Public Accounts — Issue No. 27 — Monday, June 6, 2016 (HTML)

Present: Bruce Ralston, MLA (Chair); Sam Sullivan, MLA (Deputy Chair); David Eby, MLA; Simon Gibson, MLA; Marvin Hunt, MLA; Vicki Huntington, MLA; John Martin, MLA; Lana Popham, MLA; Linda Reimer, MLA; Selina Robinson, MLA; Ralph Sultan, MLA; Laurie Throness, MLA

2. The following witnesses appeared before the Committee and answered questions regarding the Office of the Auditor General Report: An Audit of Compliance and Enforcement of the Mining Sector (May 2016)

• Al Hoffman, Chief Inspector and Executive Director, Health & Safety, Mines and Mineral Resources Division

• Nathaniel Amann-Blake, Executive Director, Policy, Legislation & Issues Resolution Branch

• Peter Robb, A/Assistant Deputy Minister, Mines and Mineral Resources Division

• Jennifer McGuire, Executive Director, Regional Operations Branch, Acting Assistant Deputy Minister

The following electronic version is for informational purposes only.
The printed version remains the official version.

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
PUBLIC ACCOUNTS


CONTENTS
Page
Auditor General Report: An Audit of Compliance and Enforcement of the Mining Sector	899
C. Bellringer
A. Todosichuk
M. Sydor
E. McKnight
W. Shoemaker
P. Robb
A. Hoffman
G. Warnock
N. Amann-Blake
J. McGuire
T. Wood

B. Ralston (Chair): Good afternoon. Today our agenda consists of the consideration of the Auditor General report An Audit of Compliance and Enforcement of the Mining Sector.

There are a number of people here who I want to introduce and place their names on the record. From the Office of the Auditor General: Carol Bellringer, the Auditor General; Morris Sydor, assistant Auditor General; Ardice Todosichuk, director of performance audit; Tanya Wood, performance auditor.

From the Ministry of Energy and Mines: Elaine McKnight, deputy minister; Al Hoffman, chief inspector and executive director, health and safety, mines and mineral resources division; George Warnock, director of geotechnical engineering; Nathaniel Amann-Blake, executive director, policy, legislation and issue resolution branch; Peter Robb, acting assistant deputy minister, mines and mineral resources division.

From the Ministry of Environment, we have Wes Shoemaker, deputy minister; Jennifer McGuire, executive director, regional operations branch, acting assistant deputy minister; and Gwenda Laughland, director, compliance policy and planning.

Thank you, all, for your presence here. I’m looking forward — I’m sure we all are — to an informative and vigorous discussion of this important report.

With that, I’ll turn it over to the Auditor General for an opening presentation.

Auditor General Report: An Audit
of Compliance and Enforcement
of the Mining Sector

This was a very long report, which you’ve no doubt noticed in preparing for today’s Public Accounts Committee meeting. In effect, there are four sections to the audit: an audit of compliance and enforcement in the Ministry of Energy and Mines, an audit of compliance and enforcement in the Ministry of Environment…. We looked at the Mount Polley situation, and we looked at selenium in the Elk Valley.

It was an extensive undertaking, and the finalization of the report was equally as extensive. We did need to have several in-depth discussions with senior management as we provided them with our usual draft reports and provided them with comments on their questions.

We chose to invest a significant amount of time into the finalization process because we thought that it was important to explain exactly where we were coming from and to ensure the ministries knew that we were listening to their concerns. Unfortunately, we reached a position which I would describe as rare — thankfully rare. It’s common that we don’t agree on every recommendation that we put forward in our reports, but it is rare that our process was as challenged as it was in this case.

We decided to include the ministry’s comments in the report without a further explanation from our office. We would like to provide you with that today — a brief summary of those misunderstandings and a few others that have emerged since the report was made public.

First, government has made public statements indicating that the audit calls for a separation of permitting from compliance and enforcement and that government was looking for but unable to find other jurisdictions that have this separation. I just want to clarify that our report does not recommend that compliance and enforcement be separated from permitting. We’re explicit that permitting is a critical piece of the regulatory framework. Rather, our report and its main recommendation advise that compliance and enforcement should be separate from the promotion of the mining industry.

I will say…. I think these guys were telling me, “Just don’t say it,” but I’m going to anyway. I may be partly at fault for that. When we were doing the press conference, the day of our release, in answer to some question, I used the word “permitting” instead of “promotion.” Quite frankly, it’s not indicated anywhere in our reports.

We’ve informed the Ministry of Energy and Mines regarding this, along with an example of another jurisdiction in Canada where such separation has been implemented. We’re aware of others in Canada as well as other jurisdictions such as Australia, the U.S. and the U.K.

Second, the ministry’s response to the report included five points. They felt obliged to share their perspective for the public record. I just want to go through a few comments on each of these. In the OAG team’s presentation, I’ll expand on a few of them.

The first point was titled “Appropriate standards.” The response from government indicated there was a lack of clarity in the audit report on what the operational effectiveness of the compliance and enforcement program should be measured against. Ardice will summarize the criteria we used. The criteria did include the standards in place in the Ministry of Environment.

We did follow our standard performance audit process. We’re not actually required to do so, but we have a standard practice that we always follow. We provide the ministry with the objective and criteria before we start the audit. Then we get the deputy minister to sign off as to their appropriateness. For each of the areas we’re auditing in performance audits, there’s not often a standard set of such criteria, and we are developing them from what we consider to be best practice. It ties into point 4 as well.
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The second point was “Professional public servants.” A comment was made to us saying that the audit report suggests that professional public servants are unable to differentiate between the mandate components or that they are unwilling to enforce the existing regulations.

We certainly were not suggesting that. It does get into the recommendation to separate promotion from compliance and enforcement, and it does get into the discussion of the risk of regulatory capture. We felt it was important to point out these risks to you, as members of the Legislature, given the significance of the consequences. Ardice will further discuss the risk-of-regulatory-capture issue.

The third point was “Disclosure of information.” The comment was: “The audit report implies that the ministries failed in their duty to disclose information regarding decisions on mining operations.”

I just want to clarify that we did not imply there was a breach of duty. Rather, in sub-recommendation 7, we recommended that when government uses section 137 of the Environmental Management Act…. We recommended that the rationale for the decision, specifically what factors — such as economic, environmental and social attributes — were considered in the determination of public interest, would be appropriate. That’s not because it was required to disclose that information, but in our view, it should be.

While the government has said publicly that it accepts all of the 16 sub-recommendations, they did not accept this one. We also acknowledge that this is something that would have to be remedied outside of the ministry, in the event that government chose to proceed.

The fourth area was audit scope. It was relating to the audit planning decisions, as to what was properly within or outside the audit scope. This gets into a section of the Auditor General Act where I’m required to report to the Legislature anything resulting from our work that I consider should be brought to the attention of the Legislative Assembly — very broad, as you can imagine.

We do have to take into account many considerations when we get to the report-writing stage. When we’re finalizing an audit, when things come to our attention, even though they weren’t in the original criteria, for example…. In the example of Elk Valley, it was a sample file that we did select, and we reported those matters we considered needed to be brought to the Legislature’s attention. That’s where the audit-scope discussion comes in.

The last point was on Mount Polley. The statement that was in government’s response was that the audit opinion is contrary to the expert panel finding of cause and is not reflective of the regulatory regime in place at the time. This is something, actually, that Morris will cover in some detail in the rest of the presentation.

In that section, there’s also a suggestion that our audit is proposing moving away from relying on professionals in the mining industry. That’s not the case. Our report does have a recommendation that the professional reliance model be strengthened with the addition of policies and procedures concerning government’s oversight — so not suggesting that it be…. Not something that’s done.

The last point I’ll make before turning things over to the audit team…. At the last Public Accounts Committee meeting, we were talking about our report on the public accounts. There was a question about the adequacy of financial security to cover the estimated environmental liabilities at major mines.

We do report, in this report, that the total estimated liability for all the mines is only covered by financial securities for around half of the amount. So we do have a recommendation, sub 1.3, that “government safeguard taxpayers by ensuring the reclamation liability estimate is accurate” — we did not do an audit of the number itself; we reported what the ministry had estimated — “and that the security held by government is sufficient” to cover the potential costs.

I’ll hand things over. I’m also going to apologize. Given the length of the report, the presentation is also a little longer than usual, but we felt it important to go through each of the major areas with you.

A. Todosichuk: Good morning, Chair, Vice-Chair and committee members. As Carol indicated, I’m going to summarize our audit of compliance and enforcement, and then Morris Sydor will conclude our presentation by addressing government’s response to our report.

In B.C., metal mines are typically low grade, meaning greater quantities of waste material need to be generated in order to extract the target mineral. With advances in mechanization, mine companies can now process enormous amounts of waste. This image of the Highland Valley Copper mine shows that to extract 500 tonnes of copper each day, the mine produces approximately 135,500 tonnes of waste material daily.

One environmental concern that stems from this waste rock is acid rock drainage. In some cases, when waste rock is exposed to air and water, it can produce acidic water. If left untreated, this acidic water can kill aquatic life and make water virtually unusable for human consumption. Once initiated, the process can persist for hundreds or even thousands of years. The picture to the left shows a Roman-era mine in Spain dating back 2,000 years but still producing acidic wastewater.

A common practice in B.C. to prevent acid rock drainage is to store the acid-generating rock underwater in tailings ponds. This minimizes the oxidization process.

Another practice involves chemically treating the water through water treatment plants. There are a number of active water treatment plants at major mines. They are indicated by those symbols outlined in red on the map to the right.
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These tailings storage and water treatment facilities may need to operate in perpetuity. Compliance and enforcement is needed to protect the environment.

For this audit, we focused on the Ministry of Energy and Mines and the Ministry of Environment because they both have environmental protection mandates and associated compliance and enforcement responsibilities for mining. Out of scope was the environmental assessment office as, at the time of our audit, we were conducting a progress audit of our 2011 audit on the environmental assessment office’s oversight of certified projects.

We conducted this audit to determine whether both ministries’ compliance and enforcement activities are protecting the province from significant environmental risks. We modelled our expectations on the Ministry of Environment’s own compliance management framework. Our expectation of the two ministries included all of the seven key elements, as shown in the graphic, as well as an expectation that both ministries were working together.

Overall, almost every one of our expectations for a robust compliance and enforcement program were not met. Some of our findings from each of these seven areas are highlighted, by ministry, in the following slides.

Looking first at the Ministry of Energy and Mines and its planning, we expected the ministry to have an overall compliance and enforcement program underpinned by a strategic plan. We found that the ministry has not focused on developing a compliance and enforcement program. Most of the ministry’s efforts are devoted to supporting the development of mining through processing permits. This emphasis reflects the ministry’s mandate to promote the development of mining in B.C.

However, we found that this emphasis on mining promotion, combined with a weak compliance and enforcement program, creates the risk of regulatory capture for the ministry. Regulatory capture occurs when the regulator, created to act in the public’s interest, instead serves the interest of industry.

We found that the ministry exhibits most of the possible signs of regulatory capture. This can give rise to a reasonable perception of and increase the actual risk of regulatory capture.

Another finding was the underfunded liability for reclamation securities. The ministry has estimated the total liability for all mines at more than $2.1 billion, yet MEM has stated that it is holding less than half that amount in total security, creating a shortfall of $1.2 billion.

Another finding was MEM’s fluctuating inspections. As shown here from the Ministry of Energy and Mines’ data, the total number of inspections across the entire health, safety and permitting branch has declined significantly since the early 2000s.

While this graph may show a trend for the broader organization, our audit focused specifically on geotechnical and reclamation inspections. In these areas, the ministry’s data indicates that annual geotechnical and reclamation inspections at major operating mines fluctuated from a high of nearly 20 for both types of inspections to a low of zero geotechnical inspections in 2010.

Enforcement is the backbone of any compliance program. It is the final line of defence against environmental degradation. We noted several instances in which the ministry’s response to significant non-compliance was to allow it to persist for years. For example, MEM failed to compel the mine operator to address the issue of seismic safety at the Myra Falls mine on Vancouver Island for 14 years. Had a major earthquake, magnitude 7 or higher, occurred before 2013, there was a risk that the dam could have failed.

The enforcement responses that the ministry can apply to non-compliances are two extremes: (1) written orders that compel the mine to act and (2) temporary suspension or shutdown. For mine operators with a history of non-compliance, written orders are sometimes ineffective as a deterrent. The ministry usually avoids using a temporary suspension or shutdown because of the social and economic implications.

Lack of enforcement can create increased risk, which can result in serious consequences. On August 4, 2014, a breach occurred within the perimeter embankment of the tailings storage facility at the Mount Polley mine in south-central B.C. The breach resulted in the release of an estimated 25 million cubic metres of wastewater and tailings. The mining company has since been working on the cleanup from this event, but the full extent of the environmental repercussions from the breach are still not known.

In response to this event, government convened an independent expert panel to investigate and report on the cause of the failure. The panel’s report noted that the mechanism of the failure was the embankment sliding on a layer of glaciolacustrine clay. However, the panel’s conclusion was that the dominant contribution to the failure was the design, primarily the over-steepened slope stressing the clay layer.

The image on the top left of the slide, labelled as drawing A, shows the original design with a dam slope of two horizontal to one vertical. In 2006, design changes were made to create an interim steep slope. The mine operator stated that this interim slope was only to last until stage 5 of the dam lift was completed. However, the ministry allowed it to become relatively permanent.

The result was, at the time of the dam failure, the downstream slope was 1.3 horizontal to one vertical, which is indicated at the bottom of the slide as drawing B. The panel emphasized that this over-steepened slope triggered the dam failure. They stated that had the downstream slope in recent years been flattened to a two horizontal to one vertical, as proposed in the original design, failure would have been avoided. This image to the
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right shows the perimeter embankment slope in 2013. The expert panel called this slope unprecedented.

We concluded that the ministry did not enforce the design due to the following: the ministry’s overreliance on qualified professionals, the ministry’s inadequate dam safety standards, too few inspections by ministry staff and the ministry’s lack of an enforcement culture.

MEM, as the regulator, had a responsibility to require the mining company to build the dam to a safe design. No other government or private actor has that ability or that responsibility.

Now let’s turn to our findings for the Ministry of Environment. We found that the ministry has developed a compliance management framework that outlines its approach to ensuring compliance. This has been in place since 2007 and includes the principles, goals and objectives that guide compliance-related work.

The ministry has also established policies and objectives for setting permit requirements, promoting compliance, verifying compliance and enforcing requirements. However, we found that the ministry’s implementation of these activities for mining has been constrained by limited resources, expertise, training and tools.

The ministry reorganized the regional operations branch in 2014 to create a dedicated compliance team. The 13 members of the team were tasked with ensuring compliance in dozens of complex industries which account for more than 5,500 Environmental Management Act authorizations. This means that each compliance team member could have around 400 authorizations to monitor and/or inspect.

We found that inspectors are not managing this workload. In addition, training, tools and guidance are inadequate.

We reviewed the ministry’s inspection records for 2012, 2013 and 2014 for a sample of eight mines. We found that the ministry did not meet the minimum requirement of its policy to inspect high-priority sites annually. Only three of the eight mines we examined had received an on-site inspection by the ministry for all of those three years. For example, Myra Falls mine had no site inspection for 2012, 2013 and 2014 — a finding of particular concern given that this site is located in a provincial park and is close to drinking water sources.

In 2014, the ministry shifted its resources to assessing compliance of high-risk mining operations. This focus limited the ministry’s ability to inspect other industries that also have Environmental Management Act permits, a situation that poses a risk to the ministry’s overall regulatory performance. In 2015, the ministry identified this risk in its risk register, stating that there was a high risk that regulatory requirements are not adequately verified and enforced.

Lack of sufficient and effective regulatory oversight in action by the ministry has had impacts, such as the degradation of water quality in the Elk Valley. Coal has been mined in this area for over 100 years, which has resulted in high concentrations of selenium in the water system. Selenium, while necessary for the health of many organisms, can be toxic in excess amounts.

The photos to the right show the impacts of high selenium levels in the Elk Valley to the westslope cutthroat trout, a species listed as being of special concern under the Species at Risk Act. To the left is a graph that shows the monitoring results by the ministry from 1996 to 2012 for selenium in the Fording River.

