Natural Resources Committee on Feb. 5th, 2013

[Scott Vaughan]

I'll ask Mr. Sloan to please elaborate on this.

[Bruce Sloan]

When we're carrying out our audit...right at the moment, Fisheries and Oceans Canada has some $100 million of environmental financial assurances in place. Our question to them is, subsequent to those changes, would those still be kept? Would some be returned? What would be the case of people coming into the industry? Would they be required to post a performance bond or not?

Those are the areas where they had not worked out the details of the regulations. At this point, they're saying to us, and we confirmed this just a week ago before the hearing, that this hasn't changed: they don't know what the changes will be. They don't know whether they'll give some of them...if they'll continue to be held or if some will be returned.

[Megan Leslie, NDP, Halifax, NS]

So there's just a gap right now.

[Bruce Sloan]

At the present time, they haven't worked out the details. Until those details are in place, they're not sure what will unfold.

[Megan Leslie, NDP, Halifax, NS]

Right.

That's fish habitat. What about CEAA, the Environmental Assessment Act? We have an entirely new act. What's the status of agencies, or maybe even C-NLOPB, or the departments? How are they adjusting to these CEAA changes?

[Scott Vaughan]

I'll defer to Ms. Leach on that, but first, just very briefly, what we've said in chapter 1 is that with the changes to CEAA, the previous obligations that had been there in CEAA to evaluate every phase of offshore oil and gas exploration changed quite considerably.

One of those changes was no obligation anymore in CEAA to evaluate the impacts of offshore exploratory. The boards told us that, one, they were caught by surprise. Two, they then had to try to figure out what they had to do under CEAA and what they were obliged to do, under more broad terms, on the Atlantic Accord.

Right now this is a period of uncertainty, but they have said—it's in their response—that they are going to stick with the old CEAA and do all the environmental evaluations required under the old act. They're reviewing that up to March 2013. They would then decide what they're going to look at and not look at in the future.

[Megan Leslie, NDP, Halifax, NS]

I think I remember you saying that at the press conference as well.

The piece that catches me by surprise is that they were caught by surprise.

They said that, or that was the sense you got?

[Scott Vaughan]

No, no, both presidents and CEOs had called me and said they were surprised. I mean, to be fair, it was in a budget bill. I believe they were informed the day of, or the day before.

But I think the reason they phoned me to express their surprise was that this was part of their work, their daily work, to make sure that you evaluate those projects, essentially from bumper to bumper, to make sure they have a full idea of what the potential environmental risks are. With those changes, they were left asking, “What are we now supposed to do? What are we required to do legally?”

As a second question, because Environment Canada and DFO no longer have those requirements to look at those phases, they also expressed concern about whether or not the officials, the ones they've relied upon to do those assessments, would continue their expertise in those areas.

So there was a legal issue and a capacity issue.

[Megan Leslie, NDP, Halifax, NS]

Thanks very much.

When it comes to fracking—going to the section on petitions in hydraulic fracturing—we are often told by the government that this falls under provincial jurisdiction. But you say very clearly that there is a mandate under Environment Canada and Health Canada as it relates specifically to toxics.

[Scott Vaughan]

Yes, absolutely.

I'll ask Mr. Ferguson to comment further.

[Andrew Ferguson]

The federal mandate is to assess substances that are being used in Canada, to determine whether they pose a threat to either human health or the environment, and then, if that is determined to be the case, to control or regulate those chemicals and their use.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Leslie.

We go now to Mr. Calkins for up to five minutes, please.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thank you, Mr. Chair.

I wanted to first express my appreciation to the commissioner. Thank you for coming. I spent a number of years on the environment committee and certainly enjoyed your candour there. I appreciate your comments today, and of course the way you keep tabs on what is happening.

I have a couple of questions for you. I'm a little confused, and perhaps you can help me understand this better. I worked in the oil field. I'm an Alberta farm boy, and of course some of us have to work off the farm, in the oil and gas sector, to support our farming habit, and I was no different.

I've worked on drilling rigs and I've worked on service rigs and so on, and I'm quite familiar with what actually happens. I've done well completions where hydraulic fracturing has actually occurred.

I looked at some of the comments you made here in the government's response to petitions, identifying some of these gaps. The points that you've raised are on identifying the substance used, assessing the risks to environmental and human health, and establishing control measures to manage the risks posed by substances determined to be toxic or capable of being toxic.

Then I went and looked for a little more information in your report. I see, for example, in exhibit 5.3, you have an oil and gas pocket typically somewhere in the neighbourhood of—well, you've actually identified it above. It says it's not to scale and typical depths are indicated. Typical well depths in western Canada at this particular point in time are well below what you show here as being the highly impermeable rock. As a matter of fact, most of the wells go through the layer of impermeable rock in order to get to the oil or gas pockets. I'm wondering if I can get some clarification on that.

