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Impact Assessment and Project Appraisal

ISSN: 1461-5517 (Print) 1471-5465 (Online) Journal homepage: https://www.tandfonline.com/loi/tiap20

Evaluation of the assessment process for major


projects: a case study of oil and gas pipelines in
Canada

Tim Van Hinte , Thomas I. Gunton & J. C. Day

To cite this article: Tim Van Hinte , Thomas I. Gunton & J. C. Day (2007) Evaluation of the
assessment process for major projects: a case study of oil and gas pipelines in Canada, Impact
Assessment and Project Appraisal, 25:2, 123-137, DOI: 10.3152/146155107X204491

To link to this article: https://doi.org/10.3152/146155107X204491

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Impact Assessment and Project Appraisal, 25(2), June 2007, pages 123–137
DOI: 10.3152/146155107X204491; http://www.ingentaconnect.com/content/beech/iapa

Evaluation of the assessment process for


major projects: a case study of oil and gas
pipelines in Canada

Tim Van Hinte, Thomas I Gunton and J C Day

Over the next several decades, oil and gas production in Canada is expected to increase to meet
growing demand in the United States and the Asia Pacific Region. Currently, eight major pipeline
projects are being proposed in Canada to transport increased oil and gas production to market. This
paper reviews potential impacts of the pipeline projects and develops a methodology for evaluating the
current regime for assessing and managing project impacts based on best practices criteria. The results
of the evaluation show that only three of 14 best practices criteria are met. The most significant
deficiencies are: lack of clear decision-making criteria and methods; absence of decision-making
processes that contain a legal obligation to provide compensation to those negatively affected by a
project and ensure project benefits are equitably distributed; and no provision for comparative
evaluation of competing projects. This paper identifies improvements required in environmental
assessment and planning processes.

Keywords: oil and gas development, oil and gas pipelines, First Nations, environmental impact
assessment, policy evaluation, project evaluation

O
VER THE NEXT SEVERAL decades, oil The purpose of this paper is to use best practices
and gas production in Canada is expected to criteria to evaluate the current regime for assessing
increase to meet growing demand in the and managing project impacts. The paper begins
United States and the Asia Pacific region. Currently, with an overview of the proposed pipeline projects
eight major pipeline projects are being proposed in and their potential impacts. Next, a methodology is
Canada to transport increased oil and gas production developed based on best practices criteria for evalu-
to market. Construction of these mega pipeline pro- ating the current impact assessment regime. The
jects will have significant impacts on the environ- paper concludes with recommendations for address-
ment. Consequently, it is essential that these ing deficiencies in impact assessment and planning
proposed pipeline projects be carefully assessed and processes.
managed to mitigate undesirable impacts.

Tim Van Hinte has a master’s degree in Resource Management Current pipeline proposals in Canada
from the School of Resource and Environmental Management at
Simon Fraser University; Email: tvanhint@sfu.ca. Dr Thomas I Eight new major pipeline projects with a combined
Gunton (corresponding author) is Professor and Director of the capital cost of about Can$25 billion are proposed for
Resource and Environmental Planning Program, School of Re- Canada (Figure 1 and Table 1). These projects can
source and Environmental Management (REM), Simon Fraser be classified into three categories based on the geo-
University, Burnaby, British Columbia, Canada V5A 1S6;
Email: tgunton@shaw.ca. Dr J C (Chad) Day is founding Direc- graphic location of the pipelines. The first category
tor of the School of Resource and Environmental Management is comprised of three proposed projects (Enbridge
(REM) at Simon Fraser University and past director of the Inter- Gateway, Terasen, and Pembina) that are designed
national Association for Impact Assessment; Email: jday@sfu.ca. to transport petroleum products between Alberta and

Impact Assessment and Project Appraisal June 2007 1461-5517/07/020123-15 US$08.00 © IAIA 2007 123
Evaluation of assessment of major projects

Figure 1. Proposed major Canadian pipeline projects

the British Columbia (BC) west coast. The compo- Alberta and the United States using overland pipe-
nents of the three west coast projects include pipe- line routes that do not require oil ports or oil tankers.
lines between Alberta and the British Columbia west The third category includes only one project
coast, a west coast oil port, and tanker traffic from (Mackenzie Valley), involving construction of a
the oil port to markets in Asia and the United States. pipeline from the Northwest Territories to northern
The second category is comprised of four projects Alberta along the Mackenzie Valley, and develop-
(Keystone, Altex, Enbridge Clipper, and Enbridge 2) ment of gas fields in the Northwest Territories.
that are designed to transport product between An important consideration in assessing these

Table 1. Comparison of major new pipeline projects in Canada

Project Location Facilities Timing Pipeline Cost Capacity


length (km) (billion Can$) (1000s of
barrels/day)

Enbridge Gateway Alberta to Kitimat BC Oil pipeline, marine 2006–2010 1100–1300 4 400/150
terminal, tanker operations,
condensate pipeline
Enbridge Clipper Alberta to Chicago Oil pipeline 2007–2011 1000 1.8 400
Enbridge 2 Alberta to Houston Oil pipeline na 3,300 3.6 400
Terasen Trans Edmonton, Alberta to Oil pipeline, marine terminal, 2006–2009 1000-1100 2.3–2.6 400
Mountain southern Vancouver (southern tanker operations
option and northern option), or Edmonton to BC
option north coast (northern option)
Keystone Northern Alberta to Oil pipeline 2007–2011 3,000 2.1 400
southern Illinois (1,700 new)
Mackenzie Gas Mackenzie Delta, Onshore natural gas fields, 2005–2010 1,696 7
Northwest Territories to wells, gas pipeline, and
northern Alberta associated facilities
Altex Alberta to Midwest USA Oil pipeline na na 3 250
Pembina North coast BC to Alberta Condensate pipeline 2006–2009 1100 na 100

Note: na = not available


Sources: Aboriginal Pipeline Group et al, 2004; Enbridge Pipelines Inc (undated; 2003); Gateway Pipelines Inc. 2005; Terasen Pipelines
2005; TransCanada Pipelines Limited 2005; Canada NEB 2006a; Globe and Mail July 7, 2006: B1.

