Public Accounts — Issue No. 28 — Tuesday, June 7, 2016 (HTML)

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

Unavoidably Absent: Kathy Corrigan, MLA; Vicki Huntington, MLA; Greg Kyllo, MLA; Selina Robinson, 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	931
W. Shoemaker
J. McGuire
A. Todosichuk
M. Sydor
A. Hoffman
P. Robb
E. McKnight
G. Laughland
G. Warnock

B. Ralston (Chair): Good morning, Members. We’re continuing consideration of the report of the Auditor General, An Audit of Compliance and Enforcement of the Mining Sector.

I have a list of questioners that continues from yesterday, and I’ll add new names as people indicate. But we’re going to begin first with Marvin Hunt.

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

M. Hunt: I want to continue the discussion on selenium. I find selenium an interesting element in the fact that it was considered to be toxic, then we discovered it was essential for life, and now we’re trying to deal with levels of selenium. So it’s an interesting process that science has gone through in selenium over the last little while.

In the report, on page 96, the Auditor General is saying that the ministry has not disclosed these risks to legislators and to the public, and I would like to know from the ministry: what was the public process that you went through, and what information was given to the public during that public process? What did they know? What did they not know?

W. Shoemaker: Chair, I’m going to apologize up front as I begin a response to this answer. It’s going to be a very comprehensive answer, I hope, and I may ask for Jennifer to round out. Nonetheless, I think it’s important to set into context not only how the issues emerged but also how we engaged with the public around the development of the area-based management plan and then the ultimate approval by cabinet.

I begin, as the audit report points out, that mining in the Elk Valley has been going on some 100 years, and it’s been over the past 20 years or so, I think, that Environment has been monitoring the health of the watershed with increasing concern. Emerging science began to indicate the potential effect of selenium and other water quality parameters — be they nitrates, sulphates, calcium — in the Elk Valley watershed, including the Fording, the Elk River and in Lake Koocanusa.

With that emerging science and concern, at least, it began a number of efforts, albeit voluntary, on behalf of industry and government to try and wrap our heads around what was going on and some of things that we might want to do.

Since the mid-1990s, the ministry, along with Teck, has been working with other stakeholders to address water quality challenges related to mining activity and particularly those associated with the increasing concentrations of selenium. So some of those early voluntary efforts were the Elk Valley Selenium Task Force in 1998 and the Canadian selenium working group in 2006. In 2010, in response to government concerns, Teck commissioned an Independent Strategic Advisory Panel on Selenium Management made up of leading experts in this field.

The panel’s reports included recommendations that led Teck to undertake several large-scale selenium management activities, including the construction of the Kilmarnock and Swift Creek clean water diversions, pilot testing of active water treatment technology at Line Creek operations in 2011, the launch of a comprehensive research and development program in 2011 to develop improved methods to manage water quality throughout mine design and reclamation practices, and construction of a full-scale West Line Creek selenium active water treatment facility at Line Creek operations with an investment of some $105 million.

But again, with concerns being raised about the effects of some of these water quality parameters and with my staff bringing these to the attention of the Minister of Environment, the minister used the powers under the Environmental Management Act to issue an order requiring the mining operator to immediately begin to stabilize and reverse the water quality trends. The order required the development of the area-based management plan, which meets specific environmental objectives and outcomes such as the protection of aquatic systems, the protection of human health and the protection of groundwater.

The ABMP, as it’s known, sets out short-, medium- and longer-term water quality objectives and lays out a schedule for the installation of nine active water treatment plants over the next 18 years.

This gets right to the nub now, I think, of the comments I will make about the public consultation.

Substantial public and stakeholder consultations were undertaken during the development of the ABMP. It was developed by a technical advisory committee with representations from the mining operator; the local environmental group — Wildsight, in this case; the province; the government of Canada; the U.S. government; the state of Montana; the Ktunaxa Nation; and an independent scientist from UBC. Parallel to the technical advisory committee work, the province was engaged in a government-to-government process to ensure that the Ktunaxa Nation’s interests and concerns were addressed.

In the course, therefore, of those consultations and that year-long process, or so, there was a large volume of scientific advice that was provided to and from the TAC. Teck received close to 700 pieces of science-based advice from the nine-member technical advisory committee,
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which again includes the representatives that I’ve already mentioned. Teck participated in over 200 hours of meetings with the TAC in subgroups between September 2013 and July 2014.

Local government, stakeholders and the public were consulted through a three-phase process. Opportunities included in-person meetings in Fernie, Sparwood and Elkford and on-line consultation. Notifications of all of this engagement process were very, very broad, including advertising and mailers to all households in the Elk Valley. In total, 213 people attended 11 meetings and open houses, and 164 pieces of written feedback were submitted.

All of that, then, forms the essence of the area-based management plan, including all of these elements around the issue of selenium — what does it impact, and what are the water quality targets to be adopted? — that were ultimately submitted to the minister.

B. Ralston (Chair): I might say that it would be helpful if you would address the recommendations of the Auditor General on page 10, which, as you know, disagree with the area-based management permit.

Let me just read. “The levels for selenium in the area-based management permit are inconsistent with the precautionary principle. The proposed targets over the next seven years show a reduction in selenium but are still significantly higher than current concentrations, creating a high risk of further environmental impacts. The minister has not disclosed these risks to legislators and the public.”

Now, that’s a fairly pointed criticism, so I’d appreciated it if you would address it.

With regards to the public consultation that was done by Teck and when the ministry was in attendance at all of those public engagement opportunities, it was front and centre that selenium levels, as well as cadmium, nitrate and sulphate levels and the formation of calcite, were increasing and were projected to continue to increase in the Elk Valley.

As my deputy has mentioned, it is a result of 100 years of mining activity. It is not an end-of-pipe type of discharge that comes out of a building that you can then just turn off. The waste rock continues to, as rain falls on it…. Nitrates and selenium leach out or seep out of the rock. The projected concentrations are the result of mining activities that happened decades earlier, and it is just over the past 15 years that the actual effects of selenium at these higher concentrations were starting to emerge.

The reason the minister took the action of issuance of the area-based management plan is because the projections that were done could foresee that the concentrations of selenium and nitrate would continue to go up and up and up if there were not actions that were put in place to stabilize and reduce. The means to stabilize and reduce is not stopping mining. It’s not walking away. It’s actually putting treatment technology in place in order to fix the water quality issues.

The treatment plants that were tested, specifically Line Creek through a pilot project, did produce some confidence that there was viable treatment technology that could be put in place in order to start to stabilize and reverse the concentrations that were showing.

The transparency with regards to disclosure of this issue to the residents in the Elk Valley, to the First Nation, to our colleagues in the U.S. EPA, as well as the state of Montana…. It was full disclosure around graphing, around projected modelling, around all of the scientific data that had been collected over the past number of decades. That is the information that the technical advisory committee reviewed in order to provide recommendations back to Teck around treatments necessary, perhaps changes to mine design, encouraging more research and development in order to have other options and tools in which to address those water quality issues.

B. Ralston (Chair): I’m wondering if the Auditor General, given the response, has a further comment.

B. Ralston (Chair): I’m using my prerogative as the Chair. I think MLA Hunt has raised the general question of selenium. It is an important part of the report, so I’m using that as an opportunity to push many of the presenters here to respond to the report.

A. Todosichuk: I just would like to point out that we did review the material — not all the public information that was available but a good portion of it. We also looked at executive information that was being provided to executive and did a cross-comparison between them. We came to the conclusion that….

What we found was, for example: potential impacts to aquatic life, especially westslope cutthroat trout, weren’t adequately included in the public information that was provided; potential impacts to international relations; potential impacts to groundwater; human health; social economic risks of different water quality levels; MOE’s ability to monitor Teck given their limited numbers that they had; cumulative effects; the permit potentially creates a monopoly for Teck; long-term monitoring; and potential risks to taxpayers from water treatment facilities. We found those issues hadn’t been adequately disclosed.

In addition, while we’re talking about 100 years of selenium that has built up from the amount of waste rock in
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the area, we’re also talking about expansion. How much waste rock will be included in that expansion will also add to the selenium levels in the Elk Valley.

B. Ralston (Chair): Just so that we’re clear, then. You don’t resile from any of the conclusions in the report?

M. Sydor: I would just like to add a further comment to follow up on what Ardice is indicating.

As the recommendation indicates, what we were looking for was better disclosure to the broader B.C. public as to how the decision was made and what the potential impacts may be. On page 102 of the graph, what we see is that, for a number of the sites that were permitted, in fact, even after a generation — 20 years — the selenium levels are still going to be substantially higher than what the health guidelines and aquatic guidelines call for.

What we’ve done is reduce the increase of selenium that we would have had if we hadn’t put the permits in place, but the permits still allow what would be called pollution under the MLA. That’s going to be going on for at least a generation. This graph only goes up to 2034. So, for example, the drinking water guidelines are about ten, and for at least one of the operations, the Fording River operation, the selenium that’s allowed under that permit is at 60.

That’s the issue that we were raising. Is the government providing adequate information as to what the impacts of these permits are in relation to what the public would accept in terms of pollution or non-pollution?

W. Shoemaker: Yes. I start, Chair, from the acknowledgment that we could always do more in terms of engagement with the public, openness, transparency. I’m all about that. I would submit that the efforts we went through with regards to the TAC and the other dialogue that occurred around the issue of selenium were substantive. But I think the fair criticism is that we should always be looking at ways in which we could provide more information.

The challenge that I find myself in…. Whilst I’m not one of the “ologists” — that is the hydrologist or the geologist — nonetheless, I think I have a little bit of a background in this area. That being said, the whole science around selenium and the various loadings and the effects on aquatic life are a very, very complex scientific issue. The science around selenium is not absolutely clear and unequivocal about cause and effect.

That being said, we find ourselves, in a way, in a very complex situation, trying to find ways in which we can convey and communicate very complex information in simple ways. I take it, from the findings in the audit, that there are ways that we must — and continue to — look for in terms of sharing information with the public.

J. McGuire: The additional comments I would add would be that…. Selenium, by nature of the chemical, bioaccumulates. To set a threshold of one number and have it apply in all environments is not correct. Selenium accumulates in different organisms at different rates in different scenarios. The terminology is “lentic or lotic environment,” so fast-moving water versus a stagnant type of water.

Selenium accumulates. It settles more in stagnant areas. Thus, there was a bigger concern around concentrations of selenium in Lake Koocanusa. In environments where there’s flowing water, there’s less concern and less evidence that there is bioaccumulation in the organisms in those environments.

With regards to the comment that’s been raised with regards to our relations with Montana and the U.S. EPA, both of those agencies were members of the technical advisory committee. To this date, Montana and B.C. are working together on the Lake Koocanusa Monitoring and Research Working Group.

We’ve had numerous meetings where both government agencies are working together to design and ensure that there’s coordinated monitoring in Lake Koocanusa to assess effects and determine whether or not the current number that’s set for Lake Koocanusa, which is two, is the appropriate number for safety. There’s agreement from Montana and EPA that it may not be and that there is more science, and that’s why we are engaged in that collaborative process right now.

W. Shoemaker: Chair, one final comment, if I may. I’ll be better positioned to, perhaps, make all my comments the first time around.

I do want to just speak to the recognition, also, of the fact that some of the selenium levels that we’re seeing at various points within the Elk Valley are well beyond drinking water guidelines or those associated with aquatic life. That is a true thing. That’s what brought us to this whole process — is to understand that…. In light of the historical mining activity, how do we begin to not only stabilize selenium levels in the area but bend down the curve and reduce areas in the Elk Valley over time?

That’s what brought us to this solution. That’s what all of this amount of research and engagement has been. That’s what all of the $600 million worth of investments by Teck in active water treatment are about.
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M. Hunt: I just want to continue with one other question. The Auditor General raised the issue of the effect of selenium on cutthroat trout. During your one-year process of public input on that, did anyone raise the issue of the effect of selenium on cutthroat trout?

J. McGuire: Yes. Absolutely. They were one of the key species that was being used as an indicator to determine effects, and it continues to be an indicator species that the monitoring is targeted directly at.

M. Hunt: At any time, did you deliberately try to hide information about the effect of selenium on cutthroat trout?

L. Popham: My question is around the reclamation bond topic. I was reading an article from theGlobe and Mail last week where the minister states in a quote that he was very surprised to learn about this funding gap that we have, the $1.2 billion funding gap we have in site reclamation bonds. My questions, I guess, are around the process and how we got to this point to have such a large gap.

When Mount Polley breached, at that point, I think the minister made quite big a statement saying: “This would never happen again. This is terrible. It’s a place to start over.” But at that point, till ten days ago, he still didn’t seem to understand that we had this funding gap.

The minister points to the mining inspector as the person that would make the decision on the amount of the bonds. I’m just wondering if the mines inspector can comment on that — about how we reached this point where we have such a gap.

A. Hoffman: Well, you’ve got to realize that the securities have been collected over a period of time. The amount of security, as I mentioned yesterday, is not the only factor that we use in determining how much security we need for each site. We look at the health of the company. We do a detailed financial analysis by an economist. We also do a detailed calculation of how much the security should be at that time.

I would say, though, that we are trying to move towards fuller security as time goes on. My deputy mentioned that it’s increased substantially. In fact, it has increased since the Auditor General looked at those figures, to the point where it’s over $1 billion that we hold. But there is a shortfall — I would agree with that — and we’re moving towards fuller security.

L. Popham: I guess I’m wondering: at what point does the minister get a report of our state with these bonds? I can’t find any information that shows that he would have requested a report since the Mount Polley breach. It’s quite interesting to me. If we’re basically saying that the minister has no responsibility around the amount of the bonds and the mining inspector really doesn’t have the responsibility around the bond….

In the case of a breach, we’re requesting a portion of the amount of possible reclamation that might be needed from a mining company. The premise is that they’re going to pay that portion — that’s what they signed up for — and the taxpayers are responsible for the rest of it. I mean, to me, that’s what it’s translating into. I can’t see where the responsibility falls when we have an inadequate bond in place.

A. Hoffman: The reclamation security, as it says, is for reclamation of the minesite. So if you’re referring to Mount Polley, that’s something outside of reclamation. The company is still fully responsible for all reclamation activities that bring that back to an acceptable state — remediation.

P. Robb: The bond for reclamation is different from a catastrophic failure. The company is responsible for that site and is still responsible, as the permit holder. The reclamation bond is something totally different. It’s to deal with our estimate of what it would cost to clean up a mine at closure, not a catastrophic failure. They are fully responsible for that site, and they continue to be.

L. Popham: Okay. Maybe my question will be just directed at the reclamation side of it, then. It’s the same question, though. I don’t understand. If it costs more than the bond….

P. Robb: As time goes forward, every five years, we have a mine closure plan. That is when we look at it and say: “We think it’s going to cost more to reclaim this site.” Al’s team, as was discussed yesterday, does a detailed analysis. That is submitted by the company. They say, “It costs us $2 million to take down the buildings, $800,000 to dispose of the trucks,” all of these things.

Then we go back and look at that and say: “We disagree with that. We think it’s going to be $9 million to take down your building and $15 million to re-contour all those slopes.” We submit that back to them, and then Al’s team has to collect it, in either some form of security — cash. I think there are three options to do it.

It’s a continuously evolving piece. In the case of water quality, over that time we may find, as science evolves and as our ways of investigating evolve, longer-term needs for reclamation. That’s why those gaps come and go, as you figure out what reclamation looks like. What are all those pieces? Have they done progressive reclamation? Have they cleaned it up as they’ve gone along? Sometimes that number goes down.
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That’s an ongoing discussion with the mine as the site is there. Al’s team would talk to Ministry of Environment and would talk to other folks to try to dig through what that number looks like.

L. Popham: So at any point, does the minister receive a report on reclamation bonds?

A. Hoffman: The figures are reported annually in the chief inspector’s report. They’re public. They’re on the ministry’s website.

L. Popham: Do you think the minister is aware of it? I mean, he seemed very surprised. That’s why I’m asking.

A. Hoffman: I can’t comment on the minister’s statement, but certainly we’ve had a number of discussions with the minister.

L. Popham: Okay. As I understand it, then, the reclamation bond figures may change over time as mines are inspected or their activities are followed. Is that right?

A. Hoffman: The mine is required to submit a reclamation report at a minimum of every five years. At that point, we look at the estimate that’s given by the minesite.

Our staff look at it very diligently to ensure that the estimates are accurate. We look at third-party costs. We don’t look at the costs of the mine cleaning up. We look at the cost if the mine was abandoned, in terms of who we had to hire, contractors to go in and do the work. So it’s very conservative in terms of the costing.

L. Popham: Just as an example, then, so I can follow it — Yellow Giant. There’s a conversation that the reclamation bond isn’t adequate. At what point was the ministry going to inspect that? I know there was an anonymous complaint which drove an inspection, but at what point was there a planned inspection?

A. Hoffman: There were a number of planned inspections before that anonymous complaint, and there have been several inspections after that. In fact, we’ve very intensely been to that site with both MOE and our staff, as well, since last July.

