Indigenous and Northern Affairs Committee on March 25th, 2010

[The Chair, Conservative, Bruce Stanton]

Good afternoon, committee members, witnesses and invited guests. Welcome to the fifth meeting of the Standing Committee on Indian Affairs and Northern Development.

Pursuant to the orders of the day and to Standing Order 108(2), today we will be discussing Northern Territories Economic Development: Barriers and Solutions.

Members, we have witnesses with us today, but before we begin, because this our first meeting resuming consideration of the study we were working on in the second session of the 40th Parliament, as a matter of protocol we should formally adopt the motion to resume the study of northern territories economic development: barriers and solutions.

I understand the wording of the motion has been circulated to you. It reads:

That the committee resume its study of northern territories economic development: barriers and solutions started in the previous session, and that the evidence and documentation received by the committee during the second session of the 40th Parliament on the subject be taken into consideration by the committee in this session.

Do we have a mover for the motion? It is moved by Mr. Dreeshen.

(Motion agreed to)

We continue.

There is a second motion, or budget, rather. The budget for the resumption of this study has been been circulated to you. This is a routine aspect of our business, committee members. Typically each committee is allowed at each session a global envelope that it uses for the expenses of the committee. I think you have a copy of it. It's on legal-sized paper. I would entertain a motion to adopt the budget expenses for this study, which you'll see come to a total amount of $39,500.

It is moved by Mr. Dreeshen.

(Motion agreed to)

Thank you very much.

Now we'll go to our witnesses.

I welcome two witnesses today, and I would like to start by offering our apologies. We had a couple of false starts here. We had both of the agencies involved with us here today scheduled to appear at earlier meetings. Because of scheduling problems, we had to cancel on them. Finally we were able to make this, and I appreciate your patience.

Today we welcome Ms. Sheila Leggett, vice-chair of the National Energy Board, and Mr. Steve Burgess, executive director of project reviews and operations for the Canadian Environmental Assessment Agency.

The normal format is a ten-minute presentation, and then we go to questions from members.

Let's begin with Ms. Leggett.

[Sheila Leggett, Vice-Chair, National Energy Board]

Thank you, Mr. Chair.

Good afternoon.

Good afternoon.

Mr. Gaétan Caron, the Chairman of the National Energy Board, extends his apologies to the committee. He was unable to be here today as he is attending to duties associated with the evaluation of the Mackenzie Gas project application.

I am not in a position to comment on the content of the application, as it is an ongoing proceeding before the Board. However, I can update you on the remaining process for consideration of this application. The NEB's oral hearings are scheduled to resume this coming March 29 to deal with updated evidence. The NEB panel will hear final arguments beginning mid-April. The NEB expects to release its regulatory decision in the fall of 2010.

The NEB is an independent federal agency that regulates several aspects of Canada's energy industry.

Our purpose is to promote safety and security, environmental protection and efficient energy infrastructure and markets in the Canadian public interest within the mandate set by Parliament for the regulation of pipelines, energy development, and trade.

Of particular note for this committee would be that NEB regulates all oil and gas exploration and production on non-accord frontier lands; for example, the Northwest Territories and Nunavut and certain offshore areas. The NEB reports to Parliament through the Minister of Natural Resources. The NEB has regulatory responsibilities under the National Energy Board Act, Canada Oil and Gas Operations Act, known as COGOA, and Canada Petroleum Resources Act, known as CPRA, relating to environmental protection, safety and conservation of the resource.

It also has responsibility for conducting environmental assessments under the Canadian Environmental Assessment Act and under the Mackenzie Valley Resource Management Act. Indeed, the National Energy Board has been considering the environment in its decisions since its inception in 1959, and under the Canadian Environmental Assessment Act since 1995.

The NEB has developed a strong capability with respect to environmental assessment, with about 45 environmental, socio-economic, and stakeholder engagement specialists on staff. Currently, the NEB conducts about 20 to 30 screening and comprehensive study types of assessments per year.

The National Energy Board is active and effective in Canada's pursuit of a sustainable energy future. This requires us to consider the economic, social, and environmental aspects of all facilities applications when we make a decision about whether the proposed project is in the public interest.

