National Energy Board Canadian Environemental Assessment Agency
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Enbridge Northern Gateway Project Joint Review Panel

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2 Determining the Canadian public interest

Contents

2 Determining the Canadian public interest

2.1 Role of the National Energy Board

2.2 Creation of the Panel

2.3 Public interest and the public convenience and necessity test under Part III of the National Energy Board Act

2.3.1 Applying the public convenience and necessity test to the Enbridge Northern Gateway Project application

2.4 The Panel's views on whether the project is in the public interest

2.4.1 Burdens and benefits of the project

2.4.2 Environmental burdens

2.4.3 Societal burdens and benefits

2.4.4 Economic burdens and benefits

2.4.5 Burdens of a large oil spill

2.4.6 Summary of the Panel's views on burdens and benefits

2 Determining the Canadian public interest

The Panel considered all of the views and evidence on the record to determine whether the Enbridge Northern Gateway Project would be in the public interest. The Panel heard about values, culture, and economy from those who could be affected by the project. People living near the proposed project spoke about protection of the environment, access to fresh water, and sustainability of salmon, as examples of their values. The Panel listened to people's concerns about culture and economy, and to Northern Gateway's proposals to address those concerns. Aboriginal people told the Panel how the project could affect them and their use of the land, water, and resources.

2.1 Role of the National Energy Board

The National Energy Board is an independent federal tribunal that regulates parts of Canada's energy industry, including interprovincial and international pipelines. The National Energy Board makes and implements regulations and guidelines to promote the safety, security, and protection of people, the environment, and property throughout a pipeline project's lifespan.*

Pipelines regulated under the National Energy Board Act must be designed, constructed, and operated in accordance with the National Energy Board Onshore Pipeline Regulations and the latest versions of relevant design codes, including the Canadian Standards Association (CSA) Z662-11 (Oil and Gas Pipeline Systems) and Z245.1 (Steel Pipe). Pipelines must be operated in accordance with other regulations under the National Energy Board Act, such as the Toll Information Regulations and the Oil Pipeline Uniform Accounting Regulations.

When an application for a new pipeline facility is received, the National Energy Board typically:

  • assesses the proposed project from environment, engineering, safety, economic, socio-economic, and lands perspectives;
  • confirms that the applicant for the facility has notified and consulted with landowners, Aboriginal peoples, and other affected parties;
  • determines how best to provide opportunities to those potentially affected by the project and other stakeholders to participate in the review of the proposed project;
  • determines whether, with specific mitigation measures and other conditions, the project is in the public interest; and
  • makes a recommendation to the Minister of Natural Resources as to whether or not a certificate approving the project should be issued.

The National Energy Board is a quasi-judicial tribunal, meaning that it is court-like and follows the principles of natural justice and fairness, which have been developed by the courts over time.

Recommendations made by regulatory tribunals such as the Panel are based on review of scientific and technical information placed on the record during a public hearing. Tribunals are not influenced by the number of letters received or by other demonstrations of public opposition or support. Rather, recommendations are based on the evidence provided, within a legal framework enacted by the legislature and applied by the courts.

* The National Energy Board takes a lifespan (lifecycle) approach to the management of issues in that it oversees all phases of a regulated facility including the planning and application phase, the application assessment and public hearing phase, the construction and post-construction phase, the operations and maintenance phase, and the abandonment phase.

2.2 Creation of the Panel

The Panel was established through the Joint Review Panel Agreement by the Minister of the Environment and the Chairman of the National Energy Board, dated 4 December 2009. The Joint Review Panel Agreement was amended on 3 August 2012 to comply with the Canadian Environmental Assessment Act, 2012, the Jobs, Growth and Long-Term Prosperity Act, and the amended National Energy Board Act. The Panel's purpose was to assess the environmental effects of the proposed project and consider the application under both the Canadian Environmental Assessment Act and the National Energy Board Act.

The three-member Panel was announced on 20 January 2010. The Panel consisted of two permanent members of the National Energy Board and one temporary member recommended by the Minister of the Environment. The Panel is an independent expert tribunal. It must consider all relevant evidence contained on its record, determine the weight to be given to that evidence, and make its recommendations solely on that evidence. Neither the Panel nor the National Energy Board is responsible for developing federal government policy.

