Canadian Lawyer InHouse

49 CANADIANLAWYERMAG.COM/INHOUSE MAY/JUNE 2018 890,000 barrels per day — and significantly increase tanker traffic through the shallows of the Georgia Straight, off southern B.C. In 2016, following a 29-month review, the NEB concluded that the expansion project was in the Canadian public interest. That year, the government of Canada subse- quently approved the project subject to 157 conditions. In addition, the British Columbia Environmental Assessment Office issued an environmental assessment certificate in 2017, allowing the expansion to move forward. Al- berta approved the project that year. From the start, the project has faced strong opposition from municipal governments in- cluding the cities of Burnaby and Vancouver, First Nations and environmental groups and B.C.'s year-old coalition NDP government. ALL THE RIGHT MOVES — SO FAR So far, K ML is playing a near-perfect le- gal game, says Al Lucas, an energy expert at the University of Calgary. Its legal team has identified issues "before they crystal- ize," he says, while "proactively developing the necessary arguments, along with effec- tive strategies to move them forward." Stikeman Elliott LLP partner Dennis Langen says K ML is winning by also con- tinuing to act respectfully toward its oppo- nents — "key in this type of conflict." Meanwhile, Evan Dixon, partner at Burnet Duckworth & Palmer LLP, high- lights K ML's ability to continue to engage strongly and relentlessly with all levels of government, "to see what if anything can be done to move things forward." BUMPY LEGAL ROAD AHEAD So far so good. But plenty of risk remains — enough, some say, to even send the project the way of the cancelled Northern Gate- way and Energy East projects. Principally, K ML risks being pulled into protracted and fast-multiplying lawsuits. Says Bryan, "Kinder's legal team will have to stay alert for the mythological many-headed Hydra, where as soon as one regulatory proceeding is resolved, two oth- ers will arise in its place. "In addition," he says, "there's the risk of the project becoming a lightning rod for political and social issues outside of it. Then there's the chance of the actual commercial and competitive opportunity expiring." Block agrees. "Those legal challenges don't need merit [to actually hurt]. Each one leads to delay, headache, cost and more frustration. Challenges, hearings, appeals. That's the real end game [for pipeline opponents]." Lucas says that, legally, B.C. can review and attach conditions to the project, but, "ultimately, [it] can't stop it." "B.C. can do some things. Until it can't. K ML is licensed and approved and has sat- isfied nearly all of the NEB conditions — and, actually, most of the B.C. ones, too." Cioni says K ML will sway also the po- litical day, as Canada is fundamentally a "petro state in denial." "Pipelines are gonna have to get built. . . . We're going to run out of money if we don't support this." Dixon says B.C. may back down, "espe- cially if other litigation favours K ML. "[Overall], there's a good chance KML will win — if it has the stomach to weather the storm as well as the cost of ongoing delays." However, University of Calgary energy expert Nigel Bankes says the biggest risk for K ML will come from the Federal Court of Appeal cases brought by B.C. and First Nation groups against the project. "On the division of powers issue, I don't think B.C. or Burnaby can succeed. The law is strongly in favour of K ML and the fed- eral permitting process. However, it's much harder to call the First Nation consultation issue . . . It will be some months before we know what the questions are. There'll be a period when all sorts of parties will prepare their legal positions. Then it will undoubt- edly go to the Supreme Court of Canada. . . . My gut tells me it'll be several years before we get all this clarified." K ML has warned that oil deliveries may be delayed nine months, to 2020's fourth quarter. The company has also told the NEB that the conflict could cost it between $30 million and $35 million in salaries, cor- porate support and other expenses — and also more than $90 million in revenue — for each month of delay. Laura Estep, a partner in Dentons' Cal- gary office, points out that KML is "extreme- ly well resourced . . . and has everything it needs to make the expansion a reality." I n d u s t r y S p o t l i g h t She predicts, "It's going to come down to what happens in the next six to 12 months, when they're constructing. They're going to need a lot of support from government, as the opposition mounts — including en- trenched encampments. That will be where the test comes in." A Calgary partner who has advised K ML on pipelines told Canadian Lawyer InHouse that it will all simply come down to con- tinued federal support. "Where there's the will at the federal level, that's what matters. Even if the project is overturned by the courts, the feds can correct what deficien- cies there are." Cioni says Canada need only "follow the Constitution. . . . The NEB was serviceable in its representation of Canadian interests for 60 years. It had social licence, because of the government on top of it," he says. "I don't understand how social licence is getting lost in the wash." IH TRANS MOUNTAIN HEADED TO COURTS? The continuing dispute between British Columbia and Texas pipeline company Kinder Morgan over the proposed $7.4-billion Trans Mountain Pipeline ULC expansion, from Alberta to B.C., is heading to the courts, with one senator urging Ottawa to ask the SCC to decide on the issue. Calgary-based senator Doug Black announced March 1 that he was calling on the federal government to expedite a reference to the Supreme Court of Canada to decide on the fate of the pipeline expansion, which has been beleaguered by opposition and delays. The project has already been approved by the government of Canada and by the National Energy Board, with a set of conditions. At issue is the safety of transporting heavy bitumen through the proposed pipeline expansion, and the environmental risks posed to British Columbian municipalities near the proposed expansion. "There's no question, in the case of pipelines, that it's a federal decision" whether to permit the expansion, says Gregory McDade, managing partner at Ratcliff &

• Cover