‘Pipelines may be straight, but the stories behind them have many twists’: How Kinder Morgan was approved

OTTAWA — Just three days after the Oct. 19, 2015 federal election, a half-dozen of the most powerful political insiders in the country gathered for dinner in the Byward Market, a historic section of the nation’s capital filled with high-end restaurants, boutiques, courtyards and artisan shops.

Representing Justin Trudeau’s new government were his top two political advisers, Gerry Butts and Katie Telford. With them was the woman who at the time headed Canada’s public service, Privy Council Clerk Janice Charette.

They were facing Brian Topp, a wily political tactician who recently stepped down as Alberta Premier Rachel Notley’s chief of staff.

At Topp’s side were Richard Dicerni, then head of the Alberta public service, and University of Alberta environmental economist Andrew Leach, at the time chair of Notley’s Climate Change Advisory Panel.

A half-year after Notley’s stunning election victory, the six discussed her multi-faceted plan to tackle Alberta’s miserable international reputation on the carbon emission front.

It wouldn’t take long into the meal for the Albertans to learn that Trudeau would not only back Notley’s decision to impose a carbon tax, among other measures, but “take it national” in short order.

And that national climate plan, in turn, would be instrumental in one of the most important political decisions in the history of B.C.’s relations with Ottawa: Trudeau’s Nov. 29, 2016 approval of the $6.8-billion Kinder Morgan pipeline expansion project.

Trudeau’s endorsement of the project, which has triggered threats of mass protests and likely civil disobedience, included all the intricacies of a plan that might have been concocted by Breaking Bad’s Walter White.

“Pipelines may be straight, but the stories behind them have many twists and turns,” acknowledged Natural Resources Minister Jim Carr, one of the key players who gave an exclusive interview for Postmedia’s look at the chronology behind the pipeline decision.

Here is the genesis of what will certainly be one of Trudeau’s boldest, and potentially most dangerous, political gambits:

Oct. 3, 2000: A boyish-looking Vancouver schoolteacher and occasional snowboard instructor in Whistler, Trudeau comes out of relative obscurity to deliver a stirring eulogy at Pierre Elliott Trudeau’s funeral at Montreal’s Notre-Dame Basilica.

Almost immediately after he touches his father’s casket and says “Je t’aime Papa,” a flood of messages begin pouring in urging him to enter politics and follow in the late prime minister’s footsteps.

Trudeau, for the first time seriously considering such a future, is advised to think hard about the four or five key issues he would fight for. One of the first he embraces, and one he will take with him to Parliament after winning a seat in 2008, is a commitment to “clean” economic growth.

But he knows he faces a major hurdle — the legacy of his father, who has long been seen in Alberta as hostile to the oil and gas industry due to his policies in the 1970s and early 1980s that created the National Energy Program and confiscated a portion of Western Canada’s oil and gas wealth for the benefit of other parts of the country.

That reputation turned much of Western __canada into a wasteland for Liberals for decades, and paralyzed successive federal governments that vowed to tackle climate change but were fearful of triggering a new backlash in Alberta.

Jan. 8, 2012: Trudeau is months away from announcing his bid for the Liberal leadership when then-prime minister Stephen Harper, after securing a majority in Parliament in the election the previous year, takes a controversial step to help Enbridge win approval for its proposed $7.9-billion Northern Gateway pipeline to Kitimat on B.C.’s central coast.

Armed with focus group data suggesting many Canadians might be skeptical of environmental groups, political aides concoct a strategy aimed at discrediting anti-pipeline activists on the eve of regulatory hearings on Northern Gateway.

So they call on Joe Oliver, the natural resources minister, to declare to the media that the green movement is funded by “foreign special interest groups” and has “a radical ideological agenda” to undermine Canada’s economy.

Suddenly, a review process that most Canadians would have likely ignored becomes highly politicized and polarized. Activists and anti-pipeline politicians can start telling ordinary Canadians who are concerned about pipelines that they’re being described by their prime minister as radical, foreign-funded subversives.

In hindsight, the plan concocted by Harper’s aides to demonize environmentalists “clearly was a mistake” and was “regrettable,” according to one senior Conservative insider.

March 29, 2012: Federal finance minister Jim Flaherty tables — with a thud, as it was a massive 498 pages — a budget that includes numerous non-financial measures clearly aimed at helping natural resource companies get federal approval, while weakening an environmental movement that in part takes advantage of tax-friendly rules for charities.

