Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue No. 60 - Evidence - April 9, 2019 (morning meeting)
CALGARY, Tuesday, April 9, 2019
The Standing Senate Committee on Energy, the Environment and Natural Resources, to which was referred Bill C-69, An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts, met this day at 8:02 a.m. to give consideration to the bill.
Senator Rosa Galvez (Chair) in the chair.
[English]
The Chair: Good morning. Welcome to this meeting of the Standing Senate Committee on Energy, the Environment, and Natural Resources. My name is Rosa Galvez. I’m a senator from Quebec and the chair of this committee. I will ask senators around the table to introduce themselves, starting with Senator Mockler.
Senator Mockler: Percy Mockler, New Brunswick.
Senator Neufeld: Richard Neufeld, British Columbia.
Senator MacDonald: Michael MacDonald, Nova Scotia.
Senator Patterson: Dennis Patterson, Nunavut.
Senator Simons: Paula Simons, Alberta, Treaty 6 territory.
Senator D. Black: Doug Black, Alberta.
The Chair: I will introduce the analysts from the Library of Parliament, Jesse Good and Sam Banks on my right; and to the clerk of the committee, Maxime Fortin.
Colleagues, today we are continuing our study of Bill C-69, An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts.
I want to stress to the witnesses that we are here to address C-69 issues, not other bills, not other areas not covered by C-69. We want this hearing to be as efficient as possible.
Today we welcome, for our first panel, from Cenovus Energy, Al Reid, Executive Vice-President and General Counsel; and Ariane Bourassa, Senior Advisor, Government Affairs. From Canadian Natural Resources Limited, we have Steve Laut, Executive Vice-Chair; and Nicholas Gafuik, Manager, Public Affairs. From Imperial Oil, we have Theresa Redburn, Senior Vice President, Corporate and Commercial Development; and Helga Shield, Manager, Environmental, Regulatory, and Socioeconomic.
You have five minutes for your opening statement, following which we will have a period of questions and answers.
We’ll start on the left. Please go ahead.
Theresa Redburn, Senior Vice President, Corporate and Commercial Development, Imperial: Good morning. My name is Theresa Redburn. I am the senior vice president of commercial and corporate development at Imperial. With me today is Helga Shield, our Environment, Regulatory, and Socio-Economic Manager.
I would like to begin by thanking the committee and the honourable senators for the opportunity to appear before you today.
Imperial is a 138-year-old Canadian company whose assets are 100 per cent Canadian, with 5,700 employees across Canada. I would like to start with a vision for Canada. Canada has the opportunity to be a responsible energy provider to people worldwide. The International Energy Agency states that global energy demand will increase 25 per cent from 2016 to 2040, with oil and natural gas continuing to meet over 50 per cent of the demand in 2040.
From an investor’s standpoint, Canada has historically had a lot to offer: world-class resources, relative political stability, high environmental standards relative to other jurisdictions, and respect for Indigenous rights. However, today Canada is not competitive to attract capital into major new oil and gas investments. Spending in Canada has nearly halved over the past three years, while in the U.S. it has risen by almost 40 per cent in one year alone.
Competitive gaps in our regulatory regime relative to other jurisdictions is concerning. Last week Royal Bank Chief Executive Officer David McKay stated he often hears concerns from investors about Canada’s falling position in the world. Imperial investors are reiterating those same concerns.
According to the World Bank ease of doing business index, Canada ranks thirty-fourth out of 35 OECD countries in the time it takes to get regulatory approval for a construction project. Yet, we rank in the top quintile globally in environmental performance and fourth among OECD countries in environmental policy stringency. An example, last year the Enbridge Line 21 repair, a proactive safety measure on an existing footprint, took over a year to obtain approval to replace less than 1 per cent of the pipeline, or 2 kilometres. We were forced to shut our operations in Norman Wells, move out employees, and local businesses declined, as did royalties.
Specific to Bill C-69, Imperial supports the broad objective of this regulatory reform as described by the government to regain public trust and help get resources to market. Investors require a process that is clear, transparent, efficient, and predictable. For trade-exposed industries like ours, it needs to be competitive.
Bill C-69 as currently proposed is overly complicated, time consuming and uncertain, legally vulnerable to challenge, and, as a result, increases investment uncertainty and, as written, would be a significant barrier to future investment, jobs, and associated benefits. More specifically in the bill, meaningful engagement with Indigenous people and the public has not been defined. This is too important to leave to later. Public policy discussions must be removed from project adjudication and placed in the proper forums. We need a reasonable designated project list that does not duplicate what is already being managed by life cycle regulators. Cooperation agreements between federal, provincial, and Indigenous authorities are a must to avoid duplication and inefficiency.
Of concern: timelines and the removal of the standing test, delays, increased capital costs, reducing rates of return, making us uncompetitive. Lastly, some real consideration needs to be given to the positive, economic legacies that benefit communities and Canada as a whole.
We fully support the amendment package put forward to the Senate by the Canadian Association of Petroleum Producers.
I would like to conclude my remarks by speaking about the oil and gas industry’s history of innovation and achievement. We are collaborating today in unprecedented ways with the Canadian Oil Sands Innovation Alliance and CRIN. Canada’s oil sands is a case study in how necessity drives innovation.
For instance, at Imperial we’ve invested significantly in R&D for over a hundred years in Canada. We have new technologies that will reduce greenhouse gas intensity by approximately 90 per cent. This is game changing, if they can be built.
In summary, Canada’s assessment process must encourage a dialogue on how projects can build positive, desirable legacies that would benefit local communities and Canada as a whole. A predictable, timely, and transparent assessment process will grow jobs, attract global business, and progress reconciliation. I ask you to consider CAPP’s full package of amendments and allow sufficient time before the coming into force of this bill. It is very important to get this right. Canada has the opportunity, responsibility, and duty to be a long-term energy provider to people worldwide. The world is better off with more Canadian energy. It is our hope to work together to make this vision a reality.
Thank you for your time. I look forward to your questions.
The Chair: Thank you.
Mr. Laut.
Steve Laut, Executive Vice-Chairman, Canadian Natural Resources Limited: Thank you, senators, for this opportunity to speak to you today about Bill C-69 and the importance of getting this legislation right.
My name is Steve Laut. I’m Executive Vice-Chairman of Canadian Natural Resources. Canadian Natural is the largest producer of oil and gas in Canada, with operations in B.C., Alberta, Saskatchewan, and Manitoba. We’re headquartered in Canada, we’re built by Canadians, we’re run by Canadians, and we are a true Canadian success story. We have grown production from 400 BOE’s a day in 1989 to 1.1 million today. We have roughly 10,000 employees and generate tens of thousands of indirect and induced, well-paying jobs. We’re proud to work together with 160 municipalities, 75 Indigenous communities, and over 35,000 landowners across our operations.
Canadian Natural, along with the entire oil and gas sector, has delivered game-changing environmental performance. By leveraging technology and Canadian ingenuity, our company is now the third-largest R&D investor for all industries in Canada.
Canada’s oil and gas sector has taken what was branded as high intensity oil in 2009 and made it the premium oil on a global stage, and we’ve done it all in 10 years. We are committed to do even better in the future.
By reducing emissions at our Horizon Oil Sands mining and upgrading operations, reducing methane vent volumes in our primary heavy oil operations, capturing and sequestering CO2 at our Quest facility, Canadian Natural has taken the equivalent of 2 million cars off the road. That represents 5 per cent of all vehicles in Canada.
The entire industry has achieved similar, equally impressive results. We’re groomed to do even more.
It’s not 2009 anymore. Canadian oil and gas is now, from a climate change perspective, as well as other environmental, social, and governance metrics, the premium product. Something all Canadians should be very proud of.
Our performance is important because global energy demand continues to grow and crude oil and natural gas will remain an important part of the global energy mix for the foreseeable future.
In this context, Canada is uniquely positioned to capture a leadership opportunity on climate change and deliver an immense made-in-Canada success story. We have an opportunity to grow oil and natural gas production in Canada to meet the growing global demand while displacing more emissions intensive sources of energy, thereby reducing global climate change emissions.
To seize this opportunity we need a workable and effective regulatory process that enables increased market access to get our premium products to global markets.
Bill C-69 as currently written is unworkable. However, with common sense amendments we can make this bill workable and create a large number of well-paying jobs for Canadians, unleash Canadian ingenuity, support investment in a low-carbon energy mix, and make Canada a world leader on climate change.
To make Bill C-69 workable we are aligned with industry in supporting amendments to improve regulatory effectiveness, efficiency and reduce timelines; increase certainty on decisions; increase clarity and understanding in the review process by industry, Indigenous communities, and other stakeholders.
Canadian Natural has worked together through industry associations, including the Canadian Association of Petroleum Producers, CAPP, and the Mining Association of Canada, MAC, to develop a broad package of amendments. I know that CAPP and MAC have previously provided this to the Senate as industry’s recommended amendments. I wish to emphasize Canadian Natural supports all these amendments.
By getting this right we can drive an almost virtuous cycle of economic, environmental, and social performance, and at the same time make Canada stronger. Thank you for this opportunity and your time.
The Chair: Thank you.
Mr. Reid.
Al Reid, Executive Vice-President and General Counsel, Cenovus Energy Inc.: Good morning. Thank you for the opportunity to present my company’s views this morning. Thank you all for making the trip to Alberta to hear Albertans’ perspective on this important bill.
My name is Al Reid. I work for Cenovus Energy. We’re a Calgary-headquartered oil and gas company. We are Canada’s largest in situ oil sands producer. We employ over 3,000 Canadians. We take responsible resource development seriously. Between 2009 and 2017 we purchased over $2.4 billion in goods and services from Indigenous-run companies. We’ve reduced our GHG emissions intensity from our oil sands projects by one third since 2004.
Although it’s no longer my direct role, I have a background as a regulatory lawyer and experience taking projects through environmental assessment and project-approval processes.
Alberta in situ oil sands projects have always been regulated by the Alberta Energy Regulator. Bill C-69 may change that. The question will be determined in regulation, so I will leave that for now, only to say we believe that federal oversight of the upstream industry is entirely redundant and unnecessary given the expertise that already exists in Alberta and the history of approvals and regulation in Alberta.
As a company that may have to bring projects through the process, we are not saying that we do not expect, and in fact welcome, a rigorous assessment process — that’s what we’re used to — but we are saying, “Let’s get it right.” Our submissions today are from the perspective of a proponent that wants to continue to build projects in this country.
Additionally, our industry is almost entirely dependent on pipelines to transport our product to market. Sadly, the current regulatory process is being abused by entities that wish to frustrate, delay, and ultimately stop the production of Canadian oil and gas. As currently drafted, Bill C-69 will make this situation worse by extending timelines and increasing the risk of litigation. We don’t believe it has to be this way.
Our goal in this process has been to identify amendments that respect the policy intentions of government, while also improving the timeline certainty and legal resilience that our industry needs to continue investing in the Canadian economy. Our amendments are contained in the Canadian Association of Petroleum Producers, or CAPP, submission. We recommend adoption of that entire package.
Respecting the limited time we have today, I will limit my remarks to a few examples of the changes that we believe will strengthen the bill. These are thematic.
First, we think it’s very important to give the agency the scope to do its job. Many of the amendments we have suggested are designed to allow the agency and the Canadian energy regulator to do just that. Establishing the right legal framework in the legislation is essential to avoid having matters being decided by the courts and not the regulator.
Second, timelines are important. Bill C-69 currently contains too many opportunities for timeline extensions. Our amendments aim to preserve government flexibility throughout the process, while providing industry certainty through a recommendation for a two-year maximum time limit from the completion of the proponent’s studies to a final decision. That’s not the whole process. That’s just two years from the time that the regulator says they have the information they need to the time that the decision would be issued.
Third, and equally important, is public participation. Canadians who are affected by a project should have the right to participate in its assessment.
However, the current bill presents a significant opportunity for abuse of process and project delay through the crowding of public hearings. The agency must have the authority to prioritize the voices of impacted stakeholders.
Finally, we are concerned about the addition of public policy considerations.
Section 22 of the bill includes an expanded list of factors to be considered during a project review, many of which are public policy factors. In our view, environmental assessment processes are decision-making processes and not a forum for public policy debate. To be efficient the agency should have the ability to provide clear expectations of relevant considerations for specific projects. We believe this is what government intends to do, but the legislation as it stands today does not make that clear.
With that high-level overview of our concerns with the bill I will conclude.
Thank you for the time. I look forward to your questions.
The Chair: Thank you very much for respecting the time.
We are going to go to a period of questions and answers. The first questioner will be the deputy chair, Senator MacDonald.
Senator MacDonald: Thank you, chair. I thank all the witnesses for being here this morning. I think I’ll direct my first question to Canadian Natural Resources Limited.
We’ve heard from, as you can imagine, a number of environmental groups in the last few months, yesterday, and we will today. They claim that we have some of the weakest environmental laws in the world. In fact one group had told us that Canada has the weakest environmental laws in the industrialized world. I would like for you to respond to that and reflect on our environmental laws and how they compare to other countries.
And the reason I direct it to you, I’m familiar with some of your information. I was pleasantly surprised with the amount of reduction of emissions by your company with your production in the oil sands. I’m wondering if you can elaborate on both of those items.
Mr. Laut: Well, thank you for that question and the opportunity to respond to it because I think this is something that Canada should be very proud of. Our environmental regulations are top tier, if not the best in the world. And that’s not just the industry speaking. An independent assessment was done by an engineering firm that reviewed all regulatory processes across the world, I think it was WorleyParsons that did the work. Canada was in the top three. I think maybe only Norway was ahead of us; very stringent environmental regulations.
Look at the regulations that have been done here in Alberta and in Canada regarding methane, regarding CO2, the CO2 issues that we have in Alberta and the legislation. That has helped drive the performance. The industry — the ones here speaking — and everybody in the entire industry, we are committed to reducing our greenhouse gas footprint. Our water usage has gone down tremendously and our land footprint has gone down. We’re doing that by utilizing Canadian ingenuity and leveraging technology. We’ve made tremendous improvements.
I think we talked to some of those slides we showed a while back to some of the senators that if the world had the same standards regarding flaring as Canada has, greenhouse gas emissions would go down 23 per cent in the world.
Canada can’t provide all the world oil, but if they adopted the regulations that we have here in Canada, it would take down 23 per cent emissions. That is equivalent to taking three times the cars that we have in Canada entirely off the road. That’s just the regulations we have in Canada.
They’re very strong and the industry supports those regulations. We’re trying to drive better performance. We want better performance and we’re delivering.
Hopefully that answers your question.
Senator MacDonald: Thank you.
Ms. Redburn, you mentioned in your presentation that public policy discussions must be removed from project adjudication and placed in the proper forum. I’m wondering if you can expand on that exactly what you’re referring to.
Ms. Redburn: Thank you, senator. One of the challenges we have found in project adjudication is debate about the scope and impacts of climate change and taking that debate beyond the impacts of a project and going further down the line. That’s a debate that’s challenging for a specific project to address.
As well, there is criteria in the bill for things like gender analysis or gender considerations. The challenge becomes what exactly is needed — what is the criteria, what is needed? If it is vague in the bill, even if it’s elaborated more in the regulation, that difference creates an opportunity for court challenges and further delay and debate.
That’s why we’re asking for more clarity in the bill and have recommendations associated with that.
Senator MacDonald: Thank you.
The Chair: I have the ugly task to monitor the time. It’s three minutes per senator so that everybody has the chance to ask questions.
Senator Cordy: Thank you very much. It’s great to be in Calgary.
Thank you for your presentations. They’ve all been very clear. You’ve been very specific in your recommendations for changes. That’s very helpful to the committee.
I would like to go back to an issue that we’ve heard this morning from several of you, but we’ve also heard — as we’ve heard witnesses in Ottawa and in Vancouver yesterday, and that’s related to timelines.
This question was asked of our department officials when we met with them early on. I would like further clarification from you. Their comment was that — as we know, the minister can extend the timeline once for a period of 90 days, but the department said this is consistent with the current legislation of 2012. The difference is with this legislation is that now if it’s extended beyond this, the minister or the Governor-in-Council must inform the proponent in writing and the reasons for granting it. In fact this bill goes a little further in that the minister has to provide or the Governor-in-Council has to provide reasons in writing. But other than that it’s similar to what currently is in place.
Perhaps you could just clarify and say specifically what you would like for timelines.
Mr. Reid: I’ll answer that. The one thing that we have put in — it’s in the CAPP’s submission, and we’ve emphasized it this morning — is there should be a two-year period from the time that a proponent has studies in front of the agency that the agency says are sufficient to address the issues that the agency thinks are relevant. That two-year period follows the 180-day period that goes from the time that a project description is posted by the agency, all of the public consultation with members of the public, as well as with agencies, federal agencies, that would have to issue approvals to allow the project to go forward.
In my experience, a project description is not something that goes in on the first draft. You probably have a three- to six-month period before that project description ever goes in. Then you have another six-month period, the 180 days, that allows you to get to the point where there’s a notice of commencement. Subsequent to that you have the period of environmental study, which is undefined, until you get to a section 19.4 notice from the agency that they have all the studies they need.
