Two “Yeses” and One “No”: Federal Government Issues Decisions on Three Major Pipeline Projects

Global Publication December 2016

On November 29, 2016, the federal government announced its approval of two major pipeline projects: Kinder Morgan’s long-awaited Trans Mountain Expansion project and Enbridge’s Line 3 project.  At the same time, the federal government announced its rejection of Enbridge’s Northern Gateway project.  The federal government’s decisions on these projects were unsurprising given recent announcements about federal environmental policy on climate change, and that these decisions are generally consistent with the federal government’s election platform concerning pipeline projects, reforming the environmental assessment regime, and enhancing marine shipping safety and spill response preparedness.  The federal government’s decisions also hint at a federal quid pro quo of requiring provinces to have strong climate change regimes in place before federal project approvals will be issued.

Federal and Provincial Carbon Policy Regimes Affirmed

During the 2015 election, the Liberal Party committed to taking a different view on the Northern Gateway pipeline from the Harper government.   Prime Minister Trudeau announced the federal government would oppose the Northern Gateway pipeline, stating that that “the Great Bear Rainforest is no place for a pipeline” and that Canadians “need to get our resources to market, but we need to do that in responsible, sustainable, thoughtful ways.”  The Northern Gateway project’s provincial and federal approvals were overturned in court earlier this year due to an invalid provincial agreement that removed the need for a provincial environmental assessment certificate and province’s failure to consult with First Nations’ on this agreement, as well as the federal government’s inadequate post-hearing First Nations consultation practices.  The federal government has now directed the National Energy Board to dismiss the Northern Gateway project application.  While this is not technically a decision against the pipeline project on its environmental merits, it amounts to the same thing. 

The Trudeau government declared, during the same election cycle, that it would not pre-judge the Trans Mountain Expansion project, which was still undergoing its environmental assessment at the time.  The Trans Mountain Expansion project has since completed its environmental assessment and undergone further ad hoc aboriginal consultation and review for greenhouse gas emissions issues, and has now received federal authorization to proceed.  As a rationale for the recent approval, the federal government cited the new federal carbon policy and Alberta’s aggressive provincial climate change policies.  Ironically, the National Energy Board hearing process was heavily criticized for not addressing upstream carbon impacts and leaving these considerations to other processes.  The federal government’s position, when taken with the federal conditions attached to the recent Pacific NorthWest LNG project approval, suggests that the federal government will require provinces to have aggressive climate change regimes in place before federal project approvals will be issued. 

Federal and Provincial Crude Oil Tanker Traffic Bans

The federal government’s decision was followed by an update on the federal government’s pledged ban on crude tanker traffic along the BC coast.  The ban does not extend to liquefied natural gas tanker traffic, non-“persistent” hydrocarbons like gasoline, or small fuel oil barges.  Draft legislation has been promised for 2017.  The federal government also recently announced $1.5 billion of federal funding for ocean protection, which will include funding for a marine safety system, restoring marine ecosystems, and research into oil spill cleanup methods.

The federal government’s attention to marine spill preparedness and response mirrors the British Columbia provincial government’s proposed changes to strengthen provincial marine spill preparedness and response requirements.

Next Steps

A number of aboriginal and environmental groups have announced forthcoming legal action and protests to the approval of the Trans Mountain Expansion Project, while others have announced they will continue to negotiate with the government.  If and when construction on the Trans Mountain Expansion Project begins, protests are expected.  Conversely, if and when the project begins operating (scheduled for 2019), discounts on Canadian oil are expected to decline, with commensurate economic benefits.

Authored by&nbspMatthew Keen and Emily Chan

Recent publications

Subscribe and stay up to date with the latest legal news, information and events...