:
Good afternoon, everyone. It's good to be here today.
We're here today to start our study on the pipeline safety act, which is Bill , officially called .
We had agreed to have three meetings plus the clause-by-clause consideration on this piece of legislation. Our first meeting today is with officials. Our second meeting will be with members of the National Energy Board. Our third meeting, an extended meeting, will be with witnesses from the industry as presented by our members. After that we will go to clause-by-clause.
Before I get to that, there are a couple of things that I really should deal with. The first is the budget for this study. You've all received a copy of it. The amount requested in $6,700. Of course, we only spend that if it's required.
I'd just ask the committee for their agreement to approve that budget. Is it agreed?
Some hon. members: Agreed.
The Chair: Second, you all received an invitation to a meeting at noon today. It was an informal meeting of the Turkish delegation from the natural resources sector, including some business people—
An hon. member: I didn't get that.
The Chair: Yes, you should have. I know it went to all members of the committee.
At any rate, I chatted with some of you earlier about this, two weeks or a week and a half ago, when I found out about it. We did have the meeting, and it was a very good meeting with a large group of Turkish officials and business people discussing natural resources. The meeting was at noon today, so we did provide a lunch. The lunch was about $600.
I'd just like to get approval from this committee to pay for that lunch.
Go ahead, please, Monsieur Caron.
Very good. Let's get to the meeting.
Today we have officials from the Department of Natural Resources who are no strangers to this committee: Jeff Labonté, director general, energy safety and security branch, energy sector; Terence Hubbard, director general, petroleum resources branch, energy sector; Joseph McHattie, legal counsel; and Christine Siminowski, director, energy safety and security branch, energy sector.
Welcome to all of you. We are looking forward to the presentation, after which, as usual, we'll go immediately to questions or comments from the members on this legislation.
Please go ahead with your presentation as you see fit.
:
Thank you very much, Chair.
Thank you, committee members, for the opportunity to come to speak to you about this particular piece of legislation which is in the House and which I think has received a fair degree of good debate and discussion. We welcome the chance to hopefully address any questions and comments you might have, and if we're not able to do so today in person, we'll do so in writing if we have to afterwards.
I have a brief set of remarks that will probably take about two minutes to run through, and then there's a PowerPoint presentation. I think it's in all of the binders, and we've had extra copies distributed. I'll probably just focus on a few highlights to leave as much time as possible for comments and questions. I recognize that some of you participated in the briefing that we had earlier in the year in anticipation of today.
First of all, I'd like to welcome my colleagues and acknowledge their participation and expertise.
Through the recent introduction of the pipeline safety act, the government is taking some action to demonstrate its commitment to both the safety of Canadians and the environment. This ongoing commitment is part of the government's plan for responsible resource development, and this particular piece of legislation builds on other pieces of legislation that have been tabled in the House and several that have passed.
I will perhaps do a quick survol of where we situate ourselves with federal pipelines.
Pipelines are an area that is managed by both the provincial governments and the federal government. Canada has about 825,000 kilometres of pipelines throughout the country. The federal government has responsibility for some 72,000 to 73,000 kilometres that cross both international boundaries and provincial boundaries, which therefore make them federal jurisdiction. The regulator for the federal government is the National Energy Board.
Through those pipelines, on an annual basis some 1.3 billion barrels of oil and petroleum products are shipped between producers and warehousers, refineries and consumers. At the same time, about five trillion cubic feet of gas are piped across the country to different hubs, different distribution points, and then ultimately to consumers, both in industry and to Canadians as individuals.
The NEB pipelines have a fairly strong safety record. The government will regularly point out that 99.999% of crude oil and products arrive safely to their destination, and that's on a regular running basis over the last five-year period. While the safety record is strong, we must, of course, continue to strive to have as few and possibly zero incidents as possible to ensure that Canadians are protected and the environment is protected as well.
