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Federal Court of Appeal Justice David Stratas, in his ruling, said that consultation between the federal government and First Nations must include meaningful, two-way dialogue.Greg Black

The federal Court of Appeal has allowed a legal challenge to the Trans Mountain Pipeline expansion project to proceed, just as construction – delayed by earlier court battles – is resuming both in British Columbia and Alberta.

A judicial review will determine whether Ottawa has adequately consulted with Indigenous communities about the project. The court, in a ruling released Wednesday, denied applications for a review on environmental matters, but ecology groups say they are now considering an appeal to the Supreme Court of Canada.

The court was emphatic that opposition to the pipeline, led by six First Nations communities, is not legal grounds to stop the $7.4-billion expansion project. But, in an unusually prescriptive ruling, the court has directed an expedited hearing to determine if there are grounds to overturn the project for a second time.

Federal Court of Appeal Justice David Stratas said in his ruling that consultation between the federal government and First Nations must include meaningful, two-way dialogue. But, he added: "The duty to consult does not require the consent or non-opposition of First Nations and Indigenous peoples before projects like this can proceed. … Under the duty to consult, First Nations and Indigenous peoples do not have a right to veto a project.”

However, he said the federal government did not, during the hearing, make the case that its consultation was sufficient: “The respondents have withheld their evidence and legal submissions on these points.” He said it will now be left to a judicial review to assess Canada’s consultation process.

The project, now owned by the government of Canada, was stalled in August, 2018, when the Court of Appeal quashed its approval based on inadequate consultation with Indigenous communities, as well as a failure to consider the negative effects of increased oil-tanker traffic on marine life – particularly the endangered southern resident killer whales. In the wake of that ruling, Ottawa conducted additional consultation and announced new measures to safeguard the marine environment. It then reapproved the project in June of this year.

The court heard 12 applications for a judicial review of the reapproval, but in Wednesday’s ruling, the court only allowed six motions. Those motions will be consolidated into a single application, which will be limited to what Ottawa has done to remedy the shortcomings on Indigenous consultation identified by the court last year.

First Nations leaders said the limits are frustrating, but leave room for a solid legal argument that Ottawa has still not fulfilled its duty to consult. “It’s a little bit crazy, but we are comfortable with the Canadian Constitution protecting our Indigenous rights," said Rueben George of the Tsleil-Waututh Nation’s Sacred Trust Initiative, which has led the legal challenges.

In an e-mailed statement Wednesday, Trans Mountain spokesperson Ali Hounsell said construction is already under way at the company’s Burnaby, B.C., terminal. Construction work will begin soon along the right-of-way in Alberta between Edmonton and Edson, and in the Greater Edmonton area.

A spokesman for federal Minister of Natural Resources Amarjeet Sohi said Canada has fulfilled its duty to consult, and it is putting strong environmental protections in place. “We remain confident that we have taken the necessary steps to get this right, by following the clear guidance set by the Federal Court of Appeal, and we are fully prepared to defend our decision in court,” said Alexandre Deslongchamps, the minister’s director of communications, in an e-mailed statement.

The oil industry’s main lobby group voiced its disappointment with the court’s decision to permit another legal challenge to the project. “The [Trans Mountain expansion] has already undergone a lengthy, thorough and extensive regulatory review process, including extensive consultation with all stakeholders. It has been deemed to be in the best interests of all Canadians,” Tim McMillan, president of the Canadian Association of Petroleum Producers, said in a statement.

The industry, which has been in a downturn since late 2014, has said the project will allow Alberta oil sands-derived crude to access overseas markets and attract higher prices. A shortage of export capacity led the Alberta government to force companies to cut production early this year, and those curtailments remain in place.

David Wright, an assistant professor at the University of Calgary’s Faculty of Law, said Wednesday’s ruling is “very unusual,” as the Court of Appeal normally does not elaborate on its reasons for decisions on such matters. The strict timeline laid out by Justice Stratas for an expedited hearing is also uncommon. The parties have just seven days to file their applications, setting in motion a process that could result in a decision by the end of the year. “The court probably recognizes that the parties are ready go, and there are no novel new points of law," he said.