ONTARIO PETROLEUM INSTITUTE CAMBRIGHT GAS CORP
MILLCREEK WATERSHED STUDY COMMUNITY LIAISON TEAM
SKELTON BRUMWELL AND ASSOCIATES INC
CONSERVATION COUNCIL OF ONTARIO
CONTENTS
Thursday 12 September 1996
Aggregate and Petroleum Resources Statute Law Amendment Act, 1996, Bill 52, Mr Hodgson / Loi de 1996 modifiant des lois en ce qui concerne les ressources en agrégats et les richesses pétrolières, projet de loi 52, M. Hodgson
Ontario Petroleum Institute; Cambright Gas Corp
Mr Doug Gilbert
Mr Jim McIntosh
Millcreek Watershed Study Community Liaison Team
Mr Robert Barron
Union Gas Ltd
Mr Bill James
Mrs Hanne Pedersen
Lafarge Canada Inc
Mr John Stratton
Sarnia Cavern Operators Group
Mr Neil MacDougall
Canada Building Materials
Mr Peter Graham
Mr Bernard Cummins
Elexco Ltd
Mr Jack Norman
Orion Resources Ltd
Mr Robert Trevail
Miss Helen Purdy
Town of Caledon
Ms Carol Seglins
Skelton Brumwell and Associates Inc
Ms Anne Guiot
Conservation Council of Ontario
Mr Glenn Harrington
STANDING COMMITTEE ON GENERAL GOVERNMENT
Chair / Président: Mr Jack Carroll (Chatham-Kent PC)
Vice-Chair / Vice-Président: Mr Bart Maves (Niagara Falls PC)
*Mr JackCarroll (Chatham-Kent PC)
*Mr HarryDanford (Hastings-Peterborough PC)
Mr JimFlaherty (Durham Centre / -Centre PC)
Mr BernardGrandmaître (Ottawa East / -Est L)
Mr ErnieHardeman (Oxford PC)
Mr RosarioMarchese (Fort York ND)
Mr BartMaves (Niagara Falls PC)
*Mrs SandraPupatello (Windsor-Sandwich L)
*Mrs LillianRoss (Hamilton West / -Ouest PC)
*Mr MarioSergio (Yorkview L)
*Mr R. GaryStewart (Peterborough PC)
Mr Joseph N. Tascona (Simcoe Centre / -Centre PC)
Mr LenWood (Cochrane North / -Nord ND)
*Mr Terence H. Young (Halton Centre / -Centre PC)
*In attendance /présents
Substitutions present /Membres remplaçants présents:
Mr Michael A. Brown (Algoma-Manitoulin L) for Mr Grandmaître
Mr TedChudleigh (Halton North / -Nord PC) for Mr Hardeman
Mr FrankKlees (York-Mackenzie PC) for Mr Tascona
Mr DavidTilson (Dufferin-Peel PC) for Mr Maves
Also taking part /Autres participants et participantes:
Ms ShelleyMartel (Sudbury East / -Est ND)
Mr JimBrown (Scarborough West / -Ouest PC)
Clerk / Greffière: Ms Tonia Grannum
Staff / Personnel: Mr Lewis Yeager, research officer, Legislative Research Service
The committee met at 0956 in the Halton Hills Place, Milton.
AGGREGATE AND PETROLEUM RESOURCES STATUTE LAW AMENDMENT ACT, 1996 / LOI DE 1996 MODIFIANT DES LOIS EN CE QUI CONCERNE LES RESSOURCES EN AGRÉGATS ET LES RICHESSES PÉTROLIÈRES
Consideration of Bill 52, An Act to promote resource development, conservation and environmental protection through the streamlining of regulatory processes and the enhancement of compliance measures in the Aggregate and Petroleum Industries / Projet de loi 52, Loi visant à promouvoir la mise en valeur des ressources, la conservation ainsi que la protection de l'environnement en simplifiant les processus de réglementation et en renforçant les mesures de conformité dans l'industrie pétrolière et l'industrie des agrégats.
The Chair (Mr Jack Carroll): Good morning, everyone. Welcome to the standing committee on general government hearings on Bill 52. We're going to start a couple of minutes early because we're all here and Mr Chudleigh, who is the member representing this region, asked for some time to give a standard political speech and welcome us all to Milton. So, Mr Chudleigh?
Mr Ted Chudleigh (Halton North): Avoiding the standard speech, I would like to welcome the committee and the deputees to the riding of Halton North and to the town of Milton. Thank you very much, Mr Chairman.
Mr Mario Sergio (Yorkview): And you're buying lunch, right?
Mr David Tilson (Dufferin-Peel): We want some apples.
The Chair: You've probably just witnessed the shortest speech that Mr Chudleigh will ever give.
Mr Chudleigh: I'm not known for my verbosity.
ONTARIO PETROLEUM INSTITUTE CAMBRIGHT GAS CORP
The Chair: Our first presenter this morning represents the Ontario Petroleum Institute, Doug Gilbert, the executive director, and Jim McIntosh. The way we conduct the hearings is you have 20 minutes. Should you leave any time for questions in that 20 minutes, it will be divided evenly among the caucuses. We rotate the beginning of that, and we will start this morning with Ms Martel from the NDP. The floor is yours, gentlemen.
Mr Doug Gilbert: Thank you very much, Mr Chairman, ladies and gentlemen. My name is Doug Gilbert. I am the executive director, as Mr Carroll said, of the Ontario Petroleum Institute, and you probably need to know who the heck we are anyway.
OPI is a technical, non-profit association which represents the explorationists, the producers, the contractors, the geologists, the petroleum engineers and other professionals, individuals or companies, that are directly related to the oil and gas industries of Ontario. One of the fundamental objectives of the institute is to maintain close liaison with all government agencies which regulate our industry and, in addition, to disseminate information relevant to members' needs, to promote the legislative goals of the institute, and indeed to inform and educate the general public on the significance of the industry to the province of Ontario.
I have given to one of the ladies here a quantity of our June newsletters. This particular issue will acquaint you with the oil and gas exploration and development activity in Ontario.
Since 1986, OPI has been working with MNR personnel to develop a revised Petroleum Resources Act instead of regulations that would allow the industry to explore for and develop in oil and gas in an orderly manner and in an environment of cooperation and partnership with MNR. The lack of commitment towards this issue exhibited by the previous NDP and Liberal governments has been extremely disappointing to industry.
In a brief to Minister Chris Hodgson last fall, we urged the minister to make revisions to the Petroleum Resources Act and the regulations and make it a high priority on his government's legislative review agenda so that the industry may take advantage of the economic opportunities that currently exist for the creation of new jobs and wealth in the province of Ontario.
Bill 52 is the catalyst that will help remove those barriers and will provide the industry with a favourable operating environment for the development of Ontario's oil and gas resources. Bill 52 provides for the transfer of jurisdiction from the Ontario Energy Board to the Mining and Lands Commissioner on such manners as unitization, compulsory pooling and other referrals under the new section 8 of the bill.
OPI and the industry nevertheless are still concerned that the cuts and downsizing to the petroleum resources program and the Petroleum Resources Centre and indeed the petroleum resources laboratory in particular will deeply affect our industry's effectiveness. In our brief to the minister, we stated that OPI supports an increase in the operating budget of the Petroleum Resources Centre to ensure that program objectives are met and to encourage industry operators to explore for and produce oil and gas in Ontario. A modest increase should not hamper the government's overall cost reduction program because it can be funded by a combination of user pay and industry cooperative services. The proposed trust fund as referred to in section 16 is currently being addressed by OPI to help serve that end.
After 138 years of continuous operation, the methods of production in the historical oil fields of Lambton and Kent counties are a window on the history of oil in the western world. It is necessary to minimize the effect of new and existing regulations to keep these fields in operation.
It is our fervent hope that the long-awaited Oil, Gas and Salt Resources Act, Bill 52, will soon be passed and promulgated by the government of the day. The Ontario Petroleum Institute and the Ontario oil and gas industry, which we represent in partnership with the Ministry of Natural Resources, are willing to take on the challenge that Bill 52 affords our industry in a responsible manner, and we intend to be an integral part of the destiny that has been set before us. Thank you very much for the opportunity to support this long-awaited legislation.
May I now introduce you to my colleague Jim McIntosh, the vice-president of engineering, Cambright Gas Corp. Jim is current president of the Ontario Petroleum Institute.
Mr Jim McIntosh: Thank you very much, Doug. As Doug mentioned, I'm the current president of the Ontario Petroleum Institute. It's a volunteer position, elected annually. I'm here talking on behalf of the company I work for, though, Cambright Gas Corp. Cambright is a privately owned Ontario-based oil and gas company. We are currently active only in Ontario. We feel very strongly that Ontario has a large potential for oil and gas production that hasn't yet been realized. We very much look forward to what we think are the positive effects of Bill 52 in revising the rules and regulations under which the oil and gas business operates in the province.
My position in Cambright is vice-president of engineering, as Doug has mentioned. As part of that position, I look after all of the company drilling and production operations. In combination with our field superintendent, we design and install all production facilities. I do all of our reservoir engineering and reservoir management. We deal closely with the Ministry of Natural Resources personnel both in London and the districts as far as coordinating our operations, letting them know what we're doing and working closely with what people are there on their behalf. So far, that relationship has worked very well.
The three major benefits I see of Bill 52 from Cambright's point of view include the appeal and tribunal process being removed from the Ontario Energy Board and being placed with the Mining and Lands Commissioner. The industry has been frustrated with the costs and with, in some cases, the lack of decisive decisions that the Ontario Energy Board has come up with in the past when dealing with oil- and gas-related issues. Because it's a very, very small portion of what they do, they generally don't have a lot of background in it. Sometimes your hearing may take more time just educating the panel on what we do rather than trying to get a hearing. We feel that the Mining and Lands Commissioner is very much more in tune with land-related issues. We feel we will get a more open hearing, something that the interest groups, besides oil and gas companies, can present their cases at as well, and will get a fairer tribunal that will result in issues being resolved.
The second positive step of Bill 52 is the removal of the current regulations under which we operate and the creation of standards which will be referred to in the regs. These standards will reflect what current technology, current techniques, are available and what anticipated minimum standards should be for what we do in the process of drilling for, producing and selling our oil and gas production. By making the regulations environmentally sensitive, which we feel they will be, we can protect the environment. We can protect the air and surface conditions as well as the groundwater in the areas where we are active.
The OPI has created a number of committees who are working along with the Ministry of Natural Resources personnel to create these standards as we speak. We are hoping by the end of this year or earlier to have the majority of these standards at least in fairly close to final draft form.
The third portion of Bill 52 which we see as a positive step is the creation of the trust fund for the lab and for the information management. One of the keys to a successful and vibrant oil and gas business is easy dissemination of historical production and other information that is gathered from operators in the process of drilling oil and gas wells.
We feel the information that's currently available, although meeting the current guidelines, very much needs to be revamped. There's a lot more information that should be available to other operators that currently is not available. By creating a trust fund that is mandated to disseminate information both to other operators and to the general public, that information base will become much more rigorous, much more available to the oil and gas business for expanded exploration and for things like universities and other people who use that information as well for their research. We see that as a very positive step.
I guess the only caution we have is that if we are to be asked to fund the trust fund through a series of royalties or whatever the funding mechanism would be, we feel very strongly that we need to have control mechanisms on how the money is spent so that the money is not unwisely spent on bureaucracy or something that doesn't result in better information management.
Those are the three main points that we see as positive steps for Bill 52. We are very much glad that it has been introduced. We hope you guys go home with a good feeling about what the industry itself feels. We are open for any questions if you've got any.
Ms Shelley Martel (Sudbury East): Thank you to the two of you for your presentation this morning. Let me begin, Mr McIntosh, by talking about the minimum standards and the development of the same, which you are obviously quite excited about because you feel this will make very clear what the commitment will be to the environment and that they will be environmentally sensitive.
I thought I heard you say that you were working in conjunction with MNR in the development of those standards as we speak. Is that correct?
Mr McIntosh: One of the standards, what we call our drilling practices guidelines, we had created about six months to a year ago, long before Bill 52 was introduced. It was guidelines that were created by the OPI for oil and gas producers in Ontario, talking about what we as an industry felt were the absolute minimum standards that an operator should follow in drilling a well. The primary standards are designed to ensure that casings and cement jobs that are an integral part of drilling a well are properly placed and are very importantly considered when an operator drills a well, not just necessarily getting down to the pay zone as fast as possible.
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Ms Martel: You've been assured by MNR that these will form a part of the technical documents that will be in the regulations of this bill?
Mr McIntosh: They have led us to that assurance, yes.
Ms Martel: So you're doing better than we are, because we haven't, as MPPs, seen any of the technical documents and it's part of the problem we've had with the bill.
There are a number of things that were in the current act, both on the aggregate side -- less so in terms of the bill that's being changed for you folks -- that now go into regulations, and we have not had the benefit of seeing any of that, so we're operating very much in the dark right now. We would like to believe that everything that will be developed will be to the highest environmental standards, but we haven't seen any of it and we won't see any of it, because it will be done by regulation and it will be dealt with by cabinet.
We have asked the parliamentary assistant and the minister to provide those to us, because we think that would be much better for us as MPPs to work with and certainly better for some of the presenters who haven't had the benefit of seeing some of the changes that we think will probably end up in the regulations after this bill is passed. That is certainly one of the difficulties we have had with this whole bill.
Let me also ask, though, about the Mining and Lands Commissioner, because I was curious to hear you say that you felt that she -- I'm assuming it's still Linda Kamerman -- will be in a better position than some of the people at the Ontario Energy Board to deal with your issues because she would have a better working knowledge of some of those issues. Can you just explain that? Because I find that curious. I'm not making any comments about her ability, because she is a very capable individual, but I'm not quite sure of that connection.
Mr McIntosh: The development of oil and gas pools and resources in the province, because of the spacing regulations that are ingrained in the current regulations, allow operators to grow on relatively defined spacing. Depending on the geological age of the formation that you're chasing, you have a certain minimum size area that you have to have pooled to be able to produce from that depth of zone.
What we have found in the past, because it's been so difficult for operators to come to the Ontario Energy Board and ask for decisions on how to get compulsory pooling and how to get units in place, in a lot of cases operators have opted not to, which has resulted in a number of pools, far more wells being drilled than may be properly needed to effectively drain the oil and gas reserves in that reservoir.
By having an incentive in place where an operator can go to a third party and get the issues on the table and get something dealt with, and because she deals with land issues -- most of what we're talking about are land issues, how to properly delegate royalties between various land owners. If there are disputes between oil and gas companies, hopefully we're professional enough that we can work that out among ourselves and then come with the common, from an industry point of view, approach for trying to unitize or trying to compulsorily pool or whatever the case may be, to more effectively drain that pool without wasting financial and surface resources.
Mr Frank Klees (York-Mackenzie): Thank you, gentlemen, for your presentation and also for your expression of support for the general direction of this bill. I also want to take the opportunity to thank the Ontario Petroleum Institute for the time that you've invested over the last number of months in working with our staff on the direction and on some of the details of this legislation.
I want to just clarify for the benefit of my colleague, with regard to the issue of standards that, as you have indicated, we are working with the industry to develop. The intent is that once the draft of those standards is ready that it, again, will be circulated to stakeholders, it will be circulated to municipalities and ratepayers for input, and certainly to my colleagues, who will then have an opportunity to assess those technical standards and bring to bear their expertise in the oil and gas industry relative to those technical standards. So there will be opportunity for broad consultation.
I'd like to just ask you very briefly, in regard to the shift to placing more responsibility on the industry for self-compliance, in your opinion, will that create a better circumstance for the environmental issues in our province than exists currently and, if so, why?
Mr McIntosh: I think any operator that is active in the province, that has a long-term future in the province is far more concerned about environmental degradation than maybe the general public gives them credit for. The last thing we as operators want is to affect the environment because the only way we continue to drill and continue to explore is to get along with land owners. If we don't get along with land owners either as a company or as an industry because of what we have done in the past, it very seriously affects our ability to go forward.
What we're hoping and what we're planning with the standards is to make the non-long-term players in the patch follow at least the minimum standards that we see as required to protect the environment, so if you've got an investor group or whoever it is just drilling a well because somebody sold them on an idea, they at a minimum will drill the well safely to protect the environment. That way it won't tarnish the industry as a whole, which is what the companies that are long-term players are concerned about.
Mr Michael A. Brown (Algoma-Manitoulin): First, I want to congratulate you on your presentation this morning. A lot of people in Ontario aren't familiar with the history of oil and gas in this province and how important it really is. As a fellow born and raised in Sarnia, I'm familiar with the Petrolia-Oil Springs area and certainly much of Kent county also. I recognize the importance of the industry to a good part of southwestern Ontario and into the province as a whole.
Yesterday we had one of your members, I presume, Pembina, in to speak with us and they were talking to us about the bonding provisions that may be in regulation. They were concerned that while there needed to be an improvement over the present status, the government may be moving in a direction, and they were just speculating that it may inhibit many of them and make them uncompetitive. Could I have your views on that situation?
Mr McIntosh: The bonding committee is currently wrestling with how best to minimize the potential future orphan well problem by forcing bonding on at least current wells from here on forward to reasonably represent what it costs physically to plug an abandoned well, so that there is an incentive on the part of operators, whether they're long-term players or whether they're one-well-wonder type players, to have enough money in reserve at the point where the well is drilled to plug an abandoned well.
The concern that Brian had and Brian expressed is for the larger operators like the Pembinas, like potentially the Cambrights, like the larger players in the patch who may have 100, 200, 500 or 600 wells, if they have to start posting bonds of $5,000, $10,000 or $15,000 per well. That very seriously affects their ability to raise money, because most of that money would be pledged from a bank, which basically lowers their ability to borrow money. That's his concern which we're trying to address with our committee in conversation with the MNR folks on how to put bonds in place that make it financially onerous for a company to leave a well suspended that isn't physically making the money, but by the same token, to have enough money there so when pools become depleted and are ready to be plugged and abandoned, it's not as much of an onerous task for an oil and gas company to plug the wells.
The Chair: Thank you very much, gentlemen. We do appreciate your attendance here this morning and your input into our deliberations.
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MILLCREEK WATERSHED STUDY COMMUNITY LIAISON TEAM
The Chair: Our next presenter is Robert Barron from the Millcreek Watershed study community liaison team. Good morning, sir, and welcome to our committee.
Mr Robert Barron: Thank you. My name is Robert Barron and I am delegating this morning as a member of the Millcreek Watershed Study community liaison team. I think perhaps I should give you a little introduction to our committee and tell you what we're about and what some of our goals are and show you here -- if you're in the MNR you've probably seen a copy of the final report which came out in June. It's what we've been working on for the past two, almost three, years now, back to October 1993.
I'll just start off by reading you some of the goals that we established in our watershed study at the beginning:
(1) to restore, protect and enhance water quality and associated aquatic resources and water supplies;
(2) to conserve, protect and restore natural land, water, forest and wildlife resources;
(3) to protect, restore and enhance groundwater quality and quantity;
(4) to minimize the threat to life and the destruction of property and natural resources from flooding and erosion and preserve natural floodplain hydrologic functions;
(5) to restore, protect, develop and enhance the ecological, historical, cultural, recreational and visual amenities of rural and urban areas; and
(6) to recognize and encourage meaningful and timely public participation in the development, finalization and implementation of the watershed plan.
I'd like to emphasize that we've had a very successful public participation in all of this. We've had over 60 meetings over the past three years now and they've averaged about 35 to 40 members of the public attending and various public functionaries, such as council members from different municipalities and the Puslinch township.
I should let you know that an important consideration for us is the amount of money that the MNR has invested in this study, $250,000, out of $500,000 for the total funding of this, and we recognize that as an important commitment to the watershed planning process involved in overall municipal and other planning in the province. We think that's very important.
Next, I'd like to introduce some of our main concerns here. We're in the process right now -- there was one incident that occurred during the study back in June 1995, an artesian well incident that occurred on the Reid Heritage Homes property, which is at the intersection of the Hanlan expressway with the 401. What happened at that time was that when they were drilling an exploration well in a property for an aggregate extraction application, they struck this well and it had a very major artesian flow of three million gallons a day. Over the 15 days it took to finally cap it off, a total of 45 million gallons were run off into the MacKrimmon Creek and then into the Millcreek itself.
This occurred during a time of year when we would normally expect the waters in that area to be going lower than usual, down to the summer low, and this, we saw during the study, significantly raised it. We had several presentations by members of the Ministry of Natural Resources and the aggregate people discussing the impacts on this.
I'd just like to take this opportunity, at the moment, to read from a letter from one of our members. His name is Michael Hoffbauer and he has been one of the facilitators at various meetings that we've had over the past few years and he says:
"We, the members of the community liaison team of the Millcreek Watershed Study, are most dismayed that on July 3, 1996, the township of Puslinch accepted in principle official plan and zoning bylaw amendment application number P194 for part of lots 23, 24 and 25, rear concession 2 in the township of Puslinch. The amendment will change the current agricultural, conservation and hazard lands to extractive and permit Reid Heritage Homes Ltd to open and operate a new gravel pit within the Millcreek watershed.
"The decision by Puslinch township to accept the amendment in principle is premature, particularly when the Millcreek subwatershed plan, dated June 1996, is in the process of being circulated to all municipalities, including Puslinch township, for approval and adoption. We wish to point out that the Millcreek subwatershed plan has financed on a pro rata basis as follows: $250,000 from the Ministry of Natural Resources; $100,000 from the region of Waterloo; $50,000 from the township of Puslinch; $25,000 from the city of Guelph; $25,000 from the county of Wellington.
"This $500,000 study represents a substantial expenditure of taxpayers' moneys and, as such, must be accorded the primary consideration for any currently proposed and future development within the Millcreek watershed. The community liaison team has been a very active public group over the past two years, having had over 60 meetings and an average attendance of 30 to 40 interested citizens from Puslinch township and most of the communities surrounding that area, including Guelph, where I come from, and Cambridge, and I think as far as Kitchener and Waterloo as well.