The board believes in a goal-oriented approach, where regulatory expectations are clear and companies determine the means to achieve the objectives. Recently, the regulations for drilling and production under COGOA were updated to reflect this regulatory best practice. The board also believes in regulatory accountability and has committed to service standards for all of its applications processes

The board believes that regulatory processes should result in better outcomes, such as the best evidence possible from a broad base of parties when an application is being considered and better environmental protection throughout the life cycle of all approved projects. The board does not believe that process for the sake of process adds value to Canadian society.

I've spoken briefly about the Mackenzie gas project to the extent I can in terms of timelines. I would just note that in following those timelines, we will meet all the obligations that we set out and signed for in the 2002 cooperation plan.

Other activities that we're preparing for in the north include getting ready for exploration drilling in the Beaufort Sea in the 2013 to 2017 timeframe. In order to be ready for that, we are in the process of conducting a review of our policy on same-season relief well capability. Part of this review will include a technical conference in Inuvik. The policy will guide applicants on the board's expectations regarding the capabilities an applicant would need to demonstrate in the event a well goes out of control.

As part of the Government of Canada's commitment to the Inuvialuit under the Inuvialuit Final Agreement, the NEB is working with a number of government departments, the Inuvialuit, and the regulated companies to demonstrate preparedness in the unlikely event of a spill from regulated oil and gas activities.

There are a number of companies planning to conduct marine programs in the Beaufort Sea, Lancaster Sound, Baffin Bay, and Davis Strait.

The NEB also anticipates dealing with an Alaska gas pipeline proposal in the future, either as an application to the NEB for the proposed Denali Alaska gas pipeline, which is in partnership of ConocoPhillips and BP, or in a support role to the Northern Pipeline Agency in the case of a proposal for an Alaska gas pipeline by TransCanada and ExxonMobil.

You asked us to talk about barriers and solutions, and we've identified two barriers from our regulatory perspective. I've talked about COGOA and CPRA. They were both designed in a different era of oil and gas development for large-scale offshore projects like Hibernia, and we're finding that they're not well suited for the increasing variety of and smaller scale projects now being contemplated in the north. The NEB is responsible for the oil and gas development components of these acts. However, the acts themselves are administered by INAC.

The second aspect we wanted to bring to your attention was the shared mandates of various assessment and regulatory bodies in the north, which result in regulatory complexity and uncertainty for potential investors.

Moving forward to solutions, I want to talk to you about some of the current solutions we're working on now, as well as a suggestion for a future solution. Our current solutions speak to the second barrier I identified of regulatory uncertainty. We have spent a lot of time and effort in the past and present, and anticipate doing so in the future, working with northerners to find holistic solutions to northern energy matters.

One of the ways we do this is through a very active participation in the Northwest Territories board forum, in which our chair, supported by staff, is very engaged. This group of regulators is developing strategies to achieve regulatory efficiencies without compromising effectiveness or jurisdiction.

This work has been very helpful for the board. As a result of it, we've developed a number of partnerships that we formalized in memorandums of understanding to align and coordinate processes. We have an existing MOU with the Mackenzie Valley environmental impact review board on a cooperative framework, as well as one with the Northwest Territories water board on cooperation with respect to downhole injection. We're in the process of discussing other potential MOUs, including ones with the environmental impact screening committee, the environmental impact review board, and INAC.

In our process of working with northerners, we have learned much from northerners. As a result of some of those learnings, we've modified some of our processes in both northern and southern Canada to increase the ability of aboriginal groups and stakeholders to participate in our proceedings.

We have an aboriginal engagement program through which we go out and visit communities in advance of any application being considered. We inform them as to what the National Energy Board is, what our processes and mandates are, and how parties might be able to ensure that they are ready to participate in any process that we have that might come to their community.

We've also been told, both in northern and southern Canada, that our hearings tend to be intimidating and are too formal. Through the lessons we've been learning through northern Canada, we've been adapting our hearings while maintaining the natural justice principles that we need to, yet striving to make our hearings less formal and less intimidating so that we can hear from as broad a variety of parties as possible on the applications.

The NEB is striving, in close collaboration with northern boards, aboriginal groups, and stakeholders, to develop environmental and socio-economic assessment and regulatory processes in the north that are responsive to the aspirations of northerners for a sustainable future, are clear and well understood, have predictable timelines, are coordinated, and minimize duplication.

