Category: Enbridge

Editorial: (II) Kitimat Council in chaos

Peter Ponter at Council
At the January 20 council meeting, Peter Ponter asks what happened to the District of Kitimat’s original motion on neutrality. (Robin Rowland/Northwest Coast Energy News)

The District of Kitimat Council is in chaos. We’re not referring to Monday’s chaotic meeting where often it was hard to figure out what Councillors were saying and where they were going.

We are referring to “Chaos” as it is defined in physics, “sensitive dependence on initial conditions,” known to most people as the “butterfly effect” (the exaggerated notion that a butterfly flapping its wings in one place could cause a storm in another place). Or we could suggest that Kitimat Council has a critical case of bad karma that is now coming back to haunt them.

How can you trust a council that doesn’t understand and follow its own motions?

District Council claims it is neutral on the Enbridge Northern Gateway project. That is wrong.

District Council decided, in violation of its own resolutions, to do absolutely nothing about the Northern Gateway Project until they have to. Doing nothing is not neutrality. Doing nothing is a default notion that actually tilts council in favour of the Enbridge Northern Gateway project. Doing nothing has meant that Council has become incapable of dealing with Gateway related issues within its own jurisdiction because they have no idea of what is going on.

A tale of two motions

So what were the initial conditions? As Peter Ponter pointed out in his presentation to Council Monday night, the original motion on neutrality called on Council to take an active part in the Joint Review proceedings.

As reported in the Kitimat Daily at the time, the motion from Councillor Rob Goffinet read:

”I move that the Mayor and Council of District of Kitimat go on record neither opposing nor supporting the Enbridge Pipeline Super Tanker Proposal and that we wish to, as a Mayor and Council, with our community, take part in the 1-2 year environmental assessment process and the Joint Review Panel to learn and understand whether this will be a beneficial project to Kitimat, the Northwest and British Columbia.

That motion was carried unanimously.

So then what happened? Nothing. The District of Kitimat did register as a government participant in the proceedings but did nothing to actually actively participate “to learn and understand whether this will be beneficial project to Kitimat….”

With the 2011 election over, the new council, sitting for the first time in 2012, was asked to reaffirm its position. At that time, Phil Germuth presented a motion that council survey the residents of Kitimat to find out what their position was on the Northern Gateway project. Our report here and Kitimat Daily’s report here.

At the time Councillor Mario Feldhoff said:

“The perfect time for the community to indicate whether they support is to reflect upon the JRP report. Do we agree with their submissions? Otherwise, our emotions are getting ahead of us and we may be perceive as being late in the game but, we may have, from my perspective, informed comment from the citizenry after they have had a chance to read a report from the JRP would be preferable in my opinion, in opposed to getting a sense of how people feel about things right now.”

So, in fact, there was not one neutrality motion as Council now maintains.

There were two separate motions, on two separate aspects of neutrality. The first called for council to remain neutral but to participate in the Joint Review Panel. The second called for council to survey the community on their feelings after the completion of the JRP.

The two motions did not, repeat not, cancel each other out. But that was, in effect, what happened. The council seems to have decided that Feldhoff’s comment was actually a motion, and that after that January 2012 meeting, they should do absolutely nothing but wait until the Joint Review Process was complete.

Every time after January 2012, when council was asked about anything, they said we are waiting for the Joint Review Process to be complete, even though council had unanimously passed a motion saying it would take part in the JRP. That is proof of Kitimat Council’s incompetence.

As we pointed in May 2012, after the introduction of the Omnibus bills, neutrality has never meant sitting on one’s ass and doing nothing. Neutral nations have always vigorously looked out for their own interests.

We will repeat that in the long history of regulatory hearings, public inquiries and even coroners inquests there have always been a role for neutral parties, represented by competent and properly instructed counsel, who vigorously look out for their client’s interests, without taking an advocacy position on a matter before the tribunal. The District of Kitimat could have, in fact, should have, actively participated and where necessary in the Joint Review and have its representatives ask tough questions of every side on all matters relevant to the District of Kitimat.

Participation didn’t happen, and, unfortunately, that is now all water under the Kitimat River Bridge.

A gift of prophecy

 

Kitimat Council
District of Kitimat Council listens to delegates plea for a simple question on the upcoming plebiscite. (Robin Rowland/Northwest Coast Energy News)

The bigger problem is that a majority on Kitimat council believes that it has the gift of prophecy, naively believing that the Joint Review Panel understands all mysteries and all knowledge. A majority of members on Kitimat council have blind faith, believing that the JRP can safely move pipelines across mountains.

With its gift of prophecy, Kitimat Council believes that all is right with the Joint Review Panel, that its 209 recommendations are gospel and thus council approves a vote question not about the Northern Gateway project but the Joint Review.

Faith is the operative word, for apart from dropping into listen from time to time, council did not participate in the proceedings in any way, and thus did not experience the many flaws in the Joint Review process that led some people to say as early as the middle of 2012 that the JRP had no credibility.

We’re already seeing the flaws in the blind faith in the JRP. As this site pointed out, the costs of the Kalamazoo cleanup now exceed the amount of money the JRP conditions call on Enbridge to set aside in case of a spill. A report by federal scientists show the Joint Review Panel erred in accepting Enbridge’s laboratory evidence that bitumen doesn’t sink.

There are already court challenges to the Joint Review Panel. (Update. A media count as of January 23 says there are now 10 court challenges to the JRP)

Most important for Kitimat, a challenge filed by the Haisla Nation which, among the many flaws it finds with the JRP report, says the JRP improperly concluded that a large spill is unlikely either from the pipeline itself, the terminal facilities or the oil tankers tasked with navigating B.C.’s coastal waters.

It doesn’t do much for the already strained relationship between the District of Kitimat and the Haisla Nation that Council continues its uncritical support of the JRP while the Haisla are challenging it in court. That the Haisla motion to the Federal Court of Appeal includes challenges to the procedural unfairness of the JRP proceedings.

The Gitxaala First Nation says Joint Review Panel ignored issues surrounding aboriginal rights and title.

A coalition of environmental groups have told the federal court there was not enough  evidence before the JRP to support its conclusion that the Northern Gateway pipeline would not have significant adverse effects on the environment; one key part of the suit is the fact that the JRP refused to consider the federal humpback strategy for Douglas Channel.

Although it is unlikely that the courts will throw out the Joint Review findings before the April vote, it might just happen. At that point, a plebiscite question based on the JRP would look pretty silly.

Who runs the Kitimat River?

We now come to the long term consequences of a do nothing council. We have to ask if the District of Kitimat Council will become lame ducks, at least in some part of town, because they have stood by and, in their misplaced faith in the National Energy Board, ceded the right to decide what happens in Kitimat to the NEB?

According to a report in the Toronto Star, using the new rules under the omnibus bills, this week the National Energy Board approved expansion of the Enbridge Line 7 pipeline in southern Ontario, without a hearing and without notifying Hamilton, the municipality involved (the pipeline actually goes through Hamilton) because the municipality was not “affected in any way” by the project. Since the media got on to the story, Enbridge has kindly said to Hamilton “we have heard and understood it and assured them directly that we will include them in all future consultation and activity on this project.”

There was another decision by the National Energy Board in December, when it agreed with DFO that it would have jurisdiction on fish habitat, if there are pipelines along water bodies such as the Kitimat River.   DFO has since clarified their position, which means we’re not going to see the absurd vision of NEB officials checking fishing licences in Radley Park.

There is already one pipeline along the west bank of the Kitimat River, Pacific Northern Gas. If the LNG projects go ahead, as well as more molecule traffic on the PNG pipeline there will be the Coastal Gas Link serving Shell and the Pacific Trails Pipeline serving Chevron and Apache. If it goes ahead, the Northern Gateway Pipeline will mean four pipelines along the west bank of the Kitimat River.

Four pipelines along the banks of the Kitimat River all under the benign eye of the National Energy Board in Calgary since they have “expertise” on pipelines and water courses.

The NEB has shown recently it doesn’t have much respect for municipalities. While the actual regulations under the DFO-NEB deal are likely to be unclear for some time, we know that what the NEB’s mandate is, to promote the oil and gas industry in this country, not to protect rivers and streams. So if the people of Kitimat, especially those who fish the Kitimat River or work in the Service Centre are in the way of what NEB bureaucrats in Calgary decide is best for us and those three, maybe four, pipelines, well too bad, eh? The NEB has the mandate to act in the national and public interest, not the residents of Kitimat.

Kitimat Council with its blind faith in the National Energy Board may very likely be a case of be careful what you wish for, sitting uselessly in the chambers at Northwest Community College while the NEB in Calgary carves up the District’s jurisdiction and does what it thinks is best for the  oil patch.

Thus the Council deliberations become a sounding brass or a tinkling cymbal, meaning nothing.

 

 

 

 

Two JRP conditions are already outdated, Cullen says

Skeena Bulkley Valley MP Nathan Cullen says at least two of the Northern Gateway Joint Review Panel’s 209 conditions may already be outdated.