We’ve made some suggestions about steps to make that 180-day early planning process, which we think is important, more efficient. We believe with that early planning done properly and the time, and it will likely be a year before you get to a notice of commencement from the first time you start to talk to the regulator, that the two-year period to finish the assessment, once you have all of the studies that the regulator thinks are relevant and required in front of them, is a reasonable outcome.
Senator Cordy: I was going to ask about the early planning stage, but you commented on that. Thank you for that answer.
Ms. Redburn, you spoke about needing time for the coming into force of this bill if it passes. I’m sure you’re hopeful that your amendments will be included in the passage. What timeline are you looking at for the coming into force, and why is it important that you have a sufficient period of time for industry to deal with the changes?
Ms. Redburn: Thank you, senator. I’m probably not the best person to answer the question as to what is the appropriate time for the Senate and the House of Commons. I would say that given the complexity this requires a significant amount of work.
We have put in detailed amendments to aid in that exercise, but we just wanted the broader picture and the broader view to be considered.
One of the elements of that broader view, and Al mentioned timelines, is it’s not just the timeline compared to the previous CEAA process, but how do we compare versus other jurisdictions who compete for capital, energy capital, around the world. That’s very important, that we look outside.
C.D. Howe published a report in February that does some comparisons of Canada versus other jurisdictions. You will see that Canada’s EIAs for oil and gas are two times that of Australia. There are repeated examples in there.
I think it’s important when we think about timelines whether it’s to get the bill right or the actual timeline of the regulatory process itself that we take that broad picture view, because that’s where Canada is having challenges now, in attracting capital. Thank you.
Senator Cordy: Thank you very much.
Senator Simons: Thank you very much, Madam Chair. I think my first question is for Mr. Reid.
When we met with Premier Lougheed — gosh, that’s a Freudian slip. When we met with Premier Rachel Notley in Ottawa a couple of weeks ago, she flagged for us concerns that the Alberta government has about the regulation in situ and subsequently presented us with her own amendments, which are different from the CAPP, CEPA group amendments that include specific scoping out of in situ. She has a number of things that she would like scoped out. I’m wondering about your perspective.
Do you feel that’s necessary, and is that something that your group would support?
Mr. Reid: Yes, we absolutely support that. As I said in my opening statement, the Alberta Energy Regulator today, formerly the Energy Resources Conservation Board, has a long history in this province of regulating our industry. As a company, we have over 800,000 barrels of oil per day of production either operating or approved through that process. It is a rigorous process. It involves early planning. It involves consultation. It involves participation in the process by affected communities. It’s a very rigorous process and it works.
One of the things that makes it work is the expertise that lives within the Alberta Energy Regulator and within Alberta Environment as to how these projects work, what the considerations are that need to be taken into account in environmental assessment.
We think it would be entirely redundant to drop a federal assessment on top of that when it’s already being adequately dealt with in Alberta.
Senator Simons: All right. I have a question, which is not exactly related to that but very much related to the package of amendments that CAPP and CEPA and MAC have presented us. That’s the issue of a privative clause. I address this question to you because of your legal background.
I know that privative clause is a key part of that package of amendments. We’ve also spoken to people who have said to us they don’t think that it will stand or that it will simply lead to cases being adjudicated all the way to the Supreme Court. I’m wondering what you think about how imperative it is to add that privative clause and if you think it will be effective or is it there primarily for sort of political window dressing.
Mr. Reid: There’s nothing in the package that’s there for political window dressing. We tried to take a very pragmatic approach as an industry to say what would we need to see amended that would allow us to be comfortable with this bill, to be able to — really to go to our boards and say this is what we’re going to do, this is how long it’s going to take to get approval, build, and actually start to see cash flow from, because that’s what our industry does. We took a very pragmatic approach.
The privative clause I believe is necessary to avoid issues where the regulator has made a decision. The language that we’ve used in our amendments makes it clear that it is the regulator’s job to make those decisions because they’re the expert.
That’s why they’re put in place. And that’s what we really see as important. The old National Energy Board Act has that, the Alberta Energy Regulator has that. What it says is we’ve put in place an expert regulator because they can make decisions around environmental impacts and production, those kinds of things, and we think that’s where that lies.
If you don’t build in the ability for them to do their job, to make those decisions and make it clear that those are not court decisions, then there is the opportunity that those will go to a panel of judges, who are very learned people but aren’t the experts who are put in place under the legislation.
Senator Simons: But they still will, right? It will just go to the Federal Court of Appeal rather than —
The Chair: I’m sorry. That’s —
Senator Simons: We’ll chat later.
The Chair: Senator Black.
Senator D. Black: Thank you, panellists, for being here and for the ongoing work you’re doing on this important piece of legislation. I don’t have the privilege of sitting on this committee so I’m thankful for the chairman for allowing me the privilege of sitting here today and asking you questions.
I’m an optimist. I’m very hopeful that the package of amendments that we’re all talking about and all working so hard on will be accepted by this committee, and then ultimately the Senate and the House of Commons.
But let’s pretend that they’re not. Let’s assume that we do not get a package of amendments that work for industry and government.
What would your advice be to the committee then in respect of Bill C-69?
The Chair: Who wants to answer that question?
Senator Simons: Nobody.
Senator Cordy: Nobody.
The Chair: Nobody. Okay, next.
Mr. Laut: Nobody wants to answer that question.
The Chair: Thank you.
Mr. Laut: I’m an optimist too, so I don’t want to think of failure. But the amendments that CAPP and MAC and all industry associations and almost all the provinces are aligned on to make common sense amendments. They’re strengthening the bill, they’re not diluting it. They’re making it stronger.
They’re getting greater certainty, greater timelines. Not just for industry, but for Indigenous groups and all other stakeholders.
What you really want here is something that everybody can feel confident that they can get their views expressed, their concerns heard, and addressed both from Indigenous, other stakeholders, and industry and so that we can actually do projects that make sense, that are environmentally sound, that create hundreds and thousands of jobs for Canadians and get premium products to global markets, to reduce climate change emissions. That’s what we want to have.
I think we’re aligned with everybody involved in the process. We need clarity, certainty on timelines, we need it to be sound and have confidence in the system. That’s not there today. I’m optimistic that we’ll get there.
I don’t know if that answered your question.
The Chair: I thank all of you for being here. I have a couple of quick questions.
Ms. Redburn, you mentioned in your notes — I’ll just use the term regained public trust with the change. My experience with the NEB while in government in British Columbia and since leaving is that I’ve never received a letter saying anybody distrusts the NEB. In fact, I think the complete opposite. But the government has said we have to regain the public trust and this bill is what’s going to do it.
You’ve all said how dire it would be if in fact we didn’t amend this bill, what would happen to present jobs, or future jobs, and investment. It’s pretty disheartening what would happen.
Do you think if the government just pushed it through and put it in that it would really regain the public trust, or all those people that would be unemployed or those that don’t have a future — and where I come from in northeast B.C., it’s about oil and gas. I think that people will not have the public trust in Bill C-69. They’ll see it as a way of “it killed my job and my opportunity for a good life.”
Ms. Redburn: Thank you, senator. I want to clarify my comments.
We supported the objective of regaining public trust. But you’re correct, our view is that this bill would not do that. In fact, we would not be building projects with this bill. That is the challenge, is that then, as you mentioned, jobs are lost; the strong bonds that many of us in industry have with the Indigenous community programs and benefits, those would be lost; and Canadian economic growth would be severely impacted.
We support the objectives of the bill, but our concerns are around the how to.
That’s why we have such a thorough set of amendments to try to address that how to.
Senator Neufeld: Mr. Laut, thank you for being here. You say it’s unworkable the way it is. I don’t disagree with you for a moment. We have to look seriously at a lot of amendments. The present government could have reduced the angst amongst the industry if at least they brought forward a project list of what actually would be reviewable and those kind of things.
Have you, or any of you, seen — maybe written on the back of an envelope — that this might be the projects list? We’ve heard from one group in Manitoba — well, that’s exactly what it was.
Senator Simons: That’s true. I’m serious, yes.
Senator Neufeld: That they saw a project list, some of their deputy ministers and whatnot, but they were sworn to secrecy.
Have any of you folks seen kind of a project list?
Ms. Redburn: I have not.
Nicholas Gafuik, Manager, Public Affairs, Canadian Natural Resources Limited: No. I would just comment that under CEAA 2012 there is a project list —
Senator Neufeld: That’s correct.
Mr. Gafuik: But beyond that, no, I have not seen any.
Mr. Reid: We have not seen a project list. And that’s of great concern to us, senator.
Senator Neufeld: Exactly. Thank you.
[Translation]
Senator Carignan: My question concerns an idea for an energy corridor project. The bill doesn’t include the possibility of an energy corridor to facilitate this. What do you think of the idea of setting up an energy corridor? Should the legislation be modernized to include specific consultations or aspects for the creation of this type of corridor?
[English]
Mr. Laut: I will take first crack at it. Thank you for that question.
I think what we’re asking for, if I understand your question correctly, is the amendments to Bill C-69 would make the possibility of an energy corridor doable. As it stands today, I would not see an energy corridor even getting off the ground. The way the bill is written, you’ll see no projects like that even enter the process because there is no certainty. The only certainty really is that there will be uncertainty and it will get delayed.
The energy corridor is likely a very good idea. However, we need to add these amendments to Bill C-69 so that good projects like that can get approved.
The Chair: Does somebody else want to comment?
Mr. Reid: I would agree with Mr. Laut. There are no provisions that would facilitate an energy corridor in this bill. We believe that would be a good idea. What industry needs through a regulatory process is certainty of process and outcome, and outcome includes timelines, and we don’t see that in the bill. That’s the difficulty we have with it.
[Translation]
Senator Carignan: In the approval criteria, do you think that the reduction of greenhouse gases should be considered from a global perspective? We’re looking at the production and effects here in Canada. However, if you develop natural gas projects that will be exported to China and that will reduce China’s coal consumption, the net result from a global perspective will be a reduction in greenhouse gases. Do you think that we should consider this type of reduction on a global scale, and not just look at the Canadian target?
[English]
Mr. Laut: I’ll go first. And, really, that was part of my opening comments. I think Canada should be very proud of what we’ve done here in reducing our emissions intensity for all our production, oil and natural gas.
Your comments are correct. The LNG project that Canada has under construction right now is equivalent to taking 40 coal-fired plants offline. That’s equivalent of reducing Canada’s emissions by 5 per cent. Now, emissions will go up because you have to build a plant, but overall globally they go down 5 per cent. If you look at the resources of Canada, we could easily build five of these plants, LNG plants. That’s equivalent to reducing Canada’s greenhouse emissions by 50 per cent. That’s massive. I mean, 50 per cent is a big number.
We have the strictest regulations, as you brought up earlier. All the production that’s produced here and the resources to get to that LNG plant and then reduce emissions across globally is very, very important. I think that’s something that has been lost in all of the discussions, is that if we produce Canadian oil and gas, we’ll actually reduce greenhouse gas emissions globally.
That wasn’t the case in 2009 for oil, but it is today. That’s something I think should be recognized and looked at.
Ms. Redburn: I would support those comments. In fact, when you look at the globe — and I mentioned this in my remarks — with Canada being a strong performer in terms of environmental standards, human rights, and with the technologies we have to reduce the greenhouse gas intensity of our operations, we can displace other oil and gas from other countries. Many, if not most, of those countries do not have anywhere near the same standards that we do have. The world would be a better place with more Canadian energy.
Senator Patterson: Thank you to the witnesses. It’s very distressing to me to see how capital is flowing out of Canada to the U.S. and elsewhere and putting this province and others in perilous economic circumstances.
I would like to ask again about this elusive project list. Mr. Reid, I wonder if you could explain, as the largest in situ oil sands producer, what are in situ projects and how important are they to your company’s production?
Mr. Reid: In situ projects are our entire production. We do not have any mining projects. Both CNRL and Imperial do, and they’re certainly at the leading edge of technology on those mining projects.
In situ oil sands production involves drilling into a reservoir that is actually too deep to mine. Today it is roughly 60 per cent of the production that comes out of the oil sands. I believe most people would tell you that it’s likely the future of oil sands. What it involves is something we call steam-assisted gravity drainage, or SAGD, which is the prevailing technology. It involves drilling two wells horizontally and you put steam in one about 5 metres above the other, you put steam in the first one. That allows the bitumen to be recovered in the lower wellbore, and you pump that back to a central processing facility.
At the central processing facility you make steam from brackish water that we recover from deep underground. It’s water that’s not fit for human consumption or for agriculture. Then you take that steam out to various well pads and then recover the emulsion, because what comes back is a mix of oil and water. You remove the water, the oil goes to market, the water gets cleaned up and goes back into steam production.
It allows us to take advantage of a reservoir area that is accessed from a well pad, where there is a disturbance that would be, oh, about half the size of a football field.
Senator Patterson: Given that this is such a high percentage of production in the oil sands and, as you say, the future the way things are moving, but yet Bill C-69 threatens the regulatory process that’s in place, and I understand working well. How important is it for us to see that list prior to passing this bill? How important is it for you?
Mr. Reid: I think it’s very important that we see the whole package, everything that this new bill is going to entail. Our first position has been that you cannot undo in regulation what you’ve done in legislation, you cannot enhance in regulation what you’ve done in legislation. The legislation is critical.
Even when that legislation is right, it’s what is it going to apply to? Today we don’t know that. As I said at the outset, we believe that things that have been handled successfully under provincial jurisdiction should stay that way. We certainly don’t want two approval processes that we have to navigate. For us it’s a source of great uncertainty.
There is a number of different regulations that need to be passed that would give life to the bill. There’s also policy guidance that needs to be passed to give life to the bill. We think there’s a big role, and it’s included in our submission, for strategic and regional assessments that would also give life to the bill.
The Chair: Thank you very much.
The last question, Senator Mockler.
Senator Mockler: Thank you for your presentations.
I am a senator from New Brunswick and Atlantic Canada. When I look at what has happened in the past, that during the time Keystone was first approved, stalled, and then finally rejected, eight equivalent Keystone XL projects were built in the U.S. I live in a border town so I can tell you what is the per litre of gasoline that my people are paying in New Brunswick, which is a difference going to Maine and staying in Canada or anywhere. If I compare the prices that I’ve seen in Vancouver yesterday, it’s anywhere between 33 cents to almost a 55 cents per litre difference. There is something wrong. I applaud when you say that you do consultations because First Nation where I come from, they want to get involved. It’s quite laudable that the First Nation has shown great interest in being involved in the development of resources. We should encourage them to do so and come to the table.
There are also a lot of concerns, for example, of the Council of Atlantic Premiers, the four premiers of Atlantic Canada. If I look across Canada, nine provinces, as we’re talking today, are concerned with Bill C-69.
I would like to have your opinions, each presenter, to have your opinion on the concerns, and I’m going to quote. The four Atlantic premiers are saying:
Our assessment of Bill C-69 as it is currently drafted is that the significant changes being proposed to the scope and scale of federal environmental assessments in Canada will not meet the dual objectives of environmental protection and economic growth.
This letter was sent to the Prime Minister of Canada on February 27, 2019. I would like to have your comments.
They also say the bill as drafted places final decision-making power in the hands of the minister or Governor-in-Council and provides the opportunity to veto the results of total scientific assessment and a review of evidence.
Being mindful that if Bill C-69 passes without any major amendments, the consequences that it will have on our investment and competitiveness.
Do you have any comments on the issues raised by the four Atlantic premiers?
Ms. Redburn: Maybe I could start. Thank you, senator.
Yes, there are serious concerns about investment in Canada. You mention the dual concerns of environmental protection and economic growth. It’s that balance that causes us concern right now. Particularly the economic growth side of things. Our investors are indicating to us in a hundred per cent of the meetings that we have with them that they are surprised by Canada’s actions, confused and concerned that approvals are suddenly no longer approvals. That with the degree of bluntness, they are effectively asking what is wrong with Canada.
I had a meeting with a senior executive of one of the largest private equity firms in the world. They had an energy investor who wanted to spend hundreds of millions of dollars on energy in Canada. They took that money and invested it in Russia.
These are just a few examples of the sentiment that we’re getting repeatedly from our investors. There’s concern that they don’t want to commit to investment in Canada because they’re just not sure that things can ever be built.
That’s what we’re facing. We’re already seeing that flight of capital, and that could only get worse if we don’t get this right.
The Chair: That ends our time for this panel. Thank you very much for your testimony and for this important conversation.
We now welcome our second panel. From the Blood Tribe, we have Roy Fox, Chief, Alberta; Clayton Blood, General Manager, Kainaiwa Resources; and Heather Exner-Pirot, Technical Expert. And from Suncor Energy, we welcome Ginny Flood, Vice President of Government Relations; and Janice Linehan, Manager.
We will proceed with your statements, five minutes for each one, after which we will go to the floor for questions and answers.
Mr. Fox, please go ahead.
Roy (Makiinima) Fox, Chief, Alberta, Blood Tribe:
[Editor’s Note: Mr. Fox spoke in his Indigenous language.]
Senators, my traditional name is Makiinima. I welcome you to a part of our ancestral and traditional lands — Calgary. I am the elected Chief of the Kainai/Blood Tribe. My family and clan have been the political, war, and business leaders of our nation since the late 1700s and beyond.
