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The view looking down the Douglas Channel from Kitimat, B.C. Tuesday, June, 17, 2014. Two legal challenges were filed against the federal cabinet's approval of the Northern Gateway pipeline.JONATHAN HAYWARD/The Canadian Press

Enbridge Inc. and its oil industry partners have seen their faint hope for the Northern Gateway pipeline project dealt a major blow Thursday as the Federal Court of Appeal quashed the permit issued by the federal cabinet two years ago.

The three-justice panel concluded that the former Conservative government failed in its duty to consult First Nations prior to issuing a cabinet order approving the $7.9-billion pipeline that would deliver 525,000 barrels a day of oil sands crude to the West Coast for export to Pacific markets.

First Nations and environmental groups celebrated the victory Thursday, but Northern Gateway president John Carruthers said the consortium remains committed to the "critical infrastructure project" and would determine next steps. The companies have signed some 31 aboriginal communities along the route to equity agreements but face a wall of opposition among coastal First Nations, who fear a major spill would destroy the marine environment.

The court ruling throws the issue back to the Liberal government to determine whether to order new hearings, or to conduct additional consultations with affected First Nations and then reach a cabinet decision. Prime Minister Justin Trudeau is facing a series of tough political decisions on a series of pipeline projects that pit the oil industry and the Alberta government against vocal opponents among environmentalists, First Nations and local politicians.

The Liberal government may not look to reinstate the permit, Natural Resources Minister Jim Carr's spokesman indicated in a statement. The government "will take the time necessary to review [the ruling] before determining our next steps, if any," Alexandre Deslongchamps said. He added that the Liberals want to forge a renewed relationship with indigenous people "based on recognition of rights, respect, co-operation and partnership, including our duty to consult."

Enbridge-led Northern Gateway was already facing daunting challenges – including meeting the National Energy Board's 209 conditions, achieving agreement from local aboriginal communities, and confronting the Liberal government promise to impose a ban on crude tanker traffic in the waters off northern British Columbia. The company has asked the National Energy Board to extend its permit beyond Dec. 31, when it will lapse unless construction has begun.

The Alberta-based oil sands industry – backed by the provincial New Democratic Party government – argues that it is crucial to obtain pipeline access to Canada's coasts in order to access new markets and ensure the sector receives world prices for its crude. The Canadian Association of Petroleum Producers released a forecast last week that said current production – plus diluent needed to ship thick oil sands bitumen – is enough to fill the pipelines carrying product from Alberta, although there is additional crude-by-rail capacity.

In addition to Enbridge, Northern Gateway is backed by Suncor Energy Inc., Cenovus Energy Inc., MEG Energy Corp., CNOOC Ltd.-owned Nexen Energy ULC and Total SA.

The seven coastal First Nations that led the court challenge argue that their livelihood and marine environment – indeed, their very way of life – would be put at risk in the event of a major oil spill.

"Everybody is pretty happy – it's wonderful result," said Art Sterritt, an elder with the Gitga'at First Nation who acted as spokesman for the hereditary chiefs and elected council. He said additional consultations would not pave the way for his nation's acceptance of the project.

"The Gitga'at people are absolutely against this project," he said "There is really no good that can come of the Northern Gateway project. … Just one spill from this project basically wipes out our rights to harvest, wipes out our access to our food, wipes out our economy, wipes out our culture."

Despite continued opposition, Enbridge chief executive officer Al Monaco in May expressed confidence in Gateway, even as he acknowledged the project's fate hinges on building support among coastal First Nations.

Indeed, some of the pipeline's financial backers viewed Alberta Premier Rachel Notley's tacit endorsement of the pipeline, as well as recent moves by governments in Edmonton and Ottawa to beef up environmental standards, as signs of progress in the long-running battle to connect oil sands crude to richer global markets.

