Good afternoon, honourable members.
Thank you for having me appear in relation to this important study.
My name is Dwight Newman, and I'm professor of law at the University of Saskatchewan. From 2013 to 2023, I served the maximum 10 years as a Canada research chair in the area of indigenous rights in constitutional and international law. I've published various works related to the intersection of indigenous rights and resource development, as well as on some resource development law issues more generally and on Canadian constitutional law more broadly. As in all of my parliamentary committee appearances, I appear entirely in a personal capacity.
In trying to understand what happened with the Trans Mountain pipeline expansion project and the cost increases, one particular lens I would offer is that of the effects of legal uncertainty, various government interactions with that uncertainty and the resulting delays and other problems. In essence, the project started very late compared to when private industry was ready to build it, which arguably contributed to inflationary costs, and its construction was in significantly changed market conditions.
A key moment in relation to the Trans Mountain project was the August 30, 2018, Federal Court of Appeal decision, quashing the Governor in Council's approval of the project. That decision was based significantly on failures in late-stage consultation steps within the project, which was after the National Energy Board joint review panel stage and prior to the Governor in Council approval. As it happened, by coincidence, 30 minutes later, Kinder Morgan shareholders voted overwhelmingly to approve a previously negotiated sale of the project to the Government of Canada.
However, to understand what led to these moments, we need to back up in time. In June 2016, there was what many considered a more surprising decision by the Federal Court of Appeal to quash the June 2014 approval of the northern gateway pipeline. I say it was considered surprising not because the Federal Court of Appeal said dramatically new things about the duty to consult, but because it applied the law of the duty to consult in ways that weren't expected by most observers. In doing so, the court also sought to offer a clear path for correcting the errors in a reasonable time frame. However, the government in place by the court decision in 2016 was less supportive of the northern gateway pipeline and chose not to take that path and instead chose to effectively end the project, which was a decision announced in November 2016.
During the same period, the government also sought to modify the approach to consultation for the Trans Mountain project, even extending the time period for final GIC approval, so as to comply with the new expectations set by the Federal Court of Appeal in the northern gateway decision. However, it failed to do so adequately, and the final phases of consultation on Trans Mountain, ahead of the GIC approval, were determined to be legally inadequate. In November 2016, the Governor in Council put its eggs in the Trans Mountain basket, but with the government having failed to take all of the lessons from the northern gateway pipeline, the eggs came cracking down in August 2018.
During a contemporaneous period, it's worth adding that British Columbia, which had previously approved Trans Mountain from a provincial perspective under a previous government, had a new government that was less supportive and that passed legislation in April 2018 aimed at stymying the pipeline in many ways. It then launched a reference on the constitutionality of that legislation. That legislation was struck down by a unanimous British Columbia Court of Appeal in May 2019, and that decision to strike down the legislation was upheld in a one-line unanimous judgment of the Supreme Court of Canada in January 2020. Along with various steps taken by municipalities at the same time, British Columbia helped to create an intervening period of uncertainty, during which Kinder Morgan was thinking of abandoning the project and ultimately came to the decision to sell the project when that became an option from the federal government.
During that time, there were many discussions on ways in which the federal government could try to act to re-establish legal certainty for the project, but it didn't follow some of the suggestions that were out there, including Senator Doug Black's Bill S-245, which made its way through the Senate but didn't get through the House. In any event, it had ceased to be relevant by the time it was there.
A mixture of legal uncertainty, government interactions with that uncertainty and various resulting delays, in my view, contributed to the project going forward much later than it would have with a private developer and, thus, led to inflationary costs and to the project being built in different market conditions.