Northern Pipeline Act (R.S.C., 1985, c. N-26)

Ownership of Pipeline

• 1 The pipeline shall be the property of and shall be operated by the company.

Design and Construction

• 2 Subject to condition 18, the company shall cause the pipeline to be designed, manufactured, located, constructed, installed and operated in accordance with those specifications, drawings and other information or data set forth in the applications of Foothills Pipe Lines (Yukon) Ltd., the Alberta Gas Trunk Line (Canada) Limited, Westcoast Transmission Company Limited, and Alberta Natural Gas Company Limited and in the submission of The Alberta Gas Trunk Line Company Limited to the Board, as amended during the Hearing and in the undertakings given by those companies during the Hearing or as ordered, directed or approved by the designated officer and no design, specification, location, drawing or other information or data shall be varied except as ordered, directed or approved by the designated officer.

• 3 Without limiting the generality of condition 2, the company shall submit to the designated officer

  • (a) information satisfactory to him in support of final detailed design, including the results of field tests and experiments and analyses thereof;

  • (b) the final detailed design of each section or part of the pipeline for his approval;

  • (c) before construction commences, detailed construction specifications and procedures, as well as inspection procedures satisfactory to the designated officer; and

  • (d) a schedule for project control, using a scheduling system acceptable to the Agency, which schedule shall

    • (i) govern the company’s activities that can reasonably be anticipated in connection with the project,

    • (ii) include schedules for regulatory reviews and approvals, and

    • (iii) be updated at thirty day intervals or as otherwise requested by the Agency.

• 4 The company shall not commence construction of a section or part of the pipeline until the designated officer has given the approval of the final design of that section or part as required by paragraph (b) of condition 3.

• 5 The company shall file with the designated officer, forthwith after execution, every contract between the company and the principal construction contractors and every substantive amendment thereto.

• 6 Every contract referred to in condition 5 shall contain a clause requiring the construction contractor to file with the company, forthwith after execution of that contract,

  • (a) a copy of every collective agreement between the construction contractor and a union that is in effect as of the day the contract referred to in condition 5 is entered into;

  • (b) a copy of every amendment to a collective agreement referred to in paragraph (a);

  • (c) a copy of every collective agreement and amendment thereto that is entered into subsequent to a collective agreement referred to in paragraph (a) during the term of the contract referred to in condition 5,

    and the company shall file a copy of every such collective agreement and amendment thereto with the designated officer forthwith after the copy is filed with the company.

Social, Economic and Environmental Matters

• 7 The company shall, in respect of social and economic matters and environmental, fisheries and agricultural concerns, comply with the undertakings given by Foothills Pipe Lines (Yukon) Ltd., The Alberta Gas Trunk Line (Canada) Limited, Westcoast Transmission Company Limited, and Alberta Natural Gas Company Ltd. and in the submission of The Alberta Gas Trunk Line Company Limited to the Board, as amended during the Hearing or such orders or directions as may be made or given by the designated officer.

• 8 Prior to the approval of the final detailed design of each section or part of the pipeline, the company shall submit to the designated officer

  • (a) the results of such further studies in respect of social and economic matters, environmental, fisheries and agricultural concerns as may be ordered or directed by the designated officer; and

  • (b) the recommendations of its environmental consultants for the protection of fisheries, farm lands and the environment.

Manpower and Procurement

• 9 With respect to the use of Canadian labour,

  • (a) the company shall submit to the Minister, on or before a date to be fixed by him, a detailed manpower plan designed to ensure the maximum possible use of Canadian labour in the planning, construction and operation of the pipeline;

  • (b) subject to any amendment approved by the Minister, the manpower plan referred to in paragraph (a), when approved by the Minister, constitutes the company’s manpower plan, and the company shall comply therewith.

• 10 With respect to Canadian participation and content,

  • (a) the company shall design a program for the procurement of all goods and services for the pipeline that ensures that

    • (i) Canadians have a fair and competitive opportunity to participate in the supply of goods and services for the pipeline,

    • (ii) the level of Canadian content is maximized so far as practicable, with respect to the origin of products, services and their constituent components,

    • (iii) maximum advantage is taken of opportunities provided by the pipeline to establish and expand suppliers in Canada that can make a long term contribution to the Canadian industrial base, and

    • (iv) maximum advantage is taken of opportunities provided by the pipeline to foster research, development and technological activities in Canada;

  • (b) the company shall submit to the Minister, in such detail as may be required by the Minister and on or before a date to be fixed by him, a report setting out

    • (i) the program referred to in paragraph (a), and

    • (ii) the procedures that the company proposes to follow in order to implement that program including such procedures as the Minister may require respecting prior approval by the designated officer in respect of proposed contracts or classes of contracts specified by the Minister and including procedures to ensure to the Minister’s satisfaction that proposed contracts for the supply of goods or services from outside Canada will not involve unfair trade practices;

  • (c) subject to any amendment approved by the Minister, the report referred to in paragraph (b), when approved by the Minister, constitutes the company’s procurement policy and procedures and the company shall comply therewith; and

  • (d) prior to the submission and approval of the report referred to in paragraph (b), the company shall make no major purchases without prior approval of the Minister.