The ministry tracked this worsening trend but took no substantive action to change it. Only recently has the ministry attempted to control this pollution by working with industry to create an area-based management plan and issuing the associated valley permit.

Prior to this valley-wide plan and permit being adopted, industry requested a permit to expand one of its mines in the area, Line Creek. The proposed expansion of this mine was into an area that is habitat for westslope cutthroat trout.

The Ministry of Environment staff, with input from external experts, concluded that the selenium levels proposed for this expansion were not likely protective of the environment. The permit could not, then, be approved by the statutory decision–maker, as they are required, under the Environmental Management Act, to only authorize a permit if it includes requirements for the protection of the environment.

Subsequently the permit was granted by cabinet under section 137 of the Environmental Management Act. This clause, which allows cabinet to approve a permit where it is in the public’s interest to do so, had never been used before. The rationale for the decision was not publicly disclosed.

As for the recently adopted Elk Valley area-based management plan and valley permit, we found that the ministry has not been transparent to the public and legislators on the risk that this plan and permit create. These include future economic liability from six water treatment facilities which may need to be monitored and maintained in perpetuity, potential impacts to international relations, and permitted selenium levels that will remain well above the aquatic and drinking water guidelines for many years to come.

In conclusion, we found over a decade of neglect in compliance and enforcement program activities within the Ministry of Energy and Mines and significant deficiencies within the Ministry of Environment’s activities. Overall, we concluded that the compliance and enforcement activities of the two ministries are inadequate to protect the province from significant environmental risks.

The independent expert panel noted that without change, the province can expect, on average, two failures such as Mount Polley every ten years. The panel firmly
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rejected any notion that business as usual can continue.

We reached a similar conclusion at the end of this audit regarding compliance and enforcement and have one overall recommendation. We recommend that government create an integrated and independent compliance and enforcement unit for mining activities, with a mandate to ensure protection of the environment. Given that the Ministry of Energy and Mines is at risk of regulatory capture, in that it both promotes and regulates mining, our expectation is that this new unit would not reside within this ministry.

This concludes our summary of the report. Morris Sydor will conclude our presentation by addressing key points that were outlined in government’s response to our report.

M. Sydor: Thank you, Ardice. When we look at government’s response to our Mount Polley section, we find that it questions our findings and conclusions. I’d like to spend a few minutes now to clear up this area of dispute.

When you look at the response, it states: “The audit opinion is contrary to the expert panel findings of cause.” It goes on to state that the panel found “the fundamental cause of the…failure was the lack of appropriate…site characterization when the dam was built and designed.” Now, that goes back to the early to mid-1990s. The response also states: “The failure of the tailings storage facility was not a compliance and enforcement issue.”

There are two points raised by government here — first, that we have an incorrect assessment on the cause of failure, and second, on the role that ministry compliance and enforcement could have played.

Let’s look first at the matter of cause. The panel’s main assignment, as you all recall, was to identify and report on the cause of the failure. To do this, the panel considered two issues. First, the failure mechanism — that is, identifying the component of the dam or foundation that failed to function as expected. The second component is the failure trigger: identifying the practices — and those may be technical, management, related to construction or something else — that enabled or contributed to the failure occurring. These two combined provide an understanding of the cause.

Lastly, the panel was also charged with identifying what actions could have been taken to prevent the failure. When we look at what the panel said about cause and preventing the failure, we find that for the cause of the failure, the panel stated: “The root cause of the breach was the undrained failure of the upper glaciolacustrine layer under the imposed load of the perimeter embankment on August 4, 2014.” Failure under the imposed load — that’s what the report states.

The panel identifies the practices that enabled the failure. It says: “The specifics of the failure were triggered by the construction of the downstream rockfill zone at a steep slope of 1.3 horizontal to 1.0 vertical.” So the panel has identified mistakes made during the construction and operation phase as the primary drivers for the failure.

When you look at government’s response, you can see that it has focused on a mistake made during the original dam design phase and has not acknowledged the mistakes made during the dam construction and operation phase that actually triggered the failure. Now, our report mirrors the panel’s finding of cause as being primarily related to the construction and operation phase.

For the third item, actions that could have prevented the failure, the panel stated: “Had the downstream slope in recent years been flattened…as proposed in the original design, failure would have been avoided.”

Now let’s look at the second area of contention — government’s statement: “The failure of the tailings storage facility was not a compliance and enforcement issue.”

That is based on government’s view that the hidden clay was the cause of the failure and that inspections would not have found it. Now, we agree that inspections would not have found the weak layer of clay, but as noted on the previous slide, it was the construction of the steep slope that triggered the failure.

The ministry has a responsibility for regulating the construction phase. That slope would have been visible to ministry inspectors and was, in fact, documented in reports to the ministry. As the panel report noted, that slope was unprecedented for that site. The chief inspector report also states that prudent engineering standards require that steep slopes on variable soils must have a flatter design. So enforcement actions could and should have been initiated.

Why didn’t the ministry enforce a more prudent standard at Mount Polley? That’s the question that the expert panel tried to answer but, ultimately, did not. Instead, the panel noted in the report that it did not understand why the steep slope was allowed to become relatively permanent. The panel also went on to state: “It is not unreasonable to ask whether the Ministry of Energy and Mines could have acted sooner or more aggressively in these matters.” Our assessment looked into this question, and we concluded that the ministry could have done more.

As the Auditor General indicated at the beginning, this audit has been a long, intense process. In addition to the many meetings with Victoria staff, the audit team visited a number of ministry offices and minesites across the province. Everybody accommodated us and took the time to discuss the matters we were pursuing. We certainly appreciate their cooperation.

The ministry has major challenges ahead. It’s addressing more than 40 recommendations from three reports. At this point, we look forward to seeing how government progresses in establishing a robust and relevant compliance and enforcement program.

B. Ralston (Chair): Thank you. Now I’m going to turn to the Ministry of Energy and Mines. Elaine McKnight, it looks like, on behalf of the ministry, will make a presentation.

E. McKnight: Yes. We were instructed to do this as kind of a joint presentation between MEM and MOE. I’m going to do the majority of the speaking, but Wes is going to contribute periodically. We didn’t realize we were able to do two when we were submitting.

B. Ralston (Chair): Perhaps I’ve misled you, then. I just assumed that…. In the order in the agenda here, you’re first. Not to diminish the role of the Ministry of Environment, because we’re very much focused on the interaction of the two ministries.

I won’t introduce my staff here again, because they were put on record, but I have a number of folks with me today — in particular, with Al Hoffman and George Warnock, around from a technical point of view. Myself, I’m not technical by nature, but I do have the staff here. So if there are any questions in that detail, we’ll have the staff to respond.

I want to first thank the committee for having the opportunity to speak today and to be able to answer any outstanding questions as the day proceeds.

Government agrees that improvements definitely are necessary, and initial work is underway to address all 16 sub-recommendations.

Since the report release, we have had further communication from the Auditor General’s office where they have raised a concern that we may have misinterpreted the main recommendation. For us, I would say that is probably valid. We took this as, from removing the recommendation to move C and E from the ministry was in reference to separating it and, by default, separating it from permitting….

When you look at page 44 of the audit, we got this feeling or that sense of what it was. Really, it does talk about here, where the audit says, “Most of MEM’s efforts are devoted to supporting the development of mining through processing permits for new and existing mines….” This emphasis is that it’s on promotion, and so we took the separation from C and E and permitting as a challenge for us to understand. As Carol did indicate, C and E and permitting are integral together, regardless of how those divisions are housed in our organization.

We have not been able to find a working model to date where that separation exists, but we will continue to look to the jurisdictions that have been recommended.

We are also reviewing the finding that the promotion conflicts with our regulatory function. It’s important to note that B.C.’s legislation does not include the mandate for promotion in our legislation. We have had suggestions from the Auditor General to look at jurisdictions, such as our provincial counterparts in Nova Scotia, Ontario and in Queensland, Australia. We have done comparative analysis on those jurisdictions, and I’ll come back to that in a moment.

We are undertaking a jurisdictional scan to look for the best leading practices to really improve upon our regulatory function. We also want to reaffirm our five points of clarification from our response.

I’m not going to touch on all of them. The five that were mentioned earlier — audit scope, appropriate standards, disclosure of information, Mount Polley and professional public servants…. I won’t touch on all five, but I think I’ll touch on two.

Really, it is probably the area where we feel it’s important to say that we do not agree with the assertion that the accident at Mount Polley could have been prevented through MEM’s actions. The audit opinion is contrary to the expert panel’s finding of cause, and it’s not reflective of the regulatory regime in place at the time.

Specifically, the panel found that inspections of the TSF would not have prevented the failure and that regulatory staff are well-qualified to perform their responsibilities, and the panel found that performance of the regulator was expected. So it was just to be able to clarify what the role of the regulator is in that function for Mount Polley. I’m certainly not an expert in this area, but I do have the qualified professional engineering staff with me today that will speak to that issue.

I also feel it’s important to mention the topic of regulatory capture. The Auditor report suggests that the professional public servants are unable to differentiate between mandate components, or they’re unwilling to enforce existing regulations.

I was appointed last fall to the position of Deputy Minister of Energy and Mines, so when I first became aware of that concern from the Auditor General, I was quite concerned. It’s a fairly serious allegation around regulatory capture, so I felt it was important to have the dialogue with the Auditor General and to ask for specific examples so that I could take appropriate steps to make the changes that were required. In the dialogue, we did have numerous discussions around this point with the Auditor General. I think that where we landed was that there is a concern or there’s risk for regulatory capture, as opposed to there actually is.

Since that time, I’ve taken the opportunity to meet with numerous staff within the ministry and really know that the ministry is comprised of many dedicated professional public servants and have come to the conclusion that they have a really good understanding of what their role is as a regulator and that they find that balance on a regular day. I don’t feel that we’re at the same kind of risk of regulatory capture, but it is something that from a policy point of view, we do agree that we need to con-
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tinue to clarify that. It’s an ongoing aspect for training and an ongoing aspect of making sure that people…. As they carry out their day-to-day jobs, we do not run into a greater risk of capture.

We are working to get greater clarity around the Auditor General’s definition of promotion. On the advice of the Auditor General, we have looked into our counterparts in Nova Scotia, where they have recently removed a reference to promotion in their mining legislation. As I said earlier, B.C. does not have that reference in its legislation. We will continue to work with the Auditor General and continue to look for jurisdictions that have successfully implemented a model where there’s concern around promotion and what that is. I think the minister at the time said, basically, that he’s the one who does most of the promotion. We don’t feel that we have that in our mandate within the organization, and we are looking to both permitting and compliance enforcement as being the main emphasis.

Limited compliance and enforcement program, weak planning results and inadequate regulatory oversight — in response to that, we will be establishing a compliance and enforcement board. It’ll be to oversee an integrated, coordinated, regulatory approach to the province.

The board will be made up of myself, the Deputy Minister of Environment and the associate deputy minister of the environmental assessment office.

The board will develop compliance and enforcement plans to map out proactive annual activities based on a risk-based approach. The board will also be responsible for furthering long-term strategic improvements in other areas such as enhancing training; developing policies, procedures and tools; conducting evaluations; and expanding public reporting.

As for the topic around inadequate reclamation security, I’ve done a review myself in the last few weeks. We are doing a further analysis in this area. There actually is a very robust program in place. I think that it’s important to know that, with the reclamation, it’s an understanding of the environment and site condition — it’s very mine-specific and site-specific — and a really detailed analysis of what goes into those estimations of cost for reclamation. As we learn more around what changes for water quality, site conditions…. All of those factors are looked at on a regular basis.

Security has more than doubled since 2011. Our ministry builds in a scheduled increase to securities as a condition of permits. So it is a condition of the permit, and it is a condition that if that permit is changed, there is an obligation to do a review. Having said that, though, we have begun a cross-jurisdictional scan for best practices. We know it is a common challenge. Recent audits in Alberta and Ontario had similar findings.

We want to be able to ensure that we have the right balance. We also know of some jurisdictions that have moved to a 100 percent model. Now they’re beginning to reconsider that because they’ve ended up with significant failures of mine closures due to the cost of the reclamation amount.

At this point, there are a couple of others where we said that MOE has a compliance and enforcement framework, but there are gaps in its application.

I don’t know, Wes, if you want to talk to that at all at this point. Or do you want to do that at the end?

W. Shoemaker: Why don’t I maybe touch on that as the concluding remarks and let you finish your presentation.

The failure to adequately coordinate with each other. Today we have many points of interactions with EAO and MOE, but we agree that that always can be improved on. I think that we work extremely closely. We do that today with our permitting activities, and we will do the same with our C and E so we can develop that and make that a stronger integration.

Lack of sufficient resources and tools to manage environmental risk. In the Ministry of Energy and Mines, we have recently changed the Mines Act to allow for administrative penalties. I think that this is really important — to be able to do that. We’re also looking at resourcing overall.

The comment around focusing on resources and on permitting of new mines over C and E. Over the past couple of years, the ministry has focused on developing efficient and effective coordinated permitting, but that wasn’t done at the expense of C and E. That is a different function within the organization. They are tied and related, but we did not use that emphasis to be able to take resources from C and E. We are going to use that approach, which has been very successful, of integrating that work effort from a project board point of view, and we’ll do that on compliance and enforcement now.

The comment around the failure to adequately monitor and inspect sites. The number of mine inspections has increased over the past few years. However, we do accept the recommendation to have an integrated risk-based approach across all of our regions. Right now we would agree that we have a different risk-based approach in the different regions. Some of that is valid because of just the different landscape and terrain, but we will look to be able to have a more integrated and a more solid risk-based approach across all of our regions.

A lack of enforcement tools. We talked about the Mines Act being changed to allow for administrative penalties. We are also looking to be able to highlight our code review, which is almost complete at this time.

Government’s immediate response. In regard to the major recommendation, we will continue that jurisdic-
[ Page 906 ]
tional scan. We are very open and willing to actually look at working models and to be able to look for any leading practices for us to be able to consider. That work is underway. As I said, we are establishing the board. We really do believe that the board will ensure greater integration between MEM and MOE and, of course, the environmental assessment office.

A lead position has been established for and will be the secretariat to this deputy board. The position will lead our overall response to these recommendations and the integration of compliance and enforcement across the ministries. In addition, a competition to fill a deputy chief inspector for compliance and enforcement is also underway.

Significant actions in the mine oversight. Over the past year, the ministry has been implementing recommendations from the expert panel, the chief inspector of mines and, now, the OAG — 43 recommendations in all. Some of them overlap. Some of them have some similarities. But we will be looking and reporting out on all of those actions.

This spring we passed the legislation that enables the administrative penalties, and it also increases the severity of the penalties available for offence prosecutions. I think it’s important to note that there was commentary — and we agree with that — that previously the staff did not have the tools to be able to take an incremental approach. Now they do. I think in the past, the challenge was to be able to deal with enforcement by shutting down the mine. With the administrative tools and the penalties, we’ll be able to move down a path where we’ll be able to sanction penalties as we go along.

Transparency is key to address our concerns and demonstrate that the work is underway. Over the past year, we’ve made available over 100,000 pages of documents for information. We’ve also been collaborating with the environmental assessment office to develop a new website and released it last month.

I think it’s important to be able to say this, because it really provides extensive information on mines. Displayed on the map, it talks about their permits. It talks about their inspections, the dam safety inspections. This started with a focus on operating mines, and now it’ll be focusing on all permitted major mines in B.C. Further documentation, including annual reclamation reports, are being added in the coming months.

I think the other part, the next one, is around the code review. We’ve had a code review going on for over a year now. We have some representatives from the union, First Nations and mines managers and have spent the last year reviewing the health and safety code for mines in B.C., with the mandate to implement recommendations of the expert panel. So those panel recommendations under the code review…. That work is nearing completion, and we’ll be working to implement those over the next coming months.

Then in final…. I agree with the Auditor General that this was a long process, and there was a lot of opportunity for dialogue. We don’t agree on all things, as it relates to some of the assertions, but for the recommendations, we’ve embraced those. We’re underway to be able to….