124 Impact Assessment and Project Appraisal June 2007


Evaluation of assessment of major projects

pipeline proposals is the overall supply/demand bal- shoreline and riparian vegetation, fish communities
ance, which will determine how many pipelines will and their habitat, marine birds and mammals, ben-
be constructed. A recent review by the National En- thic communities, and other aquatic organisms (US
ergy Board (Canada NEB, 2006a) estimates that new DOI, 2002).
projects summarized in Table 1, and upgrades of A recent environmental impact statement for the
existing pipelines, will add about 4,264,000 barrels Trans-Alaska Pipeline System provides important
per day (BPD) of new capacity. The forecasted in- insight into risks and probabilities of spills at ocean
creased demand is 1,500,000 BPD by 2015. ports (US DOI, 2002). Key findings of the analysis
Balancing pipeline capacity with demand is a for the Valdez Marine Terminal in Alaska are sum-
complex undertaking involving technical and market marized in Table 4. The report concluded that catas-
issues such as market destination, market fluctua- trophic rupture or failure of crude-oil storage tanks
tions, future increases in demand, economies of is an extremely rare occurrence, as only “eight cases
scale, contractual restrictions, and operational risks. of crude oil tank rupture are known from around the
Given these considerations, some surplus capacity is world — three caused by foundation failure, one
desirable and normal. However, the supply/demand caused by weld failure, one caused by impact of a
balance indicates that, if all projects were built, rail truck, and three caused by flooding” (US DOI,
capacity utilization would be only about 35%, well 2002: 4.4-20). However, small spills are a frequent
below economic levels. This indicates that some of occurrence.
the proposed projects will not be required. The im- Tanker spill frequency is another important factor
plications of this for project evaluation are discussed and has been extensively studied in the literature.
below. Anderson and Labelle (2000) found that there were
278 crude-oil spills greater than, or equal to, 1,000
barrels in the world between 1974 and 1999 (Table
Environmental impacts 5). There were 46 crude-oil spills of at least 1,000
barrels from tankers in US waters, including 11
Pipeline, port, and tanker projects can have signifi- spills associated with Alaska North Slope crude-oil
cant short- and long-term environmental impacts transportation. Based on these spill rates, the
(Table 2). Pipeline construction and operation can Enbridge Gateway project alone would be expected
cause damage to soils, surface and groundwater, air to experience seven spills from tankers and the port
quality, vegetation, wildlife, and fish populations. operation over 1,000 barrels during its 30-year life
Another significant impact of pipelines is leakage (Gunton et al, 2005).
of product. Pipeline rupture data summarized in Oil spills from tankers can have numerous ad-
Table 3 show that ruptures are a relatively common verse effects including shoreline contamination,
occurrence. Oil spills, which occur on average close catastrophic species loss, ocean sediment contamina-
to once per year, are the most damaging. The aver- tion, water quality deterioration, commercial fishing
age spill from the eight incidents from 1992 to 2002 industry closures, and impacts on tourism and tradi-
was 9,814 barrels and the largest spill was over tional Aboriginal culture (Canada, 1978; OOGRG,
25,000 barrels. Pipeline spills can lead to direct loss 2004; Thompson, 1978; US DOI, 1972; 2002;
of various species as a result of contaminated food WCEL, 2003; Westwater Research Centre, 1977). A
intake, reduced respiratory functions, or ingestion of review of research on the consequences of the Exxon
oily water. Valdez tanker spill in Prince William Sound, Alaska
Port operations have potential to create adverse showed that the impact of a major oil spill would be
impacts on regional air quality as a result of ship and catastrophic. Following the Exxon Valdez tanker
port- related vehicle emissions, vessel painting and spill, an estimated 2,800 sea otters, 250,000 birds,
cleaning, and other activities (AAPA 1998, 2000; 1.9 million salmon, and 12.9 million herring were
Bailey and Solomon 2004; US DOI 1972, 2002). In killed (Brown et al, 1996; Geiger et al, 1996; Piatt
addition, discharge of contaminated effluent from and Ford, 1996). Furthermore, severe impacts were
ports into the environment can result in a number of observed in many other marine species inhabiting
negative impacts on environmental resources, in- the area. Linkages within ecosystems also compound
cluding direct and indirect loss of marine biodiver- immediate effects of spills on marine life, as impacts
sity and fishery resources because of eutrophication on one species can lead to effects on others
of the water column, depletion of oxygen supplies, (OOGRG, 2004).
introduction of heavy metals into the environment, Recent studies have also indicated that oil-spill
and increased levels of nutrients in water (AAPA impacts can endure for longer than previously an-
2000; US DOI 2002). ticipated, causing delayed population reductions and
During port-dredging activities, heavy metals, postponed recovery in many species for decades
polychlorinated biphenyls (PCBs), polyaromatic hy- (OOGRG, 2004; Peterson et al, 2003). For example,
drocarbons (PAHs), dioxins, and other substances a recent report concluded that several marine species
can contaminate suspended particles in the ocean were still experiencing adverse effects almost 20
(AAPA, 1998; 2000). Furthermore, an oil spill at the years after the Exxon Valdez spill in Alaska (Peterson
marine terminal could generate negative effects on et al, 2003).