I spoke to the fact that I was going to leave you with a suggestion from our perspective about a future solution. I have mentioned the potential to modernize COGOA and CPRA. One suggestion we'd like to leave with you today is that in considering any potential modernization of those two acts, it would be a good idea to allow for participant funding programs to be developed, creating the possibility of substitution under the Canadian Environmental Assessment Act. This approach was recently announced in the budget speech for projects regulated under the National Energy Board Act.

Thank you very much for your attention. Those are my remarks.

[The Chair, Conservative, Bruce Stanton]

Thank you, Ms. Leggett. That's very helpful.

Now we'll go to Mr. Burgess from the Canadian Environmental Assessment Agency. Mr. Burgess, you have the floor.

[Steve Burgess, Executive Director, Project Reviews, Operations, Canadian Environmental Assessment Agency]

Thank you, Mr. Chairman.

I'm pleased to be here today, finally.

I hope that all committee members have a copy of my presentation. I would like to explain to you at this time how the Canadian Environmental Assessment Act works.

I thought I'd first give you a bit of a constitutional context. As you're probably aware, the environment is not really mentioned in our Constitution, but the courts have confirmed that this is a matter of shared responsibility, and that's a very important issue to remember as we go through this presentation.

Each order of government--provinces, territories, and the federal government--has responsibilities with respect to the environment and environmental assessment. These responsibilities require us to work together with our colleagues in other jurisdictions to ensure that environmental assessment is done correctly.

Federally, as you're no doubt aware, the government has responsibility for matters such as navigation and shipping, fisheries, migratory birds, and so forth. Provincially responsibilities relate more to local works and undertakings, in particular natural resources and matters of a local or a private nature.

The original federal environmental assessment process was set out in 1974. The process therefore goes back a long way. The Canadian Environmental Assessment Act did not come into force until 1995. It is triggered by federal decisions about proposed projects, either as the proponent, source of funds, land administrator or regulator. The CEA Act applies to projects.

Furthermore, the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals is a non-legislated process that requires federal departments to conduct strategic environmental assessments. It should also be mentioned that the CEA Act has limited application north of the 60th parallel where processes arising out of constitutionally protected land claim agreements with aboriginal peoples have been or are being enacted through federal legislation.

So there is relatively limited application of our legislation north of the 60th parallel.

You should have in your deck a map that describes the environmental assessment regimes in the north. Each of the land claim areas has its own environmental assessment regime. In fact, currently the Canadian Environmental Assessment Act applies most generally in the Inuvialuit settlement area under that region's final agreement, and only in a very limited way in the rest of the northern territories.

Some key features of the Environmental Assessment Act are that it's a self-assessment process. Hence, departments that have decisions to make with respect to projects are responsible for undertaking those assessments. Approximately 6,000 to 7,000 assessments are conducted every year across the country. Almost all of those are what we call screenings. For projects with more significant environmental effects, we require that comprehensive studies be undertaken, which are more detailed assessments, or a review panel involving public hearings. The idea is that the level of assessment is geared towards the nature of the project and the level of environmental impact that could occur as a result of the project.

Recently, as you're certainly aware, aboriginal consultation has become a very important issue for the government, and we have recently looked to incorporate the government's aboriginal consultation responsibilities into the environmental assessment process.

In terms of continuous improvement, there are a number of things that have happened and are continuing to happen with respect to the implementation of our act. In 2005 a cabinet directive was developed on implementing CEA. Essentially the objectives were to ensure a more timely and predictable environmental assessment process as a result of concerns that had been raised by proponents of projects, provincial authorities, and others.

In 2007 there was another cabinet directive aimed at improving the performance of the regulatory system for major resource projects, including, for example, mines, pipelines, hydroelectric developments, and so forth. The objective was to establish an oversight body called the Major Projects Management Office to facilitate the environmental assessments and regulatory processes to ensure they were applied in an efficient and effective way.

More recently, in 2008, there was an amendment to the Nunavut Land Claims Agreement, clarifying the relationship between the environmental assessment processes established under the land claim agreement and the Canadian Environmental Assessment Act, essentially so that the act would apply in a very limited way to transboundary projects, for example.