As I said, all work is underway under the 16 sub-recommendations, and we are truly trying to understand the model from separating out C and E and what that means. We’re looking to find a working model. We’ve looked to the jurisdictions in Queensland and in Ontario, we’ve looked to Nova Scotia, and we have yet to understand what that model will be. But we will continue that effort to be able to learn from any jurisdiction where that is the case, and we will adapt accordingly as soon as we can have greater clarity of what that would look like.

I think it’s important to say that with all the work that we’ve had underway with the team within the compliance and enforcement group, they have done a lot of work post–Mount Polley with chief mines inspector Al Hoffman and his report. I would say we are well underway to making a number of changes that need to be made and that we are definitely committed to continue our efforts to enhance our mining and enforcement program.

W. Shoemaker: Chair, we do apologize. We understood that we had a presentation on behalf of government. Perhaps let’s use that as an example of how we’re cooperating together, that we can even agree on a single presentation as such.

Maybe just a few points of emphasis from my part. I, too, maybe will begin where you left off, Elaine, in thanking Carol, Morris and Ardice for working with us as we went through this audit. Again, very complex.

We had many, many a conversation, and I appreciate very much the fact that the office listened, at least was willing to hear what we had to say. I think it’s been stated — the fact that there are many perspectives that we still don’t agree upon but what matters most is we know we have to do something going forward. What we have right now is not good enough, and that’s the point from which I start.

As it pertains to the compliance and enforcement efforts in the Ministry of Environment, I am happy to say that from a team that existed only a month ago of 17 individuals, we’ve been fortunate to be afforded additional resources. Over the coming weeks or so, we’ll be adding to our complement, in the order of 18 to 24, and depending on how you staff positions, we could be as much as a compliance and enforcement group of 48 individuals. We welcome that.

We know, and acknowledge the finding of the audit, that we’re not meeting our own compliance policy, and that is getting to every high-risk mine inspection each year. We certainly hope to accomplish that this year with the additional resources that are afforded to us.
[ Page 907 ]

Just a couple of key points on, maybe, the areas of disagreement that were already highlighted.

We had a discussion about the standards upon which we felt were appropriate for the audit. While it is true that our own compliance management framework was in part the measure upon which we were compared to, you will see referenced in the report some international standards, be they the OECD standards or the international framework for compliance and enforcement. We believe that it should be our own laws and regulations and, again, our own policies that should serve primarily for the focus of how we monitor and measure our performance, because it’s those other external standards that we cannot enforce upon. We have no jurisdiction with which to do that.

I’m happy to expound at further length on some of the questions. So as not to belabour the opportunity for members around the table to ask questions, I’m happy to go into greater detail at a future point on the whole cabinet discussion around the use of section 137 of the Environmental Management Act and how that all played out.

B. Ralston (Chair): Section 137 — since it is an issue, is there something succinct that you could say now that would help guide questions and discussion?

W. Shoemaker: Certainly. Right now statutory decision–makers, under the Environmental Management Act, are very limited on what they can consider in issuing a permit. To maybe oversimplify it, all they can look at is the end of the pipe. They have to look at…. The only the criteria that they have is the contaminants, the constituents that are being discharged into the environment. Given the historical mining that occurred in the Elk Valley and what Teck was proposing vis-à-vis the expansion, the statutory decision–maker in this case could not issue a permit.

That is why, for a variety of factors which cabinet is allowed to consider under section 137 of the Environmental Management Act…. It’s not that they can consider absolutely anything under the sun. They are permitted to consider social, economic, environmental considerations and to take a more broad consideration in mind, rather than just at the end of the pipe, to determine whether in fact they do want to issue a permit.

Cabinet discussions are privileged conversations, so again, we can’t share the exact nature of the cabinet discussions, and that was the position taken in the report. That happens all the time. But notwithstanding that, I think Minister Bennett was very, very clear on many occasions about the sorts of factors that cabinet had to take into account when considering such a permit.

It was a choice simply of two things. First of all, do we not issue a permit to Teck to allow them to continue their operations to make necessary investments — $600 million in investments, in nine active water treatment plants — so that they could start to stabilize the selenium curve and start to bend it down through active water treatment? Or the alternative is that Teck can’t do that. Teck walks away, and we’re left holding the bag, with a problem that only grows worse over time. Certainly, I think history proves itself as to where we landed in that regard.

Chair, I guess I’d end on that part, on section 137, and maybe just a couple of other points. But happy to come back in greater detail as the committee would determine.

B. Ralston (Chair): We’ll leave that to the members, but sure. Please continue.

W. Shoemaker: My perspective is that in elements of the report, especially in the area of the Elk Valley mining discussion, it appeared to me that a preponderance of the work, the report, is more about permitting when it really was to be about compliance and enforcement. In that regard, we had put together a very robust compliance and enforcement program for the Elk Valley coming out of the permits that we were never asked about, but nonetheless, we’re prepared to talk about the sorts of things that we’re going to do to hold the company accountable for the actions arising out of the valley-wide permit.

It was pointed out early on that the environmental assessment office was excluded outside of the scope of the audit, and that is true. But I think it would have been appropriate also to include the important role that they play in terms of monitoring the legal and enforceable conditions that go along with the environmental assessment certificate along with the permit conditions that perhaps give the public a greater assurance that there are more ways that we can get at holding gas companies accountable for those actions.

L. Reimer: Thank you very much to the Auditor General for the very extensive and detailed recommendations, which I know will help make mining better in British Columbia.

I was intrigued by the presentations by both government and the Office of the Auditor General with respect to the idea of promotion. In my mind, as government MLAs we are often asked to promote certain government activities, and yet I have never been asked to promote mining. I’m sure the minister has probably promoted mining, and so I’m intrigued about the fact that it’s actually a mandate of the ministry to promote mining. I’m wondering where that came from, because I wasn’t aware that the ministry promotes mining.
[ Page 908 ]

A. Todosichuk: One of the areas that it came from is the minister’s mandate letter.

I have a few other questions for the Office of the Auditor General, and maybe I will also ask for clarity from government on this particular issue. Did you want…?

My second question, then. It was mentioned that there were mine sites visited. I’m just wondering which mine sites we visited.

A. Todosichuk: We had a sample of eight, but our office staff also went out and visited several mine sites. We visited…. Sorry. I’m probably not going to remember the names off the top of my head, but Line Creek, Equity, Endako and…. There’s another one. I’m sorry. I can get you the names of all of them.

Now, the other thing that I found interesting is that the members of the Office of the Auditor General often audit value for money, and you’re auditors.

A lot of the very detailed recommendations in this report were around mining, and so I’m just wondering if you hired any experts in the mining area, such as were on our expert panel, as an example, that did the report on Mount Polley, and who did we hire to provide that expertise.

C. Bellringer: Yes, we did. We use subject-matter experts in almost all of our performance audits. In this case, we had three that we used throughout the audit and one that we hired at the very end to review the full report after we finished, who had expertise in….

A. Todosichuk: The experts that we had throughout the audit, as Carol was indicating…. One was a professor in mining. One was a practitioner, and one was a lawyer. The fourth person that we hired, specifically to look at the Mount Polley section, was a mining engineer.

C. Bellringer: One of the issues that we’ve identified in our practice of hiring…. We call them SMEs, subject-matter experts. One of the issues had been that when we contracted with them, we had not been asking their permission to use their names in a public way. Subsequent to this audit, we’ve now started to do that. In fact, for the report we just issued on the access to tertiary care for mental health and substance use, we did name the subject-matter experts in that report. That was the first time we had their permission to do so.

L. Reimer: Okay. The chief inspector of mines. Was the chief inspector also interviewed on this? Is that where you got your information with respect to the inspections?

A. Todosichuk: The chief inspector we met with, and we cleared our Mount Polley findings with him during the course of the audit.

M. Sydor: We also had a number of interviews with the deputy chief inspector as well, who’s responsible for the compliance and enforcement area.

E. McKnight: The way we view promotion is that it is the minister’s accountability. The only thing in the ministry that would be viewed from a public point of view would be our geological survey branch.

They’re not statutory decision–makers. They don’t make permitting decisions. They don’t make C and E decisions. They’re there to do the geological survey mapping, and so they do share that. They are able to put that out there to offer to mining companies. It is one of the things that does make B.C. quite unique in that realm, but they’re a separate branch from anything from compliance and enforcement or permitting.

P. Robb: I think Ontario and other jurisdictions you look at…. The promotion comes from our geological survey branch. They get out. They promote what great things we have in B.C. as far as rocks and geology and those pieces to try to attract investment to the province.

As Elaine said, they’re not statutory decision–makers. They don’t review projects. They don’t review permits. They don’t do compliance and enforcement. They go out and do summer field seasons, release their work or review somebody else’s work to promote mineral exploration and development in B.C.

L. Throness: I have several questions. Chair, feel free to cut me off when you feel it necessary.

B. Ralston (Chair): I’ll give a bit more latitude, just given the subject matter. I’m sure members will exercise their own discretion as well.

L. Throness: In my three years of being on this committee, this is a unique audit in that there are…. You know, usually a ministry will give meek acquiescence
[ Page 909 ]
to the findings of the Auditor General, but in this case, there’s a fairly stiff resistance from two ministries.

In a court, defence and prosecution will arrive at an agreed-upon statement of facts. This obviously was not done here. Is that not part of your process?

C. Bellringer: It’s not a legal process, so it doesn’t parallel it. We’re only required to provide the minister…. Actually, the wording in the act is “the ministry,” not the minister. The ministry must be provided with a copy of the report seven days before release. I think that’s the only requirement in the act.

We follow practice that is much broader than that. We engage the ministry right from the start. As I mentioned, we discuss the criteria that’s going to be used. We get actual sign-off of that criteria. We provide the findings as we go along. We clear facts.

At the end of the report, we provide a draft of the report in its entirety to the ministry, through the deputy minister. Actually, we start with the program level. We provide a complete draft. We ask for comments. We get those comments back.

In this case…. Okay, I’ll throw the number out. We had a 90-page — give or take — report in the first draft, and we got approximately 90 pages back in comments. We went through each and every one of them and specifically answered why we had either said something or where the source of the information was. Much of it was around scope. There was an argument as to some of things that we reported on being out of scope, being not in the original criteria.

As I mentioned, if it comes to our attention in the course of the audit, we decide whether or not to then vary the scope from that original design and we include it, because we think it’s important for you to know.

Then at the end of all of that, we just say: “Okay, here are the things we’re accepting. Here are the things we’re not.” We provide a further draft of the report to the deputy minister for their formal comments to come back to us. That’s, again, a process that we sometimes even have to discuss those comments. In this case, we had to do that. And then the report is as you see it.

It’s not what you describe, in terms of a legal process. We don’t put anything in the report in the first place that we don’t have evidence for in our files. We have, internally, quite a bit of assurance over the quality of the reports. We have a process we call “challenge,” where senior people within the office discuss the report as it’s progressing. We have a professional practices area. We have what’s called an EQCR. It’s an audit requirement. It’s that another qualified professional in the office has to be at the same level as the most senior person on the team, and they have to do the file review.

In this case, I actually brought in the professional practices people to do a further full file review — which is, again, something we rarely do, but we felt it was necessary, given the amount of discussion that was going on, to ensure that we had documented evidence for everything that we had in the report.

L. Throness: I only ask this question because there really is a huge weight of responsibility on the shoulders of the Auditor General, given the liability risks that can emerge from statements that you’ve made, particularly about Mount Polley, that put the taxpayer in some degree of jeopardy, I think, when strong statements are made over which there is factual disagreement.

The second question is about the separation question. There are many ministries which have some responsibility for promotion as well as regulation. I would think of Tourism, International Trade, Agriculture, Advanced Education. They all have some degree of responsibility to promote their sector as well as regulate it.

Are you suggesting that C and E should be separated from promotion across government, and is that policy workable?

C. Bellringer: We didn’t do an audit right across the board. As a matter of principle, if there’s a risk in terms of compliance and enforcement, yes, I would suggest that it be separated.

My third question is about liability. We have a total liability of $2.1 billion, and we have about half of that, basically, in cash now. When you consider the insurance industry, they are required to have maybe 15 percent of their insured assets as capital — less so in the case of banks.

Would it be helpful to have a recommendation that this money, this $775 million or $900 million — however much it is — be pooled in order to provide an insurance function in a more efficient way than a mine-by-mine insured amount?

C. Bellringer: We actually had looked at this from the perspective of what the government’s policy was as opposed to looking at different models to suggest a model. So I don’t have a view on other alternatives that would be a viable policy recommendation.

I believe the case is that with most of the current — I can’t think of the word — financial amount that is brought in, the guarantee that’s collected, that is being done on a current basis. But there are some older ones where it was not the case.

Some of it’s around timing. But we were looking at it to see whether or not the government’s policy was actually being complied with or not.

My main concern, I guess, in hearing the presentation of the ministry responsible for mining is the tone of the response. You’ve got now 43 recommendations from multiple bodies, both within and outside government, for significant reforms within your ministry. I would characterize the response that we heard here today as one that is, at a minimum, defensive at a time when, really, the ministry should be embracing the idea of change and reform in light of what is quite a damning report from the Auditor General.

I’ll give you, Mr. Chair, an example of how this is playing out internationally. I have a letter dated May 12, 2016, from two U.S. senators and a Congressman from Alaska which includes, among other recommendations to their federal government, “Support and work towards robust funding for water quality testing on the American side of the border to establish baseline water quality data so that the U.S. can file for damages in the event of mining-related damage from Canadian mines” — by which they mean British Columbian mines.

During the pendency of the audit, a company called Banks Island Gold, operating a mine called Yellow Giant…. The ministry received a report that they were illegally dumping tailings on July 2. It took until July 9 to actually get up to the site. They accepted the recommendation of the mine operator at face value. The mine manager said there was no problem. There was a huge problem. It took a month to shut down the mine. Even after the ministry said “shut down,” they continued to operate for two more weeks and issued public statements that they were still operating.

I expected that we would come here and we would hear from a ministry that was significantly embarrassed by our international and domestic humiliation — frankly, for our misconduct on the mine file. Instead, something totally different and a nitpicking of a key recommendation that promotion be separated from enforcement.

This isn’t a radical new recommendation. In 1992, in relation to the Westray mine disaster, a key recommendation: “The Department of Natural Resources should no longer act as both promoter and regulator of the development of mineral and energy resources in the province, since this dual mandate constitutes a conflict-of-interest situation.”

I guess my question is to the ministry. Why are we seeing this response from you, instead of saying: “Wow. We really do need to look at some improvements here”?

E. McKnight: My apologies to the group if I did sound defensive. That was not meant to be the case at all.

I think we did say, overall, we are working on all of the recommendations. We are really trying to understand the difference on the promotion one. We have absolutely gone full force to be able to make the improvements. We agree that there’s a lot of work to do.

On the actual one for Westray in Nova Scotia, I did put that out there as a point of clarity. It wasn’t meant to be a nitpick. We are genuinely trying to understand the recommendations and the difference.

I did allude to it — that the counterparts in Nova Scotia, from that…. They did have a specific reference in their legislation to promotion. It was on the health and safety side. I can have one of my staff speak more specifically about that. It’s a different scenario. But they did remove the promotion from the legislation regulation. In B.C., we do not have that.

We’re trying to look to all of those models. We have reached out to our counterparts in Nova Scotia to be able to understand how they’re structured, what they implemented differently. That work is underway right now.

It’s not a point of being defensive on that. It’s really, truly trying to understand where the recommendations are, where we can look to actually see a successful model that we can work at, because we agree. We have lots of work to do.

D. Eby: Let me quote to Ms. McKnight the principle that she reaffirmed in her presentation to the committee. This is the response to recommendation 1.0. I’m going to quote directly because I think it’s useful to use the actual words. “In the absence of evidence by the Auditor General that this has compromised the integrity of the ministry or its staff, government does not support the need for a reorganization of the ministries. However, we are prepared to further discuss this with the OAG.”

The message here is that in the absence of actual evidence of corrupt practice by the ministry, the government’s not even prepared to talk about supporting the need for a reorganization of the ministries. This was a principle that the deputy reaffirmed in the presentation to us this morning — and now a slightly different response.