The Fisheries Act and Canadian Environmental Assessment Act were watered down, while $12 million was given to the Canada Revenue Agency to fund special audits on the political activities of registered charity groups.

Gerry Butts, Trudeau’s principal secretary, long-time friend and at the time head of the environmental group World Wildlife Fund Canada, gives a speech that year to a Calgary oil industry group titled “Dog catches car.”

He advised his audience to not be overly pleased about having a federal government cheerleading the industry while showing little sensitivity for demands by many Canadians for action on the climate file. “You guys have gotten everything you’ve ever wanted, and you’re going to find it’s way more difficult to get things done.”

May 23, 2012: As the debate polarizes around the Enbridge project and criticism mounts about the company’s aggressive lobbying and heavy-handed approach with local communities and First Nations, another Calgary-based major, Kinder Morgan Canada, announces plans to seek regulatory approval for its pipeline expansion project.

Kinder Morgan President Ian Anderson, learning from Enbridge’s errors, takes a far more diplomatic and consultative approach with B.C. First Nations and local communities. He has also, according to one oilpatch insider, a far less aggressive approach to lobbying federal politicians. Liberal, Conservative and NDP MPs interviewed for this article confirm that Anderson showed far more savvy.

Kinder Morgan’s softer approach becomes another key component in the “getting to yes” process. In a speech last November to an Alberta business audience, Anderson described how he would drive along the Alberta-B.C. pipeline route to ensure he knew aboriginal and municipal leaders by name. By all accounts, he was received more warmly that former Enbridge CEO Pat Daniels, who was once angrily refused entry to an aboriginal community’s public gathering in northern B.C.

“I believe — and have been told — it’s this approach that has made our project different and has brought us as far as we’ve come,” Anderson said in that speech.

July 27, 2012: Amidst growing public angst over pipelines — buoyed in part by the release of a damning U.S. government report about a devastating Enbridge spill two years earlier in Michigan — B.C. Premier Christy Clark says her government will establish five tough conditions before projects like Northern Gateway or Trans Mountain are approved. The conditions relate to safety, aboriginal rights and the need for B.C. to get its “fair share” of the profits.

Oct. 2, 2012: Trudeau begins mapping out his vision almost immediately after he announces his long-expected candidacy for the Liberal leadership. In Calgary, he raises eyebrows by admitting his father erred in the 1970s and 1980s by bringing in the infamous National Energy Program.

Oct. 30, 2013: After easily winning the Liberal leadership, but facing concerns that he is all style and no substance, Trudeau begins delivering a series of speeches on his belief that Canada will never be able to access world markets for its natural resources without adopting a more robust climate change policy.

But while hinting that a Liberal government might support pipelines if Canada could also put a price on carbon, he adds a caveat that suggests to many that local communities under a Trudeau government would hold a veto over major projects.

“Governments may be able to issue permits, but only communities can grant permission,” he said.

Jan. 22, 2014: While stating bluntly that Northern Gateway had “spectacularly failed” to get community and First Nations support, Trudeau tells a Calgary media outlet he is “very interested” in Kinder Morgan’s proposal and “certainly” hopes the company can learn from Enbridge’s errors.

While Trudeau quickly backs off accusations of favouritism, the comment did reflect a view among Trudeau insiders — and British Columbians in general, according to polls — that Northern Gateway was being viewed more skeptically by Canadians than Kinder Morgan’s Trans Mountain expansion proposal.

“When you accept that we need to diversify markets for your resources, then you think, ‘Is (Trans Mountain) that’s through a developed area, with crude oil leaving the coast in a well-served marine environment, the better option than the one (Northern Gateway) going through a rainforest to a marine environment where there are no services?’ ” said a Liberal insider. “Kinder always made more sense.”

May 5, 2015: A perfect storm that favours Trudeau’s vision begins to form when Albertans, ruled for decades by right-of-centre governments, finally throw out the Progressive Conservative party.

The PCs had long been closely associated with — and heavily financed by — the oil and gas industry. Federal Liberals, still mired in third place in the polls nationally, look at NDP leader Rachel Notley’s win as evidence of a significant “progressive coalition” emerging in urban Alberta.

