Canada’s Federal Court of Appeal has ordered the National Energy Board (NEB) to reconsider the provincial approval to TransCanada’s $5bn Prince Rupert Gas Transmission (PRGT) pipeline.

The NEB has also been asked to determine if the pipeline project falls under federal jurisdiction and whether it needs an environmental assessment and approval from the Canadian government before moving ahead.

Also affected by the court ruling is Malaysian oil and gas company Petronas’ $27bn liquefied natural gas (LNG) project. Planned to be built on Lelu Island, the LNG export terminal which will receive natural gas through the 900km PRGT pipeline faces a constitutional law barrier now.

The PRGT pipeline is expected to transport gas sourced from north-eastern British Columbia to the LNG terminal near Prince Rupert named as Pacific NorthWest LNG.

As per the appeal court ruling, NEB had made a legal mistake by ruling out a request filed by Mike Sawyer, a resident of Smithers, a town in British Columbia.

The request was for the board to conduct a full hearing to ascertain whether the PRGT pipeline is in federal jurisdiction and whether it needs to have its approval.

Justice Donald Rennie ruled that NEB had made significant constitutional law errors in dismissing the request. Further, the judge said that NEB had only looked at the pipeline location within the state and had failed to note that the pipeline’s purpose was entirely to transport gas for export.

In Sawyer’s case, the judge said that the problem involves the Canadian constitution and that the court will look into the matter if the board’s decision is legally incorrect.

Sawyer stated: “This shows that the NEB was too quick to dismiss a legitimate constitutional argument without a full hearing.

“I’m convinced that PRGT is just one part of a massive natural gas export scheme that is clearly within federal jurisdiction and needs federal approval to proceed.”

TransCanada will have 60 days to apply to the Supreme Court of Canada to seek permission to appeal against the decision made by the Federal Court of Appeal.