ARCHIVED - Chapter 2 Regulatory review process

Archived Content

Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.

Chapter 2
Regulatory review process

2.1 Role of the National Energy Board

The National Energy Board regulates safety, security, environmental and economic matters throughout a pipeline project's lifespan. The National Energy Board has developed regulations and guidelines for the safety, security and protection of people, the environment and property. For example, pipelines regulated under the National Energy Board Actmust be designed in accordance with the National Energy Board's Onshore Pipeline Regulations, 1999 and the latest versions of relevant design codes, including the Canadian Standards Association Z662, Oil and Gas Pipeline Systems. Pipelines must also be operated in accordance with all other regulations under the National Energy Board Act, such as the Toll Information Regulations and Gas Pipeline Uniform Accounting Regulations. Facilities regulated under the Canada Oil and Gas Operations Actmust be designed and operated in accordance with their own set of regulations.

 

The National Energy Board's role as regulator is to oversee that safety and environmental issues associated with construction, operation and abandonment of regulated facilities are identified and managed by the owners of these facilities. The National Energy Board satisfies itself that a facility's design and proposed operations would result in a project that is safe, reliable and environmentally responsible before it is approved.

 

As well as regulating the physical facilities, the National Energy Board oversees the economic aspects of a proposed project. Pipeline development in Canada may occur in a competitive market but often occurs in a monopoly or near-monopoly situation. The National Energy Board's authority for economic regulation of pipelines is intended to ensure that the prices set for transporting the gas, the costs that are incurred by

the pipeline proponents and the returns to the pipeline owners are similar to those that would occur if the market were competitive.

Before submitting an application to the National Energy Board, companies must ensure that the proposed project would comply with existing statutory and regulatory requirements.

  • assess the application from economic, engineering, safety, environment and lands perspectives;
  • ensure that regulated companies have notified and consulted with landowners, Aboriginal peoples, and other affected parties;
  • determine how best to provide opportunities for affected people and other stakeholders to provide their input on the proposed project; and
  • determine whether, with specific mitigation measures and other conditions, the project would be in the public interest.

2.2 The “public interest”

We must decide whether Canadian society would be better or worse off if the project is approved. The National Energy Board Actrequires us to consider any public interest that may be affected by granting or refusing the application. To determine if a project is in the public interest, we consider the potential benefits it could bring to Canadians and the burdens it could place on Canadians.

In doing so, we examine engineering, economic, environmental and socio-economic factors. In particular, we assessed:

  • the proposed engineering design— whether or not the facilities will be safe;
  • the economics of the proposed project— is there sufficient supply and demand, will other parties have access to the facilities; are the tolls and tariffs reasonable;
  • the effect the proposed project will have on the environment, as well as the effect the environment will have on the project— the environment includes the physical, social and cultural setting where the facilities would be built; and
  • the effect the proposed project would have on individuals, groups, communities and societies.

To ensure that we heard a wide range of views from an informed and engaged public, we carried out activities to encourage meaningful participation in the review process for the Mackenzie Gas Project by all potentially affected people. These activities were designed with the following objectives:

  • to share information in a timely manner with the public about the National Energy Board's process;
  • to design a process that generally reflects the public's needs and expectations;
  • to design a process that takes into account Northerners' experiences and expectations; and
  • to ensure that the hearing process provides an opportunity to people from all walks of life to participate fully and in a manner in which they felt comfortable.

If the National Energy Board determines that a project is in the public interest, its role as a regulator would continue through the construction, operation and abandonment phases of the project.

Did you know?

Contributing partners to the Cooperation Plan

Boards and agencies with mandatory public hearing processes:

  • Mackenzie Valley Land and Water Board;
  • Mackenzie Valley Environmental Impact Review Board;
  • Gwich'in Land and Water Board;
  • Sahtu Land and Water Board;
  • Northwest Territories Water Board;
  • Canadian Environmental Assessment Agency;
  • National Energy Board; and
  • Environmental Impact Review Board for the Inuvialuit Settlement Region.
Other agencies with a direct interest in Environmental Impact Statement and regulatory matters:
  • Joint Secretariat for the Inuvialuit Settlement Region;
  • Environmental Impact Screening Committee for the Inuvialuit Settlement Region;
  • Inuvialuit Game Council;
  • Inuvialuit Land Administration;
  • Inuvialuit Land Administration Commission; and Indian and Northern Affairs Canada.

Observers:

  • Nominee of the Dehcho First Nation to the Mackenzie Valley Land and Water Board;
  • Government of the Northwest Territories; and
  • Government of Yukon.

