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Industry Expecting Clarity From Contentious NEB Pipeline Case

A simmering dispute boiled over Thursday into a formal duel over a Canadian constitutional law question before the National Energy Board (NEB): Can municipal governments block national and international pipeline projects?

The NEB granted the case a swift hearing, which created an opportunity to hand down a decision clarifying the division of powers over a long lineup of projects forming for approval to reshape the Canadian oil and gas delivery network.

The new fight over an old issue erupted in British Columbia (BC), where voting day in civic elections held across the province every four years is Nov. 15. The campaign period coincides with NEB hearings on Kinder Morgan Canada’s C$5.4 billion (US$4.9 billion) proposal to triple capacity of its 1,200-kilometer (750-mile) Trans Mountain Pipeline (TMP) between Edmonton and Vancouver Harbor to 900,000 b/d.

Where the oil conduit crosses Burnaby on the last leg of its route to the port, Mayor Derek Corrigan has made stopping the project a cornerstone of his re-election campaign. His counterpart in neighboring Vancouver, Gregor Robertson, has done the same.

TMP ignited the constitutional fight by requesting an NEB order for Burnaby to accept federal jurisdiction over pipelines and let the company carry out survey drilling, soil sampling, bush clearing and tree-cutting needed to nail down a project route.

The work obeys a board order to consider an alternate to the last leg in the 61-year-old pipeline's current route, where thickly populated city neighborhoods have proliferated since TMP's original construction across largely vacant real estate.

The proposed alternate route crosses a civic conservation area. Burnaby authorities refused to co-operate with TMP on planning surveys; blocked contractors who tried to do the job; and threatened prosecutions under civic environmental and traffic bylaws.

Burnaby’s lawyer, Gregory McDade, insisted that the NEB has no right to interfere with the exercise of city power over local traffic and environmental concerns. He warned the board that its national credibility as a fair, impartial agency is at stake in the dispute.

TMP's lawyer, Maureen Killoran, recited clauses in the National Energy Board Act that have been accepted for generations as giving the NEB exclusive power over pipeline planning, construction and operation. The contested survey work only cuts down 13 trees -- nine of which are already dead from natural causes -- and disturbs just 0.06% of the conservation area, she added.

Notable absences from the regulatory duel appeared to foreshadow victory for TMP. No provincial governments presented oral or written support for Burnaby, even though Canadian constitutional law says municipalities are their agents delegated to perform local administrative duties.

The BC government's absence was especially noted by observers as highlighting a political divide between a pro-development provincial government and left-wing critics of industry occupying senior offices at the municipal level.

In Vancouver, Robertson is a former New Democratic Party (NDP) member of the provincial legislature. The incumbent mayor’s party ran and lost on an anti-pipeline platform in BC's 2013 provincial election. In Burnaby, Corrigan has only served in civic office but is renowned as an active NDP party supporter for 35 years.

The chairman of the NEB tribunal presiding over the TMP case, David Hamilton, said only that a written decision would be delivered in due course.

Industry officials especially looked forward to a thorough clarification of regulatory authority as guidance for future proceedings on multiple pipelines proposed to support liquefied natural gas projects in BC and gas and oil market development in central and eastern Canada.

In Ontario, Quebec and New Brunswick -- where TransCanada Corp. and Canada's biggest distributors are proposing pipeline conversions, expansions and extensions -- local governments have shown signs of becoming increasingly active in regulatory reviews. Civic leaders are focusing on safety and environmental issues raised by the projects.

Before the NEB, advocates of municipal power portray the national division of regulatory power as a gray area. McDade described Canadian constitutional law as "somewhat esoteric and complex." The fine points can become proverbial cases of "dancing on the head of a pin," said the lawyer for Burnaby.

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