In a news release January 15, 2013, Cullen said, “The requirement of $950 million in spill insurance was recently called into question as reports surfaced of cleanup costs at the sites of Enbridge’s 2010 Michigan spill surpassing $1.035 billion.”

The $1.035 billion figure was contained in Enbridge’s American arm, Enbridge Energy Partners, latest filing for the third quarter over 2013 with the US Securities and Exchange Commission.
Cullen went to say that, “The JRP’s order for Enbridge to carry out new research on the behaviour of diluted in bitumen in a marine environment has been questioned following the publication of an Environment Canada study confirming that diluted bitumen will sink in saltwater in high waves and where sediment is present.”

Cullen is referring to a study by Environment Canada Emergencies Science and Technology,Fisheries and Oceans Canada Centre for Offshore Oil, Gas and Energy Research and Natural Resoures Canada on bitumen that was completed in November and released this week.

The study found

. Like conventional crude oil, both diluted bitumen products floated on saltwater (free of sediment), even after evaporation and exposure to light and mixing with water;
. When fine sediments were suspended in the saltwater, high-energy wave action mixed the sediments with the diluted bitumen, causing the mixture to sink or be dispersed as floating tarballs;
(The use of the term “tarball” in this report follows convention in the literature and refers to the consistency of floating, heavily-weathered oil. It does not describe the chemical composition of the product.)
. Under conditions simulating breaking waves, where chemical dispersants have proven effective with conventional crude oils, a commercial chemical dispersant (Corexit 9500) had quite limited effectiveness in dispersing dilbit;
. Application of fine sediments to floating diluted bitumen was not effective in helping to disperse the products;
. The two diluted bitumen products display some of the same behaviours as conventional petroleum products (i.e. fuel oils and conventional crude oils), but also significant differences, notably for the rate and extent of evaporation.

Read the report:Properties, Composition and Marine Spill Behaviour, Fate and Transport of Two Diluted Bitumen Products from the Canadian Oil Sands (pdf)
The Joint Review Panel found that dilbit was “ no more likely to sink to the bottom than other
heavier oils”

The Panel acknowledges the variety of opinions from experts regarding the behavior and fate of oil spilled in aquatic environments. These experts generally agreed that the ultimate behavior and fate of the oil would depend on a number of factors, including the volume of oil spilled, the physical and chemical characteristics of the product, and the environmental conditions at the time.

The Panel finds that likely oil behaviour and potential response options can be predicted from knowledge of the type of oil spilled and its physical and chemical characteristics. Details of oil behaviour and response options cannot be specified until the actual circumstances of a spill are known.

The Panel is of the view that, if placed along a spectrum of: tendency to submerge; persistence; and recovery difficulty, dilbit would be on the higher end of the spectrum, similar to other heavy oil products.

The Panel accepts evidence from previous spills showing that, in response to circumstances at the time, the behaviour of heavier oils, including conventional oils and synthetic crudes, can be dynamic. Some oil floats, some sinks, and some is neutrally buoyant and subject to submergence and overwashing.

Although the project would transport different types of oil, the majority of the evidence presented during the hearing process focussed on whether dilbit is likely to sink when spilled in an aquatic environment. In light of this, the Panel has chosen to focus its views on dilbit. The Panel heard that the fate and behaviour of dilbit has not been studied as much as that of other oils.

Although there is some uncertainty regarding the behavior of dilbit spilled in water, the Panel finds that the weight of evidence indicates that dilbit is no more likely to sink to the bottom than other heavier oils with similar physical and chemical properties.

The Panel finds that dilbit is unlikely to sink due to natural weathering processes alone, within the time frame in which initial, on-water response may occur, or in the absence of sediment or other particulate matter interactions. The Panel finds that a dilbit spill is not likely to sink as a continuous layer that coats the seabed or riverbed.

“It hasn’t even been a month since the JRP released their 209 conditions, and it seems like we’re already seeing some of them become obsolete,” Cullen said.

“Throughout the review process, the JRP continually ignored the situation in Michigan as it unfolded before our eyes. They saw the spill caused by Enbridge’s negligence, which was worsened by Enbridge’s incompetence, and how it brought untold damage to the local ecosystem and cost over $1 billion US. But the 209 conditions didn’t reflect what we learned about Enbridge’s history or its culture, or what we’ve learned about diluted bitumen at all.”

The Joint Review process was set up to deliver a positive verdict, according to Cullen, regardless of what the real life case studies in Michigan had already shown. “To say that it won’t cost as much – if not more – to respond to a spill in a remote corner of northwestern BC during winter than it was in Michigan in the middle of July is ridiculous,” Cullen said.

“What’s even more astonishing is that we asked repeatedly for these studies on the behaviour of diluted bitumen in the marine environment to be part of the Joint Review Panel’s assessment. That the government waited until after the JRP had given its conditional yes to release these findings is not only appalling but also highly suspect.

Cullen says there are two key questions that the Harper government now must answer. “What kind of protection is the government providing when it lowballs on the insurance for oil spills? And what kind of oversight is it giving Canadians when the verdict is given before the evidence is released?”

 

Enbridge’s Michigan cleanup costs now exceed JRP pipeline conditions for Gateway, SEC filing shows

NTSB staff examine ruptured pipe
US National Transportation Safety Board staff examine a ruptured pipe from the Enbridge oil spill in August, 2010. The photo was released by the NTSB May 21, 2012. (NTSB)

The costs for Enbridge to clean up the 2010 Marshall, Michigan oil spill now far exceeds the maximum estimate that the Joint Review Panel gave for a major spill on the Northern Gateway Pipeline and also exceeds the amount of money the JRP ordered Enbridge to set aside to deal with a spill. Enbridge’s cleanup costs have also now edged past the higher liability amount requested by the Haisla Nation.

According to the US firm Enbridge Energy Partners’ filing with the United States Securities and Exchange Commission, as of September 30, 2013, the cost of cleanup was $1.035 billion US, not including possible additional fines and penalties that might be imposed by US authorities in the future.

In its decision, the Joint Review Panel estimated the cost a major oil spill from the Northern Gateway project would be about $693 million.  As part of the 209 conditions, the JRP ordered Enbridge to set aside “financial assurances” totaling $950 million.

Note all costs in this article are for a pipeline breach. The Joint Review Panel had different estimates for a tanker spill and the liability rules for marine traffic are different from pipelines.

In its filing for the third quarter of 2013, with the SEC, Enbridge Energy Partners say that the cost up until September 2013 had “exceed[ed] the limits of our insurance coverage.” The same filing says that Enbridge is in a legal dispute with one its insurers.

In its SEC filing, Enbridge says:

Lakehead Line 6B Crude Oil Release
We continue to perform necessary remediation, restoration and monitoring of the areas affected by the Line 6B crude oil release. All the initiatives we are undertaking in the monitoring and restoration phase are intended to restore the crude oil release area to the satisfaction of the appropriate regulatory authorities.
As of September 30, 2013, our total cost estimate for the Line 6B crude oil release is $1,035.0 million, which is an increase of $215.0 million as compared to December 31, 2012. This total estimate is before insurance recoveries and excluding additional fines and penalties which may be imposed by federal, state and local governmental agencies, other than the Pipeline and Hazardous Materials Safety Administration, or PHMSA, civil penalty of $3.7 million, we paid during the third quarter of 2012. On March 14, 2013, we received an order from the EPA, or the Environmental Protection Agency, which we refer to as the Order, that defined the scope which requires additional containment and active recovery of submerged oil relating to the Line 6B crude oil release. We submitted our initial proposed work plan required by the EPA on April 4, 2013, and we resubmitted the workplan on April 23, 2013. The EPA approved the Submerged Oil Recovery and Assessment workplan, or SORA, with modifications on May 8, 2013. We incorporated the modification and submitted an approved SORA on May 13, 2013. The Order states that the work must be completed by December 31, 2013.

The $175.0 million increase in the total cost estimate during the three month period ending March 31, 2013, was attributable to additional work required by the Order. The $40.0 million increase during the three month period ending June 30, 2013 was attributable to further refinement and definition of the additional dredging scope per the Order and associated environmental, permitting, waste removal and other related costs. The actual costs incurred may differ from the foregoing estimate as we complete the work plan with the EPA related to the Order and work with other regulatory agencies to assure that our work plan complies with their requirements. Any such incremental costs will not be recovered under our insurance policies as our costs for the incident at September 30, 2013 exceeded the limits of our insurance coverage.

According to the SEC filing, the breakdown of costs include $2.6 million paid to owners of homes adversely impacted by the spill.