My grandfather to the seventh generation was Stumicksoosuk, and he was the last war chief of the Blackfoot Confederacy. Stumicksoosuk and his son Penaquim believed in the principle of financial sovereignty, which ultimately leads to genuine home rule and their respective successors have been mentored towards that end.
They often pitted such groups as the Hudson Bay Company against the American Fur Company. They pitted them against each other so that our members could get the best return for their natural resources, such as buffalo hides.
Thank you, senators, thank you, chairman, for inviting us to provide testimony on Bill C-69. I represent 13,000 Bloods, 45,000 members of the Blackfoot Confederacy, and over 130 First Nations across Canada involved in oil and gas exploration and production activities, who are members of the Indian Resource Council.
We have been involved in the oil and gas sector for seven decades. In that time we have moved from passive royalty recipients to being employees, contractors, business partners, and owners. These investments and partnerships have financially benefitted the Blood Tribe and have helped fund housing, cultural, recreational, seniors, educational programs and other services for decades. Now Bill C-69 and other government policies that are against oil and gas development are harming my nation. I can no longer sit back and allow the provincial and the federal governments to block my nation’s economic and business opportunities. I have become vocal on this issue and calling out proposed laws and policies that take away our rights to economic self-determination and, hence, financial sovereignty.
I know you have heard from many Indigenous groups both opposed and for Bill C-69. I don’t speak for them, and they don’t speak for me. I am not sure if any of them have as much experience and capacity in the upstream phase of the oil and gas sector as we do.
We began exploration and production on our reserve lands in the 1950s. I’m proud to say that there have been no environmental damages or health impacts due to oil and gas activities on our reserve territories since then.
We have many oil and gas wells and pipelines, including several compressor stations and oil batteries that are within our reserve lands, and no harm, no harm, has ever come to our people, the animals and birds, our lands, the water, and the air. However, Bill C-69 now threatens to harm the economic and other progress we have made over these past decades.
In fact, just two weeks ago the Alberta Assembly of Treaty Chiefs rescinded a resolution that had been passed last November supporting Bill C-69. We rescinded it unanimously because the chiefs are gaining a clearer understanding of the bill’s impacts on our economic rights and development. We can’t stand back and let it pass as is. The chiefs want to understand this proposed bill fully before they can make their decision for or against.
I understand that the regulatory approval process as it stands in Canada is flaunt, but Bill C-69, as it is written, just makes that process worse. It jeopardizes and sabotages future resource development by opening projects to inevitable court challenges. It is poorly worded and vague and, as a result, the oil and gas industry is already moving their investment out of the country. We, the Indigenous peoples, cannot move our territories.
Bill C-69 has not received Royal Assent, but we are already suffering its consequences. The lack of pipeline capacity and investment has caused a huge price differential for our oil. On our reserve lands, in one field alone our royalty revenues dropped from $610,000 last August to $120,000 this January, even though our production has doubled. Now, thanks to the curtailment from the Alberta government, more investment is being moved. One company that operates on our reserve lands is reducing their drilling from six planned wells to one and reducing capital expenditures from $24 million to $4 million. We estimate that we will lose $1.84 million in royalties alone. Indian Oil and Gas Canada, a federal agency, did an assessment of the losses to producing First Nations. Collectively it is over $200 million in royalties each year.
The effects of the government’s policies to us are not hypothetical. We are experiencing the fallout today. I don’t care much when politicians and lawyers say that the bill is actually good for us as First Nations. Not in the real world it isn’t, and certainly not for the Kainai/Blood Tribe.
I have some specific objections to Bill C-69. The test for standing, the scope for political interference, the limits for preapproval engagement, and the lack of consideration for economic benefits for Indigenous peoples are all problems for me. We have suggested specific wording and amendments, which we are tabling separately for your consideration. These recommendations are very much in line with those proposed by industry. We are proud to say that we have worked collaboratively with industry to align our concerns. I see industry as trying to meet their reconciliation responsibilities — Call to Action recommendation 92 for the corporate sector — by consulting with us on the amendments that will affect us. The most important thing for us is to have a strong and healthy energy sector.
We are diversifying. We have invested in alternative energy and continue to make real advances in the business aspect of the agricultural sector. We care about the environment. We have been good caretakers of our lands for thousands of years, but we cannot replace the benefits of oil and gas. We need profits and other own-source revenues. We need productive employment and real economic development. There is no genuine political self-determination without real economic and business independence.
My tribe just settled a multi-million dollar lawsuit against the federal government for their interference and mismanagement of our agricultural lands and assets over a hundred years ago. I don’t think it will take that long for First Nations to seek claims against the federal government for interfering in our energy business and our rights to economic development with legislation like Bill C-69. I am trying to lead my people out of poverty and towards self-determination, and we are determined and steadfast in this goal. I am not really asking you to help me with that. However, however, I am asking that federal politicians and bureaucrats stop putting up barriers that slow us down.
Honourable senators, we request that you fix the bad and broken Bill C-69. On behalf of the people that I represent, thank you very much.
The Chair: Thank you, chief.
Ms. Flood.
Ginny Flood, Vice President, Government Affairs, Suncor Energy: Thank you, Madam Chair, and good morning honourable senators. Welcome to Calgary. We would like to express our thanks to the committee for inviting Suncor to participate as a witness in your examination of Bill C-69, and specifically the proposed impact assessment act.
My name is Ginny Flood. I’m Vice President of Government Relations for Suncor. My experience prior to Suncor includes roles with Rio Tinto, a large mining multinational working in Canada, as well with the federal government, where I was a regulator in both Fisheries and Oceans and Natural Resources Canada pre- and post CEAA 2012.
Suncor is Canada’s largest integrated energy company, producing crude oil in both oil sands and offshore projects. As well, Suncor operates refineries, wind farms, owns Canada’s largest biofuel plant, and is a major supplier of refined projects.
Suncor is a leader in sustainability in developing natural resources. We provide significant contributions to Canada’s social and economic prosperity through our work with Indigenous peoples and other stakeholders, as well as through the taxes and royalties that we pay to governments. We employ over 12,000 people and invest approximately $300 million annually in technology and innovation, including being a founding member of COSIA, the Clean Resource Innovation Network, and Evok, all in partnership with other industry members.
As such, Bill C-69 is critical because the outcomes will significantly impact the decisions we make regarding our future investments and development in Canada. Suncor has been an active participant in Bill C-69 and appreciates the amount of time and effort that has been invested in consultations. We have worked significantly with other industry associations to ensure that we have an alignment on our amendments. We support a regulatory system that enables the responsible development of Canada’s resource industry and builds both public and investor confidence.
Today I’ll focus on four key areas where we believe amendments are required to strengthen and make Bill C-69 workable.
Firstly, Bill C-69 must provide clarity and efficiency of the impact assessment process. Canada has significant experience undertaking environmental assessments. It is imperative to leverage existing knowledge and expertise.
To help ensure predictable timelines and outcomes, a strong impact assessment process should include the following: it should limit the scope to only those issues that are relevant and within federal jurisdiction; it should establish a clear and timely transparent process; it should limit the ability for opportunistic legal challenges; and it should provide applicable regulations and clear policy guidance that are well articulated and guided by the legislation.
Secondly, the act must define a mechanism that empowers the agency and/or the review panel to determine the extent of public participation, including a defined process for ensuring adequacy of consultation. Engagement with directly impacted Indigenous peoples and stakeholders should be prioritized, while still providing opportunities for members of the public with relevant experience and expertise to contribute within legislated timelines.
Thirdly, the act must limit the opportunity for broad policy debates in project-specific assessments. The act should provide guidance to clarify which relevant factors should be considered. For instance, the act should provide clarity around the purpose of regional and strategic assessments and how they may be used in an impact assessment.
Lastly, the act must support the government’s promise to one project, one assessment. This requires mechanisms established in the legislation that recognizes and supports life cycle regulators and existing processes in other jurisdictions, allowing for exclusions and substitution. To limit duplication and avoid jurisdictional overstep, the federal government must use the experiences and processes of the best-placed regulator.
For example, in Bill C-69 offshore exploration, regardless of the scale of activity involved, will be subject to a review panel. An assessment of the review panel is not appropriate, considering the small scale and routine nature of exploration drilling. The impact assessment process needs to ensure that the scale of assessment, if required, is proportionate with the scale of potential impacts.
In closing, I would like to highlight the critical need to restore Canada’s competitiveness, particularly in the energy and resource development sectors. Given Canada’s vast resource legacy, we have an opportunity to create prosperity for future generations. To build on this legacy, it is imperative that the government establish a credible regulatory system that builds trust and allows good projects to be built in a timely manner while attracting investment to Canada.
We would like to thank the committee for inviting us here today. I welcome your questions. Thank you.
The Chair: Thank you very much for your testimony. We will go now to the period of questions.
Deputy Chair MacDonald.
Senator MacDonald: I thank the witnesses for being here today. My first question will be to Chief Fox.
A very compelling presentation, Chief Fox. Can we take you on the road with us, take you around the country? I think you would be a big asset.
You mentioned the royalties and revenues that are so important to your community. Now, you and I are adults now, but we were little boys at one time. You’ve seen a lot of changes in the last 40, 50 years in your community. I would like for you to perhaps explain them to us and let us know of the difference the oil and gas industry has made in your community.
Mr. Fox: Thank you, senator. I’ll have to apologize. I didn’t fully hear the question. As you’ve stated, we were once young. Now we’re not so young. One of the things that has happened to me is that I am losing my eyesight, I’m losing my hearing, and something else that I can’t quite remember. No, I’m just kidding.
As mentioned, commercial activity in the oil and gas sector, the upstream sector, started in the 1950s on our reserve lands and that increased over the last seven decades. As mentioned, we did not have any say in how exploration and production activity took place.
If I recall, when I first got involved in tribal politics, oil and gas was definitely one of the concerns that we had at that time, the management of our resources. At that time the chief and council could only make one decision. That was to say yes to the highest bid. We couldn’t even say no. Since then, you know, we have gained capacity, we have gained some expertise in the industry.
Right now we negotiate our leases and permits directly with the industry, we negotiate partnership arrangements with the industry, we negotiate working interest arrangements and GOR arrangements, and we negotiate other matters before we even sign on the dotted line, before we even sign off on the leases and permits.
We negotiate for ourselves. We go to Indian Oil and Gas Canada, the managers of our resources, for their rubber stamp, if you may. They have some capacity and they have some expertise. And, yes, there are some very good people.
We have been able to advance the management of our resources in oil and natural gas to a large extent. We’ve been able to negotiate large bonuses as a part of those leases and permits. We’ve been able to negotiate taking back some of those assets. We’ve taken some of those assets back, some of those oil wells and other assets back from the oil industry. We are a part of the oil and natural gas industry in Western Canada.
Yes, we receive royalties, but where we felt we needed to go was on the business side. That’s where the real money is made. Profits and other arrangements that you can make.
I have with me Clayton Blood, our general manager for the Kainaiwa Resources Inc. Of course there are other representatives. The chairman of the Indian Resource Council is here and the top management are here today. And that is one of the things that we are working on, is to acquire those assets back from industry, to get involved on the business side of the oil and gas sector, at least in the upstream phase. We are working towards midstream as well.
The change has been good for us. However, at times there are barriers that get into the progress that we have made. Of course one of the things is accessing capital, being able to get the capital that is required in order to take ownership of oil and gas assets on our reserves. The other one is in capacity and expertise. We are making progress. We are working with our friends in the industry. I think we’re developing good partnerships. I hope I’ve answered some of your question.
The Chair: Thank you very much, chief.
Senator MacDonald: Can I ask a question?
The Chair: It has been five minutes already, so I will put you down for the second round.
Senator Cordy: Thank you very much for your presentations this morning. It’s always helpful for us, especially when you give suggestions for how we can improve the bill.
Ms. Flood, my question is for you. I really like how you lined up your four — I’ll call them your concerns. I would like to look at the fourth item that you mentioned. You said excluding offshore exploration from the project list. I’m from Nova Scotia. I’ve met with the Nova Scotia Offshore Petroleum Board. Their concerns also are because of offshore that some of the projects are very small and they would spend more time getting the approval than they would having the oil well. You said the routine is small scale, but I wonder for my purposes, being from Nova Scotia, if you could expand on that.
Ms. Flood: I think one of our concerns is that each of the projects now, just in exploration drilling, which is a very routine type project, the processes are well known, the technology is well known. If everyone has to go through a major review panel, there’s going to be huge timelines. That’s going to increase the amount of time that it is going to take to go through the process, which makes us completely uncompetitive to other basins, where we’re also in the North Sea. I think the time, if I’m correct, it would be double the time.
Especially for a project that with the impacts on the environment and what you would be trying to do is look at this and take away that authority and the expertise that you would have at the offshore board. It just doesn’t seem to be reasonable and it seems to be overkill on something that would be quite routine and quite well understood in the exploration of offshore.
I don’t know, Janice, if you want to add anything, but that’s really our concern.
Suncor is involved in all of the offshore projects off of Newfoundland and Labrador. This becomes a really big concern for us as we’re looking to invest in that basin.
Senator Cordy: You also spoke about the necessity for having a cooperation agreement with provincial lifestyle regulators. I asked witnesses yesterday, for example, about the jurisdictional aspects on land, which is sometimes a little bit easier to define. Does the federal government and the provinces work cooperatively in terms of offshore exploration, and who actually has the final say or is it really an equal partnership?
Ms. Flood: I might turn it over to Janice in a second, but there is the Atlantic Accord that basically set out the agreement.
Senator Cordy: Yes.
Ms. Flood: There is a lot of cooperation with the provinces on developing the offshore assets, both with Newfoundland — I can’t speak for Nova Scotia because we’re not in that jurisdiction, but working the federal government through the Offshore Petroleum Board, as well as with Newfoundland, they work quite cooperatively together.
Janice Linehan, Manager, Suncor Energy: I’ll just add that I’m sure you’ll hear more when you go to the East Coast and Newfoundland. I think a lot of the concern is that Bill C-69 needs to allow the mechanism for the offshore boards and that expertise to be upfront, to be a major part of that process, which is the big concern right now.
Senator Cordy: Thank you.
The Chair: Senator Simons.
Senator Simons: Thank you very much, Madam Chair. I’m going to direct my first question to Chief Fox.
When we were in Vancouver yesterday we met with members of the First Nations Leadership Council, who argued a case that First Nations should be able to conduct their own impact assessments and have that substituted in the legislation. I’m just wondering what you and your team think about that as a proposition.
It really brought home to me how different it is in British Columbia, where very few Nations have settled, you know, treaty status or reserves compared to what we have here in Alberta.
Mr. Fox: I’m not too familiar with the group that you mentioned. However, I believe that First Nations and Indigenous peoples ought to be more involved in all phases of the energy sector. They should be involved in the studies that are done. They should be involved in the investigations that are conducted. We’ve tried to do that ourselves, but with limited resources.
We ensure that all the oil and gas activities on our reserve lands follow existing regulations, both from the federal and provincial government.
Over and above that we have our own processes that ensure that proper development will take place. Along with other governments, we also ensure proper development takes place on our ancestral territories.
Our ancestral territories — and I know some other tribes will argue with that — stretch beyond Edmonton, towards the Manitoba border, the Dakotas, all of Montana, and across the divide to a certain degree. We tried in short that whenever the energy industry is conducting activity, exploration and production industry, transmission activity on our lands within southern Alberta that we are also involved. We conduct studies on most any development that is going to occur on our lands.
Yes, we not only should be involved on the business side, but we should also be involved in that area where assurances can be given that any activity will not harm those territories.
I’m not sure if I answered the question.
Senator Simons: All right.
Do you think if more First Nations from Alberta took equity stakes in things like pipeline projects, would that give those projects more social licence, do you think, to cross through traditional territories of other nations in British Columbia, or does that just end up pitting nation against nation?
I think a lot of people have a belief that if First Nations had a much greater ownership stake in those linear developments that they would be easier to get approval for, but I don’t know how real that is.
Mr. Fox: Yes, that is our belief. And certainly that is the belief of the Indian Resource Council of Canada and others who are involved in trying to bring Indigenous people together, to work together in a good business way so that they are a part of the transmission activity of oil and natural gas from Western Canada.
Yes, we have our differences with other Indigenous nations. However, for centuries the Indigenous peoples of the Americas, the North Americas, have managed to come together as allies when they were enemies before.
We have a process. Our people have a process. The Blackfoot Confederacy has a process and other First Nations have similar processes that we called [Indigenous language spoken], which is the highest form of agreement. It’s a sacred covenant between two individuals, two families, two clans, two nations that they will no longer harm each other but they will assist each other. They will help each other.
It is these processes that most of our people still understand. We only need to use those, and they are being used again, to ensure that we can work in a good, concerted way amongst ourselves to achieve similar goals.
I think it’s very important that our people, albeit there are several different groups now, get that opportunity to fully be involved in the business of transporting our product to where it needs to go.
Senator Neufeld: Thank you both for being here. My first question is to Chief Fox.
