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Canada's Prime Minister Justin Trudeau, seen at a news conference in Ottawa on June 22, 2016, says the Great Bear Rainforest ‘is no place for a crude oil pipeline.’CHRIS WATTIE/Reuters

Prime Minister Justin Trudeau signalled the death knell for the Northern Gateway pipeline project Tuesday, reiterating his opposition to it just days after a court decision invalidated a previous approval and sent the matter back to the federal cabinet.

His government – which has threatened to use indirect means to block the $7.8-billion oil sands project – now has the opportunity to simply say "no" as a result of the appeal court ruling after it has completed consultations with First Nations whose territories would be affected.

In a judgment released last week, the federal Court of Appeal ruled that the previous Conservative government had failed to adequately consult aboriginal communities when it issued the conditional permit for the pipeline two years ago. The court overturned the permit and ordered the current government to revisit the process and come up with a new decision.

"On the Northern Gateway pipeline, I've said many times, the Great Bear Rainforest is no place for a crude oil pipeline," Mr. Trudeau told reporters in Montreal.

His statement appears to preclude any effort to reroute the pipeline to a terminus at Prince Rupert from Kitimat, B.C., since the Great Bear Rainforest extends as far north as Prince Rupert and well south of Kitimat.

The ruling makes it clear that governments must take seriously their duty to consult and accommodate First Nations, and not merely engage in pro forma discussions in which the outcome is already decided.

The Liberal government will need to consider its implications as they proceed with two other pipeline applications, Kinder Morgan Inc.'s proposed expansion of the Trans Mountain line to Vancouver and TransCanada Corp.'s Energy East project that would move crude from Alberta to Saint John.

The ruling said the government "fell well short of the mark" in executing its duty to consult First Nations after the joint review panel issued its recommendations and before cabinet made its final decision.

"The decision does provide some clarity as to how the process is supposed to work between the issuance of the report and the decision of cabinet," said Calgary-based lawyer Shawn Denstedt, national co-chair at Osler Hoskin & Harcourt LLP.

The discussions must be sustained and meaningful, with evidence that the government has heard the concerns of individual First Nations communities and sought to accommodate them, Mr. Denstedt noted.

The Enbridge Inc.-led Northern Gateway consortium is not conceding defeat, despite the many daunting challenges it faces. They include the implacable opposition from coastal First Nations, who initiated the court challenge, and a Liberal government pledge to impose a ban on crude tanker traffic in northern waters off British Columbia's coast.

Spokesman Ivan Giesbrecht said Tuesday that the company will work with the government to complete the consultations as ordered by the court, and that its partners "are fully committed to building this critical Canadian infrastructure project."

Meanwhile, Transport Canada is continuing to pursue the proposed tanker ban and will consult until early fall with indigenous groups and others on the impact such a policy would have on them, the minister's office said.

"These consultations will inform a government decision on how to proceed on the tanker moratorium and measures to enhance marine safety, protect the environment and communities, and support inclusive economic development," Transport Minister Marc Garneau's office said in an e-mailed statement.

Northern Gateway is currently in front of the National Energy Board seeking an extension of its Dec. 31 deadline to begin construction. Without that extension, the permit would expire.

However, Enbridge and its partners are going to have a tough time getting the project started. While the NEB has yet to respond to the court action, the application is now meaningless because there is no permit to be extended, Calgary lawyer Alan Ross, managing partner for Borden Ladner Gervais LLC, said Tuesday.

"That's now moot," Mr. Ross said.

The lawyer agreed that the court decision provides some further clarity on what governments must do to fulfill the duty to consult that was laid down in a Supreme Court of Canada decision.

But would-be investors in Canada's resource sector will see another project derailed over First Nations' objections.

"Investors are going to look at the process and the timeliness [of project reviews] with a jaundiced eye," Mr. Ross said.

With files from Reuters

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