Natural Resources Committee on Oct. 17th, 2011

[The Chair, Conservative, Leon Benoit]

Good afternoon, everyone. It's good to see everybody back after a constituency work week. I hope all the members of Parliament had a good one.

We're here today to continue our study of resource development in northern Canada.

We have as witnesses today from the Canadian Northern Economic Development Agency, Mitch Bloom, vice-president, policy and planning, and Donald James, director general, northern projects management office. We have from the Department of Indian Affairs and Northern Development, Janet King, assistant deputy minister, northern affairs organization, and Sara Filbee, assistant deputy minister, lands and economic development. She isn't here yet but is coming.

We will get started right away with presentations.

Monsieur Gravelle, you have a point of order.

[Claude Gravelle, NDP, Nickel Belt, ON]

Sorry. I was a little bit late coming in, but I'd like to raise a point of order, a point of information, from the previous meetings, if I may.

The last time, when Brian Gray was here with Natural Resources—no, not Brian Gray but the other fellow who was here.... He said Brian Gray would come to the natural resources committee soon. Can we know when that “soon” will be?

[The Chair, Conservative, Leon Benoit]

Yes. I have a clerk right on the ball here. He says he's coming on Wednesday, the next meeting.

[Claude Gravelle, NDP, Nickel Belt, ON]

He's coming on Wednesday.

My other point of information is when Mr.... It says Mr. Gray here, but it wasn't Mr. Gray. When he was here previously, he said that Meadowbank transferred federal funds to the Northwest Territories in excess of $1 billion. I think $300 million in royalties was collected. According to our sources, all of that information is not correct.

That's why we would like to have the officials from those three governments appear in front of this committee, just to clarify. We want to get to the bottom of it, as to what's true and what's not true, and the officials from those territories could certainly clear up the matter.

[The Chair, Conservative, Leon Benoit]

It's appreciated, I'm sure, by them that you have given advance notice of this. It gives them time to get the answers together.

While we're dealing with other issues, then, and before we get to the witnesses, I may as well do it now. On November 2, 2011—and I've chatted with most of you about this—there is a delegation from Norway coming to Canada. They have one time slot available, which coincides with the second half of our committee meeting. They would like to meet with this committee. They deal with resources and of course northern resources.

What I'm proposing is that we have a one-hour meeting that day, maybe two witnesses, and then we close the meeting down and meet informally with the delegation from Norway. They would appreciate it. I think it could be really helpful for us. If there's agreement, we'll proceed with that and have a one-hour formal meeting and a one-hour informal meeting with the delegation from Norway. Is there agreement to do that?

I see agreement. Thank you very much.

Let's go directly to the presentations on the orders of the day, on the agenda, starting with the Canadian Northern Economic Development Agency.

Mr. Bloom, go ahead please, sir.

[Mitch Bloom, Vice-President, Policy and Planning, Canadian Northern Economic Development Agency]

Thank you very much,

Mr. Chair and members of the committee.

On behalf of the Canadian Northern Economic Development Agency, I want to thank you for asking us to appear with you today with our colleagues from the Department of Indian Affairs and Northern Development. I'll keep my remarks brief in order to provide the committee with as much time as possible to pose questions in support of your study on resource development in the north.

The Canadian Northern Economic Development Agency, known as CanNor, was established in August 2009. The agency operates a series of economic development programs that support northerners and aboriginal people. It complements these efforts through policy and research activities that advance the understanding of northern economic development challenges and opportunities. Further, it provides major project coordination services and advice to industry and governments through its northern projects management office.

CanNor's goal is simple: advance economic development in Canada's three territories by aligning and maximizing the collective impact of all stakeholders and partners in economic development in the north.

At CanNor, we recognize that energy and mineral resource development is at this time the core economic driver of the north. Developing northern natural resources allows us to stimulate the economies of northern regions and Canada; improve employment, education and social development of aboriginals living in the north; support healthy communities; enhance and expand northern infrastructure; and generate new revenue for the government.

