:
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 .
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 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 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 , 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 are intended to create.
:
Thank you, Mr. Chair, and thank you to all the members. I appreciate the opportunity to present today.
As you might know, I'm a lawyer here on behalf of Ecojustice, which is Canada's largest public interest environmental law organization. Ecojustice has worked extensively on pipeline issues across Canada as well as on statutory liability regimes, in the context of the energy sector more broadly. This will be the focus of my presentation today.
I think we can all agree that Bill is much needed and, quite frankly, long overdue. That being said, there are some significant shortcomings in the bill as currently drafted. I'm going to focus on three of those today.
First, the absolute liability limit is inappropriately low. Second, more guidance is needed around the assessment and calculation of damages for the loss of non-use value relating to a public resource, which I'm going to refer to as “environmental damages”. Third, although the bill provides some interesting new tools for seeking compensation and reimbursement in the event of a spill, the use of most of these tools is discretionary, not mandatory.
As currently drafted, the bill can best be described as “polluter might pay”. It offers modest improvements on the current regime, but it does not fully implement the polluter pays principle, and therefore continues to expose Canadians to an unacceptable portion of the financial risks of a pipeline spill.
Moving to the absolute liability limit, it's positive that the bill incorporates the polluter pays principle into the National Energy Board Act. The bill then restricts absolute liability to $1 billion for spills from large oil pipelines.
Imposing absolute liability up to that $1 billion limit is largely an improvement over the status quo. I say “largely” because it limits what was unlimited liability under the Fisheries Act for certain spill response costs. ln the case of a major spill, $1 billion isn't enough to cover the cleanup costs, let alone compensate victims for damages and all Canadians for environmental damages. We have seen Enbridge's line 6B rupture in Michigan. The cleanup costs have topped $1.2 billion so far. There's still oil in the river there, and there's more work to be done.
ln that light, limiting absolute liability to what seems to be an arbitrary figure of $1 billion inappropriately restricts the polluter pays principle and allows polluters to shift a portion of the financial risk of a pipeline spill back onto Canadians.
Moving quickly to environmental damages, I am pleased to see that the bill includes liability for the loss of non-use value. This measure is absolutely crucial to implement effectively, because a major oil spill can never be fully cleaned up and wildlife and the environment in the vicinity of a spill will often be killed or seriously harmed before cleanup efforts can begin.
Beyond recognizing that compensation for these environmental damages is available, the bill provides no details on how they will work in practice. This lack of guidance, I submit, makes it less likely that a government will try to recover compensation. At the very least, we need a regulation-making power so that some guidance can be provided, the holes can be filled in. I urge the government to consult publicly on such guidance.
Moving to the new recovery mechanisms, the bill does provide some new tools to respond to spills and to recover damages or expenses from polluters. The use of many of these tools is left to the discretion of the NEB. Many of the tools are also contingent on the polluting company being designated by cabinet. Designation is a discretionary decision that would allow the government to, for example, take over spill response or to appoint a specialized pipeline claims tribunal to decide claims for compensation.
Staying with that pipeline claims tribunal for a few seconds, it is worth noting that any awards the tribunal makes appear to be paid directly out of taxpayer money, presumably to ensure that victims are compensated in a timely manner.
Where taxpayer funds are used to compensate victims of the spill, the NEB has the option to try to get this money back from the polluter. If the polluter doesn't have enough money to pay, then they can also try to get it back from a broader subset of the pipeline industry through various fees and levies. Again, these tools are discretionary. The NEB doesn't have to use them, and this is concerning.
In keeping with the polluter pays principle, the NEB should be required to use any and all available tools to make sure that taxpayers aren't left footing the bill for the cost of a pipeline spill. This is particularly the case given that Bill , in the context of this bill's claims tribunal, contemplates non-Canadians seeking compensation before it. Obviously, exposing Canadian taxpayers to that kind of financial risk is not acceptable.
To sum up, the bill does represent a move toward a polluter might pay model, but the shortcomings of the bill still leave Canadians exposed to an unacceptable portion of the financial risks of a pipeline spill.
Those are my remarks, subject to any questions. Thank you for the opportunity to speak today.