Where is the ministry in terms of this reorganization? It was recommendation No. 1, in a text box, bolded, completely set apart from all the other recommendations. Yet in the number one response here, the ministry says that in the absence of actual evidence of corrupt practice, the ministry will not entertain the idea of reorganization.

E. McKnight: I don’t believe it says “corrupt practice.” For me, what I talked about was that the long dialogue with the Auditor General was to really understand: what were the scenarios? What is the evidence for a regulatory capture? I did mention today that it is a serious allegation, so I wanted to really understand. If it’s truly….

It’s not about corrupt practices. It’s also around: where is the significant perception of regulatory capture? Where are the scenarios on that? I did ask for specific examples because I did genuinely want to understand. It is very different if there….
[ Page 911 ]

We talk about areas of risk. I did say earlier today that we take that responsibility very seriously, and I did agree that we need to continue to enhance our policies and make sure that our training is in place so that we minimize any risk. Given that strong assertion, we really wanted to try to understand if there were truly specific examples. So it was more around trying to educate ourselves, educate myself as a deputy.

I think that I did agree with the Auditor General that there can be areas of risk. But if there are areas of risk, then we need to make sure that we’re educating and dealing with that overall.

I think the issue of regulatory capture…. In my mind, it is a corruption of the…. I mean, I’ll take the deputy’s advice on that. But the issue of a captured regulator is one where there is non-existent enforcement and where permit requirements aren’t being adhered to. In the absence of adherence to the permit, there are no penalties, and there are no consequences.

Just flipping through this report, how the ministry could come to the conclusion that there was no evidence of capture when the number of staff around inspection is a fraction of the number around other aspects of promoting the development of mines and when it’s a key role of the ministry to promote mining in British Columbia, which it should be, I think…. We should be promoting mining.

The question is whether it should be in the same ministry. When you’re given a target of two new mines or two new expanded mines in a year and then you have an issue of an enforcement or a new regulation that might restrict that, then you’re in a very clear conflict of interest.

My question is: how can the ministry look at this report and not see itself evidence of a captured regulator? I think a risk of a captured regulator is a very polite way of putting what’s in this report. I invite the deputy to respond to that, if she wishes. It’s astounding to me she doesn’t see evidence of capture in this report.

E. McKnight: We actually, on a regular basis…. I’ve spent a lot of time over the last few months really trying to understand where we stand as it relates to inspections, as it relates to what resources we have in place. I’d be happy to have the chief mines inspector speak specifically about the Banks Island piece, because I think there’s a scenario there.

But the risk of capture…. I’ll use your words around very serious allegations, like for corruptions. I do not see that at all. I have not seen evidence of that at all. We have said that we need to continue to improve our compliance and enforcement program. We want to be able to do that. We want to have clearer policies. It’s very clear that we didn’t have all the tools — the staff didn’t have the tools — to be able to deal with what I would say were enforcement infractions, other than shutting down the mine.

We have different tools today. I think it becomes an issue of definition. I do think it’s important, wherein at any time when there’s risk of capture, that we actually take that very seriously and make sure that we are, on a regular basis, ensuring that we have the right kind of structure, rules and processes in place. I really wanted to be able to have solid evidence for us to be able to say, “If we really, really had that kind of a serious allegation, I would have wanted to be able to see that myself,” as opposed to that it’s more on the avenue that it’s really around a policy direction and a concept, a risk of regulatory capture.

So we do take it very, very seriously, and we are, I believe, really trying to put the work in place to make sure that we’re not suffering from that kind of regulatory risk at all.

S. Robinson: David had asked some questions, and I have similar ones. I just want to ask the deputy a number of questions. Does the ministry believe that British Columbians deserve the best system of mining regulations possible?

S. Robinson: Okay. And do you think that British Columbians right now have 100 percent confidence in that system that we currently have?

S. Robinson: I would say so as well. I think there are lots of details in here that demonstrate where it falls down, so I’m pleased to hear that there is some commitment to address some of those.

But I also believe that because British Columbians do not have confidence in the ability of this ministry to engage in regulation and enforcement, as it’s supposed to, and because the Auditor General…. Again, I think the words are really important. The Auditor General’s words in recommendation 1.0 are: “Given that the Ministry of Energy and Mines is at high risk of regulatory capture….” I didn’t hear her say that they’re engaged in regulatory capture, but that they’re at high risk and that there ought to be some sort of mechanism that minimizes that risk.

E. McKnight: Absolutely. That’s why we are looking very intently at the jurisdictions that we were recommended to look at. We’re trying to understand to help put in a true functioning, working model. We will look to any learnings, whether that’s from any of the jurisdictions that have been highlighted, and we have started our own
[ Page 912 ]
cross-jurisdictional review. We find it very important to be able to look to say: “What does that model look like?”

We have done some reorganization in the past, and in the past number of years, I would say that didn’t go so well, didn’t get the outcome that people were hoping to with those reorganizations. So we’re trying to take this thoughtfully.

But we would look to anybody who has information, and we would absolutely take that information and look at it and say: “If there’s a better working model, we will absolutely do that.” In the meantime, I think that our structures of putting in the secretariat with the integrated compliance and enforcement board will at least begin that journey around a greater integration and making sure that we understand, across the files, what a good compliance enforcement program is.

M. Sydor: I just wanted to get back to the discussion about compliance and enforcement and corruption that went on. We were talking about Westray. I just want to make sure that the committee members understand what happened at Westray and what impact that had on changing the compliance and enforcement regime there.

Westray was a coal mine. In the early ’90s, an inspector went out and saw coal dust in the mine. He told them to fix that problem. He came back in two weeks, and the coal dust was there. Again, the problem wasn’t fixed. He didn’t enforce an order on them. He walked away. There was an explosion at the mine, and I think 26 miners died.

Subsequently, I think it was a retired judge who was appointed to hold an inquiry. He held an inquiry, and what he determined was that, in fact, regulatory capture was part of the regime there that required change. So legislation was brought in, and here’s what the minister said on third reading. He thinks that the amendments to the legislation are extremely important because they’ll “ensure that the recommendations of the Miller report allow that the Department of Natural Resources will no longer be the regulator and promoter of the mining industry.”

What happened was that the legislation was amended so that the safety responsibilities went to the Department of Labour, and the environmental compliance responsibilities went to the Department of Environment. So we had three ministries. We had the Ministry of Mineral Resources that was responsible for promotion. You know, the word “promotion” means development. It means supporting the industry. We may not find it in our legislation, but if you read the literature internationally, “promotion” is the term used generally to support the industry, make sure there are effective tax policies in place, provide incentives, etc.

In fact, Ardice was just showing me the service plan for the ministry, and it did talk about developing a mining industry, supporting an efficient mining industry, etc. That’s what we view as promotion.

In any case, in Nova Scotia, what they did was recognize that there was a conflict of interest, as determined by a judicial inquiry, and split up their responsibilities into three ministries: Minerals, responsible for promoting the development of the industry; Labour, for safety aspects; and Environment, for environmental aspects. There was no corruption identified there. It was just a culture that was in place. When you have both of those functions in one ministry, it’s very easy for the one that the government is focusing on to supersede the other one and create the sort of problems that led to that.

There are a number of other jurisdictions where similar events have happened. We talked about the U.S. and the BP inquiry. We had one agency responsible for development of the oil and gas industry in the Gulf. That agency was split into three to separate their responsibilities and make sure that one group wasn’t affecting the work of another. The same thing happened in the U.K. I don’t think that in any of those cases was corruption identified as the issue. It was just the work environment that the people carrying out compliance and enforcement are put into.

If the ministry is looking for corruption here, they’re probably wasting their time. That’s not the issue here. The issue is reducing risk. That’s what our audit said, and that’s what it’s about.

S. Robinson: I thank Mr. Sydor for that. In some ways, where I’m wanting to head is that we have on the one hand an auditor that says there is high risk here. It’s sort of: “Alert, alert. There is the risk of something really awful happening.” The second thing is that we have a ministry that believes that British Columbians deserve the best system of mining regulations possible. They also understand that British Columbians have very little trust, I think, right now — very little confidence in the regulatory regime of this ministry right now.

Given that, given all of those things, I would have imagined that the ministry would say, “We’re going to look into this” — what the Auditor General has recommended. “We’re going to explore it because we think it’s interesting that in order to secure our relations internationally, in order to support and encourage growth in the mining industry, we have to do better.” I would have thought that that would have been the direction.

Instead, that’s not what we see in this report. I have to say I’m very disappointed. I actually have to say, given your last response, that we have a history of reorganizing that has failed. I would have thought that doing something very, very different — like separating it out — might be the actual answer. I’d like to hear your response to that.

E. McKnight: Sure. Then Peter’s going to comment as well. I think the thing around being…. We have em-
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braced the…. I have said this probably two or three times today. We will look at any model. We are absolutely willing to look, and we have looked, to the Nova Scotia model. I think there are some differences, which we talked about. We are already separated out. We have environment functions. We have the EAO. We looked at the model for Nova Scotia. We’re trying to work through with our counterparts: how does it compare? What have they structured?

We’re actually probably further ahead than them in some ways for different aspects. But we are absolutely looking to any model that will improve. We just want to make sure that we actually understand it and that we can successfully integrate with our colleagues, with MOE and with the EAO, in those functions and that clarity.

So we have no issue for looking at it. I’ve said that today. We’re not resisting that. But we want to be able to understand.

P. Robb: I think it comes back to some of the key words — “integrated” and “independent.” I think what Minister Bennett said in the press release was that business as usual is no longer acceptable. That’s the premise we’re starting from. We’re working from: how do we figure out what’s next? There’s no shelf-ready piece that we can pick off the shelf and say: “Nova Scotia — here we go. Plug and play.”

What we’re trying to do is to take an approach of assessment and look at the criteria. We think there’s a lot of great stuff in the process set out on how you should run an efficient compliance and enforcement regime. We would agree that we have lots of work to do, but there isn’t a shelf-ready piece that is integrated, coordinated and separate. It’s sitting down, taking all of those pieces, bringing it back to a board of deputies that are responsible for all those pieces and saying: “Here are a bunch of models that we think we should look at.”

When the letter, the response, was first written, we didn’t have a bunch of those examples. Since then, we’ve gone back and forth with the Auditor, and since then, I think, the minister said, during the initial press release, that we will go back and look at those. We aren’t so steadfast in saying: “Absolutely not.” There has been some movement in saying: “Let’s look at what all those pieces are.”

We’re not sure, right off the bat, that reshuffling where people sit is a solution. It may be a reshuffling of where people sit, but it also has to be a whole bunch of other pieces underneath that, which is what the new team and the new board is really to look at. We would say that business as usual is not acceptable. A bunch of the things that the Auditor said are really good to work with. We think we have a really good starting point to unpack what those are.

The work is yet to be determined, what that looks like, but it’s not sitting back here and saying: “Nothing in there was important. These weren’t really serious pieces that the Auditor found we needed to look at.” I would say that our staff take very seriously what was in there and want to talk every day about what that looks like.

I would just add that we’re willing to look at what all those are. We’re willing to bring it back to a board of folks to say, “Here are all of the examples,” work with MOE, work with EAO and then make some decisions. But to make those right off the bat wouldn’t have been our best approach here.

V. Huntington: I think one of the things that concerns me…. This was a very difficult report for me to read. The ministerial responses, the government responses, I found very difficult to read. I was really troubled by the entire thing. Primarily, for me, it backstopped everything you hear over the years about how the public and how we as legislators feel the system is working — i.e., it’s not working the way you anticipate it should, given the responsibilities and legislative mandates in the various departments.

So if I don’t go through on the detail — which, my gosh, I’d sure like to go through — I’m going to go back to this issue of regulatory capture. In listening to the discussion here and in reading what you’ve been responding to in the decisions to move forward, I don’t feel that you yet have an understanding of what regulatory capture is. It’s so insidious. It’s so much a part of your daily conversation with the permittees, with the different scientists, with the engineers, with the legislators. It’s so much a daily part of your environment that you don’t realize that you’re no longer at arm’s length from the decision-making and the applicant.

Regulatory capture isn’t a deliberate breaching of trust. It isn’t a deliberate corruption. It’s insidious. All of a sudden, Mr. Smith becomes Mike, and Mike’s the guy you had coffee with last week. You’ve been to the minesite a number of times. “Well, we’ll sit down and talk about exactly what this might mean and what this regulation is and how we can accommodate your needs, Mr. Smith” — now Mike.

All of a sudden, you have this environment — and it’s outlined in the report — of negotiation and cooperation. But that’s not what you should be doing. That’s not your role. Once the decision to permit an operation is made, then the roles should be arm’s-length. They should be capable of compliance and enforcement. You can’t enforce permits if you aren’t at arm’s length to them and to the individuals involved in them.

When you talk about setting up a mining compliance and enforcement board, I just shudder. To me, that
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means you haven’t understood that this is an arm’s-length issue. This is a separation-of-powers issue. It’s a separation of duties and controls and mandates. If Mines is responsible for the permitting of the on-site mining activity — how it’s constructed, what the processing process is, what the extensions to permits on tailings ponds are — then that’s your role. You look at that part of the mining site. Everything off that site becomes Environment’s role.

Yet you’re going to sit and talk about how you can integrate the responsibilities. I’m just looking at you, saying: “I don’t think you get what’s needed here.” Somebody has a mandate to protect the environment. Somebody has a mandate to ensure that the permitting structure of that mine follows the regulations and is done according to best practice. But you can’t have both in the same authority. I don’t think you can have the permitting….

I couldn’t agree more that the compliance and enforcement has to be separated from the permitting. It’s a role of conflict that is insidious. That’s all I think this report is trying to say and what most of us are trying to say and what I don’t think I hear here. It’s wonderful to agree over moving forward cooperatively. Well, I think you’ve been too cooperative, as it stands.

You roll in the environmental assessment office, and you’ve got another whole approach to cooperation and negotiation, because the assessment process itself is not something the public can rely on. I don’t think the Ministry of Environment can actually rely on it, ultimately. As part of your initial assessment, you have a working group. What is the working group comprised of? It’s comprised of the applicant, the local governments, all the stakeholders…. Well, no, not the stakeholders, unless they’re sort of science and within the realm of government.

You already have a negotiated table of concordance before the permit is issued. You’re even issuing a permit based on a previous negotiation, in most assessments. I think the whole process is sick. I sympathize with you, given that you have a government policy…. I’m not sitting here sort of meaning to sound critical of government; that’s not it. But you have a policy that says that the social good here is the economic activity and that we will rationalize its impact on the environment.

Staff have an obligation to follow through on that policy. But you see it. It’s not doing good for the environment. Somehow when I see a decision-maker saying, “I can’t authorize this permit,” and the cabinet is capable of doing so, therein we have the rub, really. That’s kind of something that that side of the table has got to deal with, in my mind.

It goes back to what was…. There was an audit in 2012 on the placer mining that Environment did. They found that 74 percent of placer mines were not in compliance with their permits, and they stopped some of them. Mines got so upset with Environment that they ended up saying publicly that they had overstepped their authority and they had absolutely no right to move into the issue of whether or not the permit was in compliance.

I look at you, and I say: “Is that right?” They were doing their jobs. Where is the overlap? Where is the failure to enable a ministry to be separate and responsible for its own mandate? I just think there is real trouble here and that until you recognize what regulatory capture and potential conflict is, we’ll never resolve the issue.

You cannot collaborate on every single aspect of a permit and enforcement and end up with anything that’s real on either end, in my mind.

B. Ralston (Chair): Thank you. I know that was your first cut at it, so I let you go on a bit.

E. McKnight: I can respond. And then I’m going to ask Al or George to respond, as well, to this, because I think what I hear….

I agree around the concern for regulatory capture. What we’ve been trying to understand with the solution around separating out, as you’re suggesting, compliance and enforcement from permitting….

We have looked to many different jurisdictions. What I’m learning is that there may be different functions housed in different ministries in different areas. In some jurisdictions, they have the tailings facilities and the oversight for tailings facilities separate from mines. But they have compliance and enforcement and permitting together for those tailings facilities.

