Kitimat Votes: Northern Gateway plebiscite campaigns ramping up with three weeks to go

 

Enbridge web page
Landing page for the Enbridge Northern Gateway “yes for Kitimat” web campaign.

With about three and half weeks to go, the campaigning on the for and against sides for the April 12 Kitimat plebiscite on the Joint Review Panel report on the Northern Gateway has been relatively low key up until now.

That changes with the news that Northern Gateway will hold two campaign Open Houses. Sources have told Northwest Coast Energy News that the first Open House, hosted by Northern Gateway President John Carruthers, will take place at the Rod and Gun on Tuesday, April 1. The second Open House will be hosted by Janet Holder, Enbridge’s Executive Vice President of Western Access, on Tuesday, April 8, also at the Rod and Gun.

Campaign brochure
Campaign brochure from the Northwest Institute for Bioregional Research based in Smithers,

Until now, Enbridge Northern Gateway has been using its deep pockets with a newspaper ad campaign emphasizing Kitimat residents and the promise of jobs, as well as a new website Yes To/For Kitimat.  Northern Gateway has also started a telephone campaign, asking residents if they plan to vote “yes” in the plebiscite.

The main opposition, Douglas Channel Watch, is concentrating on what political analysts call the “ground game,” by knocking on doors. Douglas Channel Watch, although they claim to be amateurs facing a giant corporation, are following a classic political strategy. DCW is certainly confident of the “no” vote and their campaign so far, is aimed at fence sitters and those who are in favour of the pipeline but are uncertain about the 209 conditions.

 

The third player, so far, is Smithers based Northwest Institute for Bioregional Research, which distributed a glossy brochure, comparing the BC provincial government’s final arguments on the project with the Joint Review Panel’s conclusions.

The opposition campaign is concentrating on the perceived lack of balance in the Joint Review Panel, while, again, so far, Enbridge Northern Gateway is avoiding the JRP, perhaps because the company itself is not all that certain about what all 209 conditions actually mean.

That means the District of Kitimat Council, with some members tilting toward favouring the Northern Gateway (although the council members generally deny public opposition), could have blundered with the ambiguous question centered around the JRP

Do you support the final report recommendations of the Joint Review Panel (JRP) of the Canadian Environmental Assessment Agency and 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?”

Overall, whether one opposes or supports the Northern Gateway project, in the end, the Joint Review hearings did not go over well in northwestern British Columbia. By and large the JRP accepted most of the Northern Gateway evidence at face value while largely playing down the concerns of many northwestern BC residents—even supporters. Most important was the JRP’s conclusion that effects of any oil spill, either from a pipeline breach or a tanker accident would be

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 residents, communities, and Aboriginal groups. We found that the adverse effects would not be permanent and widespread.

 

Murray Minchin
Murray Minchin, of Douglas Channel Watch, outline the environmental groups campaign at District of Kitimat Council, March 17, 2014. (Robin Rowland/Northwest Coast Energy News)

Douglas Channel Watch is trying to capitalize on these doubts. At District Council on Monday March 17, Murray Minchin said:

“What we found out that there are five key reasons why even supporters of Northern Gateway were going to vote no on the plebiscite and people who were sitting on the fence were considering voting no on the plebiscite.

“The plebiscite is on the Joint Review final report and conditions which allow temporary foreign workers to work on the pipeline in Canada, describes Northern Gateway as a raw diluted bitumen export pipeline; does not mandate upgrading or any other value adding job program and will allow 1,100 foot long super tankers to operate on BC’s pristine north coast…The final reason was that the Joint Review panel found that the Exxon Valdez and Kalmazoo spills were localized events with temporary affects which would be justified in the circumstances if they happened in BC.”

“So by voting no we will be sending a message to Ottawa telling them we don’t want temporary foreign workers taking jobs from Canadians. We don’t want thousands of jobs being exported overseas. We don’t want up to 364 dilbit super tankers a year, and the 364 supertankers is based on the actual amount of product that will be put through the pipeline since they’re only applying for 525,000 barrels a day but its actually designed for 850,000 barrels a day, so that’s how we come up with the figure of one super tanker a day, coming to Kitimat and one leaving.

“If you don’t think major diluted bitumen spills in Kitimat’s salmon rivers or on BC’s pristine coast can be justified in any circumstances. So if you vote no on the plebiscite, while you may support the idea, this is an opportunity to send a message back to Ottawa that they really need to rethink their priories.”

Donny van Dyk
Donny van Dyk outlines Northern Gateway’s contributions to the Kitimat community to District Council, March 10, 2014 (Robin Rowland/Northwest Coast Energy News)

Enbridge’s only public appearance early in the campaign was when Donny van Dyke, Northern Gateway’s Manager of Coastal Aboriginal and Community Relations, outlined to council on March 10, the contributions that Northern Gateway has given to the community and to local training programs.

