Canada: Major Decisions For Proposed Canadian Export Pipelines

Last Updated: January 27 2017
Article by Emily Chan and Matthew Keen

There have been major decisions recently concerning proposed Canadian export pipelines by the government of Canada, the government of British Columbia, and the new Trump administration in the United States.

Federal government issues decisions on three major pipeline projects

Late last year the federal government announced its approval of two major pipeline projects: Kinder Morgan's long-awaited Trans Mountain Expansion project and Enbridge's Line 3 project. At the same time, the federal government announced its rejection of Enbridge's Northern Gateway project.

The federal government's decisions on these projects were somewhat unsurprising given summer hints and fall announcements about federal environmental policy on climate change. The decisions were also generally consistent with the federal government's election platform concerning pipeline projects, reforming the environmental assessment regime, and enhancing marine shipping safety and spill response preparedness. The federal government's decisions also hint at a federal quid pro quo of requiring provinces to have strong climate change regimes in place before federal project approvals will be issued.

Federal and Provincial Carbon Policy Regimes Affirmed

During the 2015 election, the Liberal Party committed to taking a different view on the Northern Gateway pipeline from the Harper government. Prime Minister Trudeau announced the federal government would oppose the Northern Gateway pipeline, stating that "the Great Bear Rainforest is no place for a pipeline" and Canadians "need to get our resources to market, but we need to do that in responsible, sustainable, thoughtful ways."

The Northern Gateway project's provincial and federal approvals were both overturned in court in 2016 due to an invalid provincial agreement that removed the need for a provincial environmental assessment certificate and the province's failure to consult with First Nations on this agreement, as well as the federal government's inadequate post-hearing First Nations consultation practices. The federal government has now directed the National Energy Board to dismiss the Northern Gateway project application.

The Trudeau government declared, during the same election cycle, that it would not pre-judge the Trans Mountain Expansion project, which was still undergoing its environmental assessment at the time. The Trans Mountain Expansion project has since completed its environmental assessment and undergone further ad hoc aboriginal consultation and review for greenhouse gas emissions issues, and has now received federal authorization to proceed.

As a rationale for the Trans Mountain Expansion approval, the federal government cited the new federal carbon policy and Alberta's aggressive provincial climate change policies. The National Energy Board hearing process was heavily criticized for not addressing upstream carbon impacts and leaving these considerations to other processes. The federal government's position, when taken with the federal conditions attached to the recent Pacific NorthWest LNG project approval, suggests the federal government (i) puts a significant emphasis on climate change considerations, (ii) remains keenly aware of public opinion and is sensitive to resource development concerns, and (iii) will use federal project approvals to leverage policy decisions from provincial government.

Crude Oil Tanker Traffic Ban

The federal government's pipeline decisions were followed by an update on the federal government's pledged ban on crude tanker traffic along the BC coast. The ban does not extend to liquefied natural gas tanker traffic, non-"persistent" hydrocarbons like gasoline, or small fuel oil barges. Draft legislation has been promised for 2017. The federal government also recently announced $1.5 billion of federal funding for ocean protection, which will include funding for a marine safety system, restoring marine ecosystems, and research into oil spill cleanup methods.

The federal government's attention to marine spill preparedness and response mirrors the British Columbia provincial government's proposed changes to strengthen provincial marine spill preparedness and response requirements.

BC sets conditions for Trans Mountain pipeline

On January 10, 2017, the British Columbia provincial government issued a revised environmental assessment certificate (EAC) for the Trans Mountain Expansion project. The EAC removes the final major legal obstacle from the project. While the regulatory risk has diminished, court challenges have been filed and continued public protests can be expected at remaining permitting steps.

The need for a revised EAC arose from a January 2016 BC Supreme Court decision that the project could not simply rely on the National Energy Board's environmental assessment certificate in place of its own provincial EA certificate.

The provincial government approval layers an additional 37 conditions onto the federal conditions. The provincial conditions address an assortment of issues ranging from aboriginal consultation and engagement to wildlife impacts mitigation and monitoring, environmental offsetting, and marine spill preparedness. Regarding marine spills preparedness, the EA certificate contains eight detailed conditions that impose additional reporting and planning obligations on the proponent.

Importantly, the proponent and the province have also entered into a revenue-sharing arrangement under which the company will pay BC between $25 to $50 million per year for 20 years. These revenues will be a source of funding for environmental projects such as marine preservation and environmental monitoring, remediation of contaminated sites, and restoring habitat.

British Columbia's Premier Christy Clark subsequently announced that the provincial government's longstanding five conditions for approving a pipeline have now been met. In time for the May election, the Premier concluded that the project:

  • has completed an environmental review process;
  • includes a world-leading marine oil-spill prevention, response, and recovery system;
  • uses world-leading practices for land oil-spill prevention, response, and recovery;
  • addresses legal requirements regarding aboriginal and treaty rights; and
  • ensures that BC receives a fair share of the fiscal and economic benefits of the project.

Next Steps

A number of aboriginal and environmental groups have announced forthcoming legal action and protests to the approval of the Trans Mountain Expansion project, while others have announced they will continue to negotiate with the government. If and when construction on the Trans Mountain Expansion project begins, protests are expected. Some local politicians, First Nations leaders, and environmental activists have all promised to interfere with any construction. Conversely, if and when the project begins operating (theoretically scheduled for 2019), discounts on Canadian oil are expected to decline, with commensurate economic benefits.

President Trump signs executive order respecting Keystone XL pipeline

The Keystone XL pipeline was proposed by TransCanada Corporation as part of its Keystone pipeline system. It would better connect Canadian crude supply to US Gulf Coast refineries, and thereby achieve a price closer to world pricing. The project has long been approved in Canada, but – after long delays before the State Department – was ultimately refused a presidential permit by President Obama in November of 2015.

On January 24, 2017, President Trump signed executive orders respecting the Keystone XL pipeline project as well as the Dakota Access pipeline. The Keystone XL presidential memorandum did not specifically approve the Keystone XL pipeline, but put in place procedures that would expedite the review process.

TransCanada was invited to promptly re-submit its application to the State Department for a presidential permit, and the Secretary of State was directed to facilitate an expeditious review and reach a final decision, including a final decision on any permit conditions, within 60 days of the submission of TransCanada's application. The State Department was also directed to utilize its previous environmental impact statement issued in January 2014. The presidential memorandum also directed the Department of the Army and Department of the Interior to expeditiously review all Keystone XL applications for related approvals and authorizations should a presidential permit be issued.

At the time the orders were signed, and consistent with his campaign messaging, President Trump stated that both pipeline projects would be subject to "renegotiation," noting that new projects should use US-made steel pipe. The requirement for US-made steel pie was contained in a separate presidential memorandum that directed the Secretary of Commerce to develop a plan under which all new pipelines, as well as retrofitted, repaired or expanded pipelines, inside US borders, including portions of pipelines, use materials or equipment produced in the United States to the maximum extent possible.

How this separate order may affect Keystone XL is somewhat unclear. Press reports have suggested that much of the Keystone XL pipe has already been manufactured and delivered to various staging areas along the pipeline's right of way and was produced by pipe mills in Canada, India, Italy and the United States. While TransCanada has said it will indeed resubmit its application, it remains to  be  seen  what the commercial response of major producers will be towards multiple approved potential Canadian export pipelines.


About Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global law firm. We provide the world's preeminent corporations and financial institutions with a full business law service. We have 3800 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

For more information about Norton Rose Fulbright, see nortonrosefulbright.com/legal-notices.

Law around the world
nortonrosefulbright.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Emily Chan
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.