:
Mr. Chairman and members of the committee, thank you very much for the opportunity.
I suppose it's pretty obvious why I'm here. We build pipelines. We're interested in building them. But there's a lot more to the pipeline business for us than a couple of jobs putting some sticks of pipe in the ground.
A pipeline is an infrastructure link. It's a utility in effect, which links the upstream, the downstream, and the eventual place in which the extracted material is processed. For us, it means linking thousands of high-paid, high-skilled jobs in, say, Fort McMurray, with thousands of high-paid, high-skilled jobs in Quebec City, if energy east goes through, or in Saint John. We're really interested in this bill.
A failure to build pipelines has a net restraining effect on the industries that depend on it. If you don't have a pipeline, you can't stack up natural gas or oil or something else, in the hopes that somebody will find a way to get it to market. Pipelines are, and remain, the safest means of transporting hydrocarbons.
I don't want you to take my remarks to be a suggestion to just build them because that would be great for us. The truth is, we live here. The railroads that occasionally takes oil through the centre of most towns in the west—I'm from the Prairies—go through the centre of our communities. These are our jobs, but we're not prepared to sell out the environment for the sake of a couple of paycheques.
When I looked at the bill, I looked at it like you would look at a collective agreement. When you vote on a collective agreement, you vote on a number of things that are in there. There are some things I really like; there are some things I'm okay with, and there are other things that I thought maybe could be clarified a bit. At the end of the day, and on balance, what is being proposed here is at least a reasonable compromise that may well serve us in the long-term future.
Do some of the provisions require some clarity? I'm a lawyer, so I love to read this sort of stuff. I don't see an enormous issue of principle between the parties. I think the issues here are about deconflicting, enhancing, and otherwise looking at this body of amendments and trying to move it forward.
I have some suggestions. First of all, there are a number of provisions that require the National Energy Board, should it so choose, to do some things. One is to always use the best technology available. We agree. You should use the best technology to build the stuff, but the National Energy Board shouldn't specify what that technology is.
Furthermore, we agree and would support the National Energy Board being resourced appropriately to get the right people to do the right things at the right time.
With regard to the provisions that would allow the National Energy Board essentially to take command and control of an incident, I looked at that and thought about it for a while. In one of my other lives I was a naval officer. It is difficult to imagine sometimes, when you're sitting at a desk in an office a long ways away from the guy who's standing there with water coming down in a number of places, how much more difficult it is to make the right decision for the people who are on the scene.
To some degree, the pipeline operators may be in a better position to make decisions than the National Energy Board. Having said that, there should be a provision for the National Energy Board to be able to step in if people are not appropriately dealing with issues.
On the issue of absolute liability, the $1 billion, I don't see in there the removal of the common-law right to sue beyond the absolute limit based on fault or whatever else.
We're supportive of the polluter pays principle, and perhaps some of the discretionary things that are within the bill are appropriate in the circumstances. Sometimes we need to rely on people like the National Energy Board to make reasonable and rationed decisions, and we need to give them some discretion to do that. A suit of clothes that fits you perfectly before you gain 10 pounds needs to be let out occasionally. Maybe the National Energy Board can be the tailor for that.
Those are my remarks. I'll answer questions you may have.
:
Mr. Chair, thank you for providing me with this opportunity to share some remarks with you.
[English]
Mr. Chairman and members of the committee, thank you very much.
My name is Jim Donihee. I'm the chief operating officer and the acting chief executive officer for the Canadian Energy Pipeline Association. I thank you for the opportunity to present some remarks.
First I'll give you some background. CEPA operates 115,000 kilometres of transmission pipelines across Canada, much of which falls under the jurisdiction of the National Energy Board. Our members transport approximately 97% of all of the daily natural gas and onshore crude oil that is produced, and we have been bringing it to markets very safely for some 60 years. For example, in 2014 our members collectively transported over five trillion cubic feet of natural gas, and 1.2 billion barrels of liquid petroleum products. This represents approximately 23% of Canada's mercantile trade, and it makes an extremely significant contribution to the social fabric of our nation.
While our longstanding operational safety record of 99.9995% between 2002 and 2013 is truly exceptional, at the same time we recognize that it is not sufficient; it's not good enough. Our CEOs have publicly committed to zero incidents on pipelines, and we're very actively working to get there.