Bill implements a number of measures focused on world-class pipeline safety under the pillars of prevention, preparedness and response, liability and compensation. Prevention focuses on trying to ensure that incidents don't occur. Preparedness and response means ensuring that companies are ready and that Canadians are confident and assured that companies and the regulator are prepared to respond should incidents occur. Liability and compensation means ensuring that Canadians are protected from the costs and damages that might flow from an incident, should one occur.
Bill focuses on and strives to ensure that our pipeline safety system remains world-class and is consistent with Canadians' expectation for energy transportation and protection of the environment.
I'd like to take a few moments just quickly looking at the deck to illustrate a number of specific elements, and then, of course, we'll turn it over to the chair and welcome questions from committee members.
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There are two aspects to our presentation. First, we would like to see amendments to the bill concerning the
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To give some background, the Minister of Natural Resources is responsible for the National Energy Board Act and shares responsibility for the Canada Oil and Gas Operations Act with the Minister of Aboriginal Affairs and Northern Development, as there's a separation between north of 60 degrees and south of 60 degrees vis-à-vis energy development activities.
I will move on to slide 4, emphasizing a number of key prevention elements included in this particular bill. New sentencing provisions are in place for damages to the environment. There's an authority for the Governor in Council to implement consistent standards for pipeline monitoring and emergency response. There are amendments to damage prevention regimes to seek to have alignment and harmony with the provinces' damage prevention regimes. At the same time, there is clarification of audit and inspection powers for the National Energy Board. Those are for pipelines, and at the same time, since the board's act also provides for power lines, they extend to include power lines under their jurisdiction.
In terms of preparedness and response, slide 5, companies operating pipelines will be required under the new legislation to hold sufficient financial resources to cover any potential costs associated with an incident. Set in the act is that it would be $1 billion for major oil pipelines and regulations, at lower levels for other classes of pipelines to be developed under regulation. Companies will also be required to hold a minimum level of accessible financial resources to ensure an immediate response. This is sometimes referred to as cash on hand or cash available for a response, should it be necessary.
At the same time, the act will provide authority for the board to take control of spill response in exceptional circumstances where a company may be unwilling or unable to do so.
Finally, the act provides the NEB the authority to compel reimbursement of costs for spills incurred by governments, individuals, or communities.
In terms of liability and compensation, slide 6 in our deck, there is explicit reference in the act to the polluter pays principle. There is an inclusion of a new measure to provide no fault or absolute liability to a prescribed amount in addition to the existing unlimited liability when companies are at fault or negligent in the event of an incident. Again, the absolute liability amount is set at $1 billion commensurate with the financial responsibility requirements for major oil pipelines and will be set at a lower level for classes of pipelines to be established in regulations.
There is authority to establish a tribunal should the government ever need to authorize the NEB to take control. The tribunal will be provided as a quasi-judicial body to assess and award damages in exceptional circumstances for those who may be impacted by an event, and of course, in the end, the NEB would be provided the authority to recover said costs from the industry as a whole in an exceptional circumstance to ensure that taxpayers are not responsible for the costs.
On slide 7, I would draw attention to some additional amendments that are being made to the act for purposes of administrative efficiency, as well as transparency, including things such as: legislated timelines for Governor in Council decisions on export licences; elimination of Governor in Council approval for the name changes in pipeline certificates and transfers; and a number of things such as eliminating the mandatory retirement age for NEB members to be consistent with the Canadian charter.
We're certainly delighted to be here today and look forward to addressing your questions and comments, and certainly listening to the discussion, and would welcome that at this point, Chair.
Thank you very much, everyone, for your attention.
:
In this particular circumstance it falls into a mix of things. My colleague from Justice might contribute to my answer more fully from a legal perspective.
From a practical perspective, it depends on the nature of what issue might come about. If a company were bankrupt and no longer existed, and its pipeline had been abandoned, it would become a situation of provincial jurisdiction, perhaps as a disturbance of an environmental nature, for example, if something had caused damage. There might be a disturbance of a different nature.
