with implementing fish-accommodating structures that are required by the Fisheries Act when fish are present. The need for protection of fish and fish habitat is widely supported and is viewed by SARM as necessary to prevent the loss of this valuable natural resource. That said, we are concerned that the Fisheries Act continues to place the onus on the individual or municipality to bear the cost of compliance with the act. This includes the requirement to install larger culverts, and burying them underground in many cases, to accommodate fish movement. These requirements are above and beyond those that would normally be utilized in a typical road construction project, thus adding additional costs.

A good example of these costs comes from the RM of White Valley in the fall of 2011. The RM was replacing a culvert in one of their existing municipal roads that intersected a seasonal running stream. They consulted with DFO. DFO assessed the stream and determined that fish were present. DFO then required the RM to accommodate fish by installing a larger culvert, which in turn added $28,000 to the overall road project costs. The taxpayers of the rural municipality are left to pay the additional costs of the culvert required to accommodate the fish. SARM does recognize the importance and value of protecting fish but believes it is a benefit that is realized by all of Canadian society. SARM would like to ask that the federal government share in these costs that are currently fully absorbed at the municipal or individual level.

In contrast, under the Species at Risk legislation, a landowner discovers that there is an endangered plant or animal living on his or her property. Compensation is paid to the landowner for the loss of the use of the property, thereby recognizing the public benefit. SARM would encourage the federal government to consider providing funding to municipalities and individual land owners for the costs they accumulate while taking measures to maintain fish and fish habitat.

Thank you for the opportunity to appear today. I would be pleased to answer any questions you may have.

[The Chair, Conservative, Blaine Calkins]

Thank you, Mr. Orb. I appreciate that.

Colleagues, we only have three witnesses who were able to attend, so we should get in a full round of questioning and everybody should have an opportunity to ask a full set of questions.

We'll start with our seven-minute round. Mr. Allen.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much, Mr. Chair, and thank you to our witnesses for being here.

Mr. Prystay, I picked up on one of your comments when you talked about the Fisheries Act. One of the things you indicated was a lack of consistency in the application of the act across the country. Would you care to comment on how inconsistent that is in its application and interpretation by different fisheries folk across the country?

[Ward Prystay]

Through the work we do in development projects across Canada, we see a substantive difference in how the act is applied, be it west coast, central Canada, the Prairies, the north, or Atlantic Canada. It comes down to the level of scrutiny DFO's habitat biologists place on the various projects, the level of data required to support a review, and the level of habitat compensation required when a project goes for an authorization. It's quite variable across the country, and it's even reflected in the operational statements DFO has across the different management units.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

As an engineering consulting firm, as Stantec is, do you see that working with some of these companies there's a significant difference in the cost of implementation of similar projects across the country?

[Ward Prystay]

The mitigation that's necessary to ensure that the resource is protected is really dependent on the habitat, the system that's being affected, and the species that are present. But we do see higher costs in different parts of the country. I think British Columbia and the Northwest Territories and Nunavut have much higher costs than you would see in many other areas of the country.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Mr. Gratton, you were nodding your head on that. Would you care to comment?