Mr. Speaker, I move seconded by the honourable Member for Range Lake, that Committee Report 28-17(5) be deemed read and printed in Hansard in its entirety. Thank you, Mr. Speaker.

Thank you, Ms. Bisaro. The motion is in order. To the motion.

Question has been called. The motion is carried.

---Carried

Introduction

The Standing Committee on Priorities and Planning remains fully engaged in matters with government-wide implications as the 17th Legislative Assembly draws to a close. Through this transition report, the committee highlights areas Members believe will require the ongoing attention of our successor committee in the 18th Assembly. We have footnoted some key documents that may be of use.

Background

The Standing Committee on Priorities and Planning includes all 11 Regular Members of the Legislative Assembly. The committee's role is to:

1. review issues which have government-wide implications including the overview of the budget and fiscal framework;

2. review Government of the Northwest Territories reports on financial and performance results and program and policy evaluations to ensure anticipated outcomes are being achieved and accountability is maximized;

3. coordinate sessional business scheduling and planning in cooperation with appropriate ministerial representatives;

4. coordinate committee public consultation efforts with respect to budget and fiscal matters;

5. coordinate committee strategic planning efforts;

6. monitor and evaluate ministerial performance issues;

7. consider the budgets and financial management of any boards and agencies that are outside the responsibility of any standing committee; and

8. consider any other matter referred by the House.

Transition Issues

Devolution Legislation, Land and Resource Management, Resource Royalties and Taxes

Now that the Northwest Territories is the steward of its own land, resources, water and environment, our government must deliver on its pledge to devise an effective, efficient and made-in-the-NWT regulatory system. It must reflect the values of our residents and partner governments. Consistent with the Land Use Sustainability Framework and evolving regional land use plans, we must ensure the right balance between development, sustainable use, and conservation. The tax and royalty regime should provide fair revenue in return for the use of public land and resources. This regime has not been fully reviewed since devolution. Members of the 18th Assembly may wish to consider doing so.

Devolution implementation is substantially hampered in regions lacking settled Aboriginal land claims, increasing the need to advance negotiations that have gone on for decades. With the Government of the Northwest Territories in a more senior role, there is both new opportunity and advantage in resolving outstanding claims. This should be a high priority for the 18th Assembly.

The Intergovernmental Council was created as the forum for collaboration with Aboriginal governments. Its mandate is to review the existing regulatory system, including land-management and resource revenue, and recommend improvements. The lack of participation by some Aboriginal governments without completed land claims is not productive. Every effort should be made to include them in the Intergovernmental Council. Advancing this work, along with public engagement – a crucial process that is currently undefined – is the necessary next step to take in the 18th Assembly.

To date, the Intergovernmental Council has agreed to invite the chair of the Standing Committee on Priorities and Planning to attend council meetings with representatives of the GNWT. Members of the next standing committee should assess whether this level of involvement, coupled with the government’s public engagement process, is sufficient and whether additional action is needed.

Decentralization

The transfer of federal positions to the GNWT as a result of devolution has provided both an opportunity and a challenge in the process of building the government’s presence across the territory.

While progress has been made, human resource and infrastructure planning have not kept pace. This contributes to growth of the public service in Yellowknife and the inevitable difficulty of transferring positions to the regions once they have been established elsewhere. Implementation efforts to implement the decentralization policy should be thoroughly evaluated on a regular basis, with a view to ensuring strong coordination between departments. Every effort must be made to locate remaining devolution-related positions in the regions. The new committee may wish to request the government’s plan for doing so early in its term.

NWT Energy Plan

The challenges of providing abundant, cheap and clean energy to the people and businesses of the Northwest Territories are reflected in the fact that, after decades of study and debate, there is no comprehensive NWT energy plan. Most communities using diesel-generated power still lack clean, supplementary, renewable alternatives. Hydroelectric generation is declining due to low water levels, causing greater reliance on diesel generation in the North Slave region, at much higher and unsustainable cost. The government has taken large strides to reduce its own energy use through attention to heating systems and building efficiency. An NWT energy plan must address all these issues, based on patterns of community energy use.

Investments in individual projects in biomass energy, a solar-diesel hybrid generation system in Colville Lake, potential wind-generation projects at Storm Hills and the Snare River, and others, are encouraging and should be expedited under the aegis of an NWT energy plan. Creating and implementing it should be an immediate priority of the 18th Assembly.

Following up on the 2014 NWT Energy Charrette, the committee recommended that in 2015 the government prepare a public discussion paper to begin work on an NWT Energy Efficiency Act.To date, this has not been done. If it remains undone in early 2016, our successor committee may wish to expedite it.

Planning for the Impacts of Climate Change

The impacts of climate change on the Northwest Territories are already very serious and expensive, with fallout in many aspects of our lives, business and government. As a small sample, forest fires have caused community evacuations, low water is restricting transportation and power generation, permafrost is melting and Arctic coastlines are fast eroding. Costs to government already tally in the hundreds of millions of dollars.

The impacts of climate change will likely accelerate. Scientific knowledge is advancing daily. The GNWT must adapt, develop and adopt best practices and plan for what is ahead. Working with affected communities and informing our residents will be crucial as we mitigate impacts and reduce our own greenhouse gas emissions. Specific plans and targets are required. The committee should ensure the government responds to these needs.

