Update letter to Minister Carr on NEB regulatory oversight for Trans Mountain Expansion and Line 3 Replacement

The Honourable Minister Jim Carr
Minister of Natural Resources
House of Commons
Ottawa, Ontario  K1A 0A6

Dear Minister Carr:

In late 2016, the Federal Government approved two major pipeline projects: Enbridge’s Line 3 Replacement Program, and Kinder Morgan’s Trans Mountain Expansion Project. As you know, these two projects are complex undertakings that together require over 2,000 km of new pipelineFootnote 1. Each project bears its own suite of complexities, challenges, and opportunities.

Please accept this letter as my update on the work of the NEB to regulate and oversee these projects. As a full lifecycle regulator, the NEB has multiple, concurrent oversight and regulatory processes unfolding well before construction begins. These include:

  • Auditing the companies’ preparedness for safe construction activities;
  • Approving the detailed route to finalize the location of the facilities within the approved corridors for each project;
  • Verifying compliance with the Board’s project-specific conditions and applicable regulations and standards;
  • Evaluating and participating in emergency response exercises in advance of and throughout pipeline operation, to evaluate the readiness of the companies to respond effectively to any incident.

Some aspects of our work on these projects still require the NEB to function in a quasi-judicial manner, with a Panel of Board members assigned to reach decisions on behalf of the Board. These include detailed route hearings or consideration of applications that would change the design or route of the projects. Fair, timely, and accessible processes underpin our approach to these activities.

In other areas, especially as the Board undertakes compliance oversight activities throughout the lifecycle of a project, our approach is less quasi-judicial. Here, the NEB’s regulatory activities are intended to prevent harm, both to people and to the environment. This is achieved, in part, by the NEB’s compliance requirements, regulations and standards, together with the commitments made by a company. Moreover though, the NEB actively promotes a strong safety culture among the companies it regulates. I expect that company leaders demonstrate that safety is their overriding priority, every employee feels empowered for making safe decisions, and the organization is continually learning from its experiences with the goal of advancing safety.

NEB staff have and will continue to meet with company officials at all levels to encourage alignment on environmental protection and safety program requirements during construction and operation. Both Enbridge and Kinder Morgan are required under NEB regulations to have managements systems in place so that they are proactive in evaluating their performance, and are expected to immediately review any incidents to ensure preventative actions are taken to address issues in a systemic way.

I want to stress the importance of undertaking oversight of these projects in an open and transparent manner. The NEB’s regional engagement efforts, including those from our regional office in Vancouver, British Columbia, will help ensure that stakeholders are well informed about the work of the NEB as the projects progress. I am confident that this transparency will continue to foster positive relationships with local community stakeholders affected by these major energy projects.

Indigenous Advisory Monitoring Committees

I would like to highlight the collaborative efforts undertaken to realize the potential of the Indigenous Advisory Monitoring Committees (IAMCs) for the projects. The NEB has been an active participant in the co-development process to define the Terms of Reference for each Committee. With the assistance of the IAMCs, the NEB will be hiring additional environment and engagement staff with a focus on integrating Indigenous knowledge and experience into the NEB’s approach to project oversight and monitoring. Both the NEB and IAMCs have common goals of environmental protection, safety, information transparency, and meaningful steps to address the concerns of local communities.

The NEB’s commitment to working with the IAMCs extends through all stages of the projects’ lifecycle, and while our work in this regard is just beginning, it is a significant first step in building a new relationship with Indigenous peoples. 

Below is a more detailed account on the status of each project, and major events and next steps upcoming.

Line 3 Replacement Program:

Background

On 5 November 2014, Enbridge applied to the NEB to construct and operation the Line 3 Replacement Program, including the construction and operation of 1,096 km of new pipeline and related facilities that would replace and decommission the existing Line 3 pipeline between Hardisty, Alberta and Gretna, Manitoba. The project includes the installation of 55 valves, 18 pump stations, and 3 oil storage tanks at the Hardisty Terminal in Alberta. Enbridge intends to operate the replacement pipeline at the original pipeline’s capacity of approximately 760,000 bbl/d. Most of the Line 3 replacement pipeline will be constructed within a right of way that parallels and overlaps the existing pipeline.

The project was approved by Governor in Council (GIC) on 29 November 2016. Shortly thereafter, the NEB issued Certificate of Public Convenience and Necessity OC-063, and Orders XO-E101-004-2016 and MO-008-2016, authorizing the project, subject to 89 conditions. The Board issued a variance on 17 July 2017, approving several design-related changes.

Project Milestones and Next Steps:

  • Enbridge has obtained the necessary approval of the pipeline’s detailed route from the Board. No objections from landowners or others were raised during the 30-day period for filing a Statement of Opposition to the detailed route, which closed on 8 June 2017. The Board approved Enbridge’s Plan, Profile, and Book of References on 7 July 2017.
  • The NEB has reviewed 43 submissions related to conditions requirements, and on 31 July 2017 the Board issued a letter confirming that Enbridge has satisfied the pre-construction conditions requirements. All compliance submissions, NEB Information Requests, and compliance decisions can be found on the Board’s website.
  • Construction began on 1 August 2017. NEB staff attended project kick off meetings with Enbridge’s contractors in Saskatchewan to review construction plans and expectations.
  • The NEB has developed a compliance verification plan that includes activities to examine and assess Enbridge’s performance against regulatory obligations such as legislation, conditions, and its commitments.
    • Compliance verification work has commenced, including review of Enbridge’s environmental protection, safety and security management programs through implementation assessment meetings, manual reviews, and information exchange meetings.
    • This fiscal year, NEB Inspection Officers plan to conduct approximately 17 field inspections to confirm compliance in the areas of pipeline integrity, safety, environmental protection, damage prevention, security, and evaluations of Enbridge’s emergency response exercises. As each inspection involves three to four days onsite, a minimum of 50 days on of onsite inspection is planned.
    • In April of this year, NEB staff commenced a pre-construction audit of Enbridge’s management systems. The intent of the audit was to evaluate whether Enbridge had established the necessary oversight measures in the pre-construction phase to manage safety and environmental protection during construction of the Project. The Board’s findings will be made publically available in the coming weeks.
  • The NEB has re-developed our public project information webpages to support the information needs we heard expressed by Canadians, including providing updated information about the timing of the NEB’s oversight process and filings from the company.  The new project website can be found here:  www.cer-rec.gc.ca/Line3.
  • The Terms of Reference for the IAMC are anticipated by September 2017. The Terms of Reference will set out the goals, mandate, and framework in which the IAMC, NEB, and federal government departments will collaborate in the oversight and monitoring of the project.