Impact Assessment and Project Appraisal June 2007 125


Evaluation of assessment of major projects

Table 2. Potential environmental impacts of pipeline, port, and tanker projects

Project component Impact category Potential impacts

Pipeline Physiography and - Loss of soil capability


construction and soils - Soil compaction, pulverization, rutting, and reduced percolation rate
operation - Erosion and increased sediment load
- Decreased terrain stability
- Direct topsoil and subsoil loss
Surface and - Changes in groundwater recharge and discharge rates and flow obstruction
groundwater - Decreased water quality and quantity
- Contamination from solid, industrial, and liquid wastes
Air quality - Increased emissions resulting from burning of slash and debris, construction and operation
of pump stations, and vehicle use
- Increased dust from construction and maintenance vehicles
Noise - Negative effects on nearby residents, hunters, recreational users, and indigenous wildlife
Vegetation - Direct loss and alteration of vegetation
- Changes to physical site conditions because of introduction of nonnative and invasive
species
- Disturbance of rare plants and traditional collecting sites
Wildlife - Direct habitat loss, alteration, or fragmentation leading to species loss
- Disturbances on feeding, nesting, denning, or breeding patterns
- Alteration of seasonal and daily movements of wildlife
- Increased mortality because of greater human access to wildlife areas
Fish and fish habitat - Direct species loss resulting from increased sedimentation, turbidity, flow disruption,
trenching, or dredging in watercourses
- Indirect species loss resulting from increased water use and access to fishing areas
Oil spills and - Detrimental impacts on soils, water, and vegetation
accidents - Destruction of bird nests and feather contamination in waterfowl
- Direct loss of wildlife resulting from contaminated food intake, reduced respiratory
functions, or ingestion of oily water
- Direct loss of water birds, livestock, fish, fish eggs, and larvae
Port construction Air pollution - Negative human health effects
and operation - Destruction of upper-atmosphere ozone
- Generation of acid rain
- Increased global warming
- Destruction of agricultural resources, forest, and plant communities
Water and - Direct and indirect loss of marine biodiversity and fishery resources
contaminant - Ocean floor contamination and loss of benthic organisms
discharges
Dredged material - Negative effects on plant and animal communities
and contaminated - Decreased water quality
sediment disposal - Contamination of ocean sediments leading to species loss
- Disturbance of existing contaminated sediments in harbors can make contaminants
bioavailable
Ship- and port- - Direct loss of marine mammals, sea turtles, seabirds, and fish resulting from entanglement
generated solid or ingestion of marine debris
waste - Reduced capacity of animals to forage, digest food, and absorb nutrients
Oil spills and - Direct loss of vegetation communities, bird and mammal populations, threatened and
accidents endangered species, fish populations, and benthic communities
Tanker operations Air pollution - Detrimental human health effects
- Destruction of upper-atmosphere ozone
- Increased acid rain
- Increased global warming
- Destruction of agricultural resources, forest, and plant communities
Ballast water - Introduction of alien species
discharge - Increase mortality in marine birds
- Generation of beach tar
Accidents and oil- - Direct loss of marine and terrestrial mammals, birds, and other species
spill risks - Direct loss and/or decreased survival capacity in fish and fish larvae
- Decreased water quality by chronic toxicity levels
- Contamination of shorelines
- Other negative effects due to oil-spill clean-up techniques

Source: Aboriginal Pipeline Group et al (2004); AAPA (1998; 2000); Bailey and Solomon (2004); BC Gas Utility Ltd (1998); Canada
(1978); Canada NEB (1996; 1998; 2003a); Encana Ekwan Pipeline Inc (2003); Environment Canada and US EPA (2004);
Foothills Pipe Lines (South Yukon) Ltd (1979); OOGRG (2004); Salmo Consulting Inc (1999); Taggart and McCracken (2002);
Thompson (1978); US DOI (1972; 2002); WCEL (2003); Westwater Research Centre (1977).

Environmental impacts of port-development and is even more significant considering that the pro-
tanker traffic suggest that the Enbridge Gateway, posed tanker routes are along the inside passage
Pembina, and Terasen Northern Option proposals British Columbia, which is currently designated a
will have more significant impacts than the mainland no-tanker zone because of the risk of tanker acci-
proposals that do not entail port and tanker activities. dents and vulnerability of the environment (Gunton
Potential impacts of the tanker-based proposals et al, 2005).

126 Impact Assessment and Project Appraisal June 2007


Evaluation of assessment of major projects

Table 3. Spill rates for NEB regulated pipelines, 1992–2003 communities (Table 6). Large-scale resource pro-
jects create community impacts through significant
Product Size Incidents Frequency short-term increases in employment and population,
(barrels) (1992–2002) (per year) economic and business development, and inflation
effects. The most obvious regional economic effects
Oil <1000 2 .2 include potential to increase direct and indirect busi-
Oil >1000 6 .6
Natural gas na 18 1.8 ness opportunities and regional incomes, diversifica-
tion or expansion of the local economic base, and
Note: na = not available generation of taxes and royalties for government
Source: Computed from Canada NEB (2006b)
(Cocklin and Kelly, 1992; Detomasi, 1997; Dixon,
1978; Hua, 1985; Yamaguchi and Kuczek, 1984).
Table 4 Spill scenarios and frequencies at the Valdez marine Economic impacts of pipelines are highly cyclic-
terminal
al, with significant short-term employment during
construction phases that disappears once the project
Scenario Spill product Estimated Spill volume is operational. For example, Enbridge estimates that
description frequency (barrels) average annual construction employment for the
(per year)
Gateway Project would be approximately 1,043 per-
Small leak Crude oil 0.5 0.5-13 son years over the three-year construction period
Diesel fuel 0.5 0.02-15 (Gunton et al, 2005). At its peak in July 2009, con-
Moderate leak Crude oil 0.03 1,700-3,200 struction employment for the Gateway Project
Diesel fuel 0.03 0.7-300
Catastrophic rupture Crude oil 1.8 x 10
-6
50,350- would be approximately 2,924. Employment would
of storage tank 143,450 drop to only 75 permanent operational jobs once the
-6
Diesel fuel 2.2 x 10 40,000 project is built (Enbridge Pipelines Inc, 2003; 2005).
-5
Aircraft crash into Crude oil 2.1 x 10 382,500
tank
This cyclical trend in employment is commonly re-
Source: US DOI (2002) ferred to in the literature as the boom-town phenome-
non where an existing community “experiences a
Table 5. International, US, and Alaska north slope crude-oil
period of extraordinary growth and expects a period of
and tanker spill rates rapid decline as the project is phased out” (Hua, 1985:
216). During boom periods, population increases are
driven by an influx of migrants looking for project-
Location Period Spill size Number Volume Spill related employment. This rapid growth can cause
(barrels) of spills transported rate*
(BBBL) numerous negative effects on local communities, such
as inflation, social upheaval, unrealistic expectations
International 1974– >1,000 278 239.67 1.16 for future growth, excess investment in project expan-
waters 1999 sion, and housing shortages (Cocklin and Kelly, 1992;
>10,000 143 0.59
>100,000 58 0.24 Detomasi, 1997; Hua, 1985; OOGRG, 2004; Yama-
1985– >1,000 113 138.31 0.82 guchi and Kuczek, 1984). Other potential impacts of
1999 pipeline, port, and tanker projects include demo-
>10,000 51 0.37
>100,000 16 0.12
graphic change, increased infrastructure demands,
US coastal 1974– >1,000 46 44.50 1.03 community wellness effects, loss of traditional
and offshore 1999 Aboriginal harvesting areas and culture, impacts on
waters
>10,000 19 0.43
other economic sectors, and loss or damage to heritage
1985– >1,000 20 27.57 0.72 and archaeological resources (Table 6).
1999
>10,000 7 0.25
Shipments 1974– >1,000 11 12.60 0.88
from Valdez, 1999 Project assessment system
Alaska
>10,000 3 0.23 Three key regulatory and approval processes exist at
1985– >1,000 8 8.72 0.92
1999 the federal level for pipeline, port, and tanker pro-
>10,000 3 0.34 jects: National Energy Board (NEB) approval,
Note: * Spill rate calculated as spills per billion barrels (BBBL) TERMPOL (see below) approval for port and tanker
transported proposals, and Canadian Environmental Assessment
Source: Anderson and Labelle (2000)
Act (CEAO, 2003)) approval. Various approvals are
also required at the provincial level, including pro-
vincial environmental impact assessment.
Socioeconomic impacts
National Energy Board
In addition to environmental impacts, development
and operation of pipeline, port, and tanker projects The NEB is an independent federal tribunal that has
have potential to generate a variety of socioeco- jurisdiction to regulate international and interprovin-
nomic effects on local, regional, and First Nations cial aspects of the oil, gas, and electricity industries

