New rules for disputes over Trans Mountain project may bypass local laws: observers

January 25, 2018

The National Energy Board (NEB) has decided on a process to resolve potential future permitting disputes over the contentious Trans Mountain oil pipeline expansion project, but concerns are being raised the expedited timelines as a result of the new rules may mean regulations at the local level will be circumvented.

Trans Mountain, which is owned by Texas-based Kinder Morgan Inc., is an oil pipeline that carries diluted bitumen from the Alberta oil sands to the west coast of British Columbia. In 2013, Kinder Morgan filed a petition with the NEB to build a second pipeline (called twinning) to double its carrying capacity. Since then, it has been the subject of numerous complaints and lawsuits from a number of groups.

Under the process outlined Jan. 18, it will take approximately three to five weeks to reach a decision on a permitting dispute from the time a request is filed with the NEB. The NEB said it believes the process “will provide a measure of certainty regarding the regulatory tools available to resolve permitting disputes or disagreements in limited circumstances where Trans Mountain and provincial and municipal authorities are unable to do so.”

 

Alan Ross, an oil and gas lawyer with Borden Ladner Gervais LLP in Calgary, calls the new rules “fair and efficient,” noting the pipeline project is roughly a year behind schedule.

“The approach will provide a reasonably timely measure of certainty regarding the regulatory framework for resolving permitting disputes or disagreements,” he said. “It addresses compliance oversight. The NEB would only step in for narrow reasons, such as when there is lack of clarity as to whether Trans Mountain has achieved condition compliance.”

But the NEB's decision did not sit well with Eugene Kung of West Coast Environmental Law, who said the time constraints imposed by the new rules will limit the ability of local government to apply their own laws and permitting processes to the pipeline construction approval process.

“That’s especially concerning when you consider the nature of this project and the toxic diluted bitumen that will be flowing through it,” he said. “It’s problematic and challenging the sense that [the NEB] is essentially giving the ability to Trans Mountain to circumvent and bypass local laws by having this process to hold over them.”

As part of its decision on the permitting process, the NEB also released the reasons for its Dec. 7 order which declared that Trans Mountain was not required to comply with two sections of the City of Burnaby’s bylaws. The sections of the bylaws in question required Trans Mountain to obtain preliminary plan approvals and tree cutting permits for project-related work.
 

Kung said one of the biggest reasons he is concerned about the new rules is their “attack on the very foundational principle of co-operative federalism.”

“Our federal system is a co-operative one and it recognizes that jurisdictions aren’t watertight compartments, that there’s overlap,” he said. “And Kinder Morgan has kind of taken the doctrine of [federal] paramountcy and has come to this absurd conclusion that they should be able to dictate the pace at which local laws and regulations are imposed on them.”

But Ross said he expected the three- to five-week timeframe to be a “rarely used remedy” that will have little effect on local rules.

“There remains an expectation, reflected in the process, that all sides will go through the permitting process in good faith,” he said. “The board’s role is essentially limited to stepping in when necessary on permitting issues that affect NEB conditions on the project.”

Fenner Stewart, an assistant professor at the University of Calgary who teaches oil and gas law, said the NEB’s decision seems to stem from a feeling by some that large processes like the twinning of the Trans Mountain pipeline need to be done in a timely manner and it is within the scope of the federal government to approve and oversee approval processes.

“But if you frame it the opposite way, what you’re seeing is the NEB or the federal government somehow encroaching on the jurisdiction of the province and the municipality to exercise control over the building of these projects,” he said. “What it comes down is to whether or not someone has the presumption the provinces or municipalities are just playing delay tactics, or whether the NEB is trying to force the issue to clear the way so Trans Mountain can easily build this pipeline without having to really address any of the provincial or municipal concerns, riding roughshod over their interests.”

The government of British Columbia has raised the possibility of appealing the NEB’s decision to the courts. However that may turn out, Stewart said the question of what rights municipal and provincial governments have within the scope of these major resource development projects is still an unsettled constitutional question.

“I think the Supreme Court will have to weigh in on this issue sometime soon, and until that baseline is set, there’s going to be a wide spectrum of disagreement on this issue,” he said. “This isn’t the first time pipelines have been a lightning rod for attracting conversation about who we are as Canadians and what the Canadian identity is, and I think that’s something that is much larger than something the NEB can deal with.”