Natural Resources Committee on March 24th, 2015

[Jeff Labonté]

Thanks for the question. You've laid it out quite clearly.

When the board currently evaluates a project and a proposal for a pipeline and its operation, it will look at the financial viability of the company and its ability to construct, build, and operate the pipeline. Part of that is their asset base, their balance sheet, what kind of insurance they have, what their credit rating is, what kinds of bonds they might have, and all of the elements, and so we're providing for here that the board will have the authority and the ability to establish and understand—

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I'm sorry to interrupt again, but with our tight time, you're looking for a broad judgment that the board will make.

[Jeff Labonté]

Correct, and we're giving the board the ability to recognize different forms of financial security, because different companies will use different ways, and we don't want to prescribe that they must have insurance and it's the only thing that will be acceptable.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I have 10 seconds, Mr. Chair. I'll leave it at that.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Trost.

We'll start the third round with Ms. Crockatt, followed by Ms. Duncan and Ms. Freeland.

Go ahead, please, Ms. Crockatt.

[Joan Crockatt, Conservative, Calgary Centre, AB]

I want to continue on this path so that I can understand it well. I'm looking at an ERCB, Energy Resources Conservation Board, report in Alberta, which points out that every gas station, power station, sawmill, mine, or factory usually contaminates to some degree the land it sits on. You've stated that there are no regulations similar to this provincially and that we have 6.7 spills per year.

I'd like to know whether you have considered—especially in the low price environment that the industry is in now, and I realize it wasn't that way when this legislation was written—whether this legislation might go farther than it should.

[Jeff Labonté]

We're here talking to you and Parliament is debating the bill, so it's an open question. I think that irrespective of the price environment that the oil and gas industry receives for the product that they're offering to the market, there's an expectation that safety is a priority, that we have safe systems, and that companies are prepared for what costs might come from moving those goods and ensuring that we have adequate prevention, preparedness, and liability regimes to protect those.

Certainly in lower price environments it probably has a higher implication. In higher price environments it might have a lesser implication, but at the end of the day safety remains the same irrespective of the price that's being had by the producers. I'm sure they will have a different view. Some of the witnesses who are coming are from the pipeline industry. Others may have a more precise answer to your question.

Our analysis and our discussions to date with much of the industry and the financial industry, and the communities that would be implicated in this suggest that what's being proposed is in the realm of the way businesses currently operate and in the circumstances they would be expected to operate.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Thank you very much. That was well said.

To follow that, you testified earlier that economic aspects will have costs associated with them, but industry should be able to cover them. I'm wondering if you can tell us how responsible industry has been in terms of embracing this kind of legislation and the high safety standards that we as the government want to hold them to.

[Jeff Labonté]

I think the statements made by different industry members about the bill when it was tabled were supportive of the direction that the bill lays out vis-à-vis safety and what's expected of companies.

The majority of the companies that we communicate with and that have communicated with us about the bill, and Canadians more generally, have felt and have expressed to us that they feel they have safe operations, run good companies, and have safe pipelines. From their perspective there's nothing here that would concern them because of the way that they operate their companies. That said, it provides a higher level of protection and a higher level of expectation than exists today in the act. The focus of the legislation I think is to strengthen and provide further clarity around what's expected in terms of liability and compensation elements, and on prevention and what's expected of companies.

I think they'll probably be in a different position than I am to speak more specifically to their interests. I imagine that they're on the list of stakeholders that you're seeing in a future meeting.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Thank you.

What would be the goal of this legislation from your perspective? That's their perspective we've covered off. I'm asking, from our point of view, as the government, what is our goal in this legislation?

[Jeff Labonté]

In my view as a federal official, I think the goal of the government would be to ensure that we have a safe, functioning, well-designed, clear legal framework for our pipeline system that Canadians can be assured takes into account what's required and what's expected of companies, and that they operate good businesses and strive to not have incidents.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Crockatt.

I'm going to keep people on time for the last five questioners so that we have five minutes at the end to deal with the issue of the deadline for presenting amendments. For independent MPs, that deadline is 48 hours before we deal with this bill clause by clause at committee, but for committee members we can set a deadline and we will do that in the last five minutes of the meeting.

