Indigenous and Northern Affairs Committee on March 26th, 2015

[Elizabeth Kingston]

Double bonding occurs where a licensee must provide financial security to more than one payee to address the same reclamation requirement, which often happens when you're talking about a project that crosses over between Inuit-owned lands and crown land. The territorial government is not directly involved in this particular issue per se.

Right now the way it stands is that both the Inuit landowner and the crown want to hold the bond that must be put forward, so that essentially doubles the amount of a credit note that a company would have to bring forward. That, in and of itself, can be cost-prohibitive, particularly to a junior company that would have to actually come up with the cash in order to do that, otherwise it's a credit note or what have you with the bank.

What's laid out here essentially in section 76 is that the minister is able to sign off on an agreement between the designated Inuit association and the crown, and that must be taken into consideration by the Nunavut Water Board when they are determining the amount of the bond. We do recognize that is a step. We've been talking about this for many years and we certainly acknowledge that the staff have recognized this particular issue, but we feel that it really doesn't go far enough because it's still a proponent-driven process.

From the proponent perspective, if there's a certain amount of reclamation that has to be put forward, it doesn't really matter who holds the bond. What's important is the amount of the bond and that it's enough in a case such that a proponent is not able to take care of the situation. But the problem this runs into is there are two groups that want to hold that bond, and they both want their share, and the proponent is getting caught in the middle of that.

Often we are asked to broker meetings. As a matter of fact, there is a meeting taking place tomorrow. The longer it takes to get these agreements set in place, the longer the proponent needs to pay for time and expertise to actually move through the licensing process, it's another delay problem, and the faster we can come to these agreements, to a reasonable amount of security, and move forward, we don't really care who holds the bond. We would just like the crown and the designated Inuit association to come to an agreement that is mutually satisfactory—and quickly.

[John Barlow, Conservative, Macleod, AB]

Teresa, do you want to address the overbonding issue as well? Do you feel that it goes far enough, that it addresses the issue, or do you have some problems with it as well?

[Teresa Meadows]

Thank you, I would like to address that.

I think the issue that the water board faces is twofold with respect to security.

Number one, as referenced by the previous speaker, it does actually adversely affect timelines with respect to the evidence that comes before the board, because the board is primarily responsible for fixing the amount of security. So in the event that the parties actually do come to the board and are able to present that they have a security management agreement and that appropriate security, reclamation security for the undertaking, has been posted or would be posted under a security management agreement, the board can take that into consideration in determining the amount of security that needs to be posted under the water licence.

Unfortunately, in many respects, because of where the water licensing process comes in, the parties oftentimes have deferred those discussions until afterwards, until after they see what the terms and conditions of the water licence are. So it's very rare for the board to actually have that evidence before it while it's making a decision, and so very often, unfortunately, what ends up happening is that the board is responsible for ensuring that all of the reclamation security is posted and then subsequently the parties are having a discussion about additional security and they end up in a situation of multiple bonding or overbonding as it's sometimes called.

The second thing is that right now, the way water licences are issued—and this is the comment that the board actually made with respect to the suggested amendments in proposed new section 76.1—the board is essentially left with a one-shot deal in terms of actually fixing that security amount at the time the licence is issued. Under the licensing regime, in the event there is an amendment to a type A licence, an entire public hearing and application process is triggered. So in the event that you're fixing the amount at the outset of a licence, particularly if you're talking about a life-of-mine licence, there really isn't a mechanism for the board to be reviewing on an annual basis that security amount, in order to be able to accommodate changes over time where a security management agreement would subsequently be entered into by the Inuit association, by the crown, and by the proponent. So we're left in a situation of then attempting to try to figure out exactly how a review of that security amount or an update of that security amount could be commenced without triggering an amendment to the licence and having to conduct a public hearing in respect of that amendment specifically.

Those are the kinds of issues that arise from the board's perspective with respect to trying to address the overbonding and security issues.

[John Barlow, Conservative, Macleod, AB]

Thank you. As I've only got 20 seconds left, I just wanted to thank everybody for making the effort to be here with us today. Your input is very much appreciated.

[The Chair, Conservative, Blake Richards]

Thank you.

We'll move now to Ms. Jones for the next seven minutes.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you to all of our guests for your presentations this morning. It's certainly been very beneficial to us to understand your concerns around this bill, what you like about it, and what you don't like about it.