Despite the efforts we have made to ensure the reasonableness of our estimates, changes to the recorded amounts associated with this release are possible as more reliable information becomes available. We continue to have the potential of incurring additional costs in connection with this crude oil release due to variations in any or all of the categories described above, including modified or revised requirements from regulatory agencies in addition to fines and penalties as well as expenditures associated with litigation and settlement of claims.
The material components underlying our total estimated loss for the cleanup, remediation and restoration associated with the Line 6B crude oil release include the following:
(in millions)

Response Personnel & Equipment  $454

Environmental Consultants  $193

Professional, regulatory and other $388

Total $ 1,035

For the nine month periods ended September 30, 2013 and 2012, we made payments of $62.3 million and $120.9 million, respectively, for costs associated with the Line 6B crude oil release. For the nine month period ended September 30, 2013, we recognized a $2.6 million impairment for homes purchased due to the Line 6B crude oil release which is included in the “Environmental costs, net of recoveries” on our consolidated statements of income. As of September 30, 2013 and December 31, 2012, we had a remaining estimated liability of $265.9 million and $115.8 million, respectively.

As for insurance, Enbridge Energy Partners say:

The claims for the crude oil release for Line 6B are covered by the insurance policy that expired on April 30, 2011, which had an aggregate limit of $650.0 million for pollution liability. Based on our remediation spending through September 30, 2013, we have exceeded the limits of coverage under this insurance policy. During the third quarter 2013, we received $42.0 million of insurance recoveries for a claim we filed in connection with the Line 6B crude oil release and recognized as a reduction to environmental cost in the second quarter of 2013. We recognized $170.0 million of insurance recoveries as reductions to “Environmental costs, net of recoveries” in our consolidated statements of income for the three and nine month periods ended September 30, 2012 for the Line 6B crude oil release. As of September 30, 2013, we have recorded total insurance recoveries of $547.0 million for the Line 6B crude oil release, out of the $650.0 million aggregate limit. We expect to record receivables for additional amounts we claim for recovery pursuant to our insurance policies during the period that we deem realization of the claim for recovery to be probable.

In March 2013, we and Enbridge filed a lawsuit against the insurers of our remaining $145.0 million coverage, as one particular insurer is disputing our recovery eligibility for costs related to our claim on the Line 6B crude oil release and the other remaining insurers assert that their payment is predicated on the outcome of our recovery with that insurer. We received a partial recovery payment of $42.0 million from the other remaining insurers and have since amended our lawsuit, such that it now includes only one insurer. While we believe that our claims for the remaining $103.0 million are covered under the policy, there can be no assurance that we will prevail in this lawsuit.

 

The Joint Review, Enbridge and Michigan

The Joint Review Panel based its finding on the Marshall, Michigan spill on the figure of $767 million from the summer of 2012 –again showing the limitations of the JRP’s evidentiary deadlines since the costs are now much higher.

The JRP quoted Enbridge as saying:

Northern Gateway considered the high costs of the Marshall, Michigan spill, which were at least $252,000 per cubic metre ($40,000 per barrel), to be an outlier or a rare event because the spill occurred in a densely populated area, because the pipeline’s response time was abnormally long, and because there was the prospect of potentially lengthy legal proceedings.

Enbridge assured the JRP that the corporate culture and management changes and equipment upgrades since the Marshall, Michigan spill lowered that chances of a similar event.

The company based its models for the JRP on much smaller spills, including one spill at Lake Wabamun, Alberta from a train not a pipeline (Vol. 2 p 357)

Enbridge’s risk assessment did not “generate an estimate of economic losses caused
by a spill.”

The JRP says Northern Gateway relied on its analysis of literature, and spill events experienced by Enbridge and other liquid hydrocarbon carriers in Alberta and British Columbia. After assessing all of this information, Northern Gateway regarded the high costs of a cleanup as “conservative”–meaning the company expects costs to be lower than its estimates in evidence before the JRP.

In Northern Gateway’s view the most costly pipeline spill incident would be a full-bore oil pipeline rupture, with an estimated cost of $200 million, and an extremely low probability of occurrence.

Haisla evidence

In their evidence, the Haisla (and other First Nations and intervenors) were doubtful about Northern Gateway’s assurances. The Haisla asked that Enbridge have a minimum of $1 billion in liability, an amount Enbridge has now exceeded in Michigan.

Haisla Nation estimated the cost of damage to ecosystem services because of a terrestrial oil spill from Northern Gateway’s pipeline would be in the range of $12,000 to $610 million for a 30-year period.

The Haisla’s cost estimates were based on values for environmental goods and services and probabilities of spills that were independent of Northern Gateway’s parameters for estimating oil spill costs. In contrast to Northern Gateway’s estimated spill frequency and costs, the Haisla predicted that spills would occur more often and placed a higher value on damages to environmental goods and services.

Haisla Nation argued that Northern Gateway overestimated its ability to detect and respond to a spill. In the Haisla’s view this resulted in the cost of a spill and the requisite financial assurances being understated. Haisla cited several factors, including: remote location, limited access, challenging terrain, seasonal conditions, and river flow conditions that would cause the cost of cleaning up a spill in the Kitimat River valley to be significantly greater than the costs associated with Enbridge’s Marshall, Michigan spill.

For these reasons, Haisla proposed that Northern Gateway should be required to obtain a minimum of $1 billion of liability coverage through insurance and financial assurances. Haisla said that Northern Gateway should file annually the report from an independent third party assessing the financial assurances plan. (Vol 2 p359)

In response Northern Gateway said:

Northern Gateway said that Haisla’s findings were based on a number of fundamental methodological flaws and a lack of probability analysis to support the high frequency of occurrence of oil spill events. Northern Gateway argued that Haisla’s estimates of ecosystem service values were inflated because they were based on values from unrelated studies. In Northern Gateway’s view, Haisla relied on high passive use values that were not justified.

JRP ruling

As it has in most of its decision, the JRP accepted Northern Gateway’s evidence, including its explanation of the Marshall, Michigan spill and then went on to base its spill cost estimates not on a pipeline breach but on the 2005 railway spill at Lake Wabumum, near White Sands, Alberta.

The Panel accepts that the cleanup costs for the Marshall, Michigan spill were orders of magnitude higher because of the extended response time. In this application, the Panel accepts Northern Gateway’s commitment to complete the shutdown in no more than 13 minutes after detection. For this reason the Panel did not use the Marshall spill costs in its calculations. The spill volume and the resulting costs are directly dependent on the Northern Gateway’s control room staff and the pipeline control system fully closing the adjacent block valves no longer than 13 minutes from the detection of an alarm event, as well as the amount of oil which would drain out of the pipeline after valve closure due to elevation differences.

The Panel decided on a total unit cost of $138,376 per cubic metre ($22,000 per barrel). This is midway between the unit cost of $88,058 per cubic metre ($14,000) per barrel proposed by Northern Gateway and the unit cost of $188,694 per cubic metre ($30,000 per barrel) for the Lake Wabamun spill. It is about one-half of the Marshall spill’s unit cost. Giving weight to the Lake Wabamun costs recognizes actual costs experienced in a Canadian spill and the greater costs of spills in high consequence areas. In these areas, individuals, populations, property, and the environment would have a high sensitivity to hydrocarbon spills. The deleterious effects of the spill would increase with the spill volume, the extent of the spill, and the difficulty in accessing the spill area for cleanup and remediation.

Using these spill volume and unit cost values in the calculation below, the Panel estimated the total cost of a large spill could be $700 million. Total cost of a spill = 31,500 barrels x $22,000 per barrel = $693 million, or $700 million when rounded up.

(p362)

The Panel based the financial assurances requirements for Northern Gateway on a spill with a total estimated cost of $700 million and directs Northern Gateway to develop a financial assurances plan with a total coverage of $950 million that would include the following components:
i. Ready cash of $100 million to cover the initial costs of a spill;
ii. Core coverage of $600 million that is made up of stand-alone, third party liability insurance and other appropriate financial assurance instruments, and
iii. Financial backstopping via parental, other third party guarantees, or no fault insurance of at least $250 million to cover costs that exceed the payout of components i. and ii.
The financial backstopping would be available to fill the gap if the spill volumes or unit costs were under-estimated or if the payout from the core coverage would be less than 100 per cent.

The Panel noted that:

The evidence indicates that there is some probability that a large oil spill may occur at some time over the life of the project. In these circumstances the Panel must take a careful and precautionary approach because of the high consequences of a large spill. The Panel has decided that Northern Gateway must arrange and maintain sufficient financial assurances to cover potential risks and liabilities related to large oil spills during the operating life of the project.

Northern Gateway committed to investing $500 million in additional facilities and mitigation measures such as thicker wall pipe, more block valves, more in-line inspections, and complementary leak detection systems. This initiative should enhance the safety and reliability of the system and help reduce and mitigate the effects of a spill, but it would not eliminate the risk or costs of spills. This initiative is not a direct substitute for third party liability insurance and does not eliminate the need for liability insurance or any other form of financial assurance to cover the cost of a spill. (p 361)

So the JRP decision comes down to this, if you accept Northern Gateway’s position that pipeline spills are rare and mostly small, then the company has the financial resources to cover the damage. If, however, Northern Gateway is wrong and the costs of a pipeline cleanup exceed the $950 million required by the Joint Review Panel, as has happened in Michigan, then those JRP conditions are already obsolete.

