Thank you, Mr. Chair, and members of the committee.
My name is Martin Olszynski. I'm an assistant professor at the University of Calgary, Faculty of Law. The focus of my presentation today is on what are commonly referred to as the environmental damages provisions of Bill C-46.
I began thinking and writing about environmental damages roughly 10 years ago, when the Supreme Court of Canada first opened the door for governments to sue for such damages in a case called Canadian Forest Products v. British Columbia. I have since written several articles on this topic, including with one of Canada's leading resource economists, Professor Peter Boxall.
I will begin with a brief primer explaining this concept of environmental damages. I'll then describe their role and their treatment under Bill C-46. Finally, I will make two recommendations for improvement.
Most simply, environmental damages can be understood as the financial compensation awarded for the loss or impairment of some public environmental asset and the services it provides, for example, a forest, in the case of Canadian Forest Products, or a coastal area, such as was affected following the Exxon Valdez spill or the Gulf of Mexico following the Deepwater Horizon blowout.
Environmental and resource economists divide such harms into the loss of two kinds of values: use value and non-use value. Referring to an Environment Canada publication, the Library of Parliament's legislative summary of Bill C-46 defines these two values as follows:
Use values are associated with direct use of the environment such as fishing and swimming in a lake, hiking in a forest - or commercial uses such as logging and farming. Non-use values are related to the knowledge of the continued existence of the environment...or the need to leave environmental resources to future generations.
As committee members might imagine, environmental damages assessment can be a complex and difficult task. Various scientific disciplines—ecology, toxicology, hydrology—are applied to first determine the extent of harm done, while economics and the techniques of environmental valuation in particular are then used to convert this harm into monetary terms.
Under Bill C-46 there are actually two different roles for environmental damages. They play a role in sentencing and they play a role in civil liability. As to sentencing, where an operator commits an offence under the NEB Act, the proposed section 132—and this is clause 37, page 35—directs a sentencing judge to consider the “damage or risk of damage to the environment” as a result of the offence. That is further defined under subsection 4 as “the loss of use value and non-use value”. Through this amendment, the NEB Act joins the ranks of at least 10 other federal environmental laws with similar sentencing provisions. Although light on details, this wording is both simple and comprehensive.
The other environmental damages provisions, which are decidedly more opaque, are found in the context of civil liability. Under the proposed subsection 48.12(1)—and this is clause 16, pages 6 and 7 of bill—there's a reference to three heads of damages: “(a) all actual loss or damage incurred by any person...”; “(b) the costs and expenses” of cleanup; “(c) all loss of non-use value relating to a public resource that is affected” by the spill.
In other words, environmental damages are not actually referred to in this part of the bill; rather, their availability—at least partially—is implied by the reference in paragraph (c) to “all loss of non-use values relating to a public resource...”. Use values are not explicitly referred to, although as I will explain, some of these may be caught by paragraph (a).
There are two other relevant provisions I want to touch on just briefly. These are proposed subsections 48.12(9) and 48.13(5). The former states that only federal and provincial governments may sue for the loss of non-use values, while the latter states that the NEB is not required to consider the potential loss of non-use values when determining the financial resources that operators will be required to maintain for the purposes of absolute liability.
My first recommendation is that the third category of loss under the civil liability provisions be amended to refer simply to environmental damages. For instance, “all environmental damages resulting from the release...", and that this be coupled with an additional subsection defining environmental damages, as is the case in the sentencing provisions. Those are the simpler and more comprehensive provisions, and I suggest that the civil liability provisions be amended to reflect that simple and comprehensive structure. This would not only simplify this section, but it also seems necessary to correct what appears to be an omission in the current bill.
As the committee is probably aware, most of the wording here was brought over almost verbatim from Bill C-22 , the Energy Safety and Security Act, which amended COGOA along similar lines. That legislation already had some spill-related provisions, and specifically a definition for “actual loss or damage”. I'll just read that definition quickly. It “...includes loss of income, including future income, and, with respect to any aboriginal peoples of Canada, includes loss of hunting, fishing and gathering opportunities.”
On my reading of this bill, this definition for “actual loss or damage”, which admittedly does capture some of the use values that I was referring to before, has not been brought over. Even if it were, I submit that there would still be a gap in the legislation. I can provide some examples of that gap after my presentation, if the committee is interested.
My second recommendation is that the Governor in Council should be required within a certain timeframe, or at least authorized, to make regulations setting out a process for environmental damages assessment. Reliance on this process should result in a rebuttable presumption of validity in any action for such damages, whether in court or before the pipelines claim tribunal. First, and as noted above, environmental damages assessment is a difficult and complex exercise; regulations would bring certainty to all parties and reduce needless litigation. It is for this reason that the equivalent American legislation, CERCLA and the Oil Pollution Act, contains such provisions, and that processes have been prescribed for the purpose of what is referred to there as “natural resources damage assessment”. I submit that such regulations represent the gold standard in this context.
My second reason tracks the preventative spirit of the bill. There are now roughly 10 federal environmental laws with some kind of environmental damages provisions, and it has been 10 years since the Supreme Court opened the door for governments to sue for these, and yet I am not aware of a single case where the federal crown has actually sought to do so. Perhaps this is something that future government witnesses could shed some light on. Whatever the case, this reality greatly undermines, in my view, the deterrent effect that statutory liability regimes like Bill C-46 are intended to create.