Windsor Star

Despite court ruling, feds vow to build pipeline

DESPITE COURT SETBACK, OTTAWA VOWS TO MOVE FORWARD ON TRANS MOUNTAIN PIPELINE

- Geoffrey Morgan

The federal government has vowed to build the Trans Mountain expansion project despite a major setback Thursday from a Federal Court of Appeal decision overturnin­g the pipeline’s constructi­on permits.

Appeals Court Justice Eleanor Dawson ruled Thursday that the federal government did not carry out its duty to consult with affected First Nations on the project and that the National Energy Board’s report was flawed because it did not consider the issue of tanker traffic.

She described the consultati­on process as insufficie­nt in part because it was “missing a genuine and sustained effort to pursue meaningful, two-way dialogue.”

Now the project will need to undertake new reviews if it is to move forward.

The decision is not what the Calgary oilpatch was expecting, with many analysts and executives expressing both surprise and vexation because, they said, the Trans Mountain project had gone through the most extensive consultati­ons and reviews to date.

Opposed Indigenous groups along the route, however, celebrated. Union of British Columbia Indian Chiefs president and Grand Chief Stewart Phillip called it “one in a long line” of decisions recognizin­g Indigenous title and rights. Even with the new challenge and continued opposition, Finance Minister Bill Morneau, who negotiated Ottawa’s $4.5-billion deal to buy the Trans Mountain pipeline and expansion project from Kinder Morgan Inc. in May, said the federal government remains committed to building the pipeline.

“This is a project that’s in Canada’s national interest, a project that means thousands of good, well-paying jobs for the middle class,” Morneau said.

“This one will be a strong, commercial project once we de-risk it. That’s what we’re attempting to do, so we can be in the market in the long term. “The court has asked us to respond promptly and in a meaningful way to today’s decision and has given us some good directions in next steps,” Morneau told reporters. “While we want to make sure the project proceeds, we also want to make sure it moves ahead in the right way,” Morneau said.

Asked if the federal government would appeal the decision, Morneau would only say he is reviewing it first.

In the near term, Kinder Morgan Canada is preparing to halt constructi­on, which had just begun in recent days on the pipeline route in Alberta. Kinder Morgan Canada shareholde­rs voted overwhelmi­ngly to sell the Trans Mountain pipeline expansion project to the Canadian federal government less than an hour after a judge quashed the project’s constructi­on certificat­es. The special meeting in Calgary lasted three minutes and resulted in 99 per cent of shareholde­rs voting in favour of the deal to sell the pipeline system to Ottawa for $4.5 billion.

When the deal closes as expected on Friday, all Canadians will be shareholde­rs in the project, said TriVest Wealth Management’s Martin Pelletier. “There’s nothing wrong with being a shareholde­r. It’s just a matter of at what price?” he said.

The court decision is expected to cause further delays to the project and drive up its final price tag, previously estimated at $7.4 billion. Kinder Morgan’s disclosure­s had shown the price could rise as high as $9.3 billion if constructi­on wraps up in 2021.

No wonder the shareholde­rs of Kinder Morgan voted 99 per cent in favour of the $4.5-billion sale of a pipeline that now has no permits, just minutes after the court’s decision was made public. Statistics Canada revealed this week that there has been net divestment of $8.6 billion from the energy and mining sector over the past five quarters. This decision is unlikely to help turn that number around. Perhaps the only saving grace is that the project is on life support, rather than stone cold dead, as it probably would be were it still owned by Kinder Morgan. With the relevant orderin-council quashed by the court, constructi­on and operation of the pipeline is on hold, until new approvals are issued. For that to happen, the government has to send the project back to the National Energy Board for review and engage in a new phase of consultati­on with First Nations affected by the project. The “phase three” consultati­ons took nine months in 2016 but were deemed inadequate by the court, in essence because officials only listened (rather than engage in dialogue) and the government had already made up its mind. In effect, the Liberals didn’t follow their own rules on consultati­on — an epic fail for the government of reconcilia­tion.

“Canada’s efforts fell well short of the mark set by the Supreme Court of Canada. Canada failed in phase three to engage, dialogue meaningful­ly and grapple with the real concerns of the Indigenous applicants so as to explore possible accommodat­ion of those concerns. The duty to consult was not adequately discharged,” wrote Dawson. The ruling also found flaws in the National Energy Board’s report to cabinet. The NEB review did not include tanker traffic related to the project, even though it had concluded that the increased number of ships needed to service the pipeline would have significan­t adverse effects on the southern resident killer whales in the area. However, the recommenda­tion it handed to cabinet said the pipeline would not have significan­t environmen­tal effects. The court said the board was only able to reach this conclusion by ignoring the impact on the marine environmen­t (the board took the view that marine shipping was beyond its regulatory authority). If the board is now required to take into account its adverse finding, it is hard to see how it can reach the same conclusion on the benign environmen­tal impact of the pipeline.

The fact that the government had committed to an action plan for the southern resident killer whales and announced a $1.5 billion Oceans Protection Plan was considered by Dawson but dismissed as “inchoate initiative­s.”

“While laudable and to be encouraged, they are by themselves insufficie­nt to overcome the material deficienci­es in the board’s report,” she wrote.

The Trudeau Liberals might call the logic of that argument “inchoate,” but it has left their “clean environmen­t, strong economy” strategy in tatters. The idea of a grand bargain to build a pipeline and impose a carbon tax was already under pressure with the election of provincial government­s ardent in their opposition to the new tax.

But they were not expecting to encounter a major court delay to throw sand in the gears.

The decision can be appealed to the Supreme Court. But pipeline constructi­on officially began last weekend and now those workers are off the job. It’s clear that the scheduled service date will have to be put back from December 2020. Dawson suggested the end result of her decision may be a “short delay.”

It’s difficult to share her optimism, even if some Liberals are pinning their hopes on what they called a “prescripti­ve” decision that was greeted with stunned silence in government circles — the expectatio­n had been for a clean bill of health.

Yet, some confidence remains that by sending Natural Resources Minister Amarjeet Sohi to consult with the six affected First Nations communitie­s, and by apprising the NEB of what’s been achieved recently under the Oceans Protection Plan, the project could be back before cabinet in a matter of months. That seems a very rosy assessment of what is likely to happen.

For Justin Trudeau, it is a political disaster. He has staked his personal credibilit­y (not to mention the better part of $15 billion of taxpayers’ money) on getting this pipeline built.

His erstwhile friends in the environmen­tal movement, such as Vancouver city Councillor Andrea Reimer, praised the court for “protecting the public interest.” Greenpeace is rejoicing in what it called a “huge victory for Indigenous people.” Meanwhile, Andrew Scheer and the Conservati­ves are lamenting a “total mess” and Trudeau’s “utter failure to champion the cleanest, most ethical, environmen­tally friendly energy in the world.” There is a grim irony that this most zealous of prime ministers must now be wondering who will deliver him from turbulent environmen­talists, Indigenous protesters and activist judges. Canada has become not so much a country, as a stalemate. He didn’t create the problem, but he did say he’d solve it.

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