"Our concerns with the premature acceptance in principle of official plan and zoning bylaw amendment application P194 are as follows:
"(1) The recommendations of the Millcreek subwatershed plan, dated June 1996, have not been taken into due consideration for the proposed extractive development.
"(2) Conditions attached to the amendment by the township of Puslinch are not specific and leave room for grossly differing interpretations.
"(3) The consultants for the proponent admitted that inaccurate information was presented at a public meeting held on May 6, 1996. The community liaison team requested a second public meeting, but the township refused it.
"(4) The monitoring and contingency plans are vague. There is no investigation, enforcement and compensation.
"(5) The Puslinch township hydrogeologist, Hardin Environmental Services, has identified serious problems with the proposal which have not been resolved.
"(6) The wetlands Millcreek and MacKrimmon Creek, on lots 23, 24 and 25, rear concession 2, Puslinch township, have been previously designated and protected as class 1 provincially significant wetlands. These wetlands are identified in the Millcreek subwatershed plan as green space areas. The destruction of these class 1 wetlands will set a precedent for further removal of green space within the Millcreek watershed. Such a precedent would completely disregard the entire Millcreek subwatershed plan dated in 1996.
"(7) There is no provision for a fishery monitoring program for Millcreek and its tributaries. The continuance and protection of the fisheries is more important than the exaction of penalties if the fishery were to be damaged or destroyed. Millcreek and MacKrimmon Creek have been identified by the provincial and federal government as a type 1 fishery habitat from the fish habitat protection guidelines for developing areas, MNR 1994, and as such require a high level of protection with no compensation options, ie, relocation, redesign, mitigation.
"(8) The application does not comply with the requirements and regulations of the Aggregate Resources Act, 1989, which is still in force today, and therefore applies to the Reid application.
"(9) The application does not comply with the Puslinch township's official plan in respect to the protection of the public and water resources.
"(10) Finally, the details for a bond letter of credit or trust, to be held in the township as security, have not been specified with regard to the protection of the residents of the surrounding properties and communities.
"It has been stated by the Millcreek subwatershed consultants that the proposed Reid aggregate operation would degrade the quality and reduce the base flow of Millcreek by at least 10%. We ask how much a second and third operation would further degrade the creek. Of equal or greater importance is the very distinct possibility that further gravel extraction below the water table could adversely affect the water flow in the groundwater and bedrock aquifers because of the sensitive and unstable hydrogeological conditions.
"The community liaison team is very concerned about the water supply available for surrounding communities. For this reason, we feel that geologists and hydrogeologists of all municipalities having an interest in the Millcreek watershed should be consulted and reports requested for a cooperative discussion and evaluation. The team believes that approvals for gravel extraction within the Millcreek watershed should not be the sole prerogative of Puslinch township but should involve all municipalities. The community liaison team requests that the Millcreek subwatershed steering committee and technical committee consider the above concerns at its next meeting in October."
We've had some responses from a couple of MPPs. One is Michael A. Brown, MPP for Algoma-Manitoulin, and also Ted Arnott, MPP for Wellington, showing their interest and concern about this letter that we've had.
In addition to the issues related to the artesian well that occurred at that location at that time, this was an important impact on most of the farms around there and all the households in there, and they had to have water brought in for the 15 days during which they were trying to cap the well. It should be noted that even after that, some of the springs and wells around there that helped to sustain the fish habitat on MacKrimmon Creek have not come back since then. So that habitat has been lost.
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Another couple of concerns that I've noticed regarding the proposed amendments to the Aggregate Resources Act: I'm concerned about some of the delegation, the appointment of inspectors and trustees as far as the powers that they get of the minister under part V of the Aggregate Resources Act, requiring documentation and records for licensing of different pits and things like that. One of things we're noticing here is that it's important to have the documentation to find out the nature of any incidents or problems that occur as fast as possible to get some sort of assistance there, to get things cleared up as quickly as possible. The experience at the Reid well showed us that they had difficulties getting fast action to get the wells capped, and consequently there was a major impact in there. This was one of the big issues that occurred during the actual study. We had numerous discussions with Reid, with the aggregate producers and with the MNR and various and sundry consultants as well about this. We have had more discussions than actually appear in the final report here, but it does mention it for consideration.
A couple of other things: I'm concerned that if it's delegating responsibility to the Ministry of Transportation, which is one of the major users of aggregate, I don't see that they have any mandate whatsoever to be concerned about protection of wetlands or natural resources, such as the water supply, which our committee believes to be one of the major resources that Canada has over the world. Canada has 25% of the world's wetlands, and each year we generate an annual gross income from those wetlands of $15 billion. One thing I've tried to get information about from aggregate producers in discussions during some of our meetings was to find out what sort of income is generated by aggregate extraction annually. I was not given much information about that. A guesstimate that I got from looking at some figures and extrapolating from the government's royalties on it appeared to be in Ontario between $5 million and $6 million a year.
We regard the entire issue of the watershed, the water quality in this, as a major long-term resource which is renewable, and because of the unique geographical qualities of this area, because of the aggregate that's there, the sand and gravel, it creates an important water recharge area for Ontario, and therefore a major one for the world, because some of the best in Canada is right here in southern Ontario. This area here could be jeopardized by damage from any of these extractions.
One of the other impacts that we're apprehensive about is, in view of a history now of artesian events in that area, that if, as Reid proposes, they're going to go and create a large excavation -- he's estimating that he's going to have a 100-acre lake or pond after he's finished -- if there's an artesian well at the bottom of that, because of its proximity to the highways it could actually flood out there if they can't stop it, and they could, if they're going below the water table, create a new artesian well underneath the lake.
A major concern when I was looking over the recommendations on your new resources act, as I said, was the delegation. The other was the appointment of the trustee to administer the trust fund regarding all the moneys for rehabilitation and other uses of this money. We're concerned that the moneys for rehabilitation are not used for other purposes and that there is a continued effort to study rehabilitation of gravel pits and things like this, and to conduct such research as will help us to improve that sort of thing.
Appointing inspectors: One of the provisions recommended under I think part I of the new changes in the act is that any person can be appointed to it. One thing that concerns me in looking that over is the potential that if the Ministry of Transportation is being delegated responsibilities under part V, is it going to be appointed as inspector and is it going to be appointed as trustee over the fund as well? I'd be very concerned if people who have a large interest in obtaining gravel quickly and expeditiously for their construction purposes might not have full regard for the environmental impacts and I would not like to see them taking control over so much information and inspection. I don't believe that self-inspection or self-regulation is truly effective. For government to be doing things like that I believe is a serious neglect of its responsibilities, the fundamental responsibility of government being services to the people and protection. This is an important thing they have to provide. I think we have just about a complete consensus on that in our community liaison team.
Another issue we're talking about is the information which is available under different sections in the act -- I think it's in part V again for the licences -- and the information that inspectors can get under part I. We're interested in seeing to it that complete site plans are required and that we have adequate study of the impact's potential and procedures for extraction, and make sure they're complying with safety regulations and things like this, so that it does not have a serious impact on us.
That pretty much sums up the main points I was looking for through my own surveillance and some of the issues that I've talked about from the committee itself. If you have any questions, I'd like to answer them now.
The Chair: Mr Barron, you've used up all but about a minute and a half of your time, so there's no effective time left for questioning. Do you have any closing comments you'd like to make?
Mr Barron: I'd like to say again that I appreciate very much the support the MNR has provided to our committee. It's been a really great experience for the people who are part of this, and we have learned a great deal about the environment and about the issues of gravel extraction as well. We look forward to your continuing commitment to the public involvement process.
UNION GAS LTD
The Chair: Our next presenter is Bill James, manager of storage development at Union Gas Ltd. Good morning. Welcome to our committee. Nice to see you. I appreciate your being here. The floor is yours, sir.
Mr Bill James: Mr Chairman, ladies and gentlemen, I'd like to thank you for the opportunity to speak to you here today. I'm a firm believer in working together with people to understand and resolve problems. I appreciate the opportunity to present my views and participate in this process.
I was impressed with this government's ability to move forward with Bill 52 to resolve some of our industry's long-standing problems. I'd like to tell you briefly how my company fits into the industry, how we are affected by Bill 52 and then try to answer any questions you may have on those impacts.
First some background. I've been in the natural gas industry for over 34 years. My employer, Union Gas Ltd, has been in business here in Ontario since 1911. Union Gas pioneered in the exploration and production of natural gas and continues to have an interest in some production facilities. Union, with its sister company, Centra Gas, has almost $4 billion invested here in Ontario. The companies have over a million customers. We obviously have a long-term commitment to our customers, the people of Ontario. We're here for the long term and have to live with the results of both past and future actions as they affect the environment and the petroleum industry.
Our primary interest in Bill 52 is as Canada's largest operator of underground storage. Storage consists of depleted natural gas reservoirs which we use to store gas in the summer months for use by our heating customers in the winter season. This storage plays a very critical role in keeping the cost of gas low in the Ontario market.
Bill 52 has three major impacts, from our standpoint. First, it assists producers and land owners by having a fairer, much speedier and far less costly process for resolving disputes over the sharing of production revenues. Second, it provides for greater industry participation in the collection, storage and retrieval of vital technical data relating to the petroleum industry. I'm referring here to the drilling records and samples stored for public use by the petroleum resources lab in London. Third, it opens the door for industry participation in the development of standards for the drilling and operation of wells, a big step forward from the days of control by regulation.
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The direction taken streamlines the process of developing petroleum resources. This encourages operators to explore and develop by making it more economic and efficient. As a utility, we can benefit in two ways: First, a viable local producing community keeps the pressure on to keep gas prices low. Second, new discoveries have a potential to add to our storage system as the original gas is depleted. The approach taken to industry in moving from the in-your-face approach is encouraging. It recognizes that when dealing with Mother Nature she makes the rules, not the government. By that I mean that every time we drill a well the potential is there for the unexpected. If the government tries to have set rules or procedures, they often cannot cover all these unforeseen situations and an operator is faced with the choice of doing something which is sub-optimal in order to fulfil a rule versus doing the right thing and being in violation of a regulation that has not anticipated all the circumstances.
The ministry, by involving industry in the process of developing standards, recognizes the value of standards based on the desired outcome where that is appropriate, rather than the old control-oriented cookbook procedures. Remember, all of us in industry have a lot of money invested here and we recognize that it is in our best interests to run an efficient, safe and environmentally friendly operation. Not to do so increases our costs in the long run and jeopardizes the investment we've already made. We don't need to have regulations as an incentive to operate responsibly. We have our investment and our future, which are incentive enough to do that.
We also recognize that there are a small number of people who are not responsible operators. There will always be people like that and experience has shown that you can't prevent them from breaking the rules. In trying to do so, you simply impose an extra burden on the majority of responsible operators. I compliment the government on recognizing this and focusing on stiffer fines for the bad guys. The only language they understand is consequences. If the risk is high enough, they won't do the deed, and for the few who do their punishment will send a message to anyone else who's tempted.
My company and the industry stand ready to work with the ministry to jointly address areas of mutual concern. It's our belief that, working together, we can find solutions that benefit Ontario and are acceptable to all parties.
In summary, the changes incorporated in Bill 52 will better serve the people of Ontario, the industry and the ministry. We stand ready to work with the ministry in those areas where our experience may be of assistance.
Mr Klees: Mr James, thank you for your presentation and for your expression of support also. Again, I want to thank you for your involvement in consulting with us on some of the details of this. I want to take this opportunity to also compliment your company as an exemplary corporate citizen of this province. One of the things you indicated that sometimes is lost in these discussions is the fact that industry is very concerned about the long-term implication of our natural resources and how we deal with those natural resources because your investment and return on investment are dependent on your stewardship around that. What will the direct impact be, if any at all, on Ontario's consumers of the direction we're heading in terms of streamlining, bringing more efficiency and bringing a cooperative environment to this industry?
Mr James: The impact, as I see it, would be positive. I don't think there are going to be large reductions, for example, in the cost of gas, but certainly it either reduces the cost or slows the increases in cost. From my résumé, you can see that we've been involved in storage projects in a number of jurisdictions. The thing we are impressed with when we go into other jurisdictions is the way in which the government people work with us, encourage our participation in the industry in their areas and seem to want to have people come in and do business in their area. I think the changes that we're seeing here in Ontario will send a similar message to people from outside. Certainly in the petroleum industry here there's a lot of excellent technology outside of the Ontario oil patch, and we need people from outside the Ontario oil patch to bring those new ideas and that new technology to maintain or increase the production levels in Ontario. The environment has to be open to them to come and do business. If they feel that it's a hostile environment, for example, they just go somewhere else; there are lots of places they can go.
Mr Tilson: Mr James, you've talked about how long you've been here and that you're here for the long term. You've talked about the substantial investment your company has in this business. You didn't say the number of employees you employ; I'd be interested in that. My main question is for you to comment on what appears to be one of the criticisms of this government's initiative, and that is the issue between government regulation and self-regulation. The criticism seems to be that if you have self-regulation you will not have, particularly with issues involving the environment, the public trust.
Mr James: I can understand the point about public trust. The thing I'm primarily interested in is the outcome. I'd just refer to the previous speaker. I heard him saying there were some concerns over whether industry would or could police itself. It's human nature, I guess, when we don't understand all facets of a problem or a business, to fill in the blanks with something negative. In an absence of information, we start to suppose what's happened. With the bombing in Oklahoma, for example, the general assumption was that it must have been some foreign intervention that caused it. The human mind starts to place negative things and make assumptions. The same thing happens when people don't understand the issues an industry is faced with; they assume it will take some selfish act that, as you suggest, would harm the environment.
As you get closer to it, you understand that there are a lot of pressures on industry to do the right thing. Government cannot turn a blind eye and turn people loose, but by having the ministry looking over the industry, having the means to deal with people who don't follow the regulations, I think that's really the most effective way of handling the situation. We don't need someone looking over our shoulder all the time. The people who are bound to flout the rules are going to wait till you're looking the other way anyway and go ahead and do it. That's been my experience.
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Mr Michael Brown: I appreciate your presentation a great deal. As I mentioned to a previous presenter, being from Sarnia and being familiar with what goes on in Lambton and Kent counties in terms of gas storage and that sort of thing, it's good to have somebody from the industry here.
I wonder if you could tell me who in your opinion is the leading jurisdiction in terms of providing both environmentally friendly and business friendly regulation. Would it be Alberta, Saskatchewan, Ohio, Michigan? It might be somebody else.
Mr James: As it pertains to the petroleum industry, certainly one of the areas one would look to is Alberta. It's such a large industry there that they have had to pay a great deal of attention to the impacts on the environment. There has been a wide variety of challenges facing the industry, and the information that's available from various industry organizations, as well as from the government, is of tremendous assistance to us here in Ontario, for example, when we run into similar situations.
Mr Michael Brown: We don't know about what the regulations are under this act. This is very problematic for this committee in that we don't have any idea what the standards really are that are being required. Do you believe that the regulations that are being placed, that you've been talking about with the government, are similar to Alberta's?
Mr James: Yes. As a matter of fact, one of the things we do is look at the Alberta regulations and see how they would apply to Ontario. If there's anything that we would tend to leave out, it would be because it's not applicable, not because it's too harsh. In other words, we're not trying to soften up something that comes from another jurisdiction. We want to make sure we meet the needs of Ontario, but at the same time we don't want to put a lot of unnecessary burdens on people.
Mr Sergio: We have heard quite a bit, even yesterday, from some presenters, and you this morning spent a considerable time on the matter of self-regulation and self-control. We have heard quite a bit about: "Give us the minimum standards. Let us work within the minimum standards." We have a problem because we have no idea what those minimum standards the government wants to give you are. We are not aware of those minimum standards. But given that, if you were to be given those minimum standards, how would they be working in an industry where you mentioned that there are people who will not abide by the rules? How will those minimum standards work to protect both the industry and the public and enhance and protect the environment?
Mr James: It's my understanding that the ministry has plans for enforcement of those standards and dealing with people who do not follow the standards. What more can you do? As far as developing the standards and so forth is concerned, as I mentioned earlier, my company and the industry in general stand ready to work with the ministry in producing those standards. This would not be a one-sided thing where we hand the standards over to the ministry and say, "These are our minimum standards for you." It's something we have to work on with the ministry to make sure all of the ministry's concerns are dealt with, as well as being something the industry feels is practical and meaningful and we can all live with.
Mr Sergio: What actions would you take, as a self-regulating industry, to protect and enhance the environment so you don't get into a situation where you need the intervention of the government?
Mr James: Through our industry organization, in this particular case the Ontario Petroleum Institute, we don't have at the present time a means of reporting one operator to the association, but I think if it was felt that this was a desirable thing, we could work with the ministry to see if there weren't things that could be done within the industry association itself to help deal with these things. But ultimately, when it comes down to enforcing the law, I think that's a government thing to do. I don't think we want individuals running around doing that. That's vigilante law, and we're certainly not in favour of that.
Ms Martel: Perhaps what I'll do, Mr James, is make a couple of comments first and then I'll ask you a question about the trust fund. Two points. First of all, you've heard us on the opposition side harp a little bit this morning on the development of standards, and you need to know why we're doing that.
The Minister of Natural Resources, Mr Hodgson, in a former life, when he sat on this side, was part of a committee that studied the Crown Forest Sustainability Act in 1993-94. At that time there were a number of standards that were also being developed to deal with practices in forestry in Ontario, and he was very much of the view that those standards should be given to the committee before they even started out on their public hearings so that the committee members and all of the public would have a look at them. In fact, he was very critical of the government when those weren't produced when the hearings started.
The government did produce those standards. People had a chance to look at them. There were changes in the technical standards during the public hearings process and during the clause-by-clause. We find it passing strange that the same minister who was so concerned about the public having access to the technical standards as the bill was being developed when he was in opposition does not have the same set of standards now. That is why we have been asking for the standards, and if any of them are ready, I would just ask the parliamentary assistant to please give them to us and we would stop having this problem at the committee hearings.
Secondly, I can't speak for Mr Barron's concern around self-regulation, but let me tell you mine. Yesterday there was some discussion about the number of MNR inspectors that were going to be left to enforce parts of this act, and we couldn't get the numbers from the parliamentary assistant. I can tell you, though, that in a meeting I had in June with Mr Cooke, who is the executive director of the aggregate producers, Mr Cooke told me that MNR staff had informed him that the number would go from some 40 to 14. There are some 2,300 licensed sites in the province. That would be about 164 sites for each of those inspectors -- that's trying to monitor the compliance plans that people are supposed to send in, doing random audits, trying to get at the bad apples.
My concern is that that is not enough staff to do the kind of enforcement and compliance that has to be done in the province to make sure that the public's perception of the industry is a good one, because if those bad apples and those people get out of hand, all of the members in the industry are tarnished one way or the other. I think that's the concern that many of us from the opposition have: There will not be enough people to do the job that will convince the public that things are operating well.
Let me ask you the question about the trust fund. What is the difference between what shows in the bill to be what the trust fund will do around the funding of information management, research, surveys etc and what is done now, either through the petroleum resources program, the laboratory or the centre? What is the difference? It's not clear to me what that is.
Mr James: The difference is that at the present time there is no funding for research in the petroleum area, and this fund would provide for some moneys to be used in furthering the technical research into the petroleum industry, its impacts on the environment, in those areas specifically applicable to Ontario.
Ms Martel: Could the money from the fund at any point in future replace the money the government now provides to continue either the petroleum resource program, the lab or the centre? Is that a possibility?
Mr James: I really couldn't say that. I don't know.
The Chair: Thank you very much, Mr James. We appreciate your coming forward this morning and giving us your input.
The Chair: Our next presenter is Mrs Hanne Pedersen.
Mr Klees: Mr Chair, while the next speaker comes forward I will provide a note of explanation to the committee. Reference was made previously by a colleague to the fact that the intention is that this become a self-regulatory environment for this industry. That clearly is not the case. There is a requirement for self-compliance. This is not self-regulation; far from it.
Mr Michael Brown: Mr Chair, we don't need speeches.
Mr Klees: I just felt it was important that this committee have that understanding.
Mr Michael Brown: We'll do that in clause-by-clause.
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HANNE PEDERSEN
The Chair: Good morning, Mrs Pedersen. The floor is yours.
Mrs Hanne Pedersen: Mr Chairman and members of the committee, I'm addressing you today as a citizen of Crieff in Puslinch township, just west of where we are today. The Pedersen family has lived at RR2 for about 30 years, and before that, we lived in what is Halton region today. We own 33 1/3 acres along Concession 1, part of which, when we bought it, was a dormant wayside pit site, and it was at that time that I became aware of and interested in matters to do with gravel extraction.
As you may or may not know, Puslinch township is among the top municipalities in Ontario when it comes to the mining of gravel. I am told that building projects such as the Toronto subway system, the CN Tower, the Burlington Skyway and many major highway projects have all been built at least in part with materials from Puslinch.
Our annual total production usually runs to about two million tonnes, sometimes more and sometimes a little less, but over, for example, a 10-year period, it would be fair to say that two million tonnes is a correct figure.
We have around 20 commercial pits -- I think the actual number is 19 -- and a total acreage of about 3,000 pretty well all zoned and licensed for extraction and under operation.
With regard to Bill 52 in its present proposed form, yes, I've read it. I find it quite bewildering, I think mostly because I don't seem to be able to find any guidelines to go with the bill. In spite of the fact that I seem to understand earlier versions of the Pits and Quarries Control Act, I must say that the latest edition is strange and confusing in its present form. In spite of this state of affairs, I respectfully offer the following thoughts in the hope that some of these will at least be of help to the committee in arriving at a final bill.