Let's go now to Ms. Duncan, for up to five minutes.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

As a follow-up to Ms. Crockatt's question, it is my understanding that the purpose of this legislation is several-fold. One is in the mind of the government to clarify where they're imposing liability. Two, it provides clarity for the industry to know what they're going to be liable for and at what point in time and who is going to determine their liability from time to time. I would hope the third purpose would be to clarify the process for those who are damaged by spills. That is a lead-in to my question.

Before I was elected I spent 40 years in my legal career working particularly with communities around the world to make sure we have user-friendly environmental laws so that everybody who is involved in this understands it. I have to tell you that this is a complex area you're trying to cover off here, but I find it unbelievably confusing.

I tried to find the time to go back and look at the laws in Alberta, for example, that deal with pipelines, but we have a number of laws and I didn't have a chance to look at it clearly.

I'm puzzled as to why the decision was not made simply to establish a claims tribunal and have all claims simply go to the tribunal and then have regulations thereunder on the different categories of claims. Of course, you have to have the first part, imposing the liability and what the limits are, but I can't imagine that anybody who suffers the impact of a pipeline spill going to this bill is going to understand how their claim is going to be processed.

Can you explain to me how the government will deal with the two factors of the indigence of the company owning and operating the pipeline and the factor of whether the tribunal is in the public interest? Why would there be the factor of “in the public interest” when it can't be a claim about impact to the environment, and it's only a claim to your property or your person? What does “in the public interest” have to do with the consideration by the tribunal of a claim for damage from a pipeline?

[Jeff Labonté]

I think the purpose behind the notion of the tribunal is to provide for in the circumstance that a company is not accepting its responsibility or is unwilling to do so. In the case of the incidents that exist as in the record I pointed out—whatever it was, 6.7 or 7 incidents—companies have cleaned up the damage and have dealt with damages with individuals who were impacted and there is no requirement for a tribunal to exist. Should there be a difference of opinion on those things, certainly the individuals impacted have the court system to manage anything they wish to pursue.

The notion of the tribunal is in the notion of something that's out of the ordinary and something that I think is deemed to be significant, which would perhaps be the way to look at it, as opposed to creating an administrative tribunal to deal with something that is being dealt with on a civil basis, if you can put it that way.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

If I understand what you're saying, presumably these companies are not voluntarily cleaning up and giving compensation. Generally speaking the NEB, or some provincial agency, or somebody is going to issue a directive and then they are going to clean up according to that directive.

What this is supposed to be about is compensation claims. One side is that the government only can seek compensation for damage to the environment. The public is out of that, so you're excluding the public from doing that.

[Jeff Labonté]

Her Majesty works in the public's interest.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Anyway, I find it incredibly complex.

In fact, you're not actually establishing a tribunal to make it easier for the public to seek damages.

My question connected to that is, who is actually going to decide that the company is indigent—the court, the minister, the cabinet—and based on what?

[Jeff Labonté]

There are two components.

The board has the authority in this piece of legislation to order payment for costs incurred for cleanup. That provision doesn't exist today. If you as a landowner were impacted and had costs associated with dealing with an incident or that aspect, the board would order the company to do so.

Many companies in incidents that have occurred actually act this way long before being asked to do so and pursue these activities because it's in their economic interest and because it's what's expected of them. You can be told to do something, or you can actually do the appropriate thing because you don't need to be told.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Right, but that's not my question.

[Jeff Labonté]

The next part of the question you had was the question around who would make the determination. The tribunal would be provided the authority to make the determination when there are damages. The regulations would spell out the damages and would provide those.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

No, no, no, no. That's not my question.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Duncan. Your time is up.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

My question is this. Who's deciding they're indigent so it can be referred to the tribunal?

[The Chair, Conservative, Leon Benoit]

Excuse me, Ms. Duncan, your time is up.

We'll go now to Ms. Freeland, for five minutes, followed by Ms. Block, Mr. Leef, and then Ms. Charlton.

Go ahead, please, Ms. Freeland.

[Chrystia Freeland, Liberal, Toronto Centre, ON]

Mr. Labonté, in one of your answers you referred to the fact that this comes as part of a broader universe of different forms of transport and safety levels of those different forms of transport. That was especially interesting to me because in my riding of Toronto Centre there is very heightened concern about rail safety because of the rail line that passes through this very dense urban riding.

Could you give us a sense of how the safety measures set out here for pipelines compare with the level of safety and regulation for transport by rail? Have you thought about it in the context of that bigger puzzle?