Federal cabinet to decide again on Trans Mountain pipeline expansion this week

Prime Minister Justin Trudeau and his cabinet will decide Tuesday whether to greenlight the Trans Mountain expansion project, amid political and legal uncertainty for the pipeline the government bought last year for $4.5 billion.

The Liberal government was forced to put the project through a new consultation process after the Federal Court of Appeal quashed past cabinet approvals for the long-delayed project and halted construction last summer.

The court said the government didn't do adequate consultation work with Indigenous peoples before it first approved TMX in November 2016. The court also said the National Energy Board (NEB) did not do enough to study the effects of this project on the marine environment in B.C.'s Lower Mainland.

The NEB did the required environmental review work and conditionally approved the pipeline expansion in February.

Citing the need for more time to finish Indigenous consultations, Natural Resources Minister Amarjeet Sohi punted the decision date to June 18. The government failed to comply with legislated timelines for approving a project after an NEB report.

Cabinet meets on Tuesday and a final decision is expected to be made by ministers on that day.

Of course, even if the project secures cabinet approval, the expansion could be delayed by further litigation by Indigenous and environmental opponents who have steadfastly opposed the expansion, which would see nearly a million barrels of oil a day moved from Alberta to a terminal in Burnaby, B.C.

There could be more delays if cabinet approves the project conditionally and demands changes to the project's route to accommodate some Indigenous concerns.

For example, Coldwater First Nation, a reserve in the B.C. Interior, has long sought a route change to protect against an oil spill in its only aquifer, which supplies 90 per cent of the reserve's water. That First Nation prefers the "west alternative" route that would take the project through another area, further away from the reserve.

The company has opposed this change, saying the current routing is the "best corridor" as it uses the existing right-of-way and would not require any crossings of the Coldwater River.

An outright rejection of the project is unlikely, given how much political and financial capital the government already has invested in the controversial pipeline — a project oilpatch boosters have long demanded as a solution to constrained pipeline capacity and perpetually low prices for Canadian oil.

Finance Minister Bill Morneau is slated to be in Calgary on June 19 — a day after the expected decision — for a speech to the Economic Club of Canada, which, according to a spokesperson, will be focused on "the importance of helping the energy sector grow, and how the government's plan to invest in the middle class is building a better future for all Canadians."

The last time cabinet approved Trans Mountain, then-Natural Resources Minister Jim Carr also went to Calgary to meet with business leaders from the oil industry.

And after the stunning Federal Court decision last summer, Trudeau vowed to press on with building the $7.4-billion expansion project in the "right way."

"We believe the Trans Mountain pipeline expansion is in the best interest of all Canadians. We are committed to upholding the national interests," Trudeau said.

"We are taking the time now to understand the court ruling, which addresses two things that are very important to this government — getting the science and the environmental protections right and making sure we're walking forward in a true path of reconciliation and partnership with Indigenous peoples. Yes, these are challenges, but they have always been challenges."

To that end, the regulator has imposed 156 conditions on the project (it listed 157 conditions when it first approved the project in May 2016), while also handing Ottawa 16 new non-binding recommendations it says would help mitigate marine safety risks that could result from an expanded shipping terminal.

The NEB's "reconsideration" report concluded that project-related marine shipping is likely to cause significant adverse environmental effects on the southern resident killer whale population. The NEB also found that greenhouse gas emissions from the marine vessels would "likely be significant."

"While these effects weighed heavily in the NEB's consideration of project-related marine shipping, the NEB recommends that the government of Canada find that they can be justified in the circumstances, in light of the considerable benefits of the project and measures to minimize the effects," the board concluded.

On the Indigenous front, the government retained retired Supreme Court justice Frank Iacobucci to reboot the Phase 3 consultation process with Indigenous peoples so the government could meet its constitutional duty to consult with them before making a final decision.

The previous Crown consultation team believed, erroneously, that it could not add more conditions to the project than those the NEB already imposed as part of its Phase 2 consultation, the court found.

This time, Iacobucci and his team of 60 consultants have been told to turn feedback into action where possible.

If built, the 1,150-kilometre expansion project would nearly triple the existing pipeline's capacity to 890,000 barrels a day. It would allow pipeline shipments from Alberta's oilpatch to coastal B.C., and then to markets in Asia. Tanker traffic from the Westridge Marine Terminal would increase from about five vessels a month to one a day.

According to research by the nonpartisan Conference Board of Canada, an expanded Trans Mountain would lead to 802,000 person-years of employment and $46.7 billion in government revenue over the next 20 years.

The think-tank estimates that most of those gains would come about through higher prices for Canadian oil.