Van Dyk said the Northern Gateway supported training programs that will also be used by other new industrial and commercial projects. He said training with the company’s partners create life skills, noting that one focus of the training is to help people who may have barriers to education, life skills and gainful employment.

Van Dyke says the company plans Northern Gateway Youth Achievement Awards for outstanding students going beyond academics. As part of the awards, 50 winners received iPads.

Van Dyk said that Northern Gateway has contributed $20,000 to community groups within Kitimat, including $7,500 this year . They contributions include: $100,000 for marine skills training, $145,000  for Environmental Field Assessment training, $110,000 went to the Pipe Trades Foundation for training and financial support and $5000 for trades training for local high school students. The company has contributed $225,000 to Project Shop Class, a construction trades program, with $100,000 earmarked for the high schools in Kitimat.

Northern Gateway’s ads both in local newspapers and on a new website yesto kitimat.ca are emphasizing long term jobs.

Northern Gateway adThe latest ad says:

“The pipeline will bring jobs. But the pipeline is just the start. We’ll start to see growth in the economy and the population. We’ll see more opportunities for our kid, job training, extracurricular activities, music programs, all kinds of good stuff.”

Another of the ads, featuring Trish Parsons, Chamber of Commerce manager says:
“For me, the best thing about living in Kitimat is that you can go hiking or fishing on your way home form work. It’s a special place to live. But without jobs and stability. I worry about my kids and grandkids won’t be able to live here with me, And that’s why I want more than anything.”

The Northern Gateway ads have created vigorous debates on social media, with many of the comments opposed to the project, including resentment at the money Enbridge is spending on the ads and the idea that Northern Gateway has “infiltrated” a community event.

At the council meeting, Murray Minchin of Douglas Channel Watch pointed out that the according to the BC elections act third party advertising is capped at $3167.93 per electoral district, which given the fact that Black Press charges $8,250 for a full page colour ad in its newspapers, that if the plebiscite was a provincial election, Northern Gateway would have already far exceeded those limits.

In a free society, Enbridge Northern Gateway, as the proponent of the project, has the right to campaign on behalf of the project. It is not the same as a third party intervention in a general election.

The overall problem is the short-sighted, half-hearted approach that the District of Kitimat Council has taken with the plebiscite, which now goes beyond the confusing plebiscite question. The rules as released by District only mention signage. There was apparently no anticipation that campaign spending could be an issue, even though one side was a well-financed large corporation and therefore no research if campaign spending limits are permitted in a municipal non-binding plebiscite.

District of Kitimat plebiscite rules   (pdf)

The confusing plebiscite question and now the issue of campaign spending can only raise doubts about whether or not the community accepts the results of the vote, especially if the outcome is close.

(With more controversial energy projects coming up, and the possibility of more referenda or plebiscites, the province should set clear and transparent rules for future votes.)

 

Plebiscite Reality Check

Northern Gateway

Enbridge adThe Northern Gateway ads promise jobs, stability and say “we need to know everything’s going to be good for a long time, not just a year or two.”

Apart from the fact that Northern Gateway confidently believes it can foretell the future, that the pipeline will bring sustained growth in the Kitimat economy, here is what that Joint Review Panel said in its official report on the number of permanent jobs.

 

Northern Gateway said that the number of permanent jobs during operations would total 268.
This includes permanent workforce requirements in Edmonton, Fox Creek, Whitecourt, Grande Prairie, Tumbler Ridge, Prince George, Burns Lake, and Kitimat. It said that this also includes people expected to be employed in Kitimat to supply services associated with operations of the Kitimat Terminal, including tug operators, pilots, emergency response staff, and various other service providers.
The company said that annual spending on project operations is expected to total about $192 million. The company said that this includes $94.8 million in British Columbia, $77.6 million in Alberta, and $19.5 million in federal corporate income taxes. The company said that jobs related to operations are expected to provide opportunities for residents and offer long-term sustainable employment
benefit to the provinces.

This means that Northern Gateway will provide less than 300 permanent jobs spread across the entire pipeline route, and many of them will probably be at Enbridge headquarters in Edmonton. The number of permanent jobs at Kitimat have been estimated from as low as 25 to as high as 60. That is hardly a big boost to the Kitimat economy.

Douglas Channel Watch

Douglas Channel Watch has kept its message clear and simple.

