Thank you, Madam Chair. We would like to continue with Bill 10, which we started yesterday, then Bill 11, Bill 13, Bill 14, Bill 15, Bill 16, Bill 17 and Bill 4, time permitting. Thank you.

Thank you, Ms. Bisaro. Does committee agree?

Thank you. We will resume that after a brief break. Thank you.

---SHORT RECESS

I would like to call Committee of the Whole back to order. Yesterday when we left off, we were dealing with Bill 10, Northwest Territories Lands Act. We were on general comments. First of all, Mr. Premier, would you like to bring witnesses into the Chamber?

Yes, I would, Madam Chair.

Thank you, Premier McLeod. Committee agreed?

Agreed. Thank you, Premier McLeod. I will ask Sergeant-at-Arms, please escort the witnesses to the table.

For the record, could you please introduce your witnesses?

Thank you, Madam Chair. To my right I have Kelly McLaughlin, director of legislation for the Department of Justice; to my left I have Jamie Fulford, legal counsel for the Department of Justice. Thank you, Madam Chair.

As I was saying, yesterday when we left off we were on

general comments. The next person I had on the list was Mr. Dolynny.

Thank you, Madam Chair. I’d like to welcome the Premier and devolution team here again today under the review of Bill 10.

Madam Chair, from what I understand, when bills are reviewed or legislation is reviewed both nationally or territorially or provincially, we look at things such as the imperial system that is used to describe certain things, whether it’s units of measure, units of land. This may be more of a small, technical nature, but I thought this was something possibly not picked up when we did the mirror legislation.

In Section 9, it talks about the disposition of Territorial lands and it uses the term “acres,” 160 acres, to be specific, in 9.(1), and in 9.(3), 6,400 acres.

The unit of measure in metric terms is hectares. Is that a miss or is that something we will expect with all legislation? Did the conversion go from imperial to the metric in this mirror legislation? Thank you.

Thank you, Mr. Dolynny. Ms. McLaughlin.

Thank you, Ms. McLaughlin. Mr. Dolynny.

Thank you.

Next I have Ms. Bisaro. General comments?

Okay. Thank you. Colleagues, some of the devolution bills before Committee of the Whole today contain well over 100 clauses. Would committee agree to consider clauses in blocks of 10? We would still be able to pose questions on any clause or clauses within the block of 10. We would like to make better use of our limited time available to us. Is committee agreed?

Agreed. Thank you. Clauses 1 to 10.

---Clauses 1 through 10 inclusive approved

Clauses 11 to 20.

---Clauses 11 through 20 inclusive approved

Clauses 21 to 30.

---Clauses 21 through 30 inclusive approved

Clauses 31 to 40.

---Clauses 31 through 40 inclusive approved

Clauses 41 to 50.

---Clauses 41 through 50 inclusive approved

Clauses 51 to 58.

---Clauses 51 through 58 inclusive approved

Thank you. To the bill as a whole.

Does committee agree that Bill 10 is ready for third reading?

---Bill 10 as a whole approved for third reading

Thank you, Premier McLeod. Thank you, Ms. McLaughlin and Mr. Fulford. Sergeant-at-Arms, please escort the witnesses from the Chamber. Thank you very much.

I’d like to ask Premier McLeod if he’d like to proceed with his opening remarks on Bill 11, Petroleum Resources Act. Premier McLeod.

Thank you for the opportunity to speak to Bill 11, the Petroleum Resources Act. The passage of this legislation will be another step towards implementing the Northwest Territories Lands and Resources Devolution Agreement.

The Department of Industry, Tourism and Investment will administer the Government of the Northwest Territories’ new authorities under the Petroleum Resources Act.

Under the Devolution Agreement, the GNWT is obligated to substantially mirror Canada’s statues and regulations that are being repealed or made inapplicable to lands transferring to the GNWT through devolution.

The mirroring exercise means that the new GNWT laws will address the same matters, in substantially the same way, as federal laws do now. Mirroring principles limited changes to addressing issues such as outdated language and applying GNWT drafting standards.

Mirrored legislation is a practical first step to ensure a continued delivery of services on April 1, 2014. Mirrored legislation also ensures that there are no

legislative gaps or overlaps between GNWT and federal legislation.

The parties to the Devolution Agreement entered into a Protocol for Review of Devolution Legislation. Under this protocol, all parties had the opportunity to review and comment on this legislation before it was introduced in the Legislative Assembly. We have considered these comments carefully in the preparation of the bill before you.

The Petroleum Resources Act will govern the leasing of GNWT-owned oil and gas rights to companies that wish to find and produce the oil and gas. This includes all GNWT-owned oil and gas rights in the onshore of the NWT, right up to the onshore/offshore boundary negotiated by Canada and the GNWT. It does not include lands that will be retained by the federal government such as waste sites and the Norman Wells Proven Area.

