Natural Resources Committee on March 24th, 2015

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Crockatt.

We'll go now to the Parliamentary Secretary to the Minister of Natural Resources, Ms. Block.

Go ahead, please, for up to five minutes.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much, Mr. Chair.

I join my colleagues in welcoming you here today. I always appreciate hearing the testimony of our officials and appreciate, additionally, the briefing that we had a number of weeks ago on this bill.

A very relevant and current topic is proposed pipelines such as Keystone XL that have already been approved but are not yet built. I'm wondering how this act would affect this pipeline that's already been approved but is not yet built?

[Terence Hubbard, Director General, Petroleum Resources Branch, Energy Sector, Department of Natural Resources]

The proposed pipeline safety act will apply to both existing and future proposed pipeline projects. While the NEB has already reviewed the proposed Keystone XL pipeline and has recommended a number of terms and conditions which the cabinet has adopted and has put in place regarding the construction of the pipeline, the additional requirements, including the absolute liability requirements, will apply to these pipelines that are already approved or already constructed and in the ground.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Keystone XL would operate in more than one province, and I understand that the act modernizes and harmonizes provincial regimes. Could you describe for us in more detail what has been done and why it is important in terms of damage prevention?

[Jeff Labonté]

I'll start and I'll lean on my colleague as well to join in this one.

The provision in the act related to harmonizing damage prevention regimes is really a preventative aspect of the regulatory framework that provides the legal frame for landowners and people who might be doing things around where pipelines exist and how they might operate. Those people range from a municipal works department that might have to do some road work around a pipeline to a farmer or a landowner who might have a pipeline right-of-way in part of their property area. In some instances the most effective way of developing pipelines is to have a right-of-way containing multiple pipelines, some of which might be federal and some of which might be provincial. Certainly for owners of the pipelines as well as owners of the land, each jurisdiction has its own rules as to what is acceptable and what's permissible to avoid creating and having damages. Some of those have to do with things that are as simple as the depth of the soil. There was a question earlier about what activities can occur at what depth to ensure they don't occur at the same level at which a pipeline might be found. Some have to do with the area in which an activity might take place, so the person who wants to do the activity has to notify the pipeline company so the pipeline company can verify which activities can occur in which zone. These are referred to as safety zones.

All of these elements are included in the damage prevention regulatory framework. Our proposal in the law is to work more closely with the provinces to harmonize the degree to which these damage prevention activities are similar and compatible such that there is less opportunity for confusion or less opportunity for difference between the regimes federally and provincially. Federally, we work to ensure that things are as safe as possible and work together, but the reality of having many different provincial jurisdictions is that the jurisdictions are different. We want to be able to work at the level of the board and at the level of the regulatory framework to ensure that the standards are as compatible as possible and that we can provide as much clarity as possible to ensure that the damage prevention regime is consistent with the purposes of the act and at the same time doesn't create any potential risks.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

I understand that this legislation is part of our government's ongoing commitment to safety and environmental protection through its plan for responsible resource development. I know that you referenced that plan in the summary of your data. You also spoke to the current safety record of federally regulated pipelines. I'm wondering if you would tell us how this particular piece of legislation fits into a responsible resource development plan.

[Jeff Labonté]

I'll start and then I'll have my colleague join in, because he actually worked on the RRD initially.

The responsible resource development plan is a series of efforts under way to ensure that there are adequate and appropriate world-class safety regimes around the regulatory systems for our resource development activities, whether those are offshore oil and gas development and the Energy Safety and Security Act, nuclear energy development, whether they're the pipeline safety act here, the marine activities around my colleagues from the Ministry of Transport, or the recent amendments and proposals being put forward on rail related to rail transportation.

From a broad perspective, resource development starts with the regulatory framework around the projects, around the investment frame around those projects, the timelines related to those, the community engagement, the aboriginal consultations that are meaningful and appropriate for the circumstances, and then the environmental protection and the consideration of the environmental assessment. On a broad scale, if you look at those activities, and we have one in which we establish collectively from the federal government perspective as strong a regime as possible for resource development, the next step is to ensure that our regulatory system for moving those resources and handling those resources is equally world-class and responsive, and appropriate for the circumstances.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Block.

We're going to have to wait for the rest of the response, if you want to fit that in somewhere.

Ms. Duncan, for up to five minutes, please.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

There is a lot in this bill, and frankly I think we could use you here for several days. There are a lot of detailed questions to ask as well, but I'm going to try to combine them. I think when we have you back here for clause-by-clause study, it's going to take us a lot more than one meeting because of that.

One of the things that has puzzled me and a lot of the people who reviewed this bill is the government starts out with the proposed section 48.11 strident principle, the polluter pays principle, is now going to be applied to pipelines, yet the whole rest of that part of the bill sets about diminishing liability. We're left very confused as to what actually the government is intending to set forth. It looks pretty clear by the provisions of the bill that, in fact, there is no intention to have absolute liability. One example is the decision to override the Fisheries Act, which of course imposes absolute liability.

We raise other questions, as well as what my colleague from the Liberal Party raised, essentially, on how the other part of the bill then shifts liability to the public. Related to that, I'm left with a number of questions, and that's mainly because, as you go through the bill, a lot of information about how this bill is going to be applied is going to be by yet-to-be promulgated regulations. That applies in almost every part of the bill, including the determination of the maximum liability, which is in fact not a billion dollars. It could be an amount to be set by regulations.

