Finance Committee on Nov. 18th, 2013

[Soren Halverson, Senior Chief, Corporate Finance and Asset Management, Department of Finance]

Good afternoon.

I'm Soren Halverson. I work in the economic development and corporate finance branch of the Department of Finance. With me is Elisha Ram, my colleague also at Finance. Tim Gardiner of Natural Resources Canada is also here.

On August 30, 2013, the Government of Canada announced that it was considering an open and competitive sale for two parcels of land in the Kootenay area of British Columbia known as the Dominion Coal Blocks. These lands were acquired by the Government of Canada in 1905 in exchange for subsidies that were provided to construct the Crowsnest Pass railway.

The potential sale stems from a general review of the corporate assets of the government that was initiated in 2009. The divestiture legislation that is presently in the bill would provide for the authority for the crown to dispose of all or any part of the Dominion Coal Blocks. It would give the Minister of Natural Resources the authority to dispose of it with the approval of the Governor in Council. Also, the minister would have the authority to grant easements over the land and take any actions required to prepare the blocks for disposal.

[The Chair, Conservative, James Rajotte]

Thanks very much for that brief statement.

I'm going to begin with Mr. Rankin, please.

[Murray Rankin, NDP, Victoria, BC]

Thank you, Chair, and thank you to the witnesses.

Those who are watching might wonder why we are talking about the Dominion Coal Blocks in a budget implementation act. I don't understand it either, but it's another omnibus bill so I guess Canadians won't be surprised.

This has to do with the beautiful East Kootenay area I know very well. I look at the objective of this and I'm not entirely clear why the government wants to divest itself of this public asset. In your introduction you alluded to that.

Why is there a desire to sell this land?

[Soren Halverson]

As you mentioned, the land is situated in a beautiful area of the country. It's also an area that is well known for the high quality metallurgical coking coal resource that is available there. Parts of the Dominion Coal Blocks have been identified as being very prospective from that perspective, so a sale of these lands would permit the development of this resource, which would contribute both to the economy of the region and more broadly to the Canadian economy.

[Murray Rankin, NDP, Victoria, BC]

In the notes the Department of Finance prepared, it notes that a third of parcel 82, one of the two Dominion Coal Blocks, is an area that overlaps with the Flathead watershed. It notes that three years ago Prime Minister Harper committed to ensuring the sustained protection of the Flathead watershed.

I'm having trouble understanding how the divestiture for metallurgical coal advances the Prime Minister's commitment to the protection of this area.

[Soren Halverson]

The contemplated action doesn't necessarily involve the divestment of all parts of the parcels for coal mining. As I mentioned there are areas that are more prospective. As you mentioned there are also areas of the parcel, the Flathead, which have been acknowledged both by the provincial and federal governments as being a high quality pristine area, and the federal government does not intend to sell that portion for coal mining.

[Murray Rankin, NDP, Victoria, BC]

The material also talks about consultation with the Ktunaxa First Nation, yet clause 244 refers to the extinguishment of any rights of third parties and refers to an example of the Canadian Pacific Railway.

What about the extinguishment of aboriginal title should that exist in the area?

[Soren Halverson]

The aboriginal right is based on constitutional principles and would not be extinguished through the provisions of this act.

[Murray Rankin, NDP, Victoria, BC]

The government has mused about the protection of the Flathead as a national park, and it seems as if you have talked about that possibility here as well.

Is that something the Government of Canada, notwithstanding this divestiture, is interested in pursuing?

[Soren Halverson]

To my knowledge there is no contemplation to convert this area to a national park. However, having said that, there is an existing commitment to its ongoing protection, so I think those two statements can exist simultaneously.

[Murray Rankin, NDP, Victoria, BC]

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Rankin.

I'll go to Mr. Van Kesteren, please.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mr. Halverson, maybe you're answering the questions. Have I got this right? Are the Ktunaxa supportive of the potential sale?

[Soren Halverson]

I'm going to turn to my colleague, Mr. Gardiner. His department is responsible for taking the lead on consultations with the Ktunaxa.

[Tim Gardiner, Director, Energy Systems Management, Petroleum Resources Branch, Department of Natural Resources]

Thanks for the question.

We've been engaging in a consultation process with the Ktunaxa First Nation since March, as well as other affected first nations. It's an ongoing discussion. Terms are being discussed. At this point I don't think they have expressed support one way or the other.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

How might a potential sale benefit their community?

[Tim Gardiner]

Most of the Ktunaxa First Nation's five operating coal mines in the area provide significant economic benefits in terms of GDP, business sourcing opportunities, and employment. Additional coal mines, which could be the result of the divestiture should a buyer propose such a development and it passed appropriate environmental assessment tests, etc., obviously would produce more employment and similar benefits to the mining operations currently in place.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

So consultations are in place. There is a benefit; the consultations are still in place, and all parties are engaged.

This isn't anything unusual. This is a prelude, basically, to what must take place if at some point there is going to be an area that is going to be mined. Is that correct?

[Tim Gardiner]

Is the question in relation to the discussions with the Ktunaxa First Nation?

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

No, it's in relation to the federal government making these preparations, selling the land.

[Tim Gardiner]

If I understand your question, in the consultations with stakeholders that are occurring right now, yes, it is a normal part of government business as part of the contemplated divestiture to work with potentially impacted stakeholders to ensure we've taken into account their perspective in the contemplated action.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Van Kesteren.

We'll go to Mr. Hsu, please.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Thank you.

I just want to check with Mr. Gardiner. Do I understand you correctly that the government's understanding of the position of the Ktunaxa is that they're not supporting or opposing this sale? Did I hear correctly? What is your understanding?

[Tim Gardiner]

It's part of an ongoing dialogue right now. The contemplated action would impact them. We're discussing at the moment potential measures that could be put in place to mitigate those impacts. Their support presumably would be a function of those discussions which are ongoing.