Canadian court quashes government approval of oil pipeline to Pacific coast

Canada’s Federal Court of Appeal on Thursday quashed the approval of the contentious Trans Mountain pipeline expansion that would nearly triple the flow of oil from the Alberta oil sands to the Pacific Coast.

The decision means the country’s National Energy Board will have to redo its review of the pipeline. Prime Minister Justin Trudeau’s government approved Trans Mountain in 2016 and was so determined to see it built that it announced plans this spring to buy the pipeline.

It faces stiff environmental opposition from British Columbia’s provincial government and activists, including indigenous groups. Houston-based Kinder Morgan earlier halted essential spending on the project and said it would cancel it altogether if the national and provincial governments could not guarantee it.

In a written decision, the court said the energy board’s review was so flawed that the federal government could not rely on it to approve the pipeline. The court concluded the federal government failed in its duty to engage in meaningful consultations with First Nations before approving it.

“Meaningful consultation is not intended simply to allow indigenous peoples ‘to blow off steam,’” the decision said.

The court decision is a blow to Trudeau, whose government is having a bad week after Canada was left out of new free trade deal with the U.S. and Mexico. Talks to include Canada are now taking place in Washington.

“Now the incompetent Trudeau gov’t owns a pipeline it can’t build,” Lisa Raitt, deputy leader of the opposition Conservative Party, tweeted.

Kinder Morgan shareholders voted overwhelmingly to approve the $4.5-billion Canadian (U.S. $3.4 billion) sale of the pipeline to the government shortly after the court decision was announced.

The pipeline would allow Canada to diversify oil markets and vastly increase exports to Asia, where it could command a higher price. Canada has the world’s third-largest oil reserves, but 99% of its exports now go to refiners in the U.S., where limits on pipeline and refinery capacity mean Canadian oil sells at a discount.

Canada’s finance minister is due to speak later Thursday.

The court decision is a victory for indigenous leaders and environmentalists, who have pledged to do whatever necessary to thwart the pipeline, including chaining themselves to construction equipment. The Trans Mountain expansion would cause tanker traffic to balloon from about 60 vessels a year to more than 400 as the pipeline flow increases from 300,000 to 890,000 barrels per day.