I understand that Bill 52 is an act designed to promote resource development, conservation and environmental protection and yet somehow simplify the present government rules and regulations. It's a very good idea if everyone concerned acts responsibly when it comes to the abovementioned areas.
It is my opinion that most people will cut corners when it comes to environmental guidelines, or at least try to, and I strongly urge the committee to consider some form of guidelines at least within the part of Bill 52 which deals with gravel extraction, which I know best.
I would imagine that a maximum acreage that any one producer or subsidiary of same can hold under an extractive licence in any given district may somehow create an incentive for the industry to make more of an effort on behalf of the notion of gradual rehabilitation of extractive lands. In Puslinch township, it's very clear that there is much more land zoned extractive on an annual basis than there is rehabilitated.
The township is, however, supposed to have an official plan which offers an opportunity for various forms of development -- housing, agriculture, social, recreational and so on -- and even if an official plan may have incorporated all these aspects into it, the reality is that nobody in their right mind would buy real estate next to or even near to an extractive operation for whatever purpose they might have in mind.
Again, much more emphasis must be put upon gradual rehabilitation. It's quite evident in Puslinch township that although we have huge gravel deposits, we also have a far more important natural resource, namely, water -- water of superior quality and vast quantity and water of potential future municipal importance.
The township is situated within the headwaters of several important watersheds. You've already heard about Millcreek. There is also Spencer Creek and Fletcher Creek, to name a few. It is my belief that the combined gravel operations in the township have a very real and devastating potential for damage to this water base, and a recent study of the Millcreek watershed seems to confirm this notion. I hope the committee will take a detailed look at the concept of water versus gravel extraction before any streamlining of Bill 52 is made into law.
In section 1 of the proposed Bill 52, there is under clause (a) some reference made to wayside pits. I must say that this section, as I understand it, is totally unacceptable to me. It will just be used as a foot in the door to get a few their licence for a commercial pit, and there is no way that the local public can participate in the planning process.
As the rules are today, there are no requirements for public notice for the establishment of a wayside pit. I detect MTO afoot here, simply because we had a similar little issue within the township boundaries a few years ago and at the time the Ontario Municipal Board ruled that the status and procedures attached to the Pits and Quarries Control Act on behalf of the wayside pit issue should be maintained. After all, a pit is a pit is a pit.
I would finally like for someone to tell me that I'm wrong, but from what I understand, were this Bill 52 to become law in its present form, it will leave any one municipality with little choice but to hire its own environmental inspectors or enforcers, as the case may be. I respectfully suggest that this committee consider an increase of at least two extra cents per tonne on gravel extracted in a municipality to go directly to the township.
There is far too much time and effort spent on extractive-related problems as it is and we can probably do a better job within the township boundary lines and take care of this ourselves in an impartial and fair and sensible manner, with a strong dose of moral fibre thrown in. Thank you, Mr Chairman, for your time.
The Chair: Thank you, Mrs Pedersen. We've got about four minutes per caucus for questions, beginning with the Liberals.
Mr Michael Brown: Thank you for coming. I don't think there are many members of the Legislature who wouldn't have had, at least at some point, queries about either having gravel pits or quarries opened or a problem with an existing one.
The previous presenter, whom I've had some correspondence with, was from Millcreek, and we're still waiting for an answer to our query from the Ministry of Natural Resources regarding his information. What I'm having some difficulty in understanding is, given your difficulties with the previous act -- obviously it isn't working as it should, at least from your particular viewpoint -- do you have some suggestions on how we might improve that process?
We all know that we need to extract aggregates -- it's important to our economy, it's important to our province -- and yet we want to do that in the most sensitive and sensible way, and I think the responsible people in the industry want to do that too. So could you give us some suggestions on how you think, if you were rewriting the aggregate act, you might go with this?
Mrs Pedersen: Yes. I'm very glad you ask that question, because we have in Puslinch township struggled with this very problem: How much is too much within any one municipality and how much can we allow and yet allow for other forms of development?
It would seem to me that if we were to establish a priority zone system whereby we have zone A, zone B, zone Z, we would then have a recognition of all areas of gravel within a given area. We would have an orderly and gradual form of extraction whereby there will be no extraction in zone B until zone A is extracted and rehabilitated to its full form or state, or as close to it as possible.
I also feel, and I'm saying this with much consideration, that the present system whereby operators are allowed to operate multipits within any one area is an abuse of the intent of the Pits and Quarries Control Act, an ideal here with a gradual and orderly opportunity for extraction that is not being followed when one operator has three or four pits within, say, Puslinch township and a hole here and a hole here and a hole here. It is, after all, the mining and extraction of a non-renewable natural resource and not on the same basis as production of any other commercial commodity. Therefore, the rules need to be a little different so that other people can also live within a given area where extraction occurs. I realize, like you said, that gravel is an important commodity.
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Mr Michael Brown: A former colleague of mine who represented St George-St David said one day in the Legislature, when we were speaking about landfill sites, which is also a relatively contentious issue in this province: "You know, I don't understand it. None of my constituents have any problem with landfill sites." Of course, if you're in downtown Toronto you don't. It seems to be an issue of where you are. I am concerned -- you raised this issue and I hate to belabour it -- that we are really getting the mushroom treatment from this government: Keep us in the dark and keep us covered with manure.
Mrs Pedersen: I kind of like this government, sir. I will, however --
Mr Klees: Thank you very much. Would you repeat that, please?
The Chair: Thank you, Mr Brown. Ms Martel.
Mr Klees: What a way to close it up, Mr Brown.
Ms Martel: Thank you for your presentation here, Mrs Pedersen. I want to talk about, though, the problem we are having, because I think you hit the nail on the head when you said there are a lot of things that used to be in the act that do not appear in the new act. It has been a concern that we have raised, and I raised it again yesterday, but let me give you some examples. In the old act, for example, all of the requirements for a class A licence appeared. In the new act, that will all be done by regulation. All of the details that have to go into the report that accompanies the application for a class A licence used to be in the old act; now it all goes into the regulations. All of the information to be included to obtain an aggregate permit that used to be in the old act now goes into the regulations. It's the same thing for all of the details for the site plans that are supposed to accompany the applications -- once in the former act, all detailed; now into regulations.
The one I had some discussion with the parliamentary assistant about yesterday is that the notification process for unorganized areas, of which there are many in my riding of Sudbury East, notification to residents that there will be a new quarry opening or an expansion, has been completely repealed. The PA told me as of yesterday that this will go into regulation too. I don't know why you take out of an act something that is very clear, that is in no way, shape or form onerous, because it requires two ads in the paper and a posting on the quarry, that it should somehow be repealed. I do not understand why we do not want to give people public notice about these important issues.
Our concern has very much been that we are operating with a shell when it comes to this particular act and that all of the regulations that will really put together this bill and determine how people operate and under what kind of standards are things we are not privy to at this committee. We don't think we should be operating like that. This is an important issue. If the documents are there with respect to the standards, they should be given to us, and if information is already in the act about how people should operate and exercise their responsibilities, that should stay the same, so that everyone is clear how people are going to operate.
Let me ask you about your concern around wayside permits, because I believe you said to this committee that you had a concern that this might be, if I might paraphrase, a backdoor approach or some way to get a commercial licence.
Mrs Pedersen: A foot in the door, yes.
Ms Martel: Why are you saying that in terms of the changes you see under that section?
Mrs Pedersen: I don't have it before me, but I can remember it. It says that a wayside pit may be operated for two years consecutively as a wayside pit, whereupon it has to become a commercial pit. When you start a wayside pit, there are no rules stated that would say that there has to be notice given to the public in the surrounding area. Even a land owner next door doesn't have to be notified within the wayside permit concept. Once we turn that around and make it a commercial pit two years later, the backlash will be: "You never said anything when it was a wayside pit. Why are you complaining now?" It seems to me it's almost like a catch-22 situation.
I don't think the general public likes to complain. I do, however, think that the general public has the right to feel a reasonable amount of security on behalf of their investment in their home or property. The process where that is suggested in Bill 52 would eliminate that sense of security, or at least some security, that people have when they buy property in the country -- on behalf of the extractive concept, at least. There are lots of other things that can happen, but I think we owe it to people to let them know something as devastating as gravel extraction is happening, whether it's wayside or commercial, next door to a property owned by a homeowner, for example. We owe it to them to let them know that their property value is now about to go down for at least 25 years.
Mr Klees: Thank you very much for your submission today. This is why we're here. We're here to get input and some advice and also to provide some clarification perhaps to the members of the opposition who continue to do their best to perhaps get us sidelined here.
I want to comment on your reference to wayside pits. I want to assure you that a wayside pit will not become a commercial pit without going through the appropriate licensing procedure and notification. Wayside permits, as you're probably aware, can only be used by public authorities. They're intended to be a temporary measure. There are many hundreds of them across the province. We want to assure you that it is not in any way an agenda of this government to extend the use of those. In fact, what will be seen is that the notification process for licensing commercial operations will be streamlined. They will be required as well not only to go through the licensing process, but there will actually be a requirement for public meetings, open houses, so that those people affected will have an opportunity to come together in a public forum to have their input on that. I just wanted to assure you on that issue.
Interjection.
Mr Klees: Sorry. Let me just clarify a couple of things and I'll look forward to your comment. With regard to water issues, again a very important point, we agree with you that we have to be very concerned about the environment, about ecological issues. What this bill will do is strengthen the environmental requirements. Yes, it's not in this legislation as you see it today. This legislation is intended to be a framework that will then allow us, within regulations, to establish standards by which the operators will conduct themselves. That creates for us flexibility and opportunity to work with the industry to establish those standards.
Once again, for the benefit of my colleagues -- they're slow of hearing -- I want to assure you and the public that the intent of this government is that as soon as the draft regulations are ready, which we expect will be within the next month or so, they will be broadly circulated to all of the stakeholders, to all of those individuals who want to have their input. We look forward for their input and we will then, when that consulting process is completed, finalize those regulations, those standards within regulations, and we'll have to adhere to those.
I want to assure you of one other thing: The Ministry of Natural Resources is not getting out of the business of inspection. As a result of this bill, we will be able to target inspection as the key function of our inspectors, who today are only doing inspection for about 25% of their workload. We're going to move that from 25% to 90% of their workload.
I think it's important that you and the public understands what the direction of the government is with this bill. It's to ensure efficiency. It's to ensure that we can enhance the inspection component of the roles and responsibility of the Ministry of Natural Resources.
The Chair: Thank you, Mrs Pedersen. We do appreciate you coming forward and --
Mrs Pedersen: I didn't get a rebuttal, Mr Chairman. I'll put it in writing.
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LAFARGE CANADA INC
The Chair: Our next presenter is John Stratton, representing Lafarge Canada Inc. Good morning, Mr Stratton. Welcome to our committee.
Mr John Stratton: Good morning. My name is John Stratton and I am the property and development manager for Lafarge Canada Inc, eastern region. I've been with Lafarge and its group of companies for 28 years. I've been directly involved with the management of our property and aggregate resources for more than 17 years. I appreciate the opportunity we have been given to speak to you today on behalf of our company.
We are one of the largest aggregate producers in Ontario with nearly 70 licensed sites under the Aggregate Resources Act with operations throughout the province from London to Ottawa, north from Hagersville to Sault Ste Marie. We employ approximately 1,300 hourly and salaried employees in Ontario, both directly and indirectly, in the aggregate business. We utilize close to 150 trucking firms, both independents and companies, to transport our products to market. We produce and sell a wide range of sand, gravel and crushed stone for the construction and development industry in Ontario. In addition, we manufacture cement, ready-mix concrete, concrete pipe and manholes, paving stone, brick, block and asphalt products, all requiring aggregates as their main component.
Lafarge has an environmental policy and best practices manual which has been developed and is used across North America. Our goal is to adhere to these policies, demonstrate our leadership position within our industry and maintain our commitment to being environmentally responsible and responsive members of the communities we operate and live in. We have long been a proactive leader in the aggregate industry, along with many others, in developing rehabilitation programs and practices. We have received recognition from both within and outside our industry for our rehabilitation accomplishments and operations throughout the province. We are committed to the success of the aggregate industry in Ontario and will continue to take a proactive role in the shaping of this industry for the future.
It's for these reasons that Bill 52 is of such interest to our company. We are generally in support of Bill 52 and the amendments proposed to the Aggregate Resources Act. We agree with the concept and the objectives that we see to (1) attempt to streamline and improve the efficiency of some of the processes; (2) prioritize many of the functions performed by the MNR; and (3) delegate some of the delivery of the act to the APAO, the Aggregate Producers' Association of Ontario, and the aggregate industry itself. But in saying that, we also understand and also endorse the need to ensure that environmental standards continue to be recognized and protected.
We support the position and the comments of the Aggregate Producers' Association of Ontario on Bill 52, but we would also like to comment on several parts of Bill 52 that we feel are important and that we can provide a viewpoint on from the industry perspective, and a personal knowledge in some cases.
The first item in Bill 52 I would like to comment on is the self-assessment or self-monitoring program. We believe the completion of the annual inspections and compliance assessment reports undertaken by each individual producer under a clear set of guidelines will achieve, in many cases, what has been absent in some areas for the last two to three years, and that is a regular, annual inspection of every operation in Ontario. Annual inspections have been, to say the least, sporadic in many cases and have not been consistent from district to district.
Lafarge had the opportunity and took part in a self-monitoring program in Maple district put on by the MNR and the APAO. This consisted of a one-day training program in August 1995 for five of our people. I was one of the people who attended the session. It included a review of the legislation, site plans and inspection process, an afternoon in the field completing an inspection and an assessment report with MNR staff. We then completed inspections and assessment reports on 12 of our licensed sites, identified compliance matters which required attention and worked with the district MNR inspector to review, comment and rectify any non-compliance matters identified.
For 1996, we are currently involved in a voluntary program for all of our licensed sites in Ontario. We have a commitment from senior management within our company to undertake the responsibility of the self-monitoring program. We accept and take this responsibility very seriously. The licences we hold are the key to our continued operations and success in the future. We will not place these licences in jeopardy through a haphazard approach to the responsibility that has been given to our company.
I would like to refer to a letter dated June 12 that I wrote to all our division vice-presidents with respect to self-monitoring and annual inspections. I won't read the whole thing; I will refer to several paragraphs.
"As you are aware, the Ministry of Natural Resources is making significant changes to the Aggregate Resources Act and the way in which our industry will be regulated in the future. For 1996, the MNR and APAO have an agreement in place whereby all APAO members will complete and file a compliance assessment report for every licensed site between June 1 and August 31, 1996.
"Legislation is before the government to amend the Aggregate Resources Act and cover all aggregate operations in Ontario for 1997. In order to assist the various plant and area managers to complete the compliance assessment reports for 1996 and to help ensure that procedures are in place to comply with the new regulations in the future, the technical services property group" -- that's the group I head -- "will be taking a direct and active role in the self-monitoring program. We ask for your assistance and cooperation in this regard.
"Our objectives are as follows:
"(1) to coordinate, oversee and review all annual inspections and compliance assessment reports in accordance with the Aggregate Resources Act;
"(2) to provide assistance, interpretation and direct involvement in the inspections, filing and remedial actions required;
"(3) to develop a consistent approach to the inspection, interpretation and liaison with MNR personnel and ensure all sites for Lafarge are complete; and
"(4) to assist in site plan amendments and non-compliance matters so that Lafarge has a uniform and consistent approach in these matters."
Under the general information number of points that I went through in the letter, I'll just read a couple of them, if I may:
"(1) Ensure that you have an approved replacement site plan under the Aggregate Resources Act.
"(2) Follow-up notices to MNR on completion of remedial action should always be in writing with a copy to tax services.
"(3) Make sure the person doing the inspection has a copy of the compliance assessment report completion guide. There are no longer any grey areas. You are either in compliance or not."
Two more points:
"Notes on the site plan are in fact conditions to your licence. Review them carefully to ensure compliance."
"Be advised that a licence suspension will not only shut your aggregate operation, but any other operation within the licence boundaries."
I believe there are many benefits to our company and to the industry by assuming the delivery of this program. The pilot project in 1995, the training sessions for more than 25 of our managers in 1996 and our direct involvement in the annual inspection process have provided an enhanced and detailed working knowledge of our site plans and operations, the compliance problems and remedies and a better understanding and appreciation of the process.
I believe that the credibility of our industry and our company and the Aggregate Producers' Association of Ontario will be improved and enforced by this program. We are a responsible industry and we can deliver this product in an honest and forthright manner. We believe a self-monitoring program will remove many of the inconsistencies that now exist across the province. We believe the self-monitoring program will free up time for the remaining inspectors to concentrate on those few within our industry who choose not to abide by the act and its regulations and this can only help and improve our industry in the long run.
The second area I would like to comment on is the licence application process. We support any attempt to improve and streamline the licence application process for new or expanded licensed sites. The process currently is fraught with long time delays, uncertainties, extreme cost in some cases, for all parties involved, and not just the aggregate producer. I believe in some cases that all the time, money and resources thrown at these applications do not always provide an efficient means to reach a balance between the needs of the community, the aggregate requirements and the environment that may be impacted.
There has to be a better method to deliver a product, in this case an aggregate licence, along with all the safeguards that are required than the process that currently exists. We support the basis of standard licence conditions, standard technical reports completed by professionals that address a well-defined set of criteria and guidelines.
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One example that our company has in the township of Uxbridge: We purchased a piece of property in 1989, 60 acres, a relatively small piece, went through a rezoning, official plan amendment and licence application in 1991. There was no absolutely no public opposition to this rezoning application and licence.
The Oak Ridges moraine study froze all development. The outcome of that study is still undecided. The Durham OP went through its normal five-year review. MNR could not act on the licence application. Comments from other agencies, such as the MOE, lagged for more than two years. Seven years later, we don't have a licence, we don't have an answer. A small businessman could not operate in this kind of time frame without even getting an answer.
The next area I would like to comment on is the rehabilitation security system. We support the changes as proposed in Bill 52. We believe the revised system will provide enhanced protection for the existing licensed sites that have been abandoned or that have had their licence revoked. The pool concept or superfund concept will ensure enough funds are available for any one site that requires remediation by the fund.
I believe we have progressed a long way from the Pits and Quarries Control Act of 1971. Our company takes pride in our housekeeping, visual impact on the surrounding community and our progressive rehabilitation programs that are ongoing on a continual basis. There is no question that progressive rehabilitation is the most economical approach to achieve the final land use for our licensed properties. We also believe that the elimination of the rehabilitation claims and verification each year, again by MNR staff, will free up more productive time for those people.
The act, its regulations and site plans provide the framework under which rehabilitation has to be completed. Non-compliance under these guidelines can result in suspension of your licence by the MNR. We support and we endorse Bill 52 in this regard.
The last area I would comment on is the abandoned pit and quarry fund. We concur and support the position of the APAO and Bill 52 with respect to the changes proposed for the abandoned pit and quarry fund. We believe the APAO and its member companies can deliver and administer the program in an efficient and cost-effective manner. We have developed rehabilitation expertise within our industry. We know the equipment and have the practical experience to deliver a cost-effective final product.
In conclusion, I would restate our company's support of any changes to the Aggregate Resources Act that will rationalize and streamline some of the processes, deliver the act in a more efficient manner while maintaining the necessary environmental safeguards that are always required.
That completes my comments and I would like to thank the committee for the opportunity to express my viewpoint and our company's viewpoint.
The Chair: Thank you, Mr Stratton. We've got two minutes per caucus, beginning with Ms Martel.
Ms Martel: Mr Stratton, thank you for your presentation today. Tell me what it is about the changes in the licence application process which you feel are going to take you from the position you find yourself in of seven years and still no response to something that will give you a more direct response in a timely fashion. What are the specific changes that will allow you to do that?
Mr Stratton: I think standardized technical reports will definitely be a benefit and I'll specifically relate it to you that in this application the MOE took I don't know how many years to decide that we need to do a hydrogeological study, and that just came out in July. This is for a dry operation. This is not below water. Surely it does not take seven years or five years or three years or two years to get an answer like that.
I'm saying that if there are standard technical reports and standard conditions that every operator knows he has to do, whatever they may be, and if you go on with your eyes open and you do those reports and you bring them in with your application, we shouldn't have to wait that long to have somebody tell us, "Oh, by the way, we need this," and then come back six months later, "Oh, we think we need this." That's a general statement.
Ms Martel: Can you tell us what involvement you've had, if any, in the development of some of those standards to date?
Mr Stratton: I've had no development at this point, no.
Ms Martel: Part of the problem we've had, and it's been an ongoing problem, is neither have we. We haven't seen them, so we're at a bit of a loss from the opposition side to say whether some of those things are going to help you or hinder you. We don't know what they are yet and we would have liked to have had that while the committee travelled, because what we're being asked to do is to pass this legislation as it is as a shell and then we'll see all of the technical standards and the regulations at some point after. They will of course be developed and approved by cabinet and there won't be a committee like this that will deal with them in a way I think they should be.
Mr Klees: I'm sure you're aware of the fact that those standards, once we have the initial draft, will be circulated to you and to all of the other stakeholders and that it will not be cabinet who will be developing them because, although I have very high regard for all of the members of cabinet, none of them, I believe, are in a position to develop these standards technically. They will certainly be involved in approving the standards that you as stakeholders develop along with ministry staff.
One question for you: You indicated that in your letter to your associates you said: "There are no longer any grey areas. You are either in compliance or not." The implication is that under the current system there are grey areas. Is that correct? Could you comment on that?
Mr Stratton: Yes. I don't think I'll be talking out of school here. Because of our operations across the province, we deal with a number of different personnel with MNR and I think they have some latitude in interpretation of the act and its regulations. As we saw it, there were different things that were allowed to happen from one district to another and it was open to interpretation perhaps. Every situation is different.