Impact Assessment and Project Appraisal June 2007 127


Evaluation of assessment of major projects

Table 6. Potential socioeconomic effects of pipeline, port, and tanker projects

Impact category Potential impacts

Employment and economic - Short-term direct employment generation


development - Limited regional economic multiplier impacts as equipment and materials are produced in other
regions
- Increase in local business opportunities and regional incomes
- Diversification of the local economic base
- Generation of taxes and royalties for government
- Boom-town phenomenon can lead to inflation, social problems, unrealistic expectations for future
growth, and housing and other infrastructure shortages
- Increased unemployment in some cases because prospective in-migrants may be unsuccessful at
finding jobs
Demography - Population increases as in-migrants seek project employment, which in turn can have adverse
effects on community infrastructure and services
Infrastructure - Increased demands are placed on highways, railways, and air transportation
- Population increases may lead to increased demand for water treatment, sewage, and solid-waste
treatment and disposal, power supplies, and housing
- Increased demand for recreation complexes and other facilities
Individual, family and community - Greater consumption of alcohol and related substance abuse may place increased demands on
wellness social, police, and ambulance services
- Increased income levels may lead to improved diets, clothing, and housing
- Social tension between project workers and local residents
- Exposure to contagious diseases and sexually transmitted infections
- Adverse effects on education attainment levels
Traditional aboriginal use and - Negative impacts on retention of traditional language and identification with traditional culture
culture - Oil spills can negatively affect wildlife and fishery resources
- Decreased childhood education in traditional harvesting methods
- Increased costs of harvesting
Other economic sectors - Decreased land available for timber harvesting and disruption of existing forest industry practices
- Negative effects on commercial fishing resulting from oil spills and tanker traffic
- Negative effects on the tourism industry resulting from oil spills, environmental degradation, and
decreases in the available land base
- Labor shortages in other economic sectors
Heritage and archaeological - Negative impact on culturally or spiritually sensitive areas, culturally modified tress, historic sites
resources and cabins, heritage trails, and burial sites because of construction disturbances and operational
activities in marine and terrestrial environments

Source: Aboriginal Pipeline Group et al (2003; 2004); BC Gas Utility Ltd (1998); Canada (1978); Canada NEB (1996; 1998; 2003a);
Cocklin and Kelly (1992); Detomasi (1997); Dixon (1978); EnCana Ekwan Pipeline Inc (2003); Hua (1985); MVPI (1977);
OOGRG (2004); Salmo Consulting Inc (1999); Thompson (1978); US DOI (1972; 2002); Yamaguchi and Kuczek (1984); Yukon
Department of Energy, Mines and Resources (2002)

in Canada (Canada NEB, 2003b). The National En- other factors that the board requires to make a decision
ergy Board Act (NEB Act) sets out the regulatory (Canada NEB, 2003b).
framework and powers of the NEB as they relate to oil The NEB reviews applications for compliance
and gas activities (CIRL, 2004). In accordance with with a variety of legislative and regulatory docu-
the NEB Act, the NEB reviews applications for inter- ments, including, the NEB Act, the CEAA, the
national and inter-provincial pipelines and issues NEB’s Rules of Practice and Procedure (Can-
Certificates of Public Convenience and Necessity for ada NEB, 1995), and the NEB’s Filing Manual
approved projects (CIRL, 2004). The NEB has power (Canada NEB, 2006c). In assessing applications, the
“to consider the environmental impacts of proposed NEB states: “it is the responsibility of the NEB to
projects under its jurisdiction and to attach appropriate consider all aspects of the project in order to deter-
terms and conditions to project certificates” (CIRL, mine if the pipeline project is in the public interest”
2004: 93). In addition, the NEB is required to conduct (Canada NEB, 2003b: 21).
environment assessments (EAs) for projects under its Once an application is submitted, the NEB is re-
jurisdiction, pursuant to the CEAA (CIRL, 2004). quired to conduct public hearings for pipelines more
The approval process for a Certificate for Public than 40 kilometers in length. At certificate hearings,
Convenience and Necessity includes the following all relevant matters pertaining to pipeline applica-
information: purpose of the pipeline; pipeline de- tions are reviewed. Prior to detailed route hearings,
sign; potential environmental and socioeconomic the NEB may offer to facilitate a mediation process
impacts of the project; existing or proposed public between parties to determine whether objections can
consultation programs in relation to the project; need be resolved without the use of a hearing. Mediation
for any land rights; adequacy of supply, demand, processes are voluntary, informal, and confidential,
and other market factors; economic considerations where NEB staff trained in mediation techniques act
of the pipeline; proposed corridor route; and any as facilitators (Canada NEB, 2003b).

