Kinder Morgan Canada pipeline plans hits a mountain of opposition

[October 21, 2014]  By Julie Gordon

VANCOUVER (Reuters) - A Western Canadian pipeline once seen as the best near-term hope for sending more of the country's controversial tar sands crude to Asia has hit another snag: aboriginal communities intent on using the courts to block the proposed expansion.

Kinder Morgan Energy Partners' <KMP.N> C$5.4 billion ($4.8 billion) Trans Mountain expansion would twin a 60-year-old line running from the oil-rich province of Alberta to the coastal city of Vancouver, tripling its capacity.

The pipeline expansion had been seen as sure bet because it uses an existing route. But a surge in municipal opposition in recent months has fueled industry worries that it will enter legal and regulatory limbo along with the unbuilt TransCanada Corp <TRP.TO> Keystone XL and Enbridge Inc <ENB.TO> Northern Gateway pipelines.

The odds against the expansion are growing. Aboriginal communities along the route, angered by a consultation process they call unfair, are strategizing as a group on legal tactics they hope will stop the project dead.

The expansion would help open international markets for Canadian oil producers, delivering billions in revenues. The National Energy Board is hearing traditional evidence from Aboriginal groups as part of the regulatory review this week.

"The opposition is widespread and it is vehement, so we're going to continue this fight until the bitter end," said Grand Chief Stewart Phillip of the Union of B.C. Indian Chiefs. "We're looking at a very litigious future."

Two aboriginal communities have already filed lawsuits. Others are banding together to develop strategies around negotiations, litigation and possibly direct protest. Aboriginal leaders call it a "new era" of opposition.

Other opponents include environmental groups and municipal leaders like the mayor of Burnaby, the Vancouver suburb that houses the pipeline terminus and its marine facilities. Mayor Derek Corrigan has pledged his city will exercise every legal option to fight any increase in capacity.

"People say to me: you've already got a pipeline, you've already got a terminal and you've already got a tank farm, what's the big deal," Corrigan said. "Between the time those were built 60 years ago and today ... we've built up communities all around that area."

NOT IN MY BACKYARD

Objections from local politicians and activists have already prompted the National Energy Board to delay its final report on the project by more than six months to January, 2016.

Kinder Morgan is now pushing to run the final leg of the pipeline under the 1200-foot (370 meter) Burnaby Mountain, a conservation area.

The city challenged the company's right to cut down a few trees to complete surveying work on that route, a battle that ended up in British Columbia's Supreme Court. Kinder Morgan won that ruling, which is being appealed.

Despite the challenges, the company expects it will bring the project online in 2018 and says it is confident it will stay on budget.

While municipalities can slow pipeline work with red tape, Kinder Morgan has one major factor in its favor: inter-provincial pipelines fall under federal jurisdiction.

"If you've got valid provincial or municipal legislation that conflicts with valid federal legislation, then the provincial or municipal legislation has to give way," said Robin Elliot, a law professor at the University of British Columbia.

This is how governments make it easier to carry out major "nation building" projects like highways, airports and pipelines.

Aboriginal groups, on the other hand, have constitutional rights around consultation and accommodation when projects directly affect their reserves and traditional territories.

Kinder Morgan Canada President Ian Anderson said this month the company has had success in meeting with chiefs, but that maintaining those relationships takes daily work.

ON THE RESERVE

The existing Trans Mountain pipeline passes through 15 aboriginal reserves, with the new twin line expected to pass through roughly nine. Both affect many more traditional territories.

While the company has signed mutual benefit agreements with some aboriginal groups, three in the Vancouver area have publicly opposed the project, as have the Coast Salish in Washington State and other communities along the route.

Opponents are looking at challenging the impact the project would have on their aboriginal rights, which include hunting and fishing on traditional territories, their lawyers say.

Even if the federal government ultimately approves the project, those same groups could argue that Canada did not meet its duty to protect their interests. This could result in years of crippling court actions and appeals.

The challenges to the project will come "through negotiations, through litigation or, worse case scenario, through blockading," said Chief Ian Campbell of the Squamish Nation. "The position of the Squamish is that no means no."

(Additional reporting by Scott Haggett in Calgary; Editing by Jeffrey Hodgson and David Gregorio)
 

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