(Northwest Coast Energy News encourages all readers to read the complete JRP report  and SEC filing since space and readability does not permit fully quoting from the report)

Editorial: Kitimat Council fails in approving confusing Gateway plebiscite question

 

Kitimat Council
Unhappy councillors during the debate on the Northern Gateway plebiscite. (Robin Rowland/Northwest Coast Energy News)

District Council failed the people of Kitimat Monday night by approving a confusing question for the plebiscite on the Northern Gateway project. (There are already comments on social media that some people find the question incomprehensible).

What’s more, the Council set a sorry precedent Monday and undermined their ability to have a constructive debate on any contentious issues in the future.

Here’s what went wrong.

With the new year, Council is operating under new rules of procedure that allow discussion of an issue to take place without a motion on the floor.

The idea was, apparently, to allow members of Council to rationally and collegially discuss an issue and perhaps come to a consensus before a motion is presented, debated and voted.

That’s not what happened Monday night.

There was a staff report before Council with suggestions for either a simple yes or no vote for the Northern Gateway plebiscite or a series of questions for the voters to decide.

Councillor Rob Goffinet asked Council to discuss the issue under the new procedure. There was no motion on the floor.

The first part of the debate was about a question many have been asking. What good will a plebiscite do if all the power is in the hands of the federal government? Councillors pointed out that there was promise to “survey” the people of Kitimat after the Joint Review Report and that it was also a good idea to find out what the people of Kitimat were thinking.

Then, after only a few minutes of discussion, Councillor Mario Feldhoff introduced his motion outlining his preferred version of the plebiscite question; therefore preempting any further general discussion and, in effect, hijacking the council session.

At that point, the actual discussion by Council of one of the most important questions in Kitimat history had been going on for less than fifteen minutes.

Noting that the Council has been operating under the new rules for just three weeks, Mayor Joanne Monaghan then had to set a precedent.

What Monaghan should have done was act as a neutral Speaker and rule Feldhoff’s motion premature and out of order. At very least, she should have asked Feldhoff to withdraw the motion to allow general discussion to continue and perhaps allow a consensus to emerge.

By permitting Feldhoff’s motion to go to the floor, Monaghan undermined the spirit of the new council procedures.

It is not just Monaghan who is to blame for this. Feldhoff is an experienced councillor and a good parliamentarian. He always prepares carefully and often presents his own motions. While those motions are not always successful, presenting those motions allow Feldhoff to pilot the agenda on an issue. The other members of Council who have worked with Feldhoff for years should have anticipated this manoeuvre and, when he presented his motion, raised a point of order, telling Monaghan the motion was a violation of the spirit of the new discussion procedures.

The other failure is that those council members who preferred a simple question, as far as the reporters could tell from the debate, failed to have their own motions ready, instead depending on the staff recommendations. Again, those council members should have anticipated Feldhoff’s manoeuvre and prepared with their own motions.

The ideal, of course, was for Council to spend the time to hash out the best question on Northern Gateway, even if the debate went into the wee hours of the morning. Instead the debate was on the wording and intent of the Feldhoff motion, which reflects his belief , stated last week, that the Joint Review Panel process was valid, something many residents of Kitimat disagree with, since they consider the JRP process to have been far from fair.

The ballot question, as moved by Councillor Mario Feldhoff is:

Do you support the final report recommendations of the Joint Review Panel of the Canadian Environmental Assessment Authority (sic) and the National Energy Board, that the Enbridge Northern Gateway project be approved subject to 209 conditions set out in Volume 2 of the JRP’s final report?

Eligible residents will have the choice of voting yes, no or undecided.

There are too many questions wound up in the Feldhoff motion. There are those who support Northern Gateway and those who oppose it. There are those on both sides who have strong reservations about the Joint Review Process. There’s the big question of whether or not the Harper government will actually bother to rigorously enforce the 209 conditions. (The test for that will be in the upcoming federal budget, and whether or not there is increased funding for the agencies responsible for the conditions. Since Finance Minister Jim Flaherty is determined to balance the budget prior to the 2015 election, that is highly unlikely)

Council must revisit the plebiscite question at next Monday’s meeting and come up with a consensus on a proper question, even if it means the debate continues until the sun comes up Tuesday morning (and remember this is January).

Council must also set proper procedures so that a wide ranging discussion, as envisioned in the new procedures, aren’t unnecessarily and abruptly halted by a premature motion.

What about the JRP?

In his statement to Council on January 6, and in his motion on the plebiscite question, Councillor Mario Feldhoff is wrongly giving the Canadian Environmental Assessment Agency prime of place in the Northern Gateway Joint Review Panel. He points out, correctly that the CEAA has rejected the Prosperity Mine twice and uses that to validate the finding of the Joint Review Panel.

However, there is no evidence that three members of the panel have anything to do with the Environmental Assessment Agency. The biographies say that Sheila Leggett “ has been a member of the National Energy Board since 2006 and is currently the vice-chair of the National Energy Board.” Kenneth Bateman, according to the biography, has also been a member of the National Energy Board since 2006. As for the third member, Hans Matthews, he is a mining executive who works with First Nations on resource issues. None of the biographies of the three mention any connection with the Environmental Assessment Agency.

There is one note at the bottom of the bio page that says: “The Panel is supported by a group of staff called a Secretariat. The Secretariat is made up of both National Energy Board and Canadian Environmental Assessment Agency staff.”

So while the Joint Review Panel had support from the CEAA staff, the decision was made by two NEB members and a mining executive.

 

Kitimat plebiscite question
The Kitimat Northern Gateway plebiscite question as projected at the Council Chambers Jan 13, 2014. (Northwest Coast Energy News)

Kitimat to vote on convoluted Northern Gateway question on April 12

Updates Jan. 15 with District changing voting venue to Tamitik

Kitimat plebiscite question
The Kitimat Northern Gateway plebiscite question as projected at the Council Chambers Jan 13, 2014. (Northwest Coast Energy News)

District of Kitimat Council voted Monday night to hold the plebiscite on the Northern Gateway project on Saturday April 12, with advance polls April 2 and April 9. Voting will be held at the Tamitik Jubilee Sports Complex and Mt. Elizabeth Secondary School with special voting at Kiwanis Village, Kitimat General Hospital, Mountain View Multi-care and Delta King Place.

The ballot question, as moved by Councillor Mario Feldhoff is:

Do you support the final report recommendations of the Joint Review Panel of the Canadian Environmental Assessment Authority (sic) and the National Energy Board, that the Enbridge Northern Gateway project be approved subject to 209 conditions set out in Volume 2 of the JRP’s final report?

Eligible residents will have the choice of voting yes, no or undecided.

Whether or not there will be other questions on the ballot was deferred to staff to consider issues such as the refinery proposed by David Black and possible marine components. The staff report will be presented at the next regular meeting of council on January 20.

Councillor Rob Goffinet said the question was confusing, calling it “The Quebec referendum  on steroids.”  Councillor Phil Germuth also argued for a simpler question, while Feldhoff, who proposed the question, maintained it was clear.  The remainder of council were in favour of the question and some councillors also said the time between now and April would give Kitimat residents time to read and digest the almost 500 pages of the Joint Review Report.

councilvotejan13

Councillors Feldhoff, Mary Murphy, Edwin Empinado and Mayor Joanne Monaghan voted in favour of the wording.  Germuth, Goffinet and Corrine Scott voted against.

Even as council was breaking up after the session, the audience were pointing out areas where there could be confusion over the question.  What if someone is in favour of some, but not all the Joint Review conditions; what if someone approves the Joint Review Report but opposes the project in principle; does the question address the Northern Gateway project itself, or is it all about the Joint Review Report?

The public in Kitimat now has a week to react to the plebiscite question before the final ballot is decided at the regular meeting on January 20, when additional questions may be added.  It is highly likely that given the question as it stands, there will be fierce community reaction to the question in the coming days.

Update

On January 15,Warren Waycheshen, Kitimat, Deputy Chief Administrative Officer updated the media on the voting locations saying:

We weren’t able to secure Riverlodge for all three days so the location for the April 2, 9 and 12 voting opportunities will now all be at the Tamitik Jubilee Sports Complex (400 City Centre). The April 12 location at Mt. Elizabeth Secondary School and the special voting locations are unchanged.

Enbridge misses deadline to clean up Michigan’s Morrow Lake; EPA cites reluctance to do winter cleanup

EPA map of Kalamazoo River
EPA map of river closures and dredging operations on the Kalamazoo River during 2013. (EPA)

Enbridge has missed the US Environmental Protection Agency’s deadline to clean up parts of the Marshall, Michigan bitumen spill by December 31, 2013.

Local television news, WOOD-TV says the EPA is now considering “enforcement options.”
The EPA had already granted Enbridge a 10 month extension that the company requested in March, 2013, setting the new December deadline.

In November, Enbridge requested a second extension. The EPA denied that request.

