From a narrow legal perspective, the August 30, 2018 Federal Court of Appeal decision in Tsleil-Waututh Nation v. Canada 2018 FCA 153, is about compliance with the Canadian Environmental Assessment Act, 2012, the Species at Risk Act, and the federal duty to consult under section 35 of the Constitution Act, 1982. Its implications are, of course, much broader. Even more than the Keystone, Northern Gateway and Energy East pipelines, the Trans Mountain Pipeline Expansion Project has become a flash point over economic, energy and climate policy in Canada.

On one side of the debate are those who continue to ignore the climate crisis itself, and the social, economic and environmental implications of a continuation of an economic and energy policy that is centered around the extraction of fossil fuels. The governments of Ontario and Saskatchewan, as well as conservative opposition parties in Alberta and at the federal level are clearly in this camp.

A second camp in the debate would continue with the exploration of Canada’s fossil fuel resources, while making various levels of effort to decarbonize other elements of the Canadian society, such as electricity and transportation. Many in this camp have made their commitment to addressing climate change in other sectors conditional on continued support for the fossil fuel extraction industry. The federal government and the government of Alberta are clearly in this camp, but so are other mainstream parties in Canada. Members of this camp have yet to demonstrate a commitment to meeting Canada’s 2015 Paris climate commitments.

A third camp advocates for the complete decarbonization of Canadian society as quickly as reasonably possible, including a transition away from the production of fossil fuels. This camp takes the view that Canada has delayed action on climate change too long to be able to implement an approach that separates the fossil fuel industry from the decarbonization of other sectors of the economy, and that nothing short of best efforts to decarbonize is an adequate response to the climate crisis we are in. This camp also points out that nothing short of this level of effort is consistent with Canada’s commitments under the 2015 Paris Climate Agreement.

Ultimately, the first two camps essentially advocate for continued investment in the fossil fuel industry, while the third camp views the continued investment in this industry as counter-productive to the economic, energy and environmental prosperity of Canada. The Trans Mountain Pipeline Expansion Project has been at the center of this debate because it represents a major investment in the fossil fuel industry. For advocates, it represents an opportunity to grow the industry and to increase the revenues generated from Canada’s vast fossil fuel resources. For opponents, it represents at best a stranded asset, as it will have to be abandoned as we transition away from fossil fuels, and at worst, a failure to take seriously the commitments Canada made under the 2015 Paris Climate Agreement, an agreement Canada ratified only two years ago, and that will require the vast majority of the remaining global fossil fuel resources to remain in the ground.

The recent Federal Court of Appeal decision is the latest step in a drawn-out battle over the expansion of this pipeline among these three camps. The public debate over this project started in 2013, when the proponent, Kinder Morgan, applied for approval to significantly increase the capacity of the existing pipeline, an approval that was granted in 2016 following an environmental assessment under the much-criticized Canadian Environmental Assessment Act, 2012. In its decision, the Federal Court of Appeal quashes that approval, putting the future of the pipeline expansion into question.

The Court reached three key conclusions that led it to quash the federal approval of the pipeline expansion project. It found that the federal approval did not comply with the Canadian Environmental Assessment Act because the assessment failed to include the increased tanker traffic resulting from the pipeline expansion. The court also found that the federal government did not comply with section 79 of the Species at Risk Act in failing to identify mitigation measures to avoid or lessen the impact of the project on endangered species, particularly the effects of increased tanker traffic on an affected killer whale population. Finally, the court found that the federal government failed to comply with its constitutional duty to consult with affected First Nations communities by failing to engage in a two-way dialogue to seek to accommodate reasonable concerns raised by a number of affected First Nations communities.

On the third issue, the Court concluded that the federal government made the following key errors with respect to its duty to consult:

• It failed to engage in a meaningful two-way dialogue with affected indigenous communities to explore solutions to the concerns they had raised
• It was not enough for the NEB to conclude that the project would have minor impacts on First Nations communities. In fact, such a finding triggered the need for consultation.
• It was not enough for the Crown to take First Nations concerns back to the NEB; the Crown has to engage in meaningful two-way discussions with First Nations on how to address the concerns leading to reasonable efforts to accommodate the concerns
• It was wrong for Cabinet to suggest that it could not or would not alter or add to the terms and conditions proposed by the NEB when deciding whether to accept the recommendations of the NEB to approve the project based on public convenience and necessity. Rather, the cabinet as the ultimate project decision maker has the power and responsibility to make its own adjustments, as needed, to meet its duty to consult and accommodate.

