NEB agrees to consider LNG Canada pipeline jurisdictional challenge

Pipeline construction materials are shown in this file photo. (Grand Forks Herald / Eric Hylden)

The National Energy Board says it will consider a jurisdictional challenge of a pipeline approval that is a key component in a recently sanctioned $40-billion liquefied natural gas export facility in British Columbia.

The federal regulator says it will accept submissions until next Monday from challenger Mike Sawyer, the provincial and federal governments, and other parties on whether the 670-kilometre pipeline should be considered a federal project.

If it is, it will require National Energy Board approval to proceed, making approval of the Coastal GasLink Pipeline Ltd. project from the British Columbia Oil and Gas Commission insufficient.

LNG Canada announced earlier this month that it was going ahead with a plant in Kitimat on B.C.'s coast, with the pipeline delivering natural gas from the northeast corner of the province.

The energy board says Sawyer's jurisdictional challenge was received in July. Comment was then provided by Coastal, which is a subsidiary of TransCanada Corp., and Sawyer was allowed to reply.

It says Sawyer argues that because TransCanada operates the pipeline and the connected Nova Gas Transmission Ltd. system together, they are in fact a single federal undertaking.

In reply, according to the NEB, Coastal accuses Sawyer of pursuing a "vexatious" litigation designed to frustrate upstream natural gas development in B.C., further charging it's not a coincidence that his complaint was made as the project was finally proceeding, not years ago when it was approved.

LNG Canada's five partners -- Royal Dutch Shell, Mitsubishi Corp., Malaysian-owned Petronas, PetroChina Co. and Korean Gas Corp. -- had delayed the final investment decision on the project in 2016, citing a drop in natural gas prices.

Sawyer could not be reached for comment, but his lawyer said the board's decision is "a major step forward."

"There's a real kind of rule of law issue here as to whether a pipeline like this really is in federal jurisdiction under the constitution versus whether it's under provincial jurisdiction," said Bill Andrews.

He said Sawyer pursued similar legal avenues against the former Pacific Northwest LNG project near Prince Rupert, which was shelved last year by Malaysian state-owned energy giant Petronas. His case ended when the project was stopped, said Andrews.

TransCanada said in a statement Monday that is was disappointed with the NEB's decision, but believes "the facts pertaining to this project will support a strong case of continued provincial regulation of the pipeline."

"We understand this decision only represents the start of a review process to examine the issue of jurisdiction more closely, and not a final decision on the jurisdiction of the project," the Calgary-based company said. "However, the Coastal GasLink project was subject to a robust two-year environmental and technical review as part of the B.C. regulatory process, whereby it received all of its valid permits under the current provincial regulatory bodies."

Coastal GasLink Pipeline, LNG Canada and the provincial Energy Ministry could not immediately be reached for comment.