Whether it’s health and safety…. We haven’t yet defined that model that you’re talking about where, truly, permitting is separate from compliance and enforcement. We will absolutely, with open arms, look at that model. We have done this scan across our counterparts across the country. Some functions are in different ministries, but C and E and permitting of whatever that function is are always together.

B. Ralston (Chair): Well, it’s not really a debate. There are a couple of others who are going to respond, and then you can have a follow-up question.

E. McKnight: I think the important factor is to understand — I want to put it out there as well — how many complaints I get from the mining industry around the challenge from….

When there is C and E or there are issues, I get com-
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plaints all the time. I’m happy to receive those complaints. They talk about my staff, our staff at Energy and Mines as being challenging and difficult to deal with. And it’s to your point. They are doing their jobs. I have no issue with receiving those complaints at all, because I would say that every occasion I’ve looked into, the staff are doing their jobs. I do receive those complaints on a regular basis, so I have a fair bit of confidence that the staff are definitely doing their jobs.

A. Hoffman: I’ll start. As the chief inspector, I have the statutory authority and responsibility for permitting and health and safety at mines across the province. I just want to reassure the Chair and the members that there’s nothing in my mandate that says I should promote the industry.

The only exception might be is that if you have an industry that’s safe, that protects workers and the environment, then it leads to a more sustainable industry. In that sense, maybe I am promoting the industry. But there’s no…. My mandate is around fatalities and injury rates and number of inspections. That’s the only thing that I’m concerned about.

We try to cooperate with proponents over both permitting and non-compliances in the industry. That’s our first step. But let me make it perfectly clear that we do not hesitate to write orders. We do over 1,000 inspections a year. We write orders, and in some cases, we shut down mines. In some cases, we’re seeking prosecution. We are, in a number of cases right now. In fact, in one case, it’s a criminal code approach. I just want to reassure the members that that’s our primary function.

In terms of moving the technical people away, or those who write the permits, from compliance and enforcement, there would be big challenges about that. The permits themselves are very technical in nature, as you can imagine. They concern things like acid rock drainage and geotech, etc. It’s important that the people who ensure compliance and enforcement know what they’re talking about.

We’re not perfect, and we’re making some changes right now. The 43 recommendations were talked about before, and we’re looking at all of those 43 recommendations. We’re proceeding on all of them.

One of the major ones is the code review. That’s almost complete, with respect to tailings dams. There will be much more stringent requirements with respect to the permitting and compliance and enforcement of tailings dams.

G. Warnock: I guess I wanted to kind of reiterate what Al said. I’ve moved on to a different position now, but in my old position at Mines, it was my role to do inspections and to review permits.

Really, when I review a permit, that is the best time to find out what’s happening with all of the geotechnical infrastructure on the mine. It’s much more difficult 20 years later, when there are 100,000 pages of documents floating around, to figure out what’s happening at ten-metres depth below the ground. At time of permitting, that’s an opportunity, and we take that. We took three months with three people, almost full-time, to go through the permit application for the KSM mine, a huge mine. When else would I have that opportunity to do so?

The part about there being some sort of conflict…. If I write permit conditions for Al’s review and, ultimately, Al’s signature, I might be the only person in the mining ministry that actually knows what I’m looking for in that permit condition. So you have me at a desk writing permit conditions; you have somebody else somewhere else enforcing those conditions. They might not know what they’re enforcing. It’s a fundamental….

I can say without any hesitation that not once did I give a rip about what the mining company was going to reply to my conditions. I’m looking at it as a technical review and could not care less if they like it or not. When I’m on a mine site, when I’m looking to see if they complied with those permit conditions, the same applies. Did they comply, or did they not?

I don’t see a conflict. I’m not saying there might not be a better model out there. Maybe there is. But I think the ministry is taking the right approach in thoughtfully looking at how you separate permitting, because that’s kind of the…. What we keep hearing is that processing permits equals promotion, but I would categorically deny that. But how do we separate that and still end up with a working model?

R. Sultan: I am curious, Morris Sydor and Ardice Todosichuk, to understand your background in engineering and, in particular, mining. Can you tell us a little bit about your background?

A. Todosichuk: Sure, I can talk about my background. I’m an ecologist by training. I’ve been with the office for about six years, but prior to that, I was an ecologist. Given that we have a limited amount of specialties in our office, that’s why we, as Carol indicated, hire subject-matter experts to assist us in, obviously, something as complex as this and why we had three subject-matter experts during the course of the audit to advise us. Then we had a mining expert advise us at the end — a mining engineer.

R. Sultan: Did those outside experts that you retained advise you from day 1, or did they come in towards the end?
[ Page 916 ]

A. Todosichuk: They advise us, usually, throughout the audit, but we have certain scheduled meetings with them. Usually in the development of the plan, when we clear our facts and findings and also when we develop the report, they come in and they add their advice.

M. Sydor: Well, I started out as a chartered accountant, and then I moved into performance audits in our office many, many years ago. What I’ve been responsible for, for the last several decades, is actually carrying out performance audits similar to the one that we’ve just finished here.

Like Ardice, I’m not a mining engineer. You know, we do have a methodology that we follow. For reports, where we think we need support, we go out and seek that report and use it in a way that we feel appropriate.

R. Sultan: Lest there be any doubt in your mind, I’m very proud of the work that you’ve done on behalf of the Public Accounts Committee in the past. But I must concede some hesitation in terms of the depth of understanding you’ve brought to this particular assignment, particularly when you, apparently, cannot name the experts that you retained. They are some shadowy figures that we have to accept on good faith. Is that true?

B. Ralston (Chair): I don’t think that’s what the Auditor General said. She said that the terms of their engagement were that their names would not be revealed publicly, and they’ve changed the practice going forward. So to suggest that somehow they’re shadowy figures, I think, is unfair, frankly.

R. Sultan: Well, to me they are shadowy, Chair. I appreciate that might be the terms of their contract.

However, setting those issues aside, I must confess that the first impression I had of your synopsis was page 1, titled “Environmental Concerns.” Here’s a photograph of the Highland Valley Copper mine’s production, and it has a bar chart showing that for every 135,000 tonnes a day of waste material mined, they produce a measly 500 tonnes a day. It shows a picture of a big hole in the ground, which is indeed, in my recollection, the Highland Valley Copper mine.

I’m just wondering: what’s the particular environmental concern being highlighted here? You know — to maybe have a somewhat stretched analogy — you might have a picture of an airplane and say: “There are a lot of issues with this airplane. My goodness, what if the wing falls off?” Or having a photograph of the Victoria sewage treatment plant, should it ever be built, and saying: “You know, if this thing malfunctions, we’re going to discharge all those pollutants into the strait.”

I’m just wondering what the meaning of this picture is — what you intended to convey.

A. Todosichuk: The picture was just to, obviously, familiarize people who are reading it with where Highland Valley was or what it looks like — the picture on the left-hand side. It was more on the right-hand side that we were trying to show what the amount of waste rock is that’s happening with mechanization. Over the last years, the risk is increasing, because the amount of mechanization has allowed these great quantities of waste rock. With that waste rock is the potential, in some cases, as we pointed out, of acid rock.

R. Sultan: Well, precisely. And you have in fact, I think, accurately portrayed, in an easy-to-understand manner, the nature of the open-pit mining industry in Canada. I mean, this is not an unusual photograph, although the scale is perhaps larger than normal because of the scale of the operation.

To me, it was a signal that maybe this was: “Wow. This is something we haven’t really experienced before.” And I think, if you haven’t really been to a large-scale open-pit mine before, that is the reaction. “Good grief. What’s going on here? There’s all this machinery. They’re digging this big hole in the ground. I hope these people know what they’re doing.”

The report — perhaps to some degree, unfortunately — seems to have regressed to an examination of the Mount Polley disaster. That certainly is a vivid example of how things can go wrong, and I’m sure nobody in this room would care to stand up and defend what happened. It was a big, bloody mess. It’s an embarrassment to the industry. It’s a wake-up call to the engineering profession. It’s shameful. It should never have happened. It has disturbed the lives and the economy of the Cariboo. It is — I’m perhaps repeating myself — a bloody mess. I don’t know anybody in the industry who thinks: “Well, you know, that’s what happens from time to time.”

No, no, no. They don’t have that reaction at all. They’re highly disturbed, highly embarrassed. They realize that the continuing consequences, as our member…. Am I allowed to use Selina’s first name? I’m not sure. Anyways, it has shaken the public confidence in the process, as well as the industry.

Given all that, it’s perhaps not surprising that the minister has stood up in the House on many occasions and said: “We accept all 43 recommendations of the Auditor General’s report.” Then he says: “Except maybe part of one of them.” So you might say he has accepted 43½.

The issue today — and we’ve spent a great deal of time on it — is whether or not we need a brand new function which is entirely separate from the Ministry of Energy and Mines. From my own personal point of view — and I’m not running that ministry — I would say: “Well, if that’s what it takes to restore public confidence, who cares? Yes, let’s go ahead and do it.” I wouldn’t spend time studying how they do it in Nova Scotia or wherever. They don’t have too much to brag about in that particular province.
[ Page 917 ]

So who cares? It’s not a big deal in my personal mind, if you want to know my own opinion. But what is kind of silly, in my opinion also, is this endless argument of whether it was the clay or the angle.

I would like to read into the record the executive summary of what I view as the most competent report on the Mount Polley tailings storage facility breach. January 30, 2015, conclusions:

“The panel concluded that the dominant contribution to the failure resides in the design. The design did not take into account the complexity of the subglacial and preglacial geological environment associated with the perimeter embankment foundation.

“As a result, foundation investigations and associated site characterization failed to identify a continuous GLU layer” — clay to us laypeople — “in the vicinity of the breach and to recognize that it was susceptible to undrained failure when subject to the stresses associated with the embankment. The specifics of the failure were triggered by the construction of the downstream rock fill zone at a steep slope of 1.3 horizontal to 1 vertical. Had the downstream slope in recent years been flattened to 2 horizontal to 1 vertical, as proposed in the original design, failure would have been avoided. The slope was on the way to being flattened to meet its ultimate design criteria at the time of the incident.”

It goes on to talk about regulatory oversight, which I guess is very much the focus of our attention here today.

“The panel reviewed the roles and responsibilities of the B.C. Ministry of Energy and Mines — the regulator — and its interactions related to the MPMC TSF” — that’s this incident. “The panel found that inspections of the TSF would not have prevented failure and that the regulatory staff are well qualified to perform their responsibilities. The panel found that the performance of the regulator was as expected.”

Signed by Dr. Norbert R. Morgenstern, Chair, CM, AOE, FRSC, FCAE, PhD, PEng; Mr. Steven G. Vick, MSc, PE; Dr. Dirk Van Zyl, PhD, PE, PEng — these being the three experts hurriedly put to work to find out what in heck happened and how we can avoid it in the future.

Again, we seem to be pivoting back and forth. Was it the clay, or was it the angle of the slope? Well, the fact of the matter is, as I think we all understand, they both had to be present. If you had A without B, probably it wouldn’t have happened. If you had B without A, probably it wouldn’t have happened. You had to have A plus B. So whose fault was it? Was it A’s fault, or was it B’s fault? Well, it was A plus B’s fault. I think that’s fairly clear, at least in my mind.

I think it’s a little bit wasteful of taxpayer funds and these wonderfully expert people assembled today to say: “Really, I think it was the clay.” “No, no. You’re wrong. It was the angle,” and then start pointing fingers. Let’s concede a little bit of politics in the finger-pointing going on as well.

To repeat myself, I think this was a scandalously regrettable incident. I haven’t met anybody in the mining industry who’s proud of what happened or who are inclined to shrug their shoulders, saying: “Well, these things happen occasionally. Let’s get on with life.” No, that’s not the case. There’s lots of soul-searching going on.

I just hope that as a result of all the work the Auditor General’s staff has put into this thing, we end up with some sensible conclusions. If, as I’ve said, this results in a bifurcated organization, I shrug my shoulders. I can defend that. I can also denounce it. It depends on what side of the bed I get out of each day. But to me, that’s not the nub of the matter. I think it is good that we examine these things, make sure we understand why these mistakes happen and try and encourage the ministry and the industry and the profession not to allow it to happen again.

One final point. As a professional engineer myself, I have to issue a small bleat. If I can find the page saying, “They relied too much on qualified professional” — advice, was that it?

R. Sultan: No, that’s not the exact phrase. I’ve got so much paper, I can’t find it.

The implication is that the strategy of the government and of this ministry to depend on qualified professional persons was flawed, and they over-relied on qualified professional persons.

I would say: “If that’s your view, would they have been better off dealing with unqualified professional persons?” We deal with the best talent we can find. In this field, it will generally be experienced mining engineers, geotechnical engineers, mine experts and others who have been around this horn many, many times.

To say they’re relying too much on qualified people, I, frankly, find insulting. Obviously, it’s a phrase on your panels, Auditor General, taken out of context, but I really do take offence.

M. Sydor: You know, when we looked at the reliance on professionals…. We’re not suggesting that we go away with that model. Why we’re saying overreliance…. I think the chief inspector’s report also uses a similar sort of phrase. It’s the recognition that professionals aren’t always going to be correct, okay? It’s the expert panel that said that. The expert panel said: “You cannot presume that the designer will act correctly in every case.”

For Mount Polley, we’ve seen a lot of things going on that there were questions around, both by the staff from the Ministry of Mines but, as well, the panel questioned what was going on. Why was it allowed to happen? For example, the lack of a beach. That went on for almost a decade with a small beach here, a small beach there. The
[ Page 918 ]
engineers suggested that ten metres was necessary. What did the panel say about that? Ten metres is not a beach. If we look at the plan for Mount Polley today, we’ll see that the engineer of record recommends 100 metres.

There are a lot of questions about the sort of advice that was being provided. When we look at the fact that there were a lot of questions, and that the ministry, basically, was questioning what was going on but then accepting it, that raises questions in our mind as to whether there was overreliance. Again, we’re going back to what the panel said.

As you indicated, one of the three people on the panel was Dr. Norbert Morgenstern. He looked at the Sullivan mine in 1991, and he basically said the same thing there: basically, that employing a well-qualified consultant doesn’t necessarily guarantee that there won’t be any major failures.

So I think there’s a general recognition. Yes, we rely on them, but the oversight responsibility on the part of the Ministry of Energy and Mines is to make sure that they’re getting sound advice. If you’re not certain that you get sound advice then maybe you want to seek a third opinion rather than just saying: “I’ve got a signed document, and my butt is covered.”

G. Warnock: I just want to address the issue of original design. It’s come up a lot, and this isn’t the only body I’ve talked to about this. Really, when we speak of original design, we can talk about…. What I would say we could change it to is “outdated design.” That design that was in effect at the time of the failure had 1.3 to 1 slopes. They assessed it that way. They developed it that way. So to say: “Why did the ministry not enforce the original design…?” You could as easily say: “Why did the ministry not enforce the superseded, the outdated, the old design?” We can’t do that. We don’t do that.

APEG might look into why the design changed, and look at their members and ask them if 1.3 to 1 was appropriate. I can tell you, if I had said: “No. I know your design says 1.3 to 1. I know you’ve stamped it that way. But you’re building it at 2 to 1….” Yes, the failure would not have occurred on that day. It may well have occurred two years later when the dam was ten metres higher, and we still didn’t know about the clay. Guess who pays at that point? The taxpayers of B.C. pay, because now I’m the designer. I am not the designer.

I can tell you — and this isn’t humility — I am not the best engineer out there for tailings dams. The engineer of record is. They had dozens of people on that mine for 20 years, looked at it thoroughly, with hundreds of drill holes. They came to the conclusion that 1.3 to 1 was okay. If I had tried to enforce something that’s not in the code, something that is not in the CDA guidelines, something that, frankly, I have no grounds to enforce, I would have been put in the position of saying: “I think you should do it just because I said so.”

As soon as I say, “I said so,” I want you to think about your kids and when they hear “I said so” come from you. You lose all credibility. It is not a point of enforcing the original design. It’s a case of enforcing the current design, which was analyzed at 1.3 to 1 and, at the perimeter embankment where it failed, had a factor of safety, so they say, of 1.6.

