An Overview of the Lawsuit Against Canada Trans Mountain Pipeline

By Yiwen Hao

On the eve of Canada’s presidential election, six out of the twelve pending lawsuits against the expansion of Trans Mountain Pipeline were allowed to proceed by Canada’s Federal Court of Appeal.[1] This second challenge against the Trans Mountain Pipeline happened only a year after the first challenge which this article will focus on.

The Trans Mountain pipeline system, initiated in 1953, has been the only pipeline between Alberta and the coast of British Columbia.[2] While the pipeline has been predicted to create great value for Alberta and the country, The Trans Mountain pipeline system had previously been owned by one of the largest energy infrastructure companies in North America, Kinder Morgan.[3] On August 31, 2018, the Canada Development Investment Corporation, accountable to the Parliament of Canada, acquired the Trans Mountain pipeline system and Trans Mountain Expansion Project (collectively “Trans Mountain Pipeline”) by filing a wholly owned subsidiary named Trans Mountain Corporation. In other words, the Canadian government purchased the Trans Mountain Pipeline system and its expansion project via a crown corporation.[4] By buying the Trans Mountain Pipeline from Kinder Morgan, Prime Minister Justin Trudeau’s government faced a CA$4.5bn price tag with an additional cost of CA$6.9bn to finish the expansion.[5]

Before the government acquired the Trans Mountain Pipeline, the National Energy Board (NEB) approved a proposal by Kinder Morgan to expand the pipeline to Trans Mountain’s Pacific tidewater terminal in Burrard Inlet in 2013. The proposal immediately attracted opposition, legal challenges, and protests from environmentalists and First Nations groups because of its potential environmental impact, while Trans Mountain Pipeline moved Alberta’s heavy crude oil to British Columbia and onto Asian importers. [6] The City of Vancouver, the City of Burnaby, Tsleil-Waututh Nation, together with six other groups sued the Canadian government and its crown company. The Province of Alberta and British Columbia later joined the suit as Plaintiffs.[7]

In August 2018, the Federal Court of Appeal overturned the NEB’s approval of the pipeline expansion based on the government’s insufficient consultation with the First Nations groups. [8] Accordingly, the government re-initiated the consultation with indigenous groups impacted by the pipeline with a tight timeline.[9] On June 18, 2019 the Governor in Council directed the NEB to issue a certificate allowing for the construction and operation of the Trans Mountain Expansion Project (“the Project”).[10] The government’s reapproval of the Trans Mountain pipeline expansion was challenged by twelve lawsuits, including previous parties that won their first case in 2018.[11] As half of these lawsuits proceed in court, this article is going to overview Tsleil-Waututh Nation v. Canada, which followed the government’s first approval of the expansion project.

In Tsleil-Waututh Nation v. Canada, the City of Vancouver, the City of Burnaby, six Aboriginal groups within the meaning of the Indian Act, and one environmental group challenged the report of the National Energy Board concerning the proposed expansion of the Trans Mountain pipeline system.[12] Plaintiffs asked for judicial review of NEB’s report and Order in Council based on Plaintiff’s claims that NEB’s findings were flawed and Canada failed to fulfil the duty to consult Indigenous peoples.[13] The Federal Court of Appeal of Canada concluded that most of the claims asserted against NEB’s process and findings were without merit.[14] However, the Court found that NEB unjustifiably defined the scope of the expansion Project to exclude Project-related tanker traffic.[15] Additionally, regarding the duty to consult Indigenous people and First Nation set out by the Federal Court of Appeals, at the last stage of the consultation process prior to the decision of the Governor in Council (a stage called Phase III), Canada failed to “engage, dialogue meaningfully and grapple with the real concerns of the Indigenous applicants so as to explore possible accommodation of those concerns.”[16] As a result, the Order in Council was quashed by the Supreme Court and the matter was remitted back to the Governor in Council.[17]

