CALGARY – British Columbia’s top court has ruled the province cannot restrict heavy oil shipments across its borders in a decision that is a major legal victory for Ottawa, Alberta and the Trans Mountain pipeline project.
In a unanimous 5-0 decision Friday, the court ruled B.C.’s proposed amendments to its Environmental Management Act were beyond its constitutional authority because they targeted the federally regulated Trans Mountain expansion (TMX) project. The court ruled B.C. doesn’t have the authority to restrict flows of oil through an inter-provincial pipeline.
The decision is the culmination of the reference case the B.C. government brought last year that Houston-based Kinder Morgan Inc. specifically cited among the reasons it chose to sell the Trans Mountain system to Ottawa for $4.