Cost of Living

Controlling the rising cost of living in the NWT is a daunting but extremely important task. The cost of living is closely related to the growth of the population, expansion of the economy, and GNWT employment and retention. It also has a substantial bearing on the health and well-being of NWT residents. High cost of living is a major contributor to the high rate of poverty and hinders the ability of people in entry-level jobs to support themselves. Implementation of the holistic approach taken in the Action Plan to Reduce and Eliminate Poverty in the Northwest Territories would improve the lives of low-income earners and likely deliver substantial community, economic and health benefits, and help control health care costs. The committee urges its successor to ensure this takes place.

Food security is another close relative of the high cost of living and poverty. Members are extremely pleased to see so many communities growing their own food, renewing traditional harvests and building local knowledge. The committee strongly supports the successful Small Scale Foods Program component of the Canada-NWT Growing Forward strategy and advises that it continue and expand as opportunities arise.

Changes to the federal Nutrition North program have done little to lower the cost of food sold in remote NWT communities. The criteria for inclusion are so restrictive that many high-cost communities are left out; need is not the decisive factor. Our successor committee may wish to urge the government to exert pressure on Canada to follow up on the Auditor General’s suggested reforms and ensure that Nutrition North serves NWT communities as intended.

Population Growth

Concerted action is required to stimulate growth of the NWT population. Far too little has been done to date. Growing the NWT – Supporting Population Growth of the Northwest Territories,tabled in June 2015, does not describe a strategy. It is largely a description of current activities, lacking focus and a plan of action. Notably, the background document does contain the admission that “current actions will not be enough to achieve the NWT Population Growth Strategy’s five-year goal.” The committee could not agree more and suggests that the situation be remedied as quickly as possible, with encouragement from the 18th Assembly if necessary.

Financial Reporting

The government’s financial reporting to standing committees and the public is good, and has improved steadily over the past decade. Business plans describe the work to be done each year, the resources required, cost, and often outline challenges and future needs. The main estimates, stripped of operational detail, list the specific expenditures Members vote on in the House. And finally, the public accounts report how the money was actually spent.

Information about the activities and spending of boards, authorities and agencies could be improved in annual business plans. The need is most acute for Aurora College and education authorities, which account for $187 million of Education, Culture and Employment’s budget for 2015-16. Health authorities are somewhat different, as most are run by public administrators and will be amalgamated into a single authority. However, business plan information is lean for individual health authorities, in light of their total spending of $287 million in 2015-16. Standing committees have raised this issue before; the Committee on Priorities and Planning recommends that it be remedied in subsequent business plans. By contrast, financial reporting on the NWT Housing Corporation is excellent.

In addition, direct comparisons between main estimates and the public accounts can be difficult and could be improved, as several provinces have done. Additional recommendations have been made by the Standing Committee on Government Operations.

NWT Heritage Fund

Legislation to establish the NWT Heritage Fund was passed at the end of the 16th Assembly to benefit future generations from today’s non-renewable resource development. Members of the 17th Assembly approved the first deposits to the fund. It is a modest start.

The committee requested the government act upon the following recommendations within the life of the 17th Assembly, but this did not occur:

• Amend the act to entrench the current practice of contributing an annual minimum of 25 percent of the net fiscal benefit to the GNWT from resource revenues to the Heritage Fund;

• The Heritage Fund should be managed at arm’s length from the government, with independent management in place by the time the fund balance reaches $40 million;

• An independent committee must be established to oversee management of the Heritage Fund, and it should be required to table an annual report in the Legislative Assembly for review by the Standing Committee on Government Operations.

Legislation should be amended as needed to incorporate these changes. These measures should be seriously considered by the 18th Assembly.

Hydraulic Fracturing

To date, very little horizontal hydraulic fracturing has occurred in the Northwest Territories. The government proposed new regulations for hydraulic fracturing and the responsible Minister has extended consultation on them into the 18th Assembly. This is a welcome development. Much remains to be done to ensure that regulations and policy on hydraulic fracturing are consistent with the Land Use and Sustainability Framework and protect precious resources and health. Industry practices for “fracking” are advancing rapidly, with study of the environmental and health implications emerging more slowly. It is essential that ongoing developments are considered and applied in the best interest of NWT residents now and into the future.

Departmental Matters

Health and Social Services

Ongoing problems with mental health and addictions treatment, support for rehabilitation and recovery programs, extended care, staff shortages and nursing services were identified in committee business and resulted in motions passed in the House. It is worth noting that despite the Department of Health and Social Services’ large budget, spending on its programs is proportionally smaller in the Northwest Territories than in other Canadian jurisdictions, even with high northern operating costs. This is both a credit to our system and an indicator that adjustments may be needed in certain areas.

Critical vacancies in community-based Health and Social Services staff must be filled. These vacancies hamper program delivery most in smaller communities where backup is limited or non-existent, casting a dark shadow on the accepted Canadian tradition of universal health care.

Mental health and addictions treatment, including follow-up support, is another critical area insufficiently addressed by the current government. The only residential treatment centre in the NWT was closed and service is now provided primarily by southern facilities. A territorial treatment centre and an associated mobile treatment program are options that have been under study for some time, but decisive action must be taken.

The committee recommends that the 18th Assembly focus on remedies to these problems and improved efforts to promote better health and combat preventable conditions.

The replacement of Stanton Territorial Hospital will present challenges for service delivery, project management and fiscal control. Committee members advise vigilance by the committee as the project moves into the construction stage. Attention should also be given to extended care services, which are being removed from the hospital itself to a new facility nearby. The renovation of the current Stanton Territorial Hospital building and its new role in the community may also require scrutiny.

Education, Culture and Employment (ECE)

The Standing Committee on Social Programs has made extensive comments on the many transition issues facing the department of Education, Culture and Employment. There is no need to reiterate them here. However, slow progress on the Education Renewal Initiative and others is a serious concern and may warrant intervention by all Members.