Rights leased to a company under the Petroleum Resources Act will give the company the right to explore and, if successful, to produce oil and gas owned by the GNWT on behalf of the residents of the NWT.

Under the Petroleum Resources Act, oil and gas rights in unexplored areas will be issued after a public call for bids. The Minister may attach conditions to the transfer of rights including conditions for protecting the environment.

The Petroleum Resources Act will also establish an Environmental Studies Research Fund to pay for environmental and social studies necessary to inform decisions on whether oil and gas exploration or development should be carried out in a particular area. Oil and gas companies exploring in the NWT must make payments into this fund.

The proposed Petroleum Resources Act and Oil and Gas Operations Act each state that no work or activity on petroleum lands shall be authorized until the Minister has approved or waived the requirement of approval of a benefits plan.

Finally, the Petroleum Resources Act will allow the GNWT to prescribe the royalties that companies must pay to the GNWT once commercial production is achieved.

I would be pleased to answer any questions Members may have. Thank you.

Thank you, Premier McLeod. I’d like to ask the Premier if he would like to bring witnesses into the Chamber. Premier McLeod.

Yes, I would, Madam Chair.

Thank you, Premier McLeod. Is the committee agreed?

Thank you. I’ll ask the Sergeant-at-Arms to please escort

the witnesses in. Premier McLeod, could you once again introduce your witnesses for the record.

Thank you, Madam Chair. To my right is Mark Aitken, the ADM with the Department of Justice, and to my left is Jamie Fulford, legal counsel with the Department of Justice.

Thank you, Premier McLeod. Bill 11, Petroleum Resources Act. General comments. Mr. Dolynny.

Thank you, Madam Chair. Again, welcome back to the Premier and team here. Just some clarification questions within this act, and I know that this is mirror legislation, and I know that we don’t want to delay implementation, but I need to understand a couple of things within this act a little bit more clearly. Within the act it talks about these exploration licences and the fact that there’s a waiting period and everything else. Do we have people right now currently waiting for this act to pass that are kind of sitting in stasis for an exploration licence?

Thank you, Mr. Dolynny. Mr. Fulford.

The purpose of my question is to make sure that we are providing due process for those applicants, that we’re not superficially making them wait to get our affairs in order. Again, I haven’t had any calls to action on that, but I think it’s important that we recognize that.

Embedded within this act it also talks about a regulator. Can we define who is this entity or individual or is it a company that they’re involved with, the regulations or the regulator of the significant passages of this act?

I appreciate the explanation there. That does provide a bit more clarity, because I know that term has come up a couple times and I know Members have spoken on, so I want to make sure we’re talking about the same process between each act.

Lastly, under the part of royalties, it references the Commissioner and the Executive Council. Can we define what that position or who that person is, just for the record.

Thank you, Mr. Dolynny. Mr. Aitken.

Just for clarification, who would that person be specifically?

When I read a passage where it says Section 47(3) it says the Commissioner in Executive Council, so that means that the Commissioner, our current Commissioner is working on behalf of the Cabinet or is it with the Cabinet? Is it independent of the Cabinet or is it Commissioner and Cabinet working collectively as one signatory? I need clarification on that.

That answers those questions. Thank you, Madam Chair.

Thank you. General comments. Next I have Mr. Nadli.

Thank you, Madam Chair. My question is in terms of fracking. I know that it’s a practice that is happening here in the NWT and now that we’ve taken responsibility from the National Energy Board, the functions of this act in terms of regulating control and activities related to oil and

gas, I wanted to ask if there are any further advances that this government might undertake in terms of trying to add our further substance to the guidance document that this government has developed in overseeing fracking and practices and how it could be employed here in the North. Mahsi.

Thank you, Mr. Nadli. Mr. Fulford.

Thank you, Mr. Fulford. General comments. Next I have Ms. Bisaro.

Thank you, Madam Chair. I have a number of questions here. I’m trying to understand some of the implications, I think, of the wording in the act. I’d like to start with the change of language from the Canada Petroleum Resources Act to the NWT act and the change from the Canada act to the NWT act is that the National Energy Board is the regulator for the Canadian act, or the federal act, and then in the territorial legislation anywhere where NEB is referenced, it’s changed to the regulator and we know that that regulator is the Ministry of Industry, Tourism and Investment. Within the Inuvialuit Settlement Region the NEB will continue to act as regulator.

So I have two questions. Why did we not continue to use the NEB as a regulator within this territorial act, particularly when the NEB remains the regulatory for the Inuvialuit Settlement Region? So, what’s the rationale for going to a different regulator for most of the NWT, but keeping the NEB for the ISR? Thank you.