In the days following the decision, the federal government has made it clear that it intends to proceed with the pipeline expansion project in spite of the court decision. It has two options in this regard. It can seek leave to appeal the decision to the Supreme Court of Canada. This option would most certainly delay any further action on the project beyond the next federal election. The alternative would be to comply with the decision by correcting the errors the court has identified. A detailed assessment of the outcome of an effort to comply with the court decision is not possible without more detailed information about the impact of increased tanker traffic and the various impacts on First Nations communities along the pipeline corridor, but some preliminary comments on each of the three issues the court identified can be offered.

With respect to section 79 of the Species at Risk Act, the key task will be to identify mitigation measures to protect endangered species affected by the increased tanker traffic resulting from the pipeline expansion, and to monitor the effectiveness of these measures. An implication of this requirement is that it will likely result in restrictions and other conditions imposed on tanker traffic, which will likely affect the cost and timing of shipping, and could affect the volume of product that can be shipped.

With respect to the failure to include the increased tanker traffic as part of the project to be assessed, the key implication is that by including tanker traffic, the conclusion that the project will not cause significant adverse environmental effects is no longer defensible. This means the federal cabinet will have to grapple with whether the significant adverse effects of increased tanker traffic, such as its impact on the endangered killer whale population, are justified in the circumstances.

The most difficult problem with the federal approval identified by the Federal Court of Appeal is the federal government’s failure to engage adequately with affected First Nations communities. The Court is clear that what is required is a two-way dialogue with each affected community that represents a genuine effort to accommodate the specific concerns of that community. It seems clear that the concerns of each community have been adequately documented, so the starting point for the two-way dialogue seems well established. Nevertheless, a meaningful two-way dialogue to seek to identify ways to accommodate reasonable concerns will take time, and must be expected to result in significant changes to the project.

Of course, none of these efforts will necessarily do anything to resolve the underlying divide over the future of economic, energy and climate policy in Canada. An assessment under the proposed Impact Assessment Act (IAA), recently passed by the House of Commons, and currently before the Senate, would have brought these issues squarely within the four corners of the assessment process. There are those who are happy that this assessment largely avoided the issues of climate change, energy policy and fossil fuel exploration. However, other than a strategic or regional assessment of the broader issues, a well-run project assessment process offers perhaps the best hope of a reasoned and well-informed debate in Canada on this critical issue.

We have, for too long, had this debate in Canada without the scientific rigour and independence that a thorough assessment carried out by an impartial expert review panel (not the industry regulator) would bring to the debate. A well-designed independent assessment would offer an opportunity for mutual learning of all who decide to actively engage in the assessment, and thereby an opportunity to develop more common ground and gradually diminish the divisiveness of this critical debate over the economic, energy and environmental future of our country. It would publicly test arguments about how to integrate economic well-being, energy security, indigenous concerns and environmental protection where possible, and balance among them where necessary. Good assessments help build common ground, respect and understanding, whereas poorly designed assessments tend to be divisive.

We need a much more nuanced assessment and public discussion of the relationship between climate policy and the fossil fuel industry than what we have seen in recent years. The discussion needs to be about a just, and an environmentally and economically responsible transition to full decarbonization, not a debate that ignores the climate crisis, and not a debate that ignores the economic challenges associated with the full decarbonization of our society. That does not necessarily mean no more fossil-fuel-based Infrastructure, but it does mean no more fossil-fuel-based infrastructure without asking and answering critical questions, such as the fate of such infrastructure through the transition to full decarbonization, and the implications of this for the economic viability of such infrastructure. This was missing from the Trans Mountain EA, and this has been missing from the public discourse on the pipeline debate in Canada. We need an honest discussion of what our climate commitments mean for fossil extraction in this country in 2030, 2040 and 2050, we need to consider the economic viability of new infrastructure so they do not become stranded assets, and if we approve new infrastructure while we transition away from fossil fuels, we need to impose terms and conditions that ensure that new infrastructure does not become an obstacle to this transition. This is what a well designed and implemented EA should have contributed to the public discourse and to decision makers.

We only need to look to projects such as Muskrat Falls in Labrador and Site C in British Columbia to know that taking the time to fully explore, understand and consider the economic, social and environmental benefits, impacts, risks and uncertainties is time and money well spent. Those are just two recent examples of project decisions that were rushed because decision makers were blinded by certain obvious benefits, and as a result made multi-billion dollar decisions that very quickly proved to be short sighted and not in the public interest.

An assessment under the new IAA would not have magically resolved all these issues, but it could have made an important contribution. It could have helped us all to better understand the issues. Essentially, the assessment would have determined whether the project would contribute to or hinder efforts to meet Canada’s climate commitments, and whether it will contribute to sustainability. To be clear, an assessment under the new IAA would not have prescribed whether the conclusion on this point would result in the project being approved or not. The debate about the approaches advocated by the three camps identified at the start, however, would have been better informed by independent analysis and credible information, and less dominated by politics and rhetoric.

Meinhard Doelle,

Professor, Schulich School of Law