Bill as proposed certainly complements our industry's strong belief in the polluter pays principle, excellence in emergency response, pipeline safety, and environmental protection. For that reason, and to reassure Canadians that our industry is fully dedicated to a safe and socially responsible energy pipeline transmission industry, CEPA supports the proposed regulation.
Our members are focused first and foremost on pipeline safety and the prevention of all incidents throughout the entire life cycle of pipelines. This continuous focus on safety saw us invest over $1.4 billion in 2013 alone, in order to ensure the safety of these pipelines. We're working aggressively through our program entitled CEPA integrity first, a management systems approach that is addressing critical priorities in pipeline operations, commencing with pipeline integrity and control room management. The integrity first program, patterned after the responsible care initiative of the chemical industry, will drive significant performance throughout our industry based on our sincere desire to exceed regulatory compliance.
This year as well, CEPA will take a big step forward by committing to conducting a safety culture survey of its entire membership in order to ensure that we focus on the human dynamic that is also so absolutely critical to excellence in performance.
We are actively participating in the development of standards, and these standards, constructed largely by the Canadian Standards Association, apply to our operations throughout the design, construction, operation, and eventual retirement of the pipelines that we have the privilege of stewarding.
The best available technology is absolutely key to the way our industry functions. Through initiatives such as the Canadian Pipeline Technology Collaborative, which is a new initiative being formed, we seek to leverage new technologies through academic institutions and in collaboration with many government partners.
I think it's important to take a look at the commitments that our industry has made in recent times. First, for example, is the mutual emergency assistance agreement, the MEAA, that was first exercised in 2014 and that clearly recognizes in this day and age that any incident of a pipeline company is everybody's incident. This MEAA will seek to harness, and does harness, the resources of all of our members in order to respond in the most effective and immediate manner to any incident that might emerge.
Along with the MEAA, CEPA's members have adopted an incident command system common to all. It reflects interoperability and enhances interoperability among all of our members.
Transparency is absolutely key to earning and sustaining the trust of Canadians. To that end we've undertaken the formulation of a task force that is addressing the common template that will make available to all Canadians every bit of information that we can in order to earn their trust, while withholding only such information that is critical to privacy considerations and the security of critical infrastructure. That information is always made available to all emergency responders.
We've heard the comments by Mr. Blakely about the NEB and we believe strongly that the oversight that we receive from a competent regulator is vital to Canada's national interests. We are well served by having a strong regulator that is capable of providing timely, science-based, and fact-based consideration of our projects.
With that in mind, especially in consideration of the new powers and authorities that the NEB will be adopting through this bill, we believe that it's incredibly important for the NEB to receive the levels of funding and the flexibility of using those funds that are necessary to ensure that it can attract and retain expertise critical to being able to fulfill its mandate.
Our member companies have an exceptional track record with a very low frequency of incidents. They believe strongly in the polluter pays principle and have always ensured appropriate restoration of the environment without any financial consequence borne by the public, including considerations for loss of use. CEPA members are dedicated to the commitment of this obligation through preparedness and response. They will ensure that they fulfill their obligations as reflected in this bill.
Notwithstanding CEPA's strict adherence to the polluter pays principle, and our strong response capabilities, we are supportive of the proposed legislation that sets out liability and compensation requirements for companies operating crude oil pipelines.
As I seek to conclude, Mr. Chair, I would offer the following recommendations for this very positive step forward.
Regulatory requirements that originate from the bill should be risk-based and respond to the proven safety record that the transmission pipeline industry has demonstrated.
The federal government should continue to explore opportunities to support multi-sectoral initiatives, such as the CPTC, which will identify, develop, and implement advanced science and technology. The Canadian Standards Association remains an extremely effective body for the development of standards. We collaborate routinely and press the envelope forward to develop these standards.
We absolutely respect the role of the NEB and believe it to be vital to the good functioning of a highly responsible industry on behalf of Canadians. We believe that the NEB requires the funding that it needs and the flexibility of employing that funding to meet the obligations that you will offer to it through the approval of this bill.