Thank you, Ms. Bisaro. Mr. Fulford.

Thanks to Mr. Fulford. So, I understand that there’s no requirement, but that doesn’t tell me the rationale for why we did not continue to keep the NEB as a regulator. One of the concerns that we had from somebody who provided input to us, as committee, was that their concern is that the Minister of ITI should not be the regulator for petroleum resources and felt that if that was the direction that we were going to go that there ought to be some public discussion prior to us making that decision. So that decision has already been made, but again, I guess I would like to ask what the rationale was for this change from the NEB to the Minister of ITI as the regulator. Thank you.

Thanks to Mr. Fulford. So, I guess it just points out one of the reasons why we need to have public consultation on these acts once they have been approved, and after April 1st . It’s another

reason why the government and committee, hopefully, will get together and will provide some opportunity for fairly comprehensive consultation on these acts.

I wanted to ask about royalties. The payment of royalties comes under Section 47, I think, and beyond that as well. Am I correct in understanding that royalties can be exempted basically by the Minister without consultation with other Members and/or the general public? Is that correct? Thank you.

Thanks. I don’t need the exact section, so Mr. Fulford can stop searching. I guess my concern is that we could have decisions being made by an individual, I would hope not, but we could have decisions being made by an individual to exempt or waive or change royalties. So, my question further to this is whether or not there will be anything in regulation which will determine under what circumstances the Minister can exempt or change royalty payments. Thank you.

Thanks. Something else to add to the list for us to consider after April 1st when we

consult. I wanted to also ask, it struck me and this came from the information that we got from our staff, but it talks about disclosure of information, and I’m sorry I don’t have the reference in the bill, but as I understand it if, there was a conflict in terms of disclosure of information between the section in the act, between the Petroleum Resources Act and the Access to Information and Protection of Privacy Act, that the Petroleum Resources Act will take precedence. That struck me as being a little strange. I would have thought that the ATIPP Act would take precedence over pretty much anything else that we do. So, could I get an explanation of why the Petroleum Resources Act relative to disclosure of information would take precedence over ATIPP? Thank you.

Thank you, Ms. Bisaro. Mr. Aitken.

Thank you, Mr. Aitken. Ms. Bisaro.

Thanks, Madam Chair. Okay, understood. I wanted to ask a question with regards to the Environmental Studies Research Fund and the Minister mentioned that in his opening remarks as well. I understand the purpose; I understand who is going to be appointed to this group, but I don’t understand where the money is coming from. Could I find out how this is going to be funded with dollars? Thank you.

Thank you, Ms. Bisaro. Premier McLeod.

Thank you, Madam Chair. It would come from the industry itself. Those are companies that are operating in the Northwest Territories. Thank you, Madam Chair.

Thanks to the Premier. That’s good to hear. Where is that going to be laid out? Is it laid out already in regulations, or is it again something that has yet to be determined? Thank you.

Thank you, Ms. Bisaro. Mr. Aitken.

Thank you, Mr. Aitken. Ms. Bisaro, your 10 minutes for general comments have passed. Is there anybody else with general comments? Mr. Bromley.

Thank you, Madam Chair. I want to follow up on some of these similar questions for Bill 11, Petroleum Resources Act. I know a number of the public are alarmed at the regulations being proposed and put in force by this act, particularly because it is a fundamental change in public policy that demands public discussion certainly, and one would think in a consensus government that it would at least have demanded committee discussion. The questions were asked at the beginning of this six-week sitting. Commitments were made about briefing committee and that still has not been done. Again, so-called consensus government here seems to be failing us in a critical area such as this. I think it’s been pointed out the conflict of interest between the regulator who is also the promoter and subsidizer in this industry. So there are some fundamental concerns there.

Similar to that is concern with the lack of capacity and experience. I know the department’s going out, the regulator is going out for some contract help on that, but in the matter of transparency and to bring some certainty to this very uncertain equation, would the Minister be prepared to provide us with a copy of the contract that goes out for the closed contract services so that the public can be aware exactly what we are having contracted out and who is doing it? I’m not worried about the price on those things. Thank you, Madam Chair.

Thank you, Mr. Bromley. Premier McLeod.

Thank you, Madam Chair. Normally in these kinds of contractual situations we

would have to check with the contractor. I don’t expect there would be any problem in doing so, but we’ll just have to check to see if there are any privacy requirements or contractual arrangements that we have to check on. We’re prepared to make it available subject to checking on a number of things. Thank you, Madam Chair.

Thanks to the Premier for that. I think the fundamental change, as I said, was from a publicly accountable institution to behind closed doors. We are looking for transparency whenever we can find it here and particularly given that committee’s being kept absolutely in the dark. So I would appreciate that information.

