Transport Committee on Oct. 26th, 2017

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I'm calling to order meeting number 77 of the Standing Committee on Transport, Infrastructure and Communities in the 42nd Parliament.

Welcome, everyone. Pursuant to the order of reference of Wednesday, October 4, 2017, we are studying Bill C-48, an act respecting the regulation of vessels that transport crude oil or persistent oil to or from ports or marine installations located along British Columbia's north coast.

We have witnesses today. From the Canadian Association of Petroleum Producers, we have Nancy Bérard-Brown, manager. We also have, from the Canadian Energy Pipeline Association, Mr. Bloomer, president and chief executive officer; from the City of Victoria, by video conference, Councillor Ben Isitt; and from the City of Burnaby, Mayor Derek Corrigan.

We welcome all of you. Thank you very much for taking the time to join us today.

We'll open it up with Ms. Bérard-Brown.

[Nancy Bérard-Brown, Manager, Oil Markets and Transportation, Canadian Association of Petroleum Producers]

Good afternoon dear members of the committee.

My name is Nancy Bérard-Brown. I am speaking to you on behalf of the Canadian Association of Petroleum Producers.

I sent copies of our brief and of our presentation to the committee, as well as copies of the comments we submitted to the Honourable Minister of Transport in 2006. The documents are in both official languages.

Prior to introducing the oil tanker moratorium act in May 2017, Transport Canada undertook very brief consultations. CAPP did not support the proposed moratorium because it is not based on facts or science. There were no science-based gaps identified in safety or environmental protection that might justify a moratorium.

It is worth noting that Canada has an outstanding record on marine safety due to its stringent regulatory, monitoring, and enforcement regime and good operating practices deployed by industry. Canada has extensive experience in moving crude oil and petroleum products by sea.

The federal government has been a leader in ensuring that Canada has a world-class marine safety system that continues to evolve over time. Many safety measures have been implemented over the last number of years.

The government set up an independent tanker expert safety panel to review the Canadian regime. That panel concluded that the regime is fundamentally sound and it made some recommendations, which were all endorsed by the federal government. The national oceans protection plan launched by the Prime Minister will continue to ensure that Canada remains a leader in marine safety.

The bill as it stands would prohibit maritime access for a large range of hydrocarbon products. The moratorium would close the most economical route toward Asia, in addition to sending the message to the community of investors that Canada is not open for business.

Our production of oil and natural gas continues to increase. Canada has to expand its energy markets beyond the United States. The very broad definitions in the bill could exclude future condensate shipment opportunities from natural gas deposits that are rich in liquids and light hydrocarbons in the first stages of development.

Results have been very promising up till now.

My comments today will focus on the various definitions of oil and the need for science-based research.

As written, the regulations would prohibit the transportation of crude oil, persistent oil, or a combination of both.

First, the definition of crude oil is very broad and essentially includes all hydrocarbons. On the other hand, a list of persistent oils included in the moratorium is provided in the schedule. Having a “persistent oil” and a “crude oil” definition is confusing. If an oil product is not listed in the schedule, that does not necessarily mean that it could be transported, because it may fall under the definition of “crude oil”.

CAPP, respectfully, would recommend that the bill include only one definition of persistent oil, which links to a schedule that can be modified by regulation. Alternatively, CAPP would recommend that the crude oil definition be amended to say something like “any liquid hydrocarbon designated by regulation”.

The concept of persistent and non-persistent oils is very important, as it informs the response required in the event of a spill. The distinction is based on the likelihood of the material dissipating naturally. As a rule, persistent oils contain a large proportion of heavy hydrocarbons. They dissipate more slowly and require cleanup. In contrast, non-persistent oils are generally composed of lighter hydrocarbons, which tend to dissipate quickly through evaporation.

I would like to note that in the schedule, “condensate” is defined as a persistent oil in accordance with the ASTM D86 method. While distillation thresholds have been broadly used to define persistence, there are other key physical properties that should be considered in determining persistency.

Of note, definitions of persistent oil do vary. For example, Australia relies on standards that refer to API gravity and viscosity, in addition to alternative distillation.

Of note, western Canadian condensate is a unique, light hydrocarbon, which has very different properties and behaves differently from heavier crude oils. The timeline for condensate persistence in a marine environment is often hours or days.

CAPP would recommend that alternative definitions of persistent oil and thresholds be explored further. CAPP is also seeking consideration for alternative treatment of condensate from the list of persistent oil products.

The safe and reliable transportation of all of our products is critical for our members.