From the EPA letter it appears that, as in previous years, Enbridge is trying to avoid continuing clean up work into the winter. The EPA rejects that position, telling Enbridge it shouldn’t wait until the spring run off could spread the sunken bitumen.

The EPA says that beginning in March, 2013, “Enbridge has successfully removed oil and sediment from two of the three major impoundment areas identified in the order and from several smaller sediment trap locations.”

The area that Enbridge failed to clean up is known as the Morrow Lake and Morrow Lake Delta. The cleanup in that area was delayed when the Comstock Township planning commission unanimously  denied Enbridge a permit for “dredge pad” after fierce public opposition

The letter to Enbridge, from Jeffrey Kimble, Federal On-Scene Coordinator denying the extension is another scathing indictment of Enbridge’s attitude toward the public and the cleanup, citing Enbridge failing to prepare “adequate contingency plans,” by failing to recognize the “serious opposition” the dredging plans.

Although the EPA had told Enbridge to consider alternative plans—and Enbridge claimed it did that—the EPA found the Enbridge’s own logs showed the company didn’t start considering alternatives until it was obvious that Comstock Township would reject their dredging plans.

The EPA letter also reveals that once again Enbridge is reluctant to do further cleanup work during the Michigan winter. The EPA rejects that stance, saying that “Removal of oiled sediments prior to the spring thaw will lessen the potential oiled sediment transport in the spring to Morrow Lake via increased river velocities from rain and ice melt.”

Although we recognize that the work required by the Order is unlikely to be completed by December 31, 2013, U.S. EPA believes that had Enbridge taken appropriate steps earlier as requested, it would not require an extension now. In particular, U.S. EPA believes that Enbridge has continuously failed to prepare adequate contingency plans for a project of this nature. For example, U.S. EPA acknowledges that failure to obtain a site plan approval for use of the CCP property for a dredge pad was a setback in the timely completion of the work in the Delta.

However, Enbridge failed to prepare any contingency plans recognizing the possibility of such an occurrence. Enbridge has known since at least the middle of July 2013 that there was serious opposition to its proposed use of the CCP property. When it became clear in August 2013 that opposition to the site use might delay the project, U.S. EPA directed Enbridge to “conduct a more detailed review of your options in short order.”

Although your letter claims that Enbridge “has considered such alternatives,” your logs indicate that Enbridge did not hold initial discussions with the majority of these property owners until long after the final decision to abandon plans for use of the CCP property. These contact logs do not demonstrate that Enbridge fully explored and reviewed alternative options in a timely manner so as to avoid delay in completion of the work. Although Enbridge claims that use of identified alternative properties would be denied by Comstock Township, Enbridge did not present any site plans to the Township for approval (other than use of the county park for staging of frac tanks). To the extent that any of Enbridge’s contingency plans include the use of land for dredge pads, U.S. EPA believes that Enbridge should begin multiple submissions for property use until one is accepted….

Enbridge claims that it cannot install winter containment in the Delta to prevent the potential migration of sediments to the lake. To support that claim, Enbridge has attached a letter from STS directing Enbridge to remove anchors and associated soft containment during winter monthsas these structures could damage STS’s turbines. However, none of the correspondence provided by Enbridge discusses the use of more secure containment methods, such as metal sheet piling, which may not pose the same risks as soft containment structures. Enbridge should consider using sheet piling to construct cells which would both allow winter work and contain the sediment during that work. Enbridge should therefore try to obtain access from STS for this specific work, and for other appropriate work, for the winter timeframe. Use of sheet pile cells would allow continued operations during the winter, especially in the southern zone of the Delta outside of the main river channel. Removal of oiled sediments prior to the spring thaw will lessen the potential oiled sediment transport in the spring to Morrow Lake via increased river
velocities from rain and ice melt.

Finally, U.S. EPA is unwilling to allow Enbridge to wait until after the likely spring high
velocity river flush to reinstall the E-4 containment structures. U.S. EPA has reviewed Enbridge’s modeling, which Enbridge claims supports its requested timeline, and has found it incomplete. The model has not incorporated, and does not match, field observation of flow velocities and water levels and their potential to impact upstream critical structures if containment is in place. Moreover, U.S. EPA completely disagrees with Enbridge’s assertion that there is no evidence of migration of submerged oil during high flow events. The results of three years of poling and sheen tracking demonstrate that Line 6B oil is mobile during periods of
high flow. Now that Enbridge has a five year permit from MDEQ for the E-4 containment system, U.S. EPA reiterates that this containment must be in place immediately upon thawconditions in the spring….

Although Enbridge’s proposed two phase approach may have components that can be incorporated into a final plan, it should not be considered the approved way forward. U.S. EPA believes that pausing the work cycle until new poling can be done in June or July of 2014 could again result in a wasted construction season in the Delta. Enbridge should consider and utilize a combination of techniques in the plan. For example, several dredge pad sites have been identified by Enbridge. Enbridge should obtain approval for one of these sites, or a combination of smaller sites, so as to support hydraulic dredging in conjunction with the current approved
approach and any potential dry excavation techniques. Enbridge should also consider other winter work techniques, such as cell build out and dewatering in the Delta via sheet piling.

As always, U.S. EPA will continue to work with Enbridge to develop adequate plans and complete the work required by the Order. However, nothing in this letter excuses any noncompliance with the Order nor does it serve as the granting of any extension to any deadline in the Order. U.S. EPA reserves all its rights to pursue an enforcement action for any noncompliance with the Order.

The EPA letter also calls into question the ruling of the Joint Review Panel on the Enbridge Northern Gateway. The JRP accepts, without question, Enbridge’s assurances that the company has changed its attitude and policies since the long delay in 2010 in detecting the pipeline rupture in Marshall, Michigan.

The JRP, on the other hand, accepts, without question, Enbridge’s assurances that it has expertise in winter oil recovery from a pipeline spill.

Parties questioned Northern Gateway about locating and recovering oil under ice. Northern Gateway said that Enbridge conducts emergency exercises in winter and that Northern Gateway would learn from those experiences.
Northern Gateway outlined a number of oil detection techniques including visual assessment (at ice cracks and along the banks), drills, probes, aircraft, sniffer dogs, and trajectory modelling. It said that, once located, oil would be recovered by cutting slots into the ice and using booms, skimmers, and pump systems to capture oil travelling under the ice surface.

The company said that oil stranded under ice or along banks would be recovered as the ice started to melt and break up. It discussed examples of winter oil recovery operations during Enbridge’s Marshall, Michigan incident, and said that operational recovery decisions would be made by the Unified Command according to the circumstances.

Northern Gateway said that equipment caches would be pre-positioned at strategic locations, such as the west portal of the Hoult tunnel. It said that decisions regarding the location or use of pre-positioned equipment caches would be made during detailed design and planning, based on a number of considerations including, but not limited to, probability of a spill, access, site security,
environmental sensitivities, and potential for oil recovery at the response site.

(vol 2 page 153)

In its ruling, the Joint Review Panel said

The Panel finds that Northern Gateway’s extensive evidence regarding oil spill modelling, prevention, planning, and response was adequately tested during the proceeding, and was credible and sufficient for this stage in the regulatory process.
Parties such as the Province of British Columbia, Gitxaala Nation, Haisla Nation, and Coalition argued that Northern Gateway had not provided enough information to inform the Panel about proposed emergency preparedness and response planning. The Panel does not share this view.

Northern Gateway and other parties have provided sufficient information to inform the Panel’s views and requirements regarding malfunctions, accidents, and emergency preparedness and response planning at this stage of the regulatory process.

Many parties said that Northern Gateway had not demonstrated that its spill response would be “effective.” Various parties had differing views as to what an effective spill response would entail.

The Panel is of the view that an effective response would include stopping or containing the source of the spill, reducing harm to the natural and socio-economic environment to the greatest extent possible through timely response actions, and appropriate follow-up and monitoring and long-term cleanup. Based on the evidence, in the Panel’s view, adequate preparation and planning can lead to an effective response, but the ultimate success of the response would not be fully known
until the time of the spill event due to the many factors which could inhibit the effectiveness of the response. The Panel finds that Northern Gateway is being proactive in its planning and preparation for effective spill response….

The Panel is of the view that an effective response does not guarantee recovery of all spilled oil, and that that no such guarantee could be provided, particularly in the event of a large terrestrial, freshwater, or marine spill.

The oil spill preparedness and response commitments made by Northern Gateway cannot ensure recovery of the majority of oil from a large spill. Recovery of the majority of spilled oil may be possible under some conditions, but experience indicates that oil recovery may be very low due to factors such as weather conditions, difficult access, and sub-optimal response time, particularly for large marine spills. …

To verify compliance with Northern Gateway’s commitments regarding emergency preparedness and response, and to demonstrate that Northern Gateway has developed appropriate site-specific emergency preparedness and response measures, the Panel requires Northern Gateway to demonstrate
that it is able to appropriately respond to an emergency for each 10-kilometre-long segment of the pipeline.