There was never a set of criteria, a very specific checklist. We have that now. That was developed in the pilot project and refined for 1996. We have a two-page, detailed checklist going down point by point. I feel that when I read that it's very clear. Your fence is up or it's down, one or the other. You're in compliance or you're not. Your setbacks are this, yes or no. I mean to me it's black and white. You're in compliance or you're not in compliance and I think it's very easy: With a checklist now we can go through and you have a consistency now that we're using right across all our sites in Ontario.
Mrs Sandra Pupatello (Windsor-Sandwich): Thank you, Mr Stratton, for your presentation. I would like to just ask a couple of questions. Perhaps you could estimate for me the cost to your company for the 25-some managers you described attended various sessions and went through training, as well as your own time, additional study time etc to come up to speed in that whole process of self-monitoring that you are going through. What would that cost be to your company?
You described that seven-year delay and a small operator couldn't possibly absorb those costs without getting on in some revenue-generating after having acquired the land. How would a small operator afford that process of self-monitoring? You clearly have to assign staff to do that on a regular basis. Is there any indication in your industry that smaller firms wouldn't have the wherewithal to do that? Perhaps they're more in a position to have individuals who wear 12 hats in a smaller operation; they have to do several things. Is there a chance they wouldn't be able to complete the process as a firm like Lafarge is able to do?
Second, could you comment on the presenter before -- I don't know if you were here to hear her, the resident.
Mr Stratton: Yes.
Mrs Pupatello: She gave an interesting description as a resident from that point of view, these things popping up in their neighbourhood. You have sites across Ontario. How do you deal with residents and how comfortable are you that regulations haven't been provided for us to see in advance so that we are aware there is a process that you will go through willingly to work with the various communities that you're in to ensure that the residents are happy and are a part of the process?
The Chair: Unfortunately, Ms Pupatello, you've got no time for the answers. Thank you very much, sir. We appreciate your attendance here today.
Our next presenter is Neil MacDougall, chair of the Sarnia Cavern Operators Group.
Mr Michael Brown: Mr Chair, while Mr MacDougall is coming forward, could I just ask that the ministry or the parliamentary assistant supply for us a list of the stakeholders that the regulations will be distributed to and a copy of the checklist that we hear referred to during the pilot project so that we might see that.
Mr Klees: Mr Chair, I don't have a problem with that. We'll be pleased to do that. In fact, we're open to some suggestions as to who should be on that stakeholder list, if you'd care to suggest anyone.
The Chair: Thank you.
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SARNIA CAVERN OPERATORS GROUP
Mr Chair: Mr MacDougall, welcome to our committee. The floor is yours, sir.
Mr Neil MacDougall: Good morning. I've distributed to the members of the committee a brief overview of what I plan to speak about today and I've made the rather brash assumption that most members of the Legislature might not be familiar with some of the storage cavern operations that are currently under way in Sarnia and have been since about the 1950s.
Storage caverns are created by a solution mining out a bed of salt that's about 2,000 feet underground. Some of these caverns can be upwards of 100,000 barrels and they store a multitude of hydrocarbon products which are used to produce a variety of products from class 6 to rubber and are quite crucial to the industry in the Sarnia area.
About 50% of hydrocarbon storage capacity is in the Sarnia area, and the most recent caverns were developed in the early 1980s. They're essential to compete in the global markets mainly because margins are so tight. In the hydrocarbon areas a few cents per pound on a large-commodity chemical can make or break an annual profit for some companies. As a result a lot of companies will margin themselves out by hopefully buying products at a low price, storing them underground and hopefully selling them at a later date to be able to reduce their costs of operation.
The current legislation is going to improve the regulatory requirements for a lot of cavern operators in Sarnia. Currently we have a group called the Sarnia Cavern Operators Group which meets three times a year, and it's pretty well all of the member companies in the Sarnia area and across in the state of Michigan, to discuss the very regulatory issues that might be occurring both in the United States and Canada and to discuss safety issues. We all share technology and try to make sure that everybody's operating in a safe and efficient manner.
In the current legislation under the Petroleum Resources Act, there are no real regulations for the operation of a storage cavern. Right now in the industry we pretty well have committed ourselves to following the current CSA standard which was issued about two years ago. As a group of members we are committed to following the standards and the various safety requirements in a standard.
In the province of Alberta they have made these regulations a part of their provincial legislation and perhaps have enhanced or improved some of the existing -- they're using the standard as a bare minimum in Alberta. The intention would be that the regulations created by Bill 52 would probably follow along similar lines to the CSA standard, which would be quite agreeable to the industry because we're already following that standard. If anything, Bill 52 should help the enforcement of these regulations on member companies.
As part of our cavern operators group we have representation from the Ministry of Natural Resources. They're invited to our meetings every four months.
We have concerns about Bill 52. For the most part there are not many problems, but we have a concern from a cavern operator's point of view. In section 16, under section 67 of the bill, there's a requirement for a trust fund to be set up to help the ministry manage their current lab, which is situated in London. That lab is geared more towards petroleum, oil and gas producers in Ontario. Geologists would use that lab to help them predict where they could drill a producing well, and from the definition of the legislation, a storage cavern is lumped together as being a well, and we would have a licence. We are concerned that we would be forced to pay some sort of licensing fee or a volumetric fee to this trust fund to help fund this lab.
We're not opposed to a user fee. If we did have a requirement to use this facility or information in that lab we would be more than willing to pay a user fee through our geologist. But once our cavern has been developed, there is really no need for us to be continually going back and funding or using the MNR information systems to help us run or operate our cavern. That's the one thing we as a group are concerned about. It seems to be vague about this trust fund and how it's all set up.
The other thing is that, as cavern operators, we would very much like to assist the government in writing the regulations since there are no current regulations, perhaps incorporating the CSA standard into the regulations to make sure that the intent of the CSA standard is followed in the proposed legislation.
On the whole, there's not too much that really affects us. If anything, it encourages the use of proper standards in the legislation. On the whole, the industry is not really too concerned from a cavern operator's point of view of the legislation, especially since you're really trying to combine everything into one bill.
I realize that the MNR is going to reduce the number of inspectors in Ontario, but for the most part the industry is self-regulating; in our group we try to regulate ourselves and help each other and try to develop and safely operate our storage caverns. I know it's hard to believe, but I think we're actually one step ahead of the current legislation. We have not waited for the government to tell us what to do. We have already been following the CSA standard for the last couple of years.
That's the end of my presentation. I was told to keep it to 10 minutes and I know it's getting close to lunch, so I'll just leave it at that.
Mr Tilson: You made some comments with respect to section 16, that you had some concerns with that section. Has your group had an opportunity for recommendations to this committee, any specific amendments?
Mr MacDougall: There is one recommendation we might have: if they're looking to fund an information management system like that, perhaps an initial instalment to set up a trust from the government and then, as people use the system, charge them a fee to use it. That way there's an initial startup fund for the lab, but charge people an appropriate fee to use the system and find the information they want.
Today is the age of user fees. If someone wants to have the government search for a special sample or get some geological information, charge them $100 an hour as a search fee. I don't think we're opposed to that. We would just like to have it a bit more specific. Instead of saying, "Everybody who has a well in the province is going to be charged $1,000 per well on an annual basis," we'd rather see the people who are using that service be charged to use that service. If we have to use that service, we'd be more than willing to pay to use that service.
Mr Tilson: In addition to that, is there a use for a trust fund such as this for the other specifics?
Mr MacDougall: I would say if the government wants to get out of funding that service, this is a very good way to do it, to set up a trust fund, but the way you give the initial seed money to that trust fund would be an issue we'd like to have some discussions with the government about.
Mr Klees: The CSA standard that your industry is complying with now that you indicate is voluntary is, as you're aware, a regulation under the Petroleum Resources Act, so it is very much a part of the regulatory system today, but I appreciate your comments. Could you give me a very brief comment about how competitive you feel your industry is with your neighbouring jurisdictions and what, if any, impact this act would have on your competitive position?
Mr MacDougall: Competitive in what way? From a financial point of view?
Mr Klees: Yes.
Mr MacDougall: Depending on the member companies -- it's competitive in the fact that we have companies like Shell Canada, Imperial Oil and Sunoco all making a gasoline fuel -- so it depends on the size and shape of the cavern and the amount of capital that people have invested in the cavern. For example, some member companies might not have a suitable safety system or may not be up to the latest technological requirements, but you might be able to force everybody into an equal playing field so that a company that is really committed to the standard might be forced into updating and continually improving its safety systems on the caverns.
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For the most part everybody has safety systems, but as we continue through and more technology is developed, and the use of capital to upgrade, I think if everybody could be levelled into an equal playing field under regulations so that everybody has to continually upgrade the technology for their safety systems, on the whole that would be a general agreement for our member companies.
We're all concerned that no one wants to have an incident which would put everybody in a bad light. That's why in our association we want to make sure everybody is committed to updating and running our safety system. We encourage each other to update our caverns and inspect them on a regular basis and make sure they're up to current standards.
Mr Michael Brown: Thank you, Mr MacDougall, for coming today. I just have some questions for clarification. Would all the operators of caverns in the Sarnia-Lambton area be members of your group?
Mr MacDougall: Yes.
Mr Michael Brown: So they're all major companies.
Mr MacDougall: Yes. As you can tell from my overview here, pretty well every major company has appointed a representative to our association.
Mr Michael Brown: Would there be large divisions? How many people would be involved with the caverns in terms of employees?
Mr MacDougall: I think all the member companies are very dependent upon their cavern operations. We're talking extremely large volumes of hydrocarbon, and the safest spot to store them is underground in storage caverns. Let me put it to you this way: If we didn't have the salt cavern bed that's currently situated in the Sarnia-Lambton area, I doubt if there would be a petrochemical industry in Sarnia-Lambton. There's no way it would be competitive.
Mr Michael Brown: It provides storage from the pipelines that feed in.
Mr MacDougall: Exactly.
Mr Michael Brown: What you're telling me is that this industry has not been specifically regulated. I'm getting mixed messages from what the parliamentary assistant just said, but specifically there weren't regulations to deal with you and you've been following CSA guidelines.
Mr MacDougall: The CSA standards only came into effect in the last couple of years. The industry in western Canada helped develop a standard with some input from the Ontario industry. When that standard came out we were looking for something that would help us to bring our storage caverns up, on a Canada-wide basis, to the same standard.
In the United States, in the Gulf coast areas they were much further ahead of us, especially in the state of Texas, as to what safety requirements were, so we were playing catch-up all the time. It was welcome news to us that we had a Canadian standard we could follow.
Mr Michael Brown: What kind of petroleum products would be stored? Would you go all the way from crude oil, natural gas and then various products of the same --
Mr MacDougall: It would be more of what we in the industry would call light hydrocarbons which, for example, would be propane in your barbecue, butane for cigarette lighters. The lighter hydrocarbons that don't normally exist as a liquid at room temperature and pressure we can store safely underground.
If we needed to store them above ground, it would be a tremendous site because we'd have to have almost 17 acres of very large storage spheres. The types of products we store underground are liquids or gases that normally wouldn't be in a liquid state at room temperature.
Mr Michael Brown: They are products in and of themselves, generally speaking. They've been through the refinery or been to Nova or wherever. They've been processed.
Mr MacDougall: Alternatively, if they're feedstocks for the refinery or possibly fuels for the refinery.
Ms Martel: Thank you very much, Mr MacDougall, for making the presentation. I want to return to some questions about the trust fund, if I might, because I've been trying to sort out what the difference is in the trust fund proposed by the government in the new legislation in conjunction with or in association with some of the resources that are already established; for example, the petroleum resources laboratory or the centre.
Earlier we had a presentation from the Ontario Petroleum Institute and the folks encouraged us to very much provide a modest increase in the budget to those facilities. I guess my read of the current legislation in front of us, given what I see will be the responsibilities of the trust fund, is that in fact the trust fund might very well replace all of those things, and so the government will withdraw its funding completely and it will be entirely financed by the private sector.
I'm not sure if that's your read of it. I've been trying to get an understanding of what the difference is between the fund, as here, and what those labs do. Do you use the lab? Can you give me some idea of where we're heading?
Mr MacDougall: Specifically as a group we do not use that lab. The Ontario Petroleum Institute uses the lab on a regular basis because they're constantly searching for oil and gas deposits in the province of Ontario.
We already have developed our caverns. They're already there. They've been there for a number of years, and the only way we would ever want to use that sort of facility would be if someone decided to drill and develop another cavern, at which time, as a group, we would say we'd be more than willing to pay that fee to use the lab. But we don't want to be lumped together with a producer, because we're not using that facility on a regular basis. If we need it, we will use it. We're more than willing to pay to use it, but we're not on the same -- although the proposed legislation groups us together with the producers, we are not along the same line when it comes to this lab. We don't use it on a regular basis.
Ms Martel: So your concern or what you're relating to us is that the government then intends to, in essence, privatize what has been a public service so far. It needs to be a user-pay service because you don't use the facilities that are currently provided.
Mr MacDougall: Exactly. If you just blanket it all, it's just another form of taxation for us because we're not a regular user of that facility. The members of the Ontario Petroleum Institute, I'm sure, use that facility on a weekly basis to look at the geology to develop or look at potential areas for oil and gas development. We just do not use that facility at all. We don't want to be lumped together, just to have a blanket statement from the Legislature saying everybody who has a licence has to pay $1,000 per well. Under the current definitions of what a well is, we would fall into that category, and we feel that would be an unfair tax on our industry.
The Chair: Thank you, Mr MacDougall. We appreciate your input.
Our next presenter is Peter Graham, the property manager for Canada Building Materials.
Mr Klees: While the next speaker comes, could I just offer the committee some clarification? Ms Martel, specifically in response to your question, I can confirm for you that it is the intent under this legislation that those services, that lab service, would in fact be taken over totally by the industry. I think the previous speaker alluded to that in his comments, that the industry, through discussions with us, has agreed that they are prepared to assume that responsibility. I didn't want to leave any question on that point.
Ms Martel: Could I just ask for clarification? That was a different set of circumstances than I heard the Ontario Petroleum Institute presenters make. I heard them very clearly say they had experienced cuts and they would like the government to give a modest increase to those operations. So when we say the industry wants to take it over, I'm not sure which part of the industry is wanting to do that. That was not the message I got from the first presentation this morning.
Mr Klees: I think what I heard them say is that, yes, they would have preferred the government to add some additional funding. I think they also realized the reality of the circumstances in the province today and, as a result of discussions with us, have agreed to take on that responsibility through the trust.
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CANADA BUILDING MATERIALS
The Chair: Mr Graham, welcome to our committee. You have 20 minutes. The floor is yours, sir.
Mr Peter Graham: By my watch, I guess we're right around the noonhour, so I'll go with good afternoon. My name is Peter Graham. I am the property manager for Canada Building Materials, better known as CBM, and I'm here to voice CBM's general support for Bill 52.
Canada Building Materials is an operating division of St Marys Cement Corp, a privately owned Ontario company founded back in 1912. CBM was founded in 1930 and has continuously produced high-quality concrete products, including ready-mix concrete and aggregates, concrete block, precast concrete and calcite brick.
As one of the largest ready-mix concrete and aggregate producers in Ontario, CBM employs over 750 people and injects millions of dollars into the Ontario economy every year. Aggregate products include stone and sand for concrete, screened sand for asphalt, granular A and B for road construction, as well as brick and block sand for masonry construction.
CBM has been and continues to be committed to operating its facilities in accordance with all established planning and environmental regulatory requirements. This is done by diligent application of technically proven protection measures and by cooperating with government officials in developing improved methods of regulation.
CBM concurs with the Common Sense Revolution's component to "cut barriers to job creation, investment and economic growth," which includes actions to reduce red tape and the regulatory burden and eliminating duplication while maintaining a high level of environmental protection. We also support the development of regulatory partnerships with industry and government.
CBM has been a long-standing member of the Aggregate Producers' Association of Ontario and agrees with their approach to foster a partnership with the government in order to share responsibility for the future in terms of regulatory and legislative compliance and aggregate resource management. Specifically, we are in support of the new, innovative and positive approaches embodied in Bill 52 related to: (1) self-monitoring; (2) new licensing application processes; (3) the rehabilitation security system; and (4) the abandoned pit and quarry fund.
As far as self-monitoring is concerned, CBM possesses 17 Ministry of Natural Resources licences across Ontario at the present time. Following training by the MNR and APAO, our company personnel has completed 12 self-assessment reports to date, with the remainder to be completed by September 20 of this year. CBM strongly supports the self-assessment initiative as a proactive, positive and credible move forward. It is the cornerstone of Bill 52 and the government's new approach to aggregate resource management. We believe that self-assessment provides us with an excellent opportunity to reinforce our company's position of being a responsible operator, one that can be trusted wholeheartedly. We see it as an incredible chance for us to enhance our credibility by ensuring each and every one of our sites is thoroughly inspected and legislative requirements and conditions are adhered to.
I truly believe this industry-government compliance partnership will help us to be a better operator because company personnel will enhance their working knowledge of the Aggregate Resources Act, licences and site plans.
Self-assessment will also provide the MNR, which is still the enforcement agency, more time to ensure all sites are in compliance. If MNR focuses on the bad actors in the industry, overall industry compliance will be greatly enhanced. Self-assessment will raise the level of compliance, to the benefit of us, the industry, and the communities in which we operate.
The onus is on us as a company to complete the self-assessment reports in good faith, accurately and in a timely fashion. It is our name that is on the line here, so it is in our best interests to perform the inspections in a detailed, comprehensive and consistent manner. In fact, it is also our dollars that are on the line here. If even one of our sites is inspected by the MNR and found to be out of compliance and our licence is suspended, it is more than just our company image that we're losing.
As far as the licence application process is concerned, CBM strongly supports a more efficient, streamlined licence application process that is based on provincial standards, standard licence conditions, and one that is proponent-driven.
As an example, CBM owns a parcel of land near Cannington, Ontario, which we are in the process of licensing in order to extract aggregate. This licensing process began over eight years ago and has cost us to date well over half a million dollars. Innumerable studies had to be undertaken, including biological, visual impact, hydrogeological, traffic, noise and dust, to name a few. The licence application proceeded to the Ontario Municipal Board, where a hearing was held that lasted 28 days, a hearing where over 15 witnesses were called to substantiate their findings. What we thought was the final OMB decision was reached on October 5, 1995, and decided in our favour.
Unfortunately for us, under section 43 of the Ontario Municipal Board Act, the public has appealed this OMB decision and they have yet to come to a decision on this appeal. This, remember, is now over nine months since the initial OMB decision. This is a prime example of the extreme cost, time delay and uncertainty associated with the existing licensing process. We believe Bill 52 will help alleviate such a time-consuming, costly and inappropriate licence application process.
CBM is in support of Bill 52 and specifically the Bill 52 proposed changes that would allow the OMB to make decisions regarding the issuance of licences but where the support for the determination of licence conditions would remain with the Minister of Natural Resources.
The final area I'd like to comment on is the rehabilitation security system. CBM is in general support of the new rehabilitation security system that we believe will provide far superior protection and assurance that sites will be rehabilitated. This superfund system will ensure that sufficient money will be available to rehabilitate any site that is in need. We are willing to put our money where our mouth is in order to improve our industry's image and credibility.
We currently consider both progressive and final rehabilitation a normal requirement and activity associated with operating our business, and we are committed to continuing this in accordance with our site plan requirements. As an example, there is approximately 250 hectares of area to be extracted at our Sunderland pit, which is just southwest of Sunderland, Ontario. Of that 250 hectares, over 50 hectares, or 20%, has been progressively rehabilitated.
Thanks for the opportunity to provide my company's views. I'd be pleased to answer to the best of my knowledge any questions you might have at this time.
The Chair: Thank you, Mr Graham. We have four minutes per caucus, beginning with Mr Brown.
Mr Michael Brown: A good presentation. I was really interested in your comments regarding the eight- or nine-year delay in getting a licence, and I think for all people that would be unacceptable.
I'm just wondering, though: Corporately you would obviously presume to do all the same studies that were required. Were previous acts -- not just this one, but other acts that might impact on your particular business -- requiring you to gather information you thought was extraneous and not really useful to your business or to the public interest?
Mr Graham: I think some of the studies are necessary and useful, but we just felt it was beyond what was required. In Bill 52, with the way it is proposed to be set up, specific studies will be laid out depending on what type of operation or area you're looking to extract material from. That's fine, but this we felt went beyond what was necessary. Especially when you go to an OMB hearing, obviously you want to be as prepared as possible.
Mr Michael Brown: What you're telling me, just so I understand, is that just to be prepared for the OMB hearing, you were forced to spend money on consultants and engineering that was really extraneous but you don't want to go in half armed; you want to be assured that you can answer every conceivable question, relevant or not.
Mr Graham: Exactly. Some of those studies would have been done anyway, but it went well beyond that.
Mr Michael Brown: So do you have a level of comfort that -- I have no idea what's going to be required through this. That is apparently to be done by regulation, and that appears to be generally well thought of by the industry in that it will be in regulation.
I should just point out that governments do change and regulations can be changed on a moment's notice almost, at least in government terms: 90 days. You can change the entire world, if regulation is how things are going to be done, without any consultation, without any kind of input from your industry or any other. What we've been arguing here is that these should be put in the legislation so that there is a standard not only for now but into the future, because I'll tell you, legislation is quite a bit more hazardous for governments to change.
I just wondered if you would prefer to see these standards put in regulation and that there be public input to the regulation.
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Mr Graham: Before the act is passed, you mean?
Mr Michael Brown: Yes.
Mr Graham: Traditionally that's the way we've gone, and I guess in preference that would be the way to go, but we're willing to --
Mrs Pupatello: Trust.
Mr Graham: -- trust the government.
Mr Michael Brown: It doesn't make any difference in terms of time lines. You're still not going to be governed by this act till the regulations are proclaimed.
I'm having difficulty with the government, not with you.
