The National Energy Board erred and must reconsider whether a $5-billion pipeline to ship natural gas from Hudson's Hope to Prince Rupert falls under federal jurisdiction, Canada's Federal Court of Appeal has ruled.
In a 25-page decision released July 19, Appellate Justice Donald Rennie ruled the NEB had misapplied the legal test for whether or not a pipeline or “undertaking” falls under federal jurisdiction.
The case dealt with TransCanada Pipeline Limited’s 900-kilometre Prince Rupert Gas Transmission (PRGT) pipeline, which would run from the Hudson's Hope area to the Pacific Northwest LNG facility on Lelu Island near Prince Rupert, where natural gas would be liquefied and shipped to global markets.
While ruling the board had misapplied the jurisdictional test, Justice Rennie underscored he was offering no opinion on whether the pipeline actually falls under federal jurisdiction. That question, he said, must be decided by the board when it reconsiders the matter and correctly applies the test established by Canada’s Supreme Court.
"The Board did not ask itself whether an arguable case for federal jurisdiction had been made out," Rennie wrote in his decision.
The appeal was launched by B.C. resident Michael Sawyer, who received funding support for his case from the SkeenWild Conservation Trust. Sawyer had argued the pipeline needed federal and not provincial approvals to build as its purpose was to export gas.
Sawyer had sought the NEB—which regulates interprovincial and international pipelines—to hold a hearing to determine the jurisdiction of the project.
The NEB dismissed Sawyer's bid for a hearing. The board acknowledged the pipeline would be fed with gas from federally-regulated pipelines, but concluded it wasn't reason enough to bring the provincial pipeline under its jurisdiction.
The NEB must now reconsider whether to hold a hearing on the matter.
“This shows that the NEB was too quick to dismiss a legitimate constitutional argument without a full hearing,” Sawyer said in a statement following the ruling.
“I’m convinced that PRGT is just one part of a massive natural gas export scheme that is clearly within federal jurisdiction and needs federal approval to proceed.”
TransCanada spokesman Matthew John said the company is reviewing the judgment and considering its options.
"It is notable that this decision is not a determination that federal jurisdiction applies," John said in a statement.
"Instead, the Court determined that the National Energy Board needs to reconsider their original decision about holding a hearing to determine whether federal jurisdiction applies. Accordingly, the Court remitted the case back to the NEB for reconsideration."
The pipeline received the last of its provincial operating permits in October 2015, part of $6-billion in pipeline infrastructure required for Pacific NorthWest LNG, including extending TransCanada's NOVA Gas Transmission System in Northeast B.C. An estimated 2,500 direct construction jobs would be created during the PRGT's three-year construction period.
The pipeline's timeline is "tightly aligned" with Pacific NorthWest LNG (PNW), John said. Petronas, the Malaysian state-owned oil and gas company behind the $36-billion PNW project, made a conditional final investment decision in 2015 to build the export terminal and associated infrastructure. Petronas is currently reviewing the project following federal approvals it received last year.
"In order for PRGT to proceed with construction, PRGT will require PNW’s final commitment to move ahead with the project," John said.
"TransCanada has invested millions of dollars in skills training and education for local and Aboriginal people in B.C. to prepare them for employment in the energy sector and ensure a strong, positive legacy," he added.
"And over $6.5 million has been invested in community initiatives and programs important to British Columbians."
—with files from the Daily Oil Bulletin