Douglas Channel Watch Plebiscite Press Release (pdf)

Both in its press release and in Murray Minchin’s statement to council, he is calling on Kitimat to “send a message to Ottawa.” Given the record of the Harper government on issues such as the BC wide objections to the closing of the Kitsilano Coast Guard base, it is likely that even if there is an overwhelming “no” vote in Kitimat, Harper, his cabinet and officials will ignore the plebiscite result. It would take more pressure than from the residents of Kitimat  for Harper to pay attention. Of course, the Northern Gateway may yet garner worldwide attention like the Keystone XL has. But the big problem, as the Ottawa pundits have pointed out, if you get Harper’s attention, the result is often vindictive rather than seeing someone else’s point of view. Up to now, except for an occasional obligatory visit to the Haisla Nation, for the Conservatives, Kitimat is out of sight and out of mind.

The other small mistake by Douglas Channel Watch came a couple of weeks ago when Murray Minchin, when calling for a public forum prior to the vote, said that Kitimat didn’t need a speaker like former Dawson Creek mayor Mike Bernier (now a Liberal MLA) who Minchin said took the focus off the issue of the pipeline. However, it was Bernier, who, two years ago, warned Kitimat about the problems of work camps and a potential housing crisis. It appears that Bernier’s warning fell on deaf ears, given the current housing crisis in Kitimat.

 

Correction:

Earlier this story said “Douglas Channel Watch is also hosting an event with author Arno Kopecky at Riverlodge on Saturday March 29th at 7 pm for a talk on his book Oil Man and the Sea, Navigating the Northern Gateway.” Douglas Channel Watch says it is not hosting the event, but members of the group were spreading the word about Kopecky’s appearance.

LNG Canada passes first step in BC environmental review, to hold LNG demonstration at Mt. Elizabeth Theatre

LNG Canada logoLNG Canada, the project led by Shell Canada Energy, has passed the first step in the environmental review process for the liquified natural gas plant and terminal.

LNG Canada said Tuesday that the British Columbia Environmental Assessment Office has  approved LNG Canada’s Application Information Requirements (AIR) for the proposed project.

The company says the AIR outlines the studies, methods, and information that will be required in LNG Canada’s Application for an Environmental Assessment Certificate.

The LNG Canada AIR was developed in consideration of comments submitted by the public, First Nations and regulators during a 30-day public comment period held in November/December 2013, including a public meeting at the  Kitimat Rod & Gun, where documents were distributed and employees answered questions from politicians and the public.

LNG Canada says it will now continue to gather information and complete studies in support of developing our Environmental Assessment Application.

The company  intends submit to the Environmental Assessment Application to the the B.C. EAO later this year.

LNG Canada will hold its next public meeting, an “LNG Demonstration and Presentation” on March 6, 2014 at the Mount Elizabeth Theatre starting at 6 p.m. The company says the event is to “to share information and answer questions about liquefied natural gas (LNG).” Starting at 7 pm there will be a a live demonstration using LNG to explain the science behind liquefaction and the properties of LNG.

For more information about the project’s EA process, www.eao.gov.bc.ca and look for our project under the “Proposed EAs” sections.

The other partners in the LNG Canada project are Diamond LNG Canada, an (“affiliate” of Mitsubishi), Korea Gas Corporation and Phoenix Energy (an “affiliate” of PetroChina).

To plebiscite or not to plebiscite, that is still the question

Murray Minchin
Murray Minchin of Douglas Channel Watch gives District of Kitimat Council a preview of the group’s campaign presentation on the Northern Gateway project plebiscite at the council chambers. Feb. 24, 2014. DCW will host “Everything You Ever Wanted to Know About the Enbridge Plebiscite, but Were Afraid to Ask” at Riverlodge, Wednesday, Feb. 26 at 7 p.m. (Robin Rowland/Northwest Coast Energy News)

District of Kitimat Council will take another look at the Northern Gateway project plebiscite next Monday, March 3, when it considers a motion from Councillor Phil Germuth to cancel the vote altogether.

This Monday, February 24, Council voted to cancel the “undecided” option on the ballot, leaving voters with a simple yes or no question. That decision costs the district taxpayers $500, since council was told by the deputy administrative officer, Warren Waycheshen that the ballots had already been printed.

The question of whether “undecided” was still on the ballot came up as council was discussing the advertising campaign for the coming plebiscite—if it survives next Monday’ s vote. Apparently after the confusing Council session on January 20, some members of council believed that the “undecided” option had already been eliminated.

“Can I get clarification on it. I thought it was going to be strictly: yes or no?” Germuth asked.

There was apparently some confusion among District staff after the meeting as well. Waycheshen said he and other staff members had reviewed the minutes of that meeting and concluded there was no motions that dropped “undecided.”

Asked about the ballots, Waycheshen replied the ballots had already been ordered, but the $500 cost was minimal. He told Council that amount should not stand in their way if they wanted to amend the response to the question.