Suddenly Canadians, used to seeing a string of Alberta premiers defiantly refusing to limit the growth of a carbon-spewing oilsands industry, are faced with a diminutive, sympathetic-looking, left-leaning, giant-killing female premier who, while still advocating for pipelines to help a provincial economy hammered by low oil prices, plans concrete climate action.

“We knew this would change the media environment and public opinion,” a federal Liberal said.

Oct. 19, 2015: Trudeau wins a parliamentary majority, thanks in part to a record-breaking 17 seats in B.C.

The new government begins the transition with briefings that include finance department advice that economic growth is slow. It is clear to the incoming Liberals that if they want to fund their major tax break and infrastructure plans, the economy needs the construction of at least one pipeline to generate tax revenues.

Three days after the election, the six federal and Alberta officials meet.

Nov. 22, 2015: Notley, knowing now that Trudeau has her back, announces a major climate plan that would include a carbon tax that rises to $30 per tonne in 2018, a 100-megaton-a year cap emissions limit for the oilsands industry and a phasing out of coal by 2030.

“I don’t think the Nov. 22 announcement happens if the federal government didn’t support them,” said one federal insider.

Leach, Notley’s advisor, isn’t so categorical, but acknowledges that the Liberal platform in the 2015 election was much more in line with Alberta’s plan than any other federal party’s.

He also confirms that the Kinder Morgan approval was a key part of the national carbon tax plan. Without a coherent national plan to deal with emissions, he said, Trudeau would have been under far greater pressure to reject pipeline applications.

Jan. 11, 2016: The B.C. government tells the National Energy Board it opposes the Kinder Morgan project because the company has failed to prove it has adequate measures to prevent or respond to a spill.

May 4, 2016: Trudeau rises in the House of Commons to respond to the devastating Fort McMurray wildfires that had left some Alberta MPs, including interim Conservative leader Rona Ambrose, in tears. “Canadians will and must stand together to support our friends and neighbours in this difficult time,” Trudeau said.

While a sad coincidence, the wildfires in the wake of Alberta’s sharp economic decline starting in mid-2014 would alter the political dynamic elsewhere in Canada.

Alberta native Ken Hardie, the B.C. Liberal MP for Fleetwood-Port Kells, would say that his personal opposition to the Kinder Morgan pipeline was trumped by his broader empathy for struggling Albertans collecting welfare cheques.

“I support the government’s decision because I realize it is in the national interest and will benefit a lot of people who have been suffering,” he says after Kinder Morgan was approved.

Fort McMurray’s struggles would play a critical role in making the case for pipeline approval, according to Leach.

“The fire definitely humanized the oilsands for a large number of people,” he said. “Suddenly, it’s not just big trucks and shovels. These were real people — ‘a lot like me, doing a job that’s a lot like mine, in a place that looks a lot like the town I live in.’

“I think that was a big thing.”

May 9, 2016: The National Energy Board approves the Kinder Morgan pipeline expansion, subject to 157 conditions. Environmentalists complain that the process was tainted due to limits on who could testify, and a prohibition on cross-examining company witnesses.

Aug. 19, 2016: Rookie B.C. Liberal MP Terry Beech, who campaigned against Kinder Morgan while winning the Burnaby North-Seymour riding, tells a federal consultation panel that his community “does not grant its permission for the project to proceed.”

Beech is echoing Trudeau’s pre-election mantra that while governments grant permits, only communities grant permission. It’s an expression that many, including Beech, view as an acknowledgment from Trudeau that they hold an effective veto.

But a senior Liberal said this month that this was an “unreasonable” conclusion.

“The intent was to say, ‘We’ll consult communities more seriously (than the Harper government),’ ” the official said. “If we wanted to say community support was mandatory and that communities had a veto, we would have said that.”

Sept. 27, 2016: Speculation about “linkage” surfaces as the federal government, under enormous pressure from Clark to support B.C.’s nascent LNG sector, approves the $11.4-billion Pacific NorthWest project despite concerns about both the potential damage to salmon habitat and projected heavy carbon emissions. The federal government has also indicated possible financial support for a new transmission line to get B.C. hydroelectric power to Alberta.

Do these two items meet Clark’s 2012 demand for a “fair share” of benefits before she supports pipelines? The Trudeau government insists its environmental review process was objective and technical in nature, and made independent of any other factors.