All the partners involved in the development of northern resources have the same goal in mind. I'm talking about the implementation and enforcement of an effective regulatory system that would enable all the stakeholders to participate in a suitable process. CanNor understands that reality and focuses its efforts on moving that goal forward.

CanNor's northern projects management office, or NPMO, is one component of a broader initiative to improve the regulatory environment in Canada's north. Established in May 2010, NPMO is a service organization designed to improve the review and approval process for development projects in the territories.

The office provides regulatory pathfinding for industry and coordination of federal departments in environmental assessments and permitting processes, works with federal departments to coordinate crown consultation with aboriginal groups, and will hold the official record of crown consultation. Further, NPMO project managers located in offices in the three territories work with federal regulators, the northern boards, and industry to identify and resolve project-specific issues.

Once the projects obtain regulatory approval and the building and production phase begins, the numerous northern communities and companies must meet a number of challenges so that they can fully participate in the projects and benefit from them. Among other things, the communities and companies must ensure that they have access to an educated and well-trained labour force that is ready to begin working. They must also be able to count on the companies' development programs and capital, and the community infrastructures required for supporting regional development projects.

Here, CanNor is working with clients, industry, and partners to address these challenges and take advantage of the opportunities offered by resource development projects. The goal is to align the interests and capacities of communities and northern businesses with project proponents by accessing CanNor and other government programs.

Coordination between the project review process, as facilitated by NPMO, and regional economic development, as assisted by CanNor's economic development programs, is important. For instance, over the last two years, CanNor program strategic investments in northern economic development have assisted resource exploration by investing $10.7 million towards geoscience research, effectively building a database of geoscience information that is used by industry to strategically guide investments and by governments to assess resource potential.

There are many other examples of CanNor programs that support economic readiness planning, capacity and skills development, and infrastructure projects in aboriginal and northern communities, such as: organizing community opportunities planning exercises and workshops, like the one offered to the Northwest Territories communities last year in advance of the Avalon rare earth metals mine; providing financial support to communities and aboriginal organizations to negotiate impact benefit agreements with resource development companies; providing financial support to the Aboriginal Pipeline Group, which has a one-third ownership interest in the Mackenzie Valley pipeline, with the goal of maximizing the long-term financial benefits to aboriginal peoples along the route; and

funding nautical infrastructure projects. Those projects would include moving forward the implementation of transportation networks and power generation and distribution projects, as well as broadband access projects.

So far, CanNor has been working with territorial and local partners on more than 30 infrastructure-related projects totalling over $25 million. That work has been done thanks to the Community Adjustment Fund, Canada's Economic Action Plan and the Strategic Investment in Northern Economic Development program.

Our forecast suggests there will be more than 20 northern research development projects over the next 10 years, resulting in more than $15 billion in capital investment. This excludes the Mackenzie gas pipeline. Project management and coordination by the northern projects management office will be important to move these projects through the regulatory systems. At the same time, CanNor's economic development programming will be helping aboriginal and northern businesses to take full advantage of these opportunities with the knowledge that labour and business throughout Canada are also important participants and beneficiaries in the north's economic development.

Canada is at an important time in the development of its northern territories. CanNor understands this and is working hard to fulfill its mandate of fostering economic development in the north by aligning federal efforts with those of stakeholders and partners to the collective benefit of northerners and all Canadians.

Thank you, Mr. Chair and members of the committee.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Bloom, for your presentation.

We go now to the Department of Indian Affairs and Northern Development. Janet King, you're giving the presentation, I understand, as assistant deputy minister, northern affairs organization.

[Janet King, Assistant Deputy Minister, Northern Affairs Organization, Department of Indian Affairs and Northern Development]

Thank you, Mr. Chair, for the opportunity to appear before the committee today.

I have with me today my colleague, Sara Filbee, assistant deputy minister of lands and economic development at Aboriginal Affairs and Northern Development, as well as--should more detailed information be required--Mimi Fortier, our director general of northern oil and gas, and Paula Isaak, director general of natural resources and environment.