Junior Kindergarten implementation has been another major issue for the committee. The program is being delivered in 19 communities. It has recently been evaluated in preparation for a decision about expanding junior kindergarten to the regional centres and Yellowknife. However, funding reallocations for junior kindergarten have already impacted schools in the larger schools. For example, pupil-teacher ratios in Yellowknife schools have been driven to the legal limit of 16 to 1, which is significantly higher than any other school district. This is not ideal for students, teachers or staff. At this writing, results of the evaluation of junior kindergarten are overdue. Decisions on junior kindergarten will have profound effects on both education and child care – and young people across the territory – and therefore should be addressed both carefully and promptly by the 18th Assembly.

It is well-known that educational success is strongly rooted in each child’s first years of development. Research done by ECE and education authorities during the 17th Assembly shows that an alarming number of our children – more than 38 percent – are behind in their development at age five. Developmental delays are especially common among children in small communities. This is a burning social issue, but the economic implications and impacts are equally important to the well-being of NWT residents and society. Coordinated efforts by the departments of Education and Health are essential, covering children from the prenatal stage through age five and involving health programs, early childhood development programs, child care, kindergarten and potentially junior kindergarten. Much work remains to be done by the 18th Assembly in these critically important areas.

There is currently no system for accrediting institutions of higher learning as universities or colleges, although there has been interest in their establishment. The Education Act requires that an act be passed to establish or create any degree-granting institution; the Aurora College Act is the only one to date. In addition, the Minister must authorize any institution operating as a university. The committee advises the Department of Education, Culture and Employment to examine the need for an accreditation system in the NWT, compare accreditation methods in other jurisdictions, and publicly report the findings early in the life of the 18th Assembly.

NWT Housing Corporation

The NWT Housing Corporation has done good work during the 17th Assembly and implemented creative solutions to address housing shortages in the face of declining federal support for public housing. Nevertheless, housing remains a critical problem in the Northwest Territories, with one in five homes in core need. The situation is even worse in smaller “non-market” communities, where more than 32 percent of homes are in core need. Among smaller community homeowners, core need stands at 38 percent. Behind these numbers are the real impacts on residents’ quality of life and health.

Members observe that homelessness is a growing problem, despite the best efforts of the Housing Corporation and the government.

The committee suggests that its successor committee encourage the NWT Housing Corporation to adjust its stock to meet the need and demand in each community. In addition, the federal government must be persuaded to renew its investment in northern housing.

Conclusion

This concludes the Standing Committee on Priorities and Planning Report on Transition Matters. We wish the Members and committees of the 18th Assembly great success in serving the people of the Northwest Territories.

Ms. Bisaro.

I move, seconded by the honourable Member for Range Lake, that Committee Report 28-17(5), be received and adopted by this Assembly. Thank you, Mr. Speaker.

Thank you, Ms. Bisaro. The motion is in order. To the motion.

Question has been called. Motion is carried.

---Carried

Mr. Hawkins.

Thank you, Mr. Speaker. I wish to report to the Assembly Committee Report 29-17(5), Standing Committee on Economic Development and Infrastructure Report on Horizontal Hydraulic Fracturing. We’ve agreed to read just the executive summary.

Executive Summary

Since the beginning of the 17th Assembly, the Standing Committee on Economic Development and Infrastructure has worked steadily on the complex matter of hydraulic fracturing in the Northwest Territories, looking at horizontal hydraulic fracturing in particular. We have gathered information, undertaken study tours, monitored government strategic planning and kept abreast of developments in scientific knowledge and public policy. Most recently, we reviewed the proposed Hydraulic Fracturing Filing Regulations. Throughout, it has been clear that hydraulic fracturing is a matter of great significance to residents and the future of the Northwest Territories.

As knowledge and best practices respecting hydraulic fracturing operations, regulations and impacts continue to evolve, so does the committee’s understanding. As such, we agree that work must continue to the 18th Assembly and we contribute to the process with this report.

This report identifies six themes that have reoccurred throughout work:

1. complex or “wicked” problems;

2. a precautionary approach;

3. economic potential;

4. water;

5. the pursuit of global, local and regional knowledge; and

6. roles for residents.

It also makes eight recommendations in the following priority areas:

1. the proposed regulations themselves as well as

2. human factors;

3. monitoring;

4. natural environment;

5. reporting and disclosure;

6. waste management;

7. well construction; and

8. well suspension and abandonment.

Notably, many filings – or applications – requirements in place under the National Energy Board were eliminated in the proposed regulations, including requirements about water, environmental assessment and northern operating conditions.

We do not expect the GNWT to manage its new responsibilities exactly as federal departments and agencies have done, but rather that it would strive for a truly northern approach, one that includes fair and effective benefits for all residents honoured, enshrined Aboriginal rights and assured protection of air, human health, land, water and wildlife.

However, we would equally expect any territorial statutes and regulations, at minimum, to match, if not better, their federal predecessors.

As the work proceeds, decision-makers must be in continual support of the best possible knowledge, recognizing that regional and local knowledge are in particular demand. We recognize, too, that members of the public are typically well-informed and provided the GNWT with insightful views on a range of matters of public concern. Across all regions, while some residents speak in favour of development and the jobs it can bring, others also raise concerns regarding hydraulic fracturing, including the accessibility of benefits and the exposure to risk as well as the engagement of the process itself.