My first question right off the top is, are you in the process right now of promulgating all these regulations under the bill? Will those be reviewed by the broader public?

[Jeff Labonté]

Thank you for the questions.

I'll try my best to answer a number of them, and stop me and tell me which ones I miss, because I was trying to frame that.

On proposed section 48.11, the polluter pays principle, it's just good practice from a jurisprudence perspective to draft in the polluter pays principle, which exists in common law. I'm not a lawyer, but I think that principle has existed for some time and the act was originally written in the 1950s, at which point the polluter pays principle wouldn't have been expressed in statute. My colleague from Justice can certainly elaborate further.

With respect to the comment about the Fisheries Act, I believe that we are referencing the section of the Fisheries Act that has absolute liability for commercial fisherpersons, persons who are involved in commercial activities related to fisheries, which would be a fairly defined and unique class of citizens, if you will. I don't make my living from harvesting fish, so I would not be eligible for unlimited absolute liability under the Fisheries Act, whereas under the pipeline safety act I would, if harmed, have the ability to to recover up to a billion dollars in damages.

Should the act pass, it provides Canadians protection broadly. However, in the event that there was an incident in a theoretical context in which the Fisheries Act may be implicated, I believe, and my Justice colleague can comment on this, it's the decision of the federal crown prosecutor to decide which act they would use to prosecute or to pursue a party, should they be harmed.

Sorry, I believe there's a question there of making sure that there wasn't overlap and double counting, if you will, or double—

[Linda Duncan, NDP, Edmonton Strathcona, AB]

My question doesn't deal with criminal liability. I'm talking about civil liability.

[Jeff Labonté]

Correct.

Go ahead, Joseph.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

It has nothing to do with prosecution.

[The Chair, Conservative, Leon Benoit]

Go ahead, Mr. McHattie.

[Joseph McHattie]

Mr. Chair, the question here is about the diminishing of liability by not allowing recovery under the Fisheries Act. What this bill proposes to do is that if there is any loss caused by a pipeline spill, and one of those losses is damage to a fishery, the recovery must be done under the NEB Act.

That's the main point and under the NEB Act you would have an absolute liability up to a billion dollars.

The act also provides that the company's also liable for any amount above that. It's just that there's no backstop.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thanks.

My bigger question is about where we are with the regulations, including that provision about the billion dollars or what's set by regs.

[Jeff Labonté]

The act provides the ceiling of a billion dollars for a major oil pipeline of at least 250,000 barrels per day, if it's individually or an aggregate, and then provides a regulation-making authority.

We do not have the regulation-making authority today to establish the classes until the bill passes the House.

We have begun our work to look at the regulatory aspect of how we would establish classes beneath the 250,000 barrels a day of oil and other types of energy commodities. Roughly speaking, we would think through having a class of pipelines for major oil pipelines, which is in the act, perhaps oil pipelines, more broadly gas pipelines, and then other commodities regulated by the National Energy Board.

The development of those regulations will follow the regular process of discussions and analysis with communities and experts who have an ability to contribute. There would be a a pre-publication of those regulations that would provide for public comment, public review, and the duty on the government's part to respond to those comments and questions in writing upon final publication.

All of the regulations that are referenced in here beneath the billion-dollar aspect would be made public and would have an opportunity for public engagement.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thanks.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Duncan.

We go now to the next three in the five minute round.

Mr. Leef, followed by Ms. Charlton, and then Ms. Perkins.

Go ahead, Mr. Leef, for up to five minutes.

[Ryan Leef, Conservative, Yukon, YT]

My apologies if we covered this, but I don't think we did.

I see the act effectively makes companies liable for contractors as well and not just actions of their own. How is that different from what's currently in place?

[Jeff Labonté]

Thank you for question.

Mr. Chair, I think this simply clarifies the existing law. In ordinary civil law an agent can be liable to the principle for any of their misdeeds. This is simply a way of clarifying that existing law.

[Joseph McHattie]

The policy principle at play here would be that the company that's responsible for the pipeline certificate, the operator of the pipeline, would be responsible for any contractors or any parties working for them to avoid the situation of “you were working for me, so I'm not responsible for your actions, so therefore you're the person who's responsible”.

It attempts to clarify that there's no ambiguity on this particular point even though that already exists in elements of common law.

[Ryan Leef, Conservative, Yukon, YT]

Right. Perfect.

That provides a fair bit more clarity for the Canadian public. They know they're not going to get caught in a position of “your fault, not our fault” and they can sort out their own internal agreement on how they establish assurances and contracting terms, but at the end of the day it's the pipeline operator that's ultimately responsible.

[Jeff Labonté]

Correct.

It extends a step further even if you weren't a contractor to the pipeline company.

If you were a construction worker working near a pipeline and damaged the pipeline and caused damages, the pipeline company is responsible even though you weren't working for the pipeline company and damaged the pipeline and caused harm and costs. The pipeline company would still be under absolute liability and would have to clean up and pay for it.

They could then, after the fact, pursue me as the construction company worker to recover those costs that they might have incurred, but that will happen outside of the NEB Act and under general tort law or the appropriate legal frame.

[Ryan Leef, Conservative, Yukon, YT]

That's an interesting piece. It's not just that they're financially responsible with that absolute liability, but they're also responsible for the cleanup provisions that are embedded in other sections of this bill.