With that, Mr. Chair, I'd like to conclude my comments and thank you for the opportunity to present some comments to you. The Canadian energy pipeline industry is an industry that has a proven, long-standing track record and one that Canadians should be proud of. We look forward to making a continued contribution to the success of our nation for many years to come.
Thank you.
I'd like to thank all four of you for appearing before us. I know you're all busy people, and it's always nice to see Mr. Blakely on the plane between Edmonton and Ottawa.
I really appreciate your comment, Mr. Blakely, on clarifying the exercise of discretion. I think that's a really good, broad comment and I appreciated it—within bounds, of course.
Mr. Miron, if I understood you correctly, you expressed concern about proposed subsection 48.12(5). It allows for more than $1 billion in compensation if prescribed by regulations. I'm wondering if you agree that the criteria for this, the further extension beyond a $1 billion, should be specified in regulations and that this regulatory process be open, transparent, and inclusive.
Would you agree that, absent those regulations, we lack legal certainty on if and when the obligation for compensation might exceed $1 billion?
:
To the first question, yes, that's what I am proposing, that in proposed paragraph 48.12(1)(c) the reference be changed to “environmental damages”.
As I tried to set out in my remarks, environmental damages could be seen as the biggest envelope. Within that you have your two categories of “use value” and “non-use value”. That's the universe of environmental damages.
As to why I referred to the sentencing provisions, exactly; there are in fact ten pieces of federal environmental legislation that refer to damage to the environment and then define that very simply as the loss of use value and non-use value. In fact now the NEB Act, as amended by this bill, would have that definition, but it only operates in the context of the sentencing provisions.
I think the reason it's been written this way, in the context of the civil liability provisions, is due to this idea that perhaps use values were dealt with sufficiently under proposed paragraph 48.12(1)(a), which refers to “actual loss or damage”. I want to make it clear that some of those damages, probably some use values, probably would fall within that category, but certainly not all of them. So this is to ensure that it's comprehensive.
Again, bear in mind the restriction that was referred to earlier. The proposed paragraph 48.12(1)(c) damages—this reference that I'm suggesting to environmental damages—is only available to governments. That's consistent with similar legislation in other countries. It would essentially ensure that those damages would cover the full suite of environmental damages, but at the same time wouldn't result in double counting or anything like that.
:
I'll answer the question more of who “does” right now. The “should” is maybe a bit trickier.
In other jurisdictions, such as the United States, this is a power generally confined to governments, the federal government in the U.S. and state governments. It is a bit broader in the U.S. in that state tribes are also authorized to sue. The reference under the American legislation, under CERCLA and OPA, is to trustees, that being the federal government, state governments, and state tribes.
I have in the past, blogging about Bill , or ESSA, suggested that there might be scope here to broaden the category to recognize aboriginal governments, Indian bands and such, to claim for such damages within their territory. You could expand it to include municipalities. With the disaster that happened at Lac-Mégantic, amongst the tragic loss of life was also a massive environmental catastrophe. It seems to me that the municipality there should be empowered as well, frankly, as a representative of the people.
I guess my bottom line, to try to keep it simple, is that governments, various levels of governments, generally are accepted as being the right parties to sue for such damages.
:
Thank you very much, Mr. Chair.
I know I made a comment last week in camera that I thought you did an excellent job of chairing our committee, and I want to put that on the record today. I think you're doing a fine job today as well.
I want to thank our witnesses for being here. This has been very interesting testimony. I appreciate the recommendations that have been made here today.
I'm going to focus my questions on Mr. Blakely and Mr. Donihee.
I appreciated it when you said, “A pipeline is an infrastructure link”, Mr. Blakely, and that a failure to build a pipeline has a restraining effect on the industries that depend on it.
I would like to give you an opportunity to elaborate or describe for me the kinds of jobs that are created from building and maintaining a pipeline, and potentially how many jobs we may be looking at when you consider some of the proposals that are in front of us right now.
:
The pipeline itself is done by four principal crafts: the pipefitters, who do the welding and fitting the pipe up, and work on the pumping stations and the facilities; the operating engineers, the guys on the sidebooms, the cranes, and the backhoes who operate the heavy equipment; the teamsters who operate the big trucks that string the pipe; and the labourers who do the skid hustling and who are really the maids-of-all-work, doing everything from the guy they call the “band-aid”, who's the first aid man, through to the straw boss, through to the whatever. There's another group of people who come in and X-ray, or it's now called integrated phased array...whatever. It's become much more complicated than it was in my day.