The Panel notes the concerns of intervenors regarding Northern Gateway’s ability to respond efficiently and effectively to incidents in remote areas, and its plan to consider this during detailed design and planning. The Panel finds that Northern Gateway’s commitment to respond immediately to all spills and to incorporate response time targets within its spill response planning is sufficient to
address these concerns. Northern Gateway said that its emergency response plans would incorporate a target of 6 to 12 hours for internal resources to arrive at the site of a spill. It also said that it would target a response time of 2 to 4 hours at certain river control points.

The Panel agrees with Northern Gateway and several intervenors that access to remote areas for emergency response and severe environmental conditions pose substantial challenges. The Panel notes that the company has committed to develop detailed access management plans and to evaluate contingencies where timely ground or air access is not available due to weather, snow, or other logistic
or safety issues.

Despite the EPA letter (which admittedly was released long after the JRP evidentiary deadline) that shows that Enbridge did not consult the people of Comstock Township, Michigan, the JRP says

The Panel accepts Northern Gateway’s commitment to consult with communities, Aboriginal groups, and regulatory authorities. The objective of this consultation is to refine its emergency preparedness and response procedures by gaining local knowledge of the challenges that would be present in different locations at different times of the year
(Vol 2 p 165-167)

EPA letter to Enbridge denying deadline extension  (pdf)

DFO hands over fisheries protection along pipelines to the NEB

 

The Department of Fisheries and Oceans has handed responsibility for fish and fish habitat along pipeline routes over to the National Energy Board. The same agreement also gives the National Energy Board responsibility for dealing with First Nations fisheries if a pipeline or power line crosses their traditional territory.

DFO and NEB quietly announced a memorandum of agreement on December 16, 2013, that went largely unnoticed with the release three days later of the Joint Review Panel decision on Northern Gateway and the slow down in news coverage over the Christmas holidays.

Update January 16, 2013: DFO clarifies relationship with NEB on fisheries protection along pipeline routes

As of December 16, 2013,  Enbridge no longer has to apply to DFO for permits to alter fish habitat along the Northern Gateway route. It was also on December 16 that Kinder Morgan filed its application with the NEB for the expansion of its pipeline from Alberta to Burnaby.

Fish and fish habitat along those pipeline is now the responsibility of the Alberta-based, energy friendly National Energy Board.

On its website, the NEB says

Applications submitted to the NEB shall be reviewed under the Fisheries Protection Provisions of the Fisheries Act to determine if impacts shall occur, and if an authorization will be required under the Fisheries Act. The NEB shall also become responsible to determine if proposed projects will impact aquatic species at risk and require permitting under the Species at Risk Act. If the NEB determines than an authorization or permit will be required, DFO shall be notified and will be responsible for issuing the authorization or permit.

This MOU better integrates the Government of Canada’s initiative to streamline application processes by eliminating the requirement for duplicate reviews.

In the “Guiding Principles” of the memorandum of understanding between DFO and NEB, the first provision is

The Parties will use the provisions of this MOU to support the Government of Canada’s regulatory process improvement objectives through coordination to:
Facilitate effective and efficient use of government resources in order that regulatory decisions are made in a timely manner by applying a one-project one-review approach;
Promote clarity and consistency of the regulatory decision making process; and
Ensure responsibilities for mitigation, monitoring and reporting, compliance and enforcement, follow-up monitoring, and Aboriginal consultation are addressed.

Protecting fisheries and fish habitat is only the third priority in the MOU

Conservation and protection of fish and fish habitat, and listed aquatic species at risk and their critical habitat, will be managed in accordance with DFO’s regulatory and policy frameworks for the application of the fisheries protection provisions of the Fisheries Act and SARA [Species at Risk Act] respectively.

The question most people on the northwest coast and along BC’s rivers will ask (whether or not they support or oppose pipeline projects): Just how much expertise, if any, in fisheries and fish habitat can be found in the Calgary offices of the National Energy Board?

According to the FAQ posted on the NEB website, it is now up to the NEB to determine whether a project impacts fisheries or species at risk.

How will the MOU affect authorizations under the Fisheries Act?

The NEB will assess a project application and determine if mitigation strategies are needed to reduce or prevent impacts to fish or fish habitat. If the project could result in serious harm for fish then the NEB will inform DFO that a Fisheries Act authorization under paragraph 35(2)(b)  is likely to be required. DFO will review and issue an authorization when appropriate, prior to project construction. Authorizations issued by DFO would relate to those watercourses impacted, not the entire project.

How will the MOU affect permits under SARA?

The NEB will assess a project application for potential impacts to aquatic species at risk. If an impact to a SARA-listed aquatic species may occur, the NEB will inform DFO.  DFO will review and issue a permit under SARA when appropriate, prior to project construction.

The NEB claims that the MOU will not affect environmental protection

Will this MOU reduce environmental protection?

No, the NEB has always considered impacts to fish and fish habitat and aquatic species at risk when making its decisions. The initial assessment of impacts of federally regulated pipeline and power line projects

 

Another potentially troubling aspect of the agreement is that it makes the National Energy Board the lead agency in dealing with First Nations.

when the Crown contemplates conduct that may adversely affect established or potential Aboriginal and treaty rights in relation to the issuance of authorizations under the Fisheries Act, and/or permits under SARA, the NEB application assessment process will be relied upon by DFO to the extent possible, to ensure Aboriginal groups are consulted as required, and where appropriate accommodated;

 

Canada’s First Nations have dealt with DFO for generations and by and large both sides understand each other’s aims, even if they don’t always agree.  The NEB, however, at least as seen during the JRP hearings, often showed little understanding or respect for First Nations.  That means that already troubled relationship between First Nations and the Crown over pipelines is going to get a lot more troubled.

 

The memorandum of understanding between DFO and MOU is yet another result of the Harper government’s omnibus bills, which have the aim of efficiently approving energy projects while downplaying environmental costs.

It also means that from now on there must be a much more careful reading of the 209 conditions imposed by the Joint Review Panel on Enbridge to see if those conditions are actually going to be rigorously enforced or if all Enbridge has to do is to file reports with the NEB.

It also appears that the new and highly restrictive NEB procedures that restrict input from all but those the NEB considers “directly affected’ by a project will also apply to their new responsibility for fisheries.

 

District of Kitimat calls for plebiscite on the Northern Gateway project

Phil Germuth
Councillor Phil Germuth listens as District of Kitimat Council debates his motion that would have required Enbridge to enhance monitoring of leaks on the pipeline in the Kitimat watershed. (Robin Rowland/Northwest Coast Energy News)

District of Kitimat Council voted Monday night to hold a plebiscite on whether or not the community supports the controversial Enbridge Northern Gateway project.

District council and staff will decide the actual question for voters and the date for the plebiscite in the coming couple of weeks.

A staff report described a plebiscite as “a non-binding form of referendum,” as defined by the BC Local Government Act.

The council decision comes after the Northern Gateway Joint Review Panel released its decision on December 16, that approved the pipeline and tanker project along with 209 conditions.

After the release of the Joint Review decision, the District of Kitimat issued a news release saying, “Kitimat Council has taken a neutral stance with respect to Northern Gateway. Council will take the necessary time to review the report in order to understand the content and reasons for the decision.”

On January 16, 2012 the council adopted a resolution “that after the completion of the JRP process, the District of Kitimat survey the residents of Kitimat regarding their opinion on the Enbridge Northern Gateway project.” After the JRP decision, the District reaffrimed that it would “undertake a survey of Kitimat residents to determine their opinions of the project now that the JRP has concluded its process.”

District staff had recommended hiring an independent polling firm to conduct the survey, pointing to a pollster’s ability to craft the appropriate questions and provide quick results.

Council quickly shot down the idea. A motion by Councillor Mario Feldhoff to use a polling firm did not get a seconder.

Councillor Rob Goffinet, who made the motion for the plebiscite, noted that even as a politician he doesn’t answer phone calls from unknown numbers. He said, “People do not want a pollster to phone them and do a check list how do you feel on a project. How can we be assured if someone in or out of their home will answer a call from a pollster? I would give total responsibility to every adult citizen of Kitimat who has a point of view to express it in a yes or no ballot.”

Councillor Phil Germuth added, “Those are the same companies that went out prior to the last provincial election and said one party was going to wipe it out and we know what happened there.” Germuth was referring to BC Premier Christy Clark’s come from behind majority victory which was not predicted in the polls.

Germuth told the meeting he believed an unbiased question could be posed in the form of a referendum on the Northern Gateway project. “I have full confidence in our staff that they will be able, along with some assistance from council, to develop questions that are not going to appear biased. It should be very simple, yes means yes, no means no.”

Councillor Mario Feldhoff, who earlier in the evening had, for the first time, declared that he is in favour of the Northern Gateway project, told council that he preferred using a polling firm because it could come back with a “statistically significant” result.