The GNWT has highlighted “four areas of interest to Northerners” within the proposed regulations. Yet, Northerners have called on the GNWT for much more than these. We continue to insist upon meaningful public consultation and we recognize that to provide all communities in all regions with opportunities into the future, the NWT needs both a diversified economy and an environment that will sustain present and future generations. This will be challenging work, certainly, but with great rewards.

We look forward to the work of the next Assembly and our successor committee, and we encourage all residents to review the committee’s report and recommendations, including the research summary on hydraulic fracturing and filing regulations tabled on June 4, 2015. All these are available online at the Legislative Assembly website.

That concludes the presentation of the executive summary of the committee report on horizontal hydraulic fracturing.

I move, seconded by the honourable Member for Mackenzie Delta, that the remainder of Committee Report 29-17(5) be deemed read and printed in Hansard in its entirety. Thank you, Mr. Speaker.

Thank you, Mr. Hawkins. The motion is in order. To the motion.

Question has been called. Motion is carried.

---Carried

Introduction

Since the start of the 17th Assembly, the Standing Committee on Economic Development and Infrastructure (“the committee”) has worked steadily on the complex matter of hydraulic fracturing in the Northwest Territories (NWT), looking at horizontal hydraulic fracturing in particular. We have gathered information, undertaken study tours, monitored government strategic planning, and stayed abreast of developments in scientific knowledge and public policy.

Most recently, this work led the committee to review the proposed Hydraulic Fracturing Filing Regulations, including observation of public engagement across the NWT in which hundreds of residents have shared passionate and insightful views.

Hydraulic fracturing is clearly a matter of great significance to residents and to the future of the NWT. The committee continues to insist on meaningful public consultation and to recognize the vital need for a diversified economy – one that provides all communities in all regions with opportunities – and an environment that will sustain present and future generations.

As knowledge and best practices respecting hydraulic fracturing operations, regulation and impacts continue to evolve, so does the committee’s understanding. As such, the committee agrees that engagement, consultation and investigation must continue into the 18th Assembly. Here, we contribute to this process with a report on our work during this Assembly, highlighting areas that have not been adequately addressed and providing comments on the proposed regulations. We identify six themes emerging from our work and make eight recommendations.

As we have previously reported, it is beyond the committee’s mandate and capacity to comprehensively address all regulatory and policy issues associated with hydraulic fracturing. We look forward to the work of the next Assembly and our successor committee, and we encourage all residents to review the committee’s reports and recommendations, including the Research Summary: Hydraulic Fracturing Filing Regulations, tabled on June 4, 2015.

General Themes

The following themes emerge from the committee’s work on hydraulic fracturing.

THEME 1:

The matter of hydraulic fracturing in the Northwest Territories cannot be separated into independent discussions of economic, environmental, or human concerns. Regulation of this industry in our unique northern environment poses a “wicked” problem, a high-stakes issue impacted by complex and sometimes competing factors, including insufficient knowledge, infrastructural capacity, wide-ranging perspectives, and significant economic, environmental and social considerations.

THEME 2:

Though associated activities continue, no hydraulic fracturing activity is taking place in the NWT, largely due to remoteness and a world-wide industry downturn. While resource extraction holds profitable potential, the NWT is not currently positioned to take advantage, while scientific knowledge and understanding of the cumulative and long-term impacts of hydraulic fracturing and its processes on human health, landscapes, water and wildlife are poorly understood, particularly at local and regional levels, as is the capacity of hydraulic fracturing infrastructure – even the best available today – to maintain its integrity over time. Further knowledge is needed and the absence of evidence of harm today does not mean that protective measures should not be taken by government and by proponents.

THEME 3:

Shale oil and gas development has significant socio-economic impacts associated with the creation of many permanent and temporary high-paying jobs, and offers possibilities for economic growth to NWT communities and regions, including those where such needs are keenly felt. Young people and those seeking to enter or re-enter the workforce need training and employment opportunities that will enable them to continue to work in and contribute to their home communities.

The committee’s work and the work of our colleagues in the Legislative Assembly has highlighted training, employment and revenue needs across the NWT, particularly in light of the current downturn in oil prices and exploration. The GNWT’s approach to economic development, which includes hydraulic fracturing, will be of significant concern during the next Assembly.

THEME 4:

Territorial and transboundary waters are essential to northern life and to Aboriginal traditions in the NWT. Waters ensure healthy, productive ecosystems, but they are currently subject to increasing pressures, including continuing low-water conditions and extra-jurisdictional impacts. Water remains a priority issue for the GNWT and for residents.

THEME 5:

To keep abreast of a rapidly developing field in which much remains unknown, all decision-makers must be in continual pursuit of the best available knowledge. Discussing the state of scientific knowledge about the impacts of hydraulic fracturing, the Council of Canadian Academies reported,

“There has been no comprehensive investment in research and monitoring of environmental and health impacts for either the implementation of best current practices or in the case of accidental releases that cannot be reduced to zero. Many of the pertinent questions are hard to answer objectively and scientifically, either for lack of data, for lack of publicly available data, or due to divergent interpretations of existing data.”

All monitoring must include local and regional conditions, and the further pursuit of, and response to, knowledge of unique northern operating conditions, including permafrost, remote communities with limited municipal infrastructure, and winter roads, is essential.

THEME 6:

Social licence – public support of government legislation, regulations, policies, and programs – is an integral component of GNWT practice, as is meaningful and timely public communication, consultation, disclosure and engagement. Truly enhanced reporting and disclosure will include information disclosed to the regulator and to the public.