2.3 Coordination of review process

A renewed interest in developing northern gas resources emerged in 2000. The many agencies that would be affected by a pipeline proposal realized that there would be substantial duplication and overlap of public review processes if each agency worked alone. Beginning in the fall of 2000 the heads of these agencies met to explore means of working cooperatively to minimize duplication and overlap. In June 2002, the agencies signed the Cooperation Plan for the Environmental Impact Assessment and Regulatory Review of a Northern Gas Pipeline Project through the Northwest Territories (Cooperation Plan). The Cooperation Plan provided a framework for a joint environmental impact assessment process that met the requirements of the Inuvialuit Final Agreement, the Mackenzie Valley Resource Management Act and the Canadian Environmental Assessment Act. Mr. Rowland J. Harrison, Q.C. of the National Energy Board was appointed as a member of the Joint Review Panel for the Mackenzie Gas Project (Joint Review Panel). To assist the National Energy Board in meeting its environmental requirements, the National

Energy Board authorized Mr. Harrison under subsection 15(1) of the National Energy Board Act to report and make recommendations on social, cultural, economic and environmental matters pertaining to the Mackenzie Gas Project.

As contemplated in the Cooperation Plan our hearing process was coordinated with the Environmental Impact Review of the Mackenzie Gas Project by the Joint Review Panel. The Joint Review Panel Report and Mr. Harrison's subsection 15(1) report were taken into account in our public interest determination.

The filings made with the National Energy Board and the Mackenzie Valley Land and Water Board initiated the regulatory and environmental review processes (see Table 2-1). The Agreement issued on 22 April 2004 set out details for the environmental impact assessment by a Joint Review Panel, the coordination of hearings between regulatory agencies and the maintenance of a public registry. It also set out the role of the Northern Gas Project Secretariat, which provided logistical, communications, information management, administrative and technical support throughout the review process.

Table 2-1 Initial events in the coordinated review process

Table 2-1 Initial events in the coordinated review process
Date Event
18 June 2003 Preliminary information package filed by the Proponents of the Mackenzie Gas Project with the National Energy Board.
21 July 2003 An application for a Type A Land Use Permit and Type B Water Licence for the Camsell Bend Development filed with the Mackenzie Valley Land and Water Board. This triggered the environmental review process.
21 August 2003 Mackenzie Gas Project referred by the Minister of the Environment to a Joint Review Panel under the Canadian Environmental Assessment Act.
22 April 2004 Agreement for the Coordination of the Regulatory Review of the Mackenzie Gas Project signed by the parties
July/August 2004 Agreement for an Environmental Review of the Mackenzie Gas Project signed by the Chair of the Mackenzie Valley Environmental Impact Review Board, Chair of the Inuvialuit Game Council, and Federal Minister of the Environment.

Figure 2-1 Process timeline for review of Mackenzie Gas Project

Figure 2-1 Process timeline for review of Mackenzie Gas Project

2.4 National Energy Board
hearing process

2.4.1 Overview

The National Energy Board received the applications for the Mackenzie Gas Project in October 2004. Following an initial review we decided to hold a hearing and issued Hearing Order GH-1-2004 on 24 November 2004. Our hearing sessions were coordinated with the Joint Review Panel's hearing sessions (see Figure 2-2).

Hearing Order GH-1-2004 initially contained a list of 12 issues for discussion in the hearing related to the National Energy Board's mandate pursuant to the National Energy Board Act and the Canada Oil and Gas Operations Act. We focused on engineering, safety and economic matters in our hearing, whereas the Joint Review Panel focused on environmental, cultural, and socio-economic matters. Following the receipt of comments from intervenors, Issue 13 was added to the list of issues

(Appendix A – List of issues) by way of Order AO-1-GH-1-2004, dated 23 November 2005, to address concerns about tolls, access, tariff provisions and dispute mechanisms related to the Mackenzie Gathering System. Key events in our hearing process are shown in Table 2-2 and Appendix C – Summary of events.

2.4.2 Events leading up to the oral hearing

Throughout 2005, we continued our examination of the applications, which included the exchange of several rounds of information requests and the submission of evidence by participants. Also throughout 2005, the National Energy Board, the Joint Review Panel and the Northern Gas Project Secretariat held information sessions in northern communities near the pipeline route to explain their roles and to provide information on the National Energy Board and Joint Review Panel hearing processes. We held a pre-hearing planning conference between 5 and 13 December 2005 in Inuvik,

Yellowknife, Fort Good Hope and Fort Simpson. The purpose of the conference was two-fold: to provide information on our hearing process and the National Energy Board's role throughout the lifespan of a pipeline; and to hear participants' views on shaping certain parts of the hearing process to meet their needs.

