Natural Resources Committee on March 31st, 2015

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

I'll follow up on that.

It's been noted that we currently have a safety record of 99.999%. This legislation has been introduced to build on that and to improve on that.

Quickly, do you feel that this act will be strengthening the safety record that we already have?

[Jim Donihee]

I do believe that this act will complement the safety record and very strong commitment to zero incidents that the CEOs of the association have committed to with the work they are undertaking, because it is the right thing to do, around the integrity first program, very akin to the responsible care initiative, and a sincere desire on their part to do better than simply being compliant with regulations.

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

Thank you.

[The Vice-Chair, NDP, Guy Caron]

Thank you, Mrs. Block.

We are now going to start our third round.

Mr. Trost, you have five minutes.

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

Thank you, Mr. Chair.

One of the things that caught my interest in the earlier testimony was a bit of the discussion on the common law right to sue. We have a bunch of lawyers at the front of the room here and very few on the committee, so I would be interested in knowing what is normative in situations like this in Canada.

An illustration was given of how it took 20 years with the Exxon Valdez. Giving an American illustration to a bunch of lay people from Canada honestly doesn't mean a whole lot, because we know the Americans have a little bit of an odd system at times, even with the common-law correlation, etc.

Let's say that something did happen under this new legislation and it was actionable, something that would be suable. What sort of activity could you sue for under this current legislation? I know it's just guessing, but give the lay members of this committee some sort of idea of for how long and in what process that would wind through.

We're being asked to vote on legislation that involves legal processes. I'm a geophysicist, and we have a variety of various other skills around the table, so I'll be blunt that I don't totally get what all would be involved in that.

I have a bunch of people who are all leaning forward and saying “we can teach the guy something here”, so who wants to start on this one and upgrade my legal education?

[Martin Olszynski]

Without saying that I want to do those latter things, I will speak to your question as best I can.

We don't currently have a lot of litigation in this context. There was a spill in Alberta recently, the Plains Midstream spill, and in that context there was regulatory enforcement done, but there wasn't any common-law action for environmental damages.

As I said in my comments, even though the Supreme Court of Canada has opened the door for the government to do that in cases such as Mount Polley, Plains Midstream, and Lac-Mégantic, governments have never done it in Canada to get those environmental damages.

Where there is private loss, which is really that first category, individuals would be able—whether under this legislation or without it—to sue for that private loss. This legislation doesn't change that.

I agree with Mr. Miron that it's essentially a codification of the existing scheme at common law, so we haven't seen where government bodies, provincial or federal, sue for those environmental damages. Those environmental damages essentially just become externalities. They essentially become a cost borne by ourselves, by our communities, and by our future generations.

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

But do we see the private lawsuits going forward? These are fairly rare events. We were running through the numbers. I forget how many per year—

[Robert Blakely]

You need to have an interest in order to pursue a lawsuit, a direct interest. I cannot sue because someone has done something bad to someone else or has done something bad to the environment, because that is not my interest. If they flood my farm, then I have an interest.

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

So in the experience of the events that have happened, are there very few people, then, who have a direct interest? Is that because Canada is a big country—let's face it—and these pipelines may mostly run on some version of crown land, etc.?

[Martin Olszynski]

There are remote areas, but I can actually give you one example, again from my home province. Right now in Alberta, there is a lawsuit involving Encana, which is being sued for contamination of groundwater in relation to fracking activities.

Right now, that lawsuit is running at 10 years. To give you a sense of what does go on and why I would press very strongly, for instance, for regulations setting out a process to assess these kinds of damages, it has essentially all been about preliminary motions, both by the government and by the two government parties that were also sued in this case and are being sued for negligence.

Baseline, in this context there's so much scientific uncertainty around the quantification of these things that there is a lot of room, then, for exactly the kind of drawn-out litigation we saw in the context of the Exxon Valdez.

[Robert Blakely]

The fracking example isn't a fair one, because some people say that fracking does cause this and other people say it doesn't. There's quite a divergence in opinion on that. If the pipeline ruptures and your lower forty is filled with oil, it's not as difficult—

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

In a situation like that, it would be much quicker than if I had a situation...

[Robert Blakely]

Yes, well...

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

I want to make it clear that I wasn't commenting at all on the merits of that litigation. I was referring to it to give you an example of something like that happening.

In terms of quantification of environmental harm, it may be a bit easier. I'm not prepared to say that, but I think generally speaking the quantification of these harms and their assessment is very difficult.

[The Vice-Chair, NDP, Guy Caron]

Thank you very much, Mr. Olszynski.

