The Supreme Court’s decision to dismiss a First Nations’ legal challenge to the Trans Mountain expansion project sends important signals about the viability of energy projects in Canada, experts say.
On Thursday, the country’s top court decided it would not hear an appeal from a group of First Nations in British Columbia — the Squamish Nation, Tsleil-Waututh Nation and Coldwater Indian Band — that had challenged the adequacy of Indigenous consultation around the federal government’s approval of the pipeline.
“This is yet another critical victory for pipelines, for our prosperity,” Alberta Premier Jason Kenney said, hailing it as a win both for the province and the project — which will nearly triple the flow of oil from the Alberta oilsands to the West Coast.
The pipeline will allow Canada to diversify oil markets and vastly increase exports to Asia, where they can command a higher price. About 99 per cent of Canada’s exports now go to refiners in the U.S., where limits on pipeline and refinery capacity mean Canadian oil sells at a discount.
Kenney pointed out the court found that of the 129 Indigenous groups potentially affected by the project, 120 either support it or do not oppose it, and 43 Indigenous groups have signed benefit agreements.
“This is an affirmation that reconciliation also means reconcili-action,” Kenney said, repeating his familiar catchphrase.
“It means economic opportunity, it means saying ‘yes’ to the vast majority of First Nations and Indigenous people who want to move their communities from poverty to prosperity by being full participants in responsible resource development.”
The B.C. First Nations behind the appeal to the top court had challenged the adequacy of Indigenous consultation that lead up to a second cabinet approval of the pipeline expansion, which was first proposed eight years ago but delayed by numerous legal challenges.
Two years ago, Prime Minister Justin Trudeau’s Liberal government stepped in after years of uncertainty around the project left an empty field of prospective buyers and nationalized the pipeline for $4.5 billion.
Court decision signals stability to investors
Experts say the court’s decision to end the years-long legal battle demonstrates stability to potential investors and provides clarity about what constitutes adequate consultations with Indigenous groups.
That ripple effect could permeate beyond oil and gas projects into the energy sector as a whole.
There’s greater clarity on what can be appealed and what can’t be appealed, and what the likely outcome is.– Marla Orenstein, Canada West Foundation
“There’s greater clarity on what can be appealed and what can’t be appealed, and what the likely outcome is. It provides certainty or additional certainty for projects of all different types,” said Marla Orenstein, the director of the natural resource centre at the Canada West Foundation.
“The certainty that this decision provides is important.”
The expansion would nearly triple the capacity of the pipeline, to 890,000 barrels per day, delivering diluted bitumen to a terminal in Burnaby outside Vancouver.
It’s also expected to lead to a sevenfold increase in the number of tankers in the shared waters between Canada and Washington state.
Construction is already underway, supplying more jobs in a sector devastated by the pandemic. It is expected to slightly improve on Alberta’s unemployment rate — which could hit upwards of 25 per cent.
Trans Mountain says it currently employs 4,919 people working on the project and current forecasts suggest 5,500 people will be employed by the company during the peak construction period in mid-to-late 2021.
The expansion is scheduled to be completed in two years.
Earlier this year, Canadian oil prices hit historic lows, spurred partially by an international price war and partially by the COVID-19 pandemic.
While the demand still hasn’t recovered, one market analyst says Canada is going to need that extra pipeline eventually.
Kevin Birn, who works for IHS Markit in Calgary, says this court dismissal keeps the Trans Mountain timeline on track and could help avoid supply problems down the road as demand increases again.
“That will continue to ramp up going into 2021 and 2022, and then you need another pipeline at that point in time.”
Birn says if the expansion were blocked, Alberta’s natural resource sector would remain locked to whatever volatility occurs with Canada’s southern neighbour.
Alberta chief says decision likely to fuel other projects
The court’s rejection can also salvage the momentum for partnerships between the provincial United Conservative Party government and Alberta First Nations. Kenney’s government has made a point of encouraging more Indigenous participation and investment in natural resource projects.
Some of the Indigenous groups in favour of the pipeline have been working together to convince Ottawa to give them a stake in the project.
Chief Calvin Bruneau, who leads the Papaschase First Nation near Edmonton and is involved with a bid to get Indigenous ownership in the project, says he’s frustrated by the court challenges but he knows this one was imperative.
“It was good to help keep the pipeline going, it does need to be built and that sort of decision was necessary,” he said.
Meaningful and appropriate consultations are non-negotiable in Bruneau’s mind, but so are employment and economic prosperity. For him, Trans Mountain ticks all those boxes.
Bruneau says this Supreme Court dismissal will have lasting legal implications for natural resource development in Alberta.
“It is going to help with other projects,” he said, adding this decision will cause other groups to think twice before challenging pipelines that have received Ottawa’s stamp of approval.
Fewer roadblocks for the project will also steady tensions between Alberta and Ottawa, as the Trans Mountain expansion is one of a minority of things the two governments agree on.
When the Federal Court of Appeal dismissed the First Nations’ appeal of cabinet approval in February, Kenney praised the prime minister for his commitment to the pipeline.
“I have my disagreements with Prime Minister Trudeau on a number of issues … but I think they did realize there has to be at least one project that gets Canadian energy to global markets so we can get a fair price,” he said at the time.
4th court victory this year for pipeline proponents
However, the experts agreed it’s likely not the end of the opposition to the pipeline — as Orenstein puts it, “it’s not free sailing from from here on out.”
The First Nations that had appealed to the Supreme Court say they are exploring other avenues to block the pipeline.
The expansion also still faces stiff environmental opposition from British Columbia’s provincial government.
But Thursday’s decision is the end of the road to have the courts overturn the federal government’s approval of the project, and is the fourth court victory this year for pipeline proponents, including the February Appeal court decision at the centre of Thursday’s case.
In January, the Supreme Court ruled against the B.C. government’s attempt to regulate what can flow through the pipeline in January because as an interprovincial project it is entirely within federal jurisdiction. In March it also declined to hear an appeal over the federal approval from environment groups.
Ottawa has now approved the project twice, forced to do more Indigenous consultation and environmental review after the Federal Court of Appeal agreed with First Nations and environment groups that the first attempts were flawed. In February, however, that court said Ottawa had now lived up to its duty to consult.
Natural Resource Minister Seamus O’Regan said consultations will continue as construction continues.
“To those who are disappointed with today’s SCC decision — we see and hear you,” O’Regan said in a statement.
“The Government of Canada is committed to a renewed relationship with Indigenous people and understands that consultations on major projects have a critical role in building that renewed relationship.”