Ted Morton is a former Progressive Conservative finance and energy minister in Alberta, and is currently a senior fellow at both the University of Calgary School of Public Policy and the Manning Foundation for Building Democracy.
A year ago, I wrote that there was little likelihood that Kinder Morgan's Trans Mountain pipeline expansion would ever be approved, much less built. Six months ago, I changed my opinion: That completion was highly probable. Three months ago, I had fallen back into the pessimists' corner. Today, I believe that the completion of the TransMountain expansion is almost certain. What does this tell you? Probably not to take any of my predictions seriously! But if you are still listening, I will explain.
A year ago, Kinder Morgan was the target of a well-funded, well-organized campaign run by climate-change activists and aboriginal groups. B.C. premier Christy Clark had said her government would not support the pipeline until it met five conditions. Prime Minister Justin Trudeau was still basking in the green afterglow of his hero's welcome at the Paris climate summit. He had already vetoed Enbridge's Northern Gateway pipeline despite its approval by the National Energy Board (NEB). Trans Mountain appeared to be next in line. It looked like "three strikes and you're out" for Kinder Morgan.
Then last November, the stars began to align. Mr. Trudeau announced that his government had accepted the Kinder Morgan project and that it should proceed. Two months later, Ms. Clark announced that Kinder Morgan had now met her five conditions, and that B.C. would support the construction of the pipeline. With both the federal and provincial governments onside, the Trans Mountain expansion looked like a go.
Until May 9. Ms. Clark and her Liberals were reduced to a minority, and the province is now governed by the NDP, which campaigned on the promise "to use every tool in the toolbox" to stop the TransMountain expansion, and came to power through an agreement with the Green Party. True, the toolbox was rather bare, with interprovincial pipelines being an undisputed area of exclusive federal jurisdiction. But it was not empty.
The options ranged from not defending the prior government's environmental approval certificate in court to simply revoking it. Other options included refusing to issue routine building permits, and making a half-hearted, ineffective response to the anticipated civil disobedience and attempts to disrupt construction sites. Using some or all of these "tools" might well have the resulted in endless litigation, delays, and death by a thousand cuts. As for Ottawa, was this a hill Mr. Trudeau was willing to die on? Most thought not.
So what has changed since May? It now looks like the NDP's bark is worse than its bite. As is so often the case, B.C. Premier John Horgan has discovered that governing is more challenging than campaigning. Both in the New Democrats' rhetoric and in their actions – or inaction – there has been a big step back from the fiery rhetoric of the campaign. The message now is "to use every tool in the toolbox" to ensure the Trans Mountain expansion meets "the high standards of environmental protection and Indigenous consultation that British Columbians expect." Suffice it to say that monitoring compliance is a far cry from blocking.
Yes, British Columbia has intervened in the Federal Court of Appeals to support Indigenous and environmental groups that are challenging the legality of the NEB's approval of Trans Mountain. And yes, it has hired high-profile lawyer and aboriginal rights champion, Thomas Berger, to help them. But this is still more bark than bite. The facts point in a very different direction.
The document that outlines the Green Party's support for the NDP government does not include a reference to blocking the Trans Mountain expansion (TMX). Other Green Party policy commitments were included.
The mandate letter to the new NDP Environment Minister simply says "to defend British Columbia's interests." There is no reference to using every tool in the toolbox to block Kinder Morgan.
This "softening" of the NDP's position was restated at the press conference on Aug. 10 in which the NDP outlined its initial actions in the legal challenges against the project.
Attorney-General David Eby has said he will not artificially delay permits for the TMX because it would make the B.C. government liable to costly lawsuits.
The recent cancellation of Petronas' $36-billion Pacific NorthWest LNG project puts pressure on the federal and B.C. governments to get some other energy mega-project built. Trans Mountain is the obvious beneficiary.
TMX was not mentioned at the first meeting between Mr. Trudeau and Mr. Horgan, but media speculated that federal financial support for public transportation, affordable housing and daycare could be offered in a quid pro quo for B.C.'s acceptance of the project.
The Supreme Court's recent rulings in the Clyde River and Enbridge Line 9 cases will bolster KinderMorgan's and the NEB's position that aboriginal consultation was sufficient. The court made it clear that the "duty to consult" does not entail an "aboriginal veto" over new energy infrastructure. Like Enbridge Line 9, the Trans Mountain route is on an existing pipeline right of way. No new or additional Crown land would be required.
Like most minority governments in Canada, Mr. Horgan's NDP is not likely to last much longer than a year before another election is held – which holds out hope for Kinder Morgan that the BC Liberal Party might win.
Trudeau has a political incentive to get the pipeline built, because if is not, his Alberta ally and carbon tax partner Premier Rachel Notley is finished politically. Her likely replacement – Jason Kenney – would be a nightmare for Trudeau. And he knows it.
Last but not least, the Kinder Morgan Canada IPO – at $1.75-billion dollars – was the fourth-largest in the history of the Toronto Stock Exchange. Twenty-four of Canada's largest institutional investors – banks, pension funds, private equity – have a piece of it. It is, as they say, too big to fail. And the Prime Minister's Office knows this, even if the Prime Minister doesn't.
It won't happen tomorrow. But both time and the law are on the side of Kinder Morgan.
These remarks are excerpted from Mr. Morton's presentation to the World Alternative Investment Summit/Canada at Niagara Falls, Ont., on Sept. 15.