Ms Martel: I want to follow up on your views of why you feel the bill will make all the processes that you've gone through and all the frustration much better so that you won't have to do those things. You said to Mr Brown that you felt there were probably some things that go into the regulations which would clearly outline the studies and everything that would be necessary for you to put forward to get a licence. Do you know what those things are yet? Have you been involved in any kinds of discussions with MNR or anyone else as to what will be required?
Mr Graham: To this point no, but I trust we will have the opportunity to view those and have our opportunity to comment on those.
Ms Martel: I'm just a little bit curious, because as I read from your brief, clearly you feel there are some benefits to be derived by the change in process but you haven't and we haven't had the benefit of seeing what those changes are. So I'm just curious how you come to that decision if neither you nor we have had the benefit of seeing what those changes would be.
Mr Graham: I think it comes down to an issue of trust again. We're willing to put our trust in both the industry and government and in that partnership to work together to get a more streamlined method. But you're right. Not having seen them, it's difficult.
Ms Martel: It's difficult for all of us to make that determination.
One of the changes that I think would probably help you is under the act, certainly, after you go to the OMB, that's the end of it. I don't know: Is that where your application now sits? Is it a judicial review?
Mr Graham: Yes. Under section 43, the public is allowed to appeal. It would take a considerable amount of time to go into specific details of this example, but it's getting to the point of ridiculousness as far as how long it's been stretched out and how long we've had to wait and how much more additional money we've had to put into the wait for this final decision to come through, especially when a decision was made and now it's being appealed. It's a little frustrating and time consuming.
Mr Tilson: Just a brief question. I think we're all amazed at the story you talk about on page 3, about a licensing process that takes eight years. You have suggested that obviously in your view there was an overkill of studies that were required.
For a government to prepare regulations, do you have any recommendations as to what minimum standards should be? Obviously that might take a long time to describe now, but has your group philosophized as to what minimum standards should be to prevent that inequity happening?
Mr Graham: There have been plenty of discussions. Again, I haven't been involved on a personal level with those at this point, but it's my understanding that there are some things that have been laid out on paper. But there's nothing that I've seen to date. Obviously it will depend on where you want to extract materials and --
Mr Tilson: I'm sure Mr Klees, as the parliamentary assistant, will be noting your name and will be communicating in the future for advice on that topic.
Mr Graham: I'd appreciate that. Thank you very much.
Mr Klees: Thank you for your comments today. You indicate in your brief on page 3, and I'll just quote this because I found it interesting, that "this industry-government compliance partnership will help us to be a better operator because company personnel will enhance their working knowledge of the Aggregate Resources Act, licences and site plans." Could you just elaborate on that for me?
Mr Graham: I'm specifically thinking of, on my part, as we're structured, there are three regional managers for the aggregate divisions, western, Toronto and central Ontario, and then eastern Ontario. These responsibilities have been placed in their hands to make sure the self-assessment reports are done properly and accurately and their aggregate operations are run in accordance with legislative requirements. They're taking personal responsibility for this. They have to be up on the act, on their licences and all the conditions that are laid out in their site plans and licences.
Mr Klees: So they'll be more knowledgeable post this exercise than they have been in the past.
Mr Graham: They have to be.
Mr Klees: Obviously there is going to be direct impact on the quality of your industry and the relationships, no doubt, perhaps ultimately, with the communities in which you're working.
Mr Graham: Right, and I'm specifically looking, at least in this comment, at self-assessment, how it applies to that.
The Chair: Thank you, Mr Graham. We appreciate your attending with us today and giving us your input. We now are recessed until 2 o'clock.
The committee recessed from 1215 to 1358.
BERNARD CUMMINS
The Chair: Welcome back to our hearings on Bill 52. Our first presenter this afternoon is Bernard Cummins. Good afternoon, Mr Cummins, welcome. You have 20 minutes. The floor is yours, sir.
Mr Bernard Cummins: Thank you, members of the committee, for hearing me today. My name is Bernard Cummins. I don't represent any interest group whatsoever, other than our own particular interests based on the experience we've had with gravel operators.
My family and I reside in North Dumfries township, just off Highway 401 as you head west. I suspect that you have heard and will hear from a variety of interest groups, including members representing the gravel interests, members from municipal governments, experts of all types with respect to the gravel industry. I hope I can somehow put a human face to this debate, because the anguish this industry has caused us and our community is very great. I really wish to draw on that experience and share with you our concerns, because the present regime that we have is not working. My concern with Bill 52 is that it devolves even more power to the industry. It does not protect the interests of people like me and other residents of communities all across this province.
I must confess that I only learnt about this committee last week and my attendance was only confirmed on Monday, so I come with a sketchy outline of the proposed changes at best. I understand that the government is proposing to streamline the regulation under Bill 52. To me, streamlining the process for approval gives the unscrupulous operators free rein and it is that experience that I wish to draw upon, because we live right next door to an unscrupulous operator. I can tell you, it's not a pleasant experience. I think it's this particular type of operator the public needs to be protected from, and I don't believe Bill 52 in its present form protects us in that regard.
I am sure everyone knows that gravel pits do not exist in uninhabited areas. In North Dumfries township at least they buy up prime agricultural farms that have been in families for generations and they change our communities forever.
One issue that every gravel operator talks about is progressive rehabilitation. Unscrupulous operators couldn't care less about rehabilitation. They're in this industry to make a buck, and I can't blame them, but they have to recognize the interests of the citizens whose rights they infringe.
The operator next to us, or a representative of that operation, appeared at township council about three weeks ago to suggest that he wishes to redevelop that pit into a golf course. The development agreement that he signed with the township stipulates that the pit has to be rehabilitated to prime agricultural land, or for prime agricultural production. Furthermore, there is now a Bell Canada tower of some sort on this particular property. Again, that's not in the development agreement. This pit is supposed to be progressively redeveloped so that it can sustain prime agricultural output.
The residents of North Dumfries township also argued that berms be erected in order that we would be somewhat buffered from the noise and dust that's emitted from these pits. So what happened was that this particular operator plowed the top and subsoils to the perimeter of the pit, even though the development agreement that he signed stipulated that the top and subsoils be stockpiled on the property so that when it is redeveloped into prime agricultural land, the topsoil remains on the top of the land. Now what I suspect will happen when those berms are pushed back on to the property when it is rehabilitated is that the topsoils will be at the bottom and the worst soils will be at the top.
The hours of operation as stipulated in the development agreement for this particular pit are from 7 in the morning until 6 pm at night, and no weekend operation unless it's approved by township council. This operator has been open as early as 5 in the morning and closes as late as 7:30 at night on a regular basis. Last year I approached this operator and I said to him, "Do you not respect the interests of the community, because we were here first?" His response was, "The gravel was here before you." He couldn't care less about our interests. Surely we have some right to enjoy our peace.
I'm not asking that you shut down operators. I'm not asking that they have to work in an environment in which they can't make any money. I recognize that's unreasonable. But surely residents all across Ontario who live in these farm communities, who don't have a powerful voice, have some rights too.
Bill 52 proposes that the public approach the operator with their complaints. Surely what I've just described is evidence as to how an unscrupulous operator couldn't care less about what our concerns are. I've been to township council about enforcing this particular agreement on two different occasions in the past year. I am going to them again in two weeks. We've just had absolutely no luck in bringing this pit into conformance. They signed a development agreement, they said they wanted to be a good corporate citizen and neighbour and they haven't lived up to their responsibility. That leaves our interests totally unprotected.
The township of North Dumfries says it's the ministry's responsibility to enforce these agreements. The ministry says it's the township's responsibility, it's their agreement, and we're the ones who are left having to endure this. It's just incredible.
I understand -- and I suspect I'll be corrected if I'm wrong -- that under Bill 52 there is a provision that would allow an operator to extract gravel on a site before it is licensed. I suggest that this would just be a tremendous nail in the citizens' coffin, because presently, one of the few bargaining leverages we have is the opportunity to try to hammer out an agreement with these operators in order that our rights are protected somewhat. These interests aren't that new or profound. They're things like having hours of operation stipulated in an agreement. They're to protect sources of water and have buffering and trees etc. It's really nothing new, but it allows both sides to get together and gives us some leverage to get some of the things that concern us.
If you change that, if you allow a pit to open before any of these things have been addressed, what right does a citizen have then? How do we protect our interests? I suggest we can't, because we don't have a lot of money. We can't take these people to the OMB in every case. We all have jobs and we can't be taking off tremendous amounts of time to do that, or hire lawyers to protect our interests. We need to strike agreements, in a lot of cases, that reflect our interests and protect community interests. If you strip that away from us, we are left unprotected.
One of my final points is that we moved to the country in about 1976. It had always been a dream of my parents. They've worked for another 20 years to try to build up our property. This particular operator causes us a great deal of stress and consternation. As I said near the outset, we're not asking that you halt all gravel extraction. I'm not asking you to shut the industry down. I'm just asking that when you are in your deliberations, you reflect on the rights of people like myself and other people who don't have a strong voice, who don't have the resources that these operators have but do have interests and do have families and do have farms and do live in communities. I ask that you have a regime that ensures that when development agreements are signed, they can be enforced. Bill 52 in its present form, in my opinion, doesn't do that because the present regime isn't doing that.
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Finally, I'd like to ask, what effect will Bill 52 have on these existing agreements? In our case it's not being enforced. I think there should be a provision that grandfathers these agreements so that we're not left in this total abyss without any agreement and without any ability to enforce it with this particular operator. He's clearly demonstrated, he's even written public letters to council, that he doesn't think he has to abide by this agreement.
If I can part with perhaps a rhetorical question, if we had the Criminal Code in existence without any police officers on the street, would anybody abide by it? Of course they wouldn't. Right now, we have a development agreement with a pit. It's not being enforced and it's not being abided by. If you strip away those powers, if you strip away the ability to strike an agreement with these pits, if you put all the powers in the hands of the gravel industry to police itself, I can assure you, based on our experience with this pit and with other pits in our township, nothing will happen. It's not the good operators we're concerned about, quite obviously; it's the unscrupulous ones. It's the ones who don't care about our community. When they leave the pit, they won't redevelop it or they won't rehabilitate it. They'll be gone, and we're the ones left with the mess.
Issues like noise and dust and hours of operation, site rehabilitation, site maintenance, environmental concerns, enforcement of these development agreements -- none of these things I have raised are new. I know they're issues that you've heard before from different interests, but these are issues that affect us very profoundly in the way that we can enjoy our property and try and derive something from working all day.
The problem is that all these pits are settling, obviously, in agricultural communities and, as I've said, we don't have a strong voice. But this sort of conduct from this type of pit -- and I'm sure there are more of them across Ontario -- wouldn't be tolerated in an urban setting; people would be infuriated. But because we are virtually a lone voice, because we don't have the support of a lot of farmers -- they're being offered three-quarters of a million dollars to sell their farms to a gravel company. They don't share our concerns either. That is why we need the government, that's why we need legislators to protect our interests, because otherwise we don't have a voice.
I conclude, Mr Chair, by suggesting that these issues are real. The stress it has caused our family and our particular community on Oaks Road is real, and the damage it has caused to North Dumfries township and the divisiveness that has occurred are also very real. I ask with the greatest of respect that you, the legislators, rethink this draft bill so that people like myself and my parents and our neighbours, wherever they are in this province, can somehow live at peace on their property and that you strike a proper balance that may acknowledge the interests of the gravel industry but doesn't sell the interests of the community down the river.
Ms Martel: Thank you very much, Mr Cummins, for your presentation, which was obviously a very powerful one and very difficult for you to make. So I probably won't ask a question as much as I will make this comment. When I spoke on second reading about this bill, I raised with the government my concern that as much as anything else what we do in our roles as government is to try and protect the public interest, to make sure the public has a role in what our development is but also that we give the greatest assurance to the public that environmental and other things are being met.
My concern with this bill continues to be that with the significant downsizing of staff at MNR, there will be a very significant effect on the ability of those inspectors who are left -- and we don't know what their numbers are going to be -- to even go after the bad apples.
Sooner or later we are going to have a huge environmental problem that will blacken the eye of the entire industry, so surely it's in the industry's interest to be very clear that what we have in place when this bill is done are not only some rules that people are comfortable with, but we have enough people to enforce what they're being asked to enforce and to make sure we have the ways and means to go after people who don't want to operate within any rule.
I continue to be very concerned, because we haven't been given the numbers yet as to what staff are going to be left, that at the end of the day when this goes through we aren't going to be able to do that, we aren't going to be able to protect the public interest. It's folks like you who are going to end up suffering and, frankly, the industry is going to end up with a bad name, when most of the players in it don't deserve to have that.
Mr Klees: Mr Cummins, thank you for your presentation. I want to assure you that we take to heart your comments. I want to provide you with some level of comfort regarding this legislation and draw your attention to the new section 20 of the legislation that deals exclusively with such items as licence revocations, allowing the minister to suspend permits for an unlimited period of time until the pit comes into compliance with the terms under which they were given to operate.
We share your concern and we heard over the last couple of days from good operators that they themselves share that same concern you have, that there perhaps are operators within the province who aren't operating according to the rules. They have a concern about bringing them into line as well. I want to assure you that this legislation strengthens the government's commitment to inspection. Although there will be perhaps fewer individuals involved in the Ministry of Natural Resources overall, one of the things this legislation will do is to allow the inspectors we do have to spend considerably more time at the business of inspection rather than being involved in many administrative issues as they are now.
Mr Michael Brown: I appreciate your presentation. It highlights one of the difficulties obviously there is in aggregate extraction, and that is, there are neighbours. When you have neighbours, you have to find an efficient and effective way of looking after both the neighbours' and the industry's interests. I am very concerned. I don't think the administrative ability will be there with the far fewer inspectors to guarantee that.
One of the things, however -- it just came to my mind right now -- that happens to be in a rather similar bill, the Crown Forest Sustainability Act, is that there's a requirement for someone holding a licence under that act to have a community liaison committee that works with the operator. Many of the major operators in the forestry industry have been doing this far in advance of the legislation requiring it, just because it enabled both sides to resolve their problems in a meaningful way. Do you think that would be a helpful addition to this act, some kind of requirement for operators to form a committee that's acceptable not only to the company but to MNR and the community? What it does is sort out some difficulties. Sometimes they're just communication difficulties.
The Chair: Mr Brown, are you going to give the gentleman the chance to answer that?
Mr Michael Brown: Yes, sir.
Mr Cummins: I don't believe it will. If I can suggest, perhaps our local township government serves as a crude form of a community liaison and we've had absolutely no success in getting this company to come into conformance. Their latest tack now is to suggest that the development agreement was signed under duress, even though they had the advice of their lawyer, and therefore they don't need to abide by it. You simply cannot talk to these sorts of companies or these sorts of individuals, because they're not interested in being a good corporate citizen.
With respect to Mr Klees's comments, if I can just briefly respond, I don't think that having fewer inspectors will somehow bring this type of companies into conformance, because it isn't now. You have to have some mechanism in place that allows the community to have its voice heard. If you strip away all that and put it in the hands of the industry, you're not going to protect the interests of people like us.
The Chair: Thank you very much, Mr Cummins. We appreciate your input into our deliberations.
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ELEXCO LTD
The Chair: Our next presenter is Jack Norman from Elexco Ltd. Good afternoon, Mr Norman. Welcome to our committee.
Mr Jack Norman: Thank you very much. I am here today representing Elexco and that segment of the oil and gas industry in southwestern Ontario that is affected by the land segment of Bill 52. Land is the method by which exploration companies acquire the rights to explore, drill and produce the oil and gas reserves. Elexco is a land service company that has provided land and rights negotiations, title work, drafting and lease maintenance to the oil and gas industry for the past 20 years. During that time, we have represented major oil companies, large independents, utilities and small oil and gas producers.
The one common thread between the large and small explorers has been the frustration they have had in dealing with the Petroleum Resources Act, the Energy Act and the Ontario Energy Board Act. These acts combined provide the mechanism to allow oil and gas explorers to achieve their goals, but not in a timely and cost-effective manner.
Before I get into specifics, I would like to say that I support the direction Bill 52 is going and the method that will be applied, providing the industry benefits from the shorter time frames we have been assured will exist.
The two land areas I would like to address are pooling and unitization. Historically, when a drilling spacing unit is established, if the interest in that spacing unit is not held by the company intending to drill the well, a licence to drill can be obtained from the Ministry of Natural Resources, petroleum resources section, that would give you the right to drill the well but would not give you the right to produce the well.
If a company chooses to drill the well and the well is successful, it would be required to negotiate and obtain the missing interest from either the holdout land owner or the opposing lessee in another oil company before it could produce. If they fail in these negotiations, their only other choice would be to make an application to the Ontario Energy Board to have the joining of interest to allow the well to be produced. This application can take as long as one or two years to get before the board and would cost from tens of thousands of dollars to hundreds of thousands of dollars, depending on the complexity of the problem and the resistance to the application. Of course, their other alternative was not to drill the well. As you can see, choosing between not developing a project and having a very expensive board hearing are not exactly the two choices which oil and gas companies would like to be left with.
For the past 20 years or so, the industry has supported the idea of an individual or committee similar to those set up in oil and gas jurisdictions such as Alberta and Michigan to handle these disputes in a fair, equitable manner without a large cost to the participants. We feel that if the commissioner is qualified to judge these disputes and deals with them in a timely fashion, this system could work. If, however, it is not handled fairly and quickly, then I do not see where this system will be any better than the one presently in place to handle these pooling problems. Oil and gas exploration is a risky undertaking, and it behooves the legislators and regulators to ensure that intended-use roadblocks do not burden the enterprise from the outset nor create inequitable opportunities for the non-risk-taker.
I would now like to talk about unitization for a couple of minutes, but first I'll explain the difference between pooling and unitization. Both the industry's and the Ministry of Natural Resources' definition of "pooling" is the joining of interests to establish a drilling spacing unit; "unitization" is the joining of interests to establish a production unit. These drilling spacing units can range in size from six and a quarter acres to 50 acres, depending on the depth as defined by the Petroleum Resources Act.
In the case of the production spacing unit, the Ministry of Natural Resources could determine that if a producer is allowed to produce a gas well from a drilling spacing unit, they could drain the adjacent units with no compensation to any other parties holding an interest in those areas. The ministry would therefore require the exploring company to establish a larger unit which would cover the area it believes would be affected by the production of this gas well.
This area affected could range from something slightly larger than the original drilling spacing unit to a number of hundreds of acres, which could bring a large number of participants into the play and again require the exploring company to attempt to negotiate the rights of all of these interests prior to being allowed to put the well in production or recover any of their investment. The area in southwestern Ontario most susceptible to this at the present time is the Lambton county reef trend, where a single well could very often produce all of the gas from a single reservoir, which, again, could be hundreds of acres in size.
As I understand the mechanism under Bill 52, I could see an instance where an explorer could be forced before the commissioner at the pooling stage to have the interests joined to allow for the drilling of the well and then have the Ministry of Natural Resources require them to create a unit and find themselves back before the same commissioner to establish a production unit, and in both cases they could be held up by the same resisting interest holder.
I would like to emphasize that we in the land segment of the oil and gas industry believe that with the implementation of Bill 52 there is a real potential to significantly reduce some of the extreme costs and time delays we have seen in the oil industry over the years. If the government has a desire to assist our industry in the exploration and exploitation of the oil and gas rights, then Bill 52 will certainly be an asset.
In closing, I would like to make a couple of important points. From the oil and gas explorers' standpoint, they only want to be allowed to drill a well where they believe the oil and gas is located and to get the oil and gas, if found, into production as quickly as possible to enable them to recover their investment.
The last point I would like to make is that it's extremely difficult to encourage the investment community from Toronto or Montreal and the oil industry from Alberta or throughout the US to come and invest in the Ontario oil and gas industry when it is perceived to be a province whose acts and regulations do not encourage or aid oil companies in their high-risk investments.
Mr Tilson: Sir, thank you very much. I have two questions for you. One has to do with your comment about the extreme costs, and you gave an example of it costing thousands of dollars with respect to pursuing an application, and finally, the length of time it takes. Critics will say that to lessen those requirements will have an effect on our environment. Do you have an answer to that criticism?
Mr Norman: The delays we've had over the years were never environmental issues. The delays we had with the Ontario Energy Board, for the most part, were simply getting in front of the Ontario Energy Board. They're required to deal with things like rate base hearings for the utility companies, gas storage applications. The huge amount of technical information, for the most part, had to be obtained by the Ontario Energy Board, by people who weren't capable of evaluating it technically. Of course, what they would have to do is pull in the petroleum resources section's technical people to assess it. So most of the time delay was not in an environmental impact type of situation, as it wouldn't be now.
Mr Tilson: The final question I have for you is as a result of one of your other comments. Talking about other jurisdictions, certainly we in the government have been concerned about the difficulties in investing in this province because of the overburdening of regulations and requirements to do business in this province. Can you compare regulations in the business to other provinces or other jurisdictions? It could be in the United States.
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Mr Norman: I'll use Alberta as the example because that of course is our most active Canadian oil and gas province. In Alberta, what they did years ago was set up a board to handle disputes. When I say "disputes," the disputes don't necessarily have to be between a land owner and an oil company. It could simply be a dispute between two oil companies that have different interpretations as to where a reservoir may exist. Technical information is simply sent to that board and the board makes the decision. I guess the upside from where the Alberta standpoint is concerned is that the question is really not whether you're going to be able to go forward and explore or exploit the oil and gas reservoir; it's just who gets what share. They're going to set the rules, they're going to do it quickly and business moves forward.
I've probably used unfair examples. As we all know, Alberta has pretty much got all the oil and gas and the government owns the minerals. But they have a real mandate to make that a large industry, which they have done.
Mr Klees: A very quick follow-up question: As you are aware, the punitive measures to the industry not being in compliance have been significantly increased in this act, from $10,000 to $500,000. Also, the statute of limitations for an offence has been extended from six months to five years. Could you comment on the impact that these measures would have on your industry?
