Natural Resources Committee on May 30th, 2016

[Jim Fox]

The board has been undertaking project reviews since it began in the late 1950s, and since the 1970s it has been incorporating environmental issues into its project reviews.

In 1995, when the first Canadian environmental Assessment Act came into place, we started doing environmental assessments under that act, and continue to do so. The board considers the environment in every project it looks at and will undertake an appropriate science-based review of the impacts of the project and whether or not the mitigations being proposed by the company are appropriate. Where they're not, the board will suggest different kinds of mitigations.

In the recent Trans Mountain expansion, there were something like 157 conditions required of the company to go above and beyond what it was proposing to do in building a safe and environmentally appropriate project.

The board's process starts even before the company applies to us. We require companies to undertake a consultation process with communities, first nations, and interested parties along the route of the project to discuss what their issues are to allow the company to make adjustments during planning. Once the company applies to the board, the board requires publication of the fact that there is a project being undertaken. Then the board will conduct an appropriate review process that can be up to, and including, an oral hearing that might take place close to where the project will be undertaken.

[Candice Bergen, Conservative, Portage—Lisgar, MB]

I'm so sorry, I'm going to stop you because I just have about a minute left.

I'm going to ask you this quickly. Are you able to compare the process that you undertake to those in the United States or Mexico, but especially the United States, our competitor? When they build pipelines, is their process as rigorous? Are you at all familiar with their process and how it would compare with our regulatory process?

[The Chair, Liberal, James Maloney]

You have about 20 seconds.

[Jim Fox]

I am familiar with it, and for oil pipelines, the U.S. does not hold a public hearing. There isn't a public process. It's an internal, bureaucratic, administrative process they go through. That's the main difference.

[The Chair, Liberal, James Maloney]

Mr. Serré, it's over to you.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you for your presentation and the work you've done over the years.

I'm happy that you clarified Mr. McLeod's question related to Canada's shortcomings and the improvements that could be needed, which there always are.

If we look at the last five years during which we haven't been able to build any pipelines to tidewater, do you believe that if we had held better consultations with first nations and more consultations on the environment, we would possibly have been able to build the public confidence and get some pipelines to tidewater in the last five years? Would that have helped?

[Jim Fox]

I'm not sure if we would have gotten all the way there. I can say that better consultation and more engagement of communities along the routes and other communities that are affected or concerned would have changed the dynamic that Canadians are feeling around pipelines and development in general. That can't help but be the case. I don't know, though, that this would have resulted in pipelines being built.

[Marc Serré, Liberal, Nickel Belt, ON]

What do you see as the greatest market opportunity for Canadian crude oil products?

[Shelley Milutinovic]

The industry is certainly looking at and has its eyes on Asia as a potential opportunity. More than 99% of our oil goes to the United States, and as the United States has almost doubled its own oil production since 2008, markets are certainly looking towards Asia.

[Marc Serré, Liberal, Nickel Belt, ON]

In light of the report from the Commissioner of the Environment and Sustainable Development and the consequences of the lack of success in getting pipelines to tidewater built over the past few years, do you believe that renewing the public's confidence in the NEB's environmental process is essential to the prospect of approving pipelines built to tidewater in the near future?

What is the NEB doing to renew the public support and educate them on NEB's environmental review process?

[Jim Fox]

We do believe that renewing the public's faith in the environmental assessment process, but also in the life-cycle regulation—the regulation through the construction and operation period—is essential to what Canadians need and should be able to expect from their national energy regulator.

We are working hard to reach out to Canadians, to talk to them, and to provide them with information resources on our website or in person if that's the circumstance they're in, to talk to them about how the board regulates, how it address certain kinds of issues in the application stage where an environmental assessment is done, and then through the life cycle of the project. We don't just approve a project at the beginning and say, “Here are your conditions” and then let the project operate. We are there inspecting during construction, during operation, auditing, having an ongoing conversation with the company. Did they build it in a safe way? Are they continuing to operate it in a safe way? What adjustments need to be done to their system to move forward?

That kind of engagement is what we really believe we need to rebuild Canadians' trust in the regulator.

[Marc Serré, Liberal, Nickel Belt, ON]

Can you speak to our government's plan to invest in innovation that will help the natural resources sector to develop increasingly sustainable practices by investing in innovation?

