A ruling by Canada's Federal Court of Appeal that appears to define the limits of Indigenous consultation required by the federal government for project approval could smooth the way for increased investment in energy infrastructure, or lead to a showdown at the Supreme Court of Canada.
If the Feb. 4 decision that upheld the government's approval of Trans Mountain Corp.'s pipeline expansion over the objections of four First Nations groups stands, it could have implications for other projects including TC Energy Corp.'s Coastal Gaslink Pipeline Ltd. project. That project has drawn the ire of a splinter group from a First Nation in northern British Columbia which says it was not consulted in the approval process.
Canada's government under Prime Minister Justin Trudeau has vowed to advance reconciliation with Indigenous people and the nation's constitution requires consultation with First Nations on matters that affect their traditional territories. The requirement to consult is not unlimited, the appeals court ruling said.
"Reconciliation does not dictate any particular substantive outcome," the three-judge appeal court panel wrote in its ruling. "Were it otherwise, Indigenous peoples would effectively have a veto over projects such as this one. The law is clear that no such veto exists. ... At some juncture, a decision has to be made about a project and the adequacy of the consultation. Where there is genuine disagreement about whether a project is in the public interest, the law does not require that the interests of Indigenous peoples prevail."
The ruling is a setback for the four First Nations involved. Chief Rueben George of Tsleil-Waututh nation, one of the appellants, told a British Columbia news conference "reconciliation ends here." Other First Nations leaders at the news conference vowed to fight the decision in the Supreme Court of Canada and warned of an increase of the presence of "land defenders" to hinder the progress of the Trans Mountain project.
Trans Mountain Corp. will be able to continue construction of its expansion project after a ruling by Canada's Federal Court of Appeal.
"We are considering all of our options, including an appeal to the Supreme Court of Canada," Coldwater Indian Band Chief Lee Spahan said in a news release posted to the nation's website. "In the meantime, we will continue to work with Trans Mountain to study our aquifer and alternative routes through the Coldwater Valley. The adequacy of future consultation remains to be seen."
The ruling is seen as a big picture victory for Canada's energy industry, which has seen numerous projects delayed by challenges to regulatory authorities. In the case of Coastal GasLink, a British Columbia-regulated line which has approvals from all elected First Nations along its route, construction access had been cut off by land defenders supporting non-elected hereditary chiefs of the Wet'suwet'en First Nation. Uncertainty around the ability of companies to complete projects has been blamed for an exodus of investment capital from Canada's energy sector.
The Trans Mountain decision "provides the necessary clarity on the standard of Indigenous consultation that must be met for major projects to proceed," said Chris Bloomer, CEO of the Canadian Energy Pipeline Association. "The decision also proves that Canada has the legal and regulatory systems in place to support the development of major infrastructure projects. This ruling is critical for investor confidence to undertake major projects and signals that Canada is, in fact, open for business."
Trans Mountain's plan to expand its Eisenhower-era pipeline network that links Canada's oil sands region to a marine terminal in British Columbia has been in the works for more than a decade. The project, which was then owned by Kinder Morgan Inc., was approved by the National Energy Board and under construction in 2018, when the Houston-based company stopped work and demanded the federal government either buy the system or offer assurance that it could be completed amid bickering between various levels of government. Canada bought the system for C$4.5 billion in August 2018, and closed the deal one day after the Federal Court of Appeal quashed its permits for construction. The expansion would lift the capacity of Trans Mountain's network to 890,000 barrels per day from about 300,000 bbl/d.
After the court found consultation in the first approval of the line inadequate, the National Energy Board, which has since been replaced by the Canada Energy Regulator, restarted its approval process while the federal government carried out expanded talks with the affected groups. The Feb. 4 ruling was on an appeal of the second government approval and the court action was between the First Nations and the federal government.
"We are pleased with the court's decision to dismiss the applicants' challenges to the federal government's approval of the Trans Mountain Expansion Project," Trans Mountain CEO Ian Anderson said in an emailed statement. "After many years of consultation and review we are pleased to be able to continue moving forward and building the project in respect of communities, and for the benefit of Canadians."
Work on the re-approved project began in late 2019 with construction starting on the first section near Edmonton, Alberta. Issues like detailed routing of the line within some portions of the approved right of way remain to be finalized by the federal regulator. Alberta Premier Jason Kenney, whose province is home to the oil sands that are Canada's biggest source of oil exports, called the ruling "a victory for common sense." He noted support for the Trans Mountain project by most First Nations along its route.
"While we respect the opinion of those who have voiced opposition to the project, the fact is the majority of First Nations communities — and the majority of Canadians — want to share in the economic benefits of responsible resource development," Kenney said in emailed remarks. "That's demonstrated by the 58 mutual benefit agreements that Trans Mountain has signed with Indigenous communities across Alberta and British Columbia."