Members of the public are typically well-educated in the matters in which they address the GNWT and the assumption of an “uneducated” public has been recognized “as a form of stakeholder silencing.” The pursuit of partnerships “with those willing to share the risks” demonstrates the GNWT’s willingness to engage with variant stakeholders and perspectives, and the GNWT has a responsibility to form and foster partnerships between industry, communities and Aboriginal governments.

The Draft Hydraulic Fracturing Filing Regulations

As discussed in thecommittee’s research summary, the draft Hydraulic Fracturing Filing Regulations (HFFR) put forward by the Department of Industry, Tourism, and Investment (ITI) draw extensively on the National Energy Board’s Filing Requirements for Onshore Drilling Operations Involving Hydraulic Fracturing (NEBFR).

It is both expected and desirable that the GNWT will not manage its new duties exactly as federal departments and agencies have done, but rather that the GNWT will strive for a truly northern approach, one that includes fair and effective benefits for all residents, honours enshrined Aboriginal rights, and assures protection of air, human health, land, water and wildlife. It is equally expected and desirable that territorial statutes and regulations will at minimum match, if not better, their predecessors.

Despite this, the proposed regulations eliminate many requirements in place under the NEB, including requirements respecting environmental assessment, proof of financial responsibility, management systems, safety culture and planning, human factors, lessons learned, northern working environments, environmental protection plans, well descriptions, groundwater protections, wellbore integrity, well control systems, well completion and hydraulic fracturing operations, hydraulic fracturing design, well suspension and abandonment, and waste management. Notably, the requirement that a proponent must demonstrate “how hydraulic fracturing will be conducted safely while protecting the environment” is among those eliminated. These are further detailed in the committee’s Research Summary: Hydraulic Fracturing Filing Regulations, which also assesses how the proposed regulations address the GNWT’s identified “four areas of interest to Northerners” (baseline surface and groundwater information, public disclosure of chemical additives, air quality, and enhanced reporting).

Recommendation 1

Any regulatory framework must encompass clear minimum standards for evaluation of all applications, demonstrate fully capacity and firm parameters for enforcement with meaningful consequences to non-compliance, and review and account for areas not carried over from federal requirements to ensure that all issued have been addressed.

Approaching Hydraulic Fracturing in the Northwest Territories

Human Resource Elements

Human Error

The committee previously highlighted the risks of human error and its potential for serious impacts. When Members toured the Bakken in 2013, they were not informed of a significant oil spill. Inadequate monitoring was a factor and the spill itself was not reported in the media until two weeks later.

In its research summary, the committee noted that human error is a repeated cause of hydraulic fracturing incidents. These include the mistaken injection of fracturing fluids into a shallow aquifer in Alberta and the “Innisfail blowout,” when an Alberta operator drilled too near a producing well, and these and a lack of long-term knowledge complicate the claim that hundreds of thousands of wells in Canada have been hydraulically fractured “without incident.” Researchers at Pennsylvania State University advocate increased incident analysis and public disclosure of results to encourage better management practices and to avoid similar incidents.

Partnerships

Effective regulation of hydraulic fracturing requires “planning, people, partnerships” and the committee has recommended that the GNWT develop strong partnerships between industry, communities and Aboriginal governments.

The committee also continues to recognize the role of industry partners in setting best practices. For example, when reviewing Saskatchewan’s self-disclosure-based regulatory system, the committee noted its requirements for comprehensive baseline water and geological data and flowback monitoring, explicit guidelines for contaminated water management and disposal, and provisions for environmental protection, remediation and enforcement. However, the proposed regulations refer to “industry best practices” as a standard nine times, while the role of the regulator in approving “best practices” remains unclear.

Communities, Infrastructure and Workforce Readiness

The committee has “highlighted the need to enhance and establish training facilities and opportunities for workers both in the oil industry and related service fields” and identified workforce readiness “as a key piece of Sahtu exploration readiness.”

If residents are to benefit from any development associated with hydraulic fracturing, they must be prepared to do so. Skills- and trades-based training is vital, but it does not stand alone. Financial management training could support residents in managing new and/or increased wages, while business training and mentorship could support local and Aboriginal businesses. Many of these are not currently available or specific to oil and gas development, and despite the current lull in activity, any training would need to begin promptly.

Communities would also need to be prepared for increased demands on already strained local infrastructure, including recreational facilities, roads, and water supplies, as well as potentially increased substance abuse and crime, including sexual crimes. The committee has also heard of many negative social impacts associated with industry work camps, while increased sex trafficking and abuses of prostituted women often accompany increased resource extraction activities.

The benefits of development, including increased employment and business opportunities, higher wages and royalties, are best enjoyed in communities that are healthy, stable and well-prepared for rapid and significant change. Such principles apply in all regions that could be impacted by hydraulic fracturing, including the Sahtu, Deh Cho and Beaufort-Delta.

Recommendation 2

Any hydraulic fracturing regulatory framework must account for human factors, including error. Government oversight must ensure that reliance on self-monitoring in such a competitive industry does not hamper compliance. Budgeting for the Office of the Regulation of Oil and Gas Operations (OROGO) must not restrict access to expert advice from partners at the Alberta Energy Regulator or the NEB.

Any preparations must also include community support, including capital planning, work training, and strengthened supports, as well as plans to integrate newcomers into NWT communities, account for varied needs in all affected regions. The committee recommends a critical assessment of the economic costs and benefits associated with hydraulic fracturing in the NWT, including anticipated pre- and post-development impacts.