Both Germuth and Mayor Joanne Monaghan said that by now everyone should now how they feel. Germuth said that leaving the undecided option might lead to misinterpreted results.

District staff will wait until next Monday and the vote on Germuth’s motion to cancel the plebiscite altogether before ordering new ballots.

Earlier in the evening, it was not clear whether or not everyone in the Kitimat community “should know how they feel.” Murray Minchin of Douglas Channel Watch gave a preview of the environmental group’s campaign for a no vote:

Minchin began by rereading the plebiscite question.

Do you support the final report recommendations of the Joint Review Panel (JRP) of the Canadian Environmental Assessment Agency and 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?”

Minchin then gave Council some samples of what will be a longer presentation at Riverlodge on Wednesday night.

He pointed to Condition #1 “Northern Gateway must comply with all the certificate conditions, unless the NEB otherwise directs.”

Minchin told council, “This means the plebiscite will be held on something that might not exist. It’s written in smoke and deposited on mirrors. Why are we voting on the Joint Review Panel conditions when they can be altered or removed at any time?”

He also said Condition 169, which calls on Enbridge to file a plan for a research program on spilled oil was rather late, “far into the game,” he said, and thus an example of how the conditions had no teeth.

Minchin said even those who support the project should be concerned about other conditions, including one that calls on Northern Gateway to notify the National Energy Board if they plan to hire foreign temporary workers.

“What about all of these jobs for Canadians which we have been hearing about since day one. It is supposed to be a job generating project for Canadians,” he asked Council.

He said the Joint Review Panel should have had conditions that there be no foreign temporary workers or that a certain percentage of jobs should go to Canadians and to people from the region.

Douglas Channel Watch will be hosting what they call “a community information forum” called ‘Everything You Ever Wanted to Know About the Enbridge Plebiscite, but Were Afraid to Ask.’  –in effect a campaign for the no side,. at Riverlodge on Wednesday, February 26th at 7:00 pm. Minchin said DCW members who developed expertise in their role as a JRP intervenor will be speaking on various topics.

Ottawa’s Northern Gateway consultation with First Nations limited to three simple questions and 45 days: documents

The federal government’s main consultation with First Nations on the Northern Gateway Joint Review Panel report is limited to just three simple questions that had to be answered within 45 days, according to documents seen by Northwest Coast Energy News.

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

That despite the fact that the first volume of the JRP report “Connections” is 76 pages and the second volume “Considerations” is 418 pages including the 209 recommendations and appendices and came after two years of hearings and tens of thousands of pages of evidence.

On Dec. 6 and again on Dec. 16, 2013, just prior to the release of the Joint Review Panel report, Brett Maracle, Crown Consultation Coordinator at the Canadian Environmental Assessment Agency for the Northern Gateway project wrote to the First Nations potentially affected by Northern Gateway, saying their response had to be filed within 45 days of the release of the JRP. Since the report was released on December 19, 2013, that made the initial deadline January 31, 2014.

The letter also told the First Nations that if they wanted their positions included in the “Crown Consultation Report” that would be part of the package on Northern Gateway presented to the federal cabinet, that position had to be limited to just two to three pages “given the number of groups involved” with a final deadline of April 16, 2014.

Maracle’s letters used the term Phase IV to define the post JRP consultations, implying there were three earlier stages of consultation, something many First Nations have disputed, especially since the Harper government had earlier maintained that the JRP itself was the constitutionally mandated consultation.

The cabinet has until June 19, 2014, 180 days after the release of the report to approve the issuing of the federal permits for the Northern Gateway project. Consultation with First Nations on projects such as the Northern Gateway is required by the Constitution and has been upheld by the Supreme Court of Canada.

The three questions outlined in the letter were:

  • Does the Report appropriately character the concerns you raised during the JRP process?
  • Do the recommendations and conditions in the Panel Report address some/all of your concerns?
  • Are there any “outstanding” concerns that are not addressed in the Panel Report? If so, do you have recommendations (i.e proposed accommodation measures) how to address them?

Consultation on implementation

The third question appears to confirm what most political observers have said, approval of the Northern Gateway by the Harper cabinet is a a forgone conclusion, since Maracle speaks of “accommodation measures.” When the JRP approved the Northern Gateway project, the panel said that Enbridge’s proposed “mitigation” measures in case of a spill were adequate, something environmental groups and First Nations are now disputing in court.

It appears from the correspondence seen by Northwest Coast Energy News, that the federal government will only consider further specific consultations with First Nations after the approval of the Northern Gateway and only then on the implementation and construction process, rather than consulting on the project as a whole.