Also, the Canadian Centre for Occupational Health and Safety has a list, and every oil and gas field worker that I know of has to have a transportation of dangerous goods certificate if they're involved in the transportation of these goods to and from. So every rig worker has to be completely familiar with all of the safety measures contained on a material data safety sheet. On a material data safety sheet there is the product information, such as name, manufacturer and suppliers' names; address and emergency phone numbers; the hazardous ingredients therein; the physical data; fire or explosion hazard data; the reactivity data for chemical reactions; the toxicological properties and health effects; preventative measures; first aid measures, and so on.

I'm finding it a little hard to believe that we have a gap here where I don't think one actually exists. All you have to do is simply ask what materials are being used. The material data safety sheets provide all the information, anything from toxicology right on down to human health and any of the other kinds of things that would need to be dealt with.

So I'm wondering if you can explain to me what exactly is missing here, because I'm fairly familiar with some of these chemicals and with the chemical management plan. I'm not understanding why this is receiving such criticism in your report.

[Scott Vaughan]

Thank you very much, sir.

I don't think we were trying to be critical. I think we were trying to present a portrait of the current situation.

First, I'll go through your questions. Regarding the map, it isn't to scale, and I think you're quite right. This fracking is now going down several kilometres. It's going vertically. It's going horizontally. So that's the first one.

Then, second, in terms of what the problem is, I would say—and you sound more on top of it, certainly, than I am—the question is whether Health Canada and Environment Canada are looking at that list, for example, and right now the answer is no. We've said in this report that some of the chemicals that are used have been classified as toxic substances in other applications. That would be the first part, and that then is a federal obligation.

A second part is whether the chemicals are not transported because of issues related to, for example, the back-flow. So it's not only the chemicals going in, but also then what else is coming out in addition to the chemicals used, and I'll give you one example. In Nova Scotia there are now two tailings ponds that have been sitting for seven years because radioactive isotopes, which were sitting 10 kilometres down, came out in the back-flow. That can't be transported.

I think it would be great to pose your question to officials from Health Canada and Environment Canada: are they aware of those manifests?

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Did anybody from your audit ask those questions?

[Scott Vaughan]

What we asked Environment Canada and Health Canada was this: what are you doing in terms of identifying the chemicals used and then assessing the potential risks of those chemicals, which have been deemed toxic in other applications?

Their answer is—up to now—almost little or nothing. They actually are going through the course of evaluating these chemicals. That will be until 2020. So right now....

In fact we started this, sir, as an audit, and we decided to do it as an information piece because right now there is no program to audit.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Calkins.

We go now to Mr. Julian for up to five minutes.

Go ahead, please, sir.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair.

I will share my speaking time with Ms. Liu and perhaps also with Ms. Leslie.

I just want to briefly come back to the question that I was cut off on.

Mr. Sloan, you were beginning to answer that question on the issue of the financial securities that regulators have been given around absolute liability.

My question wasn't so much around the $30 million, $70 million, $250 million threshold. It was very much to find out how much money is in trust now with the regulators from all of the oil and gas operators, so that we can a better sense of the balance in terms of liabilities. We certainly know how costly the liabilities may be if there's ever, God forbid, a huge accident.

How much is in trust now to offset those liabilities?

[Bruce Sloan]

For the absolute total across all the operators, I'd have to calculate that for you and come back to you on it.

I mean, I think we can go through.... Operators are required to post securities for the absolute limit of $30 million, so each of the operators has posted that. They are required to provide securities that can be accessed on proving fault, up to $70 million. There are securities that the boards are holding for that.

Beyond that, it is what is the financial capacity of...? The boards look at the financial capacity of individual operators, but we did not attempt to aggregate that across all operators.

We could come back to you with that information.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

That would be very, very helpful. Thank you very much.

I will turn it over to Ms. Liu.

[The Chair, Conservative, Leon Benoit]

Go ahead, Ms. Liu.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chair.

I'd like to quote from the first chapter, which covers Atlantic offshore oil and gas activities. It is about the boards' response. It states:

The boards' practice [...] is to ensure that the results of up-to-date SEAs are known either ahead of the issuance of a call for bids, or sufficiently in advance of the closing of a call for bids and ahead of irrevocable decisions that would be taken by bidders and by the boards.

Yet in the report, you say that in the four cases examined, the boards had launched a call for bids before the assessment was completed. In one case, you even noted that the board responsible had granted exploration permits before the assessment was completed.

I would like to hear your comments on that.

[Scott Vaughan]

That is why we made a recommendation. As you said, the purpose of a strategic environmental assessment is to identify general potential risks before establishing a process, for example, for authorizations or specific project assessment. In this respect, we found a problem with timing. That is why we recommended that it was very important that strategic environmental assessments be completed before issuing calls for proposals, especially from companies. Because of the problem we observed, we made a recommendation.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thank you.

I think there is a minute and a half left for Ms. Leslie.

[Megan Leslie, NDP, Halifax, NS]

Thank you.

I just want to finish up on the fracking and the precautionary principle, which should really be at the root of everything we do when it comes to environmental legislation.

Would you say that the precautionary principle is absent here when it comes to fracking chemicals?