Have you had an opportunity to make a presentation as you did to us? You were very clear. I understand where you’re coming from. I know what you’re saying. Have you had a chance to make that presentation to the Prime Minister of Canada on behalf of all the people whom you represent? I mean thousands, when I look at your notes.
Mr. Fox: Thank you, senator. Yes, to some degree I have. I asked some basic questions when the Prime Minister attended a Chamber of Commerce function last November here in Mohkínstsis; it’s in Calgary. It was a very basic question. We followed that up with correspondence. We followed that up with op eds, and some of the major papers down East. And followed up with letters to various ministers, including Minister of Indigenous Affairs, several times. We made similar presentations to others at other occasions. I’ve got a small condensed package with me outlining those letters that were sent and so on.
I spoke to him very quickly here when he was here last November. I asked him that the Treaty 7 tribes were not in favour — I told him that we are not in favour of Bill C-69 and what assurances that he, the Prime Minister, could make to us that Bill C-69 will not affect our profits, will not affect the royalties that we receive from our resources. Very quickly he said that he did not feel that Bill C-69 would reduce our royalty rates. There’s a big difference between royalties and royalty rates.
We still have not received a reply from the Prime Minister on several letters, correspondence that we’ve sent, as well as the ministers. We have not received any reply.
Senator Neufeld: Thank you very much. That doesn’t surprise me.
I have a question also for Suncor. Obviously industry worked for — and they’ve told us — up to three years with the government to try and develop a new piece of legislation, as I understand. You, I would imagine, would have been quite surprised when Bill C-69 came out with what it entails and what could happen to the industry if it was applied, you know, to you. It does away with the NEB, something that has been around for decades. It does away with the Canadian Nuclear Safety Commission, that has done a marvellous job of regulating the nuclear industry. It does away with the offshore boards. You spoke about that.
In developing this piece of legislation, did you have discussions about those kinds of things and what effect they would have? Did the government just say, “We don’t really care. We’re going to put in what, I guess, Mr. Butts wants and you’re going to live with it”? I’m interested to know that. Were you really disappointed or what happened?
Ms. Flood: I presented to the House of Commons committee. We have been very active in Bill C-69 from the start of the legislation. We have cautioned on some of the aspects of Bill C-69 because we were very concerned around basically throwing out some of the jurisprudence, that we would be very concerned about having to start over.
Our main objective has always been that we support the intent of Bill C-69. We think that the intent is well intended. Our concern is about the execution and how the act creates a number of elements that could be legally challenged with because of the vagueness of some of the language.
We have worked with governments. We have worked through a number of the industry associations that I have mentioned to try to make sure that the act basically allows good projects to get built. We need to recognize there’s lots of experience with environmental assessment and that it’s through that process that we need to ensure that it doesn’t get caught up in litigation so that a decision is not a decision. I think that has always been our objective.
The intent of the act is fine. We’re concerned that some of the jurisprudence will be put aside and we will be starting over. That is obviously a fairly significant concern.
Senator Neufeld: I know you presented to the house committee. I see from the list that you were one of the few from the oil and gas industry, direct industry, that was able to do it.
I’m talking about the three years prior, that the government said they consulted with industry, they talked to people across Canada. I’m talking about that time, not just at the house committee, because the house committee was more about government amendments than any other amendments.
Prior to that, the development of it, the three years that took place, was Suncor involved? Did you have some say? And were you surprised with the result?
Ms. Flood: Suncor was involved. We were involved through a lot of the work that we do through the Mining Association of Canada, through CAPP and other organizations. Were we specifically consulted? We had conversations. For the most part we were working through our associations in developing those amendments.
Janice, I don’t know if you want to add anything.
Ms. Linehan: Yes. We were definitely involved, and I was specifically involved. In those three years prior there were many different meetings, multi-stakeholder meetings that we were a part of.
I guess at the end of the day if you asked if what I finally saw when Bill C-69 came out reflected all of our concerns, I would have to say no. Again, we continue to work with government and other organizations, and that’s why we’re proposing the amendments we are and why we have such a focus on the regulation and the need for the regulation to be in place. A lot of uncertainties lay there.
We’re really supportive of the fact that those regulations are in place and might need some time before the legislation comes into force for that to be properly consulted on, because we haven’t seen it yet.
The Chair: Thank you very much.
Senator Patterson.
Senator Patterson: First of all, to Suncor, I believe that you are a member of CAPP. Our situation is this: We’re under terrible pressure to get this huge bill passed in the life of this Parliament. I know that CAPP has presented a package of amendments that we understand is widely supported by industry.
I just wanted to know, the amendments that you have presented and the advice you’ve given us today, is that complementary to what CAPP is recommending? It’s in addition to what CAPP is recommending, but are they complementary?
Could you help me understand that?
Ms. Flood: Our amendments are the four amendments, and the amendments that you will have in our submission, they are all aligned with what CAPP has proposed. For us, we have projects that we’re considering, and our amendments are really around making sure that we’ve got clarity as we go forward so that when we’re making our investment decisions we know what’s happening. We are completely aligned with the CAPP recommendations. Our submission and our proposals are completely aligned.
Senator Patterson: Thank you.
Chief Fox, I would like to thank you for the inspiring and clear words you gave us about your struggle to achieve financial sovereignty, which I totally support.
You mentioned your concerns about Bill C-69, including the test for standing.
Mr. Fox: Yes.
Senator Patterson: As we understand it, under Bill C-69 it’s wide open.
Mr. Fox: Yes.
Senator Patterson: I’m wondering if you have a concern that unless it’s changed this standing test would diminish your Nation’s voice when considering projects that impact you.
Mr. Fox: Thank you, senator. I’m not sure I fully understand the question. However, let me give this reply.
Standing in those areas of development that have taken place in our territory, not just our reserve lands, but also our ancestral and traditional lands, we’ve always tried to become involved in that, along with other jurisdictions, say such as the Province of Alberta. We engage in activities.
We have really not had the opportunity to have standing in the current discussions of this bill, either at your level, either at the house level, or with other First Nations. The Assembly of First Nations have not involved us in their discussions with respect to Bill C-69. They’ve kept us out of that. They have not given us standing.
It’s very unfortunate that that has occurred. We’ve had to force our involvement in some of their sessions. They only invited those groups that were for Bill C-69. They didn’t invite myself or any member of the Indian Resource Council or any of the oil and gas producing tribes. We had to voice our concerns. I have some difficulty in how NGOs have acquired standing, though, through some of our so-called Indigenous leaders. As I mentioned before, I am the elected chief of the Blood Tribe. I’ve been involved in tribal leadership with the tribe and with the national organization for 45 years.
I am also the hereditary chief of the Blood Nation, as far back as the late 1700s, that which I have been told by my elders and my mentors.
However, unfortunately it seems as though tribal leadership in other areas, so-called tribal leadership, is coming out of the woodwork. I think they are being controlled by others. That is our concern. Others that mean to harm the oil and natural gas industry in Western Canada, in favour of other areas, even in North America.
That is a part of our concern. We have not been asked at all to be involved in this discussion until we forced ourselves to the table last November. We forced ourselves to the table. The Indian Resource Council has codeveloped other pieces of federal legislation with Canada. It’s worked out not too badly. One of them is amending the Indian Oil and Gas Act, which we did in 2009. Now we’re currently working on the amendments to the regulations. You know, that is one of our concerns, that others will get standing, who really are there to harm our industry.
I hope that answers the question.
Senator Patterson: Thank you.
The Chair: Thank you very much, chief.
[Translation]
Senator Carignan: My question is mainly for the industry representatives. Many witnesses have spoken to us about the interest, the minister’s discretion, uncertainty, the time frame, and the action taken around the world. It seems that Australia is a model in this area. As a country, Australia is very similar to Canada. It’s a large country. It has provinces, a central government, a common law system, and precepts of natural justice and procedural fairness. It also has First Nations, and some of the most extraordinary and unique flora and fauna in the world, as a result of its biodiversity. This biodiversity must be protected in a very special way. Australia has species that can’t be found anywhere else in the world. It has successfully established an effective environmental assessment process. In your presentations to the Government of Canada and to officials, have you provided examples of cases where a simpler process could be adopted? I have the impression that we’re trying to complicate things when the process should be simple and adapted to everyone’s model. The Government of Canada shouldn’t just acquire old jets from Australia. It should also draw inspiration from good practices with regard to the environmental assessment process. Can you provide some examples of comparative law?
[English]
Ms. Flood: I can’t speak specifically to whether those examples have been provided. What I can say is prior to Suncor I worked with Rio Tinto, who has major assets in Canada, but also in Australia. What I would say is, yes, their environmental assessment process is much more streamlined than ours. I think the complexity that we put on our environmental assessment and the focus is usually on building public trust and making sure that we have the processes where there’s a broad public consultation.
I think the big difference in Australia is their primary focus is — like Canada, they’ve got lots of resources and their focus really is building their economy through their resource development. That is a key element of Australia. It’s given that different focus and that different perspective. It’s not to say the regulatory environment compromises the environmental outcomes, because I can assure you that it doesn’t, given my experience with Rio Tinto.
I would think in the WorleyParsons report that had been developed, it would have highlighted some of the challenges. I think it’s important because Australia is one of our competitors as far as resources going to some of our key markets that we want to develop and why it’s so important to get market access.
Madam Chair, can I just add one point? I want to give two examples to support Chief Fox on the work that we’re doing with Indigenous communities. I think there are two areas. Suncor spends approximately over $650 million annually with Aboriginal businesses. I think it’s really important.
To put that into context, according to the CCAB, which is the Canadian Council for Aboriginal Business, that is about 10 times more than all of the federal government spends. That is just one company. I think it’s a really important proof point for what Chief Fox has been saying about the role that oil and gas plays to help Indigenous communities and businesses.
The other one I want to highlight is we have done an equity agreement with the Fort McKay and Mikisew Cree on our East Tank Farm. That is a $500 million equity agreement. It’s a business to business where the First Nations went to the market and got the capital in order to make that investment.
These are two examples of just one company in our sector that is supporting Indigenous business.
I think one of our big challenges is that the act tends to look back at what was in the past and not in the future of how our industry has actually progressed. I think that’s a really important point as we’re going forward, to make sure that we’re not impeding that ability so that we are able to work with First Nations and make sure that they’re in partnership with us in developing our resources.
The Chair: Mrs. Flood, was that information included in the statement you have provided?
Ms. Flood: No, but we can definitely provide that.
The Chair: Can you please send it to the clerk? Thank you very much.
The last question, Senator Mockler.
Senator Mockler: I want to touch on Suncor. You are aware that the four Atlantic Premiers are really concerned about this act. Suncor is an operator of offshore oil projects in Atlantic Canada. Bill C-69 will require that all designated projects in Atlantic Canada’s offshore are to be assessed by a review panel, a process that will take several years’ time. We need clarity. As well as the government of Newfoundland and Labrador is extremely nervous that offshore exploration drilling will be added to the designated project list.
With your experience that you have in Atlantic Canada, can you describe the impact on investment in Atlantic Canada if all designated projects are assessed by a review panel?
And, two, can you describe the consequences adding offshore exploration drilling to the designated project list? Our four Atlantic premiers are very concerned about that.
Ms. Flood: Yes. And I think that’s one of our suggestions that we put in our submission, is that we support the premiers in saying that given what is being proposed in Bill C-69 about all the exploration drilling projects going to a review panel makes them very challenging in the sense that it increases the timeline significantly, but they’re not proportionate with the scale of impact. Therefore we believe that if you’re looking at the investment decisions, these are key elements of costs also associated with doing the review panel.
There will be a challenge of making those types of investments and you’ll be looking at those and comparing them to other basins, such as the North Sea, which would be much more competitive in that space.
Janice, I don’t know if you want to add anything.
Senator Mockler: Mr. Fox, coming from Atlantic Canada, congratulations for the great national leadership that you have provided and when we look at your success rate.
My question to you would be, as we see that First Nation populations have shown great interest in being involved in the development of our resources, what advice do you have for First Nations in Atlantic Canada, things to do and not to do?
Mr. Fox: Thank you, senator. We had the privilege of meeting with Indigenous leaders in the Maritimes several years ago through the Indian Resource Council of Canada. We have been fortunate out west to have oil and natural gas resources within our ancestral and reserve lands.
I suppose two of the basic things that we wanted to deal with when we were seriously contemplating getting fully involved in the oil and gas sector from a business perspective was to acquire more capacity, more expertise from within, but, in the meantime, to access that from the industry. Not just the oil and gas industry, but as well as the financial sector.
The other thing is to find ways and means of being able to access the capital, the capital required in order to become owners. You know, we are very modest in our company, certainly not comparable to Suncor. However, we manage to convince private equity people to engage in partnerships. We bring the opportunity to the table. They bring the money to the table. They bring the financing. But it has to be a good project. It has to be a project that will make money. That is why industry is in industry, to make money and satisfy their shareholders.
We have to approach it from that perspective. We have to approach it from the perspective that the objective, the corporate objective, has to be to make money. Yes, if you can employ many people in reaching that, then that’s good. You know, but that is so important that we have to fully understand the concept.
Sometimes it takes longer to achieve those type of results. These are two of the things that we think are very key. Because there have been barriers. Lacking capacity. Lacking expertise has been a barrier for our people.
Lacking the ability to acquire financing has been another barrier.
Yes, we maintain a certain amount in our accounts back home and in Ottawa within the Indian moneys process. We want to save our moneys that we’ve earned for the future, our future people. Sometimes it is hard to determine if we ought to use our money to go into these business arrangements or do we keep them safe. One way to do both is to form a partnership with a private equity corporation. They take the money risk. We don’t risk our Indian money. The ones that we’ve gone into have worked out. Not just in the oil and gas sector, but in other sectors, such as agricultural, and as well as alternative energy.
I guess that’s something that I would share with the Indigenous people in the Maritimes.
The Chair: Thank you.
Mr. Fox: I hope that helps.
The Chair: Thank you very much, witnesses, for your testimony.
Mr. Fox: Thank you, chairperson and senators. I appreciate it.
The Chair: We now welcome our third panel of the morning. We have with us, as individuals, Martin Olszynski, Associate Professor, Faculty of Law, University of Calgary; and Dr. Aerin Jacob, Conservation Scientist.
You each have five minutes. We will then continue with questions.
Martin Olszynski, Associate Professor, Faculty of Law, University of Calgary, as an individual: Good morning, senators, and thank you for this opportunity to speak to you about Bill C-69 and the impact assessment act in particular.
You should have all a copy of a deck that I prepared. I should say at the outset, and perhaps obviously when you see it’s thickness, I don’t intend to cover everything in this deck in my five minutes, but I hope to refer back to it during the question and answer period.
A few words by way of my background. Presently I am an associate professor of law at the University of Calgary, Faculty of Law. I’m also a research fellow with the School of Public Policy and the Canadian Institute for Resources Law. Prior to joining the law school in 2013 I was counsel with the federal Department of Justice, practising environmental and natural resources law in the legal services unit at Fisheries and Oceans Canada.
I hold bachelor degrees in science and law from the University of Saskatchewan and a master of laws degree from the University of California at Berkeley. Perhaps, most importantly, I have been involved in this law reform process since it began in 2016.
Much has been said and written about Bill C-69. My own contributions have been spurred less by a desire to defend the bill and more to simply set the record straight. That is the spirit that animates my remarks here today.
First, and I refer the committee to the third slide in my deck, it’s fundamentally important for the committee to always bear in mind the fundamental nature of Canada’s environmental assessment regime, whether past, present, or future. Impact assessment is about process, not substance. Substantive requirements may be found in related legislation, but EA laws themselves don’t impose any. This includes the IAA’s reference to sustainability and climate change. The IAA merely requires the identification and consideration of such effects, subject to political or democratic accountability.
Second, it is important for the committee to situate the IAA in its historical context. I refer you now to the next two slides in my deck. This is especially important, I think, in light of relatively alarmist claims with respect to the bill’s potential impact on the natural resources sector, broadly defined. Between 1995 and 2012 the federal government was carrying out several thousand environmental assessments annually, with no apparent adverse effect on economic growth. It now carries out roughly 70, which is a 98 per cent reduction. The next several slides consider various aspects of this, and I’m happy to return to them during the Q and A.
The basic point is that as a major project regime, CEAA 2012 applies to only a fraction of the resource activity being carried out in Canada: two projects in Saskatchewan, four in Manitoba, seven in Alberta. While some of these are obviously important projects, such as pipelines in Alberta, so were many under the previous regime and so are many currently within provincial regimes. Although we don’t have a project list in front of us for the proposed impact assessment act, because it is also very clearly a major project regime, it is not unreasonable to expect more or less the same coverage.
The last issue I wish to discuss in my prepared remarks is the proposed inclusion of a so-called privative clause, that would shield assessments from judicial scrutiny, except with respect to questions of law. I refer you now to the last few slides beginning at around slide 21 of my deck.
This idea, as I’m about to set out, is both bad and misguided. As will be clear after my co-panellist Dr. Jacob’s presentation, we need greater potential for judicial scrutiny, not less.
As a starting point it is useful to recall why we have a separation of powers in the first place: to ensure some level of control over government, to protect against arbitrary and otherwise unreasonable exercises of power. This is reflected in the Federal Courts Act, which lays out the grounds for judicial review. I underlined section 18.1 on slide 21, errors of law, but also where decisions are based on erroneous findings of fact or without regard to the material before the decision maker.