2.3 Public interest and the public convenience and necessity test under Part III of the National Energy Board Act

In the Panel's view, the public interest is inclusive of all Canadians, locally, regionally, and nationally, and refers to the integration of environmental, societal, and economic considerations. A determination in the public interest is based on findings of fact and a review of scientific and technical information.

When applying the "present and future public convenience and necessity" test under Part III of the National Energy Board Act the Panel must consider the overall "public interest." The National Energy Board Act requires the Panel to consider any public interest that may be affected by granting or refusing the application. The Panel considers the burdens the project could place on Canadians, and the benefits the project could bring to Canadians.

In making its recommendation, the Panel assesses all the evidence on the record, including:

  • the proposed engineering design and safety of the facilities;
  • the economics of the proposed project including supply, demand, and access to the facilities;
  • the effect the proposed project would have on the environment, as well as the effect the environment would have on the project; and
  • the effect the proposed project would have on individuals, Aboriginal and non-Aboriginal groups, communities, and society.

In carrying out its assessment, the Panel looked at the environmental effects of routine operations of the project and the effects of malfunctions and accidents that may occur.

Section 52 of the National Energy Board Act sets out the criteria the Panel must consider in making a recommendation as to whether certificates of public convenience and necessity should be issued for the project. The National Energy Board has broad discretion in making its recommendation to the Minister of Natural Resources.

Section 52 states, in part:

  1. If the Board is of the opinion that an application for a certificate in respect of a pipeline is complete, it shall prepare and submit to the Minister, * and make public, a report setting out
    1. its recommendation as to whether or not the certificate should be issued for all or any portion of the pipeline, taking into account whether the pipeline is and will be required by the present and future public convenience and necessity, and the reasons for that recommendation; and
    2. regardless of the recommendation that the Board makes, all the terms and conditions that it considers necessary or desirable in the public interest to which the certificate will be subject if the Governor in Council were to direct the Board to issue the certificate, including terms or conditions relating to when the certificate or portions or provisions of it are to come into force.
  2. In making its recommendation, the Board shall have regard to all considerations that appear to it to be directly related to the pipeline and to be relevant, and may have regard to the following:
    1. the availability of oil, gas or any other commodity to the pipeline;
    2. the existence of markets, actual or potential;
    3. the economic feasibility of the pipeline;
    4. the financial responsibility and financial structure of the applicant, the methods of financing the pipeline and the extent to which Canadians will have an opportunity to participate in the financing, engineering and construction of the pipeline; and
    5. any public interest that in the Board's opinion may be affected by the issuance of the certificate or the dismissal of the application.
  3. If the application relates to a designated project within the meaning of section 2 of the Canadian Environmental Assessment Act, 2012, the report must also set out the Board's environmental assessment prepared under that Act in respect of that project.

* Minister of Natural Resources

2.3.1 Applying the public convenience and necessity test to the Enbridge Northern Gateway Project application

The factors considered, and the criteria applied, in making a recommendation under section 52 of the National Energy Board Act depend on, among other things, the location of the project, the commodity involved, and the various segments of the public that would be affected by the project. In the case of the Enbridge Northern Gateway Project, the Panel considered public safety, environmental, and socio-economic matters, and the issues identified in the List of Issues (Appendix 5).

The Panel is of the view that the consideration of a project by an independent expert tribunal process is in itself a component of the public interest. Having an independent expert tribunal take the time to collect, digest, and understand all aspects of a complex application results in thorough, reasoned recommendations and conditions. This provides the decision maker with expert views, based on tested evidence, on which to base a decision.

2.4 The Panel's views on whether the project is in the public interest

In making its recommendation, the Panel was required to consider all relevant evidence on the record and take into account whether the project is, and will be, in the present and future public convenience and necessity and, therefore, in the public interest. This report includes terms and conditions to which the certificates would be subject should the Governor in Council decide that the project should proceed.

The Panel conducted its assessment and developed its recommendations in a careful and precautionary manner, particularly when there was uncertainty in the scientific or technical information on the record. Should the project proceed, the National Energy Board would inspect and audit the project throughout its lifespan.