But Prime Minister Trudeau has reiterated his opposition to running an oil pipeline through British Columbia's Great Bear Rainforest – which is the route proposed for Northern Gateway – and has promised to impose a ban on crude tanker traffic in coastal waters that would provide access to the proposed export terminal in Kitimat, B.C.

In its decision, the panel noted that the federal government has a duty to consult First Nations on projects that affect their traditional territory and to accommodate their concerns. But on the Northern Gateway project, the former Conservative government "fell well short of the mark" in the execution of that duty, it said.

The judgment included a scathing indictment of the Harper government's approach to the consultations that were required once the review panel submitted its recommendations to cabinet. It appears the cabinet never considered whether it had fulfilled its duties to the aboriginal people before approving the pipeline, said the two justices who formed the majority opinion.

The government conducted the consultations in a "brief, hurried and inadequate" manner, they said. "The inadequacies – more than just a handful and more than mere imperfections – left entire subjects of central interest to the affected First Nations, sometimes subjects affecting their subsistence and well-being, entirely ignored."

There are currently two controversial pipeline projects at different stages of federal regulatory review – Kinder Morgan's Trans Mountain expansion and TransCanada Corp.'s Energy East. The Liberal government extended the timelines for consultations, including with First Nations, after condemning the Conservative approach as inadequate.


Excerpt from the Federal Court of Appeal ruling

The project significantly affects a number of the First Nations who are parties to these proceedings:

Gitxaala Nation. Portions of the oil and condensate tanker routes for the project are located within the Gitxaala's asserted traditional territory. Its main community, Lach Klan, is roughly 10 kilometres from the tanker routes. Also near the tanker routes are fifteen of its reserves, several harvesting areas, traditional village sites and spiritual sites.

Haisla Nation. A portion of the pipelines, the entire Kitimat terminal and a portion of the tanker route are within territory claimed by the Haisla upon which they assert rights to hunt, fish, trap, gather, use timber resources and govern. Canada accepted the Haisla's comprehensive claim for negotiations decades ago.

Gitga'at First Nation. All ships coming or going from the Kitimat terminal must pass through the Gitga'at's asserted territory. They have fourteen reserves along the proposed shipping route; indeed, the route is just two kilometres from the main Gitga'at community at Hartley Bay, B.C.

Kitasoo Xai'Xais Band Council. This party is the body that governs the Kitasoo/Xai'Xais Nation, a band of aboriginal peoples comprised of the Tsimshian Kitasoo people and Heiltsuk-speaking Xai'Xais people. Their asserted territory includes a number of coastal islands and surrounding waters and mainland territory next to inlets and fjords. Tankers will cross their territory.

Heiltsuk Tribal Council. This party governs the Heiltsuk Nation. The Heiltsuk Nation is a band of aboriginal peoples amalgamated from five tribal groups located on the central coast of British Columbia. They assert a claim to 16,658 square kilometres of land and near-shore and offshore waters on the central coast of B.C. Their main community is Bella Bella, on Campbell Island. Tankers approaching Kitimat from the southern approach will travel through the Heiltsuk's asserted territory.

Nadleh Whut'en and Nak'azdli Whut'en. They are part of the Yinka Dene or Dakelh people. The pipelines would cross approximately 50 kilometres of the Nadleh's asserted territory and cross 86 watercourses on their land, 21 of which are fish-bearing waters. The pipelines would cross approximately 110 kilometres of the Nak'azdli's asserted territory and cross 167 watercourses on their land, 60 of which are fish-bearing waters. A pumping station would also be located on the Nak'azdli's asserted territory.

Haida Nation. The Haida Nation is the indigenous peoples of Haida Gwaii. All proposed tanker routes go through or are next to the marine portion of the territory asserted by the Haida. In the southern portion of Haida Gwaii is Gwaii Haanas, a protected Haida area and national park reserve that contains a UNESCO World Heritage Site called "sGan gwaay" or "nansdins."

Follow Shawn McCarthy on Twitter: @smccarthy55Opens in a new window
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