More scientific analyses are needed in order to better understand the changes and behaviours of various oil types. The industry is meeting that need. Our association and the Canadian Energy Pipeline Association have commissioned a study which should be completed in 2018.

We recommend that the federal government undertake a science-based risk assessment related to oil tanker movements along the British Columbia north coast.

We also recommend that you examine scientific research regarding the fate and behaviour of oil products under the Oceans Protection Plan.

[The Chair, Liberal, Judy Sgro]

I know you are finishing up. Could you get your last comments in?

[Nancy Bérard-Brown]

Yes.

In conclusion, CAPP does not support the moratorium because it is not based on science. Recognizing the intent of the government to proceed, CAPP seeks to eliminate the confusion of overlapping definitions of persistent and crude oil, encourage further evaluation of the relevant characteristics of persistence, and have the flexibility to revise the scope of persistent oil through regulation consistent with future learning.

We also seek some clarification as to what factors would lead to the moratorium being lifted for any type or all types of crude oil.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Bloomer, you have five minutes, if you can, please.

[Chris Bloomer, President and Chief Executive Officer, Canadian Energy Pipeline Association]

Good afternoon. Thanks very much for the opportunity to speak with you today.

I'm Chris Bloomer, president and CEO of CEPA, the Canadian Energy Pipeline Association. We represent Canada's 11 major transmission pipeline companies. We transport 97% of Canada's natural gas and crude oil production. Our members have delivered oil and gas products with a 99.99% safety record for over a decade, a record we consistently improve through collaborative initiatives such as our integrity first program.

Our members are committed to public accountability, environmental stewardship, transparency, and continuous operational improvements through the application of management systems and evidence-based practices. We're global leaders in pipeline operations, technology, and innovation.

Although the approval of two pipelines by the federal government was a positive step for Canada, the cumulative effects of the many policy and legislative changes that directly and indirectly impact our industry are of deep concern and will determine whether or not we will be competitive in the future. This includes, but is not limited to, the potential for a complete overhaul of the system regulating and assessing major projects for interprovincial pipelines, the extent of proposed methane emissions reductions regulations, ambiguity about how indigenous people will be included within regulatory frameworks, and the fact that even recently approved pipelines are subject to further reviews and additional consultation requirements.

The proposed oil tanker moratorium act, Bill C-48, is yet another change that will compound uncertainty and negatively impact investor confidence in Canada. In his mandate letter, the Minister of Natural Resources was directed by the Prime Minister to introduce “new, fair processes” that will ensure that decisions for energy projects “are based on science, facts, and evidence, and serve the public’s interest”. This is the foundation from which we reasonably expect the government to legislate on critical matters of national importance like market access.

If passed, Bill C-48 will ban the shipping of crude oil to or from ports located on the northern British Columbia coast, restricting market access for one of Canada's high-value resources. This is perplexing given that Canada currently imports approximately 400,000 barrels a day of foreign oil into our eastern ports. CEPA strongly believes that, given the profound impact of this bill, more thought must be given to scientific analysis and achieving a broader consensus. Currently, Bill C-48 does not do this, despite claims to the contrary. Bill C-48 appears rushed, and CEPA is concerned about its content and disregard of Canada's world leadership on maritime safety.

For example, the low-carbon condensate from the Duvernay and Montney plays are of great economic and environmental significance and contribute to the government's strategic goals for wealth and job creation. However, Bill C-48 is unclear on whether they could be included in the definitions for banned oil products. The lack of clarity on this is alarming, especially given the inherent global opportunities that condensate represents for Canada.

Canada's history with marine oil transportation also contradicts the need for this bill. A 2014 Transport Canada report noted that, between 1988 and 2011, significant work by the government had improved the protection of marine safety. Since the mid-1990s, Canada has not experienced a single major spill from oil tankers or other vessels in national waters on either coast.

Additionally, this government has announced $1.5 billion in funding for a national oceans protection plan to strengthen Canada's leadership as a world leader in marine safety. It is fair to ask the question: what are the safety gaps this moratorium is supposed to restore?

In conclusion, the consequences of potentially drastic policy changes for future energy projects have instilled uncertainty within the regulatory system, adding additional risks, costs, and delays for a sector that the Prime Minister publicly acknowledged has built Canada's prosperity and directly employs more than 270,000 Canadians.

The approach to policy-making represented by the development of Bill C-48 contributes to this uncertainty and erodes Canada's competitiveness.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Bloomer.

We're on to Mr. Corrigan, mayor of the City of Burnaby.

Welcome, and thank you for joining us.

[Derek Corrigan, Mayor, City of Burnaby]

Thank you very much for the invitation to appear before the committee. It is a real privilege.