Council voted six to one in favour of the plebiscite. The lone dissenter was Councillor Edwin Empinado who told his colleagues that a mail-in ballot, another of the options presented by staff, would be more inclusive.  Empinado said he was concerned that a plebiscite would mean a low voter turnout.

Warren Waycheshen, the district’s deputy chief administrative officer, told council that the plebiscite would have to be held under the provisions of BC’s Local Government Act which covers elections and referenda, but with the plebiscite the council would have more flexibility in deciding how the vote would take place. The act would still cover such things as who was eligible to vote and the use of campaign signs.

Mario Feldhoff
Councillor Mario Feldhoff reads a statement at council, supporting the findings of the Joint Review panel on the Northern Gateway project. (Robin Rowland/Northwest Coast Energy News)

The neutrality that council had maintained for at least the previous three years began to break down during Monday’s meeting meeting when Germuth proposed a motion that would have required Enbridge to install within Kitimat’s jurisdiction a detection system capable of locating small volumes of leakage from the pipeline, a measure that is likely beyond the recommendations of the JRP decision.

It was then that Feldhoff became the first Kitimat councillor to actually declare for or against the Northern Gateway, telling council, saying he agreed with the JRP, “The overall risk was manageable and the project was in Canada’s interest. On the whole I am in favour of the conditions and recommendations of the JRP… Not only am I a District of Kitimat Councillor, I am a Canadian. To my mind, opposition to the JRP Northern Gateway report at this stage is yet another case of NIMBY-ism, not in my backyard.”

In the end, at Feldhoff’s urging, the council modified the original motion, so that it called on the District to meet with Enbridge to discuss an enhanced pipeline leak detection system where a leak could “impact the Kitimat watershed.”

It’s not clear what Council will do with the result of the plebiscite, since it is “non-binding.”

 In the past two years, Terrace, Prince Rupert and Smithers councils, together with Kitimat Stikine Regional District and the Skeena Queen Charlotte Regional District, all voted to oppose Northern Gateway. Those were all council votes, taken without surveying local opinion.

Most of the decisions are in the hands of the federal government which has 180 days from the release of the JRP report to approve the project.

 

How Gateway’s plans to dredge Douglas Channel show the limitations of the JRP mandate and ruling

(First in series of reports on how the Joint Review Panel report will affect the Kitimat region)

JRP map of blasting on Douglas Channel
Joint Review map of Northern Gateway plans for dredging and blasting on Douglas Channel (JRP)

 

If there is a significant flaw in the Joint Review Panel report on Northern Gateway, it can be found in the panel’s analysis of Enbridge Northern Gateway’s plans to blast and dredge at the proposed Kitimat terminal site.

While the Joint Review Panel does consider what it calls “cumulative effects,” the panel plays down those effects and offers no specifics about interaction between the Northern Gateway project and the two liquified natural gas projects, the KM LNG project at Bish Cove and the BC LNG floating terminal at the old log dump.

It appears the JRP considered the legacy effects of the Rio Tinto Alcan smelter and other Kitimat industries while not taking into consideration future development.

The dredging and blasting planned by Northern Gateway, as Enbridge said in its evidence,  appears to have only a minimal effect on Douglas Channel.

A glance at the map in the Joint Review ruling shows that that the dredging and blasting site is directly opposite Clio Bay, where Chevron, in partnership with the Haisla Nation, plan a remediation project using marine clay from the Bish Cove construction site to cap decades of sunken and rotting logs.

The Clio Bay project was not part of the evidence before the Joint Review Panel, the plans for the project were not formulated until well after the time for evidence before the JRP closed. But those deadlines show one area where the rules of evidence and procedure fail the people of northwestern BC.

The JRP is a snapshot in time and changes in the dynamics of the industrial development in the Kitimat Arm are not really considered beyond the terms of reference for the JRP.

It appears from the report that Enbridge plans to simply allow sediment from the blasting and dredging to float down Douglas Channel, dispersed by the currents and the outflow from the Kitimat River.

Northern Gateway said that dredging and blasting for marine terminal construction would result in a sediment plume that would extend over an area of 70,000 square metres for the duration of blasting activities.

Approximately 400 square metres of the assessed area of the marine terminal is expected to receive more than 1 centimetre of sediment deposition due to dredging. Outside of this area, typical sediment deposition levels alongshore where sediment is widely dispersed (a band approximately 4 kilometres long and 400 metres wide) are very low; in the range of 0.001 to 0.1 centimetres. Dredging and blasting activities are expected to occur over a period of approximately 18 weeks.

Northern Gateway expected most of the sediment plume created by construction activities to be minor in relation to natural background levels.

Northern Gateway would use bubble curtains to reduce pressure and acoustic effects of blasting, and silt curtains to reduce the effect of sedimentation from dredging. It said that bubble curtains are used extensively for other activities, such as pile driving, to reduce the effect of high pressure pulses that can cause injury to fish.

It added that bubble curtains have been tested extensively with blasts, and literature shows they are effective.

Northern Gateway said that physical effects from suspended sediment on marine fish and invertebrates could include abrasion and clogging of filtration mechanisms, which can interfere with ingestion and respiration. In extreme cases, effects could include smothering, burial, and mortality to fish and invertebrates. Direct chemical-related effects of suspended sediment on organisms, including reduced growth and survival, can also occur as a result of the uptake of contaminants
re-suspended by project construction activities, such as dredging and blasting, and as a result ofstorm events, tides, and currents.

The Haisla Nation and Raincoast Conservation objected to Northern Gateway’s figures, noting

Northern Gateway’s sediment and circulation model and its evidence related to contaminated sediment re-suspension at the terminal site. Both parties said that the sediment model was applied for the spring, when the increase in total suspended solids would be negligible compared to background values. In the event of delays, blasting and dredging would likely occur at other times of the year when effects would likely be higher, and these scenarios were not modelled.

The panel’s assessment of the area to be blasted found few species:

Species diversity within Kitimat Arm’s rocky intertidal community is generally low. Barnacles, mussels, periwinkles, and limpets can be found on rocky substrate. Sea urchins, moon snails, sea anemones, sea stars, and sea cucumbers are in shallow subtidal areas. Sandy areas are inhabited by commercially-harvested bivalves such as butter clams and cockles.

Northern Gateway told the JRP that it would “offset” any damage to Douglas Channel caused by the blasting and dredging

Northern Gateway said that construction, operations, and decommissioning of the marine terminal would result in both permanent and temporary alteration of marine fish habitat. Dredging and blasting, and installing physical structures in the water column for the marine terminal would permanently alter marine fish habitat. Based on the current terminal design, in-water site preparation would result in the physical alteration of approximately 1.6 hectares of subtidal marine habitat and 0.38 hectares of intertidal marine habitat. Northern Gateway expected approximately 353 square metres of subtidal marine habitat and 29 square metres of intertidal habitat to be permanently lost.This habitat would be compensated for by marine habitat offsets.

The project’s in-water vertical structures that would support the mooring and berthing structures could create new habitat, offsetting potential adverse effects. The structures may act as artificial reefs, providing marine fish habitat, food, and protection from predation. Although organisms currently inhabiting the work area would be killed, the exposed bedrock would be available for colonization as soon as the physical works are completed.

In its finding on marine sediment, the panel, as it does throughout the ruling, believes that the disruption to the environment caused by previous and ongoing human activity, means that the Northern Gateway Kitimat terminal won’t make that much difference.

Sediment quality in the marine environment is important because sediment provides habitat for benthic aquatic organisms. Northern Gateway’s baseline data for the area immediately surrounding the marine terminal indicated some contamination of water, sediments, and benthic organisms from previous industrial activity. Industrial activities in the Kitimat area have released contaminants through air emissions and effluent discharges since the 1960s. Sources of contaminants to Kitimat Arm
include effluent from a municipal wastewater treatment plant, the Alcan smelter, Methanex Corporation’s methanol plant, and the Eurocan pulpmill, as well as storm water runoff from these operations and the municipality.

Area is largely controlled by natural outflow from the Kitimat River with suspended sediment levels being highest during peak river runoff (May to July, and October) and lowest during winter. Storm events, tides, and currents can also suspend sediments. Levels of total suspended solids fluctuate seasonally and in response to climatic variations, but are generally highest during the summer.

Commercial and recreational vessels currently operating in the area may increase suspended solids by creating water turbulence that disturbs sediments. Given the current sediment contamination levels and the limited area over which sedimentation from construction activities would be expected to disperse, the Panel finds that the risk posed by disturbed contaminated sediment is low. Northern Gateway has committed to monitoring during construction to verify the predicted effects on sediment and water quality for both contaminants and total suspended solids..

The dredging and blasting section of the Joint Review Report is small when compared to the much more extensive sections on pipeline construction and tanker traffic, and the possible effects of a catastrophic oil spill.

Although minor, the marine sediment section exposes the question that was never asked, given the disruptions from years of log dumping at Clio Bay and Minette Bay and the decades of  developments at the mouth of the Kitimat River, and future development from LNG, when do cumulative effects begin to overwhelm? How much is enough? How much is too much? If every project continues to be viewed in isolation, what will be left when every project is up and running?