The National Energy Board at this point in time has been pursuing a fund to look at how to manage the abandonment that might occur, which may provide some protection against what you are explaining could potentially happen.
Bill provides clarity that, under the National Energy Board Act, pipeline companies will be responsible for their pipelines even after they're abandoned, up to the point at which they're removed from the ground. Should a pipeline be abandoned and left in place, the company will be responsible for it in perpetuity until the pipeline is removed, and it must give provisions to the board to ensure there's adequate and appropriate funding to accommodate that should the pipeline company cease to exist in the longer term.
It makes explicit and clear that abandoned pipelines remain under federal jurisdiction, and that companies remain responsible and liable for those pipelines.
:
That's a great question. I appreciate the question.
We did a fair bit of analysis and certainly looked at a whole bunch of factors when establishing the proposed limits that are included in the bill. We took into account an analysis of the historic incidents and the number of incidents that have occurred and have involved pipeline spills. We looked at current and proposed projects. We looked at existing pipelines, the volumes they carry, the nature of the goods they carry, and the exposure they might have to different scenarios of land, property, and whatnot.
We looked at other jurisdictions as well, so as your benchmark would say.... We certainly recognize that to our south in the United States there is the example of the Enbridge incident in Kalamazoo, Michigan, where there was a rupture and just shy of 20,000 barrels leaked into the Kalamazoo River, I believe. The cost of cleaning up that spill is in the order of a billion dollars. I think it's about $1.1 billion or $1.2 billion, depending on which dollar you're looking at and what day you're looking at. That particular cost would be, I think, the high-water mark, if you will, in terms of analysis we've conducted.
We looked into the records of NEB hearings and different projects that are taking place. Certainly, the northern gateway panel, as an example, had established a $950-million limit as the terms of fiscal capacity expected of the northern gateway partnership project. That was a mix of cash, insurance, and asset requirements.
We looked at the United States, Norway, Australia, and other countries around the world that we would consider peer jurisdictions. In the U.S., the methodology for looking at oil spills is an oil spill fund. An oil spill fund has an upper limit of $1 billion per incident, so should an incident occur and a company is not able to deal with the incident adequately, there is up to a billion dollars of coverage that's funded.
In establishing our assessment and liability limit, we looked at all of those factors and felt that the billion-dollar amount was an adequate amount given (a) our comparators with other jurisdictions, and (b) the number of incidents we've seen and the incidents we've seen in terms of incidents around the world, and certainly what was established as a benchmark in the northern gateway scientific hearing, which had testimony from various experts from many jurisdictions. That was one part of it.
The second part of it was to look at and compare our world in terms of liability as it relates to liability related to negligence and fault and to liability as it relates to absolute liability. Certainly when we look at the Canadian context, we have several examples in statute around this particular domain of natural resource development where we see absolute liability, in which the entity that's responsible for the activity is automatically responsible in the event of something going wrong, regardless of fault or negligence. We see this in the offshore under Bill , which has passed. We've seen it in the nuclear sector. We see it in the Fisheries Act. We see it in a number of places.
Not only did we establish the billion-dollar limit, but we also proposed—and this is certainly included in the legislation, as you see—the notion of absolute liability, which removes the arguing and entanglement about who's responsible for what and what degree of responsibility there is. It becomes the responsibility of the operator. After everything is settled and sorted out, if you will, the operator can then pursue the legal routes to deal with who may be responsible beyond themselves, whether it was a contractor or a third party.
Certainly, when we established the billion dollars, we worked fairly extensively at looking at a number of areas and came to a conclusion. I think I have covered most of what your interest was, and if there are more questions in this area, I'm happy to take them.
:
Thank you for the question.
Perhaps I could answer, but I would like to make a clarification first in connection with your question. Perhaps it should be addressed to my colleagues from the National Energy Board, because they are responsible for anything involving verification.
Generally, in a policy context,
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the description of the ground disturbance and the conditions around ground disturbance would be considered when the board would hear the application for abandonment.