Monitoring

Baseline Monitoring

The committee previously recommended that any territorial hydraulic fracturing framework include “a strategy to gather environmental and geological baseline data, with federal support.” The GNWT’s response noted collaborative efforts through the Environmental Studies Research Fund (ESRF) and a regional study, proposed in 2013. The committee recognizes these and projects currently underway as well as a provision in the proposed regulations requiring proponents to submit baseline surface and groundwater data.

Continued local and regional monitoring, including effective measurement of air and water quality and effective mitigation strategies to address all results, can better scientific understanding of hydraulic fracturing’s immediate, long-term and cumulative impacts. Without this, any initial framework is of little practical use. Notably, regulatory and scientific inattention and unpreparedness elsewhere have prevented regulators and researchers from establishing useful baselines, leaving it “too late in many oil and gas areas to collect true baseline data.”

Enforcement

The committee has repeatedly highlighted the need for a quality management program for all stages of any drilling process, yet the proposed regulations eliminated related provisions in place under the NEB. Enforcement capacity, with meaningful consequences to non-compliance, is required to confirm operators’ statements and to perform checks to ensure that operators maintain their conditions of approval. During a tour of Saskatchewan, the committee heard that despite increasing permit applications and revenues, enforcement was hampered by program funding that did not grow accordingly.

Regulatory Authority

Under the proposed regulations, the regulator may waive any requirements, a sweeping power the committee has highlighted for further review.

The committee also understands that Alberta is currently contemplating a formal review of the mandate of the AER which, like OROGO, combines a mandate of industry growth with that of industry regulation. The next Assembly may wish to monitor any such review.

Recommendation 3

Any regulatory framework must include a strategy for establishing and maintaining such a framework, including regional and local monitoring as well as baselines for all impacted regions. Further, baseline data is needed not only for surface and groundwater but also air quality and greenhouse gas emissions, forest health, land, permafrost and wildlife as well as geology and seismicity, all areas highlighted by the committee in the past. Data collected under disparate umbrellas must be marshalled to create an effective and accessible baseline framework.

Effective enforcement demands clear parameters for proponents’ submissions, stringent requirements, careful and regular monitoring and meaningful penalties for non-compliance. OROGO’s inspection and enforcement capacity must reflect a commitment to regular inspections and to proportional growth as needed and to ensure transparency and the fair application of any regulatory exceptions. Strict parameters must apply to any exercise of the regulator’s authority to exempt operators from any requirements.

Natural Environment

As discussed, the cumulative and long-term impacts of hydraulic fracturing remain largely unknown, while local and regional impacts are unique to local and regional conditions. In its first report on hydraulic fracturing, the committee wrote,

The central Mackenzie Valley is home to many species of wildlife. Land consumption and disturbance, habitat fragmentation and noise pollution are areas of serious concern for Members as well as for the people of the Northwest Territories. Strategies to monitor the impacts of industry on wildlife and habitat should include the development of independent and project-specific environmental monitoring.

The committee also points to the Environmental Studies Research Fund (ESRF), funded by industry and previously managed by the NEB. Though the fund existed before devolution, it has since become a GNWT responsibility. It is unclear whether funding was carried over, or if the NWT fund has begun from scratch.

Air Quality and Emissions

Flaring, Incineration and Green Completion Techniques (GCT)

Members have repeatedly highlighted GCT as an alternative to venting, flaring and incineration. GCT reduce wastage of natural gas, offering economic benefits and reducing impacts on air quality and climate by reducing methane and other greenhouse gas emissions, volatile organic compounds (VOCs), and particulate emissions (e.g., soot and ash). As previously noted by the committee, both Alberta and British Columbia have set clear targets for flaring reduction, while as of 1 January 2015 all newly fractured or re-fractured wells in the United States are required to use GCT. Additionally, there are no territorial regulations respecting incinerator stack testing, and industrial flaring at other sites within the NWT has resulted in significant emissions exceedances in the past, due in part to incinerators operating at inappropriately low temperatures (low efficiency).

Despite this, the NWT does not have flaring reduction targets in place, and while the regulations address GCT, operators may forego them where “impracticable” or “based on an economic evaluation.” The Committee is concerned this may result in the effective absence of GCT in any development and that enforcement would prove prohibitively difficult.

Measuring, Monitoring and Reporting

The proposed regulations require flaring reporting only where flaring takes place for more than 72 hours, within 500 metres of a residential area, or involves sour or acid gas, or if air quality exceedances are identified in a proponent’s initial emissions assessment. Since such assessment would take place before any approval, drilling, or on-site work, it appears unlikely that any such exceedances would be identified.

Similarly, while the proposed regulations permit incineration at 99 percent efficiency as an alternative to both flaring and GCT, neither industry nor regulators typically differentiate between flaring and incinerating, complicating monitoring and reporting. Efficiency also ranges between 66 and 99 percent, dependent on a wide range of factors, including weather.

The committee further notes that while in Alberta and British Columbia, the minimum public notification radius for flaring is 1.5 kilometres, while it here appears to be unspecified, and that proponents’ submissions regarding air quality do not appear to be included in the (voluntarily) publicly disclosed pre-fracture report, despite being part of any proponent’s required Environmental Protection Plan.

Greenhouse Gas Emissions

The committee has previously recommended that any hydraulic fracturing policy include requirements to quantify, report, and manage greenhouse gas emissions, a requirement reflected in the proposed regulations, though evaluation parameters and/or enforcement mechanisms remain unclear. The committee also seeks to determine how the proposed regulations engage the Greenhouse Gas Strategy: 2011-2015.