I just want to talk about the beaches for just a moment. That question was asked on more than one occasion. Here’s what one of the consultants had to say: “The tailings embankments have been designed to remain stable for any condition, and therefore there is not a requirement for a minimum beach width in terms of embankment performance.”

In other words, we’re not overrelying on professionals. We’re asking them questions. They give us answers. We assess the reasonableness of the answers. But we don’t change the design because, frankly, that puts the taxpayers of B.C. at enormous risk.

M. Sydor: I can’t understand those particular comments that go against what the panel said. What was said there was that 1.3 was signed off, and he accepts that. That’s contrary to what the panel said was an acceptable slope for that site. The panel said 1.3 was unprecedented — that that’s a slope normally found on sound rock foundations. The chief inspector of mines also said that for that particular site, that slope was not prudent.

That’s where we get to what we were just talking about earlier: overreliance on EORs. Because the EOR signed off on 1.3, we accepted it. The panel was basically saying: “You probably shouldn’t have accepted it, because that slope didn’t belong on that particular site.” The chief inspector called it not being prudent. They went further. They said it was unprecedented, normally found on sound rock foundations.

The 2-to-1 slope, they said, would not have failed. That’s why the original design was referred to by the panel. The design never really changed. The 1.3 slope was supposed to be temporary. It never was a formal long-term design change. It was there because they weren’t able to get the required fill in place. If you look at the plan today, as I indicated earlier, you will see that they’re still at a 2-to-1 slope for closure. Accepting 1.3 is where the overreliance part comes in.

B. Ralston (Chair): Okay. I’m concerned that we’re…. I know people have come here with certain agendas and certain wishes to justify their position, but we are somewhat guided by the questions of the member. A further comment I think is in order, given that your judgment has been questioned.
[ Page 919 ]

G. Warnock: I think what’s important to realize is that we didn’t blindly accept 1.3 to 1. In fact, in asking them to reassess the factor of safety of 1.3, what we really asked them to do is to reassess that slope. We asked quite forcefully. Some would say not forcefully enough. I would say I asked….

I guess I’d put it this way. I was the only engineer in 20 years to even raise the question — designers, consultants, so on. To be faulted for not hammering them with that and then having them say, “Where, Mr. Inspector, do you find that? How are you enforcing that?” and for me to say, again, “Because I said so….”

I can’t say: “Because I said so.” I want to say it’s a code reference. I want to say it’s a CDA guideline, but I can’t. So I’m left in the position of trying to change that in the best way I saw possible, and that was through influence on the engineer of record. It’s unfortunate that it came too late, but in fact, stage 10 would have had shallower slopes.

M. Hunt: I guess I’m finding this new standard for engineering is an interesting one. Madam Attorney General already said that she changed the scope of this report during its process. And we know that….

M. Hunt: Auditor General. I’m sorry. There are too many acronyms around this place that I’ve got to get my head around, so I’m still getting used to it all. Thank you, Mr. Chair, for the correction.

When it comes to the debate…. We’ve got a debate between the Auditor General and the finance department over deferred revenues, deferred expenses and all that kind of wonderful stuff. We’ve got budgets that start as three-year projections, and then they’re two-year projections. Then we give them as one-year projections, and actually, we go through quarterly updates, so there’s lots of time to adjust those all. Is that professional reliance? The accountants are never right. Have you ever noticed that? The budgets never come out the way they said three years ago or two years ago or one year ago. But now, all of a sudden, engineers have to be perfect. I find this interesting. And overreliance on the professionals….

I come from local government, okay? In a local government, we have a planning department. The planning department plans communities. They plan what’s going to go into the community. Then they have building permits, and then we decide this is what we want in this area. Then we have building permits, and then the planning department that made the plan issues the building permits. Then we have the inspectors. Guess where they are? They’re in the planning department too. So now we have the inspectors inspecting the building that was planned according to the municipality. And that’s all….

Are we suggesting that we need to change how we do government? Because that’s what I’m hearing here.

When Mr. Sydor made his comment that there should be a separation of the Ministry of Energy and Mines, of the Ministry of Environment, WorkSafe B.C…. I think we have those separations as far as the example of Nova Scotia is concerned. I’m just concerned about the words. You know, we’ve talked about words, and sometimes in politics we’re a little looser with our words.

I’m on page 44 of your report, and on page 44 of your report, on the second line, starting halfway through that second line, the sentence says: “Most of MEM’s efforts are devoted to supporting the development of mining through processing permits of new and existing mines. This emphasis reflects the Ministry of Energy and Mines’s mandate to promote the development of mining in B.C.”

Now, I’m trying to work on the math. I come from math — again, sort of this A plus B equals C thing — and it seems to me as though what’s being said here, which is getting…. I’m hearing a different explanation now, but those words say to me that supporting the mining industry is done by processing permits. So when the government processes a permit, just like the planning department processes a permit…. Whether it’s a development permit or a building permit, by processing the permit, that is immediately supporting the industry and supporting development.

Therefore, this emphasis goes back to what was just said, which is processing permits. So processing permits reflects the mandate to promote the development of mining. So what we’re really saying by those words, if my math is correct in logic here, is that processing of permits is promoting the development of the industry, and I’m sure that’s not what you meant to say. But that’s what the words say.

So again, going back to this concept of promoting the industry, I’m having problems, as it seems as though the ministry is having, to understand what you meant by those words when you said “promoting the industry.” I don’t know who, other than the minister, actually promotes the industry, as in: “Please come to B.C. and build mines.”

The processing can also come up with a negative answer. Processing an application…. I know that in local government, anybody can walk in the door and put down their 5,000 bucks, and we have to process. Does that mean that we are promoting the building of that because we’re processing? That is what your words are saying.

C. Bellringer: Just before Ardice does that, I have to say that we had…. How many pages did we end up with? It was 108. We provided facts to allow for an understanding of where we felt there needed to be improvements. I do appreciate that a lot of the, both publicly, where I’ve had to speak to this through the media quite often….

We’ve had more of the discussion around whether or not there should be a separation between promotion and
[ Page 920 ]
compliance and enforcement. It’s a bit exhausting, I have to tell you, from the position that we’ve taken throughout this entire process, which has been to make sure that we clarify all of the various facts that have been included in the full document. We can explain that one sentence. There will be an explanation, and it will be quite precise, because we choose every word that goes into it, believe it or not, quite carefully.

We may as well do that, because the question’s been asked, so we’ll certainly answer it.

A. Todosichuk: Sure. I can answer that. When we said that most of MEM’s efforts are devoted to supporting the development of mining through processing permits…. In mining, the compliance and enforcement and permitting reside in a single person, unlike the Ministry of Environment, which has separated it out. You have a permitting office, and you have a compliance and enforcement office.

Most of the effort that those people were undertaking was around permitting rather than compliance and enforcement activities. So the priority for them was to develop and to get those permits out the door, any amendments and things like that, rather than focusing on inspections and enforcement activities that we expected for compliance and enforcement.

M. Hunt: Can I ask a question of the deputy minister, then? What is the proportion of time spent in the ministry on the whole process of processing and the details of processing versus the amount of time that you would spend — and I’ll use the ballpark of a year — at a mine? How much time would you spend at a mine in enforcement and inspections to make sure that that’s complied with?

E. McKnight: I’m going to have some others help me answer this, but I’ll start with…. It will depend on the mine. It will depend on the size of the mine. If it’s a new mine, permitting is high. It’s an extensive activity. It depends where it is in the life of the mine. I can probably have Al answer that question better, to be able to say specifically….

I would think there are probably two or three categories, right? A new mine, a new large mine, a mine that’s been in operation for a few years — we’re looking at compliance and enforcement — and then a mine that’s getting closer to end of life.

You look at the province of B.C. All of our regional offices that do some of our regional inspections on the lower-level stuff — the inspectors are located in Smithers and Prince George. That’s halfway up the province, so an inordinate amount of time is spent….

It takes four days to get to Silvertip to do an inspection and get back. Would that count toward your time spent on inspection? Yeah.

Our staff spends an exorbitant amount of time inspecting. We have a very large province, and these mines aren’t located in places where you step in and step out. We can do a lot of our permitting and those things from Victoria, so the hours add up when you’re sitting at your desk. When you go to send staff to…. Silvertip is located 20 kilometres from the border, so you fly to Whitehorse and drive down the other way, or you drive 15 hours from Smithers. There’s a huge amount of time spent on inspections.

The second piece is on a mining…. Health and safety inspectors don’t do much permitting. They may give some electrical stuff at the very end of permitting. They don’t spend the majority of their lives working on permitting stuff. There are two very different groups of people that sit within Al’s office.

P. Robb: There are some projects that are quite close. There are some that…. There are not many close to communities like that.

A. Hoffman: That’s right. I mentioned earlier that we do over a thousand inspections. Of course, we have finite resources, so we have to do it on a risk basis. We are working on some formal risk analysis to determine which mines we should go to more often.

It’s somewhat easier for health and safety, but we’re working on that in terms of permitting as well.

M. Hunt: Just one question on the issue of the reclamation. I’ll call it bonding, just because it makes more sense in my head — for bonding.

When we’re dealing with that massive number that we’re at 50 percent of…. First of all, what percentage of that is old mines versus new mines? I use Britannia mine as a classic example. To me, it’s a classic example where you’ve got the leaching, as it was shown back in Italy, from the mine, which has long since been closed.

N. Amann-Blake: The numbers quoted that were provided to the Auditor General — about 75 percent of that is Teck and Barrick mines. Most of the Barrick ones are closed. The Teck ones are the southeast coal that are operating, but they are historic.

The next question I have in that is…. For example, when it comes to finances, we have bonding rates. If you’ve got a questionable company, you’ve got a very low bond rating, so you have to pay lots of interest. The big-
[ Page 921 ]
ger the company, the better the company, the longer the history it has of taking care of problems, the less interest they have to pay because they’re less of a risk.

WorkSafe B.C. does the exact same thing when it comes to your claims history. If you’ve been good, you’ve got a lower rate. If you’ve been bad, you get a higher rate.

Is that the concept of how we’re dealing with this bonding foreclosure — looking at the company and saying: “What risk is there of them being able to actually do it?” In real terms, we’re not necessarily requiring them to have all the money up front because they’re a big company and they have the resources to do it.

I think the other factor that we agree with the Auditor General on is around when you bring in the aspect of ongoing water quality or ongoing water treatment for the life of the mine. Over the last few years, that’s been a new factor in trying to come up with standards that meet that.

You have the balance of a company being able to spend the money on water treatment, so that the water actually can be treated, and then wanting to find that right amount of balance if the province had to take that over at the end of the mine. But reclamation policy is around mine closure. What would it take for that…?

That’s a fairly new variable that we’ve been dealing with in the province — well, a number of jurisdictions as well. But how you’ve described it is exactly the concept.

M. Hunt: So with those two major…. Teck was one, and I can’t remember the other.

M. Hunt: Do we see those as being highly questionable companies so that we need to have more money out of them? Or do we see them as being very large, very stable companies, and the risk, in fact, is low?

E. McKnight: We do see them as stable companies. The thing that we want to be able do, though, is on the water quality piece. The staff are meeting with Teck on an ongoing basis right now. There are a number of water treatment facilities that are coming on line over the next few years — so trying to better understand what that reclamation amount should be. But that’s a process.

P. Robb: For Teck, they have bonding written into their permit as a requirement, as the area-based management plan and the area-based permit move forward. Whether they are a good company or a bad company, we’ve taken that into consideration to….

As we get a better understanding of what the outcomes of mining in the southeast are, the curve of what that bonding reclamation requirement looks like is going up steeply in regards to Teck, given water quality. What we’ve found out, through the Ministry of Environment, through the area-based plan, through all that work over the last year, we are requiring significant sums of money from Teck coming forward.

L. Popham: I’ve got three different questions. The first one is regarding the permitting that happened at Mount Polley to increase the slope of the tailings pond. Maybe I can direct that towards the inspector.

It’s my understanding that that was an interim permit, and it was supposed to be revised at some point. I can’t find anywhere that it was. Can you address that?

G. Warnock: I guess there are two parts to this. The ultimate slope, at closure for Mount Polley, has always been and remains 2 to 1. At some point prior to my arriving — I think it was stage 6, I believe; something like that — the engineer had decided to build at 1.3 to 1 and had stated it as an interim measure.

But following that — stage 7, stage 8, stage 8A and stage 9 — they had, at every stage, analyzed at 1.3 to 1 and, at that end of the year, given us assurance….

This is what an assurance statement looks like. It’s in general conformance with design. On the main embankment, where they were, I would say, going towards the lower end of where we were happy with — the 1.3 factor of safety — they were building buttresses in there actively.

I want to make this very, very clear. Had we insisted, “No. You’re going to factor of safety of 1.5 today,” they would have had to do more buttresses on the main embankment. There still would have been no buttresses on the perimeter embankment. It was at a factor of safety of 1.6, according to their engineer.

If I had gone out there with my big hammer and said, “I’m shutting you down until you get a factor of safety of 1.5,” very well, they would have fired up their trucks and put a buttress in front of the main embankment. A perimeter embankment was not envisioned for a buttress by any of the engineers of record until stage 10, which is the next stage.

This was an interim permit that was supposed to be revisited. Was it revisited, and was there another permit applied for that would make it a permanent permit?

G. Warnock: Our permits are not interim. What we have is a permit for each stage of construction. On each
[ Page 922 ]
stage of construction, the engineer of record analyzed and said: “We’re still good at 1.3 to 1.”

When I came into the picture — I started late in 2011, November 2011 — I looked at their practice and said: “I’m not comfortable with that. I want you to work towards 1.5.” They started doing that, in fact. On the main embankment, they were starting to do that.

It was never envisioned by me. When I was writing those comments…. If you look at the comments I wrote — and these are widely publicized by the expert panel — I’m referring to the main embankment. There’s some confusion about that, because this dam was a perimeter embankment, main embankment, south embankment. So when people read “main embankment….” Don’t read that as embankment proper. Read that as one portion of that dam. All my comments were aimed towards that one portion of the dam.

The perimeter embankment…. When I look at a factor of 1.6, it’s quite robust. And you’re right. It assumed a better foundation than it had. They provided the data in their expert analysis that that foundation existed. You’re quite correct. If they had known that that clay layer was present and still recommended a 1.3 to 1, that would be inept.

L. Popham: Okay. I’m going to move on to a different topic. I’m going to talk about the idea of separating the promotion side of the ministry.

For me, I think that this report that the Auditor General has done is excellent, and I think it’s an embarrassing time for the government. I see the government side very defensive, and I think this is something that’s indefensible — what has happened. I believe this is the fault of the government that we have the environmental disaster that we have.

Now, the reason why I think that the promotion side should be separated…. And there should be no question and no argument by government. When you look at the minister’s mandate letter to promote mining, we see the minister promoting mining. We see processes not being followed properly, in my view, and not being developed properly. We have Mines permitting employees going back and forth between Mines and FLNRO — back and forth.

This is not a new problem that you get to start fresh and decide: “Okay. That doesn’t count. We’re starting over.” This has been going on and on. That’s why Mount Polley happened. It’s because it’s been flawed. When cabinet is allowed…. The minister is promoting mining. When he goes in to cabinet and overrides an environmental assessment, like what happened in Line Creek expansion permit…. This went into cabinet, and this disregarded any environmental assessment. This became a political and a financial assessment. That’s why it got allowed to have the expansion permit, in my view.

I would like to know from the Auditor General the definition of “promotion,” in her mind. Then I want to the definition of “promotion” in the government’s mind. I think that’s where the problem is.

B. Ralston (Chair): I think we’ve…. With due respect to the questioner…. I mean, I’d appreciate an answer. I think we are canvassing something that we’ve heard spoken to a number of times by both ministries and the Auditor General. But go ahead. I think we can recapitulate.

M. Sydor: I think if you look at the service plan, you’ll see a couple of objectives or sub-objectives talking about developing the industry, ensuring that the industry is efficient and able to operate. When we talked about permitting earlier, in conjunction with promotion, I think what we were looking at is permitting being used as a tool to ensure that mines develop fairly rapidly.