The Haisla have filed a document in response to the JRP that notes that

The Haisla Nation needs to understand Canada’s views of the role that future federal decisions might play for the proposed project. In its December 12, 2013 to Mr. Maracle, the Haisla Nation asked the federal government to provide a comprehensive list of the regulatory permits which would be issued the the federal government decision-makers in Haisla Nation Territory in the event the proposed project is approved and describe the consultation process that would occur prior to decisions being on those regulatory permits, within 45 days of the issuance of the JRP Report.

Mr. Maracle’s January 29, 2014 [reply] suggests that the only future federal decisions on the proposed project which may entail consultation are specific watercourse crossing and fish habitat destruction permits issued by Fisheries and Oceans Canada.

Whole-of-government

One of the problems reaching back to long before the Joint Review Panel hearings began is that the Harper government policy was what they called a “whole-of-government” approach in its consultations with First Nations, saying: “The Crown is open to discussing how consultation with the framework provided will be carried out.”

In their repose, the Haisla say the federal government never defined how the “whole-of-government” approach to First Nations was going to work and noted:

What Canada should have realized is that it has a very real obligation to consult with the Haisla Nation at the deepest end of the consultation spectrum that cannot be pigeon-holed into a one size fits all approach.

Further, the term whole-of-government is misleading, as this approach actually prohibits the majority of government from engaging in consultation.

The Haisla then say: “Documents we have obtained under an Access to Information Request clearly indicate individual departments were asked not to communicate directly with the Haisla Nation.”

The response goes on to say:

Further questions at federal government witnesses during the JRP process confirmed that federal departments had not met with the Haisla Nation since the commencement of the JRP process. While these witnesses were reluctant to confirm that they had been prohibited from meeting with us, they repeatedly referred to the “whole-of-government” approach to consultation as their reason for not meeting.

Canada’s “whole-of-government” approach clearly limited engagement to a strict process with no opportunity for real engagement.

Earliest stages

The Haisla are telling the Harper government:

It is clear that the Haisla Nation that we are the very earliest stages of consultation with Canada about the proposed project….It is clear to the Haisla Nation that the 45-day period within which Canada has unilaterally determined face-to-face meetings with all the Aboriginal groups potentially affected by the proposed project will occur is not an adequate amount of time to complete a meaningful consultation process.

 

Related

Haisla ask cabinet to postpone Northern Gateway decision to allow for adequate consultation with First Nations

Haisla consultation reply outlines flaws in Northern Gateway Joint Review report

Haisla response lists evidence rejected by Northern Gateway Joint Review

Haisla ask cabinet to postpone Northern Gateway decision to allow for adequate consultation with First Nations

Haisla NationThe Haisla Nation are calling on the federal cabinet to postpone its decision on the Northern Gateway project to allow time for adequate consultations with First Nations, according to the Haisla response to the Joint Review Panel, seen by Northwest Coast Energy News.

The Joint Review Panel report and recommendations were released on Dec. 19, 2013 and the cabinet has 180 days from that point to recommend approval of the project.

The Haisla argue that Section 54 of the National Energy Board act allows the Governor-in-Council, the federal cabinet, to extend the timeline if it wants to, if recommended by the Minister of Natural Resources.

So far, the Harper government has refused to extend the deadline. The Haisla response document says Chief Counsellor Ellis Ross spoke to Minister of Natural Resources Joe Oliver on the telephone requesting the extension, but, according to the document, all Oliver did was point to the legislation that calls for the 180 day response to a joint review report.

The Haisla response document also has a long lists of what the Haisla say are flaws in the Joint Review Panel report.

Consultations

In correspondence with the Haisla, Brett Maracle, Crown Consultation Coordinator at the Canadian Environmental Assessment Agency for the Northern Gateway project, says:

the process set out by the Government of Canada in the Aboriginal Consultation Framework was finalized after receiving and carefully considering input from Aboriginal groups….The Government of Canada believes the process outlined in the Aboriginal Consultation Framework provides for a deep level of meaningful consultation with Aboriginal groups with Phase IV being the final step prior to a decision being made on the Project.

The Haisla dispute there has been any “deep level of meaningful consultation,” citing in the document a long list of attempts to engage the federal government with little or no response.

In their response, the Haisla Nation Council says:

Canada, has, to date, refused to engage in meaningful consultations with the Haisla Nation. Instead Canada has unilaterally imposed what it calls a “deep level meaningful consultation” process which is fundamentally flawed for a number of reasons…

The document lists attempts by the Haisla to engage with ministers and government departments including requests for a meeting with then Environment Minister Peter Kent, prior to the opening of the JRP formal hearings in Kitamaat Village in January 2012. Although the Haisla requested a meeting with Kent, several times in 2011, no meeting ever occurred. It was not until April 19, 2012, four months later that Kent replied to the Haisla saying he had asked the President of the Canadian Environmental Assessment Agency to meet with the First Nation prior to the start of the JRP hearings. However, it was apparently impossible to schedule such a meeting in December, 2011.

