January 13, 2016
A BC Supreme Court judge today invalidated the agreement between the BC and federal governments on the environmental assessment process used to support the approval of Enbridge’s Northern Gateway Pipeline. While the decision does not directly overturn the federal government’s conditional approval decision, it does have major implications for the legality of the project.
Isn’t Northern Gateway already dead?
Most Canadian energy observers believe the Northern Gateway Pipeline, despite its conditional approval by the Harper government in June 2014, is essentially dead. Nonetheless, Enbridge did restate its confidence in the project earlier this week. The project is subject to a number of legal challenges. Most of the challenges are in federal courts and about alleged flaws in the federal government’s decision-making process. Today’s decision by a BC court judge was not considered one of the most significant challenges, but it does target a critical ingredient in the regulatory approval process.
BC abdicated its regulatory authority under the Environmental Assessment Act
At issue in this case was the BC government’s “equivalency agreement” with the federal government on the environmental assessment and regulatory review process for the pipeline projects. Environmental assessments have several stages, from project proposal, to scoping, to hearings and the actual assessment and report. The final stage is a decision by the appropriate regulatory authority. BC’s Environmental Assessment Act Section 17 clearly calls for a final decision on whether to issue an environmental assessment certificate. When BC entered the equivalency agreement, it not only agreed to defer to the assessment procedures used by the federal government, but also gave up its authority to issue an EA certificate. The most important part of the ruling is judge’s decision that BC had no grounds to give up final decision-making authority. As a result, the equivalency agreement is invalidated, and the province needs to make a decision on whether or not to approve the project.
BC failed in its duty to consult appropriately with First Nations
The parts of the decision about First Nations consultation, which have received all the attention in the instant press on the decsion, are an intriguing combination of limited and expansive. On the one hand, the judge ruled that the province did not have to consult about entering the equivalency agreement (consistent with previous judicial rulings on similar issues. But there was an obligation to consult First Nations about whether or not to terminate the equivalency agreement once BC made its formal opposition to the pipeline known. The province argued that the equivalency agreement transferred the obligation to consult to the Federal government, but the BC Supreme Court judge in this case disagreed. Note this case is not about the adequacy of federal government consultation with First Nations – those decisions are pending in federal court. In this case, since the BC government did not engage in direct consultations with First Nations during the process, the judge ruled it did not uphold its duty. Prior to exercising its final authority under the Environmental Assessment Act, the province must consult First Nations.
Provinces can impose conditions on interprovincial pipelines
In a new twist on regulatory federalism in Canada, the judge in this case ruled that despite federal paramountcy over interprovincial pipeline approvals, it would be permissible for the provincial government to impose certain conditions on interprovincial pipeline approvals. The province could not use its regulatory authority to deny an approval to a pipeline that the federal government approved, but it could add conditions to the federal government’s conditions.
Implications for pipeline proposals
If this decision sticks, the Northern Gateway Project can’t proceed without several additional steps by the BC government. Last we heard, the BC government was strongly opposed to the project. And this judge ruled that the province can’t block an interprovincial pipeline project approved by the federal government.
As a result, the decision shifts the intergovernmental politics of pipelines. For an equivalency agreement to pass muster, BC would be able to defer the assessment process to the federal government, but it would need to issue its own final decision. The current process, where BC submits strenuous objections to the pipeline but then defers the final decision to the federal regulator, would no longer workable.
This decision also has direct implication for the Kinder Morgan Trans Mountain Expansion project, because that regulatory review process is being conducted according to the same equivalency agreement. There are fewer direct implications for Energy East because BC’s Environmental Assessment Act and the particular equivalency agreement are not in play. If the other provinces’ EA acts and equivalency agreements are similar, then there could be important implications.
Of course, this decision could be overturned or altered on appeal. I don’t know what counts as finality of regulatory decisions anymore. Stay tuned.