[Jim Fox]

In dealing with the challenges faced by pipelines or the energy sector generally, innovation is one of the keys to a successful future. Innovation to make pipelines safer, make emergency response better, and to lower the environmental effects of the various kinds of activities in the oil and gas sector is absolutely essential.

[The Chair, Liberal, James Maloney]

Ms. Stubbs, over to you.

[Shannon Stubbs, Conservative, Lakeland, AB]

I represent a riding that spans northeast Alberta. We're just south of the oil sands. In my constituency of Lakeland, heavy oil and conventional oil and gas development, along with agriculture, are the key economic drivers. I'm a strong supporter of Canada's world-leading energy industry, and I think all Canadians should be proud of our track record in world-leading standards and innovation. They have unlocked the development of our abundant natural resources that provide so many social and economic benefits to every person and every community in Canada.

We've heard testimony over the course of this study from representatives of the Canadian Standards Association, for example, who appeared before our committee and affirmed that Canada's regulatory standards are the highest of any energy producing nation on the globe. I take your responses today on the interim measures as a very diplomatic way of expressing what you have undertaken a number of these measures traditionally through the environmental assessment and regulatory processes, including basing your decisions on scientific evidence together with public, community, and first nations consultation. Certainly, in northern Alberta, not only are first nations actively consulted on energy projects, but they're also active developers of our energy resources and partners in providing the jobs and the benefits generated by energy development there.

We've heard from some energy proponents that they're unclear on what the specific requirements will be stemming from these interim measures, which are either redundant or, in the case of upstream greenhouse gas emissions, already regulated, monitored, and enforced at the provincial level. What is your understanding of the specific differences or changes between the previous processes and those that will flow from these interim measures? Moreover, can you provide us with some clarity on how energy developers across Canada will be required to comply with the so-called new measures?

[Jim Fox]

Our understanding of the new measures is that they are intended to assist the Governor in Council or cabinet in making its ultimate decision. In a project like Trans Mountain the National Energy Board will make a recommendation report and talk about conditions. In that case, we recommended that the project was in the public interest. The cabinet has to take a look at that. The interim measures are designed to gather information for cabinet to consider in addition to the National Energy Board's report. My understanding is that there will be no further actions that stem from the interim measures, other than different kind of information going to the ultimate decision-maker.

[Shannon Stubbs, Conservative, Lakeland, AB]

So even though through the assessment process by the NEB, public and community and first nations consultations have already happened, as well as scientific, evidence-based decision-making, there will some other kind of separate approval process with which you're not involved?

[Jim Fox]

Under section 52 of the National Energy Board Act, which covers a major pipeline expansion, the board writes a recommendation report through its hearing process, and that recommendation report goes to the Governor in Council for approval. My understanding is that the interim measures are to add information to that approval process.

[Shannon Stubbs, Conservative, Lakeland, AB]

It will be interesting to see what new steps will be added in what will obviously be a political process and not an independent, science-based and evidence-based expert process that's obviously already in place.

For the benefit of committee members, could you reinforce or affirm that the issue of upstream greenhouse gas emissions is one of jurisdictional relevance, and that it is already done through provincial governments that have the responsibility for energy development in their respective provinces?

[Jim Fox]

It is true that provinces regulate activities around the upstream oil and gas, and the National Energy Board does not. I'm not sure of the fine jurisdictional alignment, as I'm not a lawyer.

[Shannon Stubbs, Conservative, Lakeland, AB]

It's already done provincially.

[Jim Fox]

Yes. Or at least it can be done.

[Shannon Stubbs, Conservative, Lakeland, AB]

Yes, yes. And just for the record, in Alberta it has a long history of being done responsibly and well, and effectively monitored and enforced.

[The Chair, Liberal, James Maloney]

Thank you, that's all your time.

Over to you, Mr. Harvey.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

My name is T.J. Harvey. I'm the member for Tobique—Mactaquac in eastern Canada. I'm very interested as well in Energy East and the other pipeline projects as well as the proposed mining projects that are going on across the country.

My questions are for you, Mr. Fox—though I guess they can be to both of you. Could you comment a little bit on the assessment process and how you conclude that pipelines are the safest means to transport our natural resources to market, as opposed to doing so by rail.