A privative clause rearranges the conventional separation of powers by restricting the scope of judicial supervision. The privative clause I have seen proposed would purport to limit recourse only to questions of law, shielding any factual determinations from independent judicial scrutiny. Here are three reasons why you should reject such a clause.
First, it is unnecessary. Canadian courts are already instructed to defer to the factual determinations of government agencies. So long as these determinations are deemed reasonable, which is a low standard as the case law bears out, they will not be disturbed.
Second, they are often ineffective. Clever lawyers will always be able to characterize their issues as matters of law rather than fact. It bears noting also that currently only NEB-assessed projects in CEAA 2012 are subject to a privative clause and this has not prevented their litigation. Such as in the Northern Gateway, the Trans Mountain, and the Bigstone pipelines.
Thirdly, and finally, it is misguided. As my final slide shows — this is page 23 — there is no evidence of an excess of CEAA-related litigation that would justify the inclusion of a privative clause. Less than 7 per cent of projects on the CEAA registry, and that number is 213, are litigated. I know this because I went through the registry yesterday and I searched within the public litigation database for every one of those projects. There are roughly 14 out of 213 that are currently subject to litigation.
What is clear is that it is generally the more controversial projects, and I’ve listed them there, that are being litigated. That is something a privative clause is not going to change.
On the other hand, shielding proponents’ and the bureaucracy’s assessments from any independent scrutiny whatsoever can only perpetuate and perhaps worsen the current lack of scientific rigour in Canada’s EA process.
Those are my prepared comments. I look forward to answering any questions.
The Chair: Thank you.
Please, Dr. Jacob.
Aerin Jacob, Conservation Scientist, as an individual: Thank you, senator. It’s an honour to be here today. I work as a scientist for a joint Canada/U.S. environmental non-profit called Yellowstone to Yukon Conservation Initiative. I am speaking in my capacity as a scientist, not on behalf of my organization. I’ll focus on the proposed impact assessment act.
Impact assessment is one of the most important planning tools we have to look before we leap. Science and other forms of evidence are fundamental to making informed decisions and to truly acting in the public interest. But there is a big problem. The science used in impact assessments is often weak, and that’s why scientists have been speaking out more and more.
I began working with the impact assessment in 2006, followed by doctoral and postdoctoral research in ecology and spatial planning. In 2016, I led the so-called young scientists open letter, where nearly 2,000 scientists from across Canada wrote to the Prime Minister and six cabinet ministers sharing our concerns and our recommendations to strengthen the science and impact assessment.
Since then I have been involved or led initiatives that bring together experts from industry, universities, non-profits, and government to strengthen the role of science and impact assessment law, policy, and practice. Scientists from across Canada are worried and we want to help.
Today I want to focus on three things. My first major point is that the scientific evidence is clear that the world is changing, and it’s largely from people. I’ll give just two examples from hundreds.
First, the 2018 Living Planet Report Canada studied population trends for more than 900 species across Canada. This includes birds, fish, mammals, amphibians and reptiles. They found that populations of half of these species are declining, and on average those declines are 83 per cent. That’s driven by human-caused habitat loss, including from forestry, agriculture, urbanization, and industrial development.
My second example, although it was released just last week, it is Canada’s Changing Climate Report, and it shows that Canada is warming twice as fast as the global average, three times as fast up north. This science is clear that climate change is largely caused by human activities and unless we reduce emissions, and we still can, we will raise average global temperatures by 6 degrees by 2100. Bit by bit we are unravelling the planet’s life-support systems, and even nature has limits.
My second major point is that scientists have repeatedly made recommendations to strengthen impact assessment in Canada, and those recommendations are supported by society. There’s been a huge amount of consultation going into Bill C-69. The EA expert panel alone had more than 3,000 online responses, more than 500 written submissions, and more than 600 in-person testimonies. Scientists in Canada, including me, contributed to many stages of that consultation. Over and over we emphasized five key ways to strengthen impact assessment. They’re detailed in Appendix 1 of my notes. Some are reflected in the proposed IAA and others are related to subsequent policy and implementation.
Very briefly, these five things are: Open information, which essentially means show your work. Fundamentally this is why science is strong. It is because we can reproduce it and test it.
Second, cumulative effects, which means we have to think big and we have to think long term. Nothing in life occurs in isolation.
Third, scientific rigour. Not all information is produced according to the same standards. Decision makers need to have the best available evidence.
Fourth is independence. Essentially, that boils down to be aware of the fox watching the henhouse. Especially about science.
Fifth is transparent decision making, to be clear about how decisions were made and to not pull decisions out of a so-called black box.
Research and polling shows that stronger science in impact assessment is broadly supported by Canadians. Appendix 2 in my notes shows just one example. I can talk about others.
My third and final point is to please pass Bill C-69. The proposed IAA is an improvement on the current situation, but many of the proposed amendments would weaken it. It’s kind of like poking so many holes in a bucket that it no longer carries water.
On the other hand, senators have the opportunity to strengthen critical aspects, including those related to science. Just a few examples are extending the scientific integrity clause to all involved, not just government scientists; requiring there to be evidence that proposed mitigation actually works; and using follow-up and monitoring as an opportunity to learn.
In closing, I want to reiterate that weak science and decision making puts Canadians at risk. A couple of recent examples are the Mount Polley mine disaster and the 2013 Calgary floods. Although Bill C-69 is already a big compromise, I urge you to pass it and not weaken it further. Thank you.
The Chair: Thank you very much for your testimonies.
Senator Carignan has given his spot to Senator Patterson.
Senator Patterson: Professor Olszynski, you have painted a picture to us that the federal involvement in the environmental assessment process is minimal, that litigation risk is minimal, and I think you’re kind of suggesting that everything is okay the way it is.
I want to ask you, this province, it should be no secret to you, is struggling environmentally, there’s well over a hundred thousand people have lost — economically, over a hundred thousand people have lost their jobs. We heard from the Canadian Energy Pipeline Association in evidence that U.S. capital spending has increased 38 per cent from 2016 in the energy sector, while Canadian spending has decreased 19 per cent from 2016. There’s a hundred billion dollars’ worth of projects that have been cancelled in Canada in the energy field in recent years. Yet you’re telling us everything is okay.
We’ve been impressed that the energy industry, the leadership of CAPP has come up with a recommended suite of amendments that has been widely endorsed by the industries that are suffering in this current climate, but you have said that one of their recommendations, the privative clause, is misguided and ill informed. Are you saying that the work done by this coalition of people who are active in the energy sector, and they’ve been supported by eminent Alberta law firms, that they’re misguided and ill informed?
Mr. Olszynski: There’s a lot in your question that I would like to unpack.
The first point is I’m not suggesting that everything is hunky-dory, and certainly not in Alberta. What I wanted to do is to provide some concrete facts and numbers for your consideration. It’s very easy to claim the sky is falling when in fact, when we look at the numbers, they say something else. So when I say to you that less than 7 per cent of projects on the CEAA registry, now we’re talking about 213 projects, that less than 7 per cent are being litigated, I’m providing you with that information. You can draw the conclusion from it that you want.
To me it suggests that this idea of an onslaught of litigation doesn’t bear out. There is a handful of a dozen or so projects that have encountered strong litigation headwinds. What I’m suggesting to you, and I think others have also suggested, is that’s going to be the case regardless of what you do. Note that for the NGP assessment, for TMX, and for Bigstone, each of those had a privative clause that shielded them, and yet we still found ourselves in litigation.
More than anything I think I’m trying to help you find real solutions and not get sidetracked.
I understand absolutely that Alberta’s energy industry is in a hard way. Lots of my relatives, especially from my wife’s side, lost work in the downturn. I’m absolutely familiar with that.
At the same time, this is a federal environmental assessment regime. It will apply to all major resource projects in Canada. I am cautious, and I urge caution on your part as well, before you make changes to suit one particular sector and its problems. That’s my first point.
The next point is that I think that a lot of these things will fundamentally undermine the thing that it is that you are seeking.
On this point I think there’s the sense that we can think of the assessment process at two opposite ends on a spectrum, two versions. One is one that seeks to expedite and sort of rubber stamp these approvals as quickly as possible with a view that would somehow facilitate investment.
The other one says there are contentious policy issues at play that need to be resolved, and they need to be resolved in a context, in a space that allows all sides to feel like they’ve been heard and that gives legitimacy to the outcome.
In fact, I would suggest that your Senate hearings are a microcosm for environmental assessment. I think the fact that you chose to travel around Canada is proof positive that you understand the importance of giving people a chance to make their point, a chance to be heard. That’s exactly what’s happening here. It’s going to increase the credibility and the legitimacy of whatever it is that you decide.
When I see the amendments being proposed by some in industry, I think they will fundamentally undermine the goal, which is to ensure that the public trusts the process and that the decisions have legitimacy.
Senator Patterson: If we should not be alarmists, would you explain what that sucking sound is of all the hundreds of millions of dollars of investment capital that is fleeing Canada and fleeing Alberta? If everything is okay and we shouldn’t be alarmed, why is this happening?
Mr. Olszynski: Right. I would suggest definitely you want to find the right answer. Right? You want to know what the answer is so you can come up with the solutions. I’m going to suggest to you that a law that has not passed is probably not the reason why investment is now fleeing.
I have suggested this in other contexts. It doesn’t matter what assessment process we have. We have fundamental issues that — for instance, you know, you compared us to the United States. Yes, Texas, which has access to the coast and has a ton of oil resources, oil and gas resources, they seem to have an easier time moving that to market. That’s not surprising.
We know that we are dealing with a unique geographic sort of reality, political reality, and wringing our hands and wishing that we were Texas I don’t think is going to get us there. Finding easy scapegoats and ideas suggesting solutions that don’t address the root problems I don’t think is going to get us there either.
On this point, I might refer the committee to the last slide in my deck, which is really something that I would just encourage you to take forward generally in your thinking about this, is that there are no simple answers. I understand that’s exactly what you would like, you would like there to be a simple answer. I’m going to suggest that there isn’t. These are complex issues and we are trying to balance a lot of different things. We’re talking about economic growth, jobs, resource revenues, but we are also talking about climate change, endangered species and the risk of oil spills. These are not simple things. They deserve careful consideration and a genuine interest in finding the root problems and then, in response, appropriate solutions.
Senator Cordy: Thank you both very much for being here and bringing forward some points of discussions. As a committee we’re looking at balancing industry concerns, environmental concerns, and, of course, meaningful consultation with Indigenous nations. We’re always appreciative when we have witnesses coming before us.
Ms. Jacob, thank you for the points you’ve made, your proposals. And decision making, I think it’s really important that decisions, everything is open and transparent. That’s why this bill in terms of CEAA 2012, if there were delays, then there was just a delay. At least according to this new legislation, C-69, if the minister is going to delay it, in fact the minister or Governor-in-Council has to put those reasons in public, which is a positive step.
My question is related to cumulative effects, which you spoke about. We had discussions about this yesterday with some of our witnesses. What we heard was it’s very challenging to determine the cumulative effects, what’s going to happen in 10 years’ time. If we’re looking at the energy industry, with the ebbs and flows that we’ve seen over the years. It’s very challenging to look at what the effects might be. There were some suggestions that perhaps we should change the wording to may likely happen, not things that will happen in the foreseeable future.
I know you mentioned it in some of your reflections, things to think about. I wonder if you could expand on how we are going to effectively look at cumulative effects.
Ms. Jacob: Thanks for the question. Cumulative effects is something that I think is extraordinarily important to consider. You mentioned transparency. I think that the aspect of transparency in cumulative effects together is really important too.
The one thing I want to emphasize is that although it’s difficult to evaluate cumulative effects, people have been doing this for decades. Scientists have been studying this topic for decades. There is a huge amount of information that’s known about the cumulative effects of development on the natural world, on people. Although there are complex methods that are used, the statistics will boggle your mind. They boggle my mind. There are people who do this, who are experts in it, who are in Canada.
A couple of examples that I’ll give about the reason that it’s important to evaluate cumulative effects, that also demonstrate we know how to do this. One is from Alberta and one is from British Columbia. They’re both peer-reviewed research papers. That’s important because it shows that the science has been evaluated by the scientific community and been found to be strong.
The first one is a paper that’s written by Fisher and Burton. It was published in 2018. It shows that cumulative effects changed the mammal community in the oil sands region. The distribution of mammals, where animals live has been changed. In fact the amount of change that was caused by people was much greater than is found in the natural world. That includes species like white-tailed deer, that people hunt, and moose. It includes animals like wolves and coyotes — predators that are very important at regulating natural systems.
The second example is about cumulative effects in British Columbia. That research paper by Shackleford and colleagues in 2017 showed that cumulative effects have already affected a third of British Columbia’s land mass. All of the species that they evaluated showed reduced ranges. The places that those animals exist is shrinking. We know that these things are already happening and they’re very important to take into account.
I think that one of the best aspects of having a stronger role of science in impact assessment is that we can see that transparently. We can evaluate how different types of evidence went into showing these overall changes, and that builds public trust and credibility in the process. It also helps us make decisions that we’re not going to regret tomorrow, 20 years from now, or a hundred years from now.
The Chair: Dr. Jacob, it is true that we have heard from many witnesses that they don’t know about cumulative effects. I agree completely with you that it’s been decades that we — in science we’ve been measuring this.
Would it be possible for you to send to the clerk some of these examples, including the definition and methodology?
Ms. Jacob: I would be happy to. I will emphasize that many scientists are interested in providing this kind of information. I would be happy to discuss any of the finer details. Reading scientific papers is complicated. They’re not designed to be easily understood. I encourage, senators, to reach out if you have questions. We want to be of assistance.
Senator Simons: Thank you very much to both of our witnesses.
Professor Olszynski, I want to start with you. I understand what you’re saying about a privative clause. What would your analysis be of an amendment instead that said that any appeal of a regulator decision would have to go to the Court of Appeal and not to the Federal Court?
Mr. Olszynski: Yes. I mean, if you want to expedite the process a bit, I think that has some merit.
Other examples, frankly under the current framework you might even — if it appears that a litigant is vexatious, or whatever, then you always have that recourse.
There’s also, of course, the potential for costs to be awarded against parties in the event that they lose.
These are the traditional rules that we have used in the past. Certainly appeals from the NEB go directly to the FCA, and as well I think from the CRTC. There’s precedent for that. I just want to be clear about what’s going on here.
It’s the case right now that when you pick up a joint review panel or an agency assessment, oftentimes you will find things in there that will give you cause for pause from a scientific rigour perspective. Removing entirely the potential to challenge those kinds of things, I think, is really going to undermine the scientific rigour and that process. At the same time I’m all for smart, targeted solutions that will move things along more quickly.
Senator Simons: Thank you, That’s really helpful.
Dr. Jacob, every time I think I know this act inside, out and backwards, I learn something new. I didn’t know that it had a scientific integrity clause. That sounds like a good thing for everybody to have. The bill also affords special protection to traditional Indigenous knowledge. It also says that knowledge can be kept secret. That seems to run counter to some of the, I think, excellent points that you’ve made in your presentation.
Is there a way to square a requirement that everyone who presents, presents with scientific integrity, with also the way that the bill gives special consideration to traditional Indigenous knowledge?
Ms. Jacob: Thank you. That’s an excellent point.
I’ll emphasize that I’m a scientist; I am not an Indigenous knowledge holder. I cannot and should not speak with authority about how knowledge in that very valid way of knowing is collected, passed down or the standards that people keep, except to say that I know that it is another valid form of evidence and that we should look to people who are experts in that to understand it. I’ll focus more on as a scientist because that’s my expertise.
One part about the scientific integrity clause, it only applies to government scientists. That is a big problem. I have been a consultant working for industry. Since I’ve been speaking up about this issue, I can tell you that dozens and dozens of consultants come to me when I give public talks, when I give talks at industry, send me emails, pull me aside in the bathroom and tell me about things that are happening that they are very concerned about. I think that the scientific integrity clause and my suggestion, when I was at the House of Commons committee, was that it applied to all scientists involved. I can give numerous examples, we could be here for another week, where I could explain some of the problems that I see.
Specific to the transparency involving different kinds of information, the young scientists open letter and many of the activities that scientists have been involved with since then have explained that there are limits to what should be open. Although we’re proponents of something called open science, which is essentially show your work, and is a modern part of scientific practice. It is not the 1980s. We do not mail people, you know, a 5-inch floppy disk of data anymore. We share things online. We write reproducible code. That is how science is done. It’s how I taught students when I was at university and it is how people graduate today. It’s what they know.
Although there is that culture of open science and transparency in a modern scientific practice, not everything should be shared. For example, locations of particular species at risk. If that information is shared, for instance, with COSEWIC, the Committee on the Status of Endangered Wildlife in Canada, it should be shared carefully so that it doesn’t jeopardize those species, but it helps us to protect them.
Indigenous knowledge that is sensitive, that is identified by the community as being sensitive, that should be protected. I think that should be up to the knowledge holders. The people who know how it should be applied and know the constraints, it should be up to them to decide that.
