Pipeline Facility Application – Westcoast System
On October 21, 2016, Westcoast Energy Inc. (“Westcoast”) applied for an order under section 58 of the National Energy Board Act (the “NEB Act”) for approval to construct and operate a natural gas pipeline and associated facilities, consisting of:
(a) a 27 km, 914 mm pipeline;
(b) additional associated facilities, including pig sending and receiving facilities; and
(c) minor modifications at Westcoast’s existing Compressor Station No. 2, including the addition of a receiving barrel and tie in piping.
Together, these facilities are known as the Wyndwood Pipeline Expansion Project (the “Project”).
Westcoast requested the following relief:
(a) an order pursuant to section 58 of the NEB Act exempting the applied-for facilities from the application of paragraphs 30(1)(a) and (b) and section 31 of the NEB Act and exempting the pipeline tie-ins from the application of section 47 of the NEB Act; and
(b) an order pursuant to Part IV of the NEB Act affirming that the cost of the Project would be included in the Transmission North (T-North) (Zone 3) cost of service and tolled on a rolled-in basis.
For the reasons summarized below, the NEB found the Project, as proposed by Westcoast, to be in the public interest and granted Westcoast’s requested orders to construct and operate the Project.
The Project will be located in the Peace River District southwest of Chetwynd, British Columbia, as shown in the figure below:
Economic Feasibility
Regarding the economic feasibility of the Project, the NEB assessed the need for the proposed facility and the likelihood of it being used at a reasonable level over its economic life. To make this determination, the NEB considered:
(a) the supply of product to be shipped on the proposed facilities, and transportation contracts underpinning the facilities;
(b) the availability of adequate markets to receive the product to be delivered by the pipeline, and the adequacy of the capacity of the pipeline; and
(c) the applicant’s ability to finance the proposed facilities and the rationale for selecting the applied-for pipeline capacity.
The NEB concluded that the applied for Project was needed and would likely be used at a reasonable level over its economic life, based on the following findings:
(a) the natural gas resources in the Montney Formation represented adequate supply to support the Project;
(b) adequate markets existed to support the Project given the access to markets provided by Westcoast’s T-South system, as well as access to the Alliance Pipeline and NOVA Gas Transmission LTd. (“NGTL”) System and their connections to downstream markets;
(c) there was sufficient commercial support for the Project in the form of executed expansion service agreements; and
(d) Westcoast sized the facilities appropriately to accommodate firm service requirements and the capacity of the proposed pipeline loop was appropriate to transport the associated volumes to markets.
Tolling Matters
Westcoast requested an order from the NEB, affirming that the cost of the Project would be included in the T-North (Zone 3) cost of service and tolled on a rolled-in basis.
The NEB explained that, in assessing a proposed tolling methodology, it must be satisfied that a proposed tolling methodology:
(a) would not result in any unjust discrimination in tolls, service or facilities; and
(b) the resulting tolls would be just and reasonable and under substantially similar circumstances and conditions with respect to all traffic of the same description carried over the same route, the tolls would be charged equally to all persons at the same rate.
In the context of the Project, for the reasons summarize below, the NEB found that the proposed tolling methodology reasonably satisfied section 62 of the NEB Act, which requires that the same tolls should apply to all shippers using the same transportation services over the same facilities.
Westcoast’s Current Zone 3 Tolling Methodology
Zone 3 of the Westcoast System is tolled using a postage stamp methodology. The cost of service is allocated on the basis of contract demand volumes only. Westcoast explained that there are two postage stamp tolls in Zone 3:
(a) The Short Haul Toll for deliveries to distribution utilities connected to Zone 3 that serve northern communities and for gas movements of 75 km or less other than to the Alliance or NGTL systems; and
(b) The Long Haul Toll for all other gas movements in Zone 3.
NEB Findings re Proposed Tolling for Project
The NEB noted that:
(a) the rolled-in tolling methodology was consistent with Westcoast’s existing practice for system expansions; and
(b) the proposed tolling methodology had the unanimous support from the Westcoast Toll and Tariff Task Force.
The NEB found that:
(a) the proposed tolling methodology (rolled-in) for the Project was appropriate for the circumstances; and
(b) the proposed tolling methodology reasonably satisfied section 62 of the NEB Act, which requires that the same tolls should apply to all shippers using the same transportation services over the same facilities.
In granting Westcoast’s proposed tolling for the Project, the NEB emphasized that it could determine that a different tolling treatment would be appropriate in the future.
Facilities and Emergency Response Matters
The NEB found that:
(a) the Project would be constructed and operated in accordance with all applicable legislation and standards, including in accordance with the National Energy Board Onshore Pipeline Regulation and the CSA Z662-15 standard; and
(b) the design of the Project is appropriate for the intended use in consideration of Westcoast’s proposed mitigative measures to eliminate or minimize potential impacts of horizontal directional drilling (HDD), slope stability and potential effects of blasting activities on domestic water wells.