2.4.1 Burdens and benefits of the project

The Panel's role was to make a recommendation as to whether certificates should be issued for the Enbridge Northern Gateway Project, taking into account whether it is in the Canadian public interest. In doing this, the Panel asked itself whether present and future generations of Canadians would be better off with, or without, the Enbridge Northern Gateway Project.

The Panel considered the views and evidence of all participants to the hearing. This information was conveyed to the Panel orally and in writing, and included Aboriginal Traditional Knowledge, personal experience and beliefs, and science-based technology and research. The Panel weighed the potential burdens and benefits of the project as they would affect the environment, society, and economy at the local, regional, and national levels. These three dimensions of the public interest interact and overlap and were considered in an integrated manner.

The Panel finds that potential burdens and benefits of the project would likely be different in different locations. For example, while potential economic benefits appear likely at local, regional, and national scales, environmental and societal burdens are most likely in the local area and region of the project.

The Panel distinguished two operational contexts for consideration of project burdens and benefits. The first and most typical context involved potential burdens and benefits associated with construction and routine operation of the project. The second context involved burdens that would be experienced in the unlikely event of a large oil spill on land or water.

2.4.2 Environmental burdens

In evaluating environmental burdens, the Panel placed considerable weight on the likelihood of successful mitigation in the case of construction and routine operations. Most of the anticipated adverse environmental effects of construction and routine operations, including occasional small spills, can be mitigated through compliance with the Panel's conditions, which include all of Northern Gateway's commitments. Chapter 8 provides details.

The Panel finds that, with the application of Northern Gateway's proposed mitigation measures and compliance with the Panel's conditions, the project would cause adverse environmental effects on a number of valued ecosystem components that Northern Gateway selected to represent the environment. These include the atmospheric environment, rare plants and rare ecological communities, old-growth forests, soils, wetlands, woodland caribou, grizzly bear, terrestrial birds, amphibians, freshwater fish and fish habitat, surface and groundwater resources, marine mammals, marine fish and fish habitat, marine water and sediment quality, marine vegetation, and marine birds. The Panel does not recommend that potential effects, from the project alone, be found likely to be significant for any of these valued ecosystem components.

The Panel also considered cumulative effects for each valued ecosystem component. In most cases, the Panel recommends that project effects, in combination with cumulative effects, be found not likely to be significant.

The Panel recommends that project effects, in combination with cumulative effects, be found likely to be significant for certain populations of woodland caribou and grizzly bear already experiencing habitat disturbance without the Enbridge Northern Gateway Project. In each of these cases, despite substantial mitigation proposed by Northern Gateway that generally surpasses industry norms, there is uncertainty over the effectiveness of Northern Gateway's proposed mitigation to control access and achieve the goal of no net gain, or net decrease, in linear feature density. This led the Panel to take a precautionary approach and recommend a finding of significance. The Panel considers these findings to be at the low end of the range of possible significance.

For these reasons, the Panel does not find that potential environmental benefits outweighed potential environmental burdens. The potential adverse environmental outcomes are, in the Panel's view, outweighed by the potential societal and economic benefits described below.

2.4.3 Societal burdens and benefits

The Panel examined how people use the land and waters in traditional and contemporary ways. It examined the heritage resources contained in the project area, the project's interaction with community infrastructure and services, potential changes to individual and community health and wellbeing, and potential impacts to education, employment, and economic opportunities. Chapters 3, 4, and 9 provide details.

The Panel was told that, in some cases, the same socio-economic outcome may be viewed as a benefit by one person, and as a burden by another person. The Panel heard about the stress that some people and communities feel at the prospect of the project and their fear that a large spill could impact their communities.

The Panel requires Northern Gateway to follow through on its proposed community investment initiatives. The Panel considers all of these to be potential benefits to Aboriginal communities and others who may choose to participate. They include:

  • employment, education, and training initiatives such as:
    • educational and training opportunities along the proposed route and coastal areas, and a $3 million Education and Training Fund; and
    • support for increased cooperation between training institutions, contracting associations, unions, and Aboriginal groups, to meet employment and training targets;
  • increased employment opportunities for Aboriginal groups, with a target of 15 per cent employment of Aboriginal people during construction and operations;
  • a contract between Northern Gateway and prime contractors that would include commitment to local and Aboriginal procurement and employment targets;
  • $300 million commitment for Aboriginal procurement;
  • a business registration tool and contracting opportunities list for communities, businesses, and Aboriginal groups along the right-of-way and coastal areas;
  • investments in building sustainable communities, estimated to be 1 per cent of pre-tax profit, or about $3 million per year;
  • Aboriginal equity investment of up to 10 per cent of the project; and
  • the potential for improved communication and collaboration between users of coastal waters through a Fisheries Liaison Committee.