My remarks today will focus on Aboriginal Affairs and Northern Development Canada's role in resource development in the north from the broad mandate of northern development to its regulatory responsibilities.

Resource development in Canada's north is important to northerners and Canadians. Last week, I attended a conference in Edmonton on the future of Canada's north. Many of the speakers talked about the importance of responsible resource development.

Through the Department of Indian Affairs and Northern Development Act, the Minister of Aboriginal Affairs and Northern Development Canada is responsible for the economic and political development of the north. More specifically, the minister is directly responsible for resource management, including lands, waters, minerals, and oil and gas, both in the NWT and in Nunavut, in the same manner as provincial governments in the south, whereas in the Yukon, the focus is on the broader development context. In the offshore, jurisdiction remains with the federal government throughout the north.

AANDC furthers the political and regional economic development in the north in a number of ways, including the negotiation and implementation of land claims and self-government agreements and the devolution of responsibilities to territorial governments. Northern governments have taken on greater responsibility over the past few decades, assuming province-like responsibilities that were previously held by the federal government. This includes the devolution of land and resource management in the Yukon in 2003. In January of this year, Canada and the Government of the Northwest Territories signed an agreement in principle on the devolution of land and resource management in the NWT. Devolution activities contribute to the development of the region by moving the responsibility for decision-making closer to the people who are most affected by the decision.

Natural resource development has played an integral role in opening up the north, from the gold rush in the Yukon, petroleum exploration in the Mackenzie Valley, to the discovery of diamonds in present day Northwest Territories and Nunavut.

The Arctic region is estimated to contain one-fifth of the world's remaining oil and gas resources, making Canada's north a potential large future energy supplier. It is the world's fourth-largest producer of diamonds by volume and third by value. There continues to be offshore interest in oil and gas, with industry poised to make major investments in the Beaufort Sea with commitments to spend $2 billion for the drilling of exploration wells in the Beaufort offshore.

The Minister of Aboriginal Affairs and Northern Development Canada exercises his responsibilities in resource management in two ways: firstly, through the issuance of rights for land, minerals, gravel, and oil and gas; and secondly, through his policy development and decision making in the regulatory process.

The northern regulatory regimes were created to ensure responsible resource development in a remote region while providing for environmental protection. These principles are embodied in the various comprehensive land claim agreements across the north, and in turn are reflected in the enabling pieces of legislation and regulations that underpin the regulatory regimes in all three territories.

Currently the land claim agreements outline the required legislative provisions, and AANDC works very closely with aboriginal groups to ensure that the spirit and intent of the comprehensive land claims agreements are reflected in the legislation.

Each northern territory has its own resource management regime depending on their political development. In the Yukon, for example, the administration and control of lands and resources was transferred to the Government of Yukon on April 1, 2003, pursuant to the Yukon Northern Affairs Program Devolution Transfer Agreement. Territorial legislation was passed to regulate the transferred responsibilities. Of course, in Yukon as in the other two territories, there are still many other federal regulatory requirements that apply to fisheries, navigable waters and explosives, among other areas.

However, Yukon's environmental assessment legislation continues to be a federal law. I am talking about the Yukon Environmental and Socio-economic Assessment Act.

In the Northwest Territories there are currently four settled land claim agreements: the Inuvialuit Final Agreement, the Gwich'in Comprehensive Agreement, the Sahtu Dene and Metis Final Land Claim, and the Tlicho Final Agreement. The remaining portion of the NWT is still involved in ongoing negotiations. This creates some significant differences in the regulatory picture. For instance, due to differences in land claim agreements, the Mackenzie Valley Resource Management Act applies in most of the NWT, while the Canadian Environmental Assessment Act applies in the most northerly region, the Inuvialuit settlement region.