Should the pipeline that was proposed to be abandoned be in an agricultural area, the board may determine the conditions to require a further depth of requirement as a condition of abandonment versus the conditions related to what might be in a non-agricultural area or a rural area, or an area of forested cover, as it might be.
The considerations as to what was acceptable ground disturbance vis-à-vis an abandonment process would be taken into consideration during an abandonment hearing and may form conditions of abandonment. That's the first part of the answer.
On the question of who would verify and continue to monitor, it would be the role of the National Energy Board to continue to do so. Certainly, some potential landowner who might be impacted by an abandonment order would have knowledge of that order. It would be the board's responsibility to then communicate with that landowner vis-à-vis what would be conditions of limitations, if you will.
Generally speaking, the purpose of the ground disturbance is to establish a reasonable amount of land that may be disturbed before the safety of the individual disturbing the land might come into question.
:
Thank you for the question.
Generally speaking, the National Energy Board carries out inspections and verifications based on the activities of companies, their history, the risks involved, the questions that remain unanswered, as well as certain incidents or activities of the company. For instance, after the Kalamazoo River spill in Michigan, which involved the Enbridge company, the board inspected the operations centre. Inspectors examined all of the aspects of protocols, activities, policies and so on.
This is based on questions asked by the members of the National Energy Board. That said, if the board examines a given issue, the protocol requires that it publish the results and its report. However, once again, it would be up to my colleagues from the National Energy Board to verify what their protocol is exactly in the case of an investigation, as well as its conclusions.
Here, however, we have to examine the bill with additional precision, to see what the responsibilities and powers of the National Energy Board are. We are now working in this area and there is a great deal of activity. So we have to see what the bill says.
:
First, thanks for the question. It's a helpful one.
The oil and gas industry is a long-term industry. Certainly it moves with ups and downs like many industries, but most of the natural resource industries have booms and bottoms, and they move around in different aspects.
When we talk about pipelines, generally a pipeline project is conceived, planned, organized, evaluated, and studied usually for a period of several years before it is constructed and operated. Then it usually operates over a period of several decades.
Certainly, from a safety point of view, looking at that long rhythm and that long horizon, making sure that companies are financially viable, financially sound, and financially responsible before and during construction, during operation, and in the longer term, is part of the interest and purpose of the bill.
The other aspect around pipelines, the industry and the economics is that there is a great deal of variation and fluctuation around the producer community and how producers pay tolls for the movement of their goods using pipelines. Generally speaking, pipeline companies like to have many customers interested in using their transportation networks and it's a very competitive discussion about whether a company buys a specific amount of volume or whether it buys it on a spot basis as customer demand surges. There are a number of variables going on.
The view we have around the economic aspects is that they are certainly going to have costs associated with them, but that the industry is prepared to and should be able to cover these.
The bill provides first-hand a provision that the National Energy Board could take control of an incident response and compensation of damages to any harmed parties. That provision doesn't exist in the National Energy Board Act today, and it would propose that it would be implemented based on the ability of the Governor in Council to designate a company. A designation would follow a sequence of steps, where a company might suffer an incident, and the company might not respond to the board's orders to clean up the incident or to behave in a certain way, and the board might then make a recommendation to the Minister of Natural Resources to designate the company as unresponsive. The Governor in Council would then consider designating a company as unresponsive, and then the board would be provided the authority to act.
Bill provides that the Minister of Finance may provide funds from the consolidated revenue fund to the board to pay for the cleanup and the response. In the event that damages are suffered beyond the cleanup and response, a tribunal may be established to provide adjudication and review and assessment of damages and provide compensation for parties that may be harmed. I use the word “may” in a number of choices because there are the possibilities that an incident occurs and there aren't many parties who suffer damage, in which case setting up a tribunal would be fairly extraordinary and heavy-handed and not necessary. It may be that an incident, should it occur, could affect more than one person or several parties, in which case adjudication through a tribunal would be a reasoned response.