But federal insiders believe Clark saw Ottawa’s backing of LNG as a tradeoff leading to Victoria’s support for a heavy oil pipeline.

Oct. 3, 2016: The pattern of buffering major decisions likely to upset Canadians concerned about the environment begins. Trudeau announces just a week after Pacific NorthWest’s approval a national carbon tax program that will see the per-tonne charge rise go from $10 in 2018 to $50 by 2022.

This is when Notley plays her own linkage game.

“Alberta will not be supporting this proposal absent serious concurrent progress on energy infrastructure (code for an oilsands pipeline) to ensure we have the economic means to fund these policies,” she said.

Nov. 1, 2016: Now comes an unexpected glitch. Trudeau, as part of his vow to review projects in a more credible way than his predecessor, had set up a three-person panel to give the public another chance over the summer to express their views.

Some opposition MPs and environmental groups dismissed the panel as a toothless and biased rubber stamp, and argue that Trudeau misled British Columbians by indicating he would make Kinder Morgan go back to the drawing board.

That chippy tone changes after the three-person, $500,000 panel draws some tough conclusions.

Local communities around Burrard Inlet “stand firmly in opposition,” the report declares. More concerning for a prime minister determined to not repeat his father’s mistakes, the report essentially invites the federal government to choose between B.C. and Alberta.

“The challenge for a federal administration is to assess whether the disadvantages to one region of the country are adequately balanced by advantages in another region,” it concluded.

Suddenly, environmental groups who had dismissed the panel are cheering, while the conclusions take Ottawa by surprise. What federal officials didn’t realize, until informed by Postmedia News, was that the panel had hired Vancouver freelancer Richard Littlemore to distill the evidence and then write the report.

Littlemore, a former Vancouver Sun editorial writer, has described himself in his online biography as an “activist.” He was founding editor of DeSmogBlog.com from 2005 to 2010, and co-author of Climate Cover-up: The Crusade to Deny Global Warming.

Panel member Tony Penikett, the former Yukon NDP premier and SFU professor who approached Littlemore, did not respond to a request for comment on whether it was appropriate to hire a writer who has publicly identified with one side of the debate. Littlemore said in an e-mail that he was hired “for my impartiality as a journalist and my skill as a writer — and despite any reputation I have for reporting about climate change.”

Nov. 7, 2016: The report doesn’t appear to derail Trudeau’s plans. Speaking in Stanley Park, he unveils the first of three initiatives clearly aimed at deflecting concerns about his commitment to the environment in advance of the Kinder Morgan approval.

Ottawa, he says, will fund a $1.5-billion national Coastal Protection Strategy aimed at improving Canadian Coast Guard capacity to deal with spills.

Nov. 29, 2016: On the same day he announces Kinder Morgan’s approval, Trudeau kills Enbridge’s $7.9-billion proposal to build a pipeline to Kitimat. He also imposes a North Coast crude oil tanker moratorium.

Clark, presumably keeping what she believes is her side of the bargain after Ottawa supports both LNG and the Alberta-B.C transmission line, now says Ottawa is “very, very” close to meeting her five conditions from 2012.

Dec. 9, 2016: Trudeau caps the carefully timed trifecta when he and eight provincial premiers, including Clark, agree after a year of wrangling to a national plan to price carbon as part of a strategy to combat climate change.

Notley made clear that she couldn’t agree to a national climate plan unless she got her pipeline. And Trudeau, according to Leach, would have had difficulty approving that pipeline without a broad national consensus on a carbon tax.

“It would have been a very different conversation, saying, ‘Well, I basically don’t have the ability to approve this pipeline if I can’t point to collaborative action from Alberta on the broader agenda.’ ”

Liberals, while sensitive to strong feelings among B.C. residents and especially those near Burrard Inlet, express confidence the government can overcome hard feelings.

“British Columbians and Lower Mainlanders are focused on a lot of different things, and this is one thing. And for a subset of the population it is THE thing,” said one senior insider in assessing the political landscape. “But when you are electing a government, it’s about more than one issue, and I think that people are reasonable. And I think this is a reasonable decision and people will see that.”

But Burnaby South NDP MP Kennedy Stewart said Trudeau’s careful orchestration will be blown to smithereens when construction begins next September.

“The B.C. Liberal MPs are clearly in denial on this issue and their lives are soon going to become a living hell as British Columbians discover they have been duped by Trudeau.”