Natural Resources Committee on March 24th, 2015

[Jeff Labonté]

Correct.

[Ryan Leef, Conservative, Yukon, YT]

Ms. Block talked a little bit about some of the potential pipelines. When we're crossing provincial jurisdictions, there's going to be some harmonization, obviously, with provincial regimes that this takes into account.

How complex is that at this point to achieve? Obviously, it's self-evident, but how important is it that we standardize those regimes with pipelines that are moving across provincial jurisdictions?

[Jeff Labonté]

It's fairly complex. It's more complicated than it seems. The act provides the entry into a broader conversation that will take some time to work through with different jurisdictions. There are nine different jurisdictions that regulate pipelines in Canada. There is quite a bit of discussion to have with different jurisdictions, some of which are quite extraordinary and have phenomenally large numbers of pipelines, some of which have very few.

The degree to which we will work through the harmonization process will take some time and it will depend on a lot of hard work and analysis, and collaboration between federal and provincial jurisdictions.

[Ryan Leef, Conservative, Yukon, YT]

Have any of the provincial jurisdictions right now that have this unlimited liability and billion-dollar cap.... In effect, is this going to up some provincial regime's game and degrade others?

[Jeff Labonté]

Just to be clear, harmonization will be around damage prevention regulations, not around liability. What's proposed in the bill will only apply to federally regulated pipelines. Provincial pipelines have their own legal regime around their liability.

There are no provincial jurisdictions that have absolute liability and none that have a billion dollars.

[Ryan Leef, Conservative, Yukon, YT]

Is that largely because the federally regulated ones tend to be larger in scale, or is that just more coincidental about where they're transecting and where the product is moving?

[Jeff Labonté]

Roughly speaking, the federal pipelines tend to be larger, but my colleagues in Alberta and Saskatchewan might take issue with that. There are some pretty big provincial pipelines in Alberta and Saskatchewan.

It's really a function, typically, of how far and how large a network we're dealing with. It's not fair to say the big pipelines are federal and the little ones are provincial. That's not accurate. There are more pipelines in Alberta than there are federally. It depends on how one counts and what types of pipelines....The pipelines that go into your home are literally two inches wide and then there are pipelines that are 36 inches wide. There's quite a bit of variability.

[The Chair, Conservative, Leon Benoit]

Ms. Charlton, for five minutes.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you very much for being here today.

I think what Canadians want from us more than anything is just to ensure that we're developing our resources in a safe and secure way. We all share that goal around the table.

You know that Canadians' confidence in our system isn't exactly at an all-time high, particularly with respect to the transport through tankers, rail, and pipelines. I don't think any of them enjoy the majority support of Canadians. I know pipelines do a little better than tankers and rail, but we have a lot of work to do to get Canadians to feel secure about the way that we're developing and transporting our natural resources.

I notice in the deck you say that the bill strengthens Canada's world-class pipeline safety system by implementing new prevention measures.

I don't actually see very many prevention measures in this bill, save and except I suppose the reference to the polluter pay principle, which I suppose would have a deterrent effect on companies. Apart from deterrence, I wonder whether you could highlight for me what those robust prevention measures are that we find in this bill.

[Jeff Labonté]

Certainly, the bill provides a number of areas where its focus is on prevention.

For example, the bill provides clarified audit and inspection powers of the NEB, which is part of the monitoring and inspection areas in order to prevent incidents from occurring and trying to detect practices that may lead to incidents. That would be an example where we would see that.

Updating and looking at the damage prevention regulations.... We've been speaking a little bit about harmonizing safety zones and safety systems, and the methods in which different jurisdictions manage preventing damage to pipelines while they're in the ground and what happens around them. That would be a place where we would hope that the measures provided for—

[Chris Charlton, NDP, Hamilton Mountain, ON]

Sorry, that would be in the regulations, right?

As you said, we would hope that might happen, but there's nothing concrete in the bill that would tell me with certainty we have now done X.

[Jeff Labonté]

The bill provides us the ability to move forward with how we would do that. Today we can't so I would suggest that without the ability to move forward on how to move toward prevention and better prevention, it would allow for that. Certainly the other aspect around bringing greater clarity around sentencing and how we deal with incidents and how things occur are all in the ambit of our efforts, and certainly efforts in the bill attempt to ensure that pipeline companies do their very best and work to do their best.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Yes, but that's after the fact, right? I'm sorry, I don't mean to interrupt but we only have five minutes.

All those things in terms of sentences are after the fact. We're hoping that will act as a deterrent, but it's not necessarily an upfront measure that will enhance preventive measures.

Let me go on to a couple of other things. Forgive me for being perhaps a bit cynical about some of the provisions in the bill, because as you said in response to some of my colleagues' questions, the NEB can report that a company is unresponsive. The Governor in Council will consider whether to act. The tribunal may be established, and money may be recovered from the industry. That's a whole lot of maybes, and some of us who came to this place in a very trusting frame of mind I think have lost that trust over the last few years. That's through no fault of yours, but the bill does leave considerable vagueness.

One of the questions I have is that in determining the pipelines that will be impacted by these new provisions, you're dealing predominantly with volumetrics, right? You talk about 250,000 barrels per day. Those are the pipelines that will be covered. Why did you choose to concentrate only on volumetrics? Why not, for example, look at the goods that are being transported and the relative levels of risk that those goods may present?