The consolidated revenue fund reference is to the government's account, if you will, managed by the Minister of Finance, and would be exercised in that way only when a company would be designated as unresponsive or unwilling.
:
I would start by saying that I think we have an exceptionally strong pipeline safety system in Canada. The data demonstrates that. I think I've just walked through it with you.
Certainly there are still seven incidents a year, on average. Those are seven too many, I think from anybody's perspective. How do you get to zero? You put in place a lot of measures that make sure that people are doing their very best to ensure that pipelines are safe, that they're operated properly, and that in the event something does occur, people are prepared.
In terms of where we stack up globally, to our knowledge no other country in the world has an absolute liability regime for pipelines, so this is unique to Canada. At $1 billion we compare quite favourably with the United States. We compare quite favourably with any other country in the world, that we've established, and certainly we benchmark against what has been the most expensive incident in the history that we're aware of. We also have the minimum financial resource requirements. The United States, the United Kingdom, Australia, and other countries that we would consider to be peers do not have those requirements in law. We have proposed the ability for regulators to respond, something that you would see in other peer jurisdictions that provide this. We have it so that the regulator can compel companies to pay communities, individuals, citizens, governments, and aboriginal groups that may be impacted. Neither the United States nor the United Kingdom has such measures in their statute.
:
I'll start and then I'll have my colleague join in, because he actually worked on the RRD initially.
The responsible resource development plan is a series of efforts under way to ensure that there are adequate and appropriate world-class safety regimes around the regulatory systems for our resource development activities, whether those are offshore oil and gas development and the Energy Safety and Security Act, nuclear energy development, whether they're the pipeline safety act here, the marine activities around my colleagues from the Ministry of Transport, or the recent amendments and proposals being put forward on rail related to rail transportation.
From a broad perspective, resource development starts with the regulatory framework around the projects, around the investment frame around those projects, the timelines related to those, the community engagement, the aboriginal consultations that are meaningful and appropriate for the circumstances, and then the environmental protection and the consideration of the environmental assessment. On a broad scale, if you look at those activities, and we have one in which we establish collectively from the federal government perspective as strong a regime as possible for resource development, the next step is to ensure that our regulatory system for moving those resources and handling those resources is equally world-class and responsive, and appropriate for the circumstances.
:
There is a lot in this bill, and frankly I think we could use you here for several days. There are a lot of detailed questions to ask as well, but I'm going to try to combine them. I think when we have you back here for clause-by-clause study, it's going to take us a lot more than one meeting because of that.
One of the things that has puzzled me and a lot of the people who reviewed this bill is the government starts out with the proposed section 48.11 strident principle, the polluter pays principle, is now going to be applied to pipelines, yet the whole rest of that part of the bill sets about diminishing liability. We're left very confused as to what actually the government is intending to set forth. It looks pretty clear by the provisions of the bill that, in fact, there is no intention to have absolute liability. One example is the decision to override the Fisheries Act, which of course imposes absolute liability.
We raise other questions, as well as what my colleague from the Liberal Party raised, essentially, on how the other part of the bill then shifts liability to the public. Related to that, I'm left with a number of questions, and that's mainly because, as you go through the bill, a lot of information about how this bill is going to be applied is going to be by yet-to-be promulgated regulations. That applies in almost every part of the bill, including the determination of the maximum liability, which is in fact not a billion dollars. It could be an amount to be set by regulations.
My first question right off the top is, are you in the process right now of promulgating all these regulations under the bill? Will those be reviewed by the broader public?
:
Thank you for the questions.
I'll try my best to answer a number of them, and stop me and tell me which ones I miss, because I was trying to frame that.
On proposed section 48.11, the polluter pays principle, it's just good practice from a jurisprudence perspective to draft in the polluter pays principle, which exists in common law. I'm not a lawyer, but I think that principle has existed for some time and the act was originally written in the 1950s, at which point the polluter pays principle wouldn't have been expressed in statute. My colleague from Justice can certainly elaborate further.