We don’t know the full costs of reclamation at Banks Island. As I said yesterday, we’ve just sent a team out there to do an assessment. We’ve had consultants in there to look at reagents that are stored on the property. We, in fact, have arranged with a contractor to remove all the explosives on the property.

A. Hoffman: Well, I said it’s still…. We’re still working with the receiver for the property, and then we’ll have to determine…. If someone buys the property, then that individual or corporation will be responsible. If not, we’ll have to assess who will pay and how much, once we know a good, accurate final costing.

L. Popham: Okay. My final question, then: in the end, who is ultimately responsible for that reclamation cost? Will it land on the taxpayers?

A. Hoffman: That’s a possibility, but we certainly…. The corporation is still responsible, although they are in receivership. We’re going to work very hard with the receiver to try to get someone to take that property over.

B. Ralston (Chair): Just if I might, just to clarify. You’ve drawn a distinction between reclamation and remediation. The security is for reclamation. Is that correct?

B. Ralston (Chair): And remediations — say, in the case of Mount Polley. Obviously, Imperial Metals is a solvent company and has the financial capacity to do that. But assuming a catastrophic failure and the dollar value of the remediation exceeded the assets of the company, that would fall to the Crown, to government, to pay the costs of remediation. Isn’t that correct?

W. Shoemaker: In addition to the reclamation requirements that we’ve just spoken about, under the Environmental Management Act it’s the polluter-pay principle. Companies and individuals are held responsible for activities that cause harm to the environment.

We use our authorities and power to recover those costs from those individuals — in fact, even more strengthened with some of the amendments to the Environmental Management Act that occurred this session.

But at the end of the day, again, if the liabilities and the responsibilities, notwithstanding all of our collective efforts to pursue — whether it’s from the company themselves or from individuals who assume responsibility for the property — there may be the possibility that taxpayers do have to pay that.

A. Hoffman: I’d also like to point out that Mount Polley is…. I think the last reported figure was they’ve spent over $600 million, and I’m sure it’s been a fair bit more since then.

B. Ralston (Chair): Just so we’re clear, then. It does arise that companies are insolvent. I think in the case of the Britannia mine recovery, there’s an ongoing water treatment plan and a cost of $3 million a year, and that continues in perpetuity.
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In calculating on the reclamation bond…. It also appears that in the Teck case, in the Elk Valley, these water treatment plants will have to continue in perpetuity as well. Teck may fund them, and they’re solvent, obviously. But if there were a financial failure, then the responsibility would revert to the Crown.

In calculating the reclamation security, what consideration is given to the possibility of a long-term burden on the Crown to fund ongoing water treatment? For example, as is the case in Britannia. When the original company is gone, that fell to the Crown to build the plant. I think there was some contribution by the successor company, but no commitment at all to fund the ongoing cost.

From the perspective of the Ministry of Finance and the treasury, what calculation is given? Or what part does that play in calculating the amount of the reclamation security?

J. McGuire: I can speak to the Teck situation. The valley permit that was issued after the area-based management plan was approved includes the requirement for Teck to have in place four treatment plants. The permit will be amended to phase in the additional treatment plants.

The security bond that was calculated by the province — so the Ministries of Energy and Mines and Environment — took into consideration the staged phasing of these treatment plants. As the treatment plants come on line, it’s reflected in their bond.

P. Robb: The calculation does look at running water treatment in perpetuity on these big, new projects and looking at ones that are operating. There are cases…. The Auditor clearly points out, and is correct, that water treatment in perpetuity is likely on some of these big projects. That is a calculation that goes into…. I think Elaine has a draft of one here that is going to require long-term water treatment.

That is built into the bonding ask at the front end and then at increments. You know, 100 percent bonding is an example that some folks have used. It’s not always the best example. We have many instances of where it has led to issues going the other way. It’s trying to find what that long-term cost looks like and what it looks like as the mine develops and you stage in those costs.

B. Ralston (Chair): Just a question to the Auditor General. Is the office satisfied, in your examination of these calculations made by the ministry in calculating potential water reclamation costs in perpetuity, that there is sufficient financial capacity being requested in the bond to avoid burdening the Crown in the future?

M. Sydor: I don’t think there’s ever any guarantee that the Crown will not be burdened in the future. If we look at the financial statements of government today, there’s a note on environmental liabilities. I think the total amount that government records is just under $400 million.

We looked at that, and about $270-odd-million of that is related to mines that have been abandoned in the past, or the owners just walked away from their liability. When we look at it, we see that there’s a number of jurisdictions that have had issues with companies not being able to meet their liability obligations. In terms of examining current estimates, we think, certainly, that there’s opportunity for the ministry to do a better job of that.

There are the two issues. There’s the reclamation and the remediation. On the reclamation side, we do recognize that each company is responsible for the reclamation needs for its particular sites. On the broader issue of having an environmental catastrophe like at Mount Polley, if, in fact, the company didn’t have the resources and just said, “We can’t afford it,” that would fall on the public.

Right now, we don’t have any fund in place. Government doesn’t collect any money from companies. I think yesterday there was a question about: can we pool the resources together? Well, that’s where that sort of concept would come into play.

I think we do have a recommendation in our report. We have two recommendations. One is on the reclamation side. Are we covering enough for the estimated reclamation side? But then on the catastrophe side, there’s a need for government to consider: do we need to provide some sort of security for the public if there is some disaster that a company is not able to accommodate?

W. Shoemaker: May I, Chair, on that point? The latter point falls more within our bailiwick, relative to world-leading spill regime. That is essentially the concept and the approach. It’s industry-funded, industry-led and strong government oversight but making sure that there is assured capacity to be able to not only respond to spills as large as the Mount Polley situation but even the minor ones, and then to help facilitate recovery efforts all along.

That is pooled capacity. That is making sure that there is appropriate financial capacity in place to be able to deal with these unfortunate and rare occurrences.

B. Ralston (Chair): Well, there is that old financial principle: you can’t get blood from a stone. Obviously, the financial capacity of the companies involved is an important factor in deciding whether the Crown will be forced to pay or whether the company will. You expressed the principle of polluter-pay, but if the polluter doesn’t have any money, they’re not going to pay. It seems to be a very important consideration in considering the amount that’s set aside for these potential disasters.

L. Throness: I have several questions. The first is to our Energy and Mines deputy.
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Regarding security and disasters, do mining operators not carry private insurance to insure themselves to cover disasters like Mount Polley?

E. McKnight: They do. I think that the chief inspector of mines can speak to that in more detail, but they absolutely have that obligation and that responsibility. Under the current situation with Mount Polley, in that very unfortunate event, Imperial Metals has spent a lot of dollars. A lot of that is from an insured value.

A. Hoffman: Yes, like any other corporation, they’re required to carry insurance to cover disasters. They also carry insurance for their buildings and all of their operating equipment. Certainly, in the case of Mount Polley, they are using some of those funds to do the remediation work.

L. Throness: Do you think that the insurance coverage is adequate to protect the taxpayer in the future?

P. Robb: It’s one of the pieces that we’ve committed to look at as a part of the board work. I think the Auditor was right. What are those tools? I think they pointed to disaster relief for oil spills — those pieces. Those are good questions.

As you continue to go through the checks and balances and look at what the new models are for doing this, I think that’s something the board would have to bring forward through the secretariat to have a really good look at. But there is insurance now. Is it enough? Is it the right tool? All of those pieces are questions that we think are good pieces that the Auditor has pushed us to continue to look at.

The second question is to the Auditor General. It’s regarding the summary conclusion, “Lack of enforcement culture,” on page 9. I quote from it. It says: “MEM has adopted a collaborative approach to compliance and enforcement that emphasizes cooperation and negotiation. In the case of Mount Polley, this approach failed to produce the desired results” — and so on.

The government, across the board, has moved to sort of a compliance or outcome-based enforcement model. We’re more interested in outcomes. We’re not interested in necessarily bringing down the hammer of the law that’s used as a last resort. We’re more interested in people obeying the law and actually coming into compliance.

Are you questioning the model that we use across government now? Or does your assessment question this particular situation as a matter of emphasis — that we emphasized negotiation over enforcement too much? Or is this a problem with the model, the principle?

M. Sydor: Well, I think when we say that there is a culture of a lack of enforcement, we are questioning the model. If the model, as you’ve indicated quite correctly, can’t span the spectrum of cooperation and conciliation to acting more like a policeman, what we’ve seen — not just at Mount Polley but when we looked at the other mines as well — are instances of non-compliance where trying to promote compliance hasn’t been very effective.

It’s the same at Mount Polley. That dam failed because it was not well designed. We knew that they had gone away from the design in 2006. For seven or eight years, the company wasn’t able to get that design slope that was in the plan. At the end of the day, it failed. We had an opportunity to enforce the requirement, and it didn’t come about.

I think what our recommendation indicates is to have a look at that and try to recognize that that particular model might work where industry is in agreement with moving to compliance — that it’s going to do that on its own. But in some cases, you’re going to have to look at an individual company, and if it’s not cooperating with the model you’ve expected, then you have to move towards the other end of the spectrum and use the enforcement tools that are available.

I think the difficulty for this government was that the enforcement tools, as we’ve indicated, are quite blunt. You shut down the company. You didn’t have administrative tools. You didn’t have the ability to fine companies a reasonable amount. I think government has indicated that it’s moving in that direction.

I think there were a number of problems with the model, but I think you have to look at each organization as you’re doing your compliance and enforcement work and try to see whether taking that very cooperative approach is being effective. If it’s not, then you have to move from that to something that is going to be more effective.

L. Throness: So the government’s introduction of administrative penalties recently in legislation might move us more toward a more balanced emphasis?

M. Sydor: It’s certainly a tool that will add to the arsenal available. I think it’s something we recommended…. When was it — back in ’81?

M. Sydor: Yeah, we recommended that when we did some work in the ministry in ’81. So we’re going to see that after two generations, it’s being put in place.

L. Throness: Okay. My final question is about your main recommendation, on page 11. “We recommend that the government of B.C. create an integrated and independent compliance and enforcement unit.” Usually,
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you think of the phrase “integrated and independent” as an “or” thing rather than an “and” thing — integrated or independent, not integrated and independent.

It’s very tough to integrate something in the ministry and have it independent of the ministry. I see that as a bit of an oxymoron. So I’m wondering if you can help me by defining “compliance and enforcement unit.” Do you mean a branch within the ministry? Or do you mean an arm’s-length organization, such as the BCUC, to do compliance and enforcement?

A. Todosichuk: When we crafted that recommendation, what we were trying to do was not to be too specific about what we were expecting. We wanted to leave that up to government and allow them the ability to have that conversation about what integrated and independent would look like.

But we do look to other jurisdictions, and we have looked within our own organization to see…. There are independent organizations, such as the Forest Practices Board, which was set up to look at forest practices in B.C. When we looked within the Ministry of Environment, there’s the conservation officer service, which operates as an independent agency that conducts investigations into failings within different industries, non-compliances.

Again, these are examples that exist out there, but we didn’t want to be prescriptive about what this unit would look like or how it should be organized. That should be left up to government to decide, so that’s why it was phrased that way.

D. Eby: I have to admit some frustration about the things that are being said here today by the ministry representatives. The evidence is contained both in the report and on the ground — for example, Mr. Robb repeatedly saying that there’s this process in place for reclamation bonds, a very careful process where the background of the company is considered.

A brand-new company opened a mine, with huge liabilities, called Yellow Giant. They had $9 million in liabilities. They had $2 million in assets. We only required — what? — a $400,000 to $600,000 reclamation bond from them. Now, predictably, after a minor incident, they’re bankrupt, and we’re hoping that the sale of the site will produce enough money to protect the taxpayer.

If you listen to what Mr. Robb says — very wonderful ideas about calculations and assessing the background of the company. Yet in practice, during the pendency of the audit, this mine opened and we didn’t have the bonds in place.

In addition, I’m listening to the Ministry of Environment saying: “Oh well, we’re bending the curve down on selenium in the Elk Valley.” Yet, on page 101 of this report, very clearly the permit levels are double — not a little bit higher but double — the historical levels of selenium — by historical, I mean 2013 — in the Fording River.

I guess my questions are less about the sentiments that are being expressed here and more about the evidence that’s contained in the Auditor’s report. Part of the questions relate to this idea of regulatory capture. On page 44, the Auditor General has set out a series of possible signs of regulatory capture.

Mr. Chair, with your leave, I’d like to go through, with the Auditor General, all of these signs to identify which ones they picked out as being present in the ministries in terms of their enforcement here.

The first one is: “The regulator is located within the agency responsible for promoting the economic interests of the industry.” To the Auditor General, is that the case in British Columbia?

D. Eby: Okay. “In agency publications, environmental protection is merely one goal alongside others, such as economic development.” Is that the case in British Columbia?

D. Eby: “The regulator has a low level of prosecution activity.” Is that the case in British Columbia?

A. Todosichuk: Again, as you saw in our example from Myra Falls, we saw that non-compliances were allowed to persist for quite a long time. We saw, again, working with the company but not moving forward to getting the non-compliance brought into compliance.

D. Eby: Okay. “The legislation applying to the regulator gives the regulator wide discretion to act.” Is that the case in B.C.?

D. Eby: “The regulator’s budget and resources are not comparable with those in the industry.” Is that correct?

D. Eby: “Not comparable with those in the industry” — what does that mean?

M. Sydor: I think that what that means is that as industry expands and there’s a need for greater enforcement, the budget of the regulator would expand, and that’s not something we saw. As was indicated yesterday,
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the budget, for quite a substantial period, actually went down, and there were periods when the ministry didn’t have a senior capacity to oversee the compliance and enforcement program.

D. Eby: “The regulator shows a marked preference for giving informal recommendations and advice, which are not properly recorded.” Is that something you saw?

D. Eby: “There is a high shift of enforcement officers from the agency to the industry, where they are able to earn significantly more than they did working as enforcement officers.” Did you see that?

A. Todosichuk: No, we did not see that. We had no evidence for that, whether it occurs or not.

D. Eby: Okay. “Regulatory work often takes place in isolated regional communities, and there is frequent social collaboration between industry and the regulator.”

D. Eby: You didn’t audit that? So there were eight factors. The six that you audited you found were present, and the two that you did not audit you’re not sure about.

To the ministry, then: has there been a shift of enforcement officers from your agency to the industry, where they are able to earn significantly more than they did working as enforcement officers? And have you been engaging in what’s called social collaboration with the industry in communities that have mines in them?

E. McKnight: I’ll respond to that. I think that what I talked about yesterday around the concerns and the discussion with the Auditor General for these risk factors…. I did mention yesterday…. I asked for specific examples. Because it was a very sensitive area, I really wanted to understand that the very risk of regulatory capture…. I wanted to know where — maybe if they had specific examples.

I don’t disagree that for any industry there is a potential for risk of regulatory capture. Our goal and what we’ve committed to, and what I have certainly committed to over the last number of months, is to ensure that we have the right policies in place and that we’re reviewing that with staff, that staff understand their accountabilities.

The mere fact that there is potential for risk does not mean that there is regulatory capture. I think it’s important for us to have that distinction. We agree with the Auditor General that with the high risk, we need to continue to be diligent in this area to ensure that we do not have real capture.

From a policy point of view, we are looking at all of these areas to ensure that we’re really clear with our staff and that they understand what their accountabilities are and that they….

All public servants…. I have had the good fortune of meeting many of my staff over the last number of months. I think that they’re very professional. We do have a code of conduct, standards of conduct, in government that we must sign. All public servants take an oath. So they do take these matters very seriously. It’s important for us to continue to ensure…. I agree with you that it’s important that we make sure that we do not actually have regulatory capture.

D. Eby: Mr. Chair, one final question. I’ve got a letter dated May 20, 2014. It’s addressed to Mr. Hoffman and to someone named Diane Howe, who’s listed as the deputy chief inspector of mines. It was sent by the Shawnigan Residents Association. It’s from their lawyer, actually.

In that letter, they say that they were making submissions to the Environmental Appeal Board, and they refused to hear evidence related to South Island Aggregates’s consistent behaviour with the permit requirements. As a result, they said: “Since the Environmental Appeal Board is not willing to scrutinize South Island Aggregates’s mining permit compliance history, we submit that you must, or there will be a regulatory vacuum from which South Island Aggregates will benefit at the expense of the environment and the health and safety of people in and near the mine.”

They list out a series of concerns about the company not operating consistent with its permit, including some very obvious and demonstrable non-compliance. The mining permit required a 1.5-meter buffer between the mine and the water table, and their own documents said they were mining beneath the water table.

So when you get a letter like this, what is the typical…? I hear from Ms. McKnight that you take this very seriously, that it’s very important. When you get a letter like this, Mr. Hoffman, what is the response that your ministry engages in?

Do you have a copy for him? Otherwise, I don’t think he should be required to answer specifically about the content of the letter. But I think a general question about how you deal with such a general inquiry would be an appropriate question.

D. Eby: I’m glad to provide a copy to Mr. Hoffman, Mr. Chair. That’s not a problem. The concern is that there was no response from the ministry.
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A. Hoffman: I don’t think that’s correct. In fact, I responded to the site myself, plus a number of other inspectors have looked at the site.

