Evidence of meeting #51 for Natural Resources in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was pipelines.
A recording is available from Parliament.
4:45 p.m.
Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
It's not done by Natural Resources.
They're an independent regulatory body, so we don't get to encourage them, tell them, or ask them anything beyond what technical considerations they take into account. They decide what they look at and how they look at it, doing it in that quasi-judicial fashion and then determining the conditions under which the pipeline operates.
4:45 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you, Ms. Perkins.
We'll go now to Monsieur Caron, and possibly Ms. Charlton, if Monsieur Caron is finished before five minutes, and then Mr. Trost.
4:45 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Could you tell me when I'm halfway through my time?
4:45 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I would like to go back to what Ms. Charlton mentioned about the lack of precision and the fact that there are a lot of conditional points in the provisions.
I would like more specifically to talk about the pipelines claims tribunal which would be set up by the National Energy Board in the case of a spill, for instance. Mr. Labonté, can you tell me specifically what the criteria would be to justify setting up such a tribunal? In what circumstances would such a tribunal be created? Would it be following a complaint, the launching of legal action, or an investigation?
Can you give us more information about how the decision would be made to establish a tribunal? Would the creation of a tribunal absolutely have to be preceded by the start of an investigation? From the perspective of public interest, what would the difference be between having a case heard before a National Energy Board administrative tribunal and having it heard by a court of justice? Would this make a difference to the guilty businesses?
I am asking all of these questions to find out what the conditions would be that would lead to the creation of such a tribunal.
4:45 p.m.
Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
Thank you for this very important question.
The act provides for the ability of the Governor in Council to establish a tribunal to adjudicate claims for damages. The first condition that would need to be met would be that the company responsible that operates the pipeline would be designated as unwilling or unable to respond. The first point would be that there's a situation in which a company is not responding in an appropriate way. That designation is made and then, pending the circumstances as to whether there are damages that may need adjudication, a tribunal would be established.
It's difficult to predict and to say in advance that this circumstance leads to that creation of a tribunal, but it would provide citizens, companies, and communities that might be impacted an ability to have a hearing and a fair representation of their claims for damages. It would also provide an independent tribunal the ability to evaluate those claims, adjudicate them, and provide an award for damages outside of the judicial system.
The bill does not provide, though, that one may not choose to use a judicial system should they wish. It's not one or the other. One can choose to continue through the judicial system should they wish. The establishment of the tribunal is in the circumstances when the government would need such a system because of damages that may be present in an incident.
4:45 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you.
Ms. Charlton, you have about two minutes left, two and a bit.
4:45 p.m.
NDP
Chris Charlton NDP Hamilton Mountain, ON
Thank you very much. I only need about half a minute.
I'd like to follow up on the provisions of the bill that, in essence, put in effect a three-year statute of limitations. I wonder why you chose the three-year limit. I'm particularly thinking about things like health effects down the road. Some of those, I imagine, wouldn't necessarily manifest themselves particularly quickly.
I wonder whether you could speak to that, where the three-year limit came from.
4:50 p.m.
Legal Counsel, Department of Natural Resources
Thank you very much for that question.
I think establishing a statutory time like that is a policy question that's been directed to the minister. This tries to follow some of the federal legislation, tries to track it.
4:50 p.m.
NDP
Chris Charlton NDP Hamilton Mountain, ON
Fair enough, thank you.
You're not aware of other regimes that have a three-year limit.
4:50 p.m.
Legal Counsel, Department of Natural Resources
There are many different regimes in Canada, and they all have different time limits.
4:50 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I would like to follow up on Ms. Charlton's question. I know the question should probably be put to the minister, but I'm going to ask it anyway.
There is a three-year limitation period. However, certain consequences may not become apparent until much later than that. I'm thinking, for instance, of health-related consequences. For instance, carcinogenic substances may have adverse effects on health. But certain cancers may only appear 10, 15 or 20 years later.
Are there any provisions in the bill regarding health issues that could be caused by a spill?
4:50 p.m.
Legal Counsel, Department of Natural Resources
There is nothing that addresses that aspect directly. However, if someone believed that he had been affected by a spill, he could go before ordinary courts; that recourse is always possible. It has not been eliminated.
4:50 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
So, the limitation only applies to the administrative tribunal, to a complaint addressed to the tribunal created by the National Energy Board, the NEB, under the legislation; but the limit does not apply to any civil proceedings.
4:50 p.m.
Legal Counsel, Department of Natural Resources
That could be the case, but in civil law, there are several points to be considered.
4:50 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
In my seven-minute round I asked a two-part question, one part about bankruptcy and the pipeline being abandoned, but the second part of my question was about the competitive costs that are possible with these changes.
Has there been any competitive analysis of how much this would affect the companies? Some 1.3 billion barrels a year in Canada and a few cents on the dollar had been mentioned. Could you flesh that out a little bit more? Comparatively, what's the analysis, the business case, of what this might cost even on a per barrel basis or in total, or preferably both? Do you have any idea?
4:50 p.m.
Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
I'd say we have not included the analysis at the degree of precision that would allow us to say per barrel. The reason for that is the circumstances are quite varied. Different companies today operate with different insurance provisions. Our discussion with industry has had a wide range of answers. Some companies carry already in the area of several hundred million, nearly a billion dollars' worth of insurance. Some have less insurance, but the range would be that they have different choices about how they might carry that liability. Some self-insure. Some have various insurance policies.
The market for how those policies—
4:50 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Does this really vary depending on the company? TransGas might have a different cost from Enbridge, and of course, no one gives away their competitive information all the time.
4:50 p.m.
Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
That is correct, exactly. We did meet, consult, work with, and had queries with some of the different companies in the insurance industry, with some of the financial industry in the oil and gas sector, and asked them about the circumstances without explaining what we were proposing, just in the purview of—
4:50 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Would you say, though, that the cost was significant, or would it be fairly minor? As a layperson not involved in their finance and so forth, my guess is it would be fairly minor, but I honestly would just be guessing.
4:50 p.m.
Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
From what we can understand, what we have here is manageable in the business costs of the pipeline industry as we see them. There will be some that have increased costs and some that have very similar costs to what they have today.
The part that we're a little more focused on right now is the smaller companies that won't fall under the billion-dollar, 250,000 barrel element. That's where the work on the regulations and the pre-publishing of the regulations will allow us to engage a little bit more fully on what the circumstances are and what the financial implications are for those companies, and the government will then be in a position to establish what the class is and what the amount is that's appropriate.
4:50 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Okay, I'll follow up on something you were referring to earlier on this. In looking at the financial requirements portion of the bill, it mentions that the NEB may consider companies' financial statements, letters of credit, bonds, insurance, etc.
Remembering back to one of the iterations when I was on committee when we did nuclear liability, they said insurance was at times difficult to get. They had a very specialized market.
Perhaps you could explain a little bit about the flexibility, the options that will be looked at, when the board will say that you have enough money and you just don't need an insurance policy, and it runs through a variety of things. Again, as someone who is not a finance specialist, what are we looking at here? Are they going to say, “Okay, if they need it, these guys can tap a billion dollars fairly quickly”?