 

Joint Review Panel tells northwestern BC to bear the “burdens” of Northern Gateway for the good of Canada

 

Joint Review Panel cover
Cover of Volume 1 of the Joint Review Panel ruling on Northern Gateway

 

If you read both the 76 pages of Volume One of the Northern Gateway Joint Review decision and the 417 pages of Volume 2, a total of 493 pages, one word keeps reappearing. That word is “burden.”

The JRP panel asks “How did we weigh the balance of burdens, benefits, and risks?”

And it says:

Many people and parties commented on the economic benefits and burdens that could be brought about by the Enbridge Northern Gateway Project. In our view, opening Pacific Basin markets wouldbe important to the Canadian economy and society. Though difficult to measure, we found that the economic benefits of the project would likely outweigh any economic burdens.

The JRP notes:

The Province of British Columbia and many hearing participants argued that most of the project’s economic benefits would flow to Alberta, the rest of Canada, and foreign shareholders in oil and pipeline companies. They said British Columbia would bear too many of the environmental and economic burdens and risks compared to the benefits.

But, as the panel does throughout the ruling, it accepts, with little, if any, skepticism, Northern Gateway’s evidence and assertion:

Northern Gateway said about three-quarters of construction employment would occur in British Columbia, and the province would get the largest share of direct benefits from continuing operations.

It does touch on the “burdens” faced by the Aboriginal people of northern BC and others in the event of a catastrophic spill.

In the unlikely event of a large oil spill, we found that there would be significant adverse effects on lands, waters, or resources used by Aboriginal groups. We found that these adverse effects would not be permanent and widespread. We recognize that reduced or interrupted access to lands, waters, or resources used by Aboriginal groups, including for country foods, may result in disruptions in the ability of Aboriginal groups to practice their traditional activities. We recognize that such an event would place burdens and challenges on affected Aboriginal groups. We find that such interruptions would be temporary. We also recognize that, during recovery from a spill, users of lands, waters, or resources may experience disruptions and possible changes in access or use.

And the JRP goes on to say:

We recommend approval of the Enbridge Northern Gateway Project, subject to the 209 conditions set out in Volume 2 of our report. We have concluded that the project would be in the public interest. We find that the project’s potential benefits for Canada and Canadians outweigh the potential burdens and risks….

We are 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. We find that the environmental burdens associated with project construction and routine operation can generally be effectively mitigated. Some environmental burdens may not be fully mitigated in spite of reasonable best efforts and techniques…. We acknowledge that this project may require some people and local communities to adapt to temporary disruptions during construction.

As for the chance of a major oil spill, again the JRP talks about burdens:

The environmental, societal, and economic burdens of a large oil spill, while unlikely and not permanent, would be significant. Through our conditions we require 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.

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

And concludes:

We find that Canadians will be better off with this project than without it.

In the Joint Review ruling is one fact. Northern British Columbia must bear the “burden” of the Northern Gateway project for the good of Alberta and the rest of Canada. The JRP accepts, without much questioning, Northern Gateway’s assurances that environmental disruptions during construction will be minimal and that the chances of a major spill from either a pipeline or a tanker are minimal.

Canadians as a whole may be better off with the Northern Gateway. Whether the people who live along the pipeline and tanker route will be better off is another question, one which the Joint Review Panel dismisses with casual disdain.

Cover of JRP ruling
Cover of Volume 2 of the Joint Review rulng on Northern Gateway

The politics of the Joint Review Panel

There are actually two Joint Review Panel reports.

One is political, one is regulatory. The political decision by the three member panel, two from Alberta and one from Ontario, is that the concerns of northwestern British Columbia are fully met by Enbridge Northern Gateway’s assurances. There is a second political decision, found throughout both volumes of the report, and the reader sees the Joint Review Panel has the notion that many parts of the environment have already been degraded by previous human activity, and that means the construction and operation of the Northern Gateway will have little consequence.

Here is where the Joint Review Panel is blind to its own bias. With its mandate to rule on the Canadian “public interest,” the panel makes the political determination that, in the Canadian public interest, northwestern BC must bear the “burden” of the project, while other political issues were not considered because, apparently those issues were outside the JRP’s mandate.

…some people asked us to consider the “downstream” emissions that could arise from upgrading, refining, and diluted bitumen use in China and elsewhere. These effects were outside our jurisdiction, and we did not consider them. We did consider emissions arising from construction activities, pipeline operations, and the engines of tankers in Canadian territorial waters.

During our hearings and in written submissions, many people urged us to include assessment of matters that were beyond the scope of the project and outside our mandate set out in the Joint Review Panel Agreement. These issues included both “upstream” oil development effects and “downstream” refining and use of the products shipped on the pipelines and tankers…Many people said the project would lead to increased greenhouse gas emissions and other environmental and social effects from oil sands development. We did not consider that there was a sufficiently direct connection between the project and any particular existing or proposed oil sands development or other oil production activities

If someone in Northwestern British Columbia favours the Northern Gateway project, if they believe (and many people do) what Enbridge Northern Gateway says about the economic benefits, then it is likely they will accept the burden and the further environmental degradation imposed by the Joint Review Panel on this region of British Columbia.

If, on other hand, for those who are opposed to the project, then the decision to impose the burden on this region is both unreasonable and undemocratic (since no one in northern BC, in the energy friendly east or the environmental west has been formally asked to accept or reject the project). For those opposed to the project, the idea that since the environment has already been disrupted by earlier industrial development, that Canadians can continue to degrade the environment with no consequence will only fuel opposition to the project.

As for the assertion that green house gas emissions were not part of the Joint Review Panel’s mandate, that is mendacious. The panel made a political decision on the role of the people of northwestern BC and the state of northwestern BC’s environment. The panel made a political decision to avoid ruling on the role of Northern Gateway in contributing to climate change or the larger world wide economic impact of pipelines and the bitumen sands.

Regulations

The Joint Review Panel is supposed to be a regulatory body and should be pipeline, terminal and tanker project go ahead after the expected court challenges from First Nations on rights, title and consultation and from the environmental groups, then those 209 conditions kick in.

While the Joint Review Panel largely accepts Enbridge Northern Gateway’s evidence with little questions, in some areas the panel does find flaws in what Northern Gateway planned. In a few instances, it actually accepts the recommendations from intervenors (many from First Nations, who while opposed to the project, successfully demanded route changes to through environmentally sensitive or culturally significant territory.)

When it comes to regulations, as opposed to politics, the Joint Review Panel has done its job and done it well. If all 209 conditions and the other suggestions found in the extensive second volume of the ruling are actually enforced then it is likely that the Northern Gateway will be the safe project that Enbridge says it will be and actually might meet BC Premier Christy Clark’s five conditions for heavy oil pipelines across BC and tankers off the BC coast.

But and there is a big but.

The question is, however, who is going to enforce the 209 conditions? In recent conversations on various social media, people who were quiet during the JRP hearings, have now come out in favour of the pipeline project. Read those comments and you will find that the vast majority of project supporters want those conditions strictly enforced. Long before the JRP findings and before Premier Christy Clark issued her five conditions, supporters of the Northern Gateway, speaking privately, often had their own list of a dozen or two dozen conditions for their support of the project.

The people of northwestern BC had already witnessed cuts to Fisheries and Oceans, Environment Canada and the Canadian Coast Guard in his region even before Stephen Harper got his majority government in May 2011.

Since the majority government Harper has cut millions of dollars from the budgets for environmental studies, monitoring and enforcement. The Joint Review Panel began its work under the stringent rules of the former Fisheries Act and the Navigable Waters Act, both of which were gutted in the Harper government’s omnibus bills. Government scientists have been muzzled and, if allowed to speak, can only speak through departmental spin doctors. The Joint Review Panel requires Enbridge Northern Gateway to file hundreds of reports on the progress of surveying, environmental studies, safety studies, construction plans and activities and project operations. What is going to happen to those reports? Will they be acted on, or just filed in a filing cabinet, perhaps posted on an obscure and hard to find location on the NEB website and then forgotten?

Will the National Energy Board have the staff and the expertise to enforce the 209 conditions? Will there be any staff left at Environment Canada, Transport Canada, Fisheries and Oceans and the Canadian Coast Guard where the conditions demand active participation by government agencies, or ongoing consultation between federal agencies and Northern Gateway? Will there actual be monitoring, participation and consultation between the project and the civil service, or will those activities amount to nothing more than meetings every six months or so, when reports are exchanged and then forgotten? Although Stephen Harper and his government say the Northern Gateway is a priority for the government, the bigger priority is a balanced budget and it is likely there will be more cuts in the coming federal budget, not enhancements to environmental protection for northwestern BC.

The opponents of the project might reluctantly agree to the 209 conditions if Harper government forces the project to go ahead. It will be up to the supporters to decide whether or not they will continue their support of Northern Gateway if the 209 conditions are nothing more than a few pages of Adobe PDF and nothing more.