I've been a member of Burnaby's city council for 30 years, and I'm now in my 16th year as mayor. I'm very pleased to represent the City of Burnaby at this committee meeting, and I am most certainly in support of the moratorium on oil tankers provided in this bill to the north coast.

I am experiencing the problems associated with oil tanker traffic right here in our city. We are threatened by the imposition, against our will, of a significant new shipping risk on our shores from oil tankers, which includes the new risk of oil spills from crude bitumen oil, often, in the vernacular, called “dirty oil”.

I certainly believe that the environmental values of British Columbia's coastline in the north are worth protecting. It shows that the federal government has the power and the will to do the right thing in protecting our coast for future generations. The ban should be extended to our harbours in Burrard Inlet. The environmental values of our southern coast are at least equally deserving of protection as those in the north. In our case, we are dealing with protection of the lands and waters of a dense, urban population of nearly two and a half million people. Our citizens deserve equal protection.

This bill should also consider the risk of barges, which, under the bill, would not be included, yet pose a realistic risk to our coast. The dilemmas faced by Canada in dealing with the Enbridge northern gateway project and the Kinder Morgan Trans Mountain project are similar. They show the problems that arise with an NEB process, where proponents drive the options that are considered, rather than common sense choices of the best option. They show that corporations, sometimes foreign ones, whose sole interest is profit do not have the best interests of the people of our country or our environment in mind.

One of the things that interested me most in entering this process.... I did not want to learn as much as I've had to learn about the transportation of oil through our country, and the potential for the transportation of oil along our coast. When the issue of the Kinder Morgan pipeline came up, I began to get educated. One of the first things I did was go to the National Energy Board and ask it about its policies, about the strategic plan that was being considered in regard to the options it was choosing.

We, in cities—and I'm sure Ben will support this—are always planning. We're also looking forward, thinking of ways to protect the interests of our citizens in an organized way, in a way that makes people believe there is certainty in the future. I wanted to see the plan and the policy for this. I was truly shocked to find out there was no national oil policy. There was no national strategy. The National Energy Board was making it up as it went along, essentially on the basis of the submissions that came from individual pipeline procurers and the oil industry.

The situation is one in which the National Energy Board simply considered what Kinder Morgan wanted, and then both the National Energy Board and the Governor in Council decided they would proceed, even though they would go through the heart of metro Vancouver, Burnaby, Surrey, New Westminster, and Coquitlam, to a tank farm next to family neighbourhoods and an elementary school, on the only evacuation route for Simon Fraser University. They would then require the loading of tankers at the back end of Burrard Inlet, a location that certainly would never reasonably be considered for any new facilities, the busiest port on the west coast.

I certainly think this is a situation close to lunacy. It does not show a sensible planning process. My entire city has been concerned about this issue. Throughout the Lower Mainland, we've had the support of other jurisdictions, including metro Vancouver, in opposing this pipeline coming through Burnaby, Burrard Inlet, and along the southern coast.

If we have a pipeline to tidewater for bitumen oil that is in the national interest, it should be part of good public policy to choose a shipping route that causes the least risk and the least damage. That is not a choice that should be made for us by the oil companies.

In our case, the National Energy Board refused absolutely to consider any alternative routes, and refused to even allow Burnaby to ask for evidence of alternatives. Both Canada and the National Energy Board argued before the Federal Court of Appeal just two weeks ago that a process that fails to consider alternative locations is perfectly lawful.

It is a shame—

[The Chair, Liberal, Judy Sgro]

Mayor Corrigan, if you could just wrap up, please....

[Derek Corrigan]

Yes. I say that if this is upheld by the Federal Court of Appeal, it will certainly destroy people's faith in our system.

Again, I applaud the government for the measures in this bill. We shouldn't have to choose between a healthy environment and a healthy economy. We know that here in the city of Burnaby and throughout British Columbia.

Thank you for this opportunity.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mayor Corrigan.

Now we move on to Councillor Isitt.

[Ben Isitt, Councillor, City of Victoria]

Thank you very much for the invitation to present to the committee.

On behalf of Mayor Lisa Helps and the council for the City of Victoria, I provide the following remarks as acting mayor of Victoria.

Victoria is located on the southern tip of Vancouver Island. The shipping lanes of tankers carrying petroleum products from the Trans Mountain pipeline and other fossil fuel ports in the Pacific northwest pass offshore within several kilometres of our community. Victoria is also the capital city of British Columbia and the urban centre of the Capital Regional District, which is comprised of nine first nations, 13 municipalities, three unincorporated areas, and approximately 380,000 people.