2.4.3 Oral hearing

By letter of 23 November 2005 the Proponents indicated that they were ready to start the public hearings. We released our hearing schedule on 20 December 2005. The scheduled evidentiary portion of the oral hearing started in Inuvik on 25 January 2006 and ended back in Inuvik on 14 December 2006. The evidentiary hearing involved the questioning of witnesses for the Proponents and intervenors on their filed evidence and the presentation of oral statements by members of the communities. We held hearing sessions on 47 days in 15 communities in the Northwest Territories and Northern Alberta throughout 2006.

Figure 2-2 National Energy Board and Joint Review Panel coordinated hearing schedule

Figure 2-2 National Energy Board and Joint Review Panel coordinated hearing schedule

On 7 April 2006 Mackenzie Explorer Group filed a motion with us for an order that, when constructed and placed into service, the Mackenzie Gathering System and the Mackenzie Valley Pipeline will be a single pipeline subject to regulation under Part IV of the National Energy Board Actand that the Proponents prepare, file and serve the toll principles and the tariff(s) for this single pipeline for approval under Part IV of the National Energy Board Act. An oral hearing was held in Yellowknife on 2 June 2006. On 10 July 2006 we denied Mackenzie Explorer Group's motion.

Mackenzie Explorer Group subsequently appealed our decision. The appeal was heard by the Federal Court of Appeal on 23 October 2007 and dismissed on 22 April 2008.

In early 2007, the Proponents filed updates to the applications and on 10 and 11 October 2007 we held an oral hearing session in Yellowknife to examine the updated evidence.

In March 2010 we provided an opportunity for parties to file updated evidence and on 28 March 2010 a hearing session was held in Yellowknife to allow parties the opportunity

Table 2-2 Key events in the National Energy Board hearing process

Table 2-2 Key events in the National Energy Board hearing process
Date Event
November 2004 to
December 2005
Information sessions and technical review
5 to 13 December 2005 Pre-hearing Planning Conference in Inuvik, Yellowknife, Fort Good Hope, and Fort Simpson
25 January 2006 to
14 December 2006
National Energy Board hearing sessions in 15 Northern communities
2 June 2006 Mackenzie Explorers Group motion heard in Yellowknife
10 July 2006 Ruling on Mackenzie Explorers Group motion
5 February 2007 Proposed conditions initially issued for comment
10 and 11 October 2007 Hearing in Yellowknife to examine updated evidence
14 December 2007 Federal government enacted changes to the Canada Oil and Gas Operations Act, granting the National Energy Board the power to regulate tolls, tariffs and access on COGOA pipelines.
22 April 2008 Federal Court of Appeal dismissed Mackenzie Explorer Group's appeal, noting but not basing their decision on the fact that changes to the Canada Oil and Gas Operations Act had resolved Mackenzie Explorer Group's concerns
30 December 2009 Joint Review Panel Report issued
30 December 2009 Mr. Harrison's subsection 15(1) Report issued
Jan. to Mar. 2010 Consult to modify process
28 March 2010 Hearing in Yellowknife to examine updated evidence
12 to 22 April 2010 Final argument in Yellowknife and Inuvik

to examine the updated evidence that was filed by the Proponents, the Government of Canada Crown Consultation Unit and other intervenors. This brought the evidentiary portion of the hearing to a total of 50 days.

2.4.4 National Energy Board Act subsection 15(1) Member's report

Mr. Rowland J. Harrison, Q.C., the National Energy Board Member appointed to the Joint Review Panel, was authorized under subsection 15(1) of the National Energy Board Actto report and make recommendations to the National Energy Board on matters identified in the Environmental Impact Statement Terms of Reference for the Mackenzie Gas Project under Authorization MO-13-2004 dated 15 October 2004 (see Appendix F – Authorization MO-13-2004).

Mr. Harrison's subsection 15(1) report was issued on 30 December 2009. In it he adopted the Joint Review Panel Report for the purposes of fulfilling the requirements of his National Energy Board obligation (see Appendix G – Mr. Rowland J. Harrison's Subsection 15(1) Report).

2.4.5 Consult to modify process and final argument

The Joint Review Panel Report was issued on 30 December 2009, following which we conducted a “consult to modify” process under section 137 and subsection 141(6) of the Mackenzie Valley Resource Management Act. By letter dated 9 March 2010, parties to both the National Energy Board hearing and the Joint Review Panel hearing were invited to comment on Joint Review Panel's

Figure 2-3 Communities where our information sessions and public hearings were held

Figure 2-3 Communities where our information sessions and public hearings were held recommended measures that were directed to the National Energy Board. We received comments from 30 parties, and then made proposed modifications to the recommended measures in the form of proposed conditions, which were cross-referenced to the Joint Review Panel's recommended measures by way of a concordance table. These were presented to the Joint Review Panel for its comment and for the comment of parties in the final argument phase of our hearing (see Section 3.2, Consult to modify process). We received a letter from the Joint Review Panel on 31 March 2010 responding to our proposed conditions.