Trans Mountain Expansion Project:

Background

On 16 December 2012, Trans Mountain applied to twin the existing 1,147 km Trans Mountain pipeline system from Edmonton, Alberta, to Burnaby, British Columbia, including 981 km of new pipeline. The project includes new and modified pump stations and tanks, additional tanker loading facilities at the Westridge Marine Terminal in Burnaby and reactivation of 193 km of existing pipeline. The project will increase Trans Mountain’s shipping capacity from 300,000 bbl/d to 890,000 bbl/d. The majority of the new pipeline will be adjacent to the existing pipeline or along existing corridors. 

On 29 November 2016, the Trans Mountain Expansion project received GIC approval. On 1 December 2016, the NEB issued three legal instruments to Trans Mountain ULC (Trans Mountain) including the Certificate of Public Convenience and Necessity, authorizing the project. The NEB had previously issued five orders related to the Project, which also took effect on 1 December 2016. The eight legal instruments authorizing the construction and operation of the Project are subject to the 157 conditions as set out in the NEB’s Recommendation Report.

Project Milestones and Next Steps:

  • The NEB has reviewed 200 submissions that relate to 97 condition compliance requirements, and has issued 54 Information Requests to Trans Mountain.
  • The Board has confirmed that Trans Mountain has met a portion of the NEB’s condition requirements for the Project.  In particular, Trans Mountain has satisfied 27 of the 49 conditions necessary to begin construction at the Westridge Marine Terminal. Additional compliance requirements must be met for the company to begin construction on any portion of the Project. 
  • Detailed route approval process:
    • A Panel of NEB Board Members has been assigned to decide on routing matters, including detailed route approval and route variance applications. The Panel will decide on the necessary quasi-judicial processes to undertake the hearings.
    • A total of 452 Statements of Opposition have been filed with the Board, including 5 from Indigenous groups, and 121 from landowners.  The Panel is currently reviewing these and will determine the detailed route hearing requirements in the near future. Hearing processes are expected to begin in the fall and last several months.
    • Trans Mountain has made seven route variance applications. The Board has issued Information Requests and requested public comment on the applications. Following a public process, the Board will make a recommendation to GIC regarding the requests for variance. If the variances are approved, the NEB will begin the detailed route process for these sections of the project.
  • The NEB has developed a compliance verification plan that includes activities to examine and assess Trans Mountain’s performance against regulatory obligations set out in legislation, conditions and commitments.
    • Compliance verification activities have commenced, including manual reviews, and implementation assessment meetings.
    • Commencing this month, NEB Inspection Officers plan to conduct approximately 28 field inspections this fiscal year; a minimum of 84 days of onsite inspection is expected.
    • In late September, an emergency response exercise is planned (as required by an NEB Condition). This exercise will include deployment of personnel and first responders with equipment to the exercise site, and will test the company's ability to respond to an emergency and work effectively with first responders. NEB staff will participate in the evaluation of the exercise.
    • NEB staff have met with the British Columbia Oil and Gas Commission to discuss the sharing of inspection information.
    • In April of this year, NEB staff commenced a pre-construction audit of Trans Mountain’s management systems. The intent of the audit was to evaluate whether Trans Mountain had established the necessary oversight measures in the pre-construction phase to manage safety and environmental protection during construction of the Project. The Board’s findings will be made publically available in the coming weeks.
  • The Terms of Reference for the Trans Mountain IAMC were endorsed on 17 July 2017. Support for this initiative has been formalized by me, you, other Federal Government representatives, and a suite of Indigenous leaders from British Columbia and Alberta. The NEB has now assigned Committee and sub-committee representatives for ongoing IAMC participation.
  • NEB staff have developed and implemented a regional engagement strategy. The NEB’s Vancouver Regional Office has established dialogue and information sharing processes among municipalities, Indigenous communities, Provincial government departments, and Kinder Morgan, and has enabled informal means to address project concerns and information needs.
  • The NEB has a new project information webpage to support the information needs expressed by Canadians, including updated information about the timing of the NEB’s oversight process and fillings from the company through our interactive conditions tracker.  The new project website can be found here: www.cer-rec.gc.ca/TransMountainExpansion.

The scope and manner in which the NEB is undertaking the oversight of these two major construction projects reflects the NEB’s commitment to its mandate in a way that that maintains the public confidence of Canadians.  The NEB’s transformational efforts are ongoing and we will continue to implement improvements as we undertake this significant and comprehensive construction oversight work.

I trust this meets your satisfaction and I am available to discuss at your convenience.

Yours sincerely,
C. Peter Watson, P.Eng., FCAE
Chair and CEO 

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