Additionally, the GNWT recently committed to taking action to support international efforts to limit the increase in global temperature to below two degrees Celsius, while it is estimated that up to 80 percent of fossil fuels resource world-wide must remain in the ground to prevent catastrophic climate change. The committee asks how these factors may impact the GNWT’s approach to flaring regulation, greenhouse gas emissions management and mitigation, and/or growth of the NWT’s oil and gas industry.

Environmental Assessment

As detailed in the research summary,the proposed regulations eliminate environmental assessment requirements, including consultation and socio-economic assessment in place under the NEB. The post-devolution landscape provides an ideal framework for environmental assessment, as overseen by territorial regulators, specific to the potential impacts of hydraulic fracturing on unique territorial environments.

Human Health

The committee understands that human health concerns are among those raised by participants in public engagement on the proposed regulations.

The Yukon Select Committee completed its final report in January 2015 and included two recommendations related to human health, one respecting the collection of health-related baseline data and the other, a human health risk assessment to be undertaken by the territory’s Chief Medical Officer. In Alberta, where substantial hydraulic fracturing activity takes place, the AER is currently developing “a new process for handling recurring multi-year and multi-stakeholder complaints involving human health concerns.”

Seismicity

Scientific knowledge has advanced since the committee began its work on hydraulic fracturing at the start of the 17th Assembly. The disposal of wastewater by deep-well injection is increasingly linked to induced seismicity, or earthquake activity, as is horizontal hydraulic fracturing itself. Residents of Fox Creek, Alberta, previously experienced roughly one measurable earthquake per year, yet regional monitors have detected 160 since December 2013, including two at 4.4 on the Richter scale. The British Columbia Oil and Gas Commission attributes 231 “seismic events” to both wastewater disposal and fracturing in the Montney Basin between August 2013 and October 2014, including a 3.8- and 4.4-magnitude earthquake, respectively. These are reported to be the strongest associated with hydraulic fracturing recorded globally to date.

Local and regional geology are also factors in seismicity, again demonstrating the need for useful baselines not restricted by arbitrary boundaries (e.g., provincial borders or proponent land blocks), while the proposed regulations do not provide baseline parameters for notification of suspected seismic events or for related suspension or termination of operations.

Water

Conscientious management of all water resources remains a priority issue for residents, and many factors contribute to decisions on the regulation of water use as well as local and regional water studies. These include regulatory frameworks, regional geology and hydrology, stages of development, proximity to communities and to above- and below-ground water sources, water condition, technology and infrastructure capacity, and disposal options.

In its research summary, the committee considered a number of water contamination incidents associated with hydraulic fracturing, including those mentioned previously, 38 fracture communications incidents in Alberta and British Columbia prior to 2010, and the inappropriate injection of wastewater into 452 California aquifers.

Fracturing Fluids

The committee agrees that the pre-fracture disclosure of fracturing fluid ingredients and drilling chemicals is vital. However, such disclosure remains imperfect, often excluding proprietary information and impeded by a general lack of scientific understanding of the wide variety of chemicals used and their interactions with each other, with formation geology, and with surface water and groundwater (e.g., in flowback).

Wildlife

Landscape change due to increased oil and gas development is the primary management concern for boreal caribou, yet the proposed regulations eliminate requirements expressly addressing boreal caribou, as well as requirements addressing other wildlife and heritage resources with particular attention to species at risk. During its Bakken tour, the committee observed that,

When questioned about wildlife concerns, a State legislator noted his view that wildlife could move and take care of itself! This situation demonstrates to the committee that if adequate planning to address wildlife and other environmental concerns does not take place in advance of and alongside development, it will likely be neglected. Wildlife is highly valued in the Northwest Territories and the Department of Environment and Natural Resources and Sahtu leadership have significant roles in ensuring continued wildlife and habitat protection.

In the NWT the Bathurst and Bluenose-East caribou populations also urgently need conservation and management action, while the habitat provided by boreal forests is under extreme environmental pressures.

Recommendation 4

Any regulatory framework must include an overall environmental mitigation strategy recognizing the unique demands and impacts of hydraulic fracturing and addressing the matters noted above, including clear plans to monitor and manage emissions and flaring, to mitigate and manage material effects on air quality, and to evaluate air quality through specific and measurable requirements as well as micro-seismic monitoring. The committee recommends that the GNWT monitor the work of other jurisdictions, including Alberta and Yukon, in their studies and best practices, including work on hydraulic fracturing and human health.

Additionally, the committee again urges water withdrawal limits that would account for developmental stages and periods of low water as well as the development of tracer chemical standards and development plans indicating both sources and limits. Industry must demonstrably minimize water use.

Respecting spills and other incidents, any regulatory framework must be prepared to respond to such events, which are often unpredictable, even with stringent precaution. Fracturing chemicals and fluids, including wastewater, released into transboundary waters, either intentionally or accidentally, would also require address.

Much of this work would be required prior to any hydraulic fracturing.

Reporting and Disclosure

Reporting and disclosure are essential and encompass monitoring, testing, and data storage protocols. While under the proposed regulations, all public disclosure remains voluntary; there are no minimum standards to guide or otherwise encourage disclosure.

Databases

The committee observes that separation between GNWT participation in FracFocus.ca and any GNWT online database storing other publicly disclosed information (e.g., the pre-fracture report) may cause confusion amongst stakeholders and the general public.

Voluntary and Mandatory Disclosure

The matter of voluntary versus mandatory disclosure as well as public disclosure has been one of great public discussion. The committee recognizes that the pre-fracture report outlined in the proposed regulations would contain a wide range of information. However, public disclosure remains voluntary, including the manner and time of disclosure. Excepting the voluntary disclosure of annual environmental and safety reports, it also remains unclear which provisions of the proposed regulations enhance post-fracture reporting. Arguably, the number of NEB provisions eliminated in the proposed regulations would result in reduced reporting.