We have also looked at expert reports, in terms of this report that they broke into the water table. That’s factually incorrect. That’s not correct. Those are statements that may have been in the public domain or from the association, but the water table, in fact, is well below the lowest elevation in the pit, so the water that’s there has accumulated from rainwater.

D. Eby: So when you make a finding like that, do you think there’s a responsibility on the part of the ministry to write back to the members of the public that raised these concerns?

A. Hoffman: Generally, we would. I can’t remember if that, in fact, happened, but I can find out. Certainly, we’ve had a number of discussions with members of the public and directors of the regional district about the issue at South Island Aggregates.

G. Heyman: As you’ll know, I was not able to be present yesterday, so I’ll apologize in advance if I’m going over some ground that’s already been canvassed. I had a quick scan of the Hansard Blues, so hopefully I won’t.

Let me begin by…. I’ll have a number of questions, Chair, but maybe I’ll take a break at three and come back with some more later.

I want to follow up with Ms. McKnight’s response to Mr. Eby with respect to regulatory capture. I can’t give a direct quote, but you referred to efforts you would make to ensure that there was no real capture, and “real capture” were the words you used. Mr. Eby pointed out that, in fact, six of the eight indicators of regulatory capture were identified by the Auditor General as having been, essentially, ticked by the regulatory regime, and the other two weren’t audited.

So my question to follow up is: how do you distinguish between real capture and actual matrix that indicated that on every one of six tests of regulatory capture against which you were assessed, you met those?

E. McKnight: I wouldn’t say that we have met them. I think my earlier comment around the risk of regulatory capture is something that any government organization…. I think it not only applies to the mining sector. I think there are several areas in government, and we did talk about that a little bit yesterday, around how broadly that can apply.

I think it’s important for any organization to ensure that we actually have the policies in place. So when we look at this matrix, those are signs that we need to ensure, over the coming months, that we have clear guidelines, clear policies, that we have clear training mechanisms in place to ensure that we are minimizing any risk of regulatory capture.

I think it’s important to note that we can look to some aspects of organizational structure to ensure that you can minimize any kind of risk, but an organizational structure isn’t going to solve that on its own. We need to make sure that we have clear guidelines in place.

I think that is definitely something that we have committed to, and as the Auditor General pointed out, we need to do that in an integrated way to ensure that aspects that…. Whether it’s in Energy and Mines or whether it’s in the Ministry of Environment or in the environmental assessment office, we need to be clear that we have some integrated high standards for our public servants to ensure that we minimize that overall risk.

G. Heyman: One of the indicators was that the resources of the regulator don’t keep pace with growth of activity within the industry, if I remember correctly. I understand that it is the budget, and the government that puts forward the budget and ultimately has the majority that passes the budget, that determine the resources that each ministry or regulator can bring to bear.

My question is for representatives of both industries. Were you aware that you were falling behind in your capacity to monitor compliance and enforce compliance and inspect, or did you think that you were fine with the resources and capacity you had? If the answer is that you were aware that you were falling behind in ability, what mechanisms do you have in place to raise this to the attention of government ministers, the Legislature and the public?

E. McKnight: I’ll have Wes comment on this as well, but I think for…. As I said yesterday, I’m new to the portfolio as of last fall, but since that time a significant part of what I’ve been doing is trying to ensure or understand the commitments that we need to make in the ministry and what resources we have in place. We have had substantial budget increases over the last couple of years for Energy and Mines, and we are going to continue to look at what we need to do, in particular for compliance and enforcement.

I think it’s important to know that there were points in time that the Auditor General has pointed out, several years ago, about four or five years ago, where resources were changed significantly. There was a number of different types of reorganizations, and work did fall behind.
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Since that time, I think there’s been a substantial increase in different types of resourcing.

We said yesterday that we have had a concentrated effort to improve our permitting function, but that hasn’t been at the expense of compliance and enforcement. The structure of what we’re committing to with our board that we want to be able to put in place is to ensure that we are putting the right emphasis on that function and that we’re doing that in an integrated way across all organizations.

I think it’s important to note, as well, that even with that board structure, we’re not opposed to looking at any kind of reorganization. But we want to do that in a thoughtful way, and we want to make sure that we’re actually improving on our compliance and enforcement results as we do this.

I think, Wes, you mentioned yesterday that you’ve received significant resources in the last little while, so I’ll let you speak to that.

W. Shoemaker: Good morning, Chair. Good morning, Member. Yesterday the answer that I gave related in a couple of areas. On the permitting side of it, we have shifted towards the creation of a dedicated mining team for mine permits and have done a lot of process improvements relative to that to make sure that we dealt with permits not only in a focused but a dedicated way.

In addition to that, we have moved from compliance and enforcement on the other side of the equation, a complement of approximately 17 individuals, to additional resources that have been added that will take us up to 48 individuals. In doing so, we’ve also reoriented our compliance and enforcement resources within four groups. One is around compliance promotion. The other is around planned inspection. The third is around reactive compliance and individuals that are focused solely on provincially significant projects.

So staff, resources and capacity are certainly an important element for us to fulfil our regulatory mandate.

G. Heyman: The Auditor General report says that the focus of the ministries on permit applications results in few resources dedicated to regulatory activities and monitoring compliance and enforcement. To be clear, are you saying that this increase in compliance and enforcement staff, or the numbers that you’re referencing, are in response to the Auditor General report that took place after the investigations, or are you simply disagreeing with the Auditor General report?

W. Shoemaker: How about I’ll go first, since I answered last? The need for resources was certainly recognized and ongoing. I’m certain that the efforts of the Auditor General in helping us to examine the importance of additional capacity in this area has aided in the addition of additional resources to our compliance and enforcement function.

I’m sorry, your last point was: did I say it made no difference, or was it irrelevant? I do not make that point. Again, we recognize, as pointed out by the Auditor General, that additional resources and capacity focused on compliance and enforcement were needed and are important, and we’ve put those in place.

E. McKnight: Part of the increase was before and also during the audit. We will, of course, be taking a look at this in a significant way to ensure that we can demonstrate that we have a very strong compliance and enforcement regime in place. If we want or need additional resources to do that, we will put forward our request to government. That’s my responsibility — to ensure that we do have the right resources in place. But we’ll be doing that…. That’s one of the aspects of the board, to develop a strategic plan overall and to be able to look at the resources to be able to deliver on the function.

I would say that the Auditor General’s support or recommendations in this area to increase compliance and enforcement — we welcome that opportunity to take a look.

G. Heyman: Thank you. Recommendation 1.2 says that the government should ensure both “historical and current permit requirements are written with enforceable language.” The response of the ministries is agreement that “permits must be written with measureable and enforceable requirements.” This seems pretty self-evident for a regulator to have enforceable conditions within a permit.

My question to the ministries. I presume that you have plenty of access to legal advice and both a sense going in about what is required to have effective regulatory activity and ensure compliance, as well as the experience of people who are inspecting and attempting to enforce compliance. So was the failure to have enforceable conditions in the permits intentional — unenforceable conditions in the permits intentional?

W. Shoemaker: I will start out and certainly will invite my colleague…. The simple answer is: absolutely not intentional. I mean, the whole point of taking compliance actions or at least the issuance of permits is so that we can hold companies to account for the authorizations that we are given.

In terms of some of our past experiences with some of our permits that have been challenged, we have learned either through the Environmental Appeal Board process or through our ongoing work with our legal advisers from the Ministry of Justice as to how we can ensure that the permit conditions that we actually put in — whether it’s not only in the EMA permits but even further up the line in the environmental assessment process as part
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of certificate conditions — are not only justifiable but legally enforceable.

I’m going to get Jennifer in a moment just to speak about some of the efforts that we have done recently in terms of some of the standardized conditions and the like. But it absolutely was certainly not the effort or the approach that we didn’t care about it. To the contrary.

J. McGuire: The ministry has undertaken a review. That was reflected in the Auditor General’s report of conditions — to look at an inventory and to compare conditions.

We know that we have some conditions which are…. The wording has evolved or migrated over the years. So this was a very good point for us to go back and look at those conditions and make sure that they are enforceable.

We do have a variety of types of conditions in our permits. Permit conditions that regulate the quality and the quantity of the discharge are very clear. They say: “The maximum authorized concentration is X. The maximum volume of discharge is Y.” And those are very easy to enforce.

There are other types of conditions which are more qualitative around things, such as it’s a requirement of the permittee to maintain their works in good working order. That does involve a little bit of probing and inquiry in order to determine whether or not the client or the permittee is in compliance.

We are looking at all of the conditions that we currently have, and we have had numerous conversations with Justice, especially around current permits — most notably the valley permit — and some of the other more sensitive permits have gone through Justice for review.

E. McKnight: The same for Energy and Mines — a similar comment that definitely we will continue to work with MOE and also learn from the audit from the environmental assessment office around enforceable permits. We do have good access to Justice to be able to ensure that our permits are enforceable. As we talked yesterday, I think George mentioned that permits can be large and complex, so we do want to try to standardize across the sector to ensure that we have the same kind of components in a permit, to ensure they’re enforceable.

A. Hoffman: No, certainly we have written the permit conditions as clearly as we can. But I think there’s some work to do, and part of our compliance and enforcement program will be to look at that and perhaps make them more consistent and more enforceable across the province.

P. Robb: I think I would add the compliance and enforcement wheel or the model that is put forward. I think those are all pieces that are good reminders for us. Part of that new structure we built is to walk through those steps and then ensure that we can implement those across not only major mines but in exploration. All of those pieces that….

It’s not just in the major mine permitting that these compliance and enforcement pieces are important. One of the steps that we’re looking at is to try to make those more consistent, to try to build those pieces. I think we can always improve on those, and that’s a good reminder.

G. Heyman: If I can just follow up, and then I’ll come back to some further questions later.

Well, Mr. Shoemaker indicated that there was an ongoing review, on a regular basis, of the enforceability of permits, and other representatives of both industries and both ministries have said something similar. Yet the report says that neither ministry has adequately evaluated the effectiveness of their regulatory activities, although both ministries are aware that deficiencies in the regulatory activities are resulting in risks to the environment.

It seems pretty clear to me that if the job of a ministry is to regulate, issue permits and enforce compliance and protect the public, that there should be some matrix or system in place to ensure that that’s being met. Yet the other…. This relates to the finding of the Auditor General that six signs of regulatory capture are in place.

Perhaps the ministries can indicate what processes are in place — have been in place in the ministry prior to this report — to indicate that you could be effective in your jobs of protecting the public, protecting the environment and enforcing condition permits and adjusting course if inadequacies were found — and if, in your opinion, you have those in place, why they failed.

W. Shoemaker: I will start, again, and in a moment I’m going to turn to our director of compliance and policy just for more articulation of our overall approach to compliance and speaking to our compliance framework, for sure.

Member, in your list of concerns or in posing the question to us, there’s kind of a number of different elements mixed in with that — the issue of regulatory capture, the one of compliance effectiveness, the ones of legally enforceable conditions.

I think it’s best for us, at least to start, to attempt to answer your question by an overview of our approach to compliance within the Ministry of Environment — the overall framework and how we review our effectiveness. I think it’s in the latter part, for sure. There’s an area highlighted by the Auditor General where we not only, within the Ministry of Environment, have a compliance framework, but there were gaps in its application, especially in the area of reporting and continuous improvement. They are ones that I know are much opportunity for us to improve.
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G. Laughland: In about 2005, our current deputy at the time brought this to the ministry’s attention. How do we ensure compliance? Coming out of that, the ministry created a compliance management framework which does multiple things. It allows us to communicate with stakeholders how we ensure compliance, and it allows us to communicate within our ministry and with other ministries how we ensure compliance.

That document sets out our principles that we abide by. It sets out the compliance model of setting a requirement, promoting, verifying and enforcing and the continuous loop back to make sure we have the right requirements in place, the feedback loop.

We often find, in promoting a requirement, that maybe we haven’t set it in regulation correctly, and we will loop back. Then, in verifying, we can find other difficulties looping back, or we find that, in fact, we did do the right job, and we circle through that process of enforcement.

We also have the continuous improvement loop of: what did we accomplish last year? How do we need to adjust our compliance priorities for the coming year through compliance planning? Then we have our accountability and transparency, and that is in the form of publicly reporting our enforcement actions.

We report all of our enforcement actions. We name all of the individuals and all of the companies. It’s exceedingly rare, in all of North America. We started that in 2006. To date, in our environmental violations database, we have over 20,000 enforcement actions that we have publicly reported.

Sitting under that broad strategic framework that I just spoke about is the exact policy that guides staff in the field when they’re assessing non-compliance. It’s a risk-based model that looks at the impact. What’s the impact to the environment, specifically? Then it looks at the likelihood of achieving compliance with that regulated entity. Together that is risk. How bad is it, and who are we dealing with? You look at those in isolation. You don’t look at them together.

When you use the matrix that we have in our compliance and enforcement policy and procedure, it suggests to the inspector an appropriate enforcement response. If that response is far enough along the impact, or deep enough in the unlikelihood of achieving compliance with that regulated entity, that may trigger an investigation. Then the inspector creates a file, and we transfer that over to the independent conservation officer service to look into that.

W. Shoemaker: Just before I pivot over to my colleague, in terms of the reporting part of our overall approach to compliance, we have been reporting on our compliance actions. I think we will, therefore, broaden that to include more of our inspection activities.

E. McKnight: This is an area that we have agreed with the Auditor General that we can improve upon as it relates to really doing that annual review of our compliance and enforcement activities. Although we have, on a regular basis…. The chief mines inspector does do an annual report. It talks about the number of inspections. That’s been an ongoing activity for a number of years.

I think since Mount Polley there’s certainly been a strong commitment for transparency in relation to the activities around permits, around compliance and enforcement. I did mention yesterday that we have actually committed to…. We are working with the EAO around, and we have published a lot of new documentation around, actual mine sites as it relates to permit conditions, permits and then any kind of compliance and enforcement activity.

That will be something that we will continue to work with. We do want to learn from the audit aspects from the EAO around what that would look like and then also, too, look to models from the Ministry of Environment to be able to improve on.

I think it’s important to note, though…. George did discuss this yesterday. I think the member made a reference to the permit conditions failing. I think it’s important to really touch on that again. Maybe I’ll just ask George to make a comment around the permit conditions and what that means.

G. Warnock: Sure. Post failure, there was a pretty detailed review of all the permit conditions at Mt. Polley. That was part of the chief inspector’s mandate, to look at the two components. What happened, what went wrong, and is there an opportunity for prosecution?

In every permit condition, we couldn’t find any opportunity for prosecution. Simply put, the failure was in the design, and the failure was in the initial investigation. The most recent design that was analyzed had the exact slopes that were present, had the exact water conditions that were present, had no buttress at the toe. Still, the engineer of record stated a factor of safety of 1.6, well in excess of the Canadian dam safety guidelines. Simply put, it was not a failure of permit conditions. It was a failure of design.

I think I’ll leave it there. We wanted to make that point clear. I think there’s concern in the ministry that the broad kinds of statements that were made in the Auditor General’s report opens government to some liability. I think it needs to be on the public record that government did their job and the failure rests with the company and with the engineers of record.

L. Reimer: I actually believe my question has been answered. It had to do with reclamation shortfall. My
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question was whether this is an issue specific to B.C. or whether it’s existing in other jurisdictions. I believe I heard Mr. Sydor say it does happen in other jurisdictions. I’m wondering if your colleague Canadian Auditors General have identified it as an issue.

A. Todosichuk: We didn’t look at other jurisdictions, whether there were shortfalls in other jurisdictions. But other Auditors General, as you pointed out, have commented on it. The Alberta Auditor General has recently talked about security and that there’s insufficient security, in his opinion, in Alberta. I believe there was another report that was done by the OAG of Canada around looking at financial securities, as well, and that there was a gap there and, again, a cause for concern.

R. Sultan: I wanted to read into the record some background on the selenium story. I would commence by referring to a letter to the Globe and Mail written by Teck Corp. in response to an article by Mark Hume decrying the decision to grant a permit to the Line Creek phase 2 project. Quoting from the letter, it says, referring to Mr. Hume:

“He incorrectly suggested that the project is proceeding regardless of potential impacts on water quality. Nothing could be further from the truth. To provide context, the goal of Line Creek phase 2 is to extend the life of the existing Line Creek mine, which employs over 530 people and has been responsibly operated for over 30 years. It’s not a new mine, not intended to increase production levels.”

At this point, the letter goes on to point out, in passing, that there are five mines operated by Teck in the Elk Valley, employing over 4,000 people. The letter continues:

“In addition, we have already taken steps to protect the water quality in the region. Our first full-scale water treatment facility is nearing completion and will begin operation in the first next half of next year, well before any mining begins on Line Creek phase 2.”

If we look at the Teck website, we get further information on what is described in the November 2014 Elk Valley Water Quality Plan.

“Development of the plan was informed by scientific advice received from a technical advisory committee chaired by the B.C. Ministry of Environment and including representatives from Teck, Environment Canada, the U.S. Environmental Protection Agency, the state of Montana, Ktunaxa Nation, other provincial ministries and an independent scientist. Public input was received through three phases of consultation and conducted in the Elk Valley communities.”