The capital region includes more than 1,500 kilometres of marine shoreline in the area known as the Salish Sea, adjacent to southern Vancouver Island. This includes the Juan de Fuca Strait, which connects the Pacific Ocean to Burrard Inlet, and other inland waters. It includes the shoreline frontage of the 13 municipalities of greater Victoria around Sooke Harbour, Esquimalt Harbour, Victoria Harbour, the Saanich Peninsula, and the Saanich Inlet. It includes several hundred islands and surrounding waters in the area known as the southern Gulf Islands.

These coastal waters are vital to the economic and social well-being of our region: tens of thousands of jobs in tourism and related sectors, the property values of more than 100,000 residents and property owners who have made investment decisions in relation to their proximity to a healthy marine and shoreline environment, and also the health and wellness of all residents of the region, including their recreational options and their quality of life.

In addition, the coastal waters of the city of Victoria and the capital region are of vital importance from the standpoint of biological diversity. They provide vital and fragile habitat for species, including the southern resident killer whale population, an endangered species that has now been reduced to 75 surviving animals on the southern coast of British Columbia, concentrated in the tanker shipping route surrounding the capital region.

Risks associated with the shipment of bitumen include substantial emergency response and spill cleanup costs imposed on local government through inadequate federal safeguards, and the delegation of responsibility to a third party entity controlled by the petroleum exporters.

One final factor I wish to note is the impact of fossil fuel exports and tanker shipping from the standpoint of climate change, which Canada has recognized as a signatory to the Paris agreement. The consequences of climate change are already being felt around the globe and within Canada's borders, including within the capital region, in terms of volatile weather patterns, extreme storm surges resulting in flooding, and rising sea levels that impact property values, as well as public and private infrastructure.

Even if everything functions according to plan with the petroleum product being transported from its source to the end consumer with no loss into interior coastal waterways, there is still an unavoidable negative impact from the standpoint of climate change. The fuel is burnt by the consumer, and it is spilled into the atmosphere, contributing to global warming and threatening the ability of humans to survive on this planet.

For these reasons and others, the City of Victoria and the Capital Regional District have adopted a position of opposition to infrastructure or policies that will result in an increase of fossil fuels transport through the fragile coastal waters of the Salish Sea. I, therefore, wish to reiterate the mayor of Burnaby's request that consideration be given to extending the application of this legislation to the shipment of crude petroleum products in the southern coastal waters of British Columbia, including the Salish Sea and the Juan de Fuca Strait.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Now it's time for questions.

Mr. Lobb, you have six minutes.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thanks very much.

I have a couple of comments to the councillor and mayor who are here today. Thanks for appearing.

I appreciate your comments, and I assume you're doing the best you can for your constituents. How do you square this argument that you make on one hand with the tanker ban and then on the other hand with this historical track record of sewage spills in the area? How do you square that argument for us here today?

[Ben Isitt]

That's a good question.

[Derek Corrigan]

I'd say that in metro Vancouver, we have invested hundreds of millions of dollars in secondary treatment to ensure that our outfalls are of the highest environmental standards. It's one of the primary responsibilities.

In fact, right across our region, in the case of the north shore Lions Gate treatment plant, we joined to seek federal funding to assist in ensuring that we have the highest level of protection for Burrard Inlet. We are very conscious of and very responsible in regard to those issues.

But as we all know, nobody is ever perfect, which is one of the things that concerns—

[Ben Lobb, Conservative, Huron—Bruce, ON]

To that point, though, sir—and I'm not here to debate this, to be quite honest—at one point you're saying that nobody can be perfect, but then you're expecting the tankers, which have an almost perfect track record, to be more than perfect.

For somebody sitting here—and I'm not from British Columbia, I'm from Ontario, but I am along a Great Lake, so I appreciate the importance of clean water and safety and so forth—I scratch whatever hair I have left and wonder how we can say, on one hand, tankers be perfect, yet we will spill sewage into our waterways almost in perpetuity in those areas. I can't understand that.

Anyway, we'll move on. I want to ask the Canadian Association of Petroleum Producers a question on the schedule that's listed in the bill.

Is it your argument that there should be certain types removed from the schedule now? Do you want certain ones taken off now, or are you saying that further science and research should be done immediately to make the argument for them to be removed?

[Nancy Bérard-Brown]

Thank you for the opportunity to clarify.

What CAPP is seeking at this point is twofold. There needs to be some consideration as to whether or not condensate does belong on the list of persistent oils. Also, as I indicated a bit earlier, what we want to ensure is that as a result of further science becoming available, it is important to us that if there is any change required to any of those products listed here, we have clarity about how we can go about having those removed from the list.

