A Federal Court of Appeal decision has stopped the Trans Mountain pipeline project in its tracks, for now, and has increased doubt in the industry about the future of resource investment in Canada.
The court ruled Aug. 30 that the National Energy Board’s (NEB) assessment of the project was flawed and should not have been used as a basis to proceed when the federal government gave final approval in November 2016. The federal government purchased the project from Kinder Morgan for $4.5 billion this spring amid uncertainty about the project’s future, which has faced intense opposition from Indigenous and environmental groups.
“This decision is a stunning setback for our contractors and for thousands of workers who were about to commence work on project,” said Progressive Contractors Association of Canada president Paul de Jong.
He also pointed to the Trans Mountain decision as the latest action to shake confidence in Canadian resource investment both within and outside the country.
“As a country, we’re losing out on a major opportunity to generate thousands of jobs and billions in revenue. It sends out a message that Canada cannot be relied upon as an energy supplier,” de Jong said.
“Canada now looks like an investment to be avoided, and investment will flow to other areas that are more open for business.”
Canadian Association of Petroleum Producers president Tim McMillan echoed de Jong’s concern.
“We represent the upstream producers, not pipelines and shippers, but we have been struggling with large discounts to our product for decades. Building infrastructure to get our product to the global market is crucial not only for our members but all Canadians,” he said.
McMillan also referred to complicated regulations as a factor in the demise of previous stalled or abandoned projects such as Energy East.
The only silver lining is that this will force government and the National Energy Board to come up with a process that works
— Jordan Bateman
Independent Contractors and Businesses Association
“Our regulatory system is so complex and is not understood by Canadians at large. Companies feel it’s so difficult to navigate the existing projects like Trans Mountain and Energy East,” McMillan added.
“Sadly, global investors and Canadian investors have already discounted Canada substantially and this just reinforces that attitude.”
Independent Contractors and Businesses Association director of marketing and communications Jordan Bateman said the federal government and its bureaucracy “have failed Canadians again.”
“Kinder Morgan did everything right, they went above and beyond, and their process was held up in a dozen court cases,” Bateman said.
“It’s a gut punch to the economy and to construction, and it leaves us wondering what the next couple of years will look like.”
British Columbia Construction Association president Chris Atchison questioned the court decision and said the fact the NEB’s conclusions were deemed to be flawed as “beyond belief.”
“We can only hope that the federal government’s challenge of this decision to the Supreme Court will clear the way for the project to finally proceed and result in a positive outcome for all Canadians,” Atchison said.
He also pointed to lost revenue from the project as harmful not only to industry but to communities that would have benefited from the project.
“We are now in a position of sidelining so many positive aspects of the project: revenues for bridges, roads, schools and hospitals that would benefit our economy and boost global investor confidence in Canada’s resource industries. It’s a regrettable decision that may set back our country and province decades with a loss of incalculable social and economic benefits,” Atchison said.
De Jong also said he regretted lost revenue for communities who would have been involved in building and maintaining the pipeline.
“We have concerns about jobs being lost while this project is in limbo. Communities will lose revenue as those revenues are now in question,” he said.
The Canadian Construction Association (CCA) also appealed to all parties involved to find a compromise and move forward.
“We are asking the federal government to take the necessary actions to address the issues that led to that decision to move forward collaboratively with the Trans Mountain expansion project,” CCA president Mary Van Buren said in a statement. “The construction industry is a significant contributor to the Canadian economy, and CCA’s members are committed to working with the federal government and stakeholders to advance this Canadian infrastructure project that will generate significant economic opportunity and benefits for all Canadians.”
Shortly after the court decision, Finance Minister Bill Morneau pledged to push ahead with the government’s purchase of the pipeline and said the decision from the court are important steps in getting the project from Alberta to the B.C. coast built in “the right way for the benefit of all Canadians.”
“The only silver lining is that this will force government and the National Energy Board to come up with a process that works. We hope the federal government takes immediate action, as it’s vital both for British Columbia and Canada as a whole,” Bateman added.
Alberta Premier Rachel Notley also announced her government would pull out of the federal climate plan as a result of the decision.
“Albertans are angry. I’m angry. Alberta has done everything right and we have been let down. The combined result of the actions taken by the Harper government, the current federal government, the National Energy Board and the Federal Court of Appeal means that the current state of affairs in Canada is such that building a pipeline to tidewater is practically impossible,” Notley said in a statement on Aug. 30.
The Trans Mountain expansion is a $7.4-billion construction project that would parallel the 1,150-kilometre route of the existing Trans Mountain Pipeline. Pipeline capacity will increase from 300,000 to 890,000 barrels of oil per day.