I want to emphasize that dealing with this kind of sensitive information is absolutely part of an open science framework. There are ways that we can deal with that.
Senator Simons: And you would want scientific integrity from proponents and also from opponents?
Ms. Jacob: Yes.
Senator Simons: All right. Thank you very much. That’s really helpful.
The Chair: Thank you.
[Translation]
Senator Carignan: Thank you. My question is for Mr. Olszynski. You mentioned the number of assessments and the number of cases that went to court. You seem to be saying that it’s a small number, that it’s only less than 7 per cent, and so on. However, have you also assessed the economic value of the projects in terms of percentages? If so, what is it?
Mr. Olszynski: Thank you for the question. I’m sorry. My document hasn’t been translated into French yet. I worked hard last night to finish it. To answer your question, we’ve started the work. We’ve looked at the projects in each province, and we’re trying to determine their economic value in order to make comparisons with the provincial amounts in relation to the GDP, and so on. We’ve started the work, but we haven’t finished it yet. I’ll continue in English now.
[English]
We have done research-a-thons at several universities across Canada. We encouraged our students to access the registry and look for economic considerations, jobs, revenues, those kinds of things.
Two things are very interesting. First, it was a dog’s breakfast. It was incredibly hard for us to be able to pull consistent standardized information about the projected revenues, the basis upon which those revenues were determined.
On that point, I know that, Senator Black, you like to express concern that this current impact assessment act doesn’t give enough credence to economic considerations. I would suggest that the current act is woefully underserved in that context. We have an incredibly hard time being able to compare apples to apples.
The short answer is I am endeavouring to prepare that work. I will be happy, when I submit my formal brief to the committee, to provide some of that information because we certainly are looking at it to be able to compare the resource activity that is captured by the impact assessment act, or what we presume will be captured, compared to the rest of the activity that’s happening on a provincial scale.
[Translation]
Senator Carignan: My second question concerns some of the texts that you’ve published. You’ve raised the issue of adverse effects between the United States and Australia. When proponents are asked to control adverse effects to reduce risks —when the risk is uncertain, once a project has been approved —you noted that some proponents in Australia have been taking things a little too far in comparison with the United States. Have you also compared the other parts of the environmental assessment process that concern time, certainty, the minister’s discretion, and the number of avenues of recourse? My question is very broad, but few witnesses have told us about specific experiences in other countries, and I’m particularly interested in this.
Mr. Olszynski: It’s always encouraging to hear people make rather esoteric comments about adapted management, among other things. Again, I’ll continue in English to make things clearer.
[English]
I have done some comparative work. I am constantly scanning the United States regime. There are certain things we can say for sure, and this might come as a bit of a surprise — first of all, the NEPA, the National Environmental Policy Act, passed in the United States in early 1970, I think, remains the governing federal environmental assessment legislation in the United States. It is more like our original CEAA 1992. It is triggered by any federal decision making that has the potential to have a significant adverse effect on the environment. That is more like CEAA 92. They don’t have a major project regime like we have now.
As a general rule, it is regarded as more rigorous, and judicial supervision of that regime is more rigorous. That is partly a reflection of, I think, a culture in the United States that is generally maybe a bit more litigious. But their administrative law rules are different in the sense that they really encourage judges to take what they call a hard look at the analysis provided by government agencies and as part of the impact assessment process. When that hard look yields gaps, they will strike down those assessments and require them to be supplemented.
Whereas in Canada it is the opposite. Our courts seem to be very reluctant — even in the current context, they are very reluctant to engage in the science of environmental assessment. They have sometimes indicated that they will not sit as academies of science, in a famous case from the 1990s.
Where we have in the past been considered stronger is in the context of follow-up and monitoring. NEPA is fairly silent on those aspects. In some respects that, I think — you know, it was early assessments at the potential. I don’t think we necessarily realized that potential.
[Translation]
Senator Carignan: And in Australia?
Mr. Olszynski: I don’t know as much about it.
Senator Carignan: Thank you.
[English]
Senator Neufeld: Thank you both for being here and for the information you’ve provided.
My first question goes to Ms. Jacob. I understood you to say that you had lots of involvement in giving information in the three years prior to the bill being released. I think you said there were thousands of letters that went in from different organizations.
At the end of the day, when Bill C-69 finally hit the light of day, did it reflect what you folks wanted? I don’t see any amendments coming from the scientific community — maybe I just haven’t seen them, so you can correct me if I’m wrong — saying that this should be dramatically changed because it isn’t correct.
We hear that from industry, there are some real concerns. I’m not sure I’ve heard that concern from the people that you represent, and it would tell me that you probably got what you wanted.
Ms. Jacob: Well, I’m glad for the question. I hope you don’t regret what your email inbox looks like when I send you the various amendments that we have suggested. When the bill was —
Senator Neufeld: I have two addresses, one that goes one way and one that goes the other way.
Ms. Jacob: Okay. Well, I’ll try and do my homework and find both. When the bill was introduced in the House of Commons, I submitted amendments, and they were numerous.
Did the bill reflect what we had advised? Some aspects are an improvement.
There are many, many gaps.
I want to emphasize that some of the aspects of science that need to be strengthened come in related policy and implementation. Some of the very nerdy nitty-gritty details, they happen on the ground, they happen in policy, they don’t happen in the bill. However, if the bill doesn’t get passed, we don’t get those things.
Those are some of the improvements. That’s where many in the scientific community found that they were able to be the most help, providing advice about that. We see some positive aspects in the policy.
Some of the strengths that are related to science in the bill are things like a commitment to sustainability. I mean, the idea of sustainability has been around for a long time. Some of the things that we support are in that. As far as some of the amendments that we want to see, I have a draft of the brief that I’m going to be sending to the committee, and they contain some amendments.
Senator Neufeld: I’m asking prior to when the bill was tabled. Did I understand you to say that you have a lot of people listen to you at governments? You made presentations to them before the bill was actually written, the three years prior? That’s the part I’m asking about. I know you were in the House of Commons. I can see that list quite easily, but —
Ms. Jacob: Thanks for the clarification. Prior to February 2018 is your question; is that right?
Senator Neufeld: Yes.
Ms. Jacob: My involvement was through the expert panel and providing written testimony, and what I submitted was cosigned by almost 2,000 scientists from across Canada. I think that’s really important when scientists are speaking out about this, to evaluate the weight of that, and making an in-person presentation. So did a number of other scientists.
After that it was via meetings with senior members of the agency, public servants and politicians, a number of times.
Senator Neufeld: Okay. Thank you very much.
I have a question for Mr. Olszynski. Site C in British Columbia — and I’m sure you’re well aware of Site C — went through literally years of environmental assessment and consultation for the whole length of the Peace River, from north of where Site C is to the Athabasca delta with First Nations. Over 23,000 pages of information were given to the federal environmental assessment process. They still faced nine judicial reviews since the construction started.
Is that realistic with what you were talking about earlier? I mean, I get that there are unhappy people and I get there are people who are happy, but after it’s gone through rigorous hearings and that length of time and the studies that were done for everything you can imagine, don’t you think nine judicial reviews — it’s a good thing that it’s the Crown building it, because they’ve got deep enough pockets to continue to do it.
Apply that to the oil and gas industry, if that was a plant or something. That’s part of the hesitancy, I think, that these people have to invest money. That’s private money. This is public money in the province of British Columbia, where they have a suite of lawyers hired all the time, obviously, to do all these kinds of things.
Those are some of the fears.
Mr. Olszynski: Yes. I think that’s fair.
I think you could have named Muskrat Falls in Labrador and Newfoundland. That one is —
Senator Neufeld: I’m from British Columbia, so Muskrat Falls can deal with itself.
Mr. Olszynski: Right, but also probably 10 rounds of JRs.
I have a couple of points that hopefully will be useful to you. The first is that not all litigation is equal. Of course the really important litigation — and there has been work done by the C.D. Howe Institute on this point — the litigation that tends to stop projects is around Indigenous rights and the duty to consult. A lot of the litigation around Site C is involving the various First Nations in that area who are concerned about the impact to their Indigenous rights, their treaty rights.
On that point, that’s a constitutional imperative. The only way we’re going to deal with that is to get our house in order, both federally and provincially, and finally figure out how it is that we can move projects forward in a way that is also consistent with reconciliation. That’s going to be the case under the first Canadian environmental assessment act, the current one, and under future impact assessment acts. There’s nothing that can be done other than really to do the good work.
In terms of the kind of assessments and whether such assessments are being second guessed — what’s interesting, of course, is that both Site C and Muskrat Falls have essentially been deemed economic boondoggles at this point and just barely — I mean, I think in the context of Site C it was just because so much had already been invested that the current premier decided that he would go ahead with it.
What’s interesting is that in both cases those projects were shielded from a rigorous alternatives assessment. In the case of Site C, I think BC Hydro or the utilities commission was precluded from doing its own assessment on need. Similarly, things were sort of directed and misdirected in the context of Muskrat Falls.
If anything, it really just emphasizes the importance of rigorous assessment in ensuring that good projects are going forward.
Senator Mockler: The Council of Atlantic Premiers wrote a letter to the Prime Minister of Canada, in which they said:
Our assessment of Bill C-69 as it is currently drafted is that the significant changes being proposed to the scope and scale of federal environmental assessments in Canada will not meet the dual objectives of environmental protection and economic growth.
Those are the four premiers in Atlantic Canada. They also say that the bill is also inconsistent with the joint management principles of the Atlantic Accord Implementation Act.
I am from Atlantic Canada, and we have the Point Lepreau Nuclear Generating Station. Other stakeholders have brought to our attention a key concern. They are concerned about the transfer of responsibility for the assessment of nuclear projects from the expertise of the Canadian Nuclear Safety Commission to the impact assessment agency, in addition to the requirements for nuclear expansion on a licensed facility to go through the IAA process versus being assessed by the highly qualified life-cycle regulatory agency, the Canadian Nuclear Safety Commission.
My question to both of you is do you agree that reducing the role of the Canadian Nuclear Safety Commission, which has been cited many times as a leader in the world, reduces the role of scientific expertise in the assessment of Canadian projects?
Ms. Jacob: Thank you for the question. I don’t have expertise in nuclear. I will be cautious in how I respond. I will try to respond in a more general way about the role of science and the independence that I think is necessary.
When we assess the potential impacts — the positives, negatives, and these are things that are for economic reasons, social, environmental — there are many ways to do that and there are various standards that people use. If it is done in a very open, rigorous, transparent, independent way, I think it has a potential to provide much better evidence for decision makers to base their information on. I’m cautious when the proponents or the people who stand to benefit are also the people who are either carrying out the assessments or who are directly paying for them and in many ways influencing what happens. I have many examples of how that happens in experiences people have told me about.
My caution is really about independence.
If the agency has the ability, if government scientists or others, other experts, have the knowledge to do this, have the capacity to do this, are allowed to give unbiased, truly scientific recommendations, evaluate the evidence that’s before them, it stands to make an improvement. But I can’t speak specifically about the nuclear issue.
Mr. Olszynski: I think it’s important to clarify a couple of things. One is, of course, the impact assessment act is not taking away the CNSC’s role, but it is forcing it to sort of participate in a joint review with the Impact Assessment Agency or with the panel members chosen by a roster or in a roster.
First of all, it’s not about taking it away, it’s about forcing some sharing.
That might not be pleasant or desirable for the CNSC or the NEB, but, frankly, it’s a return to the pre-2012 status quo. Lots of projects prior to 2012 were being assessed at joint review panels. Northern Gateway started off as a joint review panel between the agency roster and the NEB.
It’s not fair to characterize it as a taking away so much as it is a sharing of that responsibility.
Second, unfortunately, legislation doesn’t happen in a vacuum. It doesn’t arise in a vacuum. I think I would look at the expert panel report, the fact that it made a very strong recommendation that these two agencies in particular shouldn’t be solely responsible for assessments anymore. I think that they provide a fairly clear rationale.
The last point, to come back to your intro and the question about the four Maritime provinces and the leaders of those provinces, are we all agreed, we’re all on the same page that this bill and this regime contain no substantive constraints or limits on the kind of project that can be approved? Everyone is agreed on that?
When the minister said on TV at one point that TMX could be approved under this legislation, she was on absolutely solid legal footing. The only constraint is her or cabinet’s assessment of the political wisdom of that decision? Because once we accept that — and I’m going to suggest to you that that is the reality — there is nowhere hidden in this bill any kind of substantive constraint on the kind of project that you can approve, then I have a really hard time understanding where these very strong positions come from. Because it is essentially a process that just requires a report, a consideration of effects and a decision at the end that is democratically accountable.
Senator Mockler: We have nine provinces in Canada that are concerned. They’re the leaders of our communities, and that’s democracy.
When you look at the Council of Atlantic Premiers and they say, “Give me your opinion on that,” or “I would like to have your opinion on this,” they say that the bill, as drafted, places final decision-making power in the hands of the minister or Governor-in-Council and provides the opportunity to veto the results of scientific assessment and a review of evidence. These are the premiers of our provinces saying that. What you’re telling me is a little bit bizarre.
Mr. Olszynski: Well, I’m just telling you that under the current act, under the former act and under the future act that is all the same.
Ms. Jacob: Can I have a follow-up to that, senator?
The Chair: Okay.
Ms. Jacob: Senator, you mentioned democracy. I think that one of the very important things to remember here is that there has been a huge amount of consultation going into this. People have spoken up about what they want.
A couple of examples are that in the 3,000 submissions that were made online about the EA experts’ panel review, the number one thing that people identified that was important to them was basing decisions on science, facts, and evidence. That was even greater than public participation. It also showed a huge amount of support for considering cumulative effects more strongly.
Although I think it is very important we think about what people want, we need to think about what are the best interests in the long term and having really clear evidence that supports decisions that are made.
Senator MacDonald: I’ll direct my question to Dr. Jacob. You describe yourself as a conservation scientist. I consider myself a conservationist. I like to maintain habitat, wetlands and contain urban sprawl, things of this nature. Of course, conserve is the root of the term conservative.
If we look at the world we live in, it took 200,000 years for mankind to reach 1 billion people. It took another 200 years for it to reach over 7.5 billion people. We’re 37 million people in Canada in a world of 7.5 billion.
I believe science. I’m not a science denier. Just last week Canada’s Changing Climate Report showed that Canada’s warming choice is past the global average, three times as fast up north. The science is clear. Climate change is largely caused by human activities unless we reduce emissions, and we still can. I assume you’re speaking about the world and not just Canada when you say “we.” Correct?
Ms. Jacob: I’m speaking about both.
Senator MacDonald: Well, about both, yes. How much impact can we have on the world? And, of course, we want to show some leadership. We hear a lot about plastic. Plastic is a problem, particularly in the oceans. But 95 per cent of the plastic in the oceans comes from nine river systems, all in Southeast Asia, the Indian subcontinent, and Africa. We can’t do anything about that over here.
What can we do to alleviate these issues, alleviate these problems in all these areas that are outside of Canada’s purview and influence?
Ms. Jacob: I love the question: What can we do? I think a lot of people wonder what can I do. What can I do as an individual, what can we do as a group in the many different groups that we find ourselves in? The good news is we can do a huge amount. Individual choices play a role, but to make the kind of change we need to make on the time scale that we need to make it, we have to have institutions play a role and governments need to play a very strong role.
You mentioned plastics. Although we hear a lot about plastics — and plastics are indeed a problem — plastics are not the most pressing problem for the oceans. Warming temperatures, ocean acidification, these are larger problems. Although plastics are a problem and we should do what we can about it, both as Canadians and collectively, it is not the number one problem.
You asked a question about what’s the role for Canada to make change and what’s the role for other countries. Essentially we all need to do something. We all share the planet. We all have a responsibility.
Canada is an extremely wealthy country. We have phenomenal science in this country. My education was all in Canada, paid for by taxpayers. We have a responsibility to use that information, training, and experience not only to improve the lives of Canadians and how we safeguard Canada, but also to improve other countries and help them meet the goals that they have for biodiversity and climate change targets. I think we have a moral responsibility to do that.
To say that Canada is a small country by population is true. We are a very large country by land mass. We have a huge coastline. We have a responsibility to the world to do something, to safeguard it.
Senator MacDonald: You mentioned earlier that Canada is a wealthy country. Of course, it’s a little less wealthy if we don’t have jobs. It’s a little tougher then.
You talked earlier about the importance of Indigenous knowledge. You said you wouldn’t deign to speak for Indigenous leadership when it comes to Indigenous knowledge. You asked me to accept the science and asked people to accept the science. When Indigenous knowledge comes in conflict with science, what’s your response?
Ms. Jacob: I approach those opportunities with curiosity, an opportunity to learn more. Not as a way of shutting down a conversation, but being in it for the long haul that we both want to understand the natural world, and here are two conflicting pieces of information. I think it’s an opportunity for people to sit down together and to talk about that. It doesn’t mean that necessarily one is better than the other, but I think it shows that we should proceed carefully. That’s an example where a precautionary principle I think would come into play, because one might suggest that something is going to happen, one might suggest that something else is going to happen. If one person tells you the bridge is going to fall down and the other one tells you that it’s fine, I think we need to be really cautious about whether we’re going to cross it.