The website goes on to point out that a water treatment facility at Line Creek completed commissioning in February 2016 and a water treatment facility at Fording River operations is planned for 2019.

Here we have what is, in fact, one of the world’s pre-eminent mining operations — certainly, one of the higher quality and, I think, most responsible mining organizations one could envisage — doing its best to remedy and remediate what they themselves concede is a problem with selenium levels.

My question is to, perhaps, the chief inspector of mines. You referred to the $600 million spent to date, as you understand it, in the Mount Polley situation. What is Teck spending? What has it invested in addressing the selenium and related water quality issues in the Elk Valley? What is their estimated annual running cost to maintain these remediation efforts, in your guesstimate?

A. Hoffman: I know that they’ve been doing extensive work on the selenium issue in the Elk Valley. I understand it’s close to $1 billion that they’ve invested in…

P. Robb: …that they’ve invested and committed to invest over the next 20 years to address the issue. That was the outcome of the…. I think it was $900 million that was about the estimate. The start of that $600 million got to about $900 million by the end of the TAC process.

R. Sultan: Well, the member for Point Grey has pointed to the all-too-typical case of a junior mining company struggling, trying to hit it big. They didn’t, it seems, even get through their first year before they went bust and left a big mess for the taxpayers to clean up. That’s unfortunately an all-too-common story.

Here we have the opposite extreme: a very sophisticated, financially solid company spending $1 billion to endeavour to clean up the selenium levels with lots of international and public scrutiny.

I turn to this piece of paper distributed by the Auditor General entitled — incorrectly, in my opinion — “Lack of public disclosure,” showing what is, indeed, an alarming growth in selenium levels in the Fording River between Swift and Cataract creeks. It starts in 1996 and goes up to 2012. It certainly is a disquieting chart.

I would ask, perhaps, the Ministry of Environment…. This chart is plotted on data prior to these massive investments, as I understand it at least, in water quality remediation. If we had it up to 2016, what would it show?

J. McGuire: Thank you, Member. Very good question. The ABMP, the area-based management plan, specifically looked at that projection of increasing selenium levels. Every time a treatment plant is put in effect, there are modelled graphs, which are in the area-based management plan and which show that there are significant decreases in selenium and nitrates.

There are models, and then it’s proven by follow-up monitoring. There are staged decreases in the valley-wide permit that shows that they are at X level. Once a treatment plant comes into effect, it will drop. The selenium concentrations will drop. That is a compliance point that they are required to fulfil. If they don’t, they would be in non-compliance and there are enforcement actions.

The area-based management plan has graphs which show that every two years, as a treatment plant comes into effect, there are decreases in that selenium concen-
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tration. It does get to a certain point, however. Treatment plants will be able to reduce the selenium concentration only to certain points. It will never get to zero because there will always be selenium in the environment.

R. Sultan: That’s a reassuring answer. Thank you. But let me ask this further question.

Let’s say we have had it with Teck and their coal mining. Coal, of all things, in today’s world. You know: “Teck, please go mine copper up at Highland Valley, and just shut the mine down. Shut down Elk Valley, and throw those 4,000 or 5,000 people out of work. I’m sure they can find occupations somewhere, eventually, maybe.”

What would happen to the selenium levels if they just folded their tent and went away and did nothing?

J. McGuire: The nature of selenium is that it continues to leach out of all of the waste rock that has been piling up for 100 years. The models are that the current levels…. Where it sits right now — for example, at Fording — is around 80 micrograms per litre. By 2035, it could be over 120 if nobody does anything. That’s just the environmental side. From the economic side, Teck employs over 4,000 people in the Elk Valley.

That’s direct employment. There are another 6,400 jobs that are associated with support work for the mines. There are over 15,000 jobs in B.C. that are directly related to the southeast coal-mining operations. Wages generated in B.C. by the southeast coal is in the magnitude of about $1.8 billion. So there are economic, social and environmental implications if Teck were to shut the doors. There would be economic, social and environmental issues immediately.

R. Sultan: My own conclusion from what you said is, well, regrettably, this particular mining activity in Elk Valley encourages and stimulates — and, I think, certainly is accountable for, I gather — increased selenium levels. But if you said, “Stop, stop, stop. Go away,” it would not improve. In fact, there would be no remediation. There’d be nobody to write a $1 billion cheque, perhaps, except the taxpayers of British Columbia.

So Teck, please, keep going. Survive. Don’t go bankrupt; that’s the worst outcome. Good on you. That’s my comment.

B. Ralston (Chair): I wanted to ask a question about the action plan. On page 4, in 1.2, it refers to permit language. We’ve had some, I think, fairly extensive discussion on this, but the recommendation says: “Action taken. Permits are reviewed when amendments are applied for throughout life of mine.” This is a joint action plan by both the Ministry of Energy and Mines and the Ministry of Environment.

Is the action plan deficient? Or is that, in fact, all that’s going to be done — that permit language will be reviewed when amendments are applied for? It seems to me that that may not remedy the problem.

W. Shoemaker: I’ll begin, and then I’ll allow my colleague to speak to the Energy and Mines initiative.

It notes that this is partially implemented and here are the sorts of things that we have done and will do. It began in Jennifer’s division, where they did a review of mining permit conditions, looking at consistency and inconsistency, and made recommendations. The next steps, then, from that review were certainly to get legal assistance to confirm they’re enforceable, to finalize a core set of conditions and to deliver training to permitting staff. That’s part of our action plan.

Ultimately, our goal is to identify a series of boiler plate — for lack of a better word — and foundational permit conditions that we know will stand that rigour of legal enforceability. We’re starting with implementing conditions for new permits — or permit amendments, as you recognized. But it is our intention to go back and clean up the old ones as resources allow. This will be done solely by the mining authorization team.

B. Ralston (Chair): Well, just before you continue… The target date here is November 2016, according to the action plan. So the target means that you will be reviewing permits? It looks like there’s going to a policy that’ll go into place.

It seems a bit peculiar that there has to be a policy to develop enforceable conditions, when it would seem to me that that would be axiomatic to writing conditions. But nonetheless. Is that what you mean by full implementation in November 2016 — that permits will be reviewed when amendments are applied for? What’s the timeline on going back to ones that aren’t applying for amendments?

W. Shoemaker: My first response — and again, I’ll invite Elaine to comment as well — is that the November 2016 target is for the development of the policy.

While I perhaps struggle, for lack of a better word, to actually say when it’s all going to be done, it follows, though, I think, from the first work that we’ve committed to do. In addition to not only looking at new permit and permit amendments is the creation of our enforcement boards, where we talk about sort of the overarching policy and approach that we will take together. Then we look at priority activities that we need to engage in and an implementation plan.

It’s all of these phasings of the various activities of our action plan here, in specific target dates that will arise. In all fairness, we certainly have not gone through at least that first phase to be able to put specific target dates associated with all of the actions within this action plan.
[ Page 946 ]

E. McKnight: That was going to be my comment. We’ll definitely communicate with the Auditor General over a period of time, in the next number of months. Once we have the compliance board in place, we’ll be able to develop that further action plan.

This one here is a commitment to have the clear policy direction around permitting and have that consistent across our organizations. I think that the emphasis, of course, as we discussed yesterday…. The emphasis on new permit conditions or any renewals will be the higher priority so that we have that clear coordination. But we do need to go back and look at all permits.

At this point in time, it has only been a few weeks, so we do not have that work completed. But we have put in place…. I did mention yesterday we’ve put in resources. We have Nathaniel here, who we’ve identified as the lead, to be able to ensure that we carry out all of this detailed work.

B. Ralston (Chair): Just on action plans. I think the committee went through a process of developing the action plans. The committee has resolved that these will come back and be looked at, as the need arises, by the committee itself. So it’s not simply a question of dealing with the Auditor General but, ultimately, accountability to this committee. Just so if that weren’t clear already, that’s probably a useful thing to say.

The next question I had was about Myra Falls. It was mentioned. The report, on page 58, does say that the seismic requirements of the dam there took 14 years to come into compliance. That was given as an example of the weakness of the enforcement and compliance culture within the ministry.

The wording, on page 58, is: “MEM” — that is the Ministry of Energy and Mines — “has no policy that requires its inspectors to ensure that mines return to compliance. From our sample of mines, we found the ministry has not been systematically tracking either industry’s compliance with permit requirements or industry’s response to MEM’s identified non-compliance.” Then they go on to give the example of Myra Falls.

I note in exhibit 15, on page 59, that in 2001 “MEM approves the mine operator’s request to extend completion of seismic upgrade until 2005 due to financial difficulties. This extension was granted contrary to the advice provided by MEM’s geotechnical staff.” Notwithstanding that, the seismic berm wasn’t completed until July 31, 2013. So it took a total of 14 years, which I think is a good example of a weak enforcement and compliance culture.

What assurances can you provide, given this example and the very blunt comment that the ministry has no policy that requires its inspectors to ensure that mines return to compliance? What assurances can you give the committee that that state of affairs is not going to continue, will not continue and that you have a new system in place? And if so, when is it going to be effective?

A. Hoffman: I’d like to turn it around and say that, in fact, this is a case where it does show that we were able to achieve compliance, although it did take a while to do it. My understanding is that the essential geotech buttressing was done some years before, about 2007. So this is not quite accurate.

We did work cooperatively with the company to get them in compliance. As you can imagine, the company was also shut down for a while during this period of time. We had to push them to get it done, but it was also done.

I guess the other thing, a similar example, is that if you had shut the mine down, then there wouldn’t have been anyone else to do the work, and government would have had to have taken it on. Although it probably wasn’t done as quickly as it should have been done, the mine did eventually achieve compliance, and it has been seismically upgraded.

P. Robb: I think, Al, in speaking to the approach taken and in speaking to the inspectors, this is one that they did do a risk-based approach with the company of saying: “Where do we spend money immediately and time immediately on that seismic upgrade?” And that was put into place to immediately address the most important areas early on in the process and take that approach to minimize the risk, deal with the company being shut down and those pieces, and get to an outcome where, you know, we hope we have an operating mine there.

It is in shutdown right now, but we hope we have an operating mine there for many years to come. There is still great ore there and a project that is in a good place to be purchased and operated. Though it took a long time, this is a good example of how to move towards not ending up with putting the public at risk of taking on additional liability and increase your bond, increase the requirements needed there over a time period to have a good project that is purchasable and operatable.

B. Ralston (Chair): Are you suggesting, then, that 14 years is an appropriate time to ensure compliance for some things, such as a seismic requirement?

P. Robb: I think what we’re saying is that, if you unpacked what is in this simple time frame, a whole bunch of work happened during that time frame to try to redress the most critical issues during that time frame and to bring them into compliance. I think this is a simplistic version of what happened. I think the Auditor’s right that this did take that amount of time, but if you unpacked what is in each of these stages, I think it tells a little bit different story.
[ Page 947 ]

B. Ralston (Chair): Did the Auditor General have any comment on the suggestion that your version is a simplistic one?

A. Todosichuk: Again, for all our public reports, we have to, obviously, keep limited what information we have in our reports. We did analyze this particular case in quite detail, but what’s provided here is a simplistic version of all that information. But we had reviewed it in detail.

M. Sydor: At the same time, we’re talking about a mine, I guess, that is not as isolated as maybe some of the ones in the northwest. I think it might be pointed out in the report that we’re talking about a mine that’s adjacent or within a provincial park and that’s also upstream of a water source for a major community.

I think when we look at it and see that it took 14 years, in this case, we were lucky, as Ardice had indicated. Studies had shown that if we had reached a seismic event of a particular magnitude, there’s a great risk that that dam would have failed and impacted the environment and the water quality. So yep, 14 years. That’s what it took that particular ministry. We look at it and wonder whether it could have been done sooner.

This issue of jobs — it comes up all the time, not just in British Columbia but anywhere you look. If you look at the literature, you’ll see that mining companies very frequently apply the jobs issue as a rationale for getting some additional support to keep operating, maybe in an environment where they otherwise shouldn’t. We have to look at it as well.

The ministry can’t guarantee that those jobs will be there. As was pointed out, they shut down for a particular period years ago. They’re shut down now. The jobs are really a factor that relates more to international commodity prices than the support that the ministry provides. Fourteen years is a long time to protect water quality, the environment and the community.

B. Ralston (Chair): I want to turn now to an issue about staff levels. Page 46. There’s a chart and some narrative about what is described as a dramatic reduction of inspectors early after 2001 and continues at a fairly low level relative to previous numbers. It’s noted on page 46:

“Throughout these years of declining full-time staff at MEM” — that is the Ministry of Energy and Mines — “the number and complexity of permit applications increased substantially. MEM used contractors to assist with workloads, which required significant oversight to ensure consistency of approach between projects and consistency with provincial policy. The demand on staff…through this approach resulted in increased stress and workload. From 2011 to 2015, MEM did not receive adequate funding for its programs and relied on contingency funding to supplement its budget.”

Then, as I think the deputy minister mentioned: “In 2015, MEM received a substantial increase to its budget to create a major mines permitting office and to create additional capacity.”

Granted, this is retrospective. But many of the comments about the lack of an enforcement culture, I think, would originate in this period of very low staff levels. So is there an explanation that the ministry can offer as to the reasons for that level of staffing, notwithstanding that the workload pressures were increasing?

E. McKnight: I can make some general comment. I’ll maybe look to Al to help provide some specifics.

We certainly agree with the Auditor General that, through periods of time where staff resourcing was significantly…. It was far too low, given the amount of work that was required to do. I did mention that there was a period of time where there was some significant restructuring within government, and we see the consequences of that, where a number of inspections declined.

It was mentioned earlier that there are periods of time in the industry where, depending on what’s going on in the industry, we have a challenge to compete for securing engineers. I think it shows in the graph that we’ve certainly done a lot of work in the last couple of years to make the increases and ensure that we have the right resourcing in place, and we continue to do that now.

A. Hoffman: No, I’d just like to echo those comments. There was a period of time when we probably didn’t have enough inspectors on the ground, but that’s increased dramatically over the last few years. In fact, now I have more geotech inspectors in my group than I’ve ever had before. So I think we’ve made a lot of positive moves in that respect.

D. Eby: There’s a specific example in the report of the Shasta-Baker mine in which the Auditor General advises this committee and the public that the Ministry of Energy and Mines asked for an additional security bond of $150,000, which the company refused to pay. The Ministry of Energy and Mines said it would reconsider the decision yet then never followed up.

My question is: has the Ministry of Energy and Mines now followed up with the operators of the Shasta-Baker mine, and have they paid that security bond?

A. Hoffman: Unfortunately, they haven’t paid that security bond. I would describe them as a bad actor in the province. In fact, we are taking some very demonstrative steps in the next few weeks to ensure that that mine comes into compliance.

P. Robb: You’ve actively followed up, and it is an active file that we’re working on.

D. Eby: Okay. Well, this is December 2014. The Ministry of Energy and Mines writes that the company must meet Ministry of Energy and Mines requirements
[ Page 948 ]
to properly manage the minesite and that their inability to do so has been “an increasing concern over the last several years.” That was December 2014. It had been a concern for years. We’re now in June 2016. You’re taking action in the next couple of weeks, you’re telling the committee?

D. Eby: Page 57 of the audit report: “Ministry of Energy and Mines is not ensuring that mining companies submit reports — as required under the Health, Safety and Reclamation Code for Mines in B.C. — in a timely manner, or even at all. For example…only a little over half of all mining companies submitted their annual reclamation report in 2013 and 2014…. Ministry staff point out that they have no enforcement tools to compel mining companies to submit reports.” Has this been fixed?

A. Hoffman: I’d just like, before we go on to that comment, to indicate that Shasta was shut down, and we’re following up very deliberately.

D. Eby: Page 57. Reports required under the Health, Safety and Reclamation Code are not being filed “in a timely manner, or even at all,” by almost half of companies. Staff told the Auditor General that “they have no enforcement tools to compel mining companies to submit reports.” Has this been fixed?

A. Hoffman: Well, we do have tools in the code to write orders, and those are prosecutable. I think, also, the new tools that we have in terms of administrative penalties…. We’ll be able to apply those for mines that don’t submit reports on time.

D. Eby: Have they been applied? Do you have 100 percent compliance now? Has this been fixed?

E. McKnight: The answer is that we have just this spring passed the legislation to allow for the monetary tools for fines. We are going through…. As we have all of those regulations in place over the next few weeks, then we’re able to turn to the action to be able to have the enforcement tools in place to ensure it can be fixed.

D. Eby: On page 26 of the report, government’s response to the adequate bonds, in terms of reclamation bonds…. The ministry response to recommendation 1.13 — that we gather enough money to reclaim the minesite in the event of a bankruptcy or default by the mining company…. Your response, as seen in the 2014 chief inspector’s annual report, is: “In the past few years, the value of security deposits has increased to reflect more closely the true costs of reclamation. The total value of securities held by the province has risen from $10 million in 1984 to more than $773 million by the end of 2014.”