First of all, a number of you have indicated that you had an opportunity to review the draft bill early on, and my question for you is about the concerns you're raising today. Did you address those concerns to the minister or the department after you received a draft bill, and were any of the suggested changes or recommendations that you put forward accepted at that time, or are all of those still on the table for discussion now?

Who wants to start?

[Ryan Barry, Executive Director, Nunavut Impact Review Board]

Thank you for the question.

Ours is very straightforward. At the Nunavut Impact Review Board we had two main concerns. We feel that one of the concerns in our submission was addressed, and that's the ability for us to continue to coordinate with the Nunavut Water Board with respect to timelines.

The second was with regard to cost recovery and the fact that if it's applied to water licensing and not to impact assessment, there is a concern about front-loading the process and impact assessment, so that the cost borne by the proponent would be lighter in water licensing. That concern has not been addressed.

[Yvonne Jones, Liberal, Labrador, NL]

The Chamber of Mines had a number of recommendations that we've reviewed. Would you like to comment on whether you provided those during the draft of the bill and if any of them were accepted, or if all of those concerns are still here today?

[Elizabeth Kingston]

We have had some opportunities to provide our input. We do appreciate that.

I would say that the one change that we've noted that we had been talking about for many years is the note around security management agreements and that there has been some movement toward trying to address this issue within this bill. We don't feel it goes far enough to add enough clarification, but most of the items that we've talked about during my presentation still remain outstanding and haven't changed from that first draft.

[Yvonne Jones, Liberal, Labrador, NL]

Mr. Kabloona.

[Teresa Meadows]

If it's all right, it's Teresa Meadows. I'll address that issue because I was involved in the working group.

The submissions were fairly extensive at the working group level with respect to the draft text of Bill S-6 before it was introduced into the Senate. I would say that our submissions were lengthy and included the same issues that we've identified in our brief as well, but also included several other issues that weren't addressed. What we've included in our brief are only those issues that remain from our perspective unaddressed in the draft of the bill.

Those are the definition of duration of the undertaking and our wanting a little more clarity around that, issues with respect to the timelines in terms of issues that are outside the control of the board that could adversely affect the ability of the board to comply with those timelines, and the issue of security that I raised earlier.

[Yvonne Jones, Liberal, Labrador, NL]

I guess my next question for all three of the parties would be with the fact that you have not been able to achieve the changes thus far that you're putting forward to our committee today. If for some reason these amendments do not pass in this bill, are you still prepared to support the bill without the changes you are requesting, or would you reject the bill on that basis?

[Ryan Barry]

We'll start with it again for the Nunavut Impact Review Board.

Recognizing that our concerns with the bill are very focused, our primary concern was the ability to be able to continue to coordinate and make use of the progress that we've made through the years. That's been addressed.

With the cost recovery issue, I think there's a lot of concerns that have been tabled by the other parties that remain to be addressed and are somewhat more significant than our concern. With our concern I think we can continue to support the bill and the increased clarity it would provide to the system.

[Elizabeth Kingston]

I would suggest that we support the forward movement of this bill.

We're here to represent the operators that are in the field and we hope that this will be viewed as a form of constructive feedback from the people who are living with the rules that are created and are doing their best to live within those rules. We are in support of the bill moving forward.

Thank you.

[Yvonne Jones, Liberal, Labrador, NL]

And Teresa.

[Teresa Meadows]

I would say that overall we were pleased with the consultation leading up to the preparation of the draft bill. A lot of the key issues that we felt would have limited our support of the bill were addressed prior to its introduction. Overall we are supportive of the bill.

I think the issues that we've raised are primarily looking toward the water board's view of implementation of the current text of the bill and issues that we see with the implementation of the bill. They are largely polishing the apple more than any concerns about the bill itself moving forward from the Nunavut perspective.

[Yvonne Jones, Liberal, Labrador, NL]

Okay. Thank you.

The question that I have right now is in regard to the compensation piece, that is, who pays and who pays what? Obviously there are differing views from the Chamber and the Nunavut Impact Review Board.

I guess my question would be, having come from the north, about how costly it can be to do business in the north. I know that it can often be a deterrent between whether we develop a resource or whether we don't because it's all about the competitive global market and sometimes it makes it more difficult for us.

