Trudeau Set to Tack Extra Review onto Kinder Morgan Pipeline

 Kinder Morgan Inc.’s proposed Trans Mountain pipeline expansion is set to face another regulatory hurdle when the Canadian government unveils new environmental review requirements in the coming weeks.

Prime Minister Justin Trudeau’s cabinet is preparing to detail “transition plans” for existing pipeline proposals as it moves to strengthen environmental review laws and give new marching orders to the National Energy Board.

The plans would in effect tack on additional regulatory requirements that will allow proposed projects already under review in Canada, including Trans Mountain and TransCanada Corp.’s Energy East, to meet an unannounced higher standard favored by Trudeau without restarting the process entirely.

“The government has committed to transition plans for important natural resource projects while we undertake longer term modernization on the crucial regulatory agencies on which a considerable portion of our economy and our environment depends,” Micheline Joanisse, a spokeswoman for Natural Resources Minister Jim Carr, said in a written statement to Bloomberg, adding more details “will be provided in the coming weeks.”

The regulatory overhaul leaves timelines for the $5.4 billion Trans Mountain expansion in limbo. Hearings resumed for the project this week and an NEB decision is due in May under the old review system. When asked what the impact of changes on Kinder Morgan’s timeline would be, one government official familiar with plans, who spoke on condition of anonymity because the changes haven’t been announced, said no final decision has been made.

Regulatory Rigor

The changes could have been more onerous. Trudeau said during last year’s election campaign the Kinder Morgan process “needs to be redone” and that the review board wouldn’t be able to meet its approval deadline if his Liberals formed government. An extended regulatory process would be another setback for Kinder Morgan, which first proposed its pipeline expansion in 2013 and has faced two delays already.

“We have gone through a thorough and rigorous process and have met the timelines, and we’re hopeful we can continue and finish the process as it’s laid out today,” Ali Hounsell, a Kinder Morgan spokeswoman, said in an interview. “We’ll have to see specifically what is announced for a transition plan before we can assess what the impact is to the project.”

The Trudeau government intends to overhaul the NEB review process but will need to pass a new law to do so, the government official said, signaling the scope of changes being considered.

Speaking January 22 at the World Economic Forum in Davos, Switzerland, Trudeau said he has committed to review Canada’s environmental assessment process so the country can get “social license for developing our resources, which will allow us to get our resources to market.”

Pipeline projects continue to be politically divisive in Canada. Montreal Mayor Denis Coderre -- a former Liberal lawmaker -- this week announced his opposition to Energy East, sparking a war of words with western political leaders. It’s the latest sign of opposition to energy development in Quebec, where Trudeau’s Liberals won 40 of 78 districts in last year’s election.

Environmentalists, meanwhile, are wondering why the review process is continuing with changes in the offing.

“The dominant feeling is just confusion,” Kai Nagata, a spokesman for the Dogwood Initiative advocacy group, said in an interview. “People are asking me: Why are we still going through the hearing as scheduled? Didn’t Trudeau say they were over?”

Campaign Rhetoric

In video recorded by the group during the election campaign, Trudeau told Nagata the NEB overhaul applies to existing proposals and that the Kinder Morgan project “needs to be redone.” In a follow-up letter to the Dogwood Initiative, which opposes the pipeline, party president Anna Gainey said the Liberals “cannot support the pipeline in its current form,” would “replace” the existing process and modernize the NEB.

However, Environment Minister Catherine McKenna said in November that “projects initiated under the original system will continue on that path.” That remains the government’s plan. “No project will be required to return to square one,” said Joanisse, the natural resources minister’s spokeswoman.

The Liberals won 17 of 42 seats in British Columbia, through which Kinder Morgan’s project runs. That result exceeded their previous showing in the western province in part because they contrasted themselves with the incumbent Conservative government, which more aggressively championed the energy sector.

‘Full-on Uncertainty’

Conservative lawmaker Candice Bergen, now opposition natural resources critic, called on Trudeau to detail his proposal and grandfather existing projects, like Kinder Morgan. “For those almost finished the process, they’re assuming they won’t be captured in those changes, but it’s just full-on uncertainty,” Bergen said in an interview January 22. “No one knows.”

Kinder Morgan took note of Trudeau’s comments on the pipeline but, since the election, has heard “nothing further in terms of clarity of what that might mean for us,” Hounsell said. The two delays so far were due to rerouting and an NEB appointment, she said, and the company fears any further changes will have a cascading effect.

“Even what may seem like a minor delay of a couple of months could add more time to that on the back end,” Hounsell said, adding the company is proceeding along the existing process until it hears otherwise.