With respect to the comment about the Fisheries Act, I believe that we are referencing the section of the Fisheries Act that has absolute liability for commercial fisherpersons, persons who are involved in commercial activities related to fisheries, which would be a fairly defined and unique class of citizens, if you will. I don't make my living from harvesting fish, so I would not be eligible for unlimited absolute liability under the Fisheries Act, whereas under the pipeline safety act I would, if harmed, have the ability to to recover up to a billion dollars in damages.
Should the act pass, it provides Canadians protection broadly. However, in the event that there was an incident in a theoretical context in which the Fisheries Act may be implicated, I believe, and my Justice colleague can comment on this, it's the decision of the federal crown prosecutor to decide which act they would use to prosecute or to pursue a party, should they be harmed.
Sorry, I believe there's a question there of making sure that there wasn't overlap and double counting, if you will, or double—
:
The act provides the ceiling of a billion dollars for a major oil pipeline of at least 250,000 barrels per day, if it's individually or an aggregate, and then provides a regulation-making authority.
We do not have the regulation-making authority today to establish the classes until the bill passes the House.
We have begun our work to look at the regulatory aspect of how we would establish classes beneath the 250,000 barrels a day of oil and other types of energy commodities. Roughly speaking, we would think through having a class of pipelines for major oil pipelines, which is in the act, perhaps oil pipelines, more broadly gas pipelines, and then other commodities regulated by the National Energy Board.
The development of those regulations will follow the regular process of discussions and analysis with communities and experts who have an ability to contribute. There would be a a pre-publication of those regulations that would provide for public comment, public review, and the duty on the government's part to respond to those comments and questions in writing upon final publication.
All of the regulations that are referenced in here beneath the billion-dollar aspect would be made public and would have an opportunity for public engagement.
:
Thank you very much for being here today.
I think what Canadians want from us more than anything is just to ensure that we're developing our resources in a safe and secure way. We all share that goal around the table.
You know that Canadians' confidence in our system isn't exactly at an all-time high, particularly with respect to the transport through tankers, rail, and pipelines. I don't think any of them enjoy the majority support of Canadians. I know pipelines do a little better than tankers and rail, but we have a lot of work to do to get Canadians to feel secure about the way that we're developing and transporting our natural resources.
I notice in the deck you say that the bill strengthens Canada's world-class pipeline safety system by implementing new prevention measures.
I don't actually see very many prevention measures in this bill, save and except I suppose the reference to the polluter pay principle, which I suppose would have a deterrent effect on companies. Apart from deterrence, I wonder whether you could highlight for me what those robust prevention measures are that we find in this bill.
:
Yes, but that's after the fact, right? I'm sorry, I don't mean to interrupt but we only have five minutes.
All those things in terms of sentences are after the fact. We're hoping that will act as a deterrent, but it's not necessarily an upfront measure that will enhance preventive measures.
Let me go on to a couple of other things. Forgive me for being perhaps a bit cynical about some of the provisions in the bill, because as you said in response to some of my colleagues' questions, the NEB can report that a company is unresponsive. The Governor in Council will consider whether to act. The tribunal may be established, and money may be recovered from the industry. That's a whole lot of maybes, and some of us who came to this place in a very trusting frame of mind I think have lost that trust over the last few years. That's through no fault of yours, but the bill does leave considerable vagueness.
One of the questions I have is that in determining the pipelines that will be impacted by these new provisions, you're dealing predominantly with volumetrics, right? You talk about 250,000 barrels per day. Those are the pipelines that will be covered. Why did you choose to concentrate only on volumetrics? Why not, for example, look at the goods that are being transported and the relative levels of risk that those goods may present?
:
Thank you for this very important question.
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The act provides for the ability of the Governor in Council to establish a tribunal to adjudicate claims for damages. The first condition that would need to be met would be that the company responsible that operates the pipeline would be designated as unwilling or unable to respond. The first point would be that there's a situation in which a company is not responding in an appropriate way. That designation is made and then, pending the circumstances as to whether there are damages that may need adjudication, a tribunal would be established.