We’re taking a fairly broad interpretation of promotion. We’re looking at what was in the service plan, what was included in the minister’s letter. Also, we’ve seen that promotion can include things such as policy people at the ministry talking to Ministry of Finance people to decide what sorts of incentives should be provided to the mining industry, what sorts of supports should be provided. We view promotion as a very broad term. I know that the minister has indicated that he’s the only one who does promotion.

As the Auditor General indicated earlier, one of the things we do when we start closing off an audit is send our report over so that the ministry can look at the findings. When the ministry came back and talked about promotion, what they indicated was that there are actually several groups involved in promotion. I think that people responding were taking that broader view of a number of attributes that can be put in under promotion.

They indicated, as was discussed earlier, that the mine development office is one agency that carries out promotion. The minister is, obviously, another one. Executive was identified as well. Members of the executive carry out promotion activities in terms of helping mining companies get set up in the province. Whatever supports they need, the ministry is going to be there to support them.

So when we look at promotion, it’s a fairly broad range of activities. It’s not just promotion in the very narrow sense.

E. McKnight: I agree that the dialogue over the last couple of weeks with the Auditor General — you’re absolutely right — is around the definition of promotion. It is helpful for us to hear around how broad it is. What I had said earlier…. We absolutely did take it as removing permitting from the ministry — C and E from permitting. That’s how we interpret it.

If that was an incorrect assumption, if it’s broader, then we need…. That’s what we’re trying to understand.
[ Page 923 ]
It’s taking a look at that. We were looking to all the other jurisdictions around permitting and C and E, and they’re not separate functions. We just briefly looked to a Nova Scotia site earlier around where they actually had promotion in their legislation.

We agree that that is the challenge — that definition and coming up with a model that we could actually address…. How do you address that potential conflict, if there is a conflict that exists?

L. Popham: I just have one follow-up question or statement on this. It might be a question. I’m just wondering: does government feel that we have the potential to have the safest mining industry in our province if cabinet is able to override environmental assessments?

W. Shoemaker: Can I pick apart your words? Because there might be a little bit of mixing apples and oranges in that.

W. Shoemaker: Environmental assessments are the front end of a project, and the statutory decision–maker in making those decisions is typically the Minister of Environment and/or the minister responsible. In the case of a mine, it would be the minister responsible for mining. Cabinet has no role in approving environmental assessments.

In the case you’re talking about, though, this is about a permit, okay? So environmental assessments, front end; permit at the back end. In this case, the statutory decision–maker who was confronted with the decision to make a permit couldn’t permit the mining operations in the area, and as such, cabinet issued the permit for Line Creek II, and then cabinet issued an order for the development of an area-based management plan. That was developed, and then cabinet issued a valley-wide permit in that regard.

It’s because cabinet has the ability to include many more factors beyond the sole consideration that a statutory decision–maker can. It considered the jobs, the economic and the environmental impacts of making this decision. On the latter part, of course, it was based on the premise I described before, that it was better to keep a mining company viable so that they could make the necessary investments in place to stabilize selenium and bend the curve over time.

L. Popham: So why, then, would the permit not have been issued? Why did cabinet have to step in? What was stopping that permit from going forward?

W. Shoemaker: Sitting beside me is the person both responsible for the permitting and the most knowledgable of the Elk Valley.

J. McGuire: Section 137, specifically Line Creek. When the application was submitted by Teck, the end-of-pipe concentrations that were being proposed, when they were reviewed, would be considered pollution, and statutory decision–makers, under the Environmental Management Act, cannot issue permits that constitute pollution.

Under section 137, cabinet has the ability to make decisions for any type of waste management activity that can take into consideration broader things, as my deputy has just said, around economics, social as well as environmental issues. So cabinet had the discretion and chose to make a decision on the Line Creek expansion permit under section 137.

With regards to the selenium issue in the Elk Valley. As the Auditor General showed with the graph, increasing selenium…. Foreseeing that there would be other challenges around how to be able to permit and contain and then see appropriate treatments put in place, the Minister of Environment at the time, Minister Lake, made a decision to issue an order, which is allowable under the Environmental Management Act, to compel Teck, who was the proponent, to develop an area-based management plan. This was the first time it had ever been used under EMA.

This area-based management plan had the ability for the company, under the direction of the minister, to assess emerging treatment technologies — so find out what the appropriate ways are to quickly and efficiently address water quality issues, what the economics are around those treatment needs, what the environmental impacts are, what the human health impacts are and what the social implications are around everything going on in the Elk Valley.

That area-based management plan was put under development. Then when it was submitted to Minister Polak for consideration, the minister made a decision to approve that ABMP. When it was then approved…. Under the act, it says that once there is an approved area-based management plan, it becomes policy for statutory decision–makers, under EMA, to take into consideration when looking at other decisions in the Elk Valley.

For me, as the decision-maker on the valley permit, it was very useful to be able to understand that Teck is making a commitment to have multiple treatment plants installed every two years at key places in the Elk Valley in order to address selenium concentrations and nitrate issues.

Knowing that, it gives me a bigger picture, a bigger view, to be able to address cumulative effects, as well as making sure that the company is going to put in timely and effective treatment regimes and monitoring require-
[ Page 924 ]
ments in order to start to see improvements in the Elk Valley. The valley permit that was subsequently issued in 2014 was the legal mechanism holding Teck to account for many of the commitments that they made in the ABMP.

W. Shoemaker: Could I finish by just simply adding this? You heard that this was the first time that section 137 of EMA was used. I expect it to be a rare occurrence. As it’s being, nonetheless, reflected in the audit, I don’t also want it to be assumed that this is the common way permits are going to be issued. It’s the rare occurrence.

C. Bellringer: I just wanted to clarify. We had never said that the permit should not have been issued, nor have we said it should have. That wasn’t what we were focusing on. It was just that on those occasions when it is…. I appreciate that there’s other information in other areas, but if you look to the order-in-council where the permit is issued under that section, you will just see: “Permit is issued.” You don’t see any of the analysis or rationale behind it. That was the issue we were raising.

B. Ralston (Chair): I think we’re going to take a recess of five minutes, and then we’ll start again. If we can come back at about a quarter to.

D. Eby: My questions are to George. Mr. Warnock had a couple of things he said that I just want to follow up on.

The first is in relation to permit wording. I understood you to say that when you write conditions on permits, you might be the only person that understands what you are getting at. I don’t want to trick you, Mr. Warnock. What I’m getting at is that the Auditor General, in the report on it, a number of times flagged what they described as unenforceable conditions. Those are conditions that, you know…. “From time to time, this should happen” or “As best as reasonably possible” or so on.

So when you said, “When I write a permit condition, I might be the only person who understands what I’m getting at,” that was a concern for me. What happens if you’re hit by a bus? I wish you the best of health, and I hope that doesn’t happen, but when that permit is on the book and you’re the only guy who knows what the condition means, where does that leave British Columbia? If you could clarify that a little bit for me and help me understand what you meant.

G. Warnock: Sure. The one permit I referenced, the KSM, had something like, I want to say, 30,000 pages. We have a photo of it. It would extend from that end of the table around to that end of the table, of binders. We dig through there for all the nuggets of geotech information that we can find and that have meaning to us, and we put them in permit conditions. We’ve taken that time. It took us three months, with three people, to do that.

I’m not saying that somebody couldn’t come up to speed and go out there and enforce it, but it would take them a long time to come up on speed with that if they had to go through and dig through all those. And you’re right. People change jobs, and so on. But during the early phases of a mine life, that continuity is fairly important.

I’m not saying it’s not a good idea. I don’t know. I don’t care one way or the other. Like the member there said, if they separate enforcement and compliance from permitting, so be it. I’m in a different ministry. I have no stake. I have no skin in the game. All I’m saying is that you have to think about the implications. The implications are more time and more burden on those two separate bodies, more staff — more everything, right?

I guess that’s all I’d say. They’re complex permits. Some of the permits are, you know, that thick. There are experts in each area. There’s geotech, there’s mechanical, there’s electrical, there’s health and safety, and each one of those people writing those conditions has the backstory that somebody pulling that permit off the shelf might not have. That’s all I was saying.

D. Eby: What training is there to write those conditions to ensure that they are enforceable or that, as best as possible, somebody reading them would understand what the intention was?

G. Warnock: There’s mandatory training that all inspectors have to go through. I didn’t get my….

G. Warnock: Okay. Specifically on writing permits, I guess the yardstick would be as to the satisfaction of the chief inspector. If I don’t write conditions that they understand, then probably nobody else can understand them either. I wouldn’t claim that there was any formal training to write permit conditions. My formal training lies in my geotechnical engineering degree.

D. Eby: Mr. Chair, there was another comment Mr. Warnock made about enforcement. As I understood it, Mr. Warnock was saying that, as far as a recommendation by an engineer of record, you don’t have the ability to enforce that recommendation. Essentially, the only way you could do that is by shutting down the mine.

G. Warnock: If they recommended something that was contrary to the code, I certainly would, and I have.
[ Page 925 ]
I have personally called the chief inspector on three occasions and said: “Al, we need to shut this tailings pond down.”

But if there’s no contravention of the code, then I’m simply overriding their engineering decision with my own. In my mind, that’s improper. If you’re going to look at the qualifications of the engineer of record that made that, that’s something that APEGBC will regulate. They will discipline. They will take that into account. It is not my role to look at an individual design and to change the design.

If they had said, for instance, “Your code provision says that we need an emergency preparedness plan, and I don’t deem it necessary,” I’m going to say: “No. Our code says you need an emergency preparedness plan, and you need to give us one.”

D. Eby: I don’t think I communicated my question well. Let’s take the example that was given. I really don’t want to get into the details of whether or not it was a good recommendation.

The engineer of record in the Mount Polley example that was given to us said you should have a beach. I don’t even know whether that’s an important thing or not. You know that. I don’t know. But you need to have a beach of a certain size. When somebody gets that at the ministry…. Let’s abstract it. When somebody gets a recommendation like that from an engineer of record within the Ministry of Energy and Mines, do you have the ability to enforce that, to the best of your understanding? Can you enforce requirement of an engineer of record, even if it’s not in the permit?

G. Warnock: One thing I noticed when I first started my time at MEM was that I would see annual reports. Occasionally I would see them come in, and they would have the same recommendations year over year.

I started putting it in permit conditions, in new permits, to the effect that MEM considers the recommendations of the engineer of record to be mandatory. There was this belief, kind of, within industry that it’s a recommendation. “Maybe we’ll follow it. Maybe we won’t.”

We’re saying: “No. It’s a recommendation. You’ll follow it.” But we wanted to qualify that. We wanted to say, “If your engineer of record agrees with what your alternate is….” In other words, an engineer might look at a slope and say: “I think you should clean off all of those catchment berms.” That’s a decent recommendation. The mine might say: “How about we just close off that area of the pit?” Also a decent response.

If your engineer of record says, “Yes, we agree. That’s reasonable. I’m happy,” I’m not going to enforce the original recommendation to go clean off the catchment berms because they’ve come up with an alternate. They’ve sealed it. They’ve signed it. They’ve said it’s okay.

D. Eby: You do agree that you have the ability to enforce an engineer of record recommendation.

D. Eby: There’s a specific passage in this Auditor General report that goes into some detail, that the Ministry of Energy and Mines does have that ability. I wasn’t sure. I guess I misunderstood you.

G. Warnock: …we’ll do our best to enforce it. But bear in mind that, at my last count, I have dealt with 147 mines in my tenure at Ministry of Mines. Some are gravel pits. There are several thousand pit slopes. There are several hundred waste rock dumps. There are 400 mining dams.

We do spot checks. We do not say, and I would never declare to you, that we have enforced every single permit condition, every single engineer’s recommendation. It’s also incumbent on the engineer of record, where he sees a problem, to go to the association and say: “I’ve been telling my client to do this, and my client is saying no.”

We have a code of ethics written on the card in my pocket. Public safety and the environment are paramount. If they don’t follow that code of ethics, it’s incumbent on them to bring it to our attention so that we can deal with it.

D. Eby: Does every permit have that catch-all recommendation that a recommendation made by an engineer of record is binding, in that permit?

G. Warnock: All the new ones do. All the ones since about mid-2013, when I started putting them in. I noticed that problem, so we started dealing with it at that point.

G. Warnock: I think it would be a good idea. In fact, probably just an order from the chief inspector would suffice.

D. Eby: I think so too. I just came up with that, Mr. Chair. That’s pretty good.
[ Page 926 ]

W. Shoemaker: Chair, may I…? Albeit from a Ministry of Environment perspective, I know it’s the sort of work that we’ll do together.

It’s around legally enforceable conditions. I think that was the nature of your question. It starts from the perspective of…. We have learned the hard way, in terms of some of the permit conditions that we’ve put on some of our permits being challenged in court and the like, and the sorts of experiences that come out of that. As a matter of course, going forward, it speaks to two things.

First of all, it’s important to ensure that you have…. In the Ministry of Environment, we have a separate group, as Ardice said, responsible for permitting, as there is from compliance and enforcement, making sure there’s good dialogue between the two, to ensure that what we put in permit conditions can actually be enforced on the ground.

We have therefore started to build standard permit conditions in a lot of our permits, albeit the nature in which they need to be shaped is a bit more unique and is also guided by us working with lawyers at the Ministry of Justice in shaping those things.

My final point is: as important as it is within the ministry from the permitting folks and the compliance and enforcement, we have a lot of the permitting individuals involved in the front end of the regulatory exercises in the environmental assessment process. As they go through whether a mine should be built or not, providing that insight in detail, when it translates from “Yes, a mine could be built,” then for it to be coming into operation, they already have a detailed understanding of some of the unique circumstances with regards to a mine, which also helps to inform the appropriate conditions in permits.

D. Eby: Mr. Chair, my colleague from North Vancouver had some concerns about the recommendation of the Auditor General in relation to the use of qualified professionals. In particular….

When I read that recommendation, it wasn’t the understanding he took from it, which was that the department shouldn’t rely on qualified professionals, but rather that, for example, the Ministry of Environment should have enough staff to read the reports that were submitted by the qualified professionals.

I’ve turned to page 90 of the audit. Mr. Shoemaker has intervened here, and I’ll quietly follow up with him on the issue of qualified professionals.

When the Auditor General writes: “The Ministry of Environment told us that it does not have the resources to review all reports submitted by industry….” That section refers to reports submitted by qualified professionals. Does he read that as I do, and does he agree with it — that the Ministry of Environment didn’t even have enough staff to read the reports submitted by the engineers and other qualified professionals, in relation to reports submitted by industry?

W. Shoemaker: Let me take the first pass at it. I’m going to invite Jennifer also, because it’s her and her staff reviewing these reports.

I started right at the outset by saying that not only…. Albeit, I did describe compliance and enforcement. Even our permitting resources were limited. As such, over time, we have been given more resources to be able to focus on such things as reviewing the reports provided by qualified professionals and in the development of conditions.

That is very much a true statement — aided now by additional resources in the ministry — that we are going to be better able to rely upon and utilize or read some of the reports provided to us by qualified professionals.

J. McGuire: To provide some other context around that question, as my deputy says, there are two teams within the Ministry of Environment, environmental protection.

We have a mining team that does specifically the environmental assessment reviews and the generation and review of applications for the purpose of making a decision under EMA for issuance of permits. That team was created in 2013, when we did a shift in delivery model, purely to make sure that we have a cohort of biologists and engineers and technical professionals that are dedicated to just look at mining permit administration, environmental assessments and permitting for the purpose of making sure we’ve got consistent language in conditions.

Also to realize that…. Prior to that shift in 2013, we had applications in our queue, so to speak, that were in the realm of ten years old. After shifting, now, to having a mining team in effect, we have applications that are maybe 18 to 12 months old. The value of that is that we’re able to have staff dedicated to be able to review the reports that are coming in for applications — gain some efficiencies — because many applications have similar information. So there is proficiency of expertise within that group, and there are 31 staff in that dedicated mining team.

On the compliance side, as Wes has mentioned, we had 15 to 19 people, and with the new resources, we’ll be at 48, once fully staffed.