I understand where the Chamber of Mines is coming from and I sympathize with that particular aspect—

[The Chair, Conservative, Blake Richards]

Ms. Jones, I have to cut you off there. You are at your time.

I know we're always getting to the important points, but unfortunately I have to cut you off there and move to Mr. Strahl.

[Mark Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

Thank you very much. I'll be sharing my time with Mr. Seeback.

I wanted to talk to the Chamber of Mines about the use of water. I understand that concerns have been raised about what constitutes water use, whether using the same water twice and recycling it still counts as a part of your daily, weekly, or monthly annual allotments. The industry has raised some concerns about that. I understand that the department is working with industry officials to try to come up with some solutions and that, hopefully, administrative measure will be identified to mitigate this in the short term.

Can you share your thoughts on that issue and potential non-legislative solutions to your concerns about what constitutes water use and maybe explain to the committee what that concern is and what you think should be done about it?

[Elizabeth Kingston]

Just to provide a little bit of background, the past practice has always been that water would circulate through the pipe that goes into the drill. There's a certain amount of water that would be revolving through that pipeline simply to keep the pipe from freezing. That's been normal practice in the north. It's due to a necessity that southern jurisdictions wouldn't have to deal with.

This has been an ongoing practice for many years. There was a rather arbitrary decision made on the part of an inspector about two years ago to suddenly include that water as part of the use for drilling purposes. What that did was create a spike in the amount of water that was being used or being measured under the current water licence. In some cases that would result in bumping a typical type B licence requirement for exploration drilling into a type A measurement.

In a way it does play into the regulations because we talk about those thresholds. What we're saying now is that if that water is now going to be included, all of those exploration licences, those type B water licences, are now going to get bumped because they're going to be over that 300 cubic metre a day threshold. I don't think anybody wants that. I think that's an expensive and timely proposition for everyone, including the federal government, Inuit organizations, the water board, and all parties. We're trying to come up with a measure that will counteract that decision that's been made. We will reiterate that it was a sudden and arbitrary decision that had no consultation from industry to provide any background. There's been no transition period. It affected four advanced projects, which immediately had to take costly measures to stay within their type B requirements.

The arbitrariness of the decision is a bit of a concern, but also it affects those thresholds as they now stand listed in the regulations. We may be have to review where those thresholds lie.

These are the kinds of conversations that we will be having with staff. We've had these conversations with staff for over the past year or so since that decision has been made. We're hoping to come up with an appropriate mitigating factor so the water is protected. It still doesn't bump the licencing aspect out of reach of junior exploration

[Mark Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

I also wanted to raise an issue you mentioned about administrative monetary penalties. We talked to the Nunavut government officials about that. They were hopeful that that new regime would allow them to more quickly and more able to deal with environmental violations or concerns rather than going through a whole prosecutorial court process. You've raised some concerns with that potential regime. Are you opposed in general to administrative monetary penalties or was it simply around the margins of the two-to-five-year liability? Perhaps you have a different word, but are you opposed to that in principle or is it simply the details of that are of concern?

[Adam Chamberlain]

I'm happy to address that.

The chamber does not object to the use of administrative monetary penalties. They're a tool used in regulatory environments throughout Canada and elsewhere. As you've alluded to, there are some details around the timing that we think need to be adjusted slightly. I'm a member, a director, of the chamber, and I'm also an environmental lawyer, and I deal with these matters regularly throughout Canada. I think that what we would like to see reflected in the application of the AMP provisions as it moves forward by government is the reality that things are different in the north. In the south, if I have a situation where an AMP is levelled or imposed on a project, the chances are that the proponent can get to that place and gather evidence and know what's really happening in almost real time. The problem in the north, of course, as we all know, is accessibility. If an AMP is imposed, it's much, much harder to get there to get the information that we would normally get quickly.

I won't go on at length, but there are significant differences between operating in the north and operating in the south that we think should be reflected in the way that AMPs are applied in the future.

[Mark Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

Are the AMPs proposed in this legislation consistent with other northern regulatory improvements that have been made with Bill C-15 and the MVRMA? In the north is there consistency? Does this apply? Do you think it should be across the whole north? Should it be similar to what is south of 60? My understanding is that what's being proposed here is what's in place in NWT—

[A voice]

Exactly.

[Mark Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

I guess I'm trying to get a read on why you would want something different in Nunavut than in NWT and Yukon.