To do a fair sized pipeline of 300 kilometres, there will probably be two or three spreads for two seasons, probably employing upwards of 6,000 people. If it is an oil pipeline, it means we will have thousands of people in a variety of trades, including plumbers, boilermakers, millwrights, iron workers, sheet metalworkers, insulators, labourers, scaffolders, carpenters, and the occasional elevator constructor. I should have a list of all my affiliates are, shouldn't I? About 60 trades are involved.
The pipeline that has 1 million barrels through it, like Energy East, needs an infrastructure that costs, let's call it, $10 billion to build. Roughly translated, $10 billion in infrastructure takes 65 million work hours to construct. If we assume for the moment that it took 6,000 people to build it, which is not a bad estimate, those 65 million hours will result in a hundred full-time jobs. Of those hundred full-time jobs, 40% will be trades jobs to keep the place running.
Twice a year or perhaps once a year, depending on the place, roughly 3,500 people will descend on that facility for 42 days, basically rebuild it, and then disappear.
For us, these jobs are not petty. These are big-time, shoot-a-dime, work opportunities. They are the opportunities in which we get to train the next group of tradespeople. Where Canada sits right now, the construction workforce is basically a baby boom workforce. No one thought the baby boomers were ever going to retire. We're going to fool them. We're all going somewhere around June 16, 2016. We're looking at replacing, call it 350,000 people, and 40% of all of our managers and supervisors in the next seven years. We need ongoing work in order to train the next group that's coming.
I'm getting preachy now because this is near and dear to my heart. When you look at it, the jobs that are on the pipeline are only a pale reflection of the jobs that are created on both ends of that line.
:
I'd also like to build on the previous comment about the command and control piece if there's a moment at the end of this.
I have to say that, at the moment, while we're waiting for further consultation in terms of the approval of the bill, various companies are taking a look at what sort of financial mechanisms they would have to put in place in order to ensure the availability of that billion dollars or whatever amounts of money are going to be mandated as being immediately necessary. Ultimately, we require greater clarification at that end.
What I can say is that all of the members of the Canadian Energy Pipeline Association are such substantial companies and of such a longstanding financial history—with strong balance sheets, and assets such as the pipelines themselves on the ground that are worth billions of dollars—that they will be capable of this. But as to exactly what the financial consequences are, we don't have enough information yet to assess what kinds of mechanisms they will have to put in place to provide the assurance to the National Energy Board that they have full access to the necessary monies.
If I may make a brief comment on the command and control piece that Mr. Blakely addressed, like him I give all my respect to the senior service. I served in our air force for 28 years. I think it's extremely important to realize that there's a significant cost to readiness. Our company is already mandated to be ready, evidenced, as I said, by some 300 emergency response exercises last year, and nobody knows their systems better than they do. I think, ultimately, you want to ensure that they are positioned to exercise the command and control for which they are fully liable. I think the suggestion is that we would not want to see the NEB step in hastily. However, in the event that a company is ever deemed to be irresponsible they should immediately step in.
Mr. Miron, I have some questions for you. I appreciate the concept you put forward of “polluter might pay”. That resonated with me. You talked about the fact that once we're over a billion dollars, the cost falls to Canadians for cleanup and compensation.
For me, all of this is with the backdrop of a couple of different things.
The first backdrop for me is the environment commissioner's 2011 report. The environment commissioner looked at the transportation of dangerous goods via pipelines and found little evidence that the National Energy Board was making sure that companies actually followed through on correcting their deficiencies in the practices they had, and also, alarmingly, that the NEB wasn't monitoring companies as to whether or not they had prepared emergency procedures manuals. That makes me think, then, about Enbridge and Kalamazoo and how the U.S. regulators likened the response to the Kalamazoo spill to the the Keystone Kops.
I think about the two overlaid. If we don't actually have an emergency procedure manual, what the heck is going on and how do we deal with it? The longer we're struggling to have a response, the more environmental damage there is and the higher the cost for cleanup and potentially for compensation.