Mr Norman: You are moving a little out of the area that is my expertise, which is the land part, not the production part. I think as an industry, though, we can see the fact that under the old act and old regulations that are here in place they are as unfair; as an example, the proposal that's being made as to the value that should be put into a bonding situation. Bonds are too low today. They don't protect the surface owner. They don't protect the government. Those kind of things need to be changed, but they need to be changed in similar fashion to those existing in other oil and gas jurisdictions: Ohio, Michigan and Alberta.
Mr Michael Brown: I have really appreciated this presentation because, quite frankly, I'm on the steep end of the learning curve, when it comes to this particular issue anyway. I would be interested, and I'm sure the committee would be, in the process that is available in Alberta. Essentially, what you're talking about is commercial interests, how to settle the commercial part of these issues. Is it between land owners or different oil companies on the same reservoir pool of natural gas, or whatever?
We don't know because we haven't seen the regulations about how the Mining and Lands Commissioner will actually deal with these issues, and perhaps you would have some comfort if we knew from the parliamentary assistant that it would be a similar method to what is used in Alberta or Michigan or some other jurisdiction that does this in a more user-friendly system.
Mr Norman: All we're looking for is something that is fair and is handled quickly. I can think of no incidence in a jurisdiction, for example, like Alberta, where you would ever have to wait two years before you would get before a board to hear your argument. We certainly would like to hear that is going to be dealt with quickly.
Mr Michael Brown: I'm just interested for information sake. In Alberta, what would be the kind of time line you might be looking at if there happens to be a dispute? Are we looking at doing it in six months? Maybe it's an unfair question.
Mr Norman: It depends on the complexity of what you're dealing with, but in a lot of instances in Alberta things are handled within days, weeks, let alone months. If it was a major unit that was being disputed, then the technical information simply would stop it from being in a real short period, but you're only talking in terms of a few months. You wouldn't be talking in terms of something that represented six months, a year or longer.
Mr Michael Brown: Would it be fair to say that the industry, in general, would favour this kind of resolution and that there aren't portions of the industry that might say this now gives an unfair advantage to the person doing the exploring versus the company that maybe already holds the rights of the land owner?
Mr Norman: I don't think there would be any disagreement from the industry. The only disagreements could come from land owners realizing that if the board was going to favour exploration and development, then the longer they can keep it from going before a board the longer that obviously isn't going to happen.
Mr Michael Brown: Some land owners may see an expedited process as in some ways eroding their bargaining situation? I'm just thinking out loud here.
Mr Norman: Possibly.
Ms Martel: Thank you, Mr Norman, for your presentation here this afternoon. I want to go back to one of the concerns that you raised around having an explorer appear before the Mining and Lands Commissioner and having a partial resolution that then might have an additional requirement by MNR which would have that person end up right back before the Mining and Lands Commissioner. I'm not an expert in this field whatsoever, and I wonder if you can just repeat that concern for me, but could you also give to the committee some kind of resolution to the problem that might solve some of your concerns and those of the people you represent?
Mr Norman: I'm not sure I'm going to be able to give you the answer -- I didn't create the problem -- but what I was expressing was that a drilling spacing unit is something that is already predetermined under the Petroleum Resources Act. As an example, on an Ordovician well in Essex county the drilling spacing unit is 50 acres in size. If a house lot was missing from that 50 acres, and there was no resolve to it through negotiations, you would simply have to go to the commissioner.
If, for whatever reason, the Ministry of Natural Resources decided that you were going to drain adjacent spacing units by producing that well, they could compel you to create a larger unit. In doing so, you have to assume that if the person wouldn't sign a lease to start with to allow you to drill the well, why would they sign the unitization agreement to allow you to create the unit? The logic is that it would force you back before the commissioner. I guess the only solution that you would have is that if you've dealt with the problem once you don't have to deal with it again. So if you forced your unit, and if that's the only problem that exists, then you shouldn't have to come back before the commissioner.
Ms Martel: So whatever the Mining and Lands Commissioner had agreed to would override any of MNR's further concerns or further requirements.
Mr Norman: Sure, it would tie them through the pooling and through the unit process. I don't know if that's fair; I really hadn't thought of what a solution would be.
Ms Martel: You were responding to Mr Klees around the bonding issue, and I'm not sure that you got to complete that. We've had other people who have raised some concerns around financial surety, bonding etc, and I wonder if you could just continue on that.
Mr Norman: That is a little bit out of my field, but I had heard some numbers, particularly from one of my clients, Pembina, which apparently spoke to you yesterday. They have 1,000 wells in Lake Erie at $15,000 a well. That's a $15-million bond. The equivalence that we're aware of is that there are bonds in Michigan and Ohio that cannot exceed, no matter how many wells you have, beyond $50,000 or $500,000. It seems strange that in a small oil patch like Ontario you would put that kind of an onus on any one company. I'm just saying the chances of anybody ever walking away and leaving somebody with a $15-million burden is pretty remote.
Ms Martel: So your suggestion to the committee is to take a look at other jurisdictions and what their maximum levels are?
Mr Norman: I'm saying take a look at other jurisdictions, yes.
The Chair: Thank you, Mr Norman. We appreciate your input here this afternoon.
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ORION RESOURCES LTD
The Chair: Our next presenter is Robert Trevail from Orion Resources Ltd. Good afternoon. Welcome to our committee.
Mr Robert Trevail: I would like to thank you for the opportunity to address the standing committee on Bill 52. I am a geologist by profession and have worked in Ontario's oil and gas industry for over 20 years, in both the private sector, with Ram Petroleums Ltd and Telesis Oil and Gas, and in the public sector as chief geologist of the petroleum resources lab of MNR. Currently I'm president of Orion Resources Consulting Ltd, based in London, Ontario. Orion provides a range of geotechnical consulting services to companies involved in the Ontario oil patch.
The portions of Bill 52 dealing with revisions to the Petroleum Resources Act represent the first substantial changes to legislation governing oil and gas exploration, development and production in over 25 years.
The current act and regulations promulgated thereunder are seriously out of date and impose an impediment to the exploration and orderly development of Ontario's indigenous oil and gas deposits. MNR petroleum resources staff do not have the necessary tools to regulate the industry in an effective manner in today's economic climate.
Regulations have not kept up with the technical advancements in drilling and production such as horizontal drilling and new types of secondary recovery. To compensate, MNR developed a series of internal policies and procedures to deal with the day-to-day operations related to exploration and production activities. In contrast, other jurisdictions such as Alberta, in conjunction with industry, develop and maintain up-to-date regulations and standards which guide the industry in the orderly development of the province's oil and gas resources.
Recent trends in drilling activity in Ontario also indicate some serious problems exist. A total of 109 wells were drilled in 1994. This total included 56 exploratory, 52 development and one service well. Drilling activity 10 to 15 years ago was at a much higher level, with an average of 200 wells per year.
While the rewards of exploring in Ontario are very attractive, the legislation governing exploration, drilling and production prove to be impediments not only to those companies and individuals currently active but, just as important, to potential investors, whether they reside in Ontario or other provinces or states.
Please note that the Ontario oil and gas companies working today made expenditures of $29 million and $26 million for exploration and development activities respectively in 1993. The revenue from oil and gas exploration and production in 1994 amounted to $90 million. In addition, the provincial government received nearly $3 million in royalty revenue generated by natural gas production from reservoirs in Lake Erie.
The Ontario oil and gas industry has been working with MNR personnel since 1986 to develop a revised Petroleum Resources Act and a set of regulations that would allow the industry to explore for and develop oil and gas in an orderly manner and in an environment of cooperation and partnership with MNR. The lack of commitment towards this issue exhibited by previous governments has been extremely disappointing to the industry. I am pleased to see that the current government is finally proceeding with these revisions.
As you may or may not know, MNR's petroleum resources laboratory in London, the only facility of its type in the province and recognized as one of the finest in North America, specializes in the collection, generation and dissemination of information and knowledge about the subsurface geology and oil, gas, salt and brine resources of Ontario. The well information, which includes files, drill cuttings, core and geophysical logs, provides the basis for all oil and gas exploration in the province. Although the basic information is static in nature, the interpretations made from the data are dynamic, continually changing as new geological theories emerge and new petroleum engineering techniques are developed. Without this asset, new exploration activities in the province would grind to a halt.
It is my firm belief that the provincial government should continue to fund and administer this important facility. However, in light of MNR program funding reductions, it is apparent that this will not occur. It is also unlikely that a government-administered user-pay system would work, given that in most cases revenue generated through provision of services flows into the consolidated revenue fund rather than being retained by the program providing the service.
In response, the government proposes in section 67 of Bill 52 to provide the minister with the authority to establish the oil, gas and salt resources trust, which will fund the operation and maintenance of laboratory facilities as well as fund information management relating to oil, gas and salt resources.
The funding mechanism for this trust is as yet undetermined. However, a number of suggestions have been put forward by both government and industry. These include a levy on oil and gas production; a levy on natural gas storage volumes; a levy on salt cavern storage volumes; a sample and core processing fee for each well drilled; a membership fee for the use of laboratory facilities, which should be paid by consultants such as myself; and user fees for casual users.
I expect there will be an initial reluctance on the part of some people involved in the Ontario oil and gas industry to participate in the trust fund just because access to the petroleum resources lab and the information contained therein has been free for many years. The concept of a trust fund as a funding mechanism for laboratory facilities and information management is a viable one and should work if both industry and government cooperate fully in its administration.
As previously mentioned, one of the major impediments to new investment in Ontario's oil and gas sector is the lack of a coherent set of rules governing drilling and production operations in the province. Once again I point to Alberta, which has in place standards covering most drilling and production operations such as gas well testing; surface casing minimum requirements and exemptions; casing cementing minimum requirements; well site selection and the surface owner; drilling rig inspection manual; drilling and completions operations guide, and many more.
Section 68 of Bill 52 provides for the development of standards governing oil and gas-related operations in Ontario. At the present time industry, through the Ontario Petroleum Institute, is working with government to develop these standards. This initiative, which began years before the introduction of Bill 52, resulted in the publication earlier this year of the Drilling Guidelines for Cable Tool Drilling Operations and Rotary Drilling Operations, which I believe you saw copies of this morning. I anticipate that with slight modifications these guidelines will be adopted as standards under the new Oil, Gas and Salt Resources Act. Other standards currently being considered include bonding; construction and operation of pipelines and batteries; pooling and unitization; well licence application requirements and procedures; and information and reporting requirements.
Development of these standards will alleviate much of the uncertainty many new investors, both inside and outside the province, have with regard to investing time and money in exploration and development programs in Ontario.
To close, I believe the amendments contained in Bill 52 pertaining to the current Petroleum Resources Act will have a long-term, positive effect on the oil and gas industry in Ontario.
Mr Michael Brown: I really appreciate the presentation. Being a member from a northern constituency, the issues that you described are very similar to the issues that get described around core libraries and the geological work that is done by the Ministry of Northern Development and Mines. I'm interested in the user-pay concept in funding this valuable resource to the people of Ontario.
It seems to me that you always have to be careful, when you move into assessing particular fees to particular groups, that they don't then start to believe it's theirs and they own it, if you know what I mean. If you're the major contributor you want to set the direction in your particular interest.
I wonder how, in your view, the university geology departments or whatever might fit into the scheme of things in expanding the knowledge of all people using this particular resource we presently have. I'm sure they do that now.
Mr Trevail: I think it would be the way in which you set up the actual trust agreement other than determining and defining what users will be allowed to do or how they will go about doing it. With regard to universities, since they are doing some of the basic research that is required to explore and develop oil and gas resources, I would see them being allowed in at no charge for access to the facilities. There would still be costs related to photocopying and those types of things that they would have to bear. As for use of the facilities, I would see there would be no charge.
Mr Michael Brown: When we talk about fees we obviously start to talk about competitiveness, and there's no one in this province who wants to make us uncompetitive. We've been talking about comparing standards to other jurisdictions, whether they be American or Saskatchewan or Alberta jurisdictions, the major gas and oil producers at least on land in this country. Are our royalty rates and fees presently uncompetitive or competitive? I just don't know. Would you be paying more royalty in Alberta or less?
Mr Trevail: You pay more royalty in Alberta than you do in Ontario. But again, royalties in Ontario are paid to the land owners, in which case most of the land is freehold, whereas in Alberta the reverse is true. The province holds the majority of --
Mr Michael Brown: The province gains most of the revenue, rather than here.
Mr Trevail: That's right.
Mr Michael Brown: But even in that case the typical royalty likely would be more in Alberta than it is here?
Mr Trevail: Yes.
Mr Michael Brown: I'm just trying to wrap my head around this. Okay, that's fine.
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Ms Martel: Thank you, Mr Trevail, for your participation here this afternoon. When you were talking about the trust, you mentioned to committee members that several suggestions have been put forward to date with respect to how to create and how to maintain the trust.
Mr Trevail: That's correct.
Ms Martel: If I heard you correctly you mentioned a levy on oil and gas production, a levy on natural gas storage, membership fees, user fees and two or three other ones, I think. Where are those suggestions coming from?
Mr Trevail: Those are just meetings that have taken place between government and the Ontario Petroleum Institute discussing the concept of a trust and putting forward suggestions that we have to explore if the trust is going to be put in place and how we're going to fund it. Both industry and government personnel have been making these suggestions.
Ms Martel: Is that just recently? Obviously, because the trust is a relatively new idea.
Mr Trevail: That's correct. Since the introduction of the bill there's been discussion on how we would fund it if it actually does come into place.
Ms Martel: You also mentioned that drilling guidelines -- there was more to that than just drilling guidelines -- have been in place and those standards are actually public now, but you also said work was going on in bonding, pooling and unitization, well licence application, and I think two more sets of standards were being developed right now that I missed when I was writing that down. Is that correct?
Mr Trevail: That's correct. As we mentioned with the drilling guidelines, this is something we've been working on together over the years to try and establish if not guidelines as regulations, at least guidelines that both parties would agree to follow.
Ms Martel: They could be the new standards.
Mr Trevail: It could be at a certain point in time. That's correct.
Ms Martel: You'll understand when I express my frustration that again we have really concrete evidence of a lot of work going on here, Mr Parliamentary Assistant, around some issues the rest of the committee has not had access to. Mr Trevail has mentioned the work that's going on around the recommendations for the trust and in at least six other areas where there are some concrete examples.
If there's some work going on, I don't know why it can't be made available to the members of this committee. I don't see what the problem is here. I really am frustrated that at the same time that we're trying to deal with the bill in a legitimate way, public presenters come before us and tell us of work that is going on and we have no access to it. I encourage you again to ask the minister to release to the members of this committee the information that can be released so we're in a better position to deal with some of these issues.
Mr Tilson: I have two short questions before Mr Klees asks you questions. First, we had a delegation this morning that was talking about the trust fund and contributions that would go to the trust fund eventually. This individual -- I honestly can't remember which delegation it was -- said that services will be provided by the trust fund and not all people in the industry will necessarily use those specific services. They were concerned that it might be an undue cost to do business if everybody was treated the same. Do you have any comments on that?
Mr Trevail: Treated the same in what way?
Mr Tilson: If everyone is treated the same and charged the same user fee or makes the same contribution to the trust fund.
Mr Trevail: As far as a levy on oil and gas production would go, if that's what we're speaking about, your level of production would determine what your levy would be. If you're a small producer you'd have a small levy; if you're a larger producer you'd have a larger levy. As far as a consultant like myself goes, it would be no different than any fees you have to pay in Alberta and would probably be less.
Mr Tilson: So it depends on the business that you do. If you have a certain amount of business you pay --
Mr Trevail: That's right.
Mr Tilson: The second question I have is a result of what seems to be a flow of similar types of questions to all delegations. For those of you who do business in other provinces and other jurisdictions, is it possible to compare how easy it is to do business in Ontario, in the oil and gas business at least, compared to other jurisdictions specifically in Canada -- currently, before Bill 52?
Mr Trevail: I think the ease of doing business more reflects, say, for drilling and production, the guidelines that are in place. If they're concrete, you know what you have to do and can't do, this sort of thing, then that will reflect on how you're going to go about doing business. With Ontario there are some gaps in guidelines, that sort of thing.
Mr Tilson: Where I was getting to was specifically the length of time it takes to deal with government requirements. Some delegations have been saying that it's greater in the province of Ontario than it is in other provinces.
Mr Trevail: On some issues it is, that's correct. As Mr Norman was speaking about, with the pooling and unitization factors there is a long time period. If you're looking at getting a drilling permit, if you go in with everything lined up, with the correct application filled out and the surveys and everything, then you can usually get the permit in a timely fashion.
Mr Klees: Mr Trevail, would you consider the discussions you've been having with the ministry regarding the development of standards, productive discussions?
Mr Trevail: Productive for which party? As far as Bill 52 goes?
Mr Klees: That wasn't a partisan question.
Mr Trevail: No. Which party, the government or the industry?
Mr Klees: I think we're working collectively on this. Was it productive for the purpose --
Mr Trevail: I think to this point in time discussions have been in a more general direction as to how we would like to see things go. Any of the work that has been going on that I'm aware of is more industry putting together its thoughts on what it would like to see developed as standards.
Mr Klees: Mr Chair, I wonder if I might respond to Ms Martel's question.
The Chair: Okay. I just want to say thank you very much to Mr Trevail. We appreciate your input here this afternoon, sir.
Mr Klees: Ms Martel, for the benefit, no doubt, of the people who have come in late, asked me to explain why the issue of standards was not discussed with her or other members of the Legislature. I want to just reconfirm that those discussions are taking place now with the industry. It is considered work in progress. I don't think it would have been productive for members of the Legislature to be part of those technical discussions. But as soon as the draft regulations are available they will be circulated. We look forward to Ms Martel's comments on those technical standards. I appreciate the opportunity once again to clarify that position for this committee.
Mr Michael Brown: Mr Chair, just to clarify Mr Klees's comments, I presume what he's just told this committee is that the bill will not go to third reading before the committee has had the opportunity to examine those technical regulations.
Mr Klees: Can I clarify Mr Brown's position on that, Mr Chair? Mr Brown did not understand that correctly.
1500
HELEN PURDY
The Chair: On that note, we will welcome Miss Helen Purdy. We appreciate your being here this afternoon.
Miss Helen Purdy: First of all, I'd just like to speak to the issue of what I feel is the prematurity of these public hearings on Bill 52. I obtained a copy of the bill in August from my member of Parliament. I called Toronto, the communications branch, after I read the bill because something was missing, and that was the regulations. I found out they hadn't been written yet and I hear today they haven't been written yet as well.
It is impossible for the public to adequately review a proposed bill when various matters related to applications and industry standards currently dealt with in the Aggregate Resources Act are to be moved into the regulations. The act and regulations must be read together.
Notification to the public -- a one-night publication and seven working days to submit your name for oral presentations -- has not been sufficient. I received a call two days ago to come here this afternoon and here I am, but not without considerable stress in my life and not as fully prepared as I wanted to be. I have a lot of things jotted down, but I have a lot of materials because I've been working on the Aggregate Resources Act for five years.
I'm a past resident of the township of Puslinch, having lived there over 20 years. I was raised on a farm in that area. I hate to see the farm land being dug up and turned into pits. I presently work in the township and also participate in three community organizations as a volunteer. In recent years, Puslinch township is perhaps best known for the infamous OMB hearing which began in 1989 and lasted 16 months. Six different aggregate operators, supported by the Aggregate Producers' Association of Ontario, the Ministry of Natural Resources and the Ministry of Transportation, defeated the township and the residents who participated. Unfortunately, I didn't participate at that time.
There has been a study put out by the University of Waterloo, entitled the Environmental Assessment and Planning Project, Case Report Number 3, The Puslinch Case. It was published in 1995; interesting reading. The township loss has since influenced other municipal governments to approve official plan amendments and licence applications for extraction. The MNR and the gravel industry are said to be too powerful to fight and municipal councils do not want to go to OMB hearings only to lose as Puslinch township did in 1989-90. Puslinch township has never gone back to an OMB hearing for a gravel extraction proposal since 1990.
I have pursued specific matters related to the licensing and operation of gravel pits through the past five years. Prior to that time, I had no interest in the extractive industry. However, when a gravel operator came knocking on my brother's door in April 1991 and asked him to come out to the road and look at his sketches for the widening and reconstruction of the county road in front of his home and property, I became actively involved. I believe in finding out the facts first before responding.
I am speaking to you today in the interest of my family and the public. I have a great deal of sympathy with the first speaker today. I realize what he was speaking about, and I've never met the man before. I do not believe that the politicians and the ministry bureaucrats who drafted this legislation have considered the public interest beyond economics. The bill is permeated with references to the establishment and provisions of the aggregate resources trust; section 6.1, as an example. The government coffers will be overflowing with permit fees, royalties, sales tax revenues. In the Kitchener-Waterloo Record this week, a pit applicant is quoted as saying the gravel on his property is worth $30 million. It sounds like the provincial government and the local municipality stand to gain substantially from the licensing of this pit.
It's quite interesting what's been happening in recent months at the township of Puslinch, because we have an agreement of understanding. I note that in this one:
"In lieu of the reconstruction of McLean Road, the company agrees to supply crush and apply 90,000 tonnes of aggregate material -- approximately 75,000 tonnes grade A and 15,000 tonnes grade B. This aggregate material will be removed from the above property and applied to township roads in Puslinch within three years of the issuance of the class A pit licence for the subject property. The company agrees to reimburse the township for any amounts owing with regard to the rehabilitation deposit filed with the Ministry of Natural Resources with respect to the wayside pit permit."
I won't go on. A proposal is before the township council right now. This was a special council meeting and I read from the minutes:
"A development agreement to include issues such as hours of operation, contribution to the township's road program etc. The proponents ask what was meant by contribution to the road program. Council members advised that this would require, for example, the provision of aggregate for township roads."
