Study on the development of a strategy to facilitate the transport of crude oil to eastern Canadian refineries and to ports on the East and West coasts of Canada

Opening Statement to the Senate Standing Committee on Transport and Communications

Study on the development of a strategy to facilitate the transport of crude oil to eastern Canadian refineries and to ports on the East and West coasts of Canada

17 May 2016

Julie Gelfand
Commissioner of the Environment and Sustainable Development

Mr. Chair, thank you for inviting us here today to contribute to your study on the transportation of crude oil. I am accompanied by Kimberley Leach, an audit principal in my group.

Transporting oil and gas in a safe manner is of critical importance. The Office of the Auditor General has presented several audit reports to Parliament on this issue. In 2013, the Auditor General conducted an audit of the oversight of rail safety. The Commissioner of the Environment and Sustainable Development conducted an audit of the transportation of dangerous products in 2011 and an audit of oil spills from ships in 2010.

2015 Fall Reports
Report 2—Oversight of Federally Regulated Pipelines

Today, I will present an overview of our audit on the oversight of federally regulated pipelines that was included in the 2015 Fall Reports tabled in Parliament in January 2016.

The National Energy Board’s mandate is to regulate pipelines, energy development, and trade in the Canadian public interest. In its regulation of pipelines, the Board sets the requirements that companies must satisfy to ensure the safe operation of approximately 73,000 kilometres of pipelines. These pipelines are used to transport oil and gas to customers in Canada and abroad.

Our audit examined some key aspects of the National Energy Board’s oversight of federally regulated pipelines. Overall, we found that the Board had made progress in some areas, such as providing more access to information on incidents and compliance. However, we observed that the Board needed to do more to keep pace with pipeline project proposals, the corresponding public interest and expectations, and the new Pipeline Safety Act.

Our audit concluded that the Board did not adequately track companies’ implementation of pipeline approval conditions, and that it was not consistently following up on companies’ deficiencies. Some examples of deficiencies found in emergency procedures manuals included the failure to include descriptions and locations of emergency equipment, of emergency evacuation routes, and of procedures for shutting down the pipeline. The lack of follow-up on the deficiencies was also a finding in our 2011 audit of the transportation of dangerous products.

In addition, we found that the Board’s data tracking systems were outdated and inefficient. We further concluded that the National Energy Board is facing ongoing challenges to recruit and retain specialists in pipeline integrity and regulatory compliance.

2014 Fall Report
Chapter 4—Implementation of the Canadian Environmental Assessment Act, 2012

Another audit that may interest the Committee is described in Chapter 4—Implementation of the Canadian Environmental Assessment Act, 2012 of our 2014 Fall Report.

Introduced as part of the government’s Responsible Resource Development plan, the Canadian Environmental Assessment Act, 2012 aimed to make the review process for major projects more predictable and timely, strengthen environmental protection, and enhance consultations with Aboriginal peoples.

In our audit, we examined whether the National Energy Board was taking steps to implement the Canadian Environmental Assessment Act, 2012.

An objective of the Act was to enhance Aboriginal engagement. Many Aboriginal peoples were concerned that they did not have the capacity to participate meaningfully in the National Energy Board’s environmental assessment process. The reduced contribution made by these groups may have diminished public confidence in environmental assessments.

Closing remarks

As you know, we provide Parliament with information that can be used by parliamentary committees when they conduct hearings on our reports or on audit-related topics. Attached to this opening statement is a list of questions you may wish to ask department officials regarding our audit of the oversight of federally regulated pipelines. I hope you will find this information useful.

Mr. Chair, that concludes my opening remarks. We are happy to answer any questions you may have.

Questions Parliamentarians may wish to ask department officials in the context of their review of the 2015 Fall Reports of the Commissioner of the Environment and Sustainable Development

Report 2—Oversight of Federally Regulated Pipelines

• Given the gaps identified in our audit, what has the National Energy Board done in relation to its new responsibilities for emergency preparedness under the Pipeline Safety Act, which comes into force this spring? Is the Board ready to take control of an incident if necessary?

• Why is the Board unable to adequately track company compliance with approval conditions and verification activities? What has the Board done to address the issues raised in this area by the audit report?

• What can the Board do to address the capacity issues identified in the audit report to deliver on its mandate and ensure that the right people are in the right job at the right time?