My questions to you are around Bill and drawing on the experience of spills that we know about. How much did they cost? How much did they cost to clean up? What kinds of damages were there? What was the proportion of what the companies were on the hook for versus citizens paying through government? How much compensation actually went unsatisfied and wasn't paid out? Can you help us situate Bill C-46 within the context of what we know about spills?
I will answer in English, because it will be quicker that way.
[English]
I would stick by my two amendments. I think that they, in a sense, just simplify the bill. I think they're achieving essentially the same objective.
The first one certainly is just to clarify the language around environmental damages.
The second recommendation—the requirement, or at least the authority, to make regulations for prescribing a process for assessing environmental damages—I think is very important. In fact, right now the legislation, if it does anything, the bill prohibits the Governor in Council from making such regulations with respect to the pipelines claims tribunal. I don't fully understand the reasoning for that, why the pipelines claim tribunal would be prohibited from essentially compensating for those damages. I think that part should be removed. That's proposed subsection 48.48(2). And again, it's regulations to set out a process that would benefit industry, government, all parties, followed essentially after the American model.
:
I have questions for Mr. Donihee.
I would presume that you think it's reasonable that the safety of pipelines is just one factor in public confidence in current pipelines and the building of new pipelines. It's good that we're bringing forward legislation that hopefully will ensure that there is increased or improved inspection and safety, and more expeditious responses and compensation.
However, I'm sure you and your association, your company members, have noted the task force report that was just issued, which is recommending an enhanced voice for first nations in all resource-based projects, including pipelines, and that they have a greater share in the benefits. Those appear to echo the Eyford report, which identified the failure on the part of the government to resolve first nation land claims as one of the key barriers to the approval of future pipelines.
I wonder if you would like to comment on that, and where you think pipeline safety legislation lies compared to the bigger issues that your companies are facing?
:
Thank you very much, Mr. Chair.
I'm going to carry on where I left off after my last question.
But first I want to say once again that I appreciated a comment Mr. Blakely made when he said, “The truth is, we live here”.
Whether we are legislators or regulators or shareholders of a company, those who are building the pipelines or working for those corporations, we all live here and we all desire to ensure that projects are only approved if they are safe for Canadians and safe for the environment.
Prior to this legislation, our government brought forward new fines for companies that break our strict environmental laws. These fines were meant to be a tool that the NEB could use to ensure companies were penalized for contraventions of NEB regulations or orders.
The measures in this act build on those previous measures by enhancing and further clarifying these provisions. For example, companies operating major crude oil pipelines will now be subject to the absolute liability up to $1 billion. I want to note that still in the event that a company is found negligent or at fault, there is unlimited liability as well. This should eliminate any residual uncertainty about which party is responsible for cleanup costs and damages if an incident occurs.
Mr. Donihee, what has been your experience with industry, with members of your organization? Have you found that companies are willing to clean up and remediate after a spill, that they're willing to shoulder the costs?
One of the things that caught my interest in the earlier testimony was a bit of the discussion on the common law right to sue. We have a bunch of lawyers at the front of the room here and very few on the committee, so I would be interested in knowing what is normative in situations like this in Canada.
An illustration was given of how it took 20 years with the Exxon Valdez. Giving an American illustration to a bunch of lay people from Canada honestly doesn't mean a whole lot, because we know the Americans have a little bit of an odd system at times, even with the common-law correlation, etc.
Let's say that something did happen under this new legislation and it was actionable, something that would be suable. What sort of activity could you sue for under this current legislation? I know it's just guessing, but give the lay members of this committee some sort of idea of for how long and in what process that would wind through.
We're being asked to vote on legislation that involves legal processes. I'm a geophysicist, and we have a variety of various other skills around the table, so I'll be blunt that I don't totally get what all would be involved in that.
I have a bunch of people who are all leaning forward and saying “we can teach the guy something here”, so who wants to start on this one and upgrade my legal education?
:
Without saying that I want to do those latter things, I will speak to your question as best I can.
We don't currently have a lot of litigation in this context. There was a spill in Alberta recently, the Plains Midstream spill, and in that context there was regulatory enforcement done, but there wasn't any common-law action for environmental damages.