I believe I am sufficiently knowledgeable to speak on several issues regarding the licensing and operation of gravel pits. I can speak on air quality. I can speak on public participation and consultation. I'm quite knowledgeable about noise and I'm learning a lot about water resources. I've chosen to discuss transportation today and related health and safety matters because I feel very strongly that the lives of children and the public have been endangered in the township of Puslinch due to the aggregate spread in the past five years.
From my inquiries and research to date, I have come to the conclusion that the transportation of gravel is given low priority in the licensing process and in the actual operation of a pit. In my reading of Bill 52, I see no evidence that would indicate the transportation matters have been addressed. This is a travesty. This week's news coverage of one negligent trucking company, Toronto's largest mover of gravel, with 150 employees and 500 safety citations in the past five years ranging from collisions to speeding and operating overweight, is bringing the transportation of gravel to the forefront. There we have it, right on the front page. I believe that along with Mr Palladini we should have the Minister of Natural Resources out on the inspection lines as well because there are just as many gravel trucks being pulled over.
The Minister of Natural Resources recently refused a request for an OMB hearing into a pit expansion. He ignored serious and specific concerns, such as traffic safety, brought to his attention and determined that to alleviate impacts caused by vehicular traffic entering and exiting the pit a tonnage condition had been imposed on the new licence, reflecting a decrease of approximately 60,000 tonnes or approximately 17% less than what was allowed under the original licence.
I don't for one minute believe that a reduction in the yearly tonnage removed from the site will lessen the danger that the location design and use of the haul road and pit entrance/exit represents to my family or the public. You see, the pit haul road and entrance/exit were established in a school bus loading zone in 1991. Two school buses stop at the pit entrance/exit twice daily. They did so this morning. My 15-year-old nephew boards and departs the high school bus, and my 10-year-old niece boards and departs her school bus. Other children are passengers on these buses. This situation is absolutely horrendous and completely unacceptable. My family was forced to transport the children to school for two and a half years when the pit first opened, due to heavy traffic at that location. The house is within 150 feet of the gravel entrance. This should not have happened. It would not have happened if there had been proper planning.
I have a copy of the transportation report that was prepared for the OMB hearing -- eight pages -- and I also have some other traffic reports. This was prepared for another pit at the same hearing. This is a transportation report prepared for the landfill site in Wellington county. This is a transportation report prepared for a pit in Paris. All of these have reference to traffic safety. They have a traffic safety component, which includes school busing. This one has nothing other than the amount of traffic on the road and consideration for the wear and tear of the road.
The convergence of a pit haul road and a county road is nothing more than a busy and congested intersection with a high percentage of truck movements each hour and particularly during the hours when school buses are travelling the county road. You must remember that one truck represents two movements -- in and out -- at a gravel truck entrance. In July 1992, I decided to count trucks associated with the pit to get some idea of the number of truck movements. In a five-hour period, from 10:30 am to 3 pm, there were 45 truck movements per hour. This represents one truck movement every 1.8 minutes over the five-hour period. I don't believe the Minister of Natural Resources is at all concerned about minutes and hours and number of trucks daily. He's interested in the tonnage figures. As for the operator's consultant, a landscape architect who is not qualified to speak on traffic issues, had only this to say when the concerns were raised about the day's events.
1510
The second concern is with the stacking of vehicles at 11:45 around the entrance. There was a terrible noise that morning. In fact, it shocked me and I grabbed my camera and I'm glad I did. You can see the results. It seems reasonable that on one of the heaviest shipping days some congestion might occur at the entrance and we are frankly impressed that there was only one notable event during such type scrutiny. The near collision of three gravel trucks at the pit entrance/exit should be taken seriously. The implication here is that the operator would ordinarily expect several such events to occur in a five-hour period. I put to this hearing that gravel operators, their consultants, the ministry and the Minister of Natural Resources and truck drivers have to show more respect and responsibility for the safety of the public and human life in regard to the transportation of gravel.
There has been a school bus accident with a gravel truck in Puslinch. It seems it wasn't treated as a priority. This is taken from the minutes of a meeting held in 1986: The reeve informed council that on February 3, 1986, at approximately 8 o'clock, a truck driver for a local company was driving a gravel truck east on Concession 5 and did not stop at the stop sign at the intersection of Concession 5 and County Road 35. At the same time, a school bus was travelling north on County Road 35 and making a left turn to go west on Concession 5. Because the driver did not stop at the stop sign, the school bus was required to quickly brake, resulting in four children being thrown from their seats. The truck hit the bus and scraped paint off the bus. It was quite fortunate that no injuries were suffered as a result of this incident. Council instructed the clerk to send a letter to the owner of the gravel pit outlining the above incident and requesting him to take appropriate disciplinary action with the driver which would discourage any similar recurrence.
I can attest to the fact that we have some very careless drivers in Puslinch township and it's particularly at this entrance/exit that should not be there.
I have some scribbling here. First of all, when I went to look at the bill I found it very difficult to read, so I cut it apart and did some paste-ups. What I did was take out the deletions, put them on this side, put in the new parts that were added. I have gone through and I have specifically written different questions throughout.
One of the areas I'm particularly concerned about is section 11, number 5. It says, "During the prescribed consultation procedures, the applicant shall attempt to resolve the objections." That would be the objections of a complainant. When you object, no one listens. That's what I've found out. First of all, when the gravel company comes knocking at your door, you have no idea -- you don't have any background in gravel. You don't know what you're to do. My brother went out and put No Trespassing signs up that night because they were going to come the next day and start construction on the exit. We felt we could keep people off his property because they planned to build a four-lane bulge in the road. That would mean, for 600 feet, there would be four lanes: one, a left-hand turning lane; a passing lane. The problem with the passing lane is that all traffic coming along that county road at 80 kilometres-plus would be directed right to where the children stood waiting for their school bus. That is dangerous.
My father, who at the time had just retired from the Ministry of Transportation and Communications, was down there on the side of the road. He told them that they could not change a road that way. There was some argument. They decided not to build the four lanes mainly because, we found out, they had not passed a bylaw to widen the county road, and that way we would have known what was going to happen ahead of time.
Something else we found out in researching this is that no permit for a commercial entrance exists for that pit, and that is required under the Public Transportation and Highway Improvement Act. So as far as I'm concerned and my family is concerned, that's an illegal entrance and an accident is waiting to happen.
I guess I'm just about out of time, but I could go on for quite some time here.
Hoping that some changes would be made, I followed the Sewell commission and I did attend a day's meeting, sat in on it. Didn't make an oral presentation but did make a written presentation. Something that was acknowledged in the first draft report: "The commission heard a number of submissions concerning aggregates. Most of them included complaints about present policy and practice." Now, I understand that the ministry often treats complaints from the public as being of a NIMBY nature. In our case I don't believe it's "not in my backyard;" it's in our front yard.
"Three major concerns require mention here." This is going on but I think it's important. "First, policies for aggregate resources conflict with other policies such as the protection of wetlands, agricultural land or significant natural features and there seems no ready agreement on how these conflicts might be resolved. Second, there are many complaints about the management of extraction. Municipalities complain that levies collected are very small. Residents complain about trucks, noise and dust." In our case, we have two asthmatics in our family. I have attended the Lung Association seminars on asthma and I've also looked into the air pollution that's caused by diesel motors.
"Third, there are significant problems with wayside pits. These questions on aggregates lie beyond the commission's mandate with the exception of some of the policy questions that the commission has addressed as noted. But the anger in the community is palpable and the commission recommends that the Ministry of Natural Resources form a task force which includes municipal and citizen representation to review these concerns and report before December 1, 1994." Now, this did not happen. When the --
The Chair: You're down to your last 10 seconds, so we're going to have to stop.
Miss Purdy: So when we had the new planning report, it was dropped. I'll have to stop there. I could go on but there are a lot of issues here.
The Chair: Thank you very much for coming forward. We appreciate your input.
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TOWN OF CALEDON
The Chair: Our next presenter is Mayor Carol Seglins from the town of Caledon. Good afternoon. Welcome to our committee. The floor is yours.
Ms Carol Seglins: Thank you very much. I appreciate having this opportunity. I will express my concern that I don't have a written handout at this point but I will certainly supply it later. I was only slotted into the one time frame that became available when someone else couldn't show up.
I am presenting on behalf of the municipality, but I do not have the planning background so my presentation to you may be a little less detailed than some of the others you've heard to date. I want to say that I have been a member of the committee, the Aggregate Resource Working Group, which was the provincial initiative to look at long-term strategy, and I certainly have given a commitment to trying to find less confrontational ways of aggregate extraction, because the past 30 years in Caledon have been -- it's very expensive both for the municipality and the producers. We'll certainly do our best to have something that is more reasonable for everyone.
I want to say that Caledon has supplied aggregate for many years and I guess there have been other suppliers that have already spoken with you about the extent. I think much of the aggregate for Queen's Park actually came out of Caledon, so we've been a producer for a long time and we feel there has to be a change in the way aggregates are extracted, the cost to the community. We've appreciated being part of the provincial initiative that has looked at it.
The province in its public planning statements has really said that it's looking for an ecosystem approach and recognition of the aggregate needs as well as the natural environment needs and community needs. So I think that the ecosystem approach is the way that we'd like to see planning in the future, and that's why we've participated in this overall process.
We agree that there are some conclusions in Bill 52 that are good ones, and we'd like to commend the committee for some of those that seem to result from some of the work that we've done on the Aggregate Resource Working Group, which has been meeting as a working group of stakeholders since June 1995.
However, we do have some concerns, and one of the concerns is the very little opportunity for public input and little review from stakeholders. As a working group that has been working on this since June 1992, we were stunned to find that the bill was presented to us as a fait accompli on our desks at a meeting, with no opportunity for any input. So not only have we not had public input, but not from stakeholders either.
I agree with the government position that we need to cut red tape, reduce costs and improve the availability of supply, but I'm not sure that the regulations or the legislation in Bill 52 will actually accomplish that. So I would like to offer some constructive points for consideration and possible inclusion in the bill.
The first issue, that the OMB decision is final: We agree with that. We agree that in fact it is the OMB which will have heard all of the concerns raised, therefore we agree with the fact that the OMB decision will be the final say. However, the minister has been given the opportunity to set conditions. We feel this is not appropriate, because the minister will not have been there throughout the process. If in fact the ministry is going to be there and be a friend to the board and explain what the ministry can or cannot do, that's one thing, but not to come in after all of the concerns have been heard and then take away that decision and disregard conditions that have been agreed to by all parties during the hearing.
The third one relates to the aggregate resource trust. There are benefits to this. The administration of the abandoned pits and quarries trust right now is just accumulating. We find in our community that there are places where there could be implementation; there is not now, so perhaps this trust could be implemented in that place. They could also hold pooled funds for doing rehabilitation where aggregate pits and licences have been revoked. They're also suggesting that there will be funds there for research, and we certainly support that.
However, some of our concerns with that trust are the accountability of the trust, the determination of the fees and how much research and who's going to determine those things. We keep hearing that this is just the legislation, the regulations and standards are to come. But without that knowledge, it's very hard to know whether in fact there will be an accountability trace.
The lack of details on the roles and responsibilities, the composition, how it will remain publicly accountable: Is it going to be through the present MNR provincial representatives? If they are private trustees or members of the APAO, how do we balance the social responsibility that the province has with the bottom-line approach that the APAO uses? I think there's more information needed on that, and I think it should be shown in the bill.
The fourth issue is information requirements. There's insufficient information here to know whether we really will have the information that's required up front. It my feeling that in fact we should at least have a minimum standard in the legislation.
The fifth point is distribution of the licence fees. These rates were set in 1980. I know that we've had a great deal of discussion in our working group about whether they're appropriate, whether they recognize the cost to the industry, to the municipality. I would encourage the opportunity to have further discussion with stakeholders about the licensing fees and whether they are appropriate.
The sixth issue is industry self-monitoring. Both the annual inspections and the annual compliance reports will be helpful tools. We agree that both of those are a good step forward. However, we feel that as it's in the legislation, we speak of the annual inspection report only being available upon request and for an appropriate fee. We feel they should be available to the host community automatically. We must know in municipalities what is going on on major land uses within our community. In our community we have 64,000 acres that the air mapping has shown to be aggregate supply of one dimension or another. Surely a municipality can be told about what is going on in the ongoing operations.
Public confidence will be eroded if the ministry is not the front-line partner, and we do need a mechanism that will assure the public of compliance. There's no access for the public on private lands that belong to the industry, and also the legislation doesn't indicate any deadlines for corrective action. So we need a mechanism to resolve those specific concerns.
We feel that as it is at present, it would be a very confrontational situation and costly, with lawsuits. Is it the municipality or private citizens? Do they have to, then, sue the private operators? That again defeats the things that the province is suggesting: that they are trying to streamline the process, cut the red tape, reduce costs and give consistency. We don't feel that particular issue has been resolved.
The compliance relationship is a good initiative. The establishment of a compliance relationship is a very interesting approach. We just feel there's not enough public access to the information, so if we can work out ways that could be more publicly available. The credibility of the self-monitoring depends on the honesty, integrity and full commitment of the APAO. There must be very serious consequences for non-compliance; we don't see these in the legislation. There should be at least minimums set there.
The suspension of the six-month limitation is a good one. Suspension should remain in place until the concern has been dealt with.
Number nine is wayside pits. This responsibility has been delegated to the MTO. One of our points on this is perhaps it's a missed opportunity for the use of wayside pits and the reduction in all of the process that regular licensing takes to do several things; one of them is the extraction of specialty products. There may be areas where there can be reduced process in those: if it's a very small operation and you get in and out within a year. By delegating it to the MTO, we miss that opportunity and also the opportunity for some urban rescue in areas that are adjacent to areas that you will see developing with either industry or housing. Those areas might again have a special process and not have to have the usual licensing process. So I think that could be a missed opportunity that possibly the province could look at.
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Number 10 was licensing, no expiry date. We've always heard at all of our discussions that extraction is an interim use. If there's no expiry date on the licence, how do you call that an interim use? We need a mechanism for review so that overall planning in communities can be done. We need policies which give certainty to both the producers and the other land users in the area. MMAH insists on 30-year OPs for all other planning issues, so why is this being treated any differently, for a licence to not have any expiry date whatsoever?
The 11th issue is no development permit for changes. This is just totally unacceptable. Standards change, and we need to be able to recognize different needs that have transpired and changes in policy as time goes on. We need those planning tools.
There are some outstanding issues that aren't addressed in the bill. I will just mention them quickly. I think they can be included in Bill 52, and we would look forward to having some opportunity for that. One of them is groundwater. The issue of water taking and discharge permits could be dealt with in this bill. The movement of fill and peat: We would encourage the province to include enabling legislation to recognize both the use and movement of fill and the extraction of peat.
Another one is the day-to-day operations. If there are only going to be a very few MNR inspectors, who's going to respond to the daily concerns and issues? Are the people in the community supposed to phone up the operator and ask about this, phone up the municipality? The municipality doesn't have any opportunity or any right to interfere in that day-to-day operation. We need a mechanism there.
The role of the MNR is very unclear in this bill. I think they've stepped back from the process. I understand and see that they're developing policy here, but they're not taking responsibility for how it works. So there is an accountability problem. We'd like to know how we can work together to actually address that.
My conclusion: Who is responsible for the social values, the overall best interests of the people of the province? Can we ensure that our environment can be sustained if the corporate bottom line is the measure of decision-making? I think there is an overall responsibility of the province. You've taken the initiative to cut cost and red tape. This may happen for the ministry, all right, but it's certainly not going to happen for the industry and the municipalities that are involved in aggregate extraction. There appears to be a reduction in public accountability to ensure that there is licence compliance and upfront information to rely on. Also, it does not recognize the true costs to municipalities. We would like to see that dealt with.
The province is focusing on strategic planning. Stakeholder groups would like to be included in the policy and program development and standards, which must recognize ecological sustainability. It requires analysis and perspective from all the facets. You can do that with a round table of stakeholders; you can't do that when you only consult with the APAO and the producers. You have a working group in place already. We'd urge you to use that group and at least give us an opportunity to bring those perspectives: mineral economics, planning, environmental science, hydrogeology, community interests, knowledge of industry operations and enforcement.
The costs of extraction will increase for producers as responsibilities are transferred to the proponents. This will protect the larger existing companies and force smaller and new companies out of the market. This, in the end, will increase the costs for everyone.
Those are my comments that I have assembled to this point. I'd like an opportunity to be able to submit them in a little bit more articulate form. I will certainly supply that if given that opportunity, and I am interested in answering any of your questions.
The Chair: Your written brief is certainly very welcome. We're down to just about a minute per caucus, beginning with Ms Martel.
Ms Martel: I don't think I'll ask a question; I'll make some comments. We've been trying to hammer home to the parliamentary assistant why we've been so disturbed by this process in terms of who's been notified, who's been involved, but more important, that we're dealing with an act that just doesn't have all the information, so we're not in a good position as members to make any kinds of decisions. It's nice to know I'm not the only one making that case and that there are people who have very legitimate concerns, who are in the know, who are also terribly concerned about the process that's before us.
Another point I should make, you talked about notification and as a municipality how important it was to you. There are two other sections in the act that I have come up with where notification is not going to exist either. In terms of a transfer of licence, for example, the minister now, under the new act, notifies the municipality after the transfer has taken place.
Second, in terms of site plan amendments, before, in the old act, it looks like it was mandatory for a municipality to be advised that there would a site plan amendment. Now the minister can advise that municipality at his or her discretion.
Ms Seglins: Actually, I would say they were only allowed to be notified, not to actually give input to the changes that were going to happen, even in the old legislation. So that does have to be addressed.
Mr Tilson: I can just say very briefly, your worship, thank you for coming. I would also like to thank the members of the committee for allowing the mayor to appear on such short notice and her for preparing her comments on such short notice. As you know, Caledon, like the township of Puslinch, is well known, unfortunately, for dumps and aggregates. Particularly in the last couple of years, we've had dumps, and now we've got aggregates that are creeping up as an issue.
I can only say that anyone who lives in Caledon or has been in politics in Caledon, unfortunately becomes an expert on the issue of aggregates, as you can see by the presentation of the mayor today. I can only thank you for your excellent presentation. I think the members of the committee would appreciate a written copy, although Hansard will record what you have said. Certainly the parliamentary assistant, Mr Klees, is here today, and I know he has made copious notes on what you have said and will be taking all of your comments back to the minister.
Mr Sergio: Mayor Seglins, thank you very much for your comments as well. There's no time for questioning, just to let you know that you are not the first one to express concern with a number of things within the proposed bill. We don't have any regulations either; we don't have any guidelines either. There is nothing in this particular proposed bill that would guide you out there, the industry and the people, including ourselves. So we are in a quandary, really, about what the government is going to propose later on. I would hope that you again and all the people will have an opportunity to review and have some further input when the legislation will be proposed.
I think you should know that we have some people who, while they have expressed concern, would like to have control of the industry. They would like to have their own self-regulation. But at the same time, Mr Trevail said that they don't have the people who could supervise and regulate their own industry. If they don't have that but they would like to have a deregulated industry, how are we going to protect both the environment and the industry?
The Chair: Thank you, Mayor Seglins. We do appreciate your attendance here today.
Ms Seglins: Could I just add that the minister did assure us that we would have the opportunity as stakeholders to participate in that review. We'd like that extended even to the development of those regulations and standards, if possible.
SKELTON BRUMWELL AND ASSOCIATES INC
The Chair: Our next presenter is Anne Guiot, representing Skelton Brumwell and Associates Inc. Good afternoon. Welcome to our committee. The floor is yours.
Ms Anne Guiot: Thank you very much. Good afternoon. My name is Anne Guiot, and I am an aggregate resource planner with Skelton Brumwell and Associates, a consulting engineering planning firm located in Barrie, Ontario. The following comments and perspective are those of both myself and the firm. As with any professional assignment, I have reviewed Bill 52 considering the intent of all the stakeholders, the stakeholders being the public, the natural environment and the aggregate industry.
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I have worked in the field of aggregate resource management for the past 12 years, the first five with the Ministry of Natural Resources in the aggregate resources section and the past seven years in private consulting with Skelton Brumwell and Associates. My various roles with the Ministry of Natural Resources include pit and quarry inspector, mineral resources administrator and Aggregate Resources Act implementation coordinator. The last work involved summarizing the standing committee's review of Bill 170, now the ARA, and assisting in the preparation of policies, information packages and publications pertaining to the Aggregate Resources Act.
More recently in the consulting field, my job has involved project coordination for licence applications, Planning Act applications, government and public liaison, presentations at public meetings and the OMB, and general services to both aggregate producers proposing development and ratepayers opposing aggregate applications.
I am currently a provisional member of the Canadian Institute of Planners and the Ontario Professional Planning Institute. I am also on the board of directors of the Ontario chapter of the Canadian Land Reclamation Association and a committee member on the Aggregate Producers' Association of Ontario's community relations and rehabilitation committee and the MNR's streamlining committee.
I appreciate the opportunity to speak to you today and hope my perspective and comments are of value.
The stated purpose of Bill 52 is "to promote resource development, conservation and environmental protection through the streamlining of regulatory processes and the enhancement of compliance measures in the Aggregate and Petroleum Industries." I have tried to keep this goal as a framework to determine the potential benefits and pitfalls of new concepts presented in Bill 52. If we can all agree at the end of the day that these goals have been met, then I believe we will have made an improvement over the current process.
My comments will focus on the general concepts that have been introduced, changed or eliminated by Bill 52, what is a move in the appropriate direction and what gives me some concern. These concepts are: (1) the aggregate resource trust, (2) licence application requirements, (3) a proponent-driven application process, (4) the notifications-consultation process, (5) scoping, (6) OMB decisions versus recommendations, (7) self-monitoring, (8) the four-year municipal review and (9) collection of rehabilitation security.
If you are following along here with what I've written, I'm going to be hitting the highlights to allow some time for question period.