Over the years concerns have been raised by various stakeholders regarding the functioning of the regulatory regime in the NWT, which led my department to undertake an independent review of the issues and subsequently release the McCrank report in 2008. Consequently, the department has taken steps to address the challenges of the regulatory regime in the NWT and the north with the establishment of the action plan to improve northern regulatory regimes, a $25 million investment over three years.

The action plan focuses on three key initiatives: to develop and amend legislation and regulations to complete and improve the regulatory system in the north, to fully establish environmental monitoring programs in the NWT and Nunavut, and to ensure a strong aboriginal voice.

Nunavut has a single land claim agreement between the Inuit of Nunavut and Canada signed in 1993. The agreement establishes the regulatory regime for project development and the establishment of five boards to manage these projects. Those boards deal with the following five areas: land use planning, environmental assessment, water rights issuance, surface rights disputes and wildlife management. To date, the process has been working well while the federal government continues to develop the regulatory regime. In fact, we hope to see the new Nunavut Project and Planning Assessment Act, which is Canada's final outstanding commitment in the Nunavut land claim agreement, re-introduced in Parliament as soon as possible.

Along with responsibilities for resource management, the department also has a very strong commitment to the environment and sustainable development. Some of our recent focus has been on environmental monitoring and Arctic science.

A key element of the action plan to improve northern regulatory regimes is the implementation of two community-based environmental monitoring programs: the cumulative impact monitoring program in the NWT and the Nunavut general monitoring program in Nunavut. They aim to achieve excellence in environmental management and stewardship through effective monitoring and assessment of cumulative impacts.

Our department's commitment to cumulative effects monitoring and assessment is not limited to onshore. Last summer our minister announced the Beaufort regional environmental assessment initiative, with funding of $28.8 million over five years. This is a multi-stakeholder initiative including grants and private sector funding to sponsor regional, environmental, and socio-economic research that will gather new information vital to the future management of the Beaufort Sea.

There is also exciting work in the science and environmental monitoring front in the high Arctic through the development of the Canadian high Arctic research station. This new station, to be located in Cambridge Bay, will be a world-class, year-round, multidisciplinary facility on the cutting edge of environmental monitoring and research issues. Four key priority areas have been identified, with one focused on resource development to ensure that development is economically and environmentally sound and promotes social development.

To support the government's commitment to building a world-class high Arctic research station, Canada also invested $85 million to the environmental action plan through the Arctic research infrastructure fund. This investment will provide the opportunity to ensure that a robust network of infrastructure is in place.

In support of international Arctic science, Canada has played a significant role in International Polar Year, which started in 2007-2008 and will be wrapping up at a final conference entitled “From Knowledge to Action”. The conference will be held in Montreal, Quebec, in April 2012. International Polar Year is the largest-ever program of multi-disciplinary research focused on the Arctic and Antarctic regions.

I will now briefly discuss our responsibilities with respect to resource development on reserve, essentially south of 60°. My colleague, Sara Filbee, is responsible for this area.

South of the 60th parallel, Aboriginal Affairs and Northern Development Canada has a mandate to manage the legal obligations of the Crown by enforcing the Indian Act, the Indian Mining Regulations and the Indian Timber Regulations.

There is considerable mineral potential on reserve lands. According to the last mineral potential inventory that was produced in 1991, about 50% of the 3,000 Indian reserves have a fair to high metallic or non-metallic mineral potential. Diamond, gypsum, graphite, coal, potash, uranium, and gold occurrences are promising on-reserve prospects.

Most of the mining activities on reserve are related to sand and gravel extraction. However, there is interest in other metallic and non-metallic mineral deposits.

In addition, the Crown has judiciary and statutory obligations related to the management of oil and gas resources on first nations lands. Indian Oil and Gas Canada, a special operating agency, manages those resources on the Crown's behalf.

That agency handles the oil and gas resources of some fifty first nations with oil and gas agreements. All funds collected on behalf of first nations are placed in their trust accounts. The agency also helps first nations manage and control their oil and gas resources.

