Subcommittee of the Standing Committee on Finance on Bill C-38 Committee on May 30th, 2012

[Stephen Hazell]

We know nothing about it. Well, I have heard a rumour—and I couldn't put any more credence than that—they're working from what's called the comprehensive study list regulation, which is a current existing regulation, in terms of preparing the designated project list regulation. Nothing's been publicly released as yet that I'm aware of.

[Kirsty Duncan, Liberal, Etobicoke North, ON]

Thank you, Mr. Hazell.

Following up on that, what do we know about the thresholds or criteria that will be used to establish the project list? A short answer.

[Stephen Hazell]

Nothing at all; there's no information at all. I mean, it's...nothing at all.

[Kirsty Duncan, Liberal, Etobicoke North, ON]

Thank you.

In the fall of 2011, the environment commissioner examined how cumulative impacts were being considered in the oil sands region of northern Alberta. The audit found significant gaps in scientific data that is needed to determine the combined environmental effects of multiple projects in the same region.

I'd like it if you could expand on what you were saying to Ms. Quach. How are cumulative impacts going to be addressed under the new CEAA?

[Stephen Hazell]

My understanding is that in the new bill, the requirement to assess cumulative effects is still there for those projects subject to federal environmental assessment—and they may be, as I say, very few in number, although we can't say for sure. That's why I'm encouraging the committee to insist that the Minister of the Environment provide the designated projects regulation. It's difficult to say how much real work will be done in terms of cumulative effects assessment.

[Kirsty Duncan, Liberal, Etobicoke North, ON]

So just to be clear, it's going to be difficult to understand how much is going to be done in terms of cumulative impacts.

[Stephen Hazell]

That's right.

[Kirsty Duncan, Liberal, Etobicoke North, ON]

Terrific. Okay.

I'm going to continue there. Again, how will cumulative effects be carried out in light of substitution and equivalency to be handled by the provinces?

[Stephen Hazell]

Provincial environmental assessment processes typically do not look at cumulative effects. In fact, I'm not aware of any jurisdiction that requires assessment of cumulative effects amongst the various jurisdictions in Canada. In Ontario, for example, the environmental assessment process is really limited to public sector projects. It doesn't even include the assessment of private sector projects unless they were designated by the Minister of the Environment in Ontario.

When it comes to substitution by provincial processes for federal processes, certainly there will be no guarantees that the cumulative effects will be assessed at all. Further, the criteria in the new bill relating to substitution are extremely weak and, as Jamie Kneen has said, will result in a patchwork of environmental assessment regimes across the country.

One benefit of the Canadian Environmental Assessment Act over the past 10 years has been, basically, to serve to elevate everybody's game. The provincial governments have not been able to run away from environmental assessment because there was always a risk the federal government might come in and actually want to do an environmental assessment. So they couldn't run away and hide. I think the reason the provincial premiers are pretty happy is because, with the federal government off the scene, they can basically downsize their own environmental assessment regimes. I think that's a real risk in some jurisdictions.

[Kirsty Duncan, Liberal, Etobicoke North, ON]

Thank you, Mr. Hazell.

How will equivalency be determined under the new CEAA?

[Stephen Hazell]

I don't believe the term “equivalency” is actually used in the new act. In the substitution section I think it says the minister must form an opinion that the provincial process would be “an appropriate substitute”. In my view, that provides significant discretion on the part of the minister to make that determination. However, this is a very peculiarly worded section, because once the minister makes the determination that the process would be an appropriate substitute, the minister must, on the request of the province, approve the substitution of that process.

It's a very curiously worded provision. I think it follows to say it's badly worded. Please amend it.

[Kirsty Duncan, Liberal, Etobicoke North, ON]

Thank you, Mr. Hazell.

How will small projects be determined under the new CEAA?

[Stephen Hazell]

Small projects will not be covered under the new act. Under current legislation a lot of screening is done, mainly of small projects, but not all. There are some large projects that are subject to screening as well, but there's really no provision for assessment of small projects, unless one of two things happens. They either get on the designated project list regulation, which seems unlikely, or the Minister of Environment could conceivably designate a small project for environmental assessment if he felt it was appropriate.

[Kirsty Duncan, Liberal, Etobicoke North, ON]

We heard from the environment commissioner yesterday that some oil sands development, some mining, and some exploratory wells might be excluded. What would it look like if they were excluded from screening, and what are the risks?

[Stephen Hazell]

I fully expect that oil sands projects will not be included in the designated project list regulation. We'll see. I think the government will argue that Alberta has a perfectly good regulatory body, the Energy Resources Conservation Board, so let it do its work. We don't really need to have the federal government involved.

That may be the argument; I don't know. At the present time under CEAA there are typically joint panel reviews between the federal Environmental Assessment Agency and the Alberta ERCB for tar sands mines. There are a number of those under way. There is the Joslyn North project, the Pierre River project, and some others. They are independent panel reviews with hearings—a pretty good process.

[The Chair, Conservative, Blaine Calkins]

Thank you, Mr. Hazell. We have to move on. We've almost gone to eight minutes.

Ms. Rempel.

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

Mr. Hazell, it's good to see you again. You were with the environment committee when we studied CEAA a few months ago.

[Stephen Hazell]

Yes.

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

I want to go back to Madam Quach's questions.

You made a comment to the effect that you saved Exxon a billion dollars, but they're not likely to thank you for it. Could you walk me through the line of thinking on that again?

[Stephen Hazell]

Sure.

Imperial Oil and the other partners in the Mackenzie gas project invested hundreds of millions of dollars up front in the environmental assessment process, the regulatory process, and doing their field work for constructing the pipeline. It's very expensive stuff. Exxon Mobil was never that enthusiastic about the project, and even Imperial Oil never said they would build that pipeline. At the time—

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

But I would like clarification on a comment you made that during the time the EA process occurred the price of gas went from roughly $6 to $2, so they would have been selling to a $2 market. Is that correct?

[Stephen Hazell]

Yes. That's more or less right. I think it's around $2 now, and it's been that way for some time.

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

But the length of the EA process allowed the company to see that realization in price change and decide not to make the project. Was that correct?

[Stephen Hazell]

That's correct.

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

We've been sitting through countless hearings here, and I've been sitting through the CEAA review for the better part of this summer. Here's the rub; the rub is right there. There's this disconnect between using environmental assessment to take away or affect industry's market decisions in their projects.

Yes, certainly, the price of gas reduced, and this was a boon for the company. However, one of the things that makes our country competitive is the ability to take risk and to move forward with business decisions based on market values in a timely process. That's what we're trying to get at here.

I really picked up on that story because it's so telling of some of the schools of thought that go into this. What we've been trying to show is we want to achieve that—