I don’t think that’s actually a response to the recommendation. The recommendation is that government safeguard taxpayers by ensuring that the reclamation liability estimate is accurate and that the security held by government is sufficient to cover potential costs. Now we’ve heard about Shasta-Baker. We’ve heard about Yellow Giant.

What specific steps is the ministry taking to ensure that, first, the reclamation liability estimate is accurate and that, second, the security held by government is sufficient? What steps are being taken?

E. McKnight: I did mention this yesterday — that we are actually working with all the jurisdictions across Canada to understand where they are at for policy in this area. We have learned in the last few weeks that there are some jurisdictions that have moved to 100 percent valuation, with some very negative impacts. We are trying to understand where the appropriate levels are.

As we did say…. I have looked at this matter myself in the last number of weeks. We do have quite a robust process to be able to go through with each mine. Reclamation is very, very mine-specific. So it’s very difficult to make this a general policy. Having said that, we can be very clear and transparent around the assessment that we do.

In a number of briefings that I have gone through and that we are going through, I would say that we look at the high-risk areas for mines. Al mentioned earlier today that there’s a requirement to have a reclamation review every five years on that plan. So we are doing that.

The biggest difference in the amount of money — we did mention that yesterday — is from two companies. The biggest one right now is with Teck, and we are working with Teck right now to understand how to close that gap. These are all areas of new requirements. I think Jennifer talked about…. With the water quality treatment coming on line, what do we need to ensure that we have continued water quality and water treatment at the end of mine life?

We are actually diligently going through that work right now, and I think the emphasis is that we will focus on the two companies where the largest discrepancy or gap is. We’ll be very transparent with that information around what decisions we get to for the right amount of dollars required to ensure that we actually have effective dollars in place at mine closure.

P. Robb: I was just going to add to that. The member’s question was: what have we done? The report was released May 3. It’s now a month later. There’s no plug-
[ Page 949 ]
and-play switch that, all of a sudden, sent out an email or a letter saying: “You now owe us 100 percent security.”

The goal of the Energy and Mines team is to put together what every other jurisdiction in Canada and the world is doing — are we a leader, or are we a laggard, and if we’re a laggard, what do we need to do differently? — make an assessment on those pieces and then come back to the board to bring what the opportunities are.

The Auditor General, since the report, has given us a bunch of pieces they looked at, saying: “Here are some places you should look at.” The goal is to go and look at those places and bring back and report, I think, to the Public Accounts and to the Auditor General what we have done to make an assessment — is this gap we have an anomaly and nobody else is like this? Is this gap we have standard practice for mining across jurisdictions in the world? — and then make sure that we’re addressing those pieces so that there isn’t this significant risk.

We have to look at…. Is it a matter of all mines going into full closure and bankruptcy at the same time for this to be a risk to the province immediately? Those pieces need to be looked at. I think, as the deputy said, we’re trying to look towards closure and continuously evolving what those numbers can be. Can we do a better job? I think that’s the question we’re going to have to ask ourselves and to look at.

B. Ralston (Chair): Just in fairness, though, you mentioned May 3 as the release of the report. As we’ve heard from the Auditor General, the process of the audit is a very extensive one. The ministry received a full draft, together with the recommendations, considerably in advance of May 3, so to suggest that the starting point for consideration of these concerns was May 3 I think is not entirely accurate. I don’t know whether you’ll concede that or not, but I feel obliged to point that out.

E. McKnight: That’s a fair comment, Chair. Having said that, I did mention that I had myself been briefed extensively on this issue.

I think the other thing is that we really made a strong move to ask all the companies to be transparent with their numbers on what they have for reclamation holdings. The majority of that information was provided to the province in confidence. Over the last few weeks — it took an enormous amount of time for staff — we contacted every company. We asked them to disclose their amount. They all agreed, and so we did make that information public. We are committed to transparency on this issue, and we are also committed to transparency around how we go forward and assess.

I think it’s important to point out — I know Jennifer and Wes can speak to this more specifically — that the ongoing water treatment and the commitment to ongoing water treatment is a relatively new area as it relates to coming up with a reclamation amount. It’s an area where we need to ensure that we have the right expertise in place to support us and to make that assessment.

We do look to the companies to provide us with what I would say is credible information. I think companies, such as Teck, are committed to do that, but we need to have the capacity in place to assess that. It is a fairly new kind of requirement. It’s an area that we have lots of work to do.

D. Eby: What’s difficult for this committee is seeing a report where the ministry is not receiving reclamation reports from almost half of companies, where a highly leveraged junior mining company and what’s been described to the committee as a bad actor don’t have sufficient reclamation bonds. To hear that you’re focusing on high-risk areas, it seems difficult to understand how those things can be consistent with what we’re seeing in terms of evidence in front of the committee.

I’m interested in the process of reclamation bonds. I thought the government held those bonds, but from your comments, it sounds like the companies hold them and then they tell you how much money they’re holding. If the government holds the reclamation bonds, where does the interest on the bonds go? And if the companies hold the reclamation bonds, what steps is the ministry taking to confirm that they actually have that money and that it won’t go to a preferred creditor?

A. Hoffman: There are a number of different vehicles that are used for companies to place their reclamation bonds. There are safekeeping agreements, letters of credit, cash. Part of our job in my group is to ensure that those securities are tracked and returned when appropriate.

We do know where they are and how they’re kept. In most cases, when companies have gone bankrupt, we were considered a secured creditor, and we have not lost a reclamation security yet. In fact, in the case of Banks Island, we’ve already gone ahead and seized those securities.

D. Eby: Just a follow-up on that. Can you give this committee a list? I didn’t quite…. There are letters of credit….

A. Hoffman: Yes. Those are generally only for smaller securities. The government actually holds those securities.

A. Hoffman: The interest? In that case, there’s no interest provided. It stays with government.

A. Hoffman: Not that I’m aware of. We’re also looking at surety bonds, which is a type of insurance. It’s an area that we’re looking into. We want to make sure that those are secure and, of course, that the surety company pays if the company fails.

I just wanted to follow up to make clear, let the members know, that I’m very disappointed with Shasta and with Banks Island. I think you’ve picked two cases which were probably two of our worst performers in the province. I’m going to be doing everything I can to hold those companies accountable and ensure that the mines are adequately reclaimed.

L. Throness: Just one question for the Auditor General. On page 44, under the title “Regulatory Capture,” the Auditor gives eight possible signs of regulatory capture. One of them, the last one, says: “Regulatory work often takes place in isolated regional communities, and there is frequent social collaboration between industry and the regulator.” You didn’t say “there could be” opportunity for social interaction; you said “there is.”

Do you have some examples of that? Could you expand on that and share that with the committee?

A. Todosichuk: As we pointed out to the other member, this is an area that we did not look at. We did not audit this particular characteristic during the course of the audit.

L. Throness: So then it might be better said that there “could be” frequent social collaboration, rather than “there is.”

A. Todosichuk: This is just a list to say these are possible signs. There isn’t a confirmation that these things exist that we’ve pointed out. These are risks that were identified in papers that we’d looked at as to what are signs of regulatory capture. So this was just a sign that was pointed out. As the last one says, this is a sign that could possibly indicate regulatory capture. However, we did not examine that.

G. Heyman: I want to return to a comment that Mr. Warnock made in response to another question. He talked about how the Mount Polley failure was not the responsibility of the ministry; it was the responsibility of the company.

If you look at the Auditor General’s report, they say the difference between their assessment and the panel’s assessment was that the panel review focused on how the dam failed, and the Auditor General focused on why the dam failed and the Ministry of Energy and Mines’ overall compliance and enforcement activities.

It said: “We found that the ministry did not ensure that the tailings dam was being built or operated according to the approved design; nor did it ensure that the mining company rectified design and operational deficiencies. The Ministry of Energy and Mines continued to allow the mine to operate and to approve permit amendments to raise the tailings dam.”

So in the context of that finding by the Auditor General, Mr. Warnock, how do you absolve the ministry of all responsibility in the Mount Polley tailings dam failure?

G. Warnock: Well, I know in English the basic difference between “how” and “why,” but when I read the report, I’m left puzzled on the distinction. I don’t see the distinction.

G. Warnock: The Auditor General’s report. Basically, when I look at what we were provided by the engineers…. In March 2014, just a few short months before the failure, the engineer of record wrote that the 2013 stage 9 raise, the most recent raise, of the embankment “is judged to have been carried out in conformance with design intent.” That was our finding as well.

The fault rests in the design. We approved the design. The design turned out, because of this unknown clay layer, to be faulty.

As far as the distinction between how and why, I honestly can’t wrap my head around that. I don’t understand. The expert panel, which is comprised of three…. I can’t call them colleagues, because they’re well above my level of expertise. Three esteemed engineers went to great lengths to say that the ministry staff were among the best they had seen in the world. I’m not saying that for my benefit. It was ministry staff that worked for me that did, I think, an excellent job.

A very unfortunate circumstance in design and in investigation led to the failure. Again, I’m puzzled by the distinction between how and why.

G. Heyman: Well, let me say that I’m somewhat astounded by your claim that the ministry staff were the best in the world, given the end result.
[ Page 951 ]

G. Warnock: Sorry, that’s not my claim. That’s the expert panel that said that.

G. Heyman: Well, you referenced it. I think the people who were impacted and continue to be impacted by the massive discharge of tailings and wastewater would be, likely, far more astonished than I am.

I would say that the difference between how and why is pretty simple. The “why” is that the ministry failed in its responsibility to adequately inspect and enforce. That’s why the deficiencies resulted in the actual spill.

Again, what we are looking at is engineers writing an engineering report. If you compare the two reports, our report and their report, you will find that they talk about glaciolacustrine layers more than 100 times. They’re doing a very detailed analysis of what was there, the size and how it was impacted under different forces.

If you look at our report, you’ll probably find us referring to it once. Our focus was on what the ministry could do to prevent the failure, primarily through its compliance and enforcement efforts. We focused above ground — what was going on in terms of the building of the dam.

The difference between how and why is how…. The panel reports that it failed because the embankment slipped on the clay under too much pressure. But why was that embankment there? That’s what we focused on.

When you look at the panel’s report, they say they were surprised. They don’t use those words, but what they say is that that slope was unprecedented. They weren’t expecting to find a slope of that steepness on that type of soil condition. The chief inspector of mines, in his report, confirms that as well. What he says is that “steep slopes on variable soil conditions should be flatter than 1.3 horizontal to 1 vertical despite the calculated factor of safety.”

Earlier Mr. Warnock had indicated that the dam met the design specifications. The factor of safety was 1.6. The real issue was that we had too steep a slope, and that was allowed by the ministry to persist for a number of years. The panel had the mandate to look at that if they had the opportunity.

What they reported…. They did report the fact that staff were well-qualified and they could carry out inspections well, but they also reported that they didn’t understand why that steep slope was allowed to persist for so long. Why was that 1.3 slope allowed to persist? That’s what they said, not us. Then they said: “We don’t have the time, but it’s reasonable to ask whether the ministry could have done more or acted sooner.” So we looked at what the ministry’s compliance and enforcement efforts were doing, and we found, in fact, that they could have done more.

One of the other things the panel pointed out was that we wouldn’t have had that spectacular a failure if there had been a beach in place. That was a design specification the company was never able to meet. The beach would have kept the water away from the dam, and we might have had a slump but not the torrent of water and tailings flowing out into Quesnel Lake.

When we looked at it, we focused on the why. Why was that slope allowed to persist? The ministry’s weak compliance and enforcement efforts are certainly a factor in the failure, from our perspective.

The quote that the Auditor General showed in their presentation yesterday said: “It is not unreasonable to ask whether MEM could have acted sooner or more aggressively in these matters.” Right above that, if we take this in context…. I’m going to read the whole thing: “The panel found these actions to be appropriate….”

B. Ralston (Chair): Could you tell me what page you’re on? I have a copy of the report.

G. Warnock: Sorry, I don’t have the…. It’s in the expert panel’s report.

“The panel also examined MEM’s actions concerning the factors that did have a material relationship to the failure. In this regard, MEM queried the designer about softer conditions in glaciolacustrine soils encountered in a groundwater well that were similar to those at the breach. Its inspector issued a ‘Departure from Approval’ notice concerning the absence of an adequate tailings beach. The inspector questioned the designer’s factor of safety of 1.3 criterion, subsequently requiring its increase. The panel found these actions to be appropriate and within the expected conduct of regulatory responsibilities.

“It is not unreasonable to ask whether MEM could have acted sooner or more aggressively in these matters or even intervened in the design process, and perhaps this might have been warranted under the harsh illumination of hindsight. Yet the panel considers that a bright line must be maintained between the designer and regulator. It is axiomatic that a regulator cannot regulate its own activities. Were it to usurp the role of the designer, it would also usurp its own role.”

I guess that’s a way of saying in more eloquent words than I’m probably going to say now….

Let’s just stop and find the page. You’re making an important point. I’m chairing the meeting. I’d like to have reference to the page that you’re referring to.

B. Ralston (Chair): I just wanted to say that the document that was being referred to is a report of the expert panel. On page 138, in chapter 10, “Conclusions,” under the title “Regulatory Factors” — that was the passage that was being read in. I’ve had a chance to review it. Ordinarily, that’s helpful, as the Chair of the meeting, to know what’s being referred to.

G. Warnock: I wouldn’t mind clarifying just the end of what I was going to say there, if I could, Chair.

G. Warnock: No. What I was also going to say is that I think the passage that was used in the presentation maybe was misleading to this group in that the conclusion that was drawn from it by the Auditor General’s office differs substantially from the conclusion that the expert panel drew from that.

I guess what I wanted to conclude by saying is that plans at a mine change over time. That’s just simply the nature of mining — as new ore bodies are discovered, as new materials are used. If you went to any mine in the province — in fact, I would say any mine in the world — and you looked at the original mine design and you went out there 20 years later, you would have a very difficult time finding your way around that minesite.

To say we should have enforced the design that is now seven years old over the current design, which was sealed by the engineer, and to say that’s a compliance issue or an enforcement issue, in fact, is incorrect. It’s, in fact, a design issue.

If I enforce a design that’s out of date or superseded and I say, “Well, I’m only going to do that when I’m going to make the design better,” that’s my judgment going up against the judgment of engineers who have devoted their lives to that minesite. They’ve done the research. They’ve come up with the design.

For me to say arbitrarily, “I want you to change your design to match my design,” what I’ve effectively done is to say: “Okay. Now, taxpayers of B.C., if or when that new design fails, you’re paying for it.” I can’t change the design of an engineer of record that meets our code, meets our permit, meets the CDA guidelines just because I think it makes it better.

We do raise the questions, and we did that a number of times. We asked reasonable questions. We got answers. That was the limit of my authority. If I go beyond my authority, I’m putting a great liability of the taxpayers of B.C.

M. Sydor: It works the other way as well. If he doesn’t exercise his duty of care, he places a liability on taxpayers. If he sees something that he recognizes as faulty and does not act because there’s a signature at the end of a document signed by an engineer, that also raises liability.

Let me just read something that the chief engineer had in his report that talks to this issue. It’s that one of the problems at Mount Polley was overconfidence in reliance on EORs. I think yesterday there was a bit of a discussion about our use of the term “over-reliance.” I think the way it’s stated in the chief inspector’s report is “overconfidence in reliance.”

It gets to the fact that, at the end of the day, as the panel noted, it’s the ministry that’s responsible for regulating the construction of the dam. They may not be responsible for the design, as was just pointed out, but at the end of the day, we want that design that was agreed to, to be built. What we agreed to at the beginning, both the company and government, is to have a dam with a slope of 2 to 1. That never changed.

The 1.4 and the 1.3 were supposed to be temporary, and like Myra Falls, we just let it go on and on, for eight years, until the dam collapsed. The dam collapsed because there was too steep a slope. The chief engineer, in his report, said that even though the factor of safety looked right, that slope should have been flatter.

At the end of the day, the chief inspector’s report, the expert panel’s report…. And there’s a third report we haven’t talked about. There are a couple of reports that the chief engineer had done by Klohn Crippen Berger. If you look at those reports, which are identified as appendices on the chief inspector’s website, you’ll see that they say the same thing. They say the major factor in the failure was the steep slope. That is something that compliance and enforcement could have done.

I think the issue here, as was addressed, is that we relied on the EORs. We relied on them too much. We should have exercised more prudent judgment. That slope was not prudent. That’s the term that the chief inspector uses in his report. At the end of the day, we had a piece of clay. We didn’t know it was there. But the main problem was that we had the wrong slope at the wrong place. That’s the end of the story.

B. Ralston (Chair): We’re going to have to end this somewhere. I don’t sense we’re going to reconcile these two views today — or at any point.

G. Warnock: No, and I don’t want to try and reconcile. I would just simply say we disagree with that assertion.

G. Warnock: Also, it referred to the main embank-
[ Page 953 ]
ment that was some two kilometres away from where the failure occurred. All of my comments relating to the factor of safety of 1.3 and so on — I think I made this point yesterday — were related to a totally different part of that dam.

I could have, like I said yesterday, asserted, gone beyond my authority and said: “You shall build that to a factor of safety of 1.5.” They would have done so, they would have had the failure that they had, and now I’m the designer of that dam. If I’m the designer, who’s regulating me?