The NEB determined that the proposed activities related to the Project design and construction were appropriate, and that the facilities would be operated safely and securely.
Land Matters
The NEB explained that applicants are expected to:
(a) provide a description and rationale for the proposed route of a pipeline, the location of associated facilities, and the permanent and temporary lands required for a project; and
(b) provide a description of the land rights to be acquired and the land acquisition process, including the status of land acquisition activities.
Based on this information, the NEB assesses the appropriateness of the proposed route, land requirements and the applicant’s land acquisition program.
In this case, the NEB found that Westcoast’s proposed route for the Project was appropriate and that Westcoast had appropriately identified and engaged stakeholders, developed engagement materials, notified stakeholders of the Project, and responded to stakeholder input.
The NEB noted that:
(a) routing decisions involve the consideration of many factors, including archaeological, environmental and engineering factors, and consultation with landowners and Aboriginal groups;
(b) Westcoast had accommodated a number of minor re-routes based on input from landowners; and
(c) Westcoast’s made efforts to minimize the Project’s environmental disturbance by proposing a right-of-way (“RoW”) that was largely contiguous to existing RoWs, and that would not result in any new permanent access.
The NEB found that:
(a) Westcoast’s proposed mitigation was suitable to address the Project’s potential land-related effects during design, construction, and operation;
(b) the route, as proposed, was acceptable; and
(c) the land rights documentation and acquisition process proposed by Westcoast were acceptable.
Public Consultation
The NEB found that:
(a) Westcoast’s design of Project-specific public notification and consultation activities were adequate given the scope and scale of the Project; and
(b) Westcoast’s implementation of Project-specific public consultation activities was adequate, including Westcoast revising the pipeline route based on consultation with stakeholders.
However, the NEB found that Westcoast’s complaint tracking, resolution, and process for ongoing consultation could be improved. The NEB determined that Westcoast’s ongoing consultation activities must include a process for tracking complaints and resolutions. Therefore, the NEB imposed Condition 12 (Complaint Tracking) requiring Westcoast to create and maintain records to track Project-related complaints or concerns by landowners, and how they have been addressed, beginning with the commencement of operation and for five years after.
Aboriginal Matters
NEB Findings re Westcoast’s Consultation with Aboriginal Groups
In assessing the consultation undertaken by Westcoast with Aboriginal groups, the NEB evaluated:
(a) the design and implementation of Westcoast’s consultation activities, including Westcoast’s activities to engage Aboriginal groups and to learn about their concerns and interests, and the specific concerns expressed by Aboriginal groups about the Project; and
(b) how Westcoast sought to understand and address the concerns of potentially affected groups and how this influenced the Project’s proposed design and operation.
The NEB noted that Westcoast was responsive to the request of Aboriginal communities and engaged with Blueberry River First Nations (“BRFN”), Kelly Lake First Nation, and Fort St. John Métis Society when they requested further information.
The NEB found that:
(a) Westcoast designed and implemented appropriate and effective aboriginal consultation activities for the Project; and
(b) the NEB process was appropriate in the circumstances.
The NEB found that:
(a) Westcoast provided all potentially affected Aboriginal groups with sufficient information about the Project, and that the level of engagement was commensurate with the level of interest expressed by Aboriginal communities; and
(b) Westcoast provided interested Aboriginal groups with reasonable opportunities to participate in Project planning, to share traditional knowledge, and to identify site-specific and general concerns about the Project.
The NEB concluded that Westcoast designed and implemented appropriate and effective consultation activities that met the requirements and expectations set out in the NEB’s Filing Manual.
NEB Findings re Project Monitoring by Aboriginal Groups
The Board noted that:
(a) Aboriginal groups can provide valuable and unique perspectives for determining mitigation measure effectiveness, partly based on their traditional knowledge;
(b) Westcoast made commitments to provide Aboriginal monitors throughout the various phases of the Project lifecycle; and
(c) Saulteau First Nation requested conditions that could solidify these commitments.
Therefore, the NEB decided to impose Condition 6 and Condition 25, requiring Westcoast to develop an Aboriginal Monitoring Plan during both the construction and postconstruction phases of the Project. These conditions imposed by the NEB were consistent with Westcoast’s stated commitments to understand any concerns raised by Aboriginal groups about the monitoring plans, to incorporate relevant feedback from Aboriginal groups into the development of the plans, and to transparently provide an explanation to the Aboriginal groups when it does not agree with specific feedback.
NEB Findings re Impacts on Traditional Land and Resource Use
The Board noted that the NEB Filing Manual requires an applicant:
(a) to describe how Aboriginal groups currently use lands and resources for traditional purposes, including the spatial and temporal extent of use and how a project could impact this use; and
(b) to describe the measures that would be taken to mitigate a project’s impacts on Aboriginal traditional land and resource use.