[Jeff Labonté]

Thank you for the question. I think it's a good one.

Looking at the analytics, volumetrics is a fairly straightforward way of identifying where you would see the majority of the movement of energy goods. I think the risks associated with a particular product moving through a pipeline vary because pipelines move different products. If we choose to pick product X, Y, or Z, it could be that today they're moved on one pipeline and tomorrow they're moved on a different pipeline. I think associating it with the product is not necessarily a static activity versus the volumetric aspect, which provides a reasoned measure for how things work.

The data demonstrates that six pipeline companies who hold certificates move about 85% of the oil volume in the country and all would be covered under the billion-dollar condition.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Okay, that's more above—

[Jeff Labonté]

If you relate volume to the activity level the activity level is represented.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Volume and risk to me aren't necessarily synonymous. Anyway, we'll leave that for another time.

[The Chair, Conservative, Leon Benoit]

Ms. Charlton, your time is up.

Mr. Labonté, we've had two or three questioners ask about this issue of what's in the bill versus regulation. Is this bill really any different from the normal? Is there anything different about what's in the bill versus what's in regulation from other pieces of legislation that go before Parliament on a regular basis?

[Jeff Labonté]

No, it's not any different from most pieces of legislation that establish authorities to provide regulations. Generally speaking, without being entirely disingenuous to Parliament, legislation doesn't get changed very often, and it takes a great deal of activity and attention from parliamentarians, whereas the regulation- making function tends to be a little more responsive to changes that happen in time and over changes in society. Making regulations are equally applicable under the law and equally important, so in no way is the regulation-making function a denigration of an attempt to ensure pipelines are safe, or to ensure that certain things don't happen in a specific way.

Certainly, there's been a fair bit of comment about how the government may or may not choose to do things, and I respect the comment. I'd suggest that certainly in the regulation-making activity there's a fairly broad and extensive public consultation period. Any Canadian and any group or association has the ability to write in and certainly contribute in a public way to the regulation that's being proposed, and the government has an obligation and a duty to respond to that. I would expect we would do that for all the elements that are laid out in this bill.

[The Chair, Conservative, Leon Benoit]

Thank you very much. I wanted you to clear that up for the committee.

We'll go now to Ms. Perkins, for up to five minutes.

[Pat Perkins, Conservative, Whitby—Oshawa, ON]

Thanks to all of you for attending today and presenting. It always brings questions to mind, because it's not our core business. We know that the standards you folks expect are high. They have been met over the years. Your 99.99% success rate with our oil pipelines and gas pipelines is something that I think needs to be celebrated. I'm not sure how that compares to other jurisdictions throughout the world. I think it would be interesting to know that.

My concern is in terms of your role. Is your role to put in preventative strategies with respect to what you want the pipeline folks to follow? I've just gone through the whole Line 9 pipeline reversal, so I've heard a lot about a lot of things, including Kalamazoo as a comparator.

Is it under your jurisdiction to look at things like the aging of the pipelines, at what point they need to be replaced, and at what point they should be upgraded? Is there any specific requirement for shut-off valves near environmentally sensitive areas? Are those sorts of things all within your purview?

[Jeff Labonté]

Thanks for the questions and the comments. Those are exactly the kinds of things that we hear about on a regular basis.

The National Energy Board is the regulator that would establish, by looking at the evidence base, the circumstances, and the elements of a pipeline, where the shut-off valves should be and what the conditions of the shut-off valves might be related to the environment, the habitat, or the land base where you find the pipeline.

Obviously, they do risk-based auditing and inspections, so older pipelines get more attention, as do pipelines that have had incidents previously and pipelines that might be around areas that are more sensitive. You'll perhaps be able to ask them when they're here about some of those things more definitively, but certainly from our perspective, setting the legal frame that allows them to do that is what we're responsible for.

[Pat Perkins, Conservative, Whitby—Oshawa, ON]

Okay. I'm just trying to figure it out. You're Natural Resources and there's the National Energy Board. Who has what authority and where does the communication between you happen?

I'm trying to understand this. Do you say to them that perhaps it would be a good idea and we could enhance the system if we were to ensure that there were shut-off valves near waterways and environmentally sensitive areas and have them consider that as part of their process? I don't know how your system works. Do you get to do that sort of thing?

[Terence Hubbard]

It is an iterative process. Natural Resources Canada does establish the policy framework under which the National Energy Board operates. As part of that, there's an ongoing dialogue between the regulator and us in Ottawa in terms of that framework and the opportunities to improve that framework going forward.

Obviously, we rely heavily upon the expertise of the NEB in terms of technical matters and how we can strengthen technical aspects of that system going forward. There are a number of different tools with which that can be done: through working through the development of new standards, through new regulations, through legislative changes, or through the NEB's technical review of pipeline matters.

The example of valves in terms of environmentally sensitive areas is a very technical question and issue. The NEB probably could spend a lot of time trying to define the considerations that go into those valve placements, but it does play into their overall safety mandate in determining exactly where those valves should be located in terms of environmental protection and also in determining the risks of creating additional weak spots in the pipeline going forward that could create additional risks of a spill.

There are a bunch of considerations in there, and we work iteratively in terms of ongoing conversation.

[Pat Perkins, Conservative, Whitby—Oshawa, ON]

Are the National Energy Board folks the folks who actually have the public hearings and meetings with groups? Is it not done by Natural Resources?