P. Robb: We disagree, and I think we’d speak to, moving forward: what are we trying to do differently? I think that’s the part of the learning that we’re supposed to take from Auditor’s report.

G. Heyman: Well, in that spirit, I have a question for the Deputy Minister of Environment. With respect, going forward, how are we going to do something different? It relates to the issue of permitting. We have the Mount Polley tailings dam collapse. We have the discharge into Hazeltine Creek and Quesnel Lake. We have the massive amount of public attention. We have the closure of the mine for a period of time, significant local concern.

Recently, the ministry issued a bypass permit to Mount Polley Mining Corp., allowing them to discharge untreated water for a period of time because the amount of water Mount Polley Mining Corp. had to allow to be discharged through the water treatment unit that they put in was in excess of capacity.

Now, when the permit was issued, the permit for the amount of treated water to be discharged was 25 percent in excess of the capacity of the water treatment unit that was being put in. The ministry knew this. All of this was a matter of record. So I’d like to understand what the ministry’s process of determining what the permit conditions and requirements should be when the result is a permitted amount of discharged water that’s actually in excess of the capacity of the treatment unit to handle.

What was the logic behind that? Was it a calculated risk? Was it an assumption that while the capacity of the unit was X, it would never be exceeded? Was it based on a recommendation of the mining corporation? Was it based on cost? To a layperson, it seems that if you’re going to require the mine to treat water before it’s discharged and you’re going to set a limit on the amount of water that can be discharged, that limit should be in line with the capacity of the treatment unit, and it clearly wasn’t.

J. McGuire: The process for determining permit conditions, overall, is that all Environmental Management Act permits are application-driven. So we receive an application from the permittee, and in this instance, it was an amendment application for recommencing the discharge into Hazeltine Creek. The ministry’s end point, so to speak, with regard to compliance and our end objective is regulating the quality and concentration of any discharge into the receiving environment.

The permit that was issued, plus the bypass that was taken into consideration after the fact, was making sure that the discharge that went into Hazeltine Creek and through the sedimentation ponds and through the diffuser that was discharged into Quesnel Lake met drinking water guidelines at the discharge point. That’s what our end requirement is for Quesnel Lake.

The bypass. It was recognized that the amount of water that was in Springer Pit needed to be reduced so that it didn’t hit a magic threshold where there were some anticipated changes in the geology that could see a backward flow of water from the pit into Bootjack Lake or into other lakes, and we wanted to have a controlled, metered discharge.

The bypass water that was pumped out of Springer Pit and into Hazeltine Creek that did bypass the treatment works did meet the discharge requirements of satisfying drinking water standards at the end of pipe, into Quesnel Lake.

J. McGuire: They would have had to have had additional treatment, or we would have looked at other options around a blended flow so that the discharge that would be coming out into Quesnel Lake would meet those requirements.

The other thing we would look at, whether or not the bypass would be going on, is: what was the duration of the discharge? We do have other permits around the province which, for a variety of either process upsets or operational needs, have short bypasses. A piece of equipment goes down, and they need to be able to do some repairs on that piece of equipment and get it back on line very quickly.

In this instance, I know that there was some discussion with Mount Polley around having different metered flows of the water coming out of Springer Pit into Hazeltine Creek and blending it with the treatment works.

G. Heyman: So despite the significant environment impact as a result of the original tailings breach and the impact on the community and the deep concern in the community, the ministry decided to rely on dilution rather than to require Mount Polley Mining Corp. to put in a second water treatment unit for the cost of about $2 million — which, I would put forward, is a relatively small expense in this context.
[ Page 954 ]

J. McGuire: I should also add that since August 4, there has been extensive local community engagement on all permitting activities. As well, both First Nations, Soda Creek and Williams Lake Indian Bands, have been part of a technical working group that reviews all monitoring data, reviews all of the permit application proposals, plans for restart, the bypass request. Everything goes through the working group so that there is full disclosure with the community of Likely, with the First Nations, so that the community is informed of all options.

So the public was fully aware of the options that were available and the various needs with regards to managing the flow coming out of Springer Pit and having a safe and controlled discharge.

G. Heyman: Are you saying that the community was supportive of allowing the discharge of untreated wastewater into Hazeltine Creek and Quesnel Lake?

J. McGuire: The quality of the discharge met drinking water guidelines at the end of pipe in Quesnel Lake.

J. McGuire: Were they supportive? The community, as I understand it, has mixed views with regards to the use of Quesnel Lake. There has also been interest from the community around having a discharge going into Quesnel River as well as other treatment options. It’s an ongoing discussion.

P. Robb: On all of the major decisions, they’ve provided letters of support to the company so far on moving forward on those decisions.

G. Heyman: If I can circle back to the start of my question. When the permit conditions were laid out, the ministry approved treated water discharge 25 percent in excess of the capacity of the water treatment unit. Was that done with the certain knowledge that the levels of contamination would not be a problem with respect to drinking water guidelines? Or was there some other basis for that decision?

J. McGuire: I’m sorry. I’d have to go back and look at the file. I don’t have that specific permit information coming to my mind right now. But I could look into it if you’d like.

G. Heyman: Well, you could, or you could simply explain the rationale for approving treated water discharge levels 25 percent in excess of the treatment unit’s capacity.

W. Shoemaker: If I may. I think what she is trying to explain is that notwithstanding permit conditions and what was considered, what matters to the environmental impact is some of the outcomes we’re monitoring and measuring for. The fact that the discharge…. Some bypasses are provided for in permits from time to time and in certain circumstances to understand accumulations of water on site and in order to authorize certain discharges — or what happened in this case. We were looking at the outcomes of the water quality that was being discharged. That’s what mattered most.

G. Heyman: Well, maybe I should never have mentioned the bypass permit. Maybe I should have simply asked, as I thought I just did: when the permit conditions allowed the discharge of treated water that was 25 percent in excess of the water treatment plant’s capacity, did you have certain knowledge that it would not be a problem?

You’re talking about outcomes. I’m talking about the conditions you lay out that are supposed to prevent negative outcomes.

W. Shoemaker: Chair, I guess what we’re looking for to be able to appropriately answer the member’s question is…. We have to go back and look at not only the permit, the permit conditions and some of the file….

B. Ralston (Chair): It does seem to me to be a fairly detailed question. Ordinarily — if you could provide a response in writing to the Clerk of the committee, and then it’ll be distributed to all members of the committee.

G. Heyman: Well, if we’re left with having a written answer, then I suppose I should ask the deputy to also respond to what the obvious supplementary question would be. If there was not certain knowledge, what was the rationale for allowing that level of treated water discharge that exceeded the plant’s capacity by a significant factor?

R. Sultan: As an aside, it’s my private information that Quesnel Lake is rehabilitating itself quite nicely, despite some of the worst fears of the environmental community and the residents. I just toss that out as an opinion I’ve received from a very qualified person.
[ Page 955 ]

The principal point I wanted to make, however, deals with the important issues raised by the member from Point Grey. I would cite the New York Times today, a story last updated June 6, headlined: “Regulators Fear $1 Billion Coal Cleanup Bill.” The first two paragraphs read: “Regulators are wrangling with bankrupt coal companies to set aside enough money to clean up Appalachia’s polluted rivers and mountains so that taxpayers are not stuck with the $1 billion bill. The regulators worry that coal companies will use the bankruptcy courts to pay off their debts to banks and hedge funds while leaving behind some of their environmental cleanup obligations.”

I think they conduct their affairs a little bit differently in the United States and, perhaps, less responsibly than we do. But the point, pushed onto the headlines of the New York Times today, is a very important one: namely, we can have security bonds or pledges of assets and promises, but when push comes to shove in insolvency — what in Canada is not chapter 11 but CCAA proceedings — it’s every man or woman for himself or herself, and devil take the hindmost. It all depends on your legal standing in a list of claimants.

The point I would like to make is that it’s all very well for us to be assured that a certain amount of security has been set aside. But I think we, as responsible custodians in this committee, would really demand some information as well on where such claims and assets stand in the pecking order, if worse comes to worse. I would argue that a well-run mining company should put them up near the top and not behind the hedge funds.

B. Ralston (Chair): I don’t know whether you’re in a position to answer this now, Elaine. But it does seem to me, given the assurances that the ministry has given about reviewing these policies, that Ralph, I think, makes a good point. Notwithstanding those assurances, is there a capacity to recover in the event of a bankruptcy or insolvency — a genuine capacity to recover?

E. McKnight: We will have to take that one away to be able to provide that information to the committee, but we’d be happy to take that work away and complete it and get some assessment. As Al indicated, there are different types of securities that we hold. We will have to do that analysis, but we will commit to doing that.

B. Ralston (Chair): I think that would be of benefit to the committee and, I think, to the public as well, given that this topic is highlighted as one of the major recommendations of this report. If there is no substance below the existence of these bonds in theory, then it’s, I think, something that should be explored.

I had myself on the list next. I wanted to follow up with the comments that are on page 60 in the report. I think Mr. Warnock did mention that in the case, as an example only…. I’m not particularly interested in hearing more details of the history of the Mount Polley breach. As an example, he did say that there was, as I understood, a preliminary investigation to determine whether or not there was a possibility of gathering evidence for a criminal prosecution. His conclusion was that there was not.

In this section, what is mentioned is the variety of enforcement tools. In this question, I’m focusing specifically upon the option of an investigation that might result in charges, at least under the Mines Act. What it says here is: “Unlike MOE” — the Ministry of Environment — “which has an independent agency, the conservation officer service, to enforce compliance with environmental legislation, MEM” — that is, the Ministry of Energy and Mines — “does not have an independent body to do the required investigative work. The chief inspector of mines has the power under the Mines Act to carry out investigations but has rarely done so.”

Given the condemnation of the culture of non-enforcement and given the commitment of the ministry to a new culture and to a broader range of investigative tools and options, what is the possibility, in the new regime or the new regime that’s contemplated, of a power to investigate that might lead to charges under the Mines Act or even Criminal Code charges?

A. Hoffman: I just want to set the record straight that we did investigate the Mount Polley tailings dam breach very thoroughly. We had six full-time staff. I also hired three retired RCMP superintendents to help us with that investigative process. We looked at over 5,000 documents and over 100,000 pages of evidence. It was all collected in accordance with the major case management technique, and I had legal advice all along the way.

The challenge, of course, is that I can’t recommend a charge to Crown counsel unless there is an offence, and an offence is a non-compliance with the act, the code or permit condition. Unfortunately — or fortunately, I guess, depending on which side of the fence you are on — there wasn’t a clear offence in this case.

I think that down the road, with this new compliance and enforcement function that’s going to be established, we will be looking at different means of looking at investigations that are not only investigative but move to the prosecutorial side, similar to what’s available in the conservation service. But that’s to be determined.

B. Ralston (Chair): What’s the process by which that will determined? In the action plan, I believe there is a consideration, and there’s some kind of a timeline on that. Is this something that would be part of the consideration of what I guess is the major recommendation — the establishment of the tripartite board, with the two deputies and someone from the environmental assessment office? Is that part of the tasks that that board will consider in terms of options for enforcement?
[ Page 956 ]

E. McKnight: Absolutely. I think it’ll be important for us to have some common understanding with our counterparts within MOE and the environmental assessment office. It’ll range from the broader piece around the strategic plan but also what we talked about earlier, about enforceable permits and ensuring that we have clear language on enforceable permits and that we’re really clear — that we have a clear understanding from a policy point of view — around what an infraction would look like.

I think that that would be an area that we’ll have to do that work around, looking to examples and sharing the information with the MOE and ourselves around: are there conditions that would lead to more enforcement? I think the administrative penalties will be a huge factor and a huge help.

The timeline for going through all of that will be a little bit dependent on the experience and the time frame for when we use those administrative tools. As we go through and assess that, developing the regulations and being really clear on how we are using those administrative tools will really help us in determining how much we improve on the enforcement side and our ability to bring forward charges.

I think it’s a long answer to say that we have, definitely, more detailed work to do, but that is part of the plan.

B. Ralston (Chair): Just to return briefly to Mr. Hoffman before I have another question about the action plan. You set out the details of an investigation, and ultimately, there was a decision that charges would not be recommended. Was that on the basis that there were no enforceable conditions or that the conditions of the permits were not written in a way that they were enforceable? Is that the legal advice that you received?

A. Hoffman: It was not only the permit conditions, but also there were not any clear contraventions of the act or the code. If you’ve read any of the reports, the decision-making was very complex and convoluted, so we were unable to point to a single individual or number of individuals who made the decisions, and therefore, we could not find a clear offence, keeping in mind that the Crown has to prove beyond a reasonable doubt. It was my feeling that there was no clear offence that I could recommend a charge under.

B. Ralston (Chair): I did practice criminal law for 25 years. I’m familiar with the standard and argued it many times.

The timeline. The action plan says that the board that’s referred to will be established by August 16, and the action taken is that the draft terms of reference for the board are developed and the first meeting is scheduled.

Are the draft terms of reference available here? Could they be distributed, or if not, could there be follow-up where they’d be distributed to members of the committee?

E. McKnight: We will definitely follow up with that. We have them. We have a draft. We had some brief discussion, but we would like to make sure that both Wes and our other counterpart, his associate deputy in EAO, have an opportunity. He was away last week.

We did look at them. If you give us another week or so, we’ll be able to distribute those.

E. McKnight: We’re just looking at calendars right now. We hope to have that scheduled within the next two weeks.

B. Ralston (Chair): Are you on track to establish the board by August 1, 2016, it says?

E. McKnight: Absolutely. We want to be…. The fact that we have the terms of reference completed…. As I said, we’re just trying to schedule given calendar, but the goal is within the next two weeks, and then we can ratify the terms of reference.

As I said earlier, we have staff in place now. Nathaniel’s responsible for pulling together the plan to ensure that we can adequately respond to all of the recommendations in the action plan. That work needs to be done, and that work can be brought to the board, and we can approve that plan and ensure that we’re following up on a timely basis.

B. Ralston (Chair): Is it the intention of the group that the minutes of these meetings be public, or will they be disclosed, or will people have to go through FOI to get them?

E. McKnight: It hasn’t been discussed, but I have no issue with the transparency on that. I’m happy to post minutes in that regard.

I don’t have anyone else on my list other than Ralph, so if there’s any…? Okay, I’ll add David.

R. Sultan: It’s unfortunate the Auditor General herself is not here to hear my comments, but I did want to observe that by the time this saga ends — the Mount Polley saga — you will have five different versions of what happened and who’s responsible.
[ Page 957 ]

We have had the expert’s report, which in my personal view as a professional engineer is the most thorough and credible document. But it was followed by a second report by the chief mining inspector wearing his hat, as I’m sure he’s obligated to do, as chief mining inspector for the government. Then we have this document purporting to be, really, addressed at the broad issue of mine inspection and compliance but, of course, very much preoccupied with the Mount Polley case.

Yet to come will be a report from the Association of Professional Engineers and Geoscientists. Based on conversations I’ve had with the executive and members of that professional body, I suspect there will be some rather direct finger-pointing, if not discipline and sanction, emerging from that exercise. So that will be No. 4 in the sequence of material that we can ponder.

Yet to come are the many legal briefs that will be written, based partly on our proceedings today and other investigations and other testimony, with respect to civil actions that I suspect are inevitable as the litigators moisten their lips and sharpen their knives and say: “There’s gold in them there hills. Let’s go after them.” Well, who are they going to go after?

What I would like to observe to the Auditor General, should she be here — and I’m sure will read the transcript — is the unusual situation she has put the taxpayers, which we represent. This is a committee to make sure the taxpayers’ money isn’t wasted, that it’s spent productively and efficiently on important things, serving the public.

Through the actions of this particular report, she has blamed the government, by and large, for what happened. Whoever is held to blame will have financial consequences, I’m sure. I mean, the numbers tossed around today are really quite staggering — $1 billion to clean up the selenium, $1 billion for coal damages in the United States, $600 million spent to date on Mount Polley.

The numbers are really quite astonishing to me. I can imagine tens of millions, if not hundreds — not to mention paying the lawyers — potentially arising from civil actions relating to the Mount Polley episode. It strikes me as being a curious application of the instrument of the Auditor General and the Public Accounts Committee to aim this revolver right at the taxpayers, who are ultimately to blame, it would appear, based on what the assistant Auditor General and his team have brought forward — certainly a conclusion which, in my opinion, is arguable.

We can point the fingers in lots of different directions once these five different piles of paper are accumulated. Who knows where the ultimate truth will lie? The courts may, if events unfold as I suspect they may. The courts will sort it all out.

I think there’s a moral, for the future selection of projects to engage in and the zeal with which certain causes are pursued, to keep in mind as the activities of the Auditor General and this committee proceed in the future.

B. Ralston (Chair): Let me just say briefly, in response, that the Auditor General is an independent officer of the Legislature and has the obligation to pursue, according to her judgment, fearlessly, where the evidence might take her and to make the recommendations as she sees fit. I would not, particularly…. I don’t think it would serve the public well to have an Auditor General who was inhibited in the performance of her duties by a fear of litigation. There’s always a possibility of litigation in our legal culture for any actions taken by government.

