A Canadian court on Thursday quashed the government's approval of the Trans Mountain pipeline to the Pacific, siding with indigenous people worried that increased tanker traffic will harm whales along the coast.
In its decision, the Federal Court of Appeal said Ottawa -- which reached a deal in May to buy the pipeline from Kinder Morgan for Can$4.5 billion (US$3.5 billion) -- must take a second look at the project, taking greater care to consult with indigenous tribes and consider marine traffic impacts.
The pipeline was to move 890,000 barrels of oil a day from landlocked Alberta province to the Pacific coast for export overseas, replacing a smaller crumbling conduit built in 1953. The project aimed to help ease Canada's reliance on the US market, and get a better price for its crude oil.
Ottawa approved the project in 2016 after an environmental review, saying it was in the "national interest."
But it has continued to face stiff opposition from indigenous tribes, environmental activists, and local governments along the 1,150-kilometer (715-mile) route.
Indigenous groups on whose traditional lands the pipeline crosses have expressed concern that the increase in shipping will impede the recovery of killer whale populations in the area.
The court concluded that the National Energy Board made a "critical error" in not considering marine shipping impacts, leading to "unacceptable deficiencies" in its recommendations to the government to greenlight the project.
It also said the government failed in its constitutional duty to "engage, dialogue meaningfully and grapple with the real concerns of the indigenous applicants so as to explore possible accommodation of those concerns."
Kinder Morgan shareholders, meanwhile, reportedly voted overwhelmingly to approve the pipeline's sale to the federal government. The company was not immediately available to confirm the vote result.
Finance Minister Bill Morneau was scheduled to address the court's decision at a press conference at 1:15 pm (1715 GMT) in Toronto.
- Political risks -
Ottawa's purchase of the pipeline, effectively nationalizing it, was meant to silence critics and bring a swift end to legal challenges and illegal protests at construction sites.
"This allows us to get rid of the political risk around (the pipeline) because we (are imposing) federal jurisdiction over the project," Morneau said in May.
Currently 99 percent of Canada's oil is sold to the United States at a discount, and access to the Pacific coast is seen as key to diversifying the world's sixth largest oil producer's energy exports.
Access to new oil markets was also key to Canada meeting its Paris climate target because Alberta -- the nation's single largest pollution emitter -- agreed to take action against carbon emissions only if it gained access to new markets for its oil.
But pushback, including from the British Columbia government, created political risks that led Kinder Morgan to temporarily halt its construction earlier this year.
Morneau said at the height of the feuding that the government's purchase of the project "will ensure that we're able to safely get Canadian oil resources to world markets where we can get a fair price for them."
"And, it will reassure investors that Canada is a country that respects the rule of law and gets big, important things done," he added.