It's difficult to predict and to say in advance that this circumstance leads to that creation of a tribunal, but it would provide citizens, companies, and communities that might be impacted an ability to have a hearing and a fair representation of their claims for damages. It would also provide an independent tribunal the ability to evaluate those claims, adjudicate them, and provide an award for damages outside of the judicial system.
The bill does not provide, though, that one may not choose to use a judicial system should they wish. It's not one or the other. One can choose to continue through the judicial system should they wish. The establishment of the tribunal is in the circumstances when the government would need such a system because of damages that may be present in an incident.
:
As a follow-up to Ms. Crockatt's question, it is my understanding that the purpose of this legislation is several-fold. One is in the mind of the government to clarify where they're imposing liability. Two, it provides clarity for the industry to know what they're going to be liable for and at what point in time and who is going to determine their liability from time to time. I would hope the third purpose would be to clarify the process for those who are damaged by spills. That is a lead-in to my question.
Before I was elected I spent 40 years in my legal career working particularly with communities around the world to make sure we have user-friendly environmental laws so that everybody who is involved in this understands it. I have to tell you that this is a complex area you're trying to cover off here, but I find it unbelievably confusing.
I tried to find the time to go back and look at the laws in Alberta, for example, that deal with pipelines, but we have a number of laws and I didn't have a chance to look at it clearly.
I'm puzzled as to why the decision was not made simply to establish a claims tribunal and have all claims simply go to the tribunal and then have regulations thereunder on the different categories of claims. Of course, you have to have the first part, imposing the liability and what the limits are, but I can't imagine that anybody who suffers the impact of a pipeline spill going to this bill is going to understand how their claim is going to be processed.
Can you explain to me how the government will deal with the two factors of the indigence of the company owning and operating the pipeline and the factor of whether the tribunal is in the public interest? Why would there be the factor of “in the public interest” when it can't be a claim about impact to the environment, and it's only a claim to your property or your person? What does “in the public interest” have to do with the consideration by the tribunal of a claim for damage from a pipeline?
:
In the world of incidents that have occurred, and incidents that we've seen and behaviour that we've seen, there's nothing to suggest that companies will not behave in the way that we expect them to or that they financially can't.
I think it's reasonable to say that it's unlikely, but in the event that it does occur—and it's in the minds of Canadians for sure, and we've heard it in discussions that we've had with different players—what will happen?
The bill provides a statute-based frame that allows the National Energy Board, an independent body that regulates the oil and gas pipeline industry in Canada federally, to make a determination that they don't believe a company is able to deal with the consequences because they may go bankrupt, or they're not behaving as rapidly or quickly as appropriate, and they make a recommendation to the Minister of Natural Resources.
The Minister of Natural Resources then seeks a cabinet decision, which is the democratic decision-making process around how the government operates, as to whether the company would then be designated as unresponsive or unreliable or unreasonable, however it might be, based on the circumstances that the board presents—the independent regulatory body. That then provides the Minister of Natural Resources with the ability to instruct the board to act.
Then the Minister of Natural Resources makes a recommendation, again based on information on the circumstances presented by the board, which is independent and has the expertise, that they believe it is going to be x dollars. It makes a recommendation to the Minister of Finance that says they believe it's going to be x dollars to clean this up, recognizing that the further authority in the act provides for the government to recover all of those costs.
Although there is a decision to be made by ministers who are accountable to Canadians about what the circumstances are and how they are present, I think we're talking about an event that's probably going to be very out of the ordinary, at best. That decision-making frame will provide the appropriate guidance to make that decision, and in doing so, it still protects Canadians and will ensure that polluters pay. The individual polluter in this circumstance, the company that isn't behaving properly, may not be the only party that pays. The industry more broadly might pay, but that would then be actually recovered by the government.