To which the Haisla reply:

For over six years, Canada ignored Haisla Nations requests for meetings. Once the JRP’s oral hearings process commenced, Canada further closed the door on any opportunity for a meeting until the JRP Report was release. This refusal to consult was baseless. The ongoing JRP process was not a rational or justifiable basis for Canada’s refusal to consult…

Canada has yet to meet with the Haisla Nation to discuss the proposed project, other than to tell the Haisla Nation it is only engaging through the JRP process for now. This is not consultation. It is, perhaps, at best an initial step towards a consultation process.
Ignoring the Eyford report

Joe Oliver
Natural Resources Minister Joe Oliver (front far right) answers questions after his news conference at the Northwest Community College Long House, March 19, 2013. Douglas Eyford is standing behind Oliver. (Robin Rowland/Northwest Coast Energy News)

In March 2013, Natural Resources Minister Joe Oliver flew to Terrace for a photo op to announce the appointment of Douglas Eyford to consult First Nations on the Northern Gateway project. Oliver then flew back to Ottawa without meeting anyone in the region. Eyford’s report Forging Partnership Build Relationship was released in November, 2013.

The Haisla say:

Mr. Eyford’s Report recommended that Canada should consider undertaking early engagement to address Aboriginal interests that may not be dealt within a regulatory process. The Haisla Nation has been seeking such early engagement from Canada since the proposed project was first announced.

Mr. Eyford’s Report also recommended that Canada should engage and conduct consultations n addition to those in regulatory processes, as may be required, to address issues and facilitate resolutions in exceptional circumstances. The Haisla Nation also asked for this, identifying early that this proposed project was an exceptional circumstance due to the significant potential impacts on the Haisla Nation.

It is not too late for Canada to correct the deficiencies in its consultation process, but cannot realistically do so by adhering unilaterally by Canada and laid out in Mr. Maracle’s letter of December 16, 2013

The Haisla Nation Council response was sent to Brett Maracle, Crown Consultation Coordinator at the Canadian Environmental Assessment Agency for the Northern Gateway project. The Haisla also sent copies of the response to Joe Oliver, the Minister of Natural Resources, Gaetan Caron, Chair of the National Energy Board, Leon Aqlukkaq, Minister of the Environment, Bernard Valcourt Minister of Aboriginal Affairs and Northern Development, Gail Shea, Minister of Fisheries and Oceans, BC Premier Christy Clark, Steve Thomson, BC Minister of Forests, Lands and Natural Resources and Mary Polak, BC Minister of the Environment.

Related

Ottawa’s Northern Gateway consultation with First Nations limited to three simple questions and 45 days: documents

Haisla consultation reply outlines flaws in Northern Gateway Joint Review report

Haisla response lists evidence rejected by Northern Gateway Joint Review

Haisla consultation reply outlines flaws in Northern Gateway Joint Review report

Haisla NationThe Haisla Nation response to the federal government’s request for consultation on the Joint Review Panel report on the Northern Gateway lists what the First Nation sees as flaws in the panel’s assessment of the project. (The Haisla filed their first list of flaws in the JRP in a court challenge).

In the response, seen by Northwest Coast Energy News, the Haisla are objecting to both the government’s and the JRP’s attitude toward the idea of consultation as well as some of the specific findings by the panel. The Haisla also fault the JRP process for refusing to take into consideration reports and studies that were released after the evidentiary deadlines.

Overall, the Haisla say

 The JRP report is written in a way that prevents an assessment of how or whether the JRP considered Haisla Nation concerns and of how whether the JRP purports to address the Haisla Nation’s concerns. Further the JRP Report is lacking n some of the fundamental justification required to understand how arrived at its recommendations.

So what are the Haisla concerns?

In the document filed with the Canadian Environmental Assessment Agency, the Haisla say:

 The proposed project carries with it an inordinate amount of risk to Haisla Nation Territory. The Haisla Nation is being asked to play host to this proposed project, despite the risk the proposed project poses to the land waters and resources relied on by the Haisla Nation for sustenance and cultural heritage. The risk includes a huge risk to Haisla Nation aboriginal rights to trap, hunt and fish, to gather seafood and gather plant materials. It could result in significant damage to the Haisla Nation cultural heritage—its traditional way of life…..

The terminal site is one of the few areas suitable for terminal development in our territory. It is also home to over 800 Haisla Nation Culturally Modified Trees (CMTs). Northern Gateway proposes to irrevocably alter the land, the use of the land and access to this land for the duration of the proposed project, which is anticipated to be at least 80 years. This irrevocable alteration includes the felling of our CMTS….