I guess related to that is a concern that decisions being made will be made by politicians instead of by objective, independent board members who are identified for that purpose. Again, it goes against certainly what the Premier’s been saying, that we are bringing decisions closer to the people and transparency and so on. This is in secret and behind closed doors, so that’s certainly a concern.

The question of royalty and fees for oil and gas are set in regulation and should be reviewed, obviously, to ensure an adequate return to the public once again. I am also concerned about the ability of the Minister to exempt a party from payment of royalties. I think government has a bad record on these sorts of things, especially when, again, decisions are made behind closed doors and in secret. I will look forward to the fleshing out of that and exactly where the authorities are, the limits on that, the role for the public in oversight of that.

The review, I would say, of royalties should include consideration of the bid system where the current approach is based on work. Bid criteria rather than cash bid or other criteria would better serve our communities and the environment. I know the Premier’s made a commitment for review soon, so that can be addressed at that time.

Mention has been made of the Environmental Studies Management Board. Again, the concern in this case is the only eligible people who sit on the board are government employees and individuals, non-native, by the oil and gas interests owners. This hardly seems fair or objective and it’s hard to understand how such a restriction serves the public interest. This part of the bill deserves a serious review to ensure, again, greater accountability and representativeness. I appreciate the information on Section 72 where rates will be set, I believe, in relation to this as well by…(inaudible)… That’s for the royalty fees rates, so I will be following up with that one.

Finally, again, as has been stated for several bills, we need a clear requirement for mandatory financial security to cover all aspects of oil and gas operations in the NWT. This is especially true in terms of accidents, malfunctions, spills and so on. I

don’t believe this bill provides that, but I guess I would ask that question at this time. Is there provision for clear requirement of mandatory financial security to cover those things? Thank you.

Thank you, Mr. Bromley. Mr. Fulford.

Thank you, Mr. Fulford. Mr. Bromley.

Thank you, Madam Chair, and thanks to Mr. Fulford. That’s good information to have and I appreciate that. I’ll maybe just postpone any further discussion on that aspect. I believe that’s all I had. Yes, that’s it. Thank you very much.

Thank you, Mr. Bromley. Other general comments on Bill 11, Petroleum Resources Act? Ms. Bisaro.

Thanks, Madam Chair. I just wanted to ask one other question. There are a number of regulations, I gather, under the Canada Petroleum Resources Act. Is my understanding correct that these regulations, Environmental Studies Research Fund regulations, Frontier Lands Petroleum Royalty Regulations, Frontier Lands Registration Regulations, will those be mirrored as the act has been mirrored?

Thank you, Ms. Bisaro. Mr. Aitken.

Thanks, Mr. Aitken. One last question. I guess it’s a comment, really. I notice that it was in Bill 10, as well, and I’m pretty sure that it’s in some of the other bills, also, but closure and reclamation of developments isn’t really covered, I don’t believe, in probably any of these acts, and it kind of goes to the same issue of financial security that Mr. Bromley was talking about. Do we have in these bills as we mirror them, do we have what the general public would consider as adequate financial security and adequate requirements for closure and remediation plans when a development is finished?

Thank you, Ms. Bisaro. Mr. Fulford.

Thanks to Mr. Fulford for that. I kind of thought that was the case. I think my concern is that the requirement may be there, but as I understand it, the amount of either the financial security or the need to have the closure and the reclamation plans is up to the regulator, and if the regulator makes a determination and determines an amount of money that is not what is required or accepts a remediation plan that’s in its infancy and isn’t updated over the years as the development occurs, we’re going to be left holding the bag when the development ends or it folds in the midst of production and everybody runs away and we’re left cleaning things up.

I think my question goes more to what there is either within the regulations or within the act that we can use, one, to make sure that the regulator sets appropriate amounts of financial security and demands appropriate closure and reclamation plans, and secondly, what do we have that’s going to enforce whatever it is that’s decided on for a development?

Great explanation, but it doesn’t give me much comfort. I didn’t really hear that there are any enforcement capabilities, and it’s something that concerns me, particularly in a number of areas as devolution comes forward. We’ve got a lot of operating mines, for instance, which, as we’ve heard over the last couple of weeks, don’t have adequate security for their closure plans, and this sounds to me like it’s similar. We’re going to have a regulator who makes a decision, but will the regulator be using somebody to determine that the amount of money that’s declared is accurate and is appropriate, and if we don’t get the money from the company, who’s going to make sure that we get it?

That’s good. Thanks.

You’re good? Okay. General comments.

Detail. Bill 11, Petroleum Resources Act. We will go through the clauses in groups of 10 again. Is committee agreed?

Thank you. Mr. Miltenberger.