As I have briefly outlined, AAND has a role in northern resource development, from political evolution through to devolution and land claims, and we retain responsibility for lands and waters, including improving the environmental assessment regimes. I have also outlined the department's activities around increasing our knowledge of the Arctic environment, with the aim of protecting and ensuring sustainable Arctic ecosystems.

Thank you for your time today, and I look forward to our discussion.

[The Chair, Conservative, Leon Benoit]

Thank you very much for your presentation, Ms. King.

Before we go to questions and comments on that section, perhaps I could get some clarification from you. You made a comment to the effect that one-fifth of the world's known oil and gas reserves are believed to be in the north. Could you clarify what exactly the north is? Is it the Canadian Arctic, is it the Arctic belonging to all countries that have a share in the Arctic, or does it go beyond the Arctic to include the oil sands, for example?

[Janet King]

It does refer specifically to the Arctic and it does refer to the full Arctic area.

[The Chair, Conservative, Leon Benoit]

Okay, not only the Canadian Arctic.

[Janet King]

Not only the Canadian Arctic, the offshore Arctic.

[The Chair, Conservative, Leon Benoit]

Thank you very much.

We go now to the first round of questioning, starting with Mr. Calkins, and then we'll go to Mr. Bevington and then Mr. McGuinty.

Mr. Calkins, for up to seven minutes.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thank you, Mr. Chair. This is quite interesting.

I want to start off with a few questions. I have a habit of asking about seven questions up front and then giving folks the time to answer them. I only have one question this morning, with about 14 parts, so we'll get at it right now.

Mr. Bloom, I really appreciated your testimony.

You talked about being stood up in August of 2009. Can you tell me what your annual budget is? Where did you get your employees? Are they new hires, or were you able to bring employees in from existing departments? It sounds to me like we've created an economic development agency to basically facilitate the private sector in dealing with the Government of Canada, so we've created more government to help the private sector deal with more government. I'm just wondering if I got that right.

I'm not trying to be cynical; I think it's actually good if we have a coordinating agency. It sounds to me like your agency is a portal for coordinating everything to get things moving.

But it seems to me that those kinds of things should have existed in previous departments anyway. I'm wondering how the evolution of that came about, and how you got your staff, where they came from, and if they have experience. Can you tell us what their experience might be so they can deal with the north? Most of the issues in the north are fairly complicated, so I think we're talking about some fairly good expertise there.

Can you give us a little more clarification on where $15 billion in investment is going to go, what kinds of projects we can expect to see, and what kind of response from the government will be needed in order to facilitate that investment?

And because you were so recently stood up, in 2009, I'm going to ask if you were part of the red tape reduction process. It would seem to me that the agency you run would be the perfect agency to ask questions about reducing red tape so we can get through the process of government regulation and getting projects off the ground.

Ms. King, my question for you is fairly straightforward. I'm curious about how many outstanding land claim agreements we have across the territories.

The most notice I took of this was on the devolution of responsibilities. As you know, the transfer of natural resources acts of 1930 gave the provinces jurisdiction over their own natural resources. In the north, the three various territories seem to have an ad hoc approach to this.

We've got devolution of environmental responsibility. Is that something your department is looking to get off the books, per se? Are you looking for further devolution on the environmental side of things to the territories?

The question constantly lingering in my mind is the one dealing with duty to consult and some of the issues raised by duty to consult. Can you explain the differences of duty to consult within an established land claim agreement and one where there is a land claim being made and there is no agreement in place? What are the differences, and what are some of the challenges facing the private sector and governments in moving forward with projects?

Hopefully there's enough time to answer.

[The Chair, Conservative, Leon Benoit]

They have four minutes to answer, Mr. Calkins. There are a lot of big questions there.

I will cut you off after seven minutes, which is four minutes more. But later on, if someone else wants to ask those questions, you can certainly pursue them.

Go ahead, please, Mr. Bloom, to start.