In the opinion of the Federal Court of Appeal, the Court reasoned that subsection 30(1) of the National Energy Board Act established the default rule that “[n]o company may operate an interprovincial or international pipeline in Canada unless the National Energy Board has issued a certificate of public convenience and necessity, and give leave to the company to open the pipeline[.]”[18] There is no doubt that Trans Mountain (Trans Mountain Pipeline ULC) submitted an application to the National Energy Board(NEB) for a certificate of public convenience and necessity for the Trans Mountain Expansion Project. As stated by Trans Mountain, the primary purpose of the Project is to “provide additional capacity to transport crude oil from Alberta to markets in the Pacific Rim, including Asia.”[19] However, within the Project, the number of tankers loaded at the Westridge Marine Terminal would increase from approximately five Panamax and Aframax class tankers per month to approximately 34 Aframax class tankers per month.[20] This leads to the first issue presented in the Court that the NCB was erred in not including impact resulted from this significant increase of the number of tankers.[21]

On May 19, 2016, NEB issued its report which recommended approval of the Project.[22] In its report, NEB assessed Project-related marine shipping and concluded that, notwithstanding the impacts of the Project upon the Southern resident killer whales and Indigenous cultural uses associated with them, the Project is likely to cause “significant adverse environmental effects.”[23] However, NEB defined the Project not to include Project-related marine shipping.[24] In other words, NEB excluded the effects of Project-related shipping from the definition as a designated project, and this allowed NEB to conclude that the Project was not likely to cause significant adverse effects. The Court held that NEB’s assessment of Project-related marine shipping was adequate for the purpose of informing the Governor in Council about the effects of Project-related marine shipping on the Southern resident killer whales and their use by Indigenous groups.[25] However, the Court added that NEB unjustifiably excluded Project-related marine shipping from the Project’s description.[26] It follows that the failure to apply section 79 of the Species at Risk Act to its consideration of the effects of Project-related marine shipping on the Southern resident killer whale was also unjustified.[27]

The Court’s analysis of the relevance of section 79 of the Species at Risk Act started from NEB’s exclusion of the marine shipping and ultimately concluded that section 79 of the Species at Risk Act should apply to the effects of Project-related marine shipping.[28] This is an unjustified failure to assess the effects of marine shipping under the Canadian Environmental Assessment Act, 2012.[29] Thus, the unjustified exclusion of Project-related marine shipping from the definition of the Project resulted in successive deficiencies such that NEB’s report was not the kind of “report” that would arm the Governor in Council with the information and assessments it required to make its public interest determination and its decision about environmental effects and their justification.[30] Therfore, the Governor in Council could not functionally make the kind of assessment of the Project’s environmental effects and public interest that the legislation requires.[31]

The Court accordingly granted a remedy which dealt with considering the adequacy of the Crown’s consultation process.[32] The Crown relied on NEB’s procedural power and remedial power to assess and accommodate environmental impacts in order to fulfill its duty to consult.[33] The extent or content of the duty of consultation is fact specific.[34] The Court determined that meaningful consultation is not just a process of exchanging information stating that, “[m]eaningful consultation is not intended simply to allow Indigenous peoples ‘to blow off steam’ before the Crown proceeds to do what it always intended to do.”[35] In the present case, the consultation must: balance multiple interests, including a safeguard in writing explaining the impacts of Indigenous concerns; focus on the constitutionally protected rights; and inform the Crown itself of the impact.[36] Among the dozens of deficiencies Plaintiff alleged, the Court held that Canada’s execution of Phase III of the consultation process was “unacceptably flawed and fell short of the standard[.]”[37]

As a consequence, Canada was required to engage in a “considered, meaningful two-way dialogue” with the Indigenous applicants rather than just receiving and understanding their concerns.[38] The Court analyzed that Canada’s power to dialogue under Phase III was extremely constrained because of Canada’s unwillingness to depart from NEB’s findings, and Canada’s erroneous view that it was unable to impose additional conditions on Trans Mountain.[39] On the contrary, the Court pointed out in Gitxaala that the Governor in Council necessarily has the power to impose conditions on any certificate of public convenience and necessity it directs the National Energy Board to issue.[40] After looking at the experience of each Indigenous group, the Court concluded that flaws thwarted meaningful dialogue resulting in unreasonable consultation process that failed to fulfil Canada’s duty to consult with and, if necessary accommodate the Indigenous applicants. Ultimately, the Court found that the Order from the Governor in Council should be quashed, and the issue of Project approval should be remitted to the Governor in Council for prompt redetermination.[41]