It doesn’t mean that we shut down conversation. It means that we go to the people who have that information, who are the experts in those fields, and we ask them to understand it.
Senator MacDonald: In the science, you’re the expert.
Ms. Jacob: Yes.
Senator MacDonald: When it comes to science, I thought we were supposed to listen to the science. You’re telling us we have to listen to the science.
Ms. Jacob: I’m speaking as a scientist. When we — the broader we or the committee — need to consider multiple forms of evidence, it doesn’t mean choosing one over the other. I can explain my science, I explain the science of other people whom I understand, but I can’t talk about Indigenous knowledge with any authority. It’s not something that I’ve been trained in. I think that we should listen very carefully to people who are experts in that field. How decision makers weigh that is not my call to make.
The Chair: Thank you very much.
That ends this panel. Thank you, professors, for your testimony.
We welcome our fourth panel of the morning. From Suits and Boots, Rick Peterson, Founder and President, and Brad Schell, Honourary Chair. From Young Women in Energy, Katie Smith, Executive Director. And from Pembina Pipeline Corporation, Michael Dilger, President and Chief Executive Officer, and Tanis Fiss, Government Relations.
I want to stress to the witness that we are studying Bill C-69 issues. Please refrain from discussing other bills or areas that are not covered by Bill C-69. This is in order to be as efficient as we can.
We will start with Mr. Peterson.
[Translation]
Rick Peterson, Founder and President, Suits and Boots: I want to thank Madam Chair, the honourable members of the committee and all the francophones and francophiles from Quebec and New Brunswick for coming to Calgary to discuss issues of vital importance to Canadians.
[English]
My name is Rick Peterson. I’m the President of Peterson Capital. We are an advisory firm. I’m speaking before you today from the investment industry, but also as my role as the founder and president of a not-for-profit called Suits and Boots. I’ve spent 31 years in the investment industry working for a number of large companies: Merrill Lynch Canada, HSBC Securities, Midland Walwyn, CIBC Wood Gundy. Since 2003 Peterson Capital has helped finance companies across Canada. We have a staff of seven employees in Vancouver, Calgary, Toronto, Montreal, Halifax, and Geneva.
Suits and Boots is a not-for-profit. We have 3,700 people. We started a year ago, in April. I believe in the front and back rows we have some of our supporters. We are a true grassroots not-for-profit. We receive no financial backing from any company. We receive no financial backing from the resource sector.
Mr. Brad Schell is the chair. Mr. Schell will be speaking on behalf of the boots in our organization. We are in every single province and territory in more than 300 communities across Canada. I think you’re going to find his testimony of interest.
As an investment banker and as somebody who works in the capital markets, I’m here today to simply reflect what my capital markets colleagues are saying and are hearing. Unanimously since that bill sailed through the house and landed on your desk, there is not one investment banker in Canada who has put up his or her hand and said this is a good bill. There is not one fund manager in Canada that has said this is a good bill. There is not one investment advisor who helps manage portfolios, TFSAs, RRSPs, who has put up his or her hand and said this is good for the resource sector and for Canada.
You don’t have to believe me. What you have to believe are the people who are involved every single day of raising capital for our resource sector.
It was interesting, the speaker — scientific lady, and I apologize for not knowing her name, before ours. Our view of the capital markets is there’s a fundamental flaw in the 2012 act, and you have an opportunity to correct that. That flaw was stripping the National Energy Board of its ability to make a final decision and making that go into cabinet. As the remark was said before, it was like letting the fox in the henhouse. That was so true. Bill C-69 adds about 10 more foxes in the henhouse. Bill C-69, and this is in the view of everybody in the capital markets, adds more risk. Investment decisions are being made across Canada, across the world every single day.
[Translation]
The most important factor is risk. What risk is associated with the capital that I’ll invest in Canada?
[English]
What’s the risk of getting your money back and making a reward? Well, the capital markets have spoken very clearly and very loudly. They’re gone.
This evening, if you get a chance to walk around Calgary — and this is ground zero of the pain, ladies and gentlemen. This is ground zero of the flight of capital. This is ground zero of the results of poorly thought out policy of the oil and gas companies, of the oil and gas sector. When you walk around Calgary tonight for a break there will be some lights on at the top of the towers, but don’t be mistaken. The lights are on, but there’s nobody home. The official vacancy rate in downtown is 25 per cent. The real vacancy rate is probably 60 per cent. You can rent floors of downtown Calgary, commercial space, for operation costs and nothing more.
It’s important to know that all of us in the capital markets want clarity and respect the need for Indigenous consultation and environmental concerns. We want that. We want that clarity. We want that clarity so that capital comes in and supports our resource sector and the young men and women in it.
The three Canadian banks reported their results last quarter last Thursday, and it was interesting. Every single one of these three banks, RBC, TD, and CIBC, all of them committed money to alternative energy, all of them committed money to green technologies. But every single one of them doubled down on their support for the resource sector, for the oil and gas sector. Not one of these gentlemen has come out in favour of Bill C-69.
Victor Dodig, the CEO, last Thursday, and I quote from The Globe and Mail, there is “. . . leakage in terms of revenue — tax revenues that support health-care spending and education spending and make our country a better place.”
Ladies and gentlemen, you have an opportunity to revisit a flawed bill and make this country a better place to invest. In conclusion, before I turn it to Mr. Schell, I’m going to ask you to do three things for us at Suits and Boots and for all of Canada.
Be focused. When you look at amendments on this bill, don’t try to solve the planet’s problems. Assess the pipeline, not the planet.
Number two, be honest. If you don’t think we should be in the resource extraction business, write a bill that keeps the oil in the ground. Don’t write a bill that pretends to want to exploit the oil, but then do everything you can to keep it in the ground.
The last thing I’m going to ask you is be strong. I’m very encouraged by some very strong amendments that I’ve heard so far that go a long way towards satisfying all the different interests. If you forward amendments to the house and you all agree with them and the Senate passes them on third reading, if that comes back to you, you need to be strong and you need to support and stand up for your amendments.
It wasn’t the case in Bill C-49. Eighteen amendments were sent by your Senate to the house; they came back with two, and the Senate caved. Don’t cave on Bill C-69.
Be strong, be realistic, because it’s the fabric of Canada, the fabric of our federation which is at risk.
Brad Schell, Honorary Chair, Suits and Boots: Senators, I just want to tell you I’m deeply honoured to be here and thank you very much for coming to Calgary, the oil capital of the world. I would like to give you a little of my history and background.
I started out at 17 years old driving a truck. I worked my way up through the ranks. I started a family-owned and operated heavy haul outfit. My wife counted the beans and paid the bills, my son came to work alongside me in the field, and when my daughter was going to university she came to work part-time in the office.
In our prime, we employed 40 people. We had top-shelf men and women. We paid them well and treated them like gold. We had quite a few long-term employees. They were key to our success.
About 12 years ago we sold out. I had a really hard time with that. I wanted to see my son and my grandkids take that company and run with it.
Today I’m very grateful we sold because I probably would be flat broke and pushing a shopping cart around downtown Calgary picking up bottles.
When I go to a Ritchie Bros. sale, I will see four or five trucks sitting in a line-up, all painted the same, good-looking rigging, and you’ll hear people talking. Well, the bank called his loan, he’s broke, he has no work. That’s going on all through Alberta. Every small town where the oil patch operates, those key little companies are finished. Devastation in this province without access to these foreign markets for our oil is ruining this place.
It came to a point in this country where we’re almost ashamed to say that we work in the oil and gas industry. Well, I’m here today on behalf of Canadians and the oil and gas industry and every Canadian who feels the same way I do. We should be proud of our oil and gas. There are pundits who oppose the oil and gas industry and pipelines. Without oil and gas in this world we’re dead in the water. Look around. How did you get here? How did your groceries get here? It takes diesel fuel and gas.
Thank you.
The Chair: Thank you.
Ms. Smith.
Katie Smith, Executive Director, Young Women in Energy: Good morning, Madam Chair and honourable senators, and thank you so much for inviting me to speak to you all today. It’s an incredible honour. I sincerely appreciate the opportunity to provide input on Bill C-69. My name is Katie Smith. I’m a 30-year-old woman working in the energy industry, which I started in when I was just 19, juggling being a full-time student and a young professional. For the past 10 years I’ve worked in various aspects of the energy industry, ranging from environmental consulting to my current role at Spartan Controls, a company specializing in industrial process automation.
In addition to my day job, I serve as the Executive Director for Young Women in Energy. For the past five years it has been our mandate to increase and provide female voice, presence, leadership, and development in the energy industry.
Young Women in Energy has more than 4,000 members, young women who are working in various disciplines across the industry. In engineering, geology, finance, reclamation, human resources, consulting, law, policy, and more.
As an active young professional in the industry and from my experience with Young Women in Energy, I am passionate about advancing the energy industry by encouraging investment in all people’s potential. As a result, I am here to share my perspective as a representative of the industry’s future. I view this bill as a critical piece of legislation that could define the role the energy industry plays in our national identity. According to PetroLMI, almost two thirds of the current Canadian energy industry is below the age of 45. We are not only concerned for the immediate challenges our industry is facing, but how these issues will affect the trajectories of our career over the next 20 to 30 years. Our stake in the future of the energy sector is substantial and cannot be ignored.
Let me be clear: Young professionals like myself absolutely support the government’s intentions of this bill. We want to work for and contribute to an energy industry that has a modern environmental and regulatory system that protects the environment and the rights and dignity of Indigenous peoples, creates new jobs and economic opportunities for Canadians, and makes a positive impact not only on Canadian society, but on the rest of the world.
However, the current form of this bill does not achieve those intentions. In preparing for today I engaged with stakeholders of my own across industry, government, academia, and peers. Among many factors addressed by other witnesses today, young professionals are especially frustrated with the lack of clarity, certainty, and an increasingly politicized process that is proposed to govern our energy’s future. Without clarity project reviews will continue to be long and complex with uncertain politicized outcomes that will likely be appealed or overturned. Canada and the rest of the world would then miss out on the economic and social benefits that projects offer, as well as the environmental leadership from Canada’s energy industry.
In its current form, I believe Bill C-69 will jeopardize investment in Canada and, as a result, the ability of many of Canada’s young professionals to pursue fulfilling careers. The stakes here are high. The energy industry is crucial for Canada’s economy and development. Canada’s energy industry is the sixth-largest producer in the world. We account for over 200 billion of our country’s nominal GDP, and we help employ nearly 900,000 Canadians both directly and indirectly. Those would be 900,000 Canadians who are able to pay taxes, raise families, and contribute to the high quality of life Canadians enjoy.
Furthermore, these are not just jobs. These are well-respected careers for both women and men, they are technology-driven jobs, future facing, focusing on changing the industry for the better. They challenge us in a good way and are making a positive impact not only on society but the rest of the world.
If we get this wrong, investment capital will be spent, just not in Canada.
Energy will be developed, just not in Canada and likely not as responsibly. Most importantly, we will lose valuable human capital. Young people will not choose Canada. They will take their skills, ideas, and enthusiasm elsewhere. We risk losing momentum as thought leaders in the energy industry.
We must get this right. We cannot afford to lose this human capital. It’s critical that we have the best possible minds and hands working to solve the energy industry’s most crucial and most time-sensitive problems. We know that today’s competitiveness and the future of the industry require nothing less. Young Women in Energy members specifically are highly skilled and wildly passionate about the Canadian energy industry. This is a once in a lifetime opportunity to set our country up for future success as we develop energy responsibly for the women and men who work in this industry.
The world needs more of Canada’s energy, not less. Canada is the example of how to responsibly develop resources. Canada will continue to improve and lead in the future.
We support the Canadian Association of Petroleum Producers, or CAPP, and the Canadian Energy Pipeline Association, or CEPA’s, proposed amendments as submitted previously to this committee. We believe they’ve undergone a thorough and comprehensive evaluation of the bill and have proposed productive amendments that make this bill workable and address our concerns of clarity, certainty, and politics.
On behalf of all the young professionals forming the future of your energy sector, together with the many Canadians our energy industry supports, I urge you to vote to amend Bill C-69. Let’s work together to create the modern, environmental, and regulatory system we need to advance Canada’s energy industry into the future. We believe with these proposed amendments young people and investors will continue to choose Canada.
Thank you. I am happy to answer any questions.
Michael (Mick) Dilger, President and Chief Executive Officer, Pembina Pipeline Corporation: Good morning, everyone. My name is Mick Dilger. I’m President and CEO of Pembina Pipeline Corporation. We’re a $35 billion company, located here in Calgary. You probably haven’t heard of us because we tend to shy away from events like this and fly under the radar. We feel compelled to be here today because of the importance of this bill.
I thank you for having us, holding these important hearings. I thank you for your service to our country.
Pembina gathers about half of the oil and gas in Alberta to the centre for further export, about half of the natural gas liquids. We’re the largest third-party gas processor, the largest storage owner, and the largest fractionator of natural gas liquids in the country. We are also diversifying into the petrochemical sector to add value to these hydrocarbons and also looking at the LNG business.
The focus for my speech today is the business of pipelines. First some background. Canada’s energy sector has suffered dramatically. About a 50 per cent loss in the value of the energy sector since 2014. That’s larger than the Royal Bank of Canada. That’s larger than the entire telecommunications sector in the country. That’s 30 times the size of SNC and Bombardier combined. It’s been lost, evaporated; $30 billion of infrastructure projects have not been constructed.
It’s led to haemorrhaging in revenue of the oil and gas sector. Without egress prices drop and the cycle continues. We’ve had over a hundred thousand job losses in Alberta. When we read about manufacturing, engineering job losses, those are counted in the thousands. These are counted in the tens of thousands.
By contrast, the United States is flourishing. They’ve had a tenfold increase in exports, with another threefold increase projected. They’re realizing world commodity prices, not made-in-Canada prices.
The Global Petroleum Survey says that nine out of 10 of the best jurisdictions on the globe are now in the United States. Alberta’s forty-third and B.C. is fifty-eighth. In 2014 Alberta was third in the world and B.C. was seventeenth.
The Fraser Institute says between 2014 and 2017 the amount being invested in Canada by foreign companies has decreased 50 per cent, whereas the amount Canadians are investing outside of the country has increased by 75 per cent. This is called a flight of capital. Money is rushing out of our country at an alarming rate.
Why is it that when Canada has amongst the finest geology in the world, we may well have the single largest gas resource on the planet called Montney, highly economic; we have companies led by world-leading teams; we have world-leading environmental and ethical standards that nobody wants to invest here? It’s about policy. What else could it be? It’s about policy, and we’re scaring everybody away. We have scared everyone away. Capital hates risk, and we’ve created risk. You don’t put your own money into risky things. Why would others?
Bill C-69. Politicization and the fear of Bill C-69 continue to artificially crush our sector. It’s about that risk I talked about. We need to keep politics out of the process of identifying which projects are in the national interest for the same reason we need to keep politics out of the judiciary.
If we are hoping that federal, provincial, municipal, and Indigenous politics all line up at a time when the approach is to take four to six to eight years to create and construct, we’re dreaming. We need a single truly empowered regulatory body, science-based to transcend the noise of politics and speak for what’s in the long-term interest. The ability to nation build in our country needs to be retained.
There’s no room for politics of the day for projects that require huge upfront capital investments and take half a decade or longer to get approved, unless the federal government is going to construct and own every major export pipeline in the future. That’s where we’re heading.
We’re soon going to observe the impact on taxpayers of the federal government owning TMX, and we’ll see how that works out. We’ll see what their return on investment is. The silver lining though is that at least the federal government will learn what it’s like to be a pipeliner for a while. That’s going to be no fun for them.
Companies can’t put billions of dollars at risk with a guessing game of who will form the government of the day when it comes time for approvals.
We also don’t need a parallel process in Bill C-69 to consult with Aboriginal groups when this duty is already properly bestowed to federal and provincial governments. Imagine in the future deciding between three competing government groups and industry on who is going to best consult and how to do this. The courts are already figuring all of that out in parallel with the TMX project.
We also don’t need everyone in Canada to have standing on pipeline projects that don’t impact them. It’s just a silly idea. You’re building a garage in Nova Scotia. Why would an Albertan need to intervene? It makes no sense.
Why will no new pipelines get built? Let’s start with the basics, the business of pipelines. Regulated pipelines attract single digit, after-tax project returns. If you invested in a diversified portfolio in Canada, you could achieve, you know, high single digit, after-tax returns in your portfolio. That’s about what a pipeline earns on a project. Start with that.
Take out millions or billions of dollars of upfront investment to do routing, capital cost estimates, which you need because otherwise you don’t know what to charge your customer. You have to set fees. You have to do, you know, millions or billions of dollars of work upfront to set fees. You have lengthy customer negotiations. You’re trying to share the risk with them. You have years of consultation with no certainty of outcome. Then you have different levels of government fighting about who has jurisdiction. We’ve all seen how that’s going.
Then you have courts second-guessing governments and the national regulator. Everybody wants a veto. Everybody wants a veto on every project.
After all of these challenges, not to mention the stress on companies, their employees, shareholders, balance sheets, risk-adjusted returns don’t work. It doesn’t make sense for pipeline companies who earn single digit, after-tax rates of return to take on these risks.