128 Impact Assessment and Project Appraisal June 2007


Evaluation of assessment of major projects

If the NEB issues a certificate for a pipeline • environmental effects of the project, including
project, the board is involved in the inspection of cumulative effects;
construction activities and pipeline operations. Typi- • technically and economically feasible measures
cally, NEB inspection officers carry out field inspec- that would mitigate adverse environmental
tions to ensure that project conditions are adhered to. effects;
Certificates for public convenience and necessity • alternative means of carrying out the project that
may be revoked by the board, in circumstances of are technically and economically feasible and the
repeated violations by proponents (Canada NEB, environmental effects of these alternatives;
2003b). • the need for, and requirements of, a follow-up
program in respect of the project;
TERMPOL review process • impact of the project on sustainability of renewable
resources;
TERMPOL is a joint review process administered by • comments from the public;
DFO (Department of Fisheries and Oceans) and • any other factors that the Minister of the
Transport Canada Marine Safety (TCMS), commonly Environment requires to be considered.
referred to as the technical review process (TRP) of
marine terminal systems and transhipment sites Provincial approval processes
(Transport Canada, 2001). The purpose of TRP is to
assess environmental, operational, safety, and man- The provinces also have their own separate review
agement issues associated with tanker routes and ma- processes for pipelines that include full environ-
rine terminal siting, construction, and operation. mental assessments (BC EAO 2003). The federal
TRP begins when a proponent submits a written Government has signed harmonization agreements
request for review to TCMS (Transport Canada, with the provinces to coordinate approvals and pro-
2001). Following a formal request, the proponent vide a unified assessment to avoid duplication
and representatives from relevant federal depart- (Boyd, 2003; Canada and British Columbia, 2004).
ments informally meet to discuss submission re-
quirements and the director general of TCMS First Nations’ rights and titles
appoints a chairperson for the TERMPOL Review
Committee (TRC). The chairperson then forms the An increasingly important consideration in project
TRC by including representatives from federal de- approvals is First Nations’ rights and title. Where
partments with expertise or responsibilities associ- First Nations have negotiated treaties, treaty provi-
ated with the project. While TRP is a useful process sions regarding use of land and resources must be
for addressing a variety of issues with respect to respected in any pipeline approval. Even when there
proposed tanker routes and marine terminal systems, are no treaties, such as in most of British Columbia,
it is not mandatory. First Nations’ rights and title confer a duty to consult
and accommodate First Nations’ interests in any pro-
Canadian Environmental Assessment Agency ject that impacts their Aboriginal rights (Donovan
and Griffith, 2003).
The CEAA establishes specific objectives, duties, This requirement has a significant impact on the
and powers of the agency, which consist of adminis- approval of pipeline projects in British Columbia,
tering the EA process and procedures established by where Aboriginal rights exist and treaties have not
the act or its regulations (CEAO, 2003). The CEAA been signed. However, case law dealing with Abo-
was first passed in 1992, but legislation was updated riginal rights and title and the duty to consult and
most recently in 2003 (Boyd, 2003). accommodate Aboriginal people is unclear and con-
EAs may be carried out in several ways (Boyd, tinues to evolve, as demonstrated by recent decisions
2003). Screenings provide a brief analysis of envi- by the Supreme Court of Canada (Haida Nation vs
ronmental and cumulative effects of a project and British Columbia (Ministry of Forests), 2004; Taku
are typically used for simple or routine projects. River Tlinglit First Nation vs British Columbia (Pro-
Comprehensive studies are more detailed than ject Assessment Director), 2004).
screenings, since environmental and cumulative ef-
fects are considered in conjunction with project al- Impact and benefits agreements (IBAs)
ternatives, monitoring systems, and other project
characteristics. Federal EAs may also be carried out Impact and benefits agreements (IBAs) are an im-
through mediation or a panel review. These two portant mitigation tool used by project proponents,
methods are used if a comprehensive study deter- governments, and First Nations to establish formal
mines that a project may cause significant adverse long-term relationships with respect to large-scale
environmental effects. Large-scale pipelines would resource development projects (Keeping, 1998;
be likely to be subject to a full panel review because 1999; Kennett, 1999; NRTEE, 2001; O’Reilly and
of their potential impacts. Eacott, 1998; Sosa and Keenan, 2001). Typically,
Comprehensive studies must consider the follow- IBAs are divided into seven broad categories: intro-
ing factors (CEAO, 2003: s.16): ductory provisions; employment and training;

Impact Assessment and Project Appraisal June 2007 129


Evaluation of assessment of major projects

economic development and business opportunities; A potential area for confusion is the overlapping
social, cultural and community support; financial jurisdictions of provincial governments, which have
and equity provisions; environmental and cultural authority for approving many aspects of pipeline
resources; and other substantive and procedural pro- projects. This overlap is largely clarified by
visions. The negotiation of IBAs is contingent on harmonization agreements on environmental ass-
voluntary participation by stakeholders and project essment between the federal and provincial govern-
developers. In most circumstances, participation by ments that specify roles and responsibilities to
project developers is motivated by the desire to ap- reduce overlap and uncertainty (Boyd, 2003). How-
pease stakeholders who have legal rights to block or ever, agreements such as the Canada–British Co-
impede project development. lumbia Agreement on Environmental Assessment
Unfortunately, research on evaluation of IBAs Cooperation are ambiguously worded and do not
is limited (Kennett, 1999; O’Reilly and Eacott, adequately outline the level of EA collaboration
1998; Sosa and Keenan, 2001). Sosa and Keenan between the two governments (Canada and British
(2001) conclude that, despite widespread use of Columbia, 2004). Federal and provincial EA co-
IBAs in Canada, there is little research on their operation agreements also fail to define clearly cir-
effectiveness. cumstances that determine which government
assumes the lead agency role when both parties have
an EA responsibility.
Evaluation of impact assessment There may also be confusion in the roles of DFO
and Transport Canada on port and tanker assess-
To assess the effectiveness of impact assessment and ments relative to the role of the NEB on pipeline as-
approval processes for pipeline, port, and tanker pro- sessments, even though the tanker, port, and pipeline
jects, a methodology was developed based on; best are all part of the same project requiring assessment.
practices’ criteria (Table 7). Best practices evalua- Furthermore, First Nations also have a legal role in
tive criteria were formulated based on a review of decision-making processes, based on Aboriginal
the following literature: Baker and McLelland rights and title claims, but this role has not been
(2003); Bardach (2000); British Columbia (2002); clearly defined. Therefore, most roles and responsi-
Calbick (2003); Council of the Haida et al v. Minis- bilities have been clearly defined or are likely to be
ter of Forests et al (2000); Doyle and Sadler (1996); clearly defined by agreements among the parties.
Elliott (1997); Gilpin (1995); Gunton (1991); Hanna However, because some roles, particularly the role
(2005); Innes and Booher (1999); IAIA (1999); of First Nations, are not clearly defined or are sub-
Laswell (1971); Mazmanian and Sabatier (1989); ject to negotiation, this criterion is only largely met.
Noble (2005); OOGRG (2004); Sadar (1996); Taku
River Tlinglit First Nation v. Ringstad et al (2002); Legislative base
Weimer and Vining (1998); Wood (1995).
Each criterion was assessed using the following Principle: The structure of the management regime
scale: should be formally structured through legislation
and regulations. A formal structure outlined in legis-
• Fully met no deficiencies lation gives decision-makers the authority to carry
• Largely met no major deficiencies out their roles, as well as explicitly outlining their
• Partially met at least one major deficiency level of authority, roles, and responsibilities. This
• Not met two or more major deficiencies ensures that the responsibilities, timelines, pro-
cesses, information requirements, and authority are
Roles and responsibilities transparent and accountable.