The Court then ordered NEB to reconsider on a principled basis for Project-related shipping incidental to the Project, asked the Governor in Council to redetermine the approval of the Project based on NEB’s recommendation, and requested Canada to re-do its Phase III consultation and make appropriate accommodation.[42]

However, as mentioned at the beginning of this article, it only took the Canadian government less than a year to comply with the consultation process and redirect NEB to issue a permit. It is possible that the Indigenous groups will have a long way to go to challenge this second approval.[43]

 

1. James Munson, Court Approves Pipeline Lawsuits on Eve of Canada Election (1), BLOOMBERG LAW (Sep 4, 2019, 3:03 PM) https://news.bloombergenvironment.com/environment-and-energy/court-approves-pipeline-lawsuits-on-eve-of-canada-election.
2. Expansion Project, TRANSMOUNTAIN.COM, https://www.transmountain.com/project-overview.
3. History, TRANSMOUNTAIN.COM, https://www.transmountain.com/history.

 

5. Bruce Livesey, Did Canada buy an oil pipeline in fear of being sued by China?, THE GUARDIAN (May 31^st, 2018), https://www.theguardian.com/commentisfree/2018/may/31/justin-trudeau-kinder-morgan-pipeline-china-did-he-fear-being-sued.
6. Expansion Project, TRANSMOUNTAIN.COM, https://www.transmountain.com/project-overview.
7. Tsleil-Waututh Nation v. Canada (Attorney General), [2018] F.C.A. No. 876.
8. Rod Nickel, Court quashes Canadian approval of Trans Mountain oil pipeline, REUTERS (August 30, 2018), https://www.reuters.com/article/us-kinder-morgan-cn-pipeline/court-quashes-canadian-approval-of-trans-mountain-oil-pipeline-idUSKCN1LF1U6.
9. Justin Brake, Canada to restart consultations with Indigenous groups on Trans Mountain, NATIONAL NEWS (Oct. 3, 2018), https://aptnnews.ca/2018/10/03/canada-to-restart-consultations-with-indigenous-groups-on-trans-mountain/.
10. Trudeau approves contentious Trans Mountain pipeline expansion, THE GUARDIAN (Jun. 18, 2019), https://www.theguardian.com/world/2019/jun/18/canada-trans-mountain-pipeline-expansion-approved-trudeau.
11. James Munson, Court Approves Pipeline Lawsuits on Eve of Canada Election (1), BLOOMBERG LAW (Sep 4, 2019, 3:03 PM) https://news.bloombergenvironment.com/environment-and-energy/court-approves-pipeline-lawsuits-on-eve-of-canada-election.
12. Tsleil-Waututh Nation v. Canada (Attorney General), [2018] F.C.A. No. 876, at paragraph 5-8.
14. at paragraph 773
15. Id.
16. Id.
17. Id.
18. Id. at paragraph 54, 55; see also Subsection 30(1) of the National Energy Board Act, R.S.C. 1985, c. N-7.
19. Tsleil-Waututh Nation, [2018] F.C.A. at paragraph 9.
21. Id. at paragraph 125.
22. Id. at paragraph 55, 56.
23. Id. at paragraph 63.
24. Id. at paragraph 67.
25. Id.
26. Id. at paragraph 125.
27. Id. at paragraph 127.
28. Id. at paragraph 442.
29. Id. at paragraph 445.
30. Id. at paragraph 451.
31. Id. at paragraph 470.
32. Id. at paragraph 472.
33. Id. at paragraph 486-87.
34. Id. at paragraph 488 (citing Rio Tinto Alcan Inc. v. Carrier Sekani Tribal Council, [2010] S.C.C. 43, at paragraph 48).
35. Id. at paragraph 494-97 (citing Haida Nation v. Briticsh Columbia, [2004] S.C.C. 73, at paragraph 61-63).
36. Id.
37. Id. at paragraph 557.
38. Id. at paragraph 558-60.
39. Id. at paragraph 562.
40. Id. at paragraph 634.
41. Id. at paragraph 768.
42. Id. at paragraph 771-72.
43. The Government of Canada has approved the Trans Mountain Expansion Project, CANADA ENERGYREGULATOR (June 18, 2019), https://www.cer-rec.gc.ca/pplctnflng/mjrpp/trnsmntnxpnsn/mdsttmnt2019-06-18-eng.html.