Canada: Federal Court Of Appeal To Decide If BC Pipeline Project Is Subject To NEB Jurisdiction

The Federal Court of Appeal has granted a pipeline opponent leave to appeal the question of whether the Prince Rupert Gas Transmission Project (PRGTP) is within federal jurisdiction and subject to regulation by the National Energy Board (NEB). The PRGTP is currently being regulated by the Province of British Columbia and received an Environmental Assessment Certificate in November 2014. This is another example (similar to recent challenges related to Northern Gateway and Energy East, as discussed in a prior post) where pipeline opponents are disputing whether federal or provincial regulators, or both, should oversee and regulate pipeline projects.

The PRGTP is a proposed 900 km natural gas pipeline that will deliver gas from Hudson's Hope (near Fort St. John) to a proposed liquefied natural gas (LNG) facility near Prince Rupert. The LNG facility is called Pacific NorthWest LNG and it is to be owned by a consortium led by Petronas. As seen in recent news stories (for example, here, here and here), that LNG project is facing significant uncertainty as the proponents await a decision on an environmental assessment from the Canadian Environmental Assessment Agency and as questions mount about potential impacts from the Federal Government's climate change policies.

In an October 2015 Application to the NEB, Michael Sawyer asserted that the PRGTP should be subject to federal jurisdiction despite the fact that it is wholly located in British Columbia. Mr. Sawyer argued to the NEB that the PRGTP will be operated together with TransCanada Pipelines' NOVA Gas Transmission Limited System (NGTL). He relied on the test set out by the Supreme Court of Canada in Westcoast Energy Inc. v. NEB and asserted that PRGTP will be operated with NGTL as a "single federal undertaking" and is therefore subject to federal jurisdiction. The project proponent (TransCanada) disagreed, and asserted that the PRGTP is a local work that offers intraprovincial gas transportation service under a different arrangement than NGTL.

In a Decision dated November 30, 2015, the NEB declined to find jurisdiction over the PRGTP and denied Mr. Sawyer's Application. The NEB indicated that it is not persuaded that the PRGTP and NGTL systems will be functionally integrated and commonly managed and controlled, such that they are operated as a single "enterprise."

In February 2016, the Federal Court of Appeal granted Mr. Sawyer leave to appeal the NEB's Decision. There is no information about when the appeal will be heard. If Mr. Sawyer's appeal is successful, it would introduce more uncertainty around the Pacific NorthWest LNG project. Such a decision could also provide support to future pipeline opponents who seek to add levels of review to local pipeline projects that are connected to larger interprovincial pipeline networks.

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