It’s a bad day for Justin Trudeau.
Under his leadership, Canada has now officially bought a pipeline that it wants to expand, but the government faces new and substantial hurdles in that goal.
Shortly after a Federal Court of Appeal decision quashed his cabinet’s approval of the Trans Mountain Expansion Thursday morning, shareholders of the company behind the project, Kinder Morgan Canada, voted to finalize the pipeline’s sale to the Canadian government for $4.5 billion.
In an unsurprising move at a meeting in Calgary, shareholders voted 99 percent in favour of selling the pipeline to Canada.
That means Canada is stuck buying the existing pipeline, while its plans to expand that pipeline have hit a major roadblock.
The Federal Court of Appeal said Canada’s consultations with First Nations “fell well short of the mark set by the Supreme Court of Canada,” and the National Energy Board had made a “critical error” when it excluded marine tanker traffic from its review. The court’s decision volleys the matter back to cabinet. The court says Trudeau’s government must further consult with First Nations, and ask the NEB to reconsider its recommendations, if it has any hope of expanding the pipeline.
Following the decision, Trans Mountain said it was suspending construction on the project. "The court decision was not a condition of the transaction between KML and the federal government," said Ian Anderson, president of Kinder Morgan Canada.
Ottawa had announced in late May that it had made a deal with Kinder Morgan Canada to buy the existing pipeline for $4.5 billion. However that price will be reduced to about $4.175 billion because Kinder Morgan Canada estimates it will pay $325 million in taxes to the Canadian government.
The costs of expanding the pipeline were estimated at $6.3 billion, with $1.1 billion already spent. A recent report from Kinder Morgan warned those costs could increase by another $1.9 billion in certain scenarios.
Trudeau has said expanding the pipeline is key to Canada’s economic future; it will allow Canada to export oil from the west coast, and will secure jobs.
“We’ve stepped in, we’re going to get that pipeline built, and we don’t intend to be in the pipeline business for the long term. There is a very strong business case for this pipeline,” Trudeau told Bloomberg earlier this year.
So far, Canada has failed to find a buyer for the pipeline.
Cover image of Prime Minister Justin Trudeau following a meeting with a group of businessmen in Longueuil, Que. on Tuesday, August 28, 2018. Photo by Paul Chiasson/The Canadian Press