(1) Aggregate resource trust: Bill 52 proposes that MNR no longer be bankers and that all financial transactions be handled by the trust as opposed to aggregate resource officers. Fundamentally, I agree with this shift. However, I do have concerns. In order for the trust to operate successfully, it must be both credible and accountable as perceived by all stakeholders, including the government.
Recommendation: That the trust be created such that its corporate and operational structure is not inordinately controlled by any of the stakeholders.
(2) Licence application requirements: Currently requirements for information to be included on site plans and within the section 9 report are detailed by legislation. MNR staff has expanded upon these requirements with additional details provided in policy and procedure.
There are a number of resulting problems. First of all, there is a very big difference between what is legislatively required and what is nice to know. Second, there is a wide range of interpretation of the guidelines between aggregate resource officers. Finally, if the aggregate resource officer is not diligent in following guidelines, and the site plan or report author is not equally diligent in following guidelines, then the result is a site plan or report not up to standard, which does not serve the best interests of any of the stakeholders.
Bill 52 proposes to prescribe the application requirements in the regulations. It is my understanding that these regulations will provide more detail than is currently contained in the ARA, but less detail than provided for in MNR policy. This I believe will be a big improvement. It will let all stakeholders know specific required information up front and hopefully improve consistency between districts. Perhaps most important, however, it will identify what is required information in the regulations and not allow it to get lost in MNR policy. Without the regulations drafted at this time, it does, however, leave a void of information when one is reviewing Bill 52 and trying to comment.
Therefore, I've recommended that the regulations in draft form are reviewed by a limited group representing all stakeholders.
(3) Proponent-driven applications: The ARA provides for licence applications to be processed by aggregate resource officers. They are in control of circulation, liaison with agencies and the public, and timing in general.
It has been my observation that two problems have arisen as a result of this. First, the applicant has virtually no control of the timing of processing the application. Second, I often hear that MNR is pro aggregates and does not adequately represent the interests of the public.
Bill 52 proposes that the application process be proponent-driven. This is real progress. Not only does it put control and responsibility in the hands of the proponent, but it provides for a more neutral role for the MNR. Furthermore, the proponent will now be able to control timing of applications so that they may dovetail with other planning applications.
Recommendations: (1) That the regulations set out a clear course of action for proponents, agencies and the public detailing roles and responsibilities; (2) that each stage of the process include limited but realistic time frames; and (3) that failure to meet responsibilities within the stipulated time frame, as noted in recommendations 1 and 2, represents a no-concerns response.
(4) Mandatory consultation: Bill 52 introduces a requirement for consultation during the notification and circulation period. Fundamentally I believe it is appropriate for a proponent to consult with concerned area residents about a proposed application. In some cases a consultative process will be effective in reducing or eliminating concerns, and in some cases it will not. The real merit in this requirement is the opportunity to make an objector as responsible for his objection as an applicant is for his application.
Therefore the recommendation: That the regulations should require documentation by both objector and proponent outlining outstanding concerns, attempts to resolve concerns and possible solutions to concerns.
(5) Scoping: Bill 52 introduces the ability for the MNR to direct that the board shall determine only the issues specified in the referral -- in effect, scoping.
I believe the concept of scoping is a good one. However, as many of the applications we handle are submitted concurrently with Planning Act applications, there are potential problems. There is no similar provision in the Planning Act for scoping. Therefore, in all likelihood, all issues may be before the board through Planning Act referrals. If scoping does not work, we are left with the status quo, that is, the right for a full hearing on all issues. Therefore, under the appropriate circumstances, is scoping not worth a try?
Recommendation: Again, that the responsibilities of an objector be spelled out in the regulations as recommended in point 4.
(6) Ability for the OMB to make a decision versus a recommendation: Under the ARA the OMB has the ability to make recommendations to the MNR regarding a licence application. Bill 52 provides for the OMB to make a decision on the issuance of a licence with prescribed conditions and a recommendation on additional conditions. Although there is merit in increasing consistency with the Planning Act where the board does make the final decision, I don't believe Bill 52 improves the current situation, and would in fact increase problems.
The first problem arises where the board may not want to accept scoping if they are to make a decision on an application. If they were to make a recommendation only, they could qualify what their recommendation is based upon, and the final decision would rest with the MNR, who originally scoped the project.
The second problem deals with the need for MNR to be able to determine appropriate licence and site plan conditions that are enforceable. The MNR should be making every attempt to satisfy the conditions as identified by the board. However, I believe they need the final say to ensure it is within their mandate.
Recommendation: That Bill 52 be revised so that the OMB make recommendations to the MNR.
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(7) Self-monitoring: Self-monitoring is here for APAO members. Currently a partnership agreement between APAO and MNR governs self-monitoring. Bill 52 legislates self-monitoring for all licensees. This is a positive step in that it levels the playing field for all designated area operators.
My concern with self-monitoring deals with MNR's changing role from being compliance oriented to enforcement oriented. In order to be successful, MNR must be diligent in enforcement.
Recommendations: (1) That there be enough MNR staff to be able to audit the self-regulation program to ensure program success; (2) that MNR staff be well trained and diligent in enforcement.
(8) Municipal review: Currently the ARA requires that every four years local and upper-tier municipalities have the opportunity to comment on the operator's compliance. Presumably this clause was included within the ARA to provide the municipality with some continuing measure of involvement. Bill 52 does not provide for this.
I do not believe this should be restricted to every four years. I also do not believe it needs to be written into legislation. If the municipality or anyone else has concerns or questions regarding the compliance of operation of a pit, they should have the ability to approach the MNR at any time.
Recommendation: That Bill 52 or the regulations provide clarity that MNR will continue to respond to complaints.
(9) Rehabilitation security deposit: Bill 52 provides the opportunity to do away with the traditional incentive for rehabilitation, that is, money. Instead the focus is on compliance on the part of the operator and enforcement on the part of MNR to ensure that rehabilitation is completed as required by the site plans. It is difficult to predict whether this will be enough to ensure quality rehabilitation. Again I believe the success of the change will be dependent on adequate enforcement.
I am pleased to see there have been safeguards built into Bill 52 to either build up the superfund as it is depleted or to fall back to a collection system.
The proposed new system also addresses the problem of rehabilitating sites where the licensee has defaulted on a licence and does not have enough money in account to rehabilitate even to a minimum standards.
Finally, the eight cents per tonne has not been linked to actual rehabilitation costs, and I fully support the shift in focus from the cost of the work to the quality of the work.
Recommendation: That there be some kind of monitoring of this new approach to evaluate its success and implement change if necessary.
In conclusion, I would like again to consider the purpose of Bill 52. Does Bill 52 promote resource development, conservation and environmental protection through the streamlining of regulatory processes and the enhancement of compliance measures? Yes. If applicants are told of application requirements up front and are able to control the timing of the application process, I believe it will go a long way to reducing time and risk for licensing pits and quarries. If a potential site does not measure up to the standards or the necessary background research identifies unresolvable environmental concerns, a licence should not be pursued.
Ensuring compliance of an operation should be the responsibility of the operator. Some operators will do the job very well; others will abuse it. What needs to be ensured is MNR's enforcement of all abuse cases. If there is a weakness in meeting the goal of Bill 52, I would suggest it is the enhancement of compliance measures. The bill must be clear in MNR's new enforcement role.
In January 1990 we saw proclamation of the Aggregate Resources Act. We've had six years to work with this act and understand what its strengths and weaknesses are. We have an opportunity with the current provincial government to make positive change to the legislation to ensure program success while government downsizing occurs. It is essential, for Bill 52 to be an improvement over the ARA, that input be received from all stakeholders. I believe your attention today goes a long way towards achieving that goal and wish you every success.
Thank you for the opportunity to present my perspective. I'd be happy to answer any questions.
Mr Klees: Thank you very much for your input today. Your experience in the industry comes through clearly. We look forward to continuing to get some input from you as we develop those regulations.
You've made a number of points that I think are on the mark and I think we're certainly on side with you. Your comment with regard to the fact that the trust should be created such that there is not an inordinate control of any stakeholder: I assure you that we agree with you on that and we're working now to ensure that this structure represents the broadest sector and is not in any way skewed.
There was a point made earlier and I just want to take this opportunity to clarify for the record about the accountability of that trust, because it's a key issue. The act makes very clear reference in subsection 6.1(7) that "The trust shall report annually to the minister on the financial affairs of the trust." Then in subsection (8), "The minister shall submit the report to the Lieutenant Governor in Council and shall table the report in the Legislative Assembly." So the ultimate accountability of that trust is clearly to the Legislative Assembly of this province. I wanted to make that point very clear so that people understand that this is not something we're setting up and expecting it simply to function out there in orbit somewhere.
Mr Michael Brown: I think this is an extraordinary brief. It's very helpful to us. I was interested in your comments on self-monitoring. You've put this more clearly, at least in my mind, than I've seen it put before, and I appreciate that. Now we've moved from the government being a partner in aggregate extraction to being the regulator or the enforcer, and I think that's probably a fair way to characterize what's going on here.
I just wonder if you can help me with this. I agree with you that for this to work, enforcement is critical. I'm a little concerned at this point that the penalties that will be available under this act will not necessarily be appropriate to the violation of the act. In other words, you can't have an overreaction or an underreaction to compliance measures. Sometimes they're big, sometimes they're small, but you must respond to every one of them, and if suspension ends up being your tool, that may be too great for some things and not great enough for others. I just wonder about your views on that and how MNR itself would decide what the appropriate penalty might be in the situation.
Ms Guiot: I can't comment on how to establish the penalties really, but I think what will be important is that they are strictly adhered to. I know years ago when I was with the MNR, the goal was to bring the operator along in compliance. If it meant working with him over several months to get his fence up and eventually he got the fence up, then that's what you would do. It appears to me we are now in a situation where if the fence is not up, you will be penalized. There's not going to be a four-month period to work together.
Ms Martel: Thank you for your presentation today. I wanted to make one comment and then I wanted to ask you a question about the trust fund and how it's established.
The comment I wanted to make had to do with the recommendation around point 7, self-monitoring, and that is that there be enough MNR staff to be able to audit the self-regulation program to ensure program success. One of the points we've been raising during the course of these public hearings is our concern that there will not be enough MNR staff left on the ground not only to make sure the program works but to deal with the bad operators. That will be I think a problem for the government in the long run. It will be a problem for operators in the long run if the industry is given a bad name because of one or two or three people who really want to break the rules and flout them all the time. I agree with you around your concern in that respect.
I wanted to ask you about the trust fund, because you said in your recommendation that it should be created in such a way that the corporate and operational structure is not inordinately controlled by the stakeholders. Can you give the committee some sense of what would make you comfortable in terms of how it's established, how it's administered and how it deals with applications that will no doubt come in from people who have money to rehabilitate but from a number of areas where there are abandoned pits and quarries that have to be dealt with?
Ms Guiot: I'd like to see at some point in the system a committee that represents all stakeholders so that there could be an ability for anyone to stay informed of what the trust does, if it's just an interest perspective, and to be involved in bringing issues to the table that the trust might be dealing with such as research on rehabilitation, for instance.
The Chair: Thank you, Ms Guiot. We do appreciate your interest and your presentation this afternoon.
CONSERVATION COUNCIL OF ONTARIO
The Chair: Our next presenter is Glenn Harrington, representing the Conservation Council of Ontario. Good afternoon, sir. Welcome to our committee. The floor is yours.
Mr Glenn Harrington: Thank you very much for giving us the opportunity to comment today. It's late and I will be brief and I won't belabour points that have already been made.
The first point in our presentation is one that you've heard many times, and that is that we find it impossible to review this legislation without seeing the regulations, without seeing details on how the trust is going to be set up and without some understanding of any new functions that the Aggregate Producers' Association is going to have. We think those are key to how we evaluate this legislation. But I'm not going to beat that dead horse, I'm simply going to ask that there be broad consultation on those things. We have been promised that will come to the Aggregate Resource Working Group and we're willing to review those things there.
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There are four points that we would like to suggest be considered in the review of this act, and I think probably you will have heard most of these as well before.
Number one is we can see no reason now why the entire province should not be designated. For 25 years the Conservation Council and the industry have been asking for designation of the entire province, and the reason we have been given consistently is that it costs too much to administer licences in areas where they are very few and far between. As we pass that expense on to the proponent, I see no rationale any longer to have areas of this province that are not designated. This is particularly important in the north and in the eastern parts of this province where very often you have two operations side by side that are operating under completely different rules and completely different financial conditions. It's not good environmentally, it's not good socially and it's not good for the business concerns of the operators.
The second is also a long-term position of the Conservation Council, and that is that wayside pits should be eliminated. We find that they're very often a shortcut to getting a licence, very often a way of avoiding complex reviews and regulations and quite often create problems. If they are to be left in -- and our strong recommendation is that they should just be removed -- we want to make it clear that we want the regulation of those to stay with the Ministry of Natural Resources.
The Ministry of Transportation describes itself consistently in the public as developers. They are proponents of many wayside pits and there have been many problems with the management of MTO wayside pits as well as other wayside pits. We see it akin to putting the fox in the chicken house to have them review the wayside pits that they are managing on their own.
The third is that there needs to be some rationalization between the Mining Act and the Aggregate Resources Act, and specifically how things like advanced exploration permits, which currently are being operated to produce building materials, get grandfathered into the Aggregate Resources Act. This has something to do with how you make sure that compensation for municipalities, for example, is consistent in the province, and again, it has more to do with applications in the north and in the east than it does around Metro.
The last point is that we think peat should be included in the definition of aggregate. It sounds a little funny but it simply means that peat extraction comes under this legislation. We find it incomprehensible that if you owned a piece of property and you went to a hill to dig sand out of that and shipped that to a construction site, you would require an official plan change, a zone change and an Aggregate Resources Act licence. If you went downhill to a wetland and scooped out that wetland and took it and sold it for peat, you would have no requirements for any of this. On the one operation there would be provisions for environmental monitoring and impact assessment, there would be compensation to municipalities, and on the other there would be absolutely nothing but a fight.
We look at that and we say the Aggregate Resources Act and the licensing process also provide some assurance to operators that they will be able to operate in the future. The other thing about peat extraction is that that is not the case. They are open to criticism, they are open to challenge, because they have no legitimate way of having their operations approved. So we think it's one of those issues that can benefit both industry and the environment. I'm happy to answer questions.
The Chair: Thank you, sir. We've got about five minutes per caucus, beginning with Mr Brown.
Mr Michael Brown: Thank you for appearing today. "The entire province should be designated," is always very interesting to a rural northern MPP. In our area we obviously have large quarries and extractive areas. Can you help me again with explaining how, under the new regime, some of the problems that kept these areas from being designated before in terms of enforcement, in terms of just driving from Sudbury to Meldrum Bay or to La Cloche Island or wherever, how these areas are going to be enhanced? It's quite difficult, at least it seems to me, in terms of the bureaucracy of the whole thing.
Mr Harrington: The bureaucracy, from what I see, has essentially been eliminated from the process. There is not going to be a requirement for an inspector to visit the site. There's going to be a requirement to review the monitoring reports and to periodically poke your nose in to see if everything is okay if you think things are not going well. It's not so much the far-flung licences that are really the problem, it is the licences that are immediately adjacent to one another that really create problems, and there you have two operations working under entirely different sets of rules.
Mr Michael Brown: Could you give me a for instance of that?
Mr Harrington: Here's the boundary of the municipality of Sudbury. I'm operating here and I'm operating under an aggregate permit. I don't need licensed drawings, I don't need very much at all to do that. I don't pay any money to the municipality, and my trucks go on to that road. Here, I'm in the regional municipality of Sudbury. I have a licence, a zoning application to go through, I've been through all of that public consultation process, and my trucks go on to that same road. I pay the municipality compensation because I'm deemed to have an impact on that municipality. I don't over here. So the rules are entirely different for both of those.
The reason has always been given that there are these far-flung licences and that they're impossible to get to, but that's no longer something we need to be concerned with. The applications are going to be paid for by the proponent, the process they go through to license is going to be financed by the proponent and the aggregate inspectors are going to be responsible for simply monitoring the reports that come to them and for dealing with problems as they arise. So yes, you might have to, once a year, if there's a problem out there, go out and take some action, but it's only when problems arise, and that's when the aggregate resources officer should be taking action, if there are problems.
Mr Michael Brown: It's been suggested to this committee by some people that one of the biggest policing agencies of this system will be the competitor down the block who says, "Gee whiz, X operation up here is not complying and that's giving them an unfair advantage." Through the grapevine, so to speak, that will get back to the ministry and they will check on their compliance, because, under this system, you're always taking their word for it that they have met the criteria. Inspectors will in fact perhaps be tipped by competitors that this would be the case. I'm just wondering in the rural northern situation how that might occur seeing as there's probably no one anywhere near them.
Mr Harrington: I think if there's no one anywhere near you and you're not harming anybody and there are no problems, probably you're going to be left alone. It's like submitting your income tax. You're going to have to lie if there are problems, and if you get caught lying, I think you're going to get hammered for it. But I think the problems of the one or two far-flung licences that are around versus the problems it creates around urban areas especially are pretty small compared to the big problems that I see.
The other realistic part about aggregate licences is they don't occur off in the boondocks where there is nothing, because there's no reason to have aggregate there. They occur where there's a demand for it. That might be a mine, that might be a municipality, but there are people around where they occur and I think that's reasonable policing there as well.
Ms Martel: Thank you, Mr Harrington, for making the presentation today. How long have you been a member of the Aggregate Resource Working Group?
Mr Harrington: Since its inception. Before that, I was a member of the steering committee.
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Ms Martel: Are you in the same position as Mayor Seglins was in, in that all of a sudden you saw the bill in the form it was going to be presented and that was the sum total of your participation in it?
Mr Harrington: Absolutely, along with everybody else.
Ms Martel: Well, not everyone else. That point's been made.
You've got a lot of expertise. You've been doing all of this work for the ministry -- as a volunteer, I suspect. Maybe you get a per diem to be part of the working group, I don't know. You can answer that for us. Now the minister is telling you, "Well, you can be involved in the drafting of the regs," but you weren't around for any of the initial work that's been done. How does that make you feel after all the time you spent trying to give your input and advice and expertise to try and deal with some very controversial issues?
Mr Harrington: The aggregate working group's position on that was pretty clear. We essentially halted our activities and said, "We want to hear from the minister to make sure this doesn't happen." We had our chance to yell at the minister and say that we thought what he had done was completely inappropriate after all the work we had all put in for free. So we vented our spleen at that point.
We have not been told we will be involved in the drafting of the regulations, we have been told we are going to be involved in the review of the regulations, and I see that as being very different. I would be very happy to be involved in the drafting of the regulations through that group as opposed to the review of the regulations. But again, we've been told that's the way it's going to be, and I think the group has essentially accepted that.
We're doing some very good things in that group. We think there'll be changes to legislation that are required out of it, but we're not ready yet. There's no point in coming forward with some of our initiatives until we're ready to say, "This is what we think should happen."
Ms Martel: So the process for you from this point on, despite your meeting with the minister, is that you will see the regulations after they have been drafted and you can give your comment then as a working group.
Mr Harrington: Yes.
Mr Klees: Thank you for your presentation today. You've made some interesting points. I'd like to just follow up on a couple of items. I know one Mr Danford wants to follow up on as well, and that's with regard to wayside permits. Your wish list, of course, is to have them eliminated. I don't think that's going to happen, but I would like to ask something of you. If we were to introduce an amendment that returned wayside permits to their original intent, which was to facilitate the construction and maintenance of roads where aggregate sources were not readily available, thereby eliminating the usage for other projects, would you be in support of an amendment like that?
Mr Harrington: I'll answer that with two answers. We have always said there are probably places where wayside permits should occur. Those are generally in the far north where you're building a road and you're never going to be back there, or you'll be back there in 30 years, and there isn't a licensed gravel pit within 300 miles. Generally speaking, that's only where it is. In the south, there are almost always licensed sites. The rationale for it has always been not the availability of material but the price of that material.
The Aggregate Resource Working Group has agreed that one of the problems in this industry is that we have driven the price of material down so low that the industry cannot operate profitably. As the Conservation Council says all the time, industries that are not profitable tend to be bad industries, industries that are profitable tend to be good industries. So we disagree with the idea that driving the price of aggregate down is good.
If it is only where aggregate is not available -- and I have made a few other suggestions as well -- where the deposit is so small that you can't license it, where urbanization is about to occur and we need to rescue that aggregate before it occurs, those are all possibilities, but that's not the way it is used right now.
Mr Harry Danford (Hastings-Peterborough): My concern is on the wayside permits and your comment about them, that perhaps they should be eliminated entirely. I was also pleased to hear that you're aware of the east and the north, and I guess I'm referring more to the east. I think you'll also be aware there are very small pockets of aggregates in the eastern areas, and construction jobs do need to take place. Most of those wayside permits are granted to municipalities in most cases. I think that's a fair comment. Do you see that they should not be allowed to do that? Because it is in the interest of the public, and certainly the cost is a big factor in the north for some of the reasons you just mentioned.
Mr Harrington: I see the licensing process as a very good process to make sure that what you're doing is socially, economically and environmentally viable and appropriate. I look at municipalities and say municipalities use aggregate consistently, not just on a piece-by-piece basis. There's a good example where I say -- for road sand, for example, which is what they're commonly used for. That's not a onetime deal, that's every year. Municipalities are always constructing roads, and if they need that aggregate supply, they should license their own deposit. There are lots of municipalities with licences. If not, if it's only to get cheap aggregate, then all it does is hurt the industry, and by way of doing that, hurt the environment, because an industry that's trying to compete with a wayside permit has to go cheaper, and cheaper generally means not as nice.
The Chair: Thank you, Mr Harrington. We do appreciate your input here this afternoon.
That was our last presenter. The committee is now adjourned until 10 o'clock tomorrow morning in Toronto.
The committee adjourned at 1616.