Those folks will be doing not only the on-site inspections for all of the high-risk facilities but also looking at all of the data reviews that are coming in as a permit condition or a requirement under the permit. So we will be having more timely reviews of the data that’s coming in.

D. Eby: I raised the issue of the Yellow Giant mine and discharge of effluent from that mine, the fact that it took a week to get someone to the site after there was a complaint, the fact it took a month to shut down the site and that the operator continued operating — during at least
[ Page 927 ]
a week, it seems — even after the shutdown order had been issued, in the face of the ministry shutdown order.

I have another question in relation to that, and that’s: was there a bond? In light of the Auditor General’s finding about reclamation bonds, was there a bond for the Yellow Giant mine? If there was, is it for the full amount?

It’s my understanding now that this mining company may be on the verge of, if not already in, bankruptcy. For example, in the last article I have, $10.74 million in liabilities to $1.36 million in assets — so a net of $9 million in liabilities this company had. Now they’ve been shut down by the ministry.

Was there a bond in place? Are we going to be able to reclaim that site and repair the damage that’s been done if this company does, in fact, go bankrupt?

A. Hoffman: We originally heard about this problem from an anonymous call that came to our regional office in Smithers on July 2. We acted very quickly. The mine was, in fact, shut down on July 8 or 9, I think — the date that you said. Then we’ve been continuously following up at that mine site.

Unfortunately, the company has gone into bankruptcy, and we’re currently working with the trustee to rehabilitate the site. I understand that they’re having difficulty, but they’re still trying to sell the operation. That’s our hope. If not, then we do have a reclamation bond on the site. Again, I don’t have the figures off the top of my head. I believe it’s in the range of $400,000 to $600,000. It’s probably short of what we need. But we haven’t forgotten about it, and we’re working diligently to ensure that it’s cleaned up.

D. Eby: Sure. Using this example, was that $400,000 to $600,000 based on the estimate of the company of the cost of the reclamation? This was an issue raised by the Auditor General in the report, that the ministry doesn’t go behind the company’s representation about the cost of reclamation. How do you know whether or not that amount of money is enough? It sounds woefully inadequate to me.

A. Hoffman: Well, we do an assessment based on some calculations that we have in spreadsheets. We do the best we can at the time, and as was indicated previously, we do raise the reclamation securities as required, but we are short, probably, in this one.

A. Hoffman: Again, I don’t have the final figures because the assessment isn’t done. We sent a group of inspectors out there about two or three weeks ago. They’re doing a detailed review of what has to be done. There’s still a plant on the site. There are a number of open portals that have to be sealed. When we get that, it’ll become public.

P. Robb: But I think, Al, the answer to that question is that it’s not just industry who provides the number; it’s your technical staff who review their assessment of what the costs are. Industry will provide their assessment, and we go through and question or edit or add from there.

A. Hoffman: Exactly. They provide an estimate, and our staff review that estimate to ensure that it’s accurate.

D. Eby: Mr. Chair, I’m sorry. I know, and I’m seeing my time. But that is not what I understood the Auditor General to say the process was, and I wonder whether they had any response to that suggestion that the ministry does go behind the representations by the company.

On page 6, in the summary — and this is a joint audit of two ministries — the concern and the conclusion of the Auditor General was that neither ministry — that is, the Energy and Mines Ministry nor the Ministry of Environment — coordinates with each other on their compliance and enforcement activities. That was a contributing factor to the weakness and the failure of the compliance and enforcement program, in the view of the Auditor General.

Further, page 82. It’s “Key Findings” about the Ministry of Environment. On the right-hand side, in the column, it’s entitled “Coordination with MEM” — that is, the Ministry of Energy and Mines.

“In 2009, the provincial government introduced a policy for a coordinated and integrated approach to natural resource management in the mineral exploration and mining sectors of B.C. We expected MOE” — the Ministry of Environment — and the Ministry of Energy and Mines “to coordinate their compliance and enforcement planning and activities because they have an overlapping mandate to protect the environment.

“Instead, however, we found that MOE’s inspection planning is not coordinated with that of MEM, nor does MOE regularly advise MEM of the non-compliance and enforcement actions it has taken. Although MOE and MEM have developed the Memorandum of Understanding for the Environmental Management of Mining Projects, that document has been in draft form since 2012.”

“This lack of coordination reduces the effectiveness and efficiency of MOE’S compliance and enforcement actions and increases the likelihood of environmental risks not being addressed.”

That sounds like a fairly serious concern. My questions, then, would be to the Deputy Minister of Environment. Is this accurate, and what steps are being taken to remedy it?

W. Shoemaker: I would say the statement is accurate, and I’d go further to say that, in some instances — and probably a lot more attention to those permits and mine projects that are going on in the Elk Valley — there’s a high degree of coordination.
[ Page 928 ]

But I think it points to the need, as spoken by my colleague earlier on in her opening remarks, about the level of coordination, information-sharing and planning that we will do together in terms of our strategic framework for compliance enforcement that will result from the establishment, then, of the enforcement boards, where we will talk about not only the priorities but the implementation of some of our activities to ensure that there is the appropriate information being shared back and forth between our compliance and enforcement staff.

That’s my take of it. Perhaps my colleague at Energy and Mines has something to add.

E. McKnight: I agree with the statement. I think that in some areas there’s much greater cooperation, just depending on the actual geography of where we are in the province. I would say in some of the areas in the northwest the staff know each other, and they’re closely aligned for C and E. But to Wes’s point, that was one of the pieces that we have agreed we would do far more coordination on.

W. Shoemaker: I think we’re also going to be relying a lot more heavily upon all of the “boots on the ground.” There are a number of compliance and enforcement resources that government has out in the field. They could very well be natural resource compliance enforcement officers. There could be the compliance and enforcement officers from Energy and Mines. There could be my environmental protection officers. There are my conservation officers.

Whilst each of us has, perhaps, separate and distinct mandates in terms of the appropriate legislation and authorities that they have to effect, what matters most in terms of that — either coordination or information sharing — is that we maximize the opportunity to have eyes and ears on the ground.

B. Ralston (Chair): In the passage that I read, there is a document that was referred to. “The Memorandum of Understanding for the Environmental Management of Mining Projects has been in draft form since 2012,” which is four years ago. Couldn’t either one of you explain why that is?

J. McGuire: Yes, there is a draft, and we’ve been operating generally in accordance with the draft. Other things have come along.

P. Robb: Yeah, I would agree with that. We share it with proponents. We use it. We implement it. You know, the good thing about things being in draft is that we’re able to evolve it, until we run it for a while and make sure it’s right. We’ve just added a whole other section in it that came up in repeated permits, which we thought we could coordinate on more. I think those are the pieces that we’re trying to finalize. How do we cooperate? How do we not overlap in such a way that we’re wasting resources in all of those pieces?

B. Ralston (Chair): Generally…. I don’t quite understand why it would stay in draft and not be in a final form, given that there’s a policy directive, apparently from the minister, back in 2009.

It would seem to fall into one of the definitions of some of the hallmarks of regulatory capture: “The legislation applying to the regulator gives the regulator wide discretion to act.” If something’s in draft form, wouldn’t that give both ministries a very wide discretion to act and that that, in fact, confirms one of the points of regulatory capture?

E. McKnight: It’s a policy document. I’d say to what Peter commented around the actions and the working is: is it unfortunate that it has “draft” on it? Yes. Are we going to take “draft” off it? Yes. Have the groups been working in principle out of the document? They have. But it is a policy document that we’ve been working with, I understand, over the last few years.

B. Ralston (Chair): Are we saying that it doesn’t make any difference that it’s a draft? I’m a bit mystified by…. I mean, if something’s a draft, it seems me, it’s not in final form. It’s subject to revision, and therefore it sets a lower standard, frankly, because it’s not final and therefore might be perceived to be more flexible and would fit into the description of giving the regulator a wide discretion to act. Are you saying that it doesn’t matter that it was a draft?

W. Shoemaker: Well, obviously it’s highly desirable to have it in the final form. I think you heard evidence about how it was important to continue to involve the coordination and the relationship. But for me, this is a policy document. Again, it isn’t sort of a legally enforceable tool.

What matters most, though, is the coordination and the work that happens together. That’s what matters most to me, as opposed to a piece of paper — not undermining the importance of having a formal understanding about how it is that we will work together in our roles and responsibilities.

B. Ralston (Chair): Now, one of the things that both deputy ministers have mentioned as one of the solutions or implementation steps is the proposal of a joint management board which will have the Deputy Minister of
[ Page 929 ]
Environment, the Deputy Minister of Energy and Mines and a senior person from the environmental assessment office sitting as a board to oversee enforcement and compliance.

Can you explain to me the relationship between the conditions of the environmental assessment office…? That was the subject of an audit a few years ago, and what the Auditor General found was that the conditions frequently imposed by the environmental assessment office were deemed unenforceable, very much like some of the conditions that we’ve heard about issued by other ministries here.

What is the view of the proposed relationship between the permit conditions of the environmental assessment office and the other regulatory conditions put forward by both ministries?

W. Shoemaker: Okay. Well, let me start, having oversight for the environmental assessment office. Again, you have to understand that the certificate conditions that get put onto any environmental assessment certificate that is issued are really around how the mine is to be built, like the footprint, the nature of the activities — again, the overall footprint. From thereinafter, come the permit conditions, it is about the activities and how the mine, in this case, seeing as we are talking about mines, is operated and functions.

I think the role that we are doing vis-à-vis the proposed compliance and enforcement board would be to understand how we coordinate our compliance and enforcement activities around our respective permit conditions — but amongst other things, also to share with one another the learnings vis-à-vis the legally enforceable conditions that either agency would use, whether it’s in the front end of the regulatory process, in the environmental assessment process, or as Energy and Mines and Environment go about setting their respective permit conditions on their respective authorities.

B. Ralston (Chair): Just a question, then, to the Auditor General. The reference in the summary: “Neither ministry coordinates with the other on their compliance and enforcement activities.” When referring to the Ministry of Environment, would that include the conditions of the environmental assessment office as well as other Ministry of Environment regulations?

A. Todosichuk: As we pointed out when we started and gave you the slide production, the environmental assessment office was not included in our audits. We didn’t look at the EAO certificate conditions and whether they were being met for mining. But as we pointed out, we have done a follow-up audit in that time and have looked at whether the recommendations…. I believe we found that four of the six recommendations in our 2011 audit had been followed by the EAO, but they’re still working on two of those recommendations.

B. Ralston (Chair): What are the two that they’re still working on — compliance with conditions?

T. Wood: It was the effectiveness of the environmental assessment conditions. That was the other recommendation.

B. Ralston (Chair): This is another question to the Auditor General. This is, obviously, slightly outside the ambit of the audit. The proposed solution…. Since, in the action plan, that’s one of the conditions — this joint board which will also include the environmental assessment office…. What is the view, in a preliminary way, of the Auditor General’s office of the efficacy — or not — of including that office in this proposed joint board?

M. Sydor: Well, as was indicated by Wes, there is a link in terms of the permits that the Ministry of Environment and the Ministry of Mines subsequently issues. So when we talk coordination, that’s a third body that it is useful to coordinate with. In terms of where the ministries are going, if they’re going to go with that board approach, I think we’ll certainly be interested in seeing where that lands at the end of the day. At a minimum, it certainly should help with the coordination between the two ministries and the front-end conditions that are being set.

One of the things that we did recommend, I think, in 2011, was the same thing as we’ve recommended here — that the premise that we looked at, at the time, didn’t contain enforceable language. I think that our findings were that the environmental assessment office has made progress there, but we found the same conditions still existing here. So I think the three offices working together is probably a positive step.

B. Ralston (Chair): I’m going to go next to Simon, as a first time, and then we’ll begin on a round of second time, further….

B. Ralston (Chair): No, go ahead. We might as well use the time we have.
[ Page 930 ]

S. Gibson: I just want to go back, if I may, to the committee, to the board folks that were recruited by the Auditor General — this panel of experts. I presume they were volunteers or compensated. That doesn’t really matter too much. My query really goes to the heart of what was said earlier regarding a lack of confidence, at times, in experts. Then, of course, you had a panel of experts of your own, so it was maybe a little bit of a shootout between both sides. I’m not trying to overstate it.

I guess my question is…. You must have had a shortlist of people to serve on the panel. How did you get those people? Did you interview them? Did you give them the same questions? I guess, did you have a process or a system to secure the panel? Because the panel has a role to play here, and I’m hearing that you abided by many of their opinings, if you will. My query is: was it systematic? Was it strategic, to form the panel? How many did you interview? Just tell me a bit about the process.

A. Todosichuk: Sure, I can answer that question. I’m not sure of the exact number that we interviewed, but we did do an interviewing process. We have a set level of characteristics that we’re looking for. One is independence. That’s obviously a big part of what our office is looking for from a potential subject-matter expert. They form a contract with us. They are paid individuals. But what I want to make clear is that they provide advice to us on how we set…. Like I said, in three circumstances — looking at the planning, looking at our facts and findings and looking at our report.

Those conclusions that we come to, in the report, stand alone as far as the Auditor General’s own report. It’s not influenced, in the fact of…. The evidence that we have is not overridden by a subject-matter expert to say: “No, you can’t say that.” We say: “No, our subject-matter expert might have that view. We disagree with the subject-matter expert because our facts and findings, which have been approved through our internal process and through our quality assurance, says, ‘No, that statement is actually true.’” I hope that clarifies.

A. Todosichuk: The final criteria? We have a list of criteria. I can probably get that for the member, if they’d like.

As I pointed out, the major one that we’re looking for is whether they’d had a government contract, whether they were independent — as I said, that’s one of the main pieces that we’re looking for — whether they have the expertise that we were trying to get that would lend itself to being a subject-matter expert. So we review their bios, we looked at their CVs, all those things are submitted to us as well.

S. Gibson: Further to that. So now that there’s transparencies involved with regarding the membership, I guess my query is: was the ministry well acquainted with the members of the panel?

E. McKnight: No. The Auditor General’s commitment to disclose who they use as experts is new. So with this audit, we knew the same information, what they’ve disclosed today — the type of individual, their background — but we don’t know who the individuals are. We didn’t…. We have no….

S. Gibson: Okay. There was some individual identified, perhaps just doing some consulting.

B. Ralston (Chair): I think that was from the expert panel on Mount Polley. There were three individuals and one was referenced, but that’s a separate panel. Their people are separate.

M. Sydor: As the Auditor General had indicated earlier, I think in this particular case, we had agreed with the individuals involved that their names would be confidential. So I think it would be up to the Auditor General, I guess, to go back and see whether they’re willing to do that.

S. Gibson: Okay. Now I’ve clarified the other individual. That’s a good point.

B. Ralston (Chair): Well, we’re a minute or two from 4:30, so we’ll continue tomorrow at nine o’clock.

Sam and I have decided that we will have the full four hours. The other audit we were proposing to deal with is not going to go forward, because my sense was that — from the members — there was an appetite to spend much more time on this. We’ll be back here tomorrow at nine o’clock in this room.

Access to on-line versions of the report of proceedings (Hansard)
and webcasts of committee proceedings is available on the Internet.

Chair:	Bruce Ralston (Surrey-Whalley NDP)
Deputy Chair:	Sam Sullivan (Vancouver–False Creek BC Liberal)
Members:	Kathy Corrigan (Burnaby–Deer Lake NDP)
	David Eby (Vancouver–Point Grey NDP)
	Simon Gibson (Abbotsford-Mission BC Liberal)
	George Heyman (Vancouver-Fairview NDP)
	Marvin Hunt (Surrey-Panorama BC Liberal)
	Vicki Huntington (Delta South Ind.)
	Greg Kyllo (Shuswap BC Liberal)
	John Martin (Chilliwack BC Liberal)
	Lana Popham (Saanich South NDP)
	Linda Reimer (Port Moody–Coquitlam BC Liberal)
	Selina Robinson (Coquitlam-Maillardville NDP)
	Ralph Sultan (West Vancouver–Capilano BC Liberal)
	Laurie Throness (Chilliwack-Hope BC Liberal)
Clerk:	Kate Ryan-Lloyd

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