I’m sure the Auditor General will be able to speak for herself, but speaking on behalf of the committee, I think it’s at least my obligation to provide a counterpoint to what’s been expressed by Mr. Sultan.

R. Sultan: May I add a p.s., Chair? If civil litigation gets used — and my own sense of it is that it is likely to — all the evidence will be on the table, including not only who the assistant Auditor General and his colleague in this work have pursued and the evidence they’ve accumulated, who they consulted and the bona fides of all the various experts that were brought to bear — those of an engineering type and those of an non-engineering type.

It will all be out there in the public for our view. I would just add, as a p.s., that as the Public Accounts Committee — underlining “public” — I would think that all of this information should be public now. That’s my p.s. to the Auditor General.

B. Ralston (Chair): If you’re referring to the contracts that the Auditor General entered into at her own judgment and discretion with experts, which had a “non-disclosure of the name” clause in them, that’s not something that is in the committee’s purview — I don’t think. I mean, I can take legal advice on that.

But what they have said is that they’ve revised the policy. Doubtlessly, if there’s litigation and subpoenas and all that sort of stuff, it will come out. I agree with you. I’m not sure that the kinds of cautions that you’re issuing…. I’m just concerned that might inhibit the work of this committee and the important and crucial work of the Office of the Auditor General, which is one of the main independent offices of the Legislature and has a long and proud history in this province and across the country in different Offices of the Auditor General.

R. Sultan: I would commend the Auditor General for having raised important issues with respect to mine com-
[ Page 958 ]
pliance and inspection, which deserve to be ventilated. I think this has been a very helpful exercise in that regard, but there are some rather quixotic twists and turns here.

I would think, too, under the power of subpoena, that we can say: “Well, a contract was struck.” I don’t think that will hold up.

B. Ralston (Chair): I’m not going to offer a legal opinion here — nor should you, I don’t think. But let’s move on.

D. Eby: In line with those remarks, if we applied the philosophy of anticipated litigation to all of our independent officers — the Representative for Children and Youth, the independent investigations office, the Office of the Police Complaint Commissioner, the Ombudsperson — there’s very little work that would be done because they regularly reveal shortcomings on the part of government that are potentially actionable.

I also note, on the record, my surprise that the Association of Professional Engineers might be providing information to the government in advance of any report in relation to Mount Polley and potentially consulting with a member of the government in relation to that very sensitive matter. It’s surprising news to me that a member would have advance notice of that. I just want to put that on the record.

Moving back to the report. Page 41 of the report, in the summary of key findings in relation to reclamation bonds, says that the Ministry of Energy and Mines “has estimated that its financial security deposits for major mines are undersecured by more than $1.2 billion, yet the ministry has not disclosed this to the public or to legislators or communicated the potential risk this poses.”

Now, I’ve heard two versions of this in evidence before this committee. The first was the version of Mr. Hoffman, which is that, in fact, the bonds are publicly disclosed and that he regularly had conversations with the minister about it. He didn’t understand why the minister would be surprised about this shortfall. Then I heard from Ms. McKnight that there was a great scrambling to try to figure out the amounts that each company held in bonds and so on. That’s just what I heard. I see some heads shaking, so I’ve clearly misunderstood.

I’d just like to understand whether or not this has been publicly disclosed and if I misunderstood about the work that Ms. McKnight described, trying to find out about the amounts. What was that in reference to?

E. McKnight: What I was referring to was the activity for us to publicly disclose further the amount of detail. I would look to the Auditor General to answer this question. But my understanding is that those amounts…. The overall amount is publicly disclosed with the government’s public accounts.

I need to make sure that that’s the correct information. I think it’s the total amount. Morris, is that correct?

M. Sydor: No, the amount in the public accounts is something different. That’s the amount that government is liable for, based on past environmental actions, liabilities, that it has incurred because companies have abandoned mines or such. The total there is reflective of a number of different industries. My recollection is that the number is just under $400 million. But we had a look at it, and approximately $275 million is due to past mines leaving liabilities for government to pick up.

That’s separate from the $1.2 billion that we’re inferring to those who are operating mines now and that have future liabilities. We’re trying to make sure they have enough security placed with government to cover off the future costs. So they’re two separate issues.

E. McKnight: I think there was a recent change in accounting policy to be able to, I guess, publish this information, given that it isn’t considered as government’s liability. I believe that was in the last couple of years. We regularly report the number to the comptroller general’s office. That’s done on an annual basis — that number, that information that we need to supply.

What I was referring to in the effort to make sure that we could disclose is the individual number by company. There is an aggregate number that was reported, as I said, on an annual basis.

We went back to each of the companies and asked them if they would agree to publicly disclose their number. We had to contact all the mines to be able to do that. We were very fortunate that they all agreed. We did make that information public so that there would be greater transparency to this issue.

P. Robb: Some of the companies have reported the number aggregated. We had to break those out and get permission to do that. That was the work we had to do leading up to the release to the Globe and Mail.

E. McKnight: We did publish that information out. It was to the Globe and Mail, I believe.

D. Eby: So it’s now publicly reported. Will it be the practice going forward that that will be publicly reported?

E. McKnight: That’s our commitment. We’ve made a commitment to make sure that we have clear transparency on this, so we have no issues for publicly disclosing those numbers.

D. Eby: The next question I have is in relation to the number of inspectors who are on staff at the Ministry
[ Page 959 ]
of Energy and Mines. The last figures we have are for 2015, which report four geotechnical inspectors, four geochemical inspectors and three reclamation inspectors. Are those still the same numbers of inspectors that you have now?

A. Hoffman: Four geotechnical inspectors is correct. We have one on maternity leave. And what were the other two?

A. Hoffman: I think we actually have five geochem inspectors now. We’ve hired another one recently, and we have added an additional reclamation inspector now, as well — just hired recently.

D. Eby: In the report, it says that as of spring 2015, the position of geotechnical manager was vacant. Has that position been filled since?

A. Hoffman: The current geotech manager is on maternity leave, and another person has been appointed, acting, while she’s away from work.

D. Eby: So spring 2015 was vacant as a result of maternity leave, and that person is coming back shortly, or…?

D. Eby: How many current vacancies are there? How many people are you trying to hire right now, or do you consider yourself at full complement?

A. Hoffman: We’re pretty close to full complement now. We still have some executive positions that we’re trying to hire — the deputy chief inspector. There’s an executive director of regional operations that we’re hiring. But other than that, we’re almost at full complement.

D. Eby: They’re new positions. Are there any positions that have been vacant for an extended period of time? This has been an issue that’s been identified repeatedly. For example: “Nevertheless, we also noted that Ministry of Energy and Mines has struggled to fill vacant positions and to retain individuals with experience in mining — a challenge the ministry has attributed to the more competitive salaries offered by industry.”

A. Hoffman: No, things have turned around somewhat due to the downturn in the mining industry. We’ve been able to hire some very competent people.

D. Eby: The same question to the Ministry of Environment. We heard reports from you earlier on, yesterday, about plans to increase hiring. The report says that the number of full-time employees in 2014 was a 29 percent drop from 2012 levels. Where are we now, in comparison to those 2012 staffing levels?

D. Eby: Or just, I mean, tell me in terms of historic staffing levels. Where are we at now?

D. Eby: Page 83, Mr. Chair, of the report, under the subheading “Resources.”

W. Shoemaker: Jennifer, why don’t I get you to answer this one? It’s a little bit more of a complicated story from 2012 to 2013. Comments before the committee yesterday referred to staffing levels most recently, where we were at 17. With the additional resources that were provided to us recently, we’ll move up to 48 compliance and enforcement staff. Jennifer, do you want to give a bit of an explanation?

J. McGuire: Sure, the context. In 2102, the regional operations branch would be described that we had six geographic regions, all created equal. That meant that we had monitoring staff, compliance staff and permitting staff in each of those six regions. We were having some recruitment challenges, specifically into the northern regions and into the Lower Mainland.

In 2013, we did a shift in delivery model and went to, as it pertains to mining and compliance, a dedicated mining authorizations team, which has 31 staff, and a dedicated monitoring and compliance team.

We shifted again in 2014 to split out the compliance from the monitoring staff. So as of April 1 this year — my deputy is correct — we have 17 positions currently in that team. With the recent addition of funds that we’ve received this year, we’re in full-on recruitment mode, and
[ Page 960 ]
we’ll be getting up to 48 positions. We’ll have positions in all offices around the province, as well as potentially co-locating in some of the regional Forests, Lands and Natural Resource Operations offices, so that we’ve got greater dispersion of staff who are available to help with complaint response and to do compliance activities.

D. Eby: Just so I understand, there were 31 in the combined compliance and monitoring, and then you dropped to 17?

We have a dedicated mining team that has 31 people in it, which does only environmental assessment reviews, permit issuance and permit administration. They’re the ones that write the permits, review the monitoring data and engage with clients on their applications that come in as well as with the environmental assessment office for projects that are going through the EA.

We have a separate team which is dedicated specifically to do the compliance functions. When the Auditor General reviewed the two teams, there were 13 members. We’ve since reallocated some additional base capacity into that team, which puts us at about 17 or 18 people, and we are in recruitment mode, where’s we’re adding a whole bunch of additional capacity that will be distributed around the province.

D. Eby: Okay. In that audit report, they say that your team, the compliance team, “as a whole, has an insufficient level of expertise in mining” and that “as a cost-saving measure, the ministry had filled some positions with less experienced staff.” In terms of the hiring that’s going on now, are you hiring less experienced staff again, as a cost-saving measure? Or are you requiring some level of mining experience?

J. McGuire: I’d like to just clarify that particular point. I know that we had numerous conversations with the auditing team around that particular statement.

The challenge that we did face was with regard to recruiting engineers — licensed science officer–level positions. It was a challenge to recruit those because of the competitive market for those particular folks. We are very successful at being able to recruit people who are new or at entry into their careers. They have solid science and engineering qualifications, so we chose to recruit junior staff and to have them trained internally to be able to perform the functions that are necessary for conducting compliance.

The functions that they do perform are that they know how to be able to conduct an investigation. They know how to be able to take legal samples. They know how to be able to assess whether or not there is environmental impact from whatever type of permit they are monitoring.

With regards to the training, the Auditor General did find that that is an area for us to improve. Since the audit, we have been putting a concerted amount of increased effort into training. The Ministry of Environment is a signatory or a member of something which is called the Western States Project. It is a group of three Canadian provinces as well as U.S. states — regulators and enforcement professionals agencies. The sole purpose of this particular group is to train compliance investigators and attorneys for the purpose of being able to do environmental compliance and enforcement.

Through that membership, we have sent five staff to multi-week-long, comprehensive training courses offered by the U.S. EPA. We’ve also had all of our inspectors, in October of 2015, take a week-long inspectors training course. We’ve had staff participate in ecotoxicology assessment workshops so that they understand the impacts of the point of discharge. That’s what the Ministry of Environment is interested in — the point-of-discharge impact.

We’ve also had staff participate in training around ARD — acid rock drainage — and know what the factors are to look for when they’re out there on site, as well as other related training.

D. Eby: In the Auditor’s report, there is also a discussion of the major investigations unit of the conservation officer service, which had ten full-time staff and six vacancies at the time of the audit, of which six of those staff members were working full time on Mount Polley, which left just four in relation to general investigations and so on. Is that still the situation now, or has that been addressed?

W. Shoemaker: Yeah, I get the reference in the report to that. I just don’t have the conservation officer detailed staffing. I know that we’ve also added resources in that area. I’d be happy to follow up with the appropriate levels of staffing in the conservation officer service.

G. Laughland: I think the point to make is that that is a special unit of the conservation officer dedicated to more complex environmental investigations. If they are tapped out with investigations, they reach into the other 120 or so other officers to grab their skills and pull them into that major case file hierarchy. So there are other resources available in the broader conservation officer service, if those are needed. But there is a smaller, dedicated unit.

D. Eby: My last question in this series is simply whether the Auditor General has any response to any of these
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points that the committee should be aware of.

A. Todosichuk: No, as was pointed out, all these numbers are accurate, and we’re at the point of…. When we were conducting the audit, those numbers were accurate. Of course, there’s been new information now, which is provided.

L. Popham: I just want to revisit some words that the Auditor General said yesterday in concluding her report.

“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 risk.

“The independent expert panel noted that without change, the province can expect, on average, two failures, such as Mount Polley, every ten years.”

My question, I guess…. I think this is obviously because of the risk of environmental disasters, the follow-up on this report is critical by the Auditor General’s office. So I’m wondering, will that be done as a priority, or when can we expect to see the follow-up?

M. Sydor: I think our process now is one where we discuss potential follow-ups with the committee and make decisions after those deliberations. So that will take place. Now that we’ve had a meeting on the original report, we’ll decide what the appropriate timing is going to be. Normally, that’s within a year.

B. Ralston (Chair): There is the process of the action plans, which I think were circulated as part of this. Some of questions I had were references to the action plan, so there is a more established process that we, as a committee, have instituted and will be followed up upon in conjunction with the Auditor General’s office.

D. Eby: The report, on page 86, discusses fees for discharge of various contaminants into the environment, and the chart lists fee per tonne discharge. I looked at this chart, and I’ve tried to make sense of it. I imagine — the tonne of wastes that may also include arsenic — that the fee for discharging a tonne of arsenic into the environment isn’t $273.

I’m trying to understand how these fees work such that the fees are so low for the amounts that appear to be quite high. I certainly invite the Auditor General or the Ministry of Mines or whoever in the Ministry of Environment to explain these fees, what they’re levied on.

J. McGuire: The fees are prescribed through the permit fee waste discharge regulation. When I was speaking earlier about…. The EMA permits are written, and we authorize a maximum quantity and a maximum concentration. The quantity or the flow or the volume times whatever the concentration is and multiplied by the fee per tonne calculates out to what the permit fee is.

The permit fee regulation is a bit dated. It was last updated in 2004, so there is an opportunity, perhaps, for the ministry to be looking at the permit fee regulation again.

D. Eby: The explicit recommendation of the Auditor General is that the ministry review the fees and ensure that they’re effective in reducing pollution at minesites. Is that happening?

W. Shoemaker: At the end of the overall process, it involves the authority and approval by Treasury Board. In the meantime, though, I think we are looking not only cross-jurisdictionally, as to fees charged in other jurisdictions, but I suppose within our own assessment of risk in the type of activity that is occurring here in British Columbia.

D. Eby: To the Auditor General: why did you feel that the fees needed to be reviewed? Was it simply the fact that that hadn’t been done since 2004, or was it a feeling that the fees were inadequate?

A. Todosichuk: Again, it was because it hadn’t been looked at since 2004. It was dated. Also, as you look at selenium and, as we pointed out, the amount of water treatment facilities that are going to be needed to deal with that issue, selenium has been captured as a catch-all in the regulation, under “Metals.” We thought that perhaps when the review happens, selenium may need to be reviewed as its own category.

D. Eby: To the ministry: will you be reviewing selenium as its own category, then?

W. Shoemaker: The answer to that is yes, but everything’s on the table for review. Absolutely.

B. Ralston (Chair): Just if I might, looking at the action plan for recommendation 1.5, on page 7 of the action plan, the assessment of progress by the entity is “no action taken.” There’s “Action planned.” You mentioned “a cross-jurisdictional scan of fees,” but so far, nothing has been done, according to this report. That’s a report that you prepared yourself.

Your target date is March 2017. Any reason to suppose that that might take place sooner than then or that the comment “no action taken” is inaccurate?

W. Shoemaker: I think the comment of no action
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taken is not reflective of our commitment to look at this area. We just felt it was early days in terms of actioning all of these elements. Part of the plan is to be able to accurately say: “This is what we’re doing by when.” It is a commitment to look at the fees. Perhaps at our next update, we’ll have either more to report in that regard or a more definitive time frame in which some of these things will be addressed.

D. Eby: This is a question in relation to process and the government response to the process of the Auditor General. There were two paragraphs that seemed to contradict each other. On page 21, at the bottom, the government says that the ministry didn’t have the opportunity to “challenge the thinking of panel members with additional engineering evidence and/or competing legal or scholarly opinions.”

But then, on the next page, on page 22, it says: “In particular, we appreciate the extended process by which the audited team allowed the ministries to raise and discuss factual and legal concerns arising in connection with successive drafts of the Audit Report.”

I don’t understand how, on page 21, the ministries weren’t provided the opportunity to challenge panel members or the Auditor General with additional engineering evidence or competing legal or scholarly positions, but then, on the next page, there was an extended process by which the audit team allowed these exact issues to be raised. So just to the government: can you clarify for me?

E. McKnight: Yes. I think that we talked about this a little bit throughout the discussions. The first reference is around knowing who the experts were that the Auditor General had hired for their support. We’ve talked about that. We didn’t have that opportunity to know what their true expertise was, specifically in relationship to the work around the engineering for Mount Polley.

But on the other hand, as you pointed out — and we did say this — we had a number of discussions with the Auditor General about a number of facts. We had extended time periods. We had some areas of legal discussion as well. So there were kind of different emphases of where we thought it would have been helpful to have greater disclosure. But we’ve discussed that item earlier on.