Then in 2009 there were a number of recommendations made by the Canadian Council of Ministers of the Environment for the improved integration of federal, provincial, and territorial environmental assessment requirements to improve harmonization, efficiency, and the rigour of the environmental assessments that are undertaken.

Mr. Chairman, that's my presentation.

Thank you.

[The Chair, Conservative, Bruce Stanton]

Merci, Monsieur Burgess.

Now we'll go to questions from members. We're going to begin this afternoon with Mr. Martin. It's a seven-minute round.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Russell is first, and then I will go next.

[The Chair, Conservative, Bruce Stanton]

Okay, sorry about that.

We're going to go to Mr. Russell. It's a seven-minute round, members, and we'll go through questions. I should tell you as well that we do have committee business today. We're hoping to finish at or before five o'clock, so we'll leave sufficient time to deal with some of our other business.

Let's go to Mr. Russell.

Seven minutes, Mr. Russell.

[Todd Russell, Liberal, Labrador, NL]

Thank you, Mr. Chair.

Good afternoon to each of you. It's good to finally have you before committee. As our chair said, we have endeavoured on a couple of occasions to hear your testimony at committee, so we're happy to have you here.

From listening to both of you speak, it seems that the NEB has a far greater presence in a lot of the northern projects. Is that a fair statement?

[Steve Burgess]

I can speak from our perspective. The NEB's mandate deals with oil and gas development in the north primarily. Our legislation applies more generally to any projects for which the federal government has decision-making power. These can include major resource developments but can also include smaller projects--for example, the construction of waste-water treatment facilities in some areas, or any other project for which the federal government makes a decision.

However, as I mentioned during my presentation, our application applies under very limited circumstances in the north as a result of the requirements set out in the land claim agreements--for example, the Mackenzie Valley Resource Management Act, the Nunavut Land Claims Agreement Act, and so forth.

[Todd Russell, Liberal, Labrador, NL]

When it comes to the NEB, then, it seemed from your presentation that one could assume you have a strong environmental assessment component to what you do when it comes to oil and gas projects in the north, recognizing and respecting the various land claim agreements there, which have their own processes incorporated into them and certain constitutional responsibilities arising thereby.

However, does the NEB have a greater environmental assessment role to play than say CEAA, when it comes to oil and gas projects in the north? Just from listening to your presentation, it seems that way to me.

[Sheila Leggett]

I didn't want to speak about how busy CEAA was in the north. I can tell you with respect to oil and gas activity in the north, the National Energy Board has been quite busy with the NEB hearing process for the Mackenzie gas project. Of course there has also been a joint review panel that has been going on concurrently with that process, which was run through CEAA.

Also, in being proactive, there's been a lot of discussion in the north about potential future oil and gas activities and what those would look like. As I said, there is a realization that there is a lot of regulatory complexity in the north. The National Energy Board has been very involved in those discussions as we seek to figure out how we can have a process that will focus on merits and other aspects of a project, both the positives and negatives of a potential project, in a way that the process doesn't become the driver. What we want is the process to get to the facts and to allow the best decision in the public interest.

We're working with a number of the northern boards, as I said, and other stakeholders and parties in the north to make sure that the process is streamlined for the sake of the process itself, allowing us to consider the true content of an application before us.

[Todd Russell, Liberal, Labrador, NL]

I noticed that CEAA has made some efforts, and I commend this. I've seen a difference in CEAA's approach to consultation with aboriginal people after the court decision in the cases of Haida Nation v. British Columbia and Taku River Tlingit First Nation v. British Columbia. I was involved with Voisey's Bay prior to that, and I was somewhat involved in the Lower Churchill after that. I did see a noticeable difference and an improvement, in my own opinion.

Did the NEB respond in a similar fashion to the legal duty to consult arising rising from the Haida and Taku River Tlingit cases?

[Sheila Leggett]

We have been responding to the legal duty to consult as the law has been generated, and have been striving to be proactive in going forward. Hence, we have what we call an enhanced aboriginal engagement program, which I briefly mentioned in my presentation. Under it we will go out to communities where there aren't even projects being contemplated, or we will go out to the general areas where future projects are being contemplated, to make sure that parties understand who we are and how they could meaningfully participate in our process.