By seeking to use Haisla Nation aboriginal title land for the proposed project, Northern Gateway will be effectively expropriating the economic value of this land. Northern Gateway is proposing to use Haisla Nation aboriginal title land for a project with no benefit to the Haisla Nation and which is fundamentally at odds with Haisla Nation stewardship principles.

 

Obstructed clear understanding 

The Haisla say that “Canada has failed to adhere is own framework” for the JRP because in the Aboriginal Consultation Framework says “Federal departments will be active participants in the JRP process to ensure the environmental assessment and consultation record, is as accurate and complete as possible.”

The Haisla say “Canada provided limited written evidence to the JRP” and goes on to say that the “federal governments not only failed to provide relevant information but also obstructed a clear understanding of project impacts.”

Among the evidence relevant to Northern Gateway that the federal government was “unable or unwilling to provide” includes:

  •  Natural Resources had expertise on acid rock damage and metal leaching but did not include evidence on that in their evidence
  •  Fisheries and Oceans did not have a mandate to conduct an assessment of the potential toxicological effects of an oil spill.
  •  Environment Canada did not review or provide information on the spills from pipelines.
  • The federal government witnesses were unable to answer questions about the toxicity of dispersant.
  • Environment Canada was asked if it had studies of the subsurface currents and the movement of submerged oil. Environment Canada told the JRP did not measure hydrodynamic data but relies on DFO. DFO cold not provide any witnesses to the JRP with expertise on subsurface currents.

 

In the formal response on the JRP report, Haisla also say:

  •  The JRP has concluded that the risk of a large spill form the pipeline in the Kitimat River Valley is not likely, despite very significant information gaps relating to geohazards, leak detection and spill response.
  •  The JRP has concluded that a large spill would result in significant adverse environmental effects. However, the JRP appears to base a finding that these effects are unlikely to occur on an unreasonable assumptions about how widespread the effects could be or how long they would last. The JRP has not considered the extent to which a localized effect could impact Haisla Nation.
  •  The JRP relies on the concept of “natural recovery” as mitigation of significant adverse effects. The Haisla Nation asked the JRP to compel information from Northern Gateway about the applicability of its evidence to species found in Haisla National Territory. The JRP, however, refused to compel this evidence from Northern Gateway.
  •  The JRP has accepted at face value that Northern Gateway would shut down its pipeline within 13 minutes in the event of a rupture and has failed to consider the effects of a large spill that is not detected with this timeframe through the control centre (or was in the case of Kalamazoo, is detected by the control centre but is systematically mischaracterized and ignored).

As part of the consultation process the Haisla want 22 changes to the JRP report, changes which echo the Haisla Final Written Argument that was filed at the end of the hearings.

It says:

 The Panel should find that potential impacts to asserted Haisla Nation aboriginal rights and title from the proposed project are such that project cannot be found to be in the public interest in the absence of meaningful consultation… The current status of engagement and the federal government imposition of a 6-month time limit to complete consultation raise serious concerns that meaningful consultation will not be possible. Therefore the proposed project is not in the public interest.

Among the others are:

  • The JRP should have determined the significant of adverse effects to rare ecological communities that cannot mitigated.
  • The JRP should have provided more information to allow a reasonable assessment of the risk of a spill from the pipelines.
  • The JRP would have considered all factors to contribute to the risk of a spill.
  • The JRP should have found that Northern Gateway’s assessment of the toxicity of an oil spill because it did not consider the full range of products to be shipped nor did it consider the potential pathways of the effect of a toxic spill, whether from a pipeline, at the marine terminal or in the case of a tanker spill
  • The evidence had not demonstrated that Northern Gateway’s spill response would be able to mitigate the effects of a spill either at the pipeline, at the Kitimat marine terminal or from a tanker spill.
  • The JRP did not consider the impact of the Kitimat Marine Terminal on their cultural and archaeological heritage, including culturally modified trees.

Related

Ottawa’s Northern Gateway consultation with First Nations limited to three simple questions and 45 days: documents

Haisla ask cabinet to postpone Northern Gateway decision to allow for adequate consultation with First Nations

Haisla response lists evidence rejected by Northern Gateway Joint Review

Haisla response lists evidence rejected by Northern Gateway Joint Review

Members of the Joint Review panel make notes at Kitamaat Village (Robin Rowland)
Members of the Northern Gateway Joint Review Panel, left to right, Kenneth Bateman, chair Sheila Leggett and Hans Matthews make notes at the June 25, 2012 hearings at the Haisla Recreation Centre, Kitamaat Village. A map of Douglas Channel can be seen behind the panel. (Robin Rowland/Northwest Coast Energy News)

The Haisla Nation in their response to the Crown on the Northern Gateway Joint Review Panel details four studies, three Canadian and one American that were released after the Joint Review evidentiary deadline had passed, evidence that the Haisla say should be considered in any consideration of the Northern Gateway pipeline, terminal and tanker project. (The American report from the National Oceanic And Atmospheric Administration was released after the JRP final report)

JRP chair Sheila Leggett’s constant citing of rules of procedure and her stubborn refusal to consider new evidence and studies in a dynamic situation that was changing rapidly was one of the reasons that many people in the northwest said the JRP had lost credibility.

