Court quashes Trudeau’s approval of Trans Mountain pipeline

The Federal Court of Appeal has quashed the federal government’s approval of the troubled Trans Mountain expansion project, after concluding that Prime Minister Justin Trudeau’s cabinet made its decision without considering all evidence and failing in its legal duty to consult First Nations.

The decision, announced Aug. 30, is the first major court defeat for the project, requiring the government to ask the federal energy regulator or its successor to redo a federal environmental evaluation and correct a “critical” mistake it made to ignore the consequences of increased oil tanker traffic off the coast of British Columbia.

"Canada was obliged to do more than passively hear and receive the real concerns of the Indigenous applicants," wrote Justice Eleanor Dawson in a unanimous ruling that quashed the Trudeau government's approval of the Trans Mountain expansion project.

Conservationists have also warned that the project threatens the survival of a few dozen southern resident killer whales that were already at risk, a concern that was acknowledged by the National Energy Board (NEB), following public hearings to review the pipeline expansion.

Justice Eleanor Dawson, on behalf of the panel, wrote that the government took an "unreasonable" approach to consultations that didn't allow for a meaningful or adequate two-way conversation with the affected First Nations, in the months before it approved the project. She also criticized the government for making its decision based on inadequate evidence from the report prepared by the NEB, which failed to allow participants to cross-examine the Texas company officials about their evidence and testimony during its review.

“Indeed, a review of the record of the consultation process discloses that Canada displayed a closed-mindedness when concerns were expressed about the Board’s report and was reluctant to depart from the findings and recommendations of the Board,” said Dawson in the ruling.

The unanimous decision by a three member panel that heard the case will also require the Trudeau government to restart its consultations with First Nations about the project, before construction can proceed.

The ruling confirms longstanding criticism from affected First Nations that the Trudeau government took a "paternalistic," "unrealistic," and "inadequate" approach to consulting them, failing in its legal duty under the Constitution. The Tsleil-Waututh Nation, which occupies unceded territories in what is now known as the Burrard Inlet in the Vancouver region, and other affected First Nations launched the case almost immediately after the Trudeau government approved the project in November 2016.

“With rare exceptions, Canada did not dialogue meaningfully with the Indigenous applicants about their concerns about the Board’s review. Instead, Canada’s representatives were focused on transmitting concerns of the Indigenous applicants to the decision-makers and nothing more. Canada was obliged to do more than passively hear and receive the real concerns of the Indigenous applicants.”

Government still plans to buy project

Despite the major setback, Finance Minister Bill Morneau told reporters outside his Toronto office that the government was still planning to purchase the project and related assets from their Texas owner, Kinder Morgan, and proceed with addressing issues identified in the ruling "promptly" as the court directed.

The government also has the option to appeal the decision, which comes three months after it announced a deal on May 29 to spend $4.5 billion to buy Kinder Morgan Canada's (KML) existing pipeline and the expansion project. It ordered one of its Crown corporations, Export Development Canada, to help arrange the multi-billion-dollar purchase.

Morneau and Kinder Morgan both said the deal was expected to close within a day after shareholders in Kinder Morgan Canada Ltd. gathered in Calgary, shortly after the ruling was released, and voted 99.98 per cent in favour of the $4.5 billion sale to Canada.

"The parties expect to close the transaction as early as Aug. 31, 2018," the company stated.

Morneau indicated it was too early to say whether an appeal was in the works, but said that the court decision demonstrates that the government made the right decision to purchase the project. He explained that there were too many political risks and delays to allow a private company to proceed on its own.

"Our next step is to close on the acquisition of the project. We expect that will happen as early as tomorrow."

Alberta opposition leader Kenney blames courts

The ongoing delays could drive up the costs of completing the project, previously estimated by Kinder Morgan to cost $4.1 billion to build, but now expected to cost at least $13.8 billion. This total is on top of the billions to be spent by the government to purchase the Kinder Morgan assets.

In Alberta, Premier Rachel Notley, who has vowed to get the pipeline expansion project built, announced at a news conference on Thursday evening that Alberta was pulling out of the federal climate plan until Ottawa could "fix" the "crisis" caused by the Federal Court's ruling.

"Now, more than ever, we need to come together and prove to ourselves and to the world that our country works," Notley said. "This ruling is bad for working families. And it is bad for the economic security of our country."

Alberta Opposition Leader Jason Kenney quickly blamed the courts.

"Today’s ruling makes it abundantly clear that the Federal Court of Appeal has no regard for the real-world economic impact this decision will have on ordinary Canadians’ lives and livelihoods," he tweeted.

In comments to reporters, he said the judiciary "needs to understand that these are not academic questions."

"People are going to lose their jobs. Businesses are going to go down. First Nations will lose the opportunity to generate wealth for their people as a result of today's decision. Do they even care about that when they balance out competing interests in these decisions?"

Trans Mountain to suspend construction

The head of Kinder Morgan Canada said that the company planned to suspend construction as a result of the ruling.

"We are reviewing the decision with the Government of Canada and are taking the appropriate time to assess next steps," said the company's president, Ian Anderson, in a statement.

"We remain committed to building this project in consideration of communities and the environment, with meaningful consultation with Indigenous peoples and for the benefit of Canadians. Trans Mountain is currently taking measures to suspend construction related activities on the project in a safe and orderly manner. The court decision was not a condition of the transaction between KML and the federal government."

Morneau also stressed that the Trudeau government had inherited a flawed system for reviewing industrial projects from former prime minister Stephen Harper, and that it was taking steps to resolve those issues.

The Trudeau government has introduced legislation to reverse many changes, adopted by Harper's government to reduce federal environmental oversight. If adopted, the legislation would also replace the NEB with a brand new energy regulator.

In Victoria, B.C. Premier John Horgan was all smiles as he greeted reporters to react to the news.

"It's not about winning and losing. It's about the rule of law," said Horgan who has expressed his opposition to the Trans Mountain project.

He said the ruling confirms that the federal government didn't adequately consider the threats to the coastline before it approved the project.

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By Mike De Souza & Carl Meyer