Would you? If you can put your money anywhere in the world in a diversified portfolio and get high single digit, after-tax returns, would you put your money at risk with all these risks I’ve articulated and invest in this sector? Guess what, we’re not either.
If you look at Enbridge, Pembina, TransCanada, we’re sneaking up to a hundred billion dollars invested in the United States and elsewhere in the last number of years. We’re investing more money outside of Canada than inside of Canada.
We wouldn’t do it either, and we’re not.
In closing, Bill C-69 will continue to drive away capital investment, will put downward pressure on Canadian hydrocarbon prices, destroy tens of thousands of middle-class jobs, lose royalty and tax revenue, rob Indigenous communities of countless opportunities, and eliminate all the environmental and social benefits from responsible energy development. Worst of all, it will favour foreign oil over Canadian oil. Oil that isn’t accountable for all these standards that are being proposed in Bill C-69. No questions asked. Let’s just import it from jurisdictions that our government openly condemns.
Thank you.
The Chair: Thank you very much.
We’re going to a period of questions. I would appreciate it if senators keep their preambles short.
Senator MacDonald: I thank all of you for being here today.
I’ll direct my questions to Pembina. You’re one of the large and successful pipeline companies in this country. Your testimony is very sobering to hear, quite frankly.
We had a situation a few years ago with Energy East pipeline and the upstream and downstream emissions imposed on it, which basically killed the pipeline. That was the end result.
How does the imposition of these types of measures downstream and upstream give an advantage to foreign companies, foreign pipeline companies, as opposed to a Canadian company? I think Canadians have to hear that.
Mr. Dilger: What I’ve been trying to articulate here is that those same restrictions are in no way imposed on foreign oil. Many foreign jurisdictions don’t have nearly the ethical or environmental standards that we already impose, let alone what Bill C-69 contemplates. They’re transported from halfway around the world, which is causing even more greenhouse gases. They’re imported down the St. Lawrence Seaway instead of matching Canadian supply with Canadian demand. I mean, it defies logic. It absolutely defies logic.
Senator MacDonald: Your company is obviously a large company, great expertise. You’re not going to leave the pipeline business. Is it inevitable that all your investments in pipelines are going to be in other countries now or more likely?
Mr. Dilger: We’re doing what we can with the hydrocarbons that exist.
We’re trying to diversify into petrochemicals to add value to the hydrocarbons that we have, but the system is backing up. You know, it is backed up. The ultimate impact is it’s backing right up to the producer who now can no longer make money. The producing community cannot raise equity anymore because prices are so low they’re having a difficult time making profits. It’s leading to massive job loss.
The ripple effect to Canada is going to be astounding because, you know, we have a very successful banking sector, which, by the way, is also investing more outside of Canada than inside of Canada because they have nobody to lend money to anymore.
Mr. Peterson spoke of capital markets. The ripple effect of losing hydrocarbon investment, which used to be the largest capital investor in the country by a long shot, is going to be traumatic. Balance sheets are stressed and weakening and people are hanging on now. They’re just hanging on. Another few years of this, it’s going to be absolute chaos. We’re going to see the real tragedy of a sector that was the envy of the world just brought to its knees.
Senator MacDonald: Thank you, sir.
Senator Cordy: Thank you very much. It’s been a very interesting and informative panel. It makes me realize how the decision that we made to come to Western Canada, particularly Alberta, has been very positive for the committee members to learn more about the reactions and what’s happening to your oil industry.
Being from Nova Scotia, of course, it’s not really a surprise because so many Nova Scotians came to Alberta to work. Many have returned back to Nova Scotia and many have stayed here, but they’re not working in the oil and gas industry any longer or they’re unemployed or have found other jobs. Thank you very much for what you told us today.
My question is for Ms. Smith. You said you support the CAPP amendments. You spoke about the lack of clarity within Bill C-69, the lack of certainty, and that without the clarity and the certainty that the approval process will be long. We could probably also include that funding challenges as spoken by Mr. Dilger and Mr. Peterson would also come into play.
Specifically I wonder if you could just expand on that? If there are specific amendments related to gaining some of that certainty and clarity that you would highlight from within the — either the CAPP proposals or amendments that you yourself would think of?
Ms. Smith: I am by no way a policy expert, but I have reviewed the CAPP amendments to the best of my understanding. I think what’s really important from a clarity perspective is the language and what’s expected of each process.
One thing to note, just even in the initial amendments of CAPP, they bring up the idea of the notice of commencement. When they talk about the notice of commencement, all the amendments that they’re doing is what should be included in that notice of commencement.
When I say lack of clarity, if you just say notice of commencement, especially from someone with zero policy background, I don’t know what that means. I think what they’re looking for is a little more clarity on what each section of the bill would actually entail. We as an industry are happy to support a rigorous process, but we need to know what process that is going to be. I think that’s what I meant by clarity and certainty.
Regarding timelines, because I know you’ve asked a couple of questions, again I’m not a policy expert, but they are implementing some maximums. You want some minimums and you want some maximums. It’s, again, just to understand greater certainty of what kind of timelines are we actually looking at. I’ll leave that to — CAPP can provide more actual information. I really appreciate the boundaries being at least offered to consider by the committee.
Senator Cordy: Mr. Dilger, you presented what I would call a pretty bleak picture of the pipeline industry. Is the bill saveable? Are there amendments that you would suggest?
Mr. Dilger: I think CEPA, the Canadian Energy Pipeline Association, has done a very good job of presenting a reasonable set of amendments. I talked about certainty in the regulatory process and certainty for capital markets. We had a world-leading regulatory process that attracted capital from around the globe, not just to infrastructure, but to the upstream sector as well. I personally would favour doing the small renovation in my house that I know will fix my house rather than building a whole new house and realizing I have a whole bunch of new renovations to do next. I think we had something perfectly good that needed some tweaking.
If the bill, which I don’t think is needed, needs to be passed, then I think the amendments put forth by CEPA, as a basket, not one or the other, are very sensible.
Senator Cordy: Thank you very much.
Senator Simons: Thank you very much, Madam Chair. I know we’re not supposed to have a long preamble. I want to say what a privilege it was to have Mr. Schell and Ms. Smith here representing — I don’t want to say the past — the legacy and the future of the industry. I mean, you both spoke with so much heart and so much intelligence and so much love for your field. I think that was really important for my colleagues who are not from Alberta to hear. I want to thank you both for just speaking so eloquently.
I’m going to ask my question of Mr. Peterson. I understand what you and Mr. Dilger are saying about the flight of capital in response to Bill C-69. The timeline you outline suggests that capital was leaving before C-69 came to the forefront of public attention. And obviously it’s not the law now. What are some of the other factors that you think are driving that flight of capital? And if we can pass an amended C-69, how do we regain the confidence of international investors, that they can come and do business here and see a project come to fruition?
Mr. Peterson: The capital markets are a leading indicator. The capital markets look to the future. As Mr. Dilger eloquently pointed out, the issues that Pembina and others are facing are not new to the capital markets.
If a fund manager sees on the horizon the possibility or the probability of regulations coming in that could add risk to his or her investment portfolio, it’s already built in. The flight of capital that we’re seeing and the negative views on our market are built in because the expectation is that C-69 largely in its form is going to pass.
I’m not a legal expert. I think we had some very good testimony from Andrew Roman, a litigator out of Toronto. I think CAPP has done a good job.
Those of us in the capital markets, we simply want clarity. We would like to know where it’s going to be going. We would like fewer potential triggers for litigation. My understanding is there are now 22 mandatory considerations on the review side of it instead of 12, as there were before.
What the capital markets are looking for is clarity, succinctability to understand what the cost to the capital is for the people on the ground, and what can be done is for the Senate to send back a very clear set of guidelines and amendments. I think it can be done. I’ve seen very strong amendments that have come forward, ideas that have come in these committees so far.
Have you invited a fund manager here to speak to you?
Senator Simons: I don’t think we have somebody coming here, but I know that —
Mr. Peterson: Do you have a fund manager?
Senator Simons: Our colleague Howard Wetston was looking —
Mr. Peterson: I’m an intermediary between Pembina and the fund managers, but I would strongly suggest, senator, that you ask that question of the men and women who are pulling the trigger on investments in Canada. That answer will be the clarity that you seek.
Senator Simons: Thank you. I know that we are looking for someone.
The Chair: Yes.
Mr. Peterson: You are looking, or do you have someone?
The Chair: No. We have a panel on finance.
Mr. Peterson: You have a fund manager? You have an institutional —
The Chair: We have a panel on finance.
Mr. Peterson: Okay. That’s very good news. Please ask that question to that person.
Senator Simons: I shall. Thank you very much.
[Translation]
Senator Carignan: My question is for the Pembina representatives. With regard to your company’s investments, can you provide an example of a different investment or an investment that you’ve changed by going abroad? Take the example of your Jordan project in Oregon. Are you planning to invest in the United States in order to export the natural gas that you normally could have or should have produced in Canada, since you need to make this type of investment abroad?
[English]
Mr. Dilger: To this point we are looking more aggressively into the United States because that’s where the growth is in oil and gas. If you look at the Marcellus, Permian, different areas, that’s where the growth is.
You know, we will proudly remain in Canada and serve our existing customers, but capital markets expect a company like ours to grow. When there’s no growth in oil and gas, you can’t grow in Canada. To build new processing plants, new petrochemical plants, new pipelines, you have to go where the growth is.
With no egress there’s no processing required, there’s no gathering required, there’s no services required. We will be forced to grow outside of the country, and we’re backed up. The pipelines are full. They remain full. There can’t be any growth.
[Translation]
Senator Carignan: I’ve put this question to a few witnesses, but I’ll ask you the question because you work in the gas industry. You’ve already heard statements regarding the importance of exporting gas as a transitional energy source. Do you think that the greenhouse gas reduction effect should be added as a criterion from a global perspective? The natural gas that you’re exploiting here —which you export to Japan or Asia, for example —will eliminate coal-fired plants. This will help reduce greenhouse gases globally. Should this type of criterion be included in a bill such as Bill C-69?
[English]
Mr. Dilger: When we export natural gas, we are displacing coal. The customers that we’re looking for our Oregon-based Jordan Cove Project, the 7.5 million tonnes of natural gas that we will export will displace all the GHG emissions in the State of Oregon, by way of example.
My personal belief, and I’m far from a climate scientist, is the only way to meet Paris and other objectives is to displace coal with natural gas. That’s the only way. Renewables, you can’t get there. There’s not enough money in the world. The technology isn’t quite ready. We need transition fuels, and that’s the only way to accomplish that objective.
I really believe with a gas resource like the Montney, which some people believe is the largest natural gas field in the world, that Alberta and British Columbia can be part of the solution, much more than part of the problem. We should be proud of that. We should be exporting and be proud of exporting clean Canadian ethical energy to the rest of the world that are lining up to buy it, but we’re snatching defeat from the jaws of victory. That’s what we are doing.
Senator Richards: Thank you very much for being here. It was asked before. What amendment would help? This bill to me is such a — for lack of a better word — disaster. I don’t know what amendment would help on the consultation or the oversight or the veto. What amendment might help this bill that we would see in the process of litigation diminished?
I don’t know. Every time I read it, it gets more convoluted. If one of you could tell me that there would be an amendment that would really help, that would actually pass through the Senate and through the other place, then please tell me, because I don’t know.
Mr. Peterson: I’m venturing onto territory where I’m not an expert, but Andrew Roman put out a very interesting piece. You can see it on his blog. He talks about the use of the word “must” versus the use of the word “may.”
Senator Richards: Yes, I know that.
Mr. Peterson: From a layman’s viewpoint, from a capital markets viewpoint, it seems obvious to me that there will always be potential litigants who can find issue with something that must be done but maybe isn’t done in the full scope of what they would wish.
As Mr. Dilger pointed out, the fact that there’s no more standing, the fact that thousands of people can come and make a presentation — those two together is a fiery pool of octane ready to go off to blow off a project.
Was the mandatory work done and did it hear from a wide enough scope of people? The lack of standing and making it a narrow definition of what must be done is probably a retirement dream for many litigators in Canada. We have to stop that.
Senator Richards: You mentioned that we’re getting our oil from all other sources, and I know this amendment will never pass, but it seems to stop the government’s sleight of hand. We might have an amendment that says that every barrel we refuse to take out of the ground of Alberta we take off a ship coming into the St. Lawrence. That might smarten them up a bit.
Thank you very much.
Senator Neufeld: I thank all of you for being here and giving us the information you did. I live in northeastern B.C. and spent my life in the oil patch before I got into politics. I have a strong feeling about it, the same as Mr. Schell.
People wonder why money is leaving Canada. I mean, Northern Gateway got cancelled. How long has TMX been in the process? Energy East got sabotaged. It doesn’t take long to figure out it’s not working. I’m not saying that it worked perfectly before. I think the industry has been clear about that and has said that and they’re willing to look at something that will be better. We’re hoping for something better. Obviously we didn’t get it.
There was talk from the Prime Minister during the election that people had lost trust in the NEB. In my life, I never received a letter from anyone that said, “I lost trust in the NEB,” or from any industry. That doesn’t mean the NEB was perfect. It’s got a heck of a good record around the world.
Senator MacDonald: Hear, hear.
Senator Neufeld: It always bothers me that we in Canada seem to say our stuff is bad and that someplace else is good. I think it’s time we stuck our hand up for Canada, and that’s exactly what I heard from all of you. I’m glad the younger generation is here, because I’m soon going to be out of it.
The Prime Minister went around and said the people had lost trust and this new bill would bring trust back. We’ve lost a hundred thousand jobs in Alberta. If you bring this back, from all the information that we’ve had, we could lose another hundred thousand jobs. Do you think that’s going to bring trust back to the process, or will people say, “I don’t trust anything that government is doing”? I would just like your viewpoint, each one of you who presented. What do you think? If we’re trying to get trust back, how do we do that by destroying what we’re trying to get going better?
The Chair: Can we have short answers, because we still have a question from Senator Black? We want to get to his question.
Mr. Dilger: I think it will be irrelevant by then, to be honest with you.
The question that Senator Simons asked about, given Bill C-69 is just coming up, is a lot of this flight of capital happened before. I think the NEB was being undermined long before Bill C-69 was talked about — understaffed, under-resourced, and overrun in an energy boom. I mean, we had $100 oil in 2014, up from $50, and they were under-resourced. It happened long ago.
Changing. If we bring in this bill and then we change it again, how is that going to help investor confidence? It’s going to be too late.
Ms. Smith: I think the one thing about the NEB is not a lot of people know about it. I’ve worked in the industry for 10 years and it’s taken the last six months to better understand what this process really looks like. I think that’s one piece.
Again, I think it’s the intention, versus what this bill in this current form actually says. I think it is still missing that certainty. I don’t think by changing it without actually fixing any of the issues, I don’t think we’ll keep any of the trust.
Mr. Peterson: As part of our Suits and Boots brief, we sent in, I think, too many letters. We sent in 37 pages of letters. My apologies to Maxime Fortin.
I would urge senators to read these letters. We’re talking about policy today, but if you read these letters, these aren’t canned emails from a lobby group. These are heartfelt, endearing, tearful, frustrated letters that I think reflect the tearing of the social fabric in Canada. We’re tearing Canada’s social fabric apart. I mean, people from Nova Scotia write to us, from Quebec, from Newfoundland, from Nunavut. They’re writing to us and saying, “What’s happening to the Canada that I know?”
We need more companies like Mr. Dilger’s. We need more young people coming into the business. We need more people like Brad who can say to their grandchildren there’s a future.
Read those letters, reflect that in your amendments, and we’ll be fine.
Thank you.
The Chair: Senator Black, Senator Mockler, very short questions, please.
Senator D. Black: Thank you very much, Madam Chair.
I don’t have a question. I just simply want to thank Mr. Schell and Mr. Peterson, Ms. Smith and Mr. Dilger for your incredible testimony today. As we see in this room, I see nothing but faces of people who love Canada and care deeply and know we’re doing something wrong here. Your testimony today has helped us coalesce around that view. I’m deeply indebted.
Senator Mockler: You said it so well. I have two little questions.
I am not happy with what happened to Energy East, and I live in Atlantic Canada and in New Brunswick. When you ask the proper question or you ask a question, they play the blame game. They blame the industry. In the meantime, we have Obama on the other side that killed the Keystone pipeline, but at the same time, following what happened, he built the equivalent of eight Keystone pipelines in the United States. In Canada, we’re idle.
Mr. Dilger, how could we have saved Energy East? Could we have saved Energy East as a nation-building project from coast to coast to coast with an energy corridor?
Mr. Dilger: Energy East was a no-brainer. We’re matching existing supply with existing demand in a reutilized pipeline that was existing for most of the distance. A gas pipeline converted to oil. We let a single jurisdiction have a veto over a nation-building project.
You know, where does the veto stop? Does it stop at the province? Does it stop at the city? Does it stop at the community? Does it stop with the single landowner? If everyone has a veto, linear assets, nation-building assets cannot succeed. It was a no-brainer.
The Chair: Witnesses, thank you very much for your testimony.
Senators, thank you for your questions and this very important and interesting conversation.
(The committee adjourned.)