• 11 The company shall provide the Minister and the Board, prior to the execution thereof, with copies of every proposed contract for the procurement of goods or services that require the prior approval of the designated officer under the procedures referred to in condition 10(b)(ii).

Financing

• 12. (1) The company shall, before the commencement of construction of the pipeline,

  • (a) file with the Minister and the Board evidence that the company has been incorporated in Canada and is not a non-eligible person within the meaning of the Foreign Investment Review Act, chapter 46 of the Statutes of Canada, 1973-74, as that expression was defined in that Act on April 13, 1978;

  • (b) establish to the satisfaction of the Minister and the Board that financing has been obtained for that portion of the pipeline, hereinafter referred to as the prebuilt sections, that will be used for the transmission of Canadian natural gas to the United States prior to the completion of the pipeline;

  • (c) establish to the satisfaction of the Minister and the Board that financing of that portion of the pipeline other than the prebuilt sections, hereinafter referred to as the northern section, can be obtained to enable the pipeline to be completed before the end of 1985 and that protection can be provided against risk of noncompletion of the pipeline and interruption of construction on a basis acceptable to the Minister and the Board; and

  • (d) file with the Minister and the Board documents relating to the financing obtained for the prebuilt sections and such documents shall include all relevant contracts and instruments.

• (2) The company shall, before commencing construction of that portion of the pipeline other than the prebuilt sections,

  • (a) establish to the satisfaction of the Minister and the Board that financing has been obtained for the northern section and such financing includes protection against risk of noncompletion of the pipeline and interruption of construction on a basis acceptable to the Minister and the Board;

  • (b) file with the Minister and the Board all documents relating to the financing of the pipeline not already filed pursuant to paragraph 12(1)(d); and

  • (c) provide evidence to the Minister and the Board that debt instruments issued in connection with the financing of the pipeline do not contain a provision requiring the consent of the holders of those debt instruments to the financing of the construction of the Dempster Line referred to in the Agreement or any other provision, apart from normal trust indenture provisions generally applicable in the pipeline industry, that would prohibit, limit or inhibit the financing of the construction of the Dempster Line.

• 13 The company shall file with the Minister and the Board forthwith after execution contracts between producers and shippers and between shippers and the company and substantive amendments to those contracts.

• 14 The company shall provide the Minister and the Board, in a form satisfactory to the Minister and the Board and on a quarterly basis, information on the

  • (a) costs incurred and projected in respect of the pipeline;

  • (b) financing of the pipeline; and

  • (c) progress of the planning and construction of, and procurement for, the pipeline.

• 15 The Minister and the Board shall have access to all financial records of the company for audit purposes.

• 16 The company shall

  • (a) submit to the Minister and the Board detailed costs estimates based on the final design of each section or part of the pipeline in a form satisfactory to the Board; and

  • (b) provide, before operation commences, an operations and safety manual satisfactory to the Board.

General

• 17 Prior to commencing the construction of any section or part of the pipeline, the company shall provide the Minister and the Board with such proof as the Minister and the Board consider appropriate that the company has obtained all necessary regulatory approvals.

• 18 The company shall cause the pipe for the pipeline to be of such specifications, including diameter, wall thickness and maximum allowable operation pressures as may be approved by the Minister and the Board.

• 19 When the company ascertains the lands of a landowner that may be required for the purposes of a section or part of the pipeline, the company shall serve a notice, in a manner and in a form to be determined by the designated officer, on the landowner, which notice shall set out the location of the offices of the Agency and the right of the landowner within thirty days of being served to make representations to the Agency respecting the final route of the pipeline for its consideration prior to its approval of the final detailed route.

Remote Communities

• 20 The company shall, in implementing paragraph 3(b) of the Agreement, construct laterals from the pipeline and make arrangements for the supply of gas to remote communities in Yukon and the provinces through which the pipeline passes where the communities can be economically served and have applied to the appropriate authority for such service and that authority has approved such application, except that in Yukon, Foothills Pipe Lines (South Yukon) Ltd. shall make a financial contribution in respect of providing gas

  • (a) to the communities of Beaver Creek, Burwash Landing, Destruction Bay, Haines Junction, Whitehorse, Teslin, Upper Liard and Watson Lake, in an amount not to exceed a total cost of 2.5 million dollars; and

  • (b) to other remote communities, an amount not to exceed the lesser of

    • (i) the product of 2,500 dollars multiplied by the number of customers in the communities, and

    • (ii) a total cost of 2.5 million dollars.

Dempster Line

• 21 When the Dempster Line referred to in the Agreement is to be connected to the pipeline or when additional pipeline capacity is needed to meet the contractual requirements of United States or Canadian shippers, the company shall expand the capacity of the pipeline, subject to the regulatory requirements of the Board, and to any agreement that may be entered into between Her Majesty in right of Canada and the company, in an efficient manner to permit the connection of the Dempster Line or to meet those contractual requirements, as the case may be.