Principle: Roles and responsibilities should be Evaluation: Regulatory structures for pipeline, port,
clearly defined. Administrative structures and policy and tanker projects have been formally structured in
should provide clear guidance and clearly outline legislation and regulations. However, key aspects of
levels of authority and responsibilities, including the regulatory system including decision-making cri-
those relationships that require multijurisdictional teria, type and scope of assessments, support for
collaboration, such as EA processes. Clear definition stakeholders’ involvement, compensation and miti-
of roles and responsibilities is necessary to ensure gation, and project approval are all at the discretion
efficiency and accountability. of federal and provincial officials and are not clearly
prescribed in legislations. Therefore, this criterion is
Evaluation: Jurisdiction over pipeline, port, and only largely met.
tanker projects has for the most part been clearly de-
fined. The NEB regulates construction and operation Decision-making criteria and methods
of interprovincial pipelines. Approval of proposed
marine terminals and tanker routes is likely to in- Principle: The decision-making process should be
volve a TERMPOL review under the jurisdiction of based on clear criteria and methods for assessing
DFO and Transport Canada. options. The decision-making process should be

130 Impact Assessment and Project Appraisal June 2007


Evaluation of assessment of major projects

transparent using clear decision-making criteria, of those stakeholders affected by the decision.
sound methods of analysis, and rules that clarify Therefore, stakeholders need the opportunity to par-
how decisions will be made to ensure accountability, ticipate in decision-making by having sufficient
transparency, and consistency in decision-making. resources, access to information, and opportunities
for engagement with other stakeholders and deci-
Evaluation: Many jurisdictions specify the criteria sion-makers.
and types of analytical methods, such as multiple ac- The preferred means of stakeholder involvement
counts evaluation or cost–benefit analysis, that must is a collaborative process that delegates responsibil-
be used in assessing options and formulating rec- ity for assessing options and developing recommend-
ommendations (OOGRG, 2004). With respect to ations to stakeholder tables that engage in
pipeline, port, and tanker projects, decision-making consensus-based negotiations to reach agreement.
criteria and evaluation methods used in approval Collaborative processes, which have been used ex-
processes are not explicitly outlined. tensively in land-use planning in British Columbia,
For example, the NEB simply states “it is the re- result in decisions that are more likely to be in the
sponsibility of the NEB to consider all aspects of the public’s best interest by addressing the concerns of
project in order to determine if the pipeline project is all affected parties (Frame et al, 2004).
in the public interest” (Canada NEB, 2003b: 21).
TERMPOL review and EA processes are equally Evaluation: CEAA and the NEB review processes
vague with respect to decision-making criteria. In provide opportunities for stakeholder involvement
the end, the responsible authority can make any de- through a quasi-judicial hearing process that allows
cision regardless of the assessment without provid- presentation of testimony, access to information, and
ing a clear rationale. Therefore, this criterion is not the opportunity to cross-examine witnesses. CEAA
met. and the NEB also provide financial resources to
stakeholders to participate in the processes (CEAO,
Efficiency 2003: 28).
The primary deficiencies of the stakeholder
Principle: Decisions should be reached in a timely involvement process are that it is adversarial, not
manner at a reasonable cost. The decision-making collaborative and the decision-makers have no obli-
process should not be constrained by lengthy appeal gation to accommodate the interests of stakeholders.
processes, or delays because of the lack of a clear There are also significant inequities in resources
decision-making framework or blurred roles and re- among stakeholders, such as the large pipeline com-
sponsibilities. The process should be effective in the panies and nongovernmental organizations.
sense that outcomes should be consistent with goals CEAA does provide the option for a collaborative
and objectives, implementable, and in the public mediated solution, but this has never been used.
interest. IBAs provide an opportunity for consensus-based
negotiated settlement among the parties, but the
Evaluation: Decision-making processes for pipeline, motivation to negotiate by project proponents is con-
port, and tanker projects may be both lengthy and tingent on other stakeholders having legal rights that
costly because of overlapping regulatory and ap- must be accommodated. The legal pressure to nego-
proval processes, inadequate policy frameworks, and tiate IBAs exists in only a limited number of cases.
uncertainty with respect to Aboriginal rights and title Therefore, the process only partially meets this
claims. If such issues are not adequately addressed at criterion.
the outset of decision-making processes, potential
projects may be significantly delayed by litigation. Cumulative assessment
However, decisions on many recently completed
pipeline projects, such as the Alliance Pipeline in Principle: The evaluation process should cumula-
western Canada, Express Pipeline in Alberta, and tively assess project impacts in the context of
Southern Crossing Pipeline in BC, have been impacts of all other potential projects.
reached in a timely manner (BC Gas Utility Ltd,
1998; Canada NEB, 1996; 1998). These results indi- Evaluation: Section 16(1) (a) of CEAA requires
cate that there is potential for efficient decision- cumulative assessment analysis. Therefore, this cri-
making processes. Therefore, this criterion is largely terion is fully met.
met.
Project rationale
Stakeholder involvement
Principle: The evaluation process should assess the
Principle: A legal framework should be in place to rationale for the project and evaluate alternatives to
ensure that stakeholders are collaboratively en- the project to identify the best option.
gaged in the decision-making process through
shared decision-making. Sound decisions must be Evaluation: Capacity of current pipeline proposals
based on the values, objectives, and risk assessments exceeds demand by almost three times. Therefore,