The Haisla say: “It is incumbent upon Canada to consider and discuss the information in these reports as part of a meaningful consultation process…” and then lists “key findings” that have potential impacts on aboriginal rights and title:

The West Coast Spill response for the government of British Columbia which found:

  • Most oil spilled into the marine environment cannot be cleaned up
  • There is a disconnect between planning and actual repose capability
  • Canada’s spill response is “far from world class.”

The Transport Canada Ship Oil Spill Preparedness and Response study:

  • Douglas Channel will go from low risk to high risk for pills if the project goes ahead
  • The study recommends preparation for a “true worst case discharge” rather than “the credible worst case discharge” as proposed by Northern Gateway
  • Canada needed a much more rigorous regulatory regime covering tankers.

The joint federal government technical report on the properties of bitumen from the Canadian Oil Sands:

  • There are uncertainties on how diluted bitumen would behave in a marine environment.
  • Northern Gateway did not provide adequate information about sediment levels to allow for proper study of interaction with diluted bitumen
  • Dispersant may not be effective.
  • Weathered diluted bitumen would “reach densities at which it will sink freshwater without mechanical or physical assistance.”

The US National Oceanic And Atmospheric Administration report on Transporting Alberta Oil sands:

  • Diluted bitumen has “significant differences from conventional crudes.’ (The JRP used conventional crude as a benchmark in its findings)
  • The physical properties of diluted bitumen “fluctuate based on a number of factors.
  • Pipeline operators may not have detailed information related to products in the pipeline at the time of a spill
  • There is a lack of experimental data on the weathering behaviour of oil sands product which limits the ability of spill response organizations “to understand and predict the behaviour and fate of oil sands products in freshwater, estuarine and saltwater environments.”

 
Related

Ottawa’s Northern Gateway consultation with First Nations limited to three simple questions and 45 days: documents

Haisla ask cabinet to postpone Northern Gateway decision to allow for adequate consultation with First Nations

Haisla consultation reply outlines flaws in Northern Gateway Joint Review report

 

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.

 

 

 

 

DFO clarifies relationship with NEB on fisheries protection along pipeline routes

On January 16, Fisheries and Oceans issued a statement “clarifying” its role after signing an agreement with the National Energy Board on fisheries protection along pipeline routes, saying DFO “remains responsible for fisheries protection, including the issuance of Fisheries Act authorizations.”

Fisheries and Oceans signed the agreement with the National Energy Board in mid-December.

DFO says there is little difference between its agreement with the NEB and collaborative agreements with the provinces.

Fisheries and Oceans Canada has established a collaborative agreement with the National Energy Board that will help eliminate overlap and duplication during regulatory reviews while maintaining a strong regime to manage threats to fish and fish habitat.

Fisheries and Oceans Canada remains responsible for fisheries protection, including the issuance of Fisheries Act authorizations.

Our collaborative arrangement builds on the decades of training, experience and expertise of NEB biologists in assessing the potential environmental impacts of development projects, including regarding fish and fish habitat.

These arrangements will yield a number of benefits:
• Ensuring regulators focus on the greatest threats to fish and fish habitat;
• Making the best use of available resources; and
• More efficient approval processes.

The Policy and Operational Guidelines that are followed by DFO staff and anyone else involved in these matters are available on Fisheries and Oceans Canada’s website.

The National Energy Board is best placed to deliver regulatory review responsibilities under the Fisheries Act for activities relating to federally regulated energy infrastructure (such as pipelines).

The Memorandum of Understanding between Fisheries and Oceans Canada and the National Energy Board will enable the NEB to:
• Review proponent applications for impacts to fish and fish habitat;
• Assess appropriate measures to avoid and mitigate impacts to fish and fish habitat;
• Include measures to avoid and mitigate impacts as conditions of licences, orders or certificates issued by the NEB; and
• Assess the acceptability of proponent offsetting plans when authorization is required.

Over the years, DFO has established similar arrangements with some Provinces and with Conservation Authorities.
In all cases, the standards for fisheries protection are established by DFO and the Fisheries Act Authorizations continue to be done by DFO.

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)