We resumed our hearing 12 April 2010 in Yellowknife to hear final argument. Our hearing ended on 22 April 2010 in Inuvik after a total of 58 hearing days.

In addition to the evidence obtained through our hearing process, we also considered the Joint Review Panel Report, Mr. Harrison's subsection 15(1) report, the comments received in the consult to modify process, the Governments of Canada & of the Northwest Territories Final Response to the Joint Review Panel Report for the Proposed Mackenzie Gas Project and the comments on that response before making our regulatory decisions with respect to the Mackenzie Gas Project. We have adopted the Joint Review Panel's recommendations directed to us, as modified, and they have been included in the conditions to the approvals granted for the Mackenzie Gas Project. The National Energy Board will monitor and enforce the implementation of the conditions in the approvals.

Did you know?

Northern Gas Project Secretariat

The parties responsible for the environmental impact assessment and regulatory review of the Mackenzie Gas Project agreed through the Cooperation Plan to coordinate and harmonize their review and public hearing processes for the Mackenzie Gas Project. The parties determined that their review could most effectively be implemented through the services of a secretariat to support and coordinate the public hearing processes, including all aspects related to public involvement.

The Northern Gas Project Secretariat was established in 2003 to assist in coordinating the regulatory review and environmental assessment of the Mackenzie Gas Project. An Executive Committee of Chairs, supported by the Northern Gas Project Secretariat, provided the forum through which all involved parties could present their positions and requirements and where cooperative and harmonized approaches would be developed while respecting the need for the review processes to be conducted independently. The committee comprised the Sitting Chairs of the Joint Review Panel, the NEB Panel, the Mackenzie Land and Water Board and the Northwest Territories Water Board.

Leading up to the beginning of public hearings in late January 2006, the Northern Gas Project Secretariat coordinated information sessions with the National Energy Board and Joint Review Panel to explain the review process and to present up-to-date information about how the public could participate. In addition to organizing formal public information sessions, the Northern Gas Project Secretariat conducted several informal visits to the communities along the project route to assist community leaders in their preparations for the public hearing process.

The Northern Gas Project Secretariat published an electronic monthly newsletter in English plain language: The Review – your link to the review of the Mackenzie Gas Project. The goal of the newsletter was to bring the most up-to-date information on the project to community decision-makers and leadership in an easy-to-understand, electronic format. Throughout the hearing process the Northern Gas Project Secretariat maintained offices in Yellowknife, Inuvik, Norman Wells and Fort Simpson.

A list of public information sessions held by the Northern Gas Project Secretariat, the Joint Review Panel and the National Energy Board follows.

list of public information sessions held by the Northern Gas Project Secretariat, the Joint Review Panel and the National Energy
2004 Inuvik, NT (Nov. 15)
Norman Wells, NT (Nov. 16)
Yellowknife, NT (Nov. 17)
Fort Simpson, NT (Nov. 23)
High Level, AB (Dec. 13)
Enterprise, NT (Dec. 14)
2005 Hay River, NT (Jan. 13)
Tulita, NT (Feb. 8)
Fort Good Hope, NT (Feb. 9)
Inuvik, NT (Feb. 28)
Norman Wells, NT (Mar. 1)
Yellowknife, NT (Mar. 3)
Meander River, AB (Mar. 9)
Fort Simpson, NT (Mar. 10)
Aklavik, NT (Mar. 15)
Wrigley, NT (Mar. 16)
Tuktoyaktuk, NT (Mar. 23)
Saamba K'e (Trout Lake), NT (Oct. 12)
Jean Marie River, NT (Oct. 13)
Colville Lake, NT (Oct. 19)
Tsiigehtchic, NT (Oct. 20)
Inuvik, NT (Elders' session) (Oct 20)
West Point First Nation, NT (Nov. 2)
Ft. Liard, NT (Nov. 14)
Nahanni Butte, NT (Nov. 15)
Fort Providence, NT (Nov. 21)
Kakisa, NT (Nov. 24)
Déline, NT (Nov. 25)
Fort McPherson, NT (Nov. 29)
Tsiigehtchic, NT (Nov. 30)
2006 K'atlodeeche First Nation
(Hay River Reserve), NT (Jan. 19)