The NEB noted that the Manual does not direct companies with respect to any specific methods of data collection and analysis, such as a Traditional Land Use (“TLU”) study.
Given the importance of incorporating TLU/traditional knowledge information into Project design and construction activities, as raised by all Aboriginal intervenors, the NEB imposed:
(a) Condition 7, requiring Westcoast to file a plan to address outstanding TLU investigations; and
(b) Condition 6, Condition 8, and Condition 25 requiring Westcoast to submit Aboriginal engagement reports as well as Aboriginal monitoring plans for construction and post-construction activities, which would provide Aboriginal groups further opportunities to address outstanding or unanticipated TLU issues.
The NEB determined that effects of the Project on traditional land and resource use would be short-term to long-term in duration, reversible in the long-term, local to regional in geographic extent and low to moderate in magnitude.
Based on the above, the NEB concluded that the potential adverse effects of the Project on the current use of lands and resources for traditional purposes by Aboriginal persons were not likely to be significant.
NEB Findings re Adequacy of Crown Consultation under Section 35 of the Constitution Act
The NEB noted that:
(a) the Government of Canada (“GOC” or “Crown”) had indicated that it would rely on the NEB’s process to the extent possible to discharge the Crown’s duty to consult; and
(b) the Crown therefore encouraged all Aboriginal groups whose established or potential Aboriginal or treaty rights could be affected by the Project to apply to participate in the NEB process.
The NEB further noted that a number of judicial decisions, including the Supreme Court of Canada’s decision in Taku River Tlingit First Nation v. British Columbia (Project Assessment Director), 2004 SCC 74, acknowledged the Crown’s ability to rely on opportunities for Aboriginal consultation available within existing processes for regulatory or environmental review.
The NEB set out how its governing legislative scheme under the NEB Act provides it with broad powers and expansive remedial authority to deal with the impacts of federally-regulated pipeline projects.
The NEB explained that its process is designed to be thorough and accessible to Aboriginal groups that wish to raise concerns about a proposed project. The NEB noted that:
(a) in addition to the mandated one-on-one consultation between an applicant and potentially impacted Aboriginal groups, the NEB’s hearing process itself, including its reasons, is part of the overall consultative process; and
(b) in this case, while much of the early consultation was performed by Westcoast, the NEB process acted as a necessary and important check on that consultation and gave Aboriginal groups an additional avenue to explain their concerns about the Project and have those concerns considered.
The NEB found that:
(a) its process was appropriate in the circumstances;
(b) given the nature of the interests and the anticipated effects, there had been adequate consultation and accommodation for the purpose of the NEB’s decision on this Project;
(c) any potential adverse Project impacts on the interests, including rights, of affected Aboriginal groups were not likely to be significant and could be effectively addressed.
The NEB concluded that the requirements of section 35 of the Constitution Act, 1982 had been met, such that an approval of the Project was in keeping with the honour of the Crown.
Environmental and Socio-Economic Matters
NEB Findings re Environmental Protection Plan
The NEB noted Westcoast’s commitment to having and implementing an Environmental Protection Plan (“EPP”) on-site and filed a Project-specific EPP during the proceeding.
The NEB directed Westcoast:
(a) to file an updated EPP, prior to construction of the Project, as set out in Condition 4; and
(b) to include additional details on its Wildlife Mitigation Plan and mitigation of western toads as described in the condition. The EPP must also include updated Environmental Alignment Sheets.
NEB Findings re Cumulative Environmental Impacts
The NEB found that no party disputed that there were already significant existing cumulative effects on caribou and their habitat and no party disputed that, without sufficient and effective mitigation, the Project had the potential to further contribute to cumulative effects. The NEB noted that disagreement in the context of this Project’s environmental assessment (“EA”) was primarily around the scope, or extent, of what Westcoast is responsible to assess and address.
In the NEB’s view, cumulative effects required cumulative solutions. Just as no one development at any one time is necessarily responsible for all the cumulative outcomes, so too are cumulative effects not going to be resolved by any one party.
The NEB found that, as a regulator conducting an EA of a particular project in which existing cumulative effects are already significant, the NEB is responsible to ensure that the proponent’s proposed project have no net increase in cumulative effects.
The NEB noted that there were numerous proponents (including Westcoast) with existing past developments in the region. In the NEB’s view, multiple interacting past contributions are best addressed through other multi-stakeholder means coordinated through the appropriate government agencies responsible, rather than through specific project EAs. The NEB stated that, in particular, the province has a key role in leading cumulative effects initiatives.
While acknowledging the importance of addressing past and ongoing cumulative effects, the NEB found that addressing as part of mitigation for this specific Project was not the appropriate forum.
The NEB encouraged all interested stakeholders, including Westcoast and other governing bodies, to contribute towards ensuring a more integrated and holistic approach towards addressing cumulative effects.
Decision
The NEB found the Project, as proposed by Westcoast, to be in the public interest and granted Westcoast’s requested orders to construct and operate the Project.