As I said in my comments, even though the Supreme Court of Canada has opened the door for the government to do that in cases such as Mount Polley, Plains Midstream, and Lac-Mégantic, governments have never done it in Canada to get those environmental damages.
Where there is private loss, which is really that first category, individuals would be able—whether under this legislation or without it—to sue for that private loss. This legislation doesn't change that.
I agree with Mr. Miron that it's essentially a codification of the existing scheme at common law, so we haven't seen where government bodies, provincial or federal, sue for those environmental damages. Those environmental damages essentially just become externalities. They essentially become a cost borne by ourselves, by our communities, and by our future generations.
My thanks to the witnesses for being here, and for their testimony.
I missed the first hour of the meeting, so please excuse me if I repeat anything.
I come from Quebec, where people are very concerned about pipeline projects. At the moment, we have a TransCanada project and the reversal of line 9. In Quebec, people are directly affected by those projects.
We often hear that people seem to have difficulty expressing their views. People affected by the project say that they are having a hard time being heard.
The bill certainly contains some interesting elements. But it seems that some things are missing. For example, it talks about the right to consultation on environmental matters. There are environmental rights associated with the consultations, such as those with First Nations. I feel that also applies to Canadians in general.
Does the bill meet the needs for consultation? The Canadian Environmental Assessment Act has been amended to make consultations on environmental assessments more difficult.
Mr. Olszynski, Mr. Miron, can you tell us more about how the right to consultation will be respected? What are the difficulties in that regard?
:
Thank you for the question, Mr. Choquette.
[English]
I would say first, having had the privilege of serving at the National Energy Board as the chief operating officer in a previous life, that the NEB is an independent employer. There is a degree of independence about it.
The finances that it receives for its operations are approximately 90% cost recovered from industry, so I think you would find that industry, as I said in my testimony, clearly recognizes the benefit of a strong regulator and how how essential it is.
Where the NEB suffers, quite frankly, is the imposition of standard pay practices that are commonplace in the public service, but which don't serve the NEB very well when it resides in downtown Calgary and is competing for extremely qualified technical talent. It finds itself in a difficult position to compete for, in terms of its compensation basis and hiring practices, talent and to retain it.
I think that one of the strongest recommendations that I could offer is to ensure a strong, well-financed, and flexible National Energy Board to provide the quality of oversight, capability, and competence that Canadians expect of it.
My thanks to the witnesses here with us today and the witness joining the meeting by videoconference.
[English]
One of the things that I want to ask about is funding for the NEB, because according to the 2015-16 main estimates, the NEB's funding for the regulation of pipelines, power lines, energy development, and so forth has actually decreased from $81.7 million in 2013-14 to $76.8 million in 2015-16. That's a reduction of some $4.9 million, or 6% thereabouts.
Given the fact that Bill is actually giving quite a bit more responsibility to the NEB, and more authority, do you think it's strange that its budget is shrinking instead of increasing? How do you think this will impact public confidence in the NEB's ability to make sure our pipelines are the safest in the world?
Mr. Donihee, do you want to start?
:
This issue has come up quite a bit from all of the witnesses. I've really appreciated all of your testimony. This bill provides for the promulgation of a lot of regulations. Without those regulations, we still have a lot of legal uncertainty on exactly what the regime will be.
I put the question to the government and to the National Energy Board of whether or not they have already been conferring, and with the energy sector, which it seems would be logical, on the beginning of drafting the regulations. When I was assistant deputy minister, it was my understanding that when you are coming forth with a whole new legislative regime, you are also thinking about what regulations to implement that put substance to the bill, and then what kind of staffing and training you are going to need in order to implement that new regime in a constructive and effective way.
I guess I would like to hear from any of you. I appreciate the comments by Mr. Donihee, which were very honest. It is nice to hear that you once worked at the NEB, so you know what is needed.
I would just like to know if you agree, or if in any way you concur with my concern. I can only go on the basis of what the government and NEB have told us, and that is that no work has been done yet on these regulations. Does it not make sense that they ought to be expedited in a consultative process to promulgate these necessary regulations so we finally know what the new regulatory regime will be?