Transport Committee on April 10th, 2014

[Denis Blanchette, NDP, Louis-Hébert, QC]

At what point are your members going to commit to provide all the information that emergency responders need wherever there are train tracks? When will those responders be able to find out what is going through their communities and the best ways to deal with it?

[Peter Boag]

That's a process that's ongoing today. It's a question of how we can do that faster, better, and how we can provide, as you say, information to all of those people who need to know it in an effective, efficient, and timely way. That's a process we're doing right now on how we can continue to build on that.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Of course it takes time for things to be done; I understand that completely. However, you will understand that the government is going to have to become involved in support of those emergency measures.

As my colleague was saying, it is not up to taxpayers to be paying for dealings between private companies. There is a risk. Taxpayers have already paid a lot for the damages that the industry has caused.

So I am giving you one more opportunity to tell me how the government can help you in implementing better regulations. Is the government going to have to come up with regulations itself and impose standards on you, or are you ready to pick up the pace in order to provide that information as quickly as possible? Do we really have to use the threat of stricter regulations in order to get things moving? Are we going to have to wait for the next disaster if the government does not get involved? That makes no sense.

[Peter Boag]

I don't think anyone's waiting for there to be another catastrophe. I think the key point of much of the discussion and the engagement that's been going on over the last months has been to directly address that. So yes, there's a role for regulation. Yes there's a role for voluntary action on industry. I think in Canada we have a pretty good system to do that. We're responding to those challenges now.

Dave, did you want to make some additional comments there?

[David Pryce]

Sure.

Right now we are directly engaged with the firefighters association as CAPP, CFA, and the rail association to pull together the necessary information. CANUTEC, an organization in Ottawa, also provides the information around the products that are being moved, the MSDSs.

I think the gap is in understanding the implications of what the MSDS sheets say—material, safety, data sheets—and how the firefighters, or any first responders should interpret that data to understand how best to approach an incident in action.

The other piece that we said we are going to do, and other organizations are doing, is participate in TransCAER, which puts us directly in the field with the first responders, and providing our information through an educational system there.

We're looking to enhance that. Any coordination around this that the government chooses to impose would not be a concern for us. The minister has put an emergency order or a directive in place that requires the rail companies to advise municipalities now of the nature of the product that is moving through these.

There are a number of things in play. I think an overarching governance of that would be significant in improving the circumstance of the situation.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Mr. McGuinty, for five minutes.

[David McGuinty, Liberal, Ottawa South, ON]

Gentlemen, I want to go back to the question of shipping oil by rail.

Shipments of Canadian crude have reached 175,000 barrels per day, compared with just under 24,000 barrels per day at the start of 2012. It's gone from 24,000 in 2012 to 175,000 barrels today.

Private equity is weighing in heavily, right? Calgary-based TORC has $250 million invested in private equity from Kohlberg Kravis Roberts. Kinder Morgan is working with Imperial Oil now to build a $170-million facility to ship crude out of Edmonton, going to 250,000 barrels a day. Enbridge did a deal last year with Tundra Energy Marketing, building a 60,000 barrel-per-day terminal near Cromer, Manitoba. U.S. Valero began operating a 50,000 barrel-per-day rail terminal at its Quebec refinery, taking in Bakken and then Canadian crude. It goes on and on. There's a gold rush, but it's an oil rush, shipping oil by rail.

I want to ask the two gentlemen from CAPP, Mr. Pryce and Mr. Stringham, when your sector and your organization and your members talk about obtaining a social licence to operate their companies, what does that mean?

[Greg Stringham]

From my perspective, we take a look at what's happening to the development of the oil and gas industry. You cited several of the proposed loading terminals on rail. Rail is becoming the larger portion of our sector. I mean, you have to put that into the context that we're actually moving, for Canada today, about 3.2 million barrels a day of oil.

[David McGuinty, Liberal, Ottawa South, ON]

What does social licence mean? When your members, Exxon, Suncor, any corporate members of your group get up and say—your CEOs; Mr. Mulroney spoke about it the other night—that you operate under the social licence, what does that mean in plain English?

[Greg Stringham]

In plain English, as we look at the social licence that the industry needs to have in order to develop the Canadian resources, I think it means two main things. One is whether it is being done in an environmentally and responsible and safe manner, and two, what the benefits are that are accruing to Canada, to governments, and to the individuals as part of that development so that Canadians see the development of that.

[David McGuinty, Liberal, Ottawa South, ON]

Let me just explore that with you.

My view of social licences is simpler. Your companies' abilities to operate are granted by Canadian citizens. It's not by any order of regulation, not any regulator. Your ability to operate, all of you here today, is granted by the Canadian people.

In that sense, I want to ask you about the Auditor General's report. As I said earlier, the only credible objective analysis of what's going on in rail safety and SMS done by any group, not by any trade association, not by Transport Canada, was done by the Auditor General.

Let me ask you a question, Mr. Stringham, and Mr. Pryce, particularly you as the VP of operations. In terms of your members' responsibilities to maintain and keep their social licence, that is, the permission of the Canadian people to do what your members are doing, have you examined the Auditor General's findings and report in detail?

Mr. Pryce.

[David Pryce]

I have not.

[David McGuinty, Liberal, Ottawa South, ON]

You have not.

Have your members looked at the Auditor General's report in detail?

[David Pryce]

I would expect that some of them have, or at least in part.

[David McGuinty, Liberal, Ottawa South, ON]

So CAPP has not been briefing boards of directors, compliance officers, risk mitigators, risk managers. They're not aware of the scathing 12 or 15 conclusions of the Auditor General.

[David Pryce]

I would say that we've paid attention to what the discussion has been with respect to rail, whether it's the Auditor General or the Department of Transport and the working groups they have put in place, which we have been participating on, to address the issues that we've seen come forward.

[David McGuinty, Liberal, Ottawa South, ON]

Do you think as a condition of keeping the social licence you have been granted by the Canadian people you ought to be paying closer attention, for example, to the number one conclusion of the Auditor General, which is that Transport Canada can't tell us whether there's a proper safety management system in play right now?

That's his number one conclusion.

[David Pryce]

I'm not understanding where you're going with the question, but we certainly believe there should be appropriate safety management systems in place. We do use those within our own business. We have looked at safety, both from a safety management system perspective, a safety process perspective. We also believe that safety culture is—

[David McGuinty, Liberal, Ottawa South, ON]

This is my last question, Mr. Chair.

[The Chair, Conservative, Larry Miller]

No, you're out of time.

[David McGuinty, Liberal, Ottawa South, ON]

I'm out of time. That's too bad.

Maybe the witnesses will come back, Mr. Chair.

[The Chair, Conservative, Larry Miller]

Go ahead and finish, Mr. Pryce.

[David Pryce]

I was just saying that we look at safety culture as probably the best opportunity to enhance the safety performance, regardless of the industry.

It's more than just documenting safety and safety performance; it's trying to embed the safety culture in the business, from the CEO all the way down to the individual who is operating a valve or a drain system, or whatever.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Komarnicki, you have five minutes.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Carrying on from where I left off, I get the feeling that you say you want to ship the petroleum product, the crude oil, the Bakken crude, and leave it up to the rail company to be concerned about how it gets there and how safe it is, and the liability is theirs and you don't share in that liability. I'm wondering if perhaps shippers shouldn't share in that liability, to make you more interested.

For instance, in the transload facilities that I asked about previously, do you know what the risk and safety proportionality is, or comparability, between what the incidents might be at the point of a transloading facility versus actual rail transport by cars on rail? Have you done any assessments on that?

Mr. Stringham or Mr. Pryce can answer.