The Panel finds that a variety of additional societal benefits are likely to result from the project. These include potential benefits to communities, industry, and local economies. Examples include research, monitoring, and planning initiatives and techniques with relevance beyond the project, such as:

  • enhanced marine transportation safety and spill response on the West Coast due to improved coastal environmental sensitivity mapping and introduction of escort tugs that could also be used for open ocean rescue;
  • improved pipeline leak detection systems;
  • new investment capital and expertise associated with the project that could help diversify the Canadian economy;
  • innovative use of semi-quantitative risk assessment in project planning;
  • research on fate and behaviour of hydrocarbons in the environment;
  • a marine research chair funded by Northern Gateway at a university in British Columbia;
  • a public-private alliance to monitor interactions of woodland caribou and wolves, and a research chair funded by Northern Gateway;
  • a collaborative marine mammal research initiative supported by Northern Gateway;
  • research, monitoring, and mitigation of vessel traffic effects on marine wildlife, including birds, funded by Northern Gateway;
  • collaborative environmental monitoring with communities;
  • development of Community Response Plans; and
  • ongoing Aboriginal Traditional Knowledge studies.

For these reasons, the Panel is of the view that the net overall societal effects of the project would be positive, significant, and would provide potential benefits and opportunities to those individuals and businesses that choose to participate in the project.

2.4.4 Economic burdens and benefits

The estimated capital cost of the project is $7.9 billion. Construction and routine operation of the project would provide local, regional, and national economic opportunities and benefits. These are likely to include an increase in Canada's gross domestic product, an increase in employment opportunities and labour income, and increased government revenues. The project would create hundreds of thousands of person-years of employment during construction, including contracting and economic development opportunities for Aboriginal groups and local communities. Approximately 268 long-term jobs would be created by the project, including some in the marine services sector. Chapter 9 provides details.

The concept of ecological goods and services was described during the public hearing. The Panel is of the view that there is a temporary economic burden associated with ecological goods and services affected by pipeline construction. Based on the hearing record, the Panel finds that the estimated costs for damages to ecosystem goods and services are not well quantified and are based on a methodology that is not currently broadly accepted.

The Panel also heard about potential economic burdens on the marine fisheries, ecotourism, and individual and community lifestyles. With the mitigation, commitments, and conditions required by the Panel, the Panel finds that any economic burden associated with these aspects of coastal living during routine operations would be temporary and would not be significant.

For these reasons, the Panel is of the view that opening Pacific Basin markets is important to the Canadian economy and society. Though difficult to measure, the Panel finds that the economic benefits of the project would likely outweigh any economic burdens.

2.4.5 Burdens of a large oil spill

The Panel finds that some level of risk is inherent in the Enbridge Northern Gateway Project, and that no party could guarantee that a large spill would not occur. The Panel finds that a large spill, due to a malfunction or accident, from the pipeline facilities, terminal, or tankers, is not likely. The Panel finds that Northern Gateway has taken steps to minimize the likelihood of a large spill through its precautionary design approach and its commitments to use innovative and redundant safety systems, such as its commitments to address human error, equipment failures, and its corporate safety culture. These commitments, and all others made by the company, would be enforced under the regulatory regime.

Specific examples of design enhancements required by the Panel to reduce the risk of a large spill, discussed in this chapter and Chapters 5 and 7, include:

  • thicker pipe;
  • additional block valves;
  • complementary leak detection systems;
  • re-routing the pipelines away from major rivers, wherever feasible;
  • trenchless river crossings, wherever feasible;
  • Tanker Acceptance Program;
  • use of escort tugs; and
  • navigation safety enhancements.