[Todd Russell, Liberal, Labrador, NL]

Very quickly, if I could, I'm going to refer our wonderful notes from our analysts, which state:

Budget 2010 proposes to provide $11 million over two years to Indian and Northern Affairs...through the Streamlining the Northern Regulatory Regime initiative, to accelerate the review process for resource projects in the North.

That's one.

Page 96 of the Budget 2010 document Leading the Way on Jobs and Growth states that this initiative would “provide clarity and certainty for investors while ensuring that the environment is protected and that Canada’s obligations under existing land claims agreements with Aboriginal groups are respected.”

We don't know where the hell this is all leading, in some sense; it was only just announced in the budget.

We're wondering to what extent you have been involved in discussions with the federal government to determine how best to address the regulatory streamlining in the north. How have you been involved? And what role is each of your organizations now going to play in developing the federal government efforts to improve the northern regulatory regime?

[Sheila Leggett]

I can go first, if you want.

Gaétan Caron sits on the major projects management office deputy ministers committee. From our perspective, that has been instrumental in getting the various government departments and agencies to talk to each other, be coordinated, and understand what it takes to have the processes unfold in a predictable manner. I would suggest that the MPMO has been a huge aspect of that, as well as with setting up the northern projects management office, which is just getting under way. We fully support that initiative as well, and we are very involved in it.

We believe we're going to get to the best solutions by getting everybody talking to each other and figuring out the best pathways forward. That's the way we're involved from the federal government perspective as an independent agency.

[Steve Burgess]

As I mentioned earlier, our legislation applies relatively little in the north, so our involvement in the northern projects initiative is probably less than what it would be with respect to the major resource management office initiative that applies south of 60.

[Todd Russell, Liberal, Labrador, NL]

Thank you.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Russell.

You have the floor, Mr. Lemay, for seven minutes.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

I don't have any questions, Mr. Chair. However, I believe my colleague does.

[Yvon Lévesque, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Thank you, Mr. Chair.

Thank you for coming here. I don't know if Mr. Burgess has travelled as far as Ms. Legett to be here.

I am from Quebec and I see that your map does not include Quebec. I don't know what we did to scare you like that. Nevertheless, I'm curious to know exactly how northern aboriginal organizations are integrated into this process. I'm not saying that your ideas are better than the ones Quebec has, but perhaps Quebec could draw some inspiration from you.

[Steve Burgess]

Thank you, Mr. Chair.

An environmental assessment regime was in fact put in place further to the signing of the James Bay and Northern Quebec Agreement. This environmental assessment program is very well established.

Quebec Superior Court decisions have confirmed that the Canadian Environmental Assessment Act also applies to Northern Quebec.

Agreements have been concluded with the Cree and Inuit of Northern Quebec to harmonize the two processes. The process established further to the signing of the convention has a truly aboriginal flavour. With respect to assessments, we work very closely with aboriginal groups. They are involved at all times in the assessment process.

[Yvon Lévesque, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Northern development is not an issue that concerns us especially, because we're talking here about development north of the 60th parallel. Nunavik is a region in Quebec and is concerned by issues other than development in Canada's North.

In Chisasibi, for example, it was recommended that Fisheries and Oceans Canada conduct an environmental study of the eelgrass beds of James Bay. That recommendation was adopted a little over a year ago and we have not heard anything further. Will this study take many years to complete?

[Steve Burgess]

Mr. Chair, I'm not an expert on scientific studies. I'm not familiar with that particular study. However, scientific studies, for example, studies of natural cycles, can sometimes take years to complete. But I'm not familiar with the study you mentioned.

[Yvon Lévesque, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Is the environmental management process in the northern territories the same as what we see in Quebec, given the nations that inhabit the territories and the provinces' northern regions?

[Steve Burgess]

As I see it, there are differences. If memory serves me well, the James Bay and Northern Quebec Agreement dates back to the 1970s. This was one of the country's first land claims agreement. First nations living in this region have a long history of self-management. The systems in place may be a little more advanced than they are elsewhere. I know that the Canadian Environmental Assessment Agency and other departments work very closely with aboriginal groups in the north, particularly when it comes to environmental assessments.