Mr. Trost, thank you very much.

Monsieur Choquette, for five minutes.

[François Choquette, NDP, Drummond, QC]

Thank you, Mr. Chair.

My thanks to the witnesses for being here, and for their testimony.

I missed the first hour of the meeting, so please excuse me if I repeat anything.

I come from Quebec, where people are very concerned about pipeline projects. At the moment, we have a TransCanada project and the reversal of line 9. In Quebec, people are directly affected by those projects.

We often hear that people seem to have difficulty expressing their views. People affected by the project say that they are having a hard time being heard.

The bill certainly contains some interesting elements. But it seems that some things are missing. For example, it talks about the right to consultation on environmental matters. There are environmental rights associated with the consultations, such as those with First Nations. I feel that also applies to Canadians in general.

Does the bill meet the needs for consultation? The Canadian Environmental Assessment Act has been amended to make consultations on environmental assessments more difficult.

Mr. Olszynski, Mr. Miron, can you tell us more about how the right to consultation will be respected? What are the difficulties in that regard?

[Ian Miron]

I don't see a whole lot of consultation within this bill itself. I am aware that there are some extra efforts outside of the legislation that have been proposed by the government with respect to consultation with first nations. This bill isn't an environmental assessment bill. This is a liability bill. From my perspective, that's what this bill is about. It's about polluter pays. I don't see a whole lot of room for consultation within this bill.

[Martin Olszynski]

I would echo those comments. I think, in some cases, where there is a discretion to make regulations, for instance.... Regulations are inherently consultative and when regulations are published in the Canada Gazette there will be public comment periods, and those kinds of things. To that extent, some of the regulations that are called for here will involve further public consultation, and that's good.

I think the more those regulations are promulgated and prepared, the better.

[François Choquette, NDP, Drummond, QC]

Mr. Donihee, you put forward some recommendations. In your fourth recommendation, you say that, for the National Energy Board's new powers to be effective, the regulatory agency needs a better funding model. It seems that its current allocations and the Treasury Board constraints on the way in which they are used are too restrictive and do not allow its expertise to be maintained or enhanced.

Can you tell us more about that recommendation? What do you mean by it exactly? What are the improvements needed?

[Jim Donihee]

Thank you for the question, Mr. Choquette.

I would say first, having had the privilege of serving at the National Energy Board as the chief operating officer in a previous life, that the NEB is an independent employer. There is a degree of independence about it.

The finances that it receives for its operations are approximately 90% cost recovered from industry, so I think you would find that industry, as I said in my testimony, clearly recognizes the benefit of a strong regulator and how how essential it is.

Where the NEB suffers, quite frankly, is the imposition of standard pay practices that are commonplace in the public service, but which don't serve the NEB very well when it resides in downtown Calgary and is competing for extremely qualified technical talent. It finds itself in a difficult position to compete for, in terms of its compensation basis and hiring practices, talent and to retain it.

I think that one of the strongest recommendations that I could offer is to ensure a strong, well-financed, and flexible National Energy Board to provide the quality of oversight, capability, and competence that Canadians expect of it.

[The Vice-Chair, NDP, Guy Caron]

Thank you very much, Mr. Choquette.

We now move to Mr. Regan, for five minutes.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you, Mr. Chair.

My thanks to the witnesses here with us today and the witness joining the meeting by videoconference.

One of the things that I want to ask about is funding for the NEB, because according to the 2015-16 main estimates, the NEB's funding for the regulation of pipelines, power lines, energy development, and so forth has actually decreased from $81.7 million in 2013-14 to $76.8 million in 2015-16. That's a reduction of some $4.9 million, or 6% thereabouts.

Given the fact that Bill C-46 is actually giving quite a bit more responsibility to the NEB, and more authority, do you think it's strange that its budget is shrinking instead of increasing? How do you think this will impact public confidence in the NEB's ability to make sure our pipelines are the safest in the world?

Mr. Donihee, do you want to start?

[Jim Donihee]

I'm sorry I'm not familiar with the trend lines in their estimates. I think it is best that you perhaps engage with NEB staff to that extent. As I did say a moment ago, as these additional responsibilities come to the NEB, clearly there's to be a requirement for additional funding especially for greater flexibility in terms of how they're able to attract and retain highly qualified staff in a very competitive environment even during a downturn.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

Mr. Blakely.

[Robert Blakely]

My experience in life is you do less with less. If you want to give people more responsibility and expect a higher level of service to serve Canadians better, resource it.