[Mitch Bloom]

Yes. Thank you for the questions. Indeed, the organization was established a little over two years ago, in August 2009. Its current annual budget is $44 million. That's $30 million of what I would call program funding. Those are the contribution programs that we operate, some of which I made reference to earlier. There is about $14.5 million that we use to cover off our overall operating costs across the three territories we operate in.

It was an extremely good question on the hires, because you are right, it is technical work and you do need to understand and know the north. CanNor's core, if I can call it that, actually came from the Department of Indian Affairs and Northern Development. Those people and those programs came over and provided us with a solid base of understanding of what was going on. To complement that, we did things like establishing a northern projects management office. Don James, who is sitting next to me, will give you a good example of the small but deep technical expertise we have to bear on projects like that. You are right that you have to understand the regulatory process. You have to understand how the private sector itself understands major project development in order to bring your value-added to the process.

There is no question about it, we have a fairly seasoned team on the ground, and it's growing and maturing as we go through time. The bringing together of that aspect that I talked about whereby we do both the pathfinding and supporting of the major projects with the on-the-ground community economic development is definitely something that is unique to CanNor in its creation. That's the objective: to ensure the major development does have the impact and is spread throughout communities in the north.

As I said, in that respect it is important that we have that kind of team in place. You asked about the $15 billion in investment and talked about the response from government. I am sitting here as part of that response from government. The government felt it was extremely important that it have that kind of focal point. I attended the same session that Janet did last week in Edmonton, which was quite remarkable in terms of the breadth of organizations and individuals attending it. They said what you said, actually, that it's about time and it's a good thing there is an organization completely dedicated—because INAC did have some of these activities before that we do right now—and very much focused.

I am not a regulator. Our job is to make sure the regulators are doing their jobs and to make sure industry understands that to the best extent possible. Is it really adding value to the process? I can only tell you what major corporations have told me when they come into the office or speak to me at the large conferences. They say they love the fact that there is an organization out there that they can turn to that will provide them with clear guidance in that regard.

I will make one more comment on red tape reduction. It just flows from the previous comment on the question you posed. It is our job north of 60° to try to make sure we are keeping the entire system of federal government focused on regulatory streamlining and simplification. Again, I am not encumbered as the regulator the way my colleagues are, so yes, we get to push them and try to make sure we are maximizing that to the collective benefit of Canadians, understanding at the end of the day that it is running through a process that is legislatively established.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Calkins, for the questions.

And thank you, Mr. Bloom, for your concise answers.

We will go to Mr. Bevington for up to seven minutes. Go ahead, please.

[Dennis Bevington, NDP, Western Arctic, NT]

Thank you, Mr. Chair.

I am very pleased to be here. I know the issue of CanNor actually came to my attention much before the events of two weeks ago, with various companies coming to me asking why there were such delays in the final approval of their funding for the projects they were working on. Information came out that only the minister right now can make financial decisions with CanNor, while previously the minister was only involved when decisions were less than $250,000. Is that the case today?

[Mitch Bloom]

The answer to your question is yes. Our minister does make decisions on the programs and funding we provide to communities and projects.

[Dennis Bevington, NDP, Western Arctic, NT]

How low does this go, with the financial decision-making right now?

[Mitch Bloom]

The minister makes decisions on all the projects based on recommendations she gets from the officials.

[Dennis Bevington, NDP, Western Arctic, NT]

Does she make decisions on the ordinary operation of the offices?

[Mitch Bloom]

No, I was speaking to the project proposals that come in through our contributions program, the $30 million programs I made reference to earlier.

[Dennis Bevington, NDP, Western Arctic, NT]

What impact has this made on the decision-making process in project approval? What is the average length of time right now for a project to be approved through the minister's office?

[Mitch Bloom]

That's a good question. I can't honestly answer you regarding how long it takes, but I can try to respond to the “what has it done to the process” question. It's a very rigorous process because it has to get through several levels of the organization prior to approval by the minister, which ensures we are providing our best advice once and at that point the minister decides.