Recommendation 5

In keeping with the GNWT’s post-devolution authority, the committee recommends amendments to the Petroleum Resources Act to address mandatory disclosure and legislated privilege periods. Until that time, it is expected OROGO would continue the NEB’s practice of explicitly requesting that operators waive such privileges.

Waste Management

Storage, treatment, transportation, and disposal of waste materials, including emergency planning and protection of vulnerable communities and habitats, remain key areas in committee discussion. Members point to Kennetcook, Nova Scotia, where hydraulic fracturing wastewater has sat in open storage pits for more than two years, subject to flooding and overflow, due to regulatory ill-preparedness and mismanagement.

The committee previously emphasized the importance of monitoring flowback, because heat, pressure and time can alter fracturing fluids’ composition, both in formation and when stored as wastewater. Monitoring of naturally occurring radioactive material (NORM) may also be relevant. The GNWT has stated that it is a “long-term goal to manage [wastewater] very effectively, treat it, if possible, and reclaim it, if possible, in the NWT,” while the committee has previously stated,

Transporting waste out of the Northwest Territories on the winter road system appears to be an adequate temporary solution; however, industry emphasized that in order to advance to production, a made-in-the-North water treatment or disposal system must be found.

However, even with current technology and best practices, wastewater cannot be re-integrated into the water table or re-used except, typically, for later stages of hydraulic fracturing. Even then, the general robustness and applicability of wastewater recycling remains poorly understood and large quantities of freshwater remain a core requirement as brackish or saline water damages both formations and equipment.

Recommendation 6

Any regulatory framework must implement and enforce stringent waste management requirements, including transportation and emergency management expectations.

On-surface storage of waste materials (e.g., lined pits) remains unacceptable to the committee, which again emphasizes its support of tank storage only. Additionally, emerging scientific knowledge must be taken into account in any future pursuit of deep-well injection in our region. Risk assessment must account for the possibility of restricted access in other jurisdictions.

WELL CONSTRUCTION:

As the committee has repeatedly emphasized, stringent casing and construction regulation, including compliance monitoring and enforcement, as well as regular monitoring and maintenance of suspended and abandoned oil and gas wells, are essential to reducing methane leakage and the risk of inter-well communications. The committee has recognized the existence of best practices.

Nevertheless, insufficient scientific and practical understanding of the long-term impacts of active, suspended and abandoned wells leave considerable uncertainty respecting the ability of even the most stringent rules to prevent leakage and communications over extended periods. Further, the regulations appear to eliminate requirements respecting blow-out prevention specific to hydraulic fracturing and previously in place under the NEB.

Recommendation 7

Any regulatory framework must impose clear and stringent well construction standards and require thorough, consistent and long-term well monitoring, including procedures to effectively and efficiently identify and address any loss of integrity.

Well Suspension and Abandonment

Abandonment and Decommissioning

As the committee has previously recommended, any regulatory framework must address the full lifespan of a well, including abandonment and decommissioning.

Securities and Proof of Financial Responsibility

Sufficient securities are a vital component of development, as demonstrated in other jurisdictions. Saskatchewan has implemented a liability management program, while Alberta is currently facing an increasing number of newly orphaned wells, presenting public environmental, financial and logistical liability. Further, the Auditor General of Alberta, reviewing securities policies for mines and the oilsands, recently reported,

“improvements are needed to both how security is calculated and how security amounts are monitored. Without these improvements, if a mine operator cannot fulfill its reclamation obligations and no other private operator assumes the liability, the province is at risk of having to pay substantial amounts of public money.”

Recommendation 8

A review of territorial securities policies and the implementation of clear securities criteria are required to aid the GNWT in preventing the negative impacts experienced elsewhere. The GNWT must continue the NEB’s practice of refusing surety bonds as proof of financial responsibility.

Conclusion

This concludes the committee’s Report on Hydraulic Fracturing and the Northwest Territories. All committee reports and tabled documents are available online at the Legislative Assembly website (www.assembly.gov.nt.ca).

Mr. Hawkins.

I move, seconded by the honourable Member for Mackenzie Delta, that Committee Report 29-17(5) be received and adopted by this Assembly. Thank you, Mr. Speaker.

Thank you, Mr. Hawkins. The motion is in order. To the motion.

Question has been called. Motion is carried.

---Carried

Item 12, reports of committees on the review of bills. Item 13, tabling of documents. Mr. Ramsay.

Thank you, Mr. Speaker. I wish to table the following four documents, entitled “Northwest Territories Economic Opportunities Strategy: Connecting Business and Communities to Economic Development Opportunities – Progress Report 2014-2015;” “Northwest Territories Mineral Development Strategy Implementation: Progress Report April 1, 2014 – March 31, 2015;” “Towards a Northwest Territories Agricultural Strategy – What we Learned;” and “Follow-up Letter for OQ 881-17(5): Support for Regional Tourism Centres.” Thank you, Mr. Speaker.

Thank you, Mr. Ramsay. Mr. Abernethy.

Thank you, Mr. Speaker. Mr. R.C. McLeod.

Thank you, Mr. Speaker. I wish to tale the following three documents, entitled “Northwest Territories Housing Corporation Annual Report 2014-2015;” “Follow-up Letter for OQ 829-17(5): Public Housing Waiting Lists;” and “Follow-up Letter for OQ 901-17(5): Mackenzie Delta Elders Facility.” Thank you, Mr. Speaker.