Canadian Court Strikes Down Enbridge Gateway Pipe Approval

(Bloomberg) -- Canada's Federal Court of Appeal ruled to overturn Enbridge Inc.'s permits for the Northern Gateway pipeline, which was approved by former Prime Minister Stephen Harper's government.

The court heard arguments in a judicial review from four environmental groups and seven first nations and determined that the federal government didn't “fulfill its duty to consult” with communities, according to a copy of the ruling.

Aboriginal and environmental groups prepared legal challenges and have planned blockades to halt construction of the pipeline, which would transport Alberta oil to the Pacific coast for shipment to Asia. Harper's cabinet endorsed the project in June 2014, subject to 209 conditions set by a regulatory review panel in December.

Enbridge is considering its “next steps” for Northern Gateway, John Carruthers, who heads the project, said in an e-mailed statement. The Calgary-based company's aboriginal partners are “fully committed” to building the pipeline, he said.

Decade Old

Enbridge has spent years working on the Northern Gateway proposal, which would cost at least C$7.9 billion to build, according to estimates in the 2014 National Energy Board decision. The 1,177 kilometer (732 mile) Northern Gateway was first proposed about a decade ago, and is the only major proposed domestic conduit to have won federal government approval.

Prime Minister Justin Trudeau has voiced opposition to Northern Gateway. His cabinet will now have to tackle the politically thorny decision of whether to renew the pipeline's approval, risking the ire of opponents in British Columbia where his Liberal Party holds 17 of the 42 seats in the House of Commons as well as that of the oil industry in Alberta.

A spokeswoman for Natural Resources Minister Jim Carr said he would comment on the ruling later on Thursday.

The country's oil industry, constrained by its reliance on the U.S. as the main destination for crude exports, is seeking new markets. Delays and opposition to pipeline projects are hampering that effort, leading to bottlenecks and discounts in Canadian heavy oil.

British Columbia's northern coast is home to numerous indigenous communities that have traditionally relied on the Pacific for food and transportation. The Gitga'at who live at the mouth of the Douglas Channel, near Canada's northern Pacific Coast, vigorously oppose oil tanker proposals, arguing a spill would devastate their way of life.

--With assistance from Josh Wingrove and Natalie Obiko Pearson To contact the reporter on this story: Jeremy van Loon in Calgary at jvanloon@bloomberg.net. To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net, Carlos Caminada, Steven Frank