D. Eby: Can the ministry advise me what it would matter who the actual person was when you had the engineering opinion contained in the report? Can’t you just challenge the idea without knowing who the engineer is?

E. McKnight: Well, we did clarify with the Auditor General early on that we did request that they did verify that they had an engineer of record or someone with an engineering degree advising them. There had been concerns raised…. I can’t speak to this as well as probably my staff, but there was some concern that there was some commentary, some recommendations being made, that would be put in the category of practising engineering. So we did want to ensure that the Auditor General understood that and that they did have a qualified engineer retained for their expertise.

I think that there’s a broad range of engineering and engineering experiences. It would have been helpful to know, but we know that there’s a commitment from the Auditor General in the future that those types of resources will be disclosed.

P. Robb: I was just going to say, to add to what Elaine said…. We found it very useful in the discussions on the legal side and some of those pieces. I think we made some significant progress on coming up with a better report for everybody on some of those pieces where we didn’t have that opportunity around the Mount Polley, the geotechnical and the technical aspects of that interaction. We did have a great interaction, numerous back-and-forths with Morris and his team, on how the report was written, some of the ways it was written and some of the phrases that were used. I think we came up with a much better report.

We felt we didn’t get that opportunity to engage in that level of detail around the technical expertise used to make some of the assumptions and final recommendations that came out. That’s why there are two separate pieces there. But we would still stand behind that we had a very engaged process with the Auditor General on a whole host of things.

We still have some disagreement on what the Mount Polley piece is. That is what it is, what we’ve got through today. I think we would take a lot other pieces out of this, and we will see as we go through with this action plan that we are going to action many great learnings out of that process.

D. Eby: To the Auditor General: in terms of this process, I’m curious about…. Has this been…? I mean, it’s the first time, really, that I’ve been sitting on the committee, that this issue has come up — that an outside expert that you consulted, that there’s been an interest in knowing who it was.

Where did this practice come from? Was this just for this report? Has this been traditional practice? Was this at the request of the engineer? Where did this come from?

M. Sydor: Well, in terms of the general SMEs, as was indicated yesterday during the discussions…. Most audits — we select a panel. It could be two people. As I recall, when we did the forest management audit four or five years ago, we had two subject-matter experts. On this particular one, we decided to have more.

As Ardice indicated yesterday, we had three. When we started to clear the findings with the ministry, as was just indicated, they had some concerns about whether we had crafted our section around Mount Polley and the engineering aspects appropriately. We thought we had, because there was great reliance on the panel’s report, actually, and on the documents that were available on the panel’s site. We could look at those and see exactly what was being done at different stages, so we thought we had a good take on it.

Nevertheless, to respond to the ministry’s concerns, we did find an engineer. We found somebody with a lot of expertise and understanding in tailings storage facilities. It was on that basis that we had discussions. We reviewed that particular section.

No audit, in the past, has had a ministry sit down with one of our subject-matter experts to have a separate deliberation. That comes through the process of us saying: “Here’s our findings; here’s our draft report. If you have any issues, raise them.” There is a document. I think the Auditor General referred to it yesterday. We received 90 pages back from the two ministries in terms of their feedback on their report. Within that, they identified the engineering concerns we had.

We responded back to them. We sent them back a separate document for each of their concerns. We identified where the evidence sources were and our take on it. The process of the ministry dealing with the report is the ministry dealing with the audit team. We never subject our subject-matter experts to a direct meeting with the auditee. It’s the Auditor General. She’s stands behind the report.

We’d never have subject-matter experts come to support our opinions. We have to be confident that we can do that on our own. They provide advice. We decide what advice we take. Similar to a legal opinion. You don’t necessarily take the advice. You have to stand behind your final decision, and that’s what we do. We stand behind our report.

D. Eby: In terms of policy, in terms of Public Accounts Committee generally going forward, there’s a suggestion that in future the names of the panelists will be revealed as a matter of practice. Is that right?

M. Sydor: I think we’re going to try to do that. We’re going to try to find the right people. In fact, we’re doing that now for audits that are getting underway. We’re making sure that as we talk to subject-matter experts, they agree that their names will be attached to the report if we feel that’s appropriate.

We’re going to go down that road, okay. I think we may still end up with situations where we find the right person that, for a number of reasons, may be hesitant. Then we’ll have to look at that and maybe discuss that with the ministry that’s involved in that particular audit. Our plan right now is to try, to the extent possible, to find subject-matter experts who are willing to have their names associated with the product.

D. Eby: I can see benefits on both sides. The benefit, obviously, of providing anonymity is the person doesn’t need to worry, if they provide a report critical of government, that they might be less likely to be retained in the future. But the benefit of disclosing the name is that we can all sit around and say, “Well, this person has no idea what they’re talking about,” because of who they are, I guess.

In terms of the policy that you’re going to put in place in deciding whether or not to release a name, will that be coming to this committee for consideration and discussion? Or is that something that you’re going to be doing on your own?

M. Sydor: Well, I think so far we’ve decided that it’s an appropriate policy to follow. As I’ve indicated, we’re going to go down that road to the extent possible, and if we come up against that situation where somebody is reluctant but we think it’s somebody we really want attached to that audit, then we’ll have to decide how to handle that. Right now our view is that we’re going to go forward with individuals who don’t need to keep their names confidential.

B. Ralston (Chair): Just before you start, I think we’re near the end. I’ve got only two questioners left, and they are repeat questioners — not that that’s a bad thing necessarily. We are scheduled to adjourn by one at the latest, and I’m sure we’ll be finished by then, just to assure members of the committee and the participants.

G. Heyman: I have a couple of questions with respect to recommendation 1.7, on section 137 of the Environmental Management Act. I understand there has been discussion of this recommendation and the section, both yesterday and, to some extent, indirectly, today.

My question is for Mr. Sydor. The recommendation is that when government or cabinet exercises its powers under section 137 of the Environmental Management Act that the rationale for granting a permit should be publicly disclosed.

I’m wondering if you can elaborate on the risk factors to the public that you’re attempting to address by calling for such disclosure. For example, I note that elsewhere in the report, on page 100, you say there is no definition of what constitutes public interest.

I’m wondering if your concern is specifically that there is no way to determine what balance was given to economic versus environmental versus social attributes in decision-making or whether there is more specific risk that you also considered in making this recommendation.
[ Page 964 ]

M. Sydor: I think it’s the former. I think the expectation would be, as was indicated yesterday, that this decision was made because the statutory decision–maker can’t do it based on the existing legislation that they operate under. So cabinet takes the opportunity, and as was described yesterday, there are a lot of other factors that cabinet can consider. At the end of the day, an OIC is made public, but it just says: “We made a decision on this basis.”

I think that from the standpoint of the public understanding why a particular decision was made, the sort of information that we were thinking that cabinet should be providing is: what sort of economic considerations were considered and what sort of environmental considerations — and social — to the extent possible?

Some of the things that might be considered were like what the impacts would be from a pollution standpoint. Would there be any impacts on groundwater? Would there be any health impacts, etc.? We’re talking about impacts that, in the main, were probably more negative than positive. So it’s a case of just explaining those and why the particular decision was made. Rather than just identifying the section of the legislation under which the decision is made, identify the factors that were considered.

It’s not a case of identifying the deliberations and who was on what side, which is sometimes inferred. It’s more explaining what factors were considered, and what the impacts are going forward.

G. Heyman: So you would have, in making this recommendation, given some thought — and you just alluded to it, in part — about any conflict between this recommendation and requirements for cabinet confidentiality.

Can you explain how you think this recommendation can be implemented within any constraints that cabinet confidence would involve and also whether you think there should be a publicly understood template about assigning relative weight to factors that might constitute the public interest — such as the economic, environmental and social attributes that you mentioned in the recommendation?

M. Sydor: Yeah. Public interest is very broad, and it gives a lot of latitude for decisions to be made. There would be different factors considered for different decisions. I mean, there are probably other sections of legislation, obviously, that provide for cabinet decision-making.

My recollection is that when we did the Agricultural Land Commission, back 20 years ago, there was a reference to public interest and cabinet involvement, and we probably had a similar recommendation, if you go back that far.

The idea is mainly to identify what were the main factors considered and what the benefits are to the province, to the taxpayers of the province, for making this particular decision. The decision is made, in theory, because there’s a net benefit that’s being provided.

Clearly, there’s some pollution aspect that the statutory decision–maker couldn’t take on in their position, so that’s part of the discussion. To offset that, there must be some benefits that are being provided, and there’s no clear indication as to what those benefits are — whether they’re environmental, social or economic — in the way that the decision is now made public. We’re just suggesting that there needs to be a broader disclosure of what those benefits are so the public can understand why the decision was made.

G. Heyman: To Mr. Shoemaker: you’ve referenced earlier today, and quite possibly yesterday, the desire for greater transparency. There were recently amendments to the Environmental Management Act to actually deal with the situation of the use of Section 137 in future, which presumes that it’s at least being contemplated.

Would you care to comment on Mr. Sydor’s elaboration of the public interest aspects of this recommendation and how the ministry sees them being met in future, within the context of the act and the recent amendments?

W. Shoemaker: I’ll start with your last point. Recent amendments to the Environmental Management Act, vis-à-vis section 137, were not in the realm of sort of providing the rationale or the public disclosure.

I am not a lawyer. I’m not an expert in this area. However, I will say these two things. First of all, I think what I explained yesterday was the fact that cabinet deliberations are privileged. Again, I take Morris’s clarification that he wasn’t suggesting that those deliberations now become public.

Further — and I’m not an expert in this area — it is my understanding that in the course of the authority of the Auditor General and in conducting performance audits, it’s not to sort of question the policy decisions of cabinet or of government on how much weight we should give to this element or to the social or to the environment. So let’s be clear about what the limitations are thereof.

In this whole area, though, to round out the story, whilst we could not disclose the nature of cabinet deliberations relative to its exercising section 137 of the EMA, I think the record is that the public commentary and consultations that we engaged in around selenium in the Elk Valley and the considerations that we were looking for, and then the many, many statements that ministers, including Minister Bennett, made around the considerations taken into account are the sorts of things that we did try and make available — the jobs, the environmental
[ Page 965 ]
impacts, the social impacts, that were taken into account when cabinet decided to use this limited authority under the Environmental Management Act in this situation.

To the extent that on the one hand, we can’t disclose cabinet confidentiality but that we yet can engage in some of the factors taken into account when permits are considered and the like, I think we are looking for those opportunities, through the opportunities for public engagement in the permitting process to some of the data and information that we post and make readily available. We’re open to that, and we’re interested in further feedback on how that transparency can be achieved.

B. Ralston (Chair): And you did say yesterday that it was the first time this section 137 was used and you expected it to be a rare occurrence. Just to reiterate.

G. Heyman: Should I assume from your reply that you are accepting this recommendation or you’re accepting it in an indeterminate and qualified manner?

W. Shoemaker: The latter, I would say. To state it differently, if you’re asking if I accept the recommendation that, in all instances, cabinet has to provide a rationale of all of the factors and considerations it took into account — no, I’m not saying that.

D. Eby: In the Westray mine disaster report, the inquiry chair found that there was a pattern in the inspections that took place that was problematic. I’m curious about whether that’s present here in British Columbia, in light of this report that we received. I’m going to run through some characteristics that were identified as problematic, and I wonder if the ministry could explain whether or not this happens in B.C.

The first was that the inspectorate normally gave Westray management notice of impending inspections. By so doing, the inspectors could not be assured that the conditions they encountered truly reflected the regular condition of the mine. Does the ministry routinely give notice of impending inspections?

A. Hoffman: On occasion we give notice. The primary reason then is that if we’re looking at a particular technical issue, we have to ensure that the people that are responsible for it are on site.

We also do impromptu surprise inspections at minesites on different shifts — afternoon shift, midnight shift — to ensure, as your concern reflected, that the mine isn’t just preparing for us before we come. We catch the mine exactly how it operates, without any inspector influence.

D. Eby: How often would you do this? I’m looking at the Yellow Giant mine, for example. They were granted their permit in March, and there were no investigations or audits until June. Would this happen once a year that there’d be an impromptu inspection? Or how would that happen?

A. Hoffman: Again, it depends on the risk at a particular minesite. If we think they’re a bad player, then we inspect quite frequently. Banks Island is a particular case in point, because it’s in a very remote area. You have to hire a helicopter to get there. But we have arrived there with no advance warning to the mine manager.

D. Eby: The second factor. In this case, it was the Department of Labour. “Department of Labour inspectors were regularly accompanied by management on their inspections. One consequence was to discourage the miners from discussing conditions with the inspectors. Workers underground did not have open communication with the inspectors.”

A. Hoffman: Generally, we are. We are generally accompanied by the mine manager or his representative, as well as a union rep. Quite often, we try to pull a worker apart from the management or talk to them individually and privately to ensure that they doesn’t feel threatened by a supervisor or a manager being present.

D. Eby: The third factor was: “The inspectorate relied on Westray management for guidance and choice of inspection routes. Such reliance led to careless inspection and ignorance of the true state of operations underground.”

A. Hoffman: Absolutely not. It’s generally the inspector’s professional judgment. Sometimes it’s workers’ concerns. Sometimes it’s the concern from a previous inspection. Sometimes it’s accident rates. There’s a variety of different reasons we inspect in a certain area, but we’re certainly not directed by the mine manager on where to inspect.

D. Eby: One of the repeated themes in these reports and the Westray mine disaster report…. There’s one out of New Zealand — the Pike River coal mine tragedy. These are modern tragedies. There’s one out of West Virginia — the Upper Big Branch inquiry. It’s reflected, unfortunately, in the Auditor General’s report — the overreliance on negotiated agreements rather than enforcement.

For example, from the New Zealand report…. I won’t
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ask you to comment on this specifically, because I don’t have a copy for you. But they said that the inspectors favoured negotiated agreements with mining companies rather than using the range of tools available to them. This was in accordance with departmental policy.

In Westray…. With a hands-off attitude, “the stage was set for Westray management to maintain an air of arrogance and cynicism,” knowing it would not be seriously challenged. In West Virginia…. The reports are much the same.

A couple of members of this committee have said that, in fact, overly relying on negotiated outcomes is actually a virtue of the British Columbia mining enforcement system. Can you respond a little bit as to how you balance negotiated outcomes with actual enforcement, where you’re laying charges? How do you decide when to transition from one to the other?

A. Hoffman: Initially, we always try to use a collaborative approach with the mine manager. Sometimes we don’t see their point of view, so we talk about it. But certainly, if there’s any condition that’s what we call IDLH — immediately dangerous to life and health — we act immediately. We can shut down operations, which we quite frequently have done — or a portion of an operation, where we write orders. Eventually, we have tried to prosecute some people.

The deputy pointed out — and Nate and Peter — that we are moving towards administrative penalties. That will be another intermediate tool in our toolbox, and we plan to use that effectively, as well, to achieve compliance.

D. Eby: My last question. Mr. Warnock was saying that amendments to permits are quite routine, and if you saw a mine at the beginning of its initiation and then tried to find your way around a number of years later, it would be difficult to do.

In the West Virginia report, there was some discussion about ventilation. It was a coal mine where there was an explosion, and a lot of people were killed.

One of the key findings was — it was actually a red flag — that there were a number of amendments to the ventilation permit. The inspector described it as just changing, flip-flopping, changing air flow directions, installing and moving controls to facilitate with the amount of mine and so on. The conclusion was that they were trying to use duct tape to fix things instead of engineering. They’re not taking the time to look ahead at what they have.

What’s the difference between the regular evolution of a mining permit as the mine expands and continues, versus a red flag for a poorly designed system that needs to be amended on a regular basis? How do you determine?

G. Warnock: I’ll give you an example. When you drill, say, test holes for development of a pit wall, you’re limited, naturally, to the knowledge that you have at that hole location. As you open up that wall, you might discover faults or joints that you didn’t know were there, and it might necessitate a wall design change. Similarly, on a waste rock dump you would go out and do your design.

Over a period of time, because your walls change, you might develop a pit somewhere totally different than what you had planned at the start, and you would have to alter your waste rock dump design to accommodate the pit. In tailings, you might be counting on a certain type of material coming out based on your drilling.

Basically, it comes down to the knowledge of your subsurface. That knowledge — unlike mechanical beams, say, or steel beams or unlike concrete — those factors are never known 100 percent at the start of a project. It’s just the simple nature of the ground we’re dealing with that nature gave us.

That what I mean by…. I’m not talking about ventilation or things like that — mechanical structures. I’m talking about earthen structures that will naturally evolve over time based on the materials you’re given.

B. Ralston (Chair): I think we’ve come to the end of the proceedings. I want to thank all the witnesses for their appearance and their participation. I want to thank all the committee members for what has been, perhaps, a longer than usual consideration of a report. But given its importance and its significance for development of public policy in British Columbia, I think we owed it to people to take that time. So thank you very much.

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

REPORT OF PROCEEDINGS(Hansard)

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REPORT OF PROCEEDINGS
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