Impact Assessment and Project Appraisal June 2007 131


Evaluation of assessment of major projects

the pipeline proposals involve competing projects Monitoring and enforcement


that will not all be built. Consequently, it is import-
ant to conduct a comprehensive comparative evalua- Principle: The regulatory framework should clearly
tion of all proposals thus ranking them in terms of outline monitoring and enforcement processes,
overall social benefits, to identify which projects infractions, and penalties. An effective monitoring
achieve the greatest public interest. Section 16(2) of and enforcement strategy, based on principles of
CEAA requires consideration of the purpose of pro- adaptive management, ensures environmental, eco-
jects and alternative means of carrying them out for nomic, and social goals are achieved during all pro-
all comprehensive reviews. However, this section ject phases. Compliance-monitoring processes and
does not require comparative evaluation of alterna- penalties for noncompliance should be clearly out-
tive projects. lined and results made available to all interested
The NEB review process requires consideration of parties, including the public.
the purpose of a pipeline, adequacy of supply, de-
mand, and other market factors. Pipelines are, how- Evaluation: Monitoring and enforcement for pipeline,
ever, normally evaluated as a single project, not in port, and tanker projects are required by various gov-
comparison with alternative projects. Market factors ernment agencies. The NEB requires that pipeline
are assessed based on evidence of shipper’s interest, companies develop monitoring programs to include
not all cost and benefits. There is no provision in the provisions for regular patrols and inspections during
review process to ensure that there is a comprehen- construction and operations, ongoing communication
sive comparative evaluation of competing projects to with stakeholders, emergency procedures, and other
identify the project or combination of projects that safety concerns (Canada NEB, 2003b). The NEB also
maximize the public interest. Therefore, this cri- monitors pipeline performance through field inspec-
terion is not met. tions and by requesting that companies submit Assur-
ance of Voluntary Compliance (AVC) reports
First Nations (Canada NEB, 2003b). In terms of enforcement, the
NEB may revoke or suspend a company’s certificate
Principle: Legal and fiduciary obligations, such as for public convenience and necessity or issue sanc-
the duty to consult and address First Nations’ inter- tions for noncompliance (Canada NEB 2003b).
ests, should be fully met. Similarly, through TRP, Transport Canada and
DFO require that project proponents submit inform-
Evaluation: Case law indicates that First Nations ation with respect to proposed monitoring pro-
have a legal right to be involved in land-use grams, contingency plans, mitigation measures, and
decisions with respect to areas subject to Aboriginal emergency procedures (Transport Canada, 2001).
title claims. The NEB encourages public participa- The mandate for Transport Canada also includes re-
tion in review processes, but has stated “imposing on sponsibilities with respect to vessel inspection and
the Board a fiduciary duty towards Aboriginal enforcement of marine safety programs (Transport
peoples as part of its decision-making … process is Canada, 2003). Accordingly, this criterion is met.
inconsistent with its function as an independent
quasi-judicial tribunal” (Canada NEB, 2002: 1). Equity
TRP also has limited opportunities for First Nations
consultation and involvement. Principle: The decision-making process and out-
Federal and provincial EA processes stress the comes should contain a legal obligation to provide
need for consultation with affected parties, but the compensation to those negatively affected by the
extent of such consultation is both ambiguous and project and ensure project benefits are equitably
unclear. Section 40 of CEAA provides for the ap- distributed.
pointment of a joint review panel that includes First
Nations representatives when a First Nations body Evaluation: Regulatory and approvals processes for
has been established pursuant to a land-claims pipeline, port, and tanker projects do not adequately
agreement referred to in section 35 of the Constitu- address issues of equity and compensation. The
tion Act. For example, a joint review panel that in- NEB clearly states that it does not have jurisdiction
cludes First Nations representatives has been set up over compensational matters, since land-use com-
to review the Mackenzie Valley pipeline proposals pensation is typically negotiated between landown-
(NPEIARCC, 2002). ers and pipeline companies (Canada NEB, 2003b).
However, this provision is limited to only those Similarly, EA, Transport Canada, and DFO pro-
cases where a land-claims agreement has been con- cesses do not include provisions for compensating
cluded and is not therefore relevant to most of Brit- stakeholders who are negatively affected as a result
ish Columbia. While the courts provide a means of a project.
of enforcing obligations to First Nations, such Projects may include negotiation of IBAs between
processes pose significant obstacles in terms of cost proponents and First Nations to address employment,
and time. Therefore, this criterion is only partially training, economic development, business opportuni-
met. ties, and community support issues. However, such

132 Impact Assessment and Project Appraisal June 2007


Evaluation of assessment of major projects

agreements are not required by regulatory agencies approval processes. However, project proponents,
and are at the discretion of project proponents. who have a bias in favor of project approval, provide
CEAA contains no provisions for compensation or most information. Other stakeholders have the op-
distributional equity. Therefore, this criterion is not portunity to submit their own information and evalu-
met. ate project proponent information. However,
information is not supplied by an objective party.
Resources Therefore, this criterion is only partially met.

Principle: Decision-making bodies should have Impartiality and democratic accountability