The issue that we saw, as well, with the definition is that currently you have the list of persistent oil in the schedule, and it can be amended by regulation. However, the definition of “crude oil” within the text, and “oil”, does not allow for any changes. We think that it is important.

With all respect, we understand the determination of the government to proceed, but we want to ensure that if there is any persistent oil that doesn't belong there, that we have the ability and the clarity on which principle is going to be followed, which science and criteria, in order to remove any or all of those from the list of persistent.

[Ben Lobb, Conservative, Huron—Bruce, ON]

I have one last question to the councillor from Victoria.

I wonder what your thoughts are with the government leaving a huge loophole in their ban, in the fact that they allow supertankers with light diesel fuel, gasoline, propane, etc. A supertanker can carry 318,000 metric tons of that product, yet only 12,500 metric tons of oil.

There has to be a study put forward to justify this. What are your thoughts and what are the thoughts of your constituents on this loophole here?

[Ben Isitt]

I'll preface my remarks by pointing out that I'm not a marine biologist or a chemical engineer.

My understanding is that crude products, particularly bitumen, are particularly harmful to the marine ecology and particularly challenging to recover by authorities entrusted with cleanup operations. I think, at a minimum, those products cannot be permitted.

My understanding is that as the refining process is advanced, the opportunities for the product evaporating or being recovered in other ways increase, so there could be some rationale...but generally I think we have to strengthen regulations of the transport of all petroleum products, including the refined products you mentioned.

I do have a brief comment in relation to your first question.

Certainly the absence of proper sewage treatment infrastructure in the core area of the capital region is a major problem. For 40 years, federal and provincial authorities allowed greater Victoria to dump raw sewage into the Juan de Fuca Strait. About two-thirds of our population rely on this unacceptable situation. One-third of our population of the region is covered by about 10 waste-water treatment plants.

Fortunately, the previous Government of Canada pledged approximately a quarter of a billion dollars to build proper waste-water infrastructure for the core area. This commitment was honoured by the current government, and construction is now under way for a proper tertiary waste-water treatment system for the core area of greater Victoria.

I want to acknowledge the contribution by both of those governments to this vital partnership to clean up the marine environment.

[The Chair, Liberal, Judy Sgro]

That's good. Thank you very much.

Mr. Hardie.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Mr. Floatie's going to be out of a job? Is that what you're saying? That's an inside-the-ballpark joke.

Mayor Corrigan, who would have known 18 years ago that you and I would find ourselves in this connection today? I have to acknowledge the fact that out of everybody here, you and your city have had the most direct experience with respect to crude oil ending up where it shouldn't be. I'll give you some time to elaborate on what happened and what it meant when that pipeline burst.

[Derek Corrigan]

One of the realities of the pipelines in Burnaby is that they were originally part of a co-operative that served refineries along our coastline in Burrard Inlet. Five or six refineries have now been reduced to a single refinery. Over the course of many years though it became incredibly difficult, as a result of geographical changes, to be able to determine where the original pipelines were laid. In each case, the National Energy Board has required that at any point you were doing any excavation near those pipelines, you were required to have staff from the transmission company available to supervise.

In the case of the oil spill we had in our residential neighbourhood in Burnaby, that supervision was not done. It was not properly executed when a contractor worked on sewer lines and a pipe was broken. That broken pipe, instead of being turned off at the point of the tank farm, was turned off at the tanker, which exacerbated the huge flow of oil into our neighbourhood, costing residential damage in the millions of dollars, and ecological damage, as that oil flowed into Burrard Inlet. It was catastrophic, and it literally took years to clean up the mess that was left for us.

That direct incident in our community, and the way it was handled by Trans Mountain in the course of their dealings with it was extremely disappointing. It brought to the attention of all our residents that these accidents do happen, and when they do happen there are severe consequences for the surrounding community and for the ecology of our city.

It's going to be even worse if we're looking at bitumen products coming through our community because, in reality, if we are going to export oil, I believe very strongly that we Canadians should be refining it here in Canada. We should be sending refined products to any place in the world that wants to purchase them and not crude oil. I'm very disappointed in it.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

I'd like to ask both our pipeline representatives, why not refine it here? There's an easy way around this if you have the right product, a safer product, to ship out of our ports.

[Chris Bloomer]

I think it's a matter of economics and markets. I think the cost to refine in Canada to be competitive and have those products delivered to the relevant markets is.... You just mentioned that three refineries were taken out of Burnaby. There was refining in the past, and there's less refining now because of the economics.