The Panel finds that, in the unlikely event of a large oil spill, there would be significant adverse environmental effects, and that functioning ecosystems would recover through mitigation and natural processes. The Panel finds that a large oil spill would not cause permanent, widespread damage to the environment. The extent of the significant adverse effects would depend on the circumstances associated with the spill. Past spill events indicate that the environment recovers to a state that supports functioning ecosystems similar to those existing before the spill. The Panel finds that, in certain unlikely circumstances, a localized population or species could potentially be permanently affected by an oil spill.

A large spill would cause temporary, significant adverse environmental, societal, and economic effects, including economic burdens to users of affected environments for fishing, hunting, gathering, and tourism. Research from past spills shows that environmental, societal, and economic burdens of a large oil spill would likely be reduced by effective spill response, financial compensation, and natural recovery processes within the environment, in weeks to months. Some components, such as individual species and habitats, would likely recover within weeks, months, or years. In the case of large mammals, recovery times could extend to decades. The Panel notes that users of natural environments may experience changes in relative abundance, distribution, or behaviour of biota during recovery from a spill.

Appropriate oil spill preparedness, response, and financial capability would impose an economic burden to Northern Gateway and are required as a condition of approval. The Panel requires Northern Gateway to conduct full-scale spill response exercises to provide the best possible proof of spill response capability. The Panel requires Northern Gateway to manage the safety of the project tanker fleet and tanker operations through its commitments and its contracts with owners of tankers that would load and unload at the Kitimat Terminal.

If a large spill were associated with a pipeline rupture, the pipeline's delivery capability might be lost for an extended period. A shutdown of the facilities could also have significant economic implications for the customers that rely on the project to get their product to market. A shutdown may also negatively affect Canadian prices for oil commodities.

Canadians expect industry to operate in a responsible manner. A large oil spill could affect Canada's reputation as an energy supplier and could affect local, regional, and national socio-economic development, investment, and international market access. After a large spill, the company could suffer significant economic and reputational effects that could potentially affect its ability to operate.

2.4.6 Summary of the Panel's views on burdens and benefits

The Panel has taken a careful and precautionary approach in assessing the project. The Panel is of the view that opening Pacific Basin markets is important to the Canadian economy and society. Societal and economic benefits can be expected from the project. The Panel finds that the environmental burdens associated with project construction and routine operations can, generally, be effectively mitigated. Continued monitoring, research, and adaptive management of these issues may lead to improved mitigation and further reduction of adverse effects. The Panel acknowledges that this project may cause some people and local communities to experience temporary disruptions during construction.

The environmental, societal, and economic burdens of a large oil spill, while unlikely and not permanent, would be significant. Through its conditions, the Panel requires Northern Gateway to implement appropriate and effective spill prevention measures and spill response capabilities, so that the likelihood and consequences of a large spill would be minimized.

Pipeline spill prevention measures would include pipeline routing, design, materials, construction techniques, maintenance, and operating procedures that support the integrity of the pipelines and keep the products contained in the system. Tanker spill prevention measures would include tanker design, inspection, and maintenance, and Northern Gateway's Tanker Acceptance Program, Terminal Regulations, operational limits, and the use of pilots and escort tugs. Spill response planning and capabilities would address foreseeable scenarios and contingencies on land and water, and would be tested through live exercises. The Panel's requirements for spill prevention measures and response capabilities are described in detail in Chapters 5 and 7.

The Panel recommends that project effects, in combination with cumulative effects, be found likely to be significant for certain populations of woodland caribou and grizzly bear already experiencing habitat disturbance without the Enbridge Northern Gateway Project. The Panel used a precautionary approach in arriving at its view. Despite substantial mitigation proposed by Northern Gateway, there is uncertainty over the effectiveness of Northern Gateway's proposed mitigation to control access and achieve the goal of no net gain, or net decrease, in linear feature density. The Panel recommends that the Governor in Council find that these cases of significant adverse environmental effects are justified in the circumstances.

It is the Panel's view that, after mitigation, the likelihood of significant adverse environmental effects resulting from project malfunctions or accidents is very low.

For all of the above reasons, the Panel is of the view that, overall, the Enbridge Northern Gateway Project, constructed and operated in full compliance with the conditions required by the Panel, is in the Canadian public interest. The Panel finds that Canadians would be better off with this Project than without it.

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Date Modified:
2013-12-19