sufficient resources in place to ensure an effective
and efficient decision-making process. Sufficient Principle: The management regime should be man-
resources include adequate financial and human aged by impartial, expert decision-makers who rep-
resources to carry out project evaluation and resent the publics’ interests, and are directly, or
monitoring. indirectly, accountable through the democratic
process to those affected by the decision.
Evaluation: Regulatory agencies have been provided
with resources to evaluate and monitor pipeline, Evaluation: NEB and CEAA review panels are
port, and tanker projects. Based on past experience comprised of impartial experts who make recom-
and contemporary examples, such as the Mackenzie mendations to government. Final decisions are made
Gas Project in northwestern Canada, adequate re- by elected officials who are accountable to the pub-
sources are likely to be provided to relevant authori- lic through an electoral process.
ties to carry out decision-making responsibilities There are several deficiencies with this structure.
with respect to pipeline projects. Accordingly, this First, expert review panels are not obligated to incor-
criterion is met. porate stakeholders’ interests in their recommend-
ations. Therefore, there is no direct accountability
Appeal process to the public. Direct accountability to stakeholders
requires more collaborative decision-making that
Principle: The decision-making process should in- relies on consensus-based stakeholder negotiation.
clude a mechanism to allow stakeholders to appeal a Secondly, elected officials can unilaterally make
decision. If decisions breach procedural require- whatever decision they wish regardless of a project
ments, prescribed guidelines, or goals and objec- assessment and without providing clear justification.
tives, then stakeholders should be afforded the right Although elected officials are ultimately accountable
to challenge such decisions. The appeal process through elections, elections do not ensure effective
should be efficient and narrowly defined to eliminate accountability (Weimer and Vining, 1998). There-
delays to the decision-making process. Moreover, fore, this criterion is only partially met.
the appeal board or tribunal should have sufficient
expertise to render such decisions.
Conclusions
Evaluation: While regulatory decisions can be ap-
pealed to the courts in certain instances, court ap- Eight major pipelines that could have significant det-
peals are costly, lengthy, and based on unclear rimental environmental impacts are currently under
decision-making criteria. EA processes and TRP do consideration in Canada. A methodology was devel-
not provide mechanisms enabling stakeholders to oped for evaluating impact assessment processes
appeal tribunal decisions. However, if stakeholders based on 14 best-practice criteria. The evaluation of
do not agree with a decision made by the NEB, the regulatory and approval processes for pipeline pro-
board permits stakeholders to request a review of the jects reveals serious deficiencies. Of the 14 criteria,
board’s decision on the application. Therefore, this three have been fully met, three largely met, five
criterion is partially met. partially met, and three have not been met (Table 7).
The most significant deficiencies are: lack of clear
Adequate and objective information decision-making criteria and methods; inadequate
stakeholder involvement; no provision for compara-
Principle: Decisions should be based on adequate tive evaluation of competing projects; inadequate
information supplied by objective parties. Adequate consideration of legal and fiduciary obligations to
scientific and technical information regarding poten- First Nations; lack of compensation provisions; reli-
tial environmental and socioeconomic impacts of ance on project proponents for information; and
projects must be available and supplied by objective weak provisions for impartial and democratically
parties to ensure that decisions are based on the best accountability decision-making.
available information. To address these issues, proponents, First Nations,
and regulatory bodies at the federal and provincial
Evaluation: Information on all aspects of proposed levels of government should establish collaborative
projects is required as part of CEAA and the NEB decision-making processes in order to review project

Impact Assessment and Project Appraisal June 2007 133


Evaluation of assessment of major projects

Table 7. Regulatory and approval processes evaluation criteria

Best-practice principle Discussion Assessment

Roles and responsibilities Roles and responsibilities of parties are clearly defined, Largely met
Roles should be clearly defined although roles of First Nations remain unclear.
Legislative base The regulatory system is formally structured in legislation, Largely met
The structure of the management regime should be but legislation provides extensive discretionary powers to
formally structured through legislation or regulation decision- makers
Decision-making criteria and methods Decision-making criteria and evaluation methods are not Not met
The decision-making process should be based on clear explicitly outlined. Responsible authorities have the
criteria and methods for assessing options discretion to make any decision on a project regardless of
the assessment findings
Efficiency Decision-making processes may be costly and lengthy, Largely met
Decisions should be reached in a timely manner at a but recent pipeline projects have been approved in a
reasonable cost timely manner
Stakeholder involvement Stakeholders are involved in regulatory and approvals Partially met
processes to some extent, but consultation methods are
A framework should be in place to ensure that
not based on collaborative decision-making
stakeholders are fully engaged in the decision-making
process through collaborative decision making
Cumulative assessment CEAA requires cumulative impact assessment Met
The evaluation process should cumulatively assess
project impacts in the context of impacts of all other
potential projects
Project rationale CEAA and the NEB assess project rationale but do not Not met
The evaluation process should assess the rationale for require comparative evaluation of alternatives
the project and complete a comparative evaluation of
alternatives to the project
First Nations Case law requires governments to consult and Partially met
Legal and fiduciary obligations, such as to consult and accommodate concerns of First Nations, but court
address First Nations interests, should be fully met processes are costly and lengthy, while outcomes are
uncertain
Monitoring and enforcement Monitoring and enforcement activities are carried out by Met
The regulatory framework should clearly outline regulatory agencies
monitoring and enforcement processes, infractions, and
penalties
Equity Equity and compensation issues are not adequately Not met
The decision-making process should contain a legal addressed
obligation to provide compensation to those negatively
affected by a project and ensure project benefits are
equitably distributed
Resources Regulatory agencies are provided with adequate Met
Decision-making bodies should have sufficient resources resources
in place to ensure effective and efficient decision-making
processes
Appeal process Regulatory decisions can be appealed to the courts in Partially met
The decision-making process should include a limited circumstances, but such processes are costly and
mechanism to allow stakeholders to appeal a decision. lengthy
Adequate and objective information Information on all aspects of proposed projects is required Partially met
Decisions should be based on adequate information as part of approval processes: however, project
proponents, not objective parties, provide most
information
Impartiality and democratic accountability The decision is made by either the project proponents or Partially met
The management regime should be structured such elected officials depending on the impacts of the project;
that impartial decision-makers represent the publics’ decisions are not made by impartial experts; however,
interests, and are directly, or indirectly, accountable decisions are ultimately accountable to democratically
through democratic processes to those affected by the elected officials
decision.

information and assess project options. Furthermore, be mandated for comparative evaluation of compet-
all parties should commit to an ongoing relationship ing projects. Without these changes, the regulatory
based on open communication, collaboration, and regime will not be able to ensure that major pipeline
trust to ensure effective and efficient project-review projects are in the public interest.
processes. Clear decision-making criteria should be As a final observation, it should be noted that
established and compensation made obligatory. In- major pipeline companies are increasingly commit-
formation should be provided by objective parties ted to social and environmental sustainability.
instead of project proponents, and processes should Enbridge and TransCanada Pipelines, for example,

134 Impact Assessment and Project Appraisal June 2007


Evaluation of assessment of major projects

publish comprehensive annual corporate responsibil- actively support and welcome efforts to mitigate the
ity reports and covet their participation in the Dow deficiencies in the regulatory regime. With strong
Jones Sustainability Index, which is based on stakeholder support, improvements in the regulatory
achieving social, environmental, and economic regime for pipelines to improve social, environ-
standards. Therefore, the major pipeline com- mental, and economic performance should be
panies, along with other stakeholder groups, should achievable.

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