Pipelines – TransCanada – Aboriginal Engagement Process
On November 10, 2015, TransCanada Pipelines Limited (“TCPL”) applied to the National Energy Board (“NEB”) for approval to construct and operate the Vaughan Mainline Expansion Project (the “Project”). TCPL submitted its application (the “Application”) under section 58 of the National Energy Board Act (the “NEBA”), which allows the NEB to exempt a pipeline application from certain provisions of the NEBA. Specifically, TCPL requested the NEB exempt the project from sections 30(1)(a) and 31 of the NEBA (certificate requirements).
The NEB issued a Letter Decision on August 4, 2016, in which it issued Order XG-T211-020-2016 approving the Project subject to conditions pursuant to NEBA section 58 (the “Order”). The Order also included a sunset clause providing for the Order to expire on July 18, 2018 if construction of the Project has not begun.
Project Overview
The Project is to be located in the City of Vaughan, in the Regional Municipality of York, Ontario (“Vaughan”). The Project is intended to facilitate access to the growing natural gas supplies in the northeastern United States.
The Project will include the construction and operation of 11.7 km of new buried pipeline (outside diameter of 1067 mm) and associated facilities.
A map of the Project location, submitted by TCPL as part of the Application, is reproduced below.
The Project will connect into TCPL’s approved King’s North Connection project and the existing TransCanada Line 200-2 pipeline. The Project will run north and east before heading south to connect into the existing TransCanada Line 200-3.
NEB Process
After determining the Application was sufficiently complete, on February 10, 2016, the NEB issued Hearing Order GH-001-2016, which established a written and oral process for the NEB’s consideration of the Application (the “Hearing Order”).
The Hearing Order granted standing upon registration for Aboriginal groups, municipalities, landowners, and occupants that would be directly affected by the NEB’s decision on the Application, provided those groups registered before the March 2, 2016 deadline. The Hearing Order also stated that the NEB intended to hold a community meeting where all interveners, commenters, and NGTL would have the opportunity to present oral statements expressing their respective views on the Project (the “Community Meeting”).
On March 18, 2016, the NEB released Ruling No. 1 in the proceedings, which established the list of parties (i.e. TCPL and interveners) and the list of commenter’s granted standing to participate in the proceedings.
The Community Meeting was held on April 27, 2016. Four interveners and TCPL presented at the Community Meeting.
The NEB held the oral hearing between June 14 and June 16, 2016, in Vaughan, Ontario.
Land Matters and Route Selection
TCPL submitted that it considered many criteria in its route selection process, including utilizing existing linear disturbances, minimizing watercourse and road crossings, avoiding or minimizing impact to environmentally sensitive areas, avoiding lands of certain designated status, input from Aboriginal groups, as well as input from other stakeholders and regulatory agencies (the “Route Selection Factors”).
In its submissions, TCPL described seven different route variations for the Project, including alternatives suggested by stakeholders, and provided its rationale for selecting the route described in the Application (the “Proposed Route”). TCPL submitted that, with reference to the Route Selection Factors, the Proposed Route achieved the optimal balance in avoiding or mitigating adverse effects to affected parties and the environment.
The NEB noted that the proposed Project was located in the Greater Toronto Area in close proximity to urban areas where there were many competing interests. The NEB noted that while TCPL had not resolved all routing concerns to the complete satisfaction of certain stakeholders, the NEB was satisfied that TCPL had committed to continued stakeholder engagement and to work with affected parties to resolve outstanding concerns.
The NEB approved the Proposed Route, but ordered that approval be conditional on TCPL meeting various commitments with respect to stakeholder concern and continued consultation.
Aboriginal Engagement Process
Mississaugas of the New Credit First Nation (“MNCFN”), Haudensaunee Development Institute (“HDI”), and Conseil de la Nation huronne-wendat (“CNH”) registered to participate in the proceedings as interveners. All three Aboriginal groups were eligible for pre-decided standing pursuant to the Hearing Order.
TCPL submitted that the Project does not cross any lands defined as reserve lands or lands designated for reserve status under the Indian Act. TCPL noted however, that the project does traverse asserted traditional MNCFN territories, Six Nations of the Grand River territories, and is also in the asserted traditional harvesting territory of the Metis Nation of Ontario. However, TCPL submitted that there is no known traditional land use currently practiced in the area.
CNH expressed concerns related to the Project’s impact on the extensive Huron-Wendat archeological heritage within the proposed pipeline area. In addition to impacts on identified sites, CNH submitted that there is a strong possibility that additional burial sites would be discovered during construction.
CNH also expressed concerns with respect to current laws regarding archaeological assessments. CNH submitted that ossuaries (burial chambers) can be located at depths starting at 20 to 130 cm, but the required depth for archaeologists conducting an assessment is only 5 cm.
CNH recommended two conditions related to the Project’s construction. The first condition is that an archaeologist be present to monitor construction and immediately halt construction upon the discovery of an archaeological site. The second condition is that an Aboriginal monitor from the community be present during construction to both assist the archaeologist in detecting sites and also ensure that they meet their own sacred responsibilities to guard and protect their ancestors.
TCPL submitted in reply that archaeological monitors were not necessary for reasons including that completed archaeological assessments have not yielded any sites of First Nation cultural heritage and that the Project is located primarily on private land that has been previously disturbed. The NEB held that the project was not likely to result in significant adverse effects on Aboriginal heritage resources. To address the CNH concerns, the NEB imposed a condition on the Project approval requiring TCPL to file a plan for Aboriginal participation in the monitoring of construction activities (the “Aboriginal Engagement Plan”). The NEB stated that it expects TCPL’s Aboriginal Engagement Plan to include further opportunity for the CNH to identify additional adverse effects and to address mitigation measures as necessary.
Economic Feasibility
In determining whether to approve a proposed pipeline facility, the NEB considers the need for the proposed facility and the likelihood of it being used at a reasonable level over its economic life.
TCPL submitted the Project will facilitate greater access to the Marcellus and Utica basin (natural gas plays) (the “Plays”), located in the northeast United States and in close proximity to Canadian markets. Combined, the Plays are estimated to contain between 600 and 700 trillion cubic feet (“Tcf”) of recoverable resources. TCPL submitted that production from the Plays is forecasted to grow from 14 billion cubic feet per day (“Bcf/d”) in 2014 to 34 Bcf/d by 2025.
No participants made submissions in opposition to TCPL’s position regarding adequacy of supply. The NEB held that the natural gas resources contained in the Plays were adequate to support approval of the Project.
With respect to market demand, TCPL submitted that the Project would be supported by existing eastern Canadian markets in Ontario and Quebec. While growth in residential, commercial, and industrial markets was forecasted to be modest, TCPL submitted the Project will be supported by the market’s desire for supply diversity and power generation demand, which TCPL stated is forecasted to grow from 0.3Bcf/d in 2014 to 0.7Bcf/d in 2030.
The NEB concluded that there was sufficient market demand to support the Project over its lifetime.
Costs and Financing
TCPL estimated the Project will cost $221 million. The Project will be funded through cash flow from operations and new senior debt. TCPL also stated that it will consider additional funding options including new securities issuances.
TCPL noted that it was not seeking approval relating to the recovery of the Project’s cost through tolls.
Approval and Conditions
The NEB issued Order XG-T211-020-2016 approving the Project subject to 19 conditions. The conditions were largely related to TCPL’s environmental obligations. Condition 10 also requires TCPL to file with the NEB a plan describing the participation by Aboriginal groups in monitoring activities during the construction for archeological resources.
