BC taking Kinder Morgan pipeline project to court over NEB rulings

At issue is how long municipalities can take to process permit applications before delays infringe federal constitutional powers

British Columbia is testing Canadian authority over inter-provincial pipelines in court, according to a Saturday press release. If the BC NDP government of John Horgan is successful, there is a very good chance Kinder Morgan’s $8 billion Trans Mountain Expansion pipeline project will be in peril.

The BC government says it has applied for leave to appeal a Dec. 7, ruling by the National Energy Board that allowed Kinder Morgan to bypass City of Burnaby bylaws related to construction work at the Burnaby Terminal and the Westridge Marine Terminal.

Trans Mountain Expansion
Burnaby Mayor Derek Corrigan explaining on City video why he opposes Trans Mountain Expansion.

The Province’s position is that the NEB erred by “too broadly defining federal jurisdiction over inter-provincial pipelines.”

What exactly might BC be arguing? A media spokesperson for the ministry of environment and climate change strategy wasn’t able to provide details, noting that government lawyers will soon be filing the application and accompanying briefs that will spell out the Province’s argument.

But the NEB released its reasons behind the Dec. 7 ruling on Jan. 18 and that document summarizes the arguments from both sides: BC, Burnaby vs. Trans Mountain Pipeline ULC (Kinder Morgan) and the attorney generals for Alberta and Saskatchewan.

At issue was an Oct. application by Trans Mountain for the NEB to grant municipal tree cutting permits that were taking far too long because Burnaby bureaucrats were doing everything in their power to gum up City processes, presumably to frustrate the company, which had warned in Dec. that further delays could cause investors to jettison the project.

The NEB cited two constitutional principles to justify granting the permits.

One,  the legal doctrine of inter-jurisdictional immunity holds that provincial legislation cannot impair the “core” of a federal power or undertaking (like an inter-provincial pipeline). Trans Mountain submitted that “delay substantially impairs the core of the federal government’s exclusive power over the matters of when and where the Project is built, and the Project’s orderly development and efficient operation.”

Two, the doctrine of paramountcy holds that when provincial and federal jurisdictions overlap and conflict, the federal government prevails. In this case, “Trans Mountain argued that the Project’s timing was a part of the public interest determination, and that Burnaby’s inaction flouts the federal purpose.”

BC Environment Minister George Heyman, forefront, Attorney General David Eby.

Bottom line, Burnaby is not allowed to deep six the pipeline by dragging its feet issuing permits.

But when do “reasonable regulatory processes” cross the line into foot dragging?

That question is likely at the heart of BC’s application to the Federal Court of Appeals.

In its ruling, the NEB said its role was not “to dictate to Burnaby the specifics of the process it must use for its own municipal permitting.”

Therefore, the national energy regulator was left to conclude – after reviewing copious correspondence between the company and the City – if Burnaby’s permit reviews were reasonable.

Here’s the conclusion: “…Burnaby’s process to review the PPA [re-zoning] applications and associated Tree Cutting Permits, and its execution of those processes, were not reasonable, resulting in unreasonable delay.”

The NEB then goes on to describe in some detail just how lackadaisical and disinterested Burnaby bureaucrats were in efficiently processing Trans Mountain’s applications.

And there is a clear pattern to Burnaby’s behaviour (and, one could argue, its motives).

In an NEB ruling issued Thursday on changes to the pipeline’s route, the City as per usual opposed any Kinder Morgan’s requests and its effort to resolve the situation was at best halfhearted: “Having considered all the evidence regarding consultation opportunities during the detailed route process, the Board is of the view that Burnaby chose to not take full advantage of numerous opportunities offered by Trans Mountain.”

But allowing provincial and municipal governments to conduct permitting and bylaw reviews at their own pace is part and parcel of conferring legitimacy to the outcomes, says constitutional lawyer Margot Young of UBC Law.

Margot Young, UBC law professor.

“The NEB decision leaves little scope for meaningful municipal regulations and process, although it grants the validity of such municipal/provincial jurisdiction,” she said in an email.

“Some impact on the project follows unavoidably from the recognition of shared jurisdiction. Otherwise, municipal involvement would have to be meaningless or without substance for it not to fall afoul of the doctrines of paramountcy and inter-jurisdictional immunity. Further clarification, and more precise rendering of what municipal impact is constitutional, in a way that doesn’t make a sham of co-operative federalism, is required.”

How the Federal Court of Appeal rules could make or break the Trans Mountain Expansion project.

But the effect on the rest of Canada could be even more dramatic.

Last week when the Canadian government unveiled the dramatic changes to the way in which natural resource development projects are assessed, approved, and regulated, Natural Resources Minister Jim Carr noted that Ottawa is expecting $500 billion of investment in resource development over the next 10 years.

If the court sides with BC, giving more authority to provincial and municipal governments to intervene in resource projects, the Canadian economy could be adversely affected for decades to come.

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