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No easy way out for Liberals on Trans Mountain pipeline

The August 30st decision of the Federal Court of Appeal’s against the federal government’s approval of the Alberta to British Columbia Trans Mountain pipeline expansion seems to have come as a shock to the federal and Alberta governments. It was perhaps less of a surprise to close observers of tortuous process through which the project was reviewed and approved.

The National Energy Board’s review of the project occurred under the legislative framework established through Stephen Harper’s notorious Bill C-38 of 2012. That legislation re-wrote the Canadian Environmental Assessment Act, made major amendments to the NEB Act and Fisheries Act, and replaced the Navigable Waters Protection Act with a Navigation Protection Act, all fundamentally in the name of obtaining approvals for new or expanded pipeline capacity to facilitate the export of Alberta oil sands bitumen.

The federal Liberals highlighted the flaws in Harper’s legislation in their 2015 platform. In response, they committed to restore trust and credibility to the federal environmental assessment and approvals process. While undertaking a review of the those processes, the Trudeau government permitted to review of the Trans Mountain expansion project to proceed under an “interim” set of rules. These rules were essentially the process established under Bill C-38 – with additional public consultations, and a review of the potential climate change impacts of the project. The government’s November 2016 approval of the Trans Mountain project was based on the results of that “interim” process, one whose foundations the government itself had stated were deeply flawed.

The Federal Court’s decision leaves the Trudeau government with few easy ways forward. In its decision, the court highlighted the extent to which its conclusions were grounded in “largely uncontested legal principles” in Canadian law, specifically around the Crown’s duty to consult with Canada’s indigenous peoples when their rights or interests may be affected decisions being taken by the Crown, and with respect to the review and approval of major projects. While the federal government may seek leave to appeal the decision to the Supreme Court, there is no guarantee that the court will grant leave. Even if it does, an appeal could take over a year to resolve. It is also entirely possible, given the clear grounding of the Federal Court’s decision in principles established by the Supreme Court itself, that the Supreme Court could uphold of the Federal Court’s decision, or even strengthen it.

The Federal Court of Appeal’s rejection of the Trans-Mountain approval rested on two key elements: the federal government’s failure to undertake adequate consultation with indigenous peoples potentially affected by the project; and the NEB’s decision, flowing in large part from Bill C-38 principles of scoping the review of projects as narrowly as possible, to exclude from its review the impacts of the increased shipping activity that would result from the project.

Neither issue lends itself to a quick or easy resolution. The right of indigenous peoples to consultation is grounded in Section 35 of the Constitution Act and cannot be overridden through legislation. Addressing the Federal Court’s objections will require meaningful and substantive engagement with the First Nations and indigenous peoples affected by the project. Such engagement will take time.  Finding appropriate accommodations with those communities will be difficult given the fundamental objections that many hold against the project. Further litigation around the adequacy of what further consultations and accommodations the federal government takes with indigenous peoples is almost certain in these circumstances.

The resolution of the second issue may be almost as challenging although in different ways. The federal government could take the option hinted at by Alberta Premier Notley of simply scoping question of the marine traffic flowing from the project and its impacts out of the review through legislation. Such an option would, of course, make a complete mockery of the Trudeau Liberal’s promises to reform the federal environmental assessment process and protect the maritime environment. It would also likely require amendments to the federal Species at Risk Act to remove protections for affected species, notably the iconic Orca.  In addition to destroying much of what remains of the federal Liberal’s environmental credibility, such a path would also likely drive the objections to the project in BC to even higher levels.

A substantive review of the implications of the increased tanker traffic flowing from the project could lead to the very conclusion that the NEB sought to avoid by scoping the issue out of its original review of the project. There could be findings of major risks to the marine environment and wildlife flowing both from the growth in tanker traffic, and the possibility of a bitumen spill in Vancouver Harbour or Salish Sea, and that such risks could only be managed with great difficulty, if at all. Such conclusions would put the Trudeau government in the position of having to make a direct choice between environmental protection and economic development, something which it has always sought to avoid.

The Trans Mountain decision has major implications for the government’s ongoing attempts to reform the federal environment environmental assessment and approval process, its national climate change strategy, and its electoral fortunes as the October 2019 federal election looms closer.

Bill C-69, which represents that Trudeau government’s long-term effort to fulfil its promise address the shortcomings of the assessment and approval regime established through Bill C-38, is currently before the Senate. The legislation has been the subject of increasingly vociferous attacks from some industry sectors and others, notably the Canada West Foundation. These attacks are somewhat surprising given that C-69 largely leaves the framework for federal reviews established by Mr.Harper intact, subject to the removal of important constraints on public participation, and requirements that the government provide justifications for its decisions under the legislation. The government is likely to face even more intense pressure to abandon Bill C-69 in the aftermath of the Trans Mountain decision.

With respect to the Trudeau government’s overall climate change strategy, Premier Notley’s statement of her intent to withdraw from the Pan-Canadian Framework on Climate Change has brought forward issues which were already emerging. Changes in provincial governments over the past year have introduced new actors, notably Ontario Premier Doug Ford, who want no part in Trudeau’s national climate change strategy. While Premier Notley’s administration has provided Alberta with a stable, competent and capable government, it is already facing a very difficult challenge from Jason Kenney’s United Conservative Party. Its chances of survival through the 2019 Alberta election were far from good, with the implication that an Alberta withdrawal from the national strategy was likely in the offing anyway.

How the federal Liberals will respond to these developments remains uncertain. Justin Trudeau’s electoral success in 2015 rode in large part around his ability to consolidate the progressive, post-materialist vote in Canada around the federal Liberal party. Holding that coalition together will require that the Liberals maintain some degree of environmental credibility. This is especially true in BC, where they made significant gains in 2015, particularly in the lower mainland, in Quebec, where public support for action on climate change remains the highest in Canada, and in Ontario, where moderate and progressive voters will be looking for a federal foil to Doug Ford. The Liberal’s ability to gain or lose ground in Alberta, in contrast, is far more marginal, amounting to a handful of seats either way. The situation suggests that in the end, they will carry through on their national carbon pricing regime regardless of provincial objections.

Moreover, the non-approval of the Kinder-Morgan expansion, and delays in the US around the Keystone XL and Line 3 pipelines, avoids the difficult problem of having to reconcile continued major growth in GHG emissions from Alberta, flowing from the expanded oil sands production that these projects would facilitate, with Canada’s international commitments to reduce its overall emissions. If Alberta’s emissions continue to grow, the only way Canada’s total emissions could fall is through even greater emission reductions from the remaining provinces. That allocation problem was never resolved through the Pan-Canadian Framework.

The Trans Mountain decision has brought a series legal, political and environmental issues around the Trudeau government’s strategy for reconciling its environmental and economic priorities to a head. How the government moves forward to resolve these issues will play a major role in the outcome of the 2019 federal election, and Canada’s ability to meet its international environmental obligations.