In its recent decision in Coastal First Nations v. British Columbia (Environment), the B.C. Supreme Court (Court) held that the provincial government retains authority to impose conditions on the proposed Northern Gateway Project (Project). As a result, the federal-provincial agreement to proceed with a single environmental assessment of the Project does not mean that federal approval, and the 209 conditions imposed by the federal government on its approval, is sufficient for the Project to proceed. British Columbia must still exercise its discretion to decide whether to impose additional conditions on the approval of the Project. However, any conditions imposed by B.C. cannot prevent the Project from proceeding. Finally, the Court determined that B.C. breached its duty to consult First Nations regarding the Project. 

The Court’s decision is likely to be appealed, in which case we will report on the appeal decision. 

BACKGROUND 

The Project would consist of a pipeline from Bruderheim, Alberta to Kitimat, B.C., carrying 525,000 barrels per day of bitumen diluted with condensate. A parallel pipeline would carry 193,000 barrels per day of condensate back from Kitimat to Alberta. There would be a marine terminal at Kitimat, at which 220 tankers per year would berth. 

The Coastal First Nations is an alliance of nine First Nations on the central and northern coast of British Columbia, which assert aboriginal rights and title along a significant portion of the proposed tanker route. The Coastal First Nations are concerned that an oil spill by Project tankers would likely have adverse effects on the Coastal First Nations’ territories. 

JOINT REVIEW PANEL

Because the Project includes an inter-provincial pipeline, the National Energy Board (NEB) was required to determine whether to issue a certificate of public convenience and necessity. A federal environmental assessment was also required. Accordingly, the NEB and the Canadian Environmental Assessment Agency formed a Joint Review Panel (Panel) in 2010 to review the Project. 

Also in 2010, the B.C. Environmental Assessment Office entered into a broader agreement (Agreement) with the NEB, by which B.C. agreed that if the NEB is required to assess a project, then B.C. would accept the NEB’s assessment instead of performing its own. The Agreement provides that if a project is approved by the federal government following NEB assessment, the project does not require provincial approval. The Project is the first to proceed through an NEB assessment under this Agreement. 

B.C. participated in the Panel assessment process. In its submissions to the Panel, B.C. opposed approval of the Project, asserting that the Project would not have world-class oil-spill response, prevention and recovery systems for both the land-based pipeline route and the marine-based tanker route. B.C. recommended that if the Panel did approve the Project, it should impose additional conditions primarily regarding oil-spill issues. 

The Panel recommended approval of the Project in 2013. While the Panel imposed 209 conditions on the Project, it did not adopt B.C.’s proposed conditions. In 2014, the federal Cabinet approved the Project, subject to the conditions recommended by the Panel.

LEGAL ISSUES

The Court considered three primary issues: 

  1. Whether B.C. has any constitutional jurisdiction to regulate an inter-provincial pipeline; the Court answered “yes”
  2. Whether the B.C.-NEB Agreement means that not only assessment but approval of the Project has been delegated by B.C. to the NEB; the Court answered “no”
  3. Whether B.C. was required to consult with First Nations before the federal government approved the Project; the Court answered “yes”

CONSTITUTIONAL JURISDICTION

The provincial and federal governments have various areas of jurisdiction. Some areas are distinct (e.g. national defence is exclusively a federal concern) while other areas are shared (e.g. both federal and provincial governments have environmental protection laws). 

Inter-provincial undertakings such as pipelines and railways are under federal jurisdiction. As such, Northern Gateway argued that B.C. has no regulatory role in assessing or approving the Project. 

The Court agreed that B.C. could not refuse to approve the Project or block it from proceeding, since this would directly conflict with the federal approval of the Project. However, B.C. can impose conditions on the Project “that seek to advance environmental protection interests.” In effect, B.C. cannot say “no” to the Project; but it can say “yes, with further conditions.” 

If B.C. imposes additional conditions that make the Project practically impossible, or which conflict with the federal conditions such that the Project cannot comply with both sets of conditions, then the B.C. conditions would be invalid. However, in prior cases, the Supreme Court of Canada has held that a provincial law may be more restrictive than federal law in the same sphere. 

In this case, although B.C. had argued for conditions that were not accepted by the Panel, B.C. has not exercised its authority to impose any conditions on the Project. The Court held that it is premature to determine what provincial conditions might be valid. If B.C. imposes conditions on the Project, then the Project could apply to the Court to determine whether those conditions are permissible, or whether they conflict with the federal conditions or make the Project impossible. 

ENVIRONMENTAL ASSESSMENT AND APPROVAL

In their 2010 Agreement, B.C. and the NEB agreed that where both jurisdictions were required to undertake an assessment of a project, the NEB would conduct such assessments so that B.C. would not need to assess or approve such projects. 

The B.C. Environmental Assessment Act (Act) authorizes B.C. to enter into “an agreement regarding any aspect of environmental assessment with another jurisdiction”, including the NEB. However, the Act treats assessments separately from the approvalof projects. As such, the Court held that even following an environmental assessment conducted by the NEB, B.C. is still required to exercise its discretion to approve a project. To the extent that the Agreement states otherwise, it is invalid.

In this case, because B.C. has no constitutional authority to reject the Project, its authority under the Act is limited to determining what, if any conditions to impose on the Project. 

The Court emphasized the importance of B.C. retaining independent decision-making authority despite having delegated the conduct of assessments to the NEB. The Court wrote that British Columbia “has legal responsibilities, social and political goals and other important objectives that are unique to this province”, and which can only be met if B.C. maintains the ability to review all projects that come within the scope of the Act. 

FIRST NATIONS CONSULTATION

The Coastal First Nations argued that B.C. should have consulted First Nations: (i) before B.C. entered into the 2010 Agreement with the NEB; and (ii) after the Panel recommended approval of the Project. 

The Court held that the Agreement itself was very general in nature and would not necessarily lead to adverse impacts on aboriginal rights or title. As such, B.C. was not required to consult First Nations before entering into the Agreement. 

However, the Court found that B.C. should have consulted First Nations after the Panel issued its report, because the report did not incorporate the conditions recommended by B.C. and sought by the First Nations regarding oil-spill protection. At that point, B.C. could have terminated the Agreement (at least to the extent it provides that B.C. approval is unnecessary given the NEB’s assessment), and decided whether to impose further conditions on the Project. Having failed to do so, the provincial government breached its duty to consult. 

IMPLICATIONS

Given the likelihood of an appeal of the Court’s decision to the B.C. Court of Appeal and then potentially to the Supreme Court of Canada, it would be premature to draw any final conclusions about this case. In the meantime, B.C. will need to reconsider its approach to the Project and determine whether to exercise its authority to impose on the Project further conditions beyond those recommended by the Panel and imposed by the federal government.