This fall, for the second time in two years, three judges with the Federal Court of Appeal struck down a crucially important oil export pipeline project that had been approved by Ottawa after years of regulatory review. This week the Trudeau government announced it will not appeal that ruling to the Supreme Court of Canada.
The Harper government’s approval of the proposed Northern Gateway pipeline was struck down by the Federal Court of Appeal in 2016 after Enbridge Inc. spent half-a-billion dollars on a massive six-year environmental review and Aboriginal consultation process. Now the Trans Mountain expansion, also approved by Ottawa after a billion-dollar expenditure on review and consultation by Kinder Morgan, and since purchased by the Trudeau government, has met the same fate.
It’s bad enough that a private company can’t get a fully approved infrastructure project done, but can you think of any other country in the world where three judges can overrule the ability of a national government to exercise its constitutional right to build its own project? And, in both cases, those judges based their decision on dubious conclusions that veer from objective legal analysis into nuanced opinions seemingly designed to justify their preconceived biases.
At the heart of both decisions, the panel concluded the government’s consultations with First Nations had been “inadequate”. Here is a summary of some of the consultations that took place prior to the approval of the Trans Mountain expansion:
During the period from project announcement in May 2012 until commencement of the National Energy Board (NEB) hearing in December 2013, Kinder Morgan engaged with some 130 Indigenous communities.
During the hearing, the company responded to seven rounds of information requests including 400 from the NEB and 17,000 from intervenors.
131 Indigenous groups participated in the main hearing process and there was a separate oral hearing of traditional Aboriginal evidence along with an oral argument about the project impact.
In May 2016, four years after Kinder Morgan’s original project announcement, the NEB approved it and sent the project to the Governor-in-Council. Citing a duty to “deepen” consultation, the government then proceeded with a direct consultation process involving several cabinet ministers and 117 Indigenous communities.
The government shared its assessments of Indigenous claims with affected communities and compiled a Crown Consultation Report that provided a summary of each group’s concerns and proposals for accommodation.
Finally, a Ministerial Panel Report was prepared, and the prime minister announced his government’s approval of the project. The NEB issued its certificate of Public Convenience and Necessity on Dec. 1, 2016.
All told, the project faced 18 legal challenges by the B.C. and local governments, Indigenous bands, and environmental groups. All were defeated but one.
The Federal Court of Appeal panel that struck down the Trans Mountain approval acknowledged that consultations had been extensive but decided that the government had not responded “meaningfully” to them, including offering potential accommodation measures. But how many accommodations can possibly be made for a pipeline following a route along roughly the same right of way as the currently operating one? And how do you “accommodate” those whose avowed purpose is simply to stop the project?
This decision came after the Trudeau government had devised a consultation process specifically designed to correct what they termed the Harper government’s “mistakes” that led to the court’s denial of Northern Gateway. But it still wasn’t enough. The court has now moved the already extremely difficult goal posts set by the previous panel to a place where the “adequacy” of any degree of Aboriginal consultation is impossible to predict. This is sure to repel any company from pursuing resource projects near the so-called “traditional lands” that encompass virtually every square inch of B.C. and large parts of the rest of Canada.
The second reason cited by the judges for quashing the Trans Mountain approval was what they called the NEB’s “critical error” of failing to include the impact of increased ship traffic on an estimated 75 southern resident killer whales that spend parts of the year in the region’s waters. Those particular orcas, unlike the tens of thousands that inhabit the world’s oceans elsewhere, are considered endangered. Perhaps they are, but not substantively by this pipeline.
Due to the proximity of Seattle, Washington to the Vancouver region – where Trans Mountain terminates – an analysis of tanker movements in the whale’s habitat must include both Canadian and American traffic. Essentially all tankers must transit the Strait of Juan de Fuca bordered to the north by Vancouver Island and to the south by Washington State. Every year, some 1,300 oil tankers, tug-pulled petroleum barges and industrial chemical carriers travel through the Strait of Juan de Fuca before entering the inland waters of the Salish Sea. The Canadian traffic turns north towards Vancouver and the American traffic goes south towards Seattle.
But that’s just tanker traffic. Orcas may be remarkably intelligent, but they can’t detect the difference between tankers and other large ships. Each year, some 10,000 large commercial cargo ships travel those same waters, too. And even that isn’t the whole story. During the May to September tourist season, hundreds of huge cruise ships visit Vancouver. Adding to that are the thousands of BC Ferry trips on the Salish Sea, plus tens of thousands of recreational boats. Meanwhile, the Trans Mountain project would add one ship per day. You read that right: One. Ship. A. Day.
The NEB should instead be applauded for not wasting taxpayer money doing a major study of the obvious fact that one more ship among so many others will have no appreciable impact on the orcas’ lifestyle. But now the Trudeau government has ordered the NEB to study the orca question over 22 weeks.
How much will yet another six-month project delay cost the Canadian economy? Lack of access to offshore markets means U.S. refiners are buying Canadian oil at a deep captive-market discount. That discount has long been costing the industry and governments some $15 billion per year. It has now grown to some $50 million a day. Even in the unlikely event that construction restarts immediately after that 22-week delay, another $8 billion in price discounts will have been handed to Americans as they consume cheap Canadian oil and export their own production overseas at world prices.
Last Wednesday the Liberal government announced it has appointed former Supreme Court justice Frank Iacobucci to oversee a whole new process of “meaningful consultation” with the 117 Aboriginal groups who count themselves affected by the Trans Mountain expansion. Rather than another attempt to satisfy the court’s endlessly amorphous standards of “adequate” consultations, the Trudeau Liberals should have called back Parliament early to pass a bill implementing the national government’s constitutional right to carry out projects that are in the national interest.
Business capital investment is crucial to the jobs of the future. In the period since the Trudeau Liberals took office, the proportion of capital investment in the economy has collapsed to a 40-year low. That was before this devastating court decision and the government’s inept response. Our country’s international reputation has deteriorated from a credible nation that “punches above it weight” to one governed by lightweights more fixated on political correctness than on getting their own national projects built. Canadians should be very worried.