Prince Rupert gas pipeline to be subject of federal appeal

The Federal Court of Appeal has agreed to hear an appeal from a Smithers, British Columbia resident of a National Energy Board decision related to TransCanada's Prince Rupert Gas Transmission (PRGT) project.

TransCanada is to design, build, own and operate the roughly 900-kilometre long natural gas pipeline from near Hudson’s Hope to Progress Energy Canada Ltd.’s proposed Pacific NorthWest LNG facility on Lelu Island near Prince Rupert.

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The NEB had rejected an application from Mike Sawyer who had asked the board to determine and issue a declaratory order that the project is properly within federal jurisdiction and subject to regulation by the board (rather than by the province of B.C.). He argued that the Prince Rupert pipeline project and the NOVA Gas Transmission Ltd. system’s North Montney pipeline, which crosses the Alberta-B.C. border, constitute a single federal undertaking.

Sawyer, who is backed by West Coast Environmental Law, a Vancouver-based advocacy group, had argued that TransCanada operates the project and the NGTL system together as a single enterprise. The project will be physically connected to the North Montney; it will transport gas from the NGTL system, via the North Montney, to the LNG terminal; PRGT and NGTL share common ownership by TransCanada; and the project and the NGTL system will be monitored and controlled from TransCanada’s operations and control centre and will follow TransCanada’s emergency management systems and public awareness programs, he submitted. These relationships, Sawyer maintained, are similar to the level of functional integration and control found to constitute a single federal undertaking.

For its part, PRGT argued that the Prince Rupert project is a local work that is not functionally integrated with a federal work or undertaking and that its purpose is entirely provincial in nature—to transport natural gas from a point of connection with the NGTL system in B.C. to the LNG terminal.

In contrast, it said, the NGTL system is an extensive, operationally and commercially integrated network and trading hub that physically crosses provincial boundaries. It also is an open-access system that provides transportation service to a broad range of customers who pay cost-of-service based tolls. The purpose of the NGTL system is to gather natural gas supply from the Western Canada Sedimentary Basin and transport it to intra-basin markets and to downstream Canadian and North American markets through interconnecting pipelines.

PRGT also argued that Sawyer’s application would have the effect of obstructing the construction of a significant intra-provincial work because it would cause a delay by disturbing a validly-exercised provincial power. Case law, it said, favours provincial jurisdiction for a local work, even where it connects to and facilitates the use of a federal undertaking.

In reply, Sawyer argued that part of determining whether a project is part of a federal undertaking must centre on what operations the undertaking actually performs and his view is that the operation carried out by the project and the NGTL system is transporting natural gas to markets.

In its decision, the NEB said it did not consider the fact that the project will rely on the NGTL system for natural gas to be sufficient justification to bring a facility wholly located within a province under federal jurisdiction, noting that federal pipelines deliver oil and natural gas to provincial works and undertakings across Canada. “The board is cognizant that federal jurisdiction should not be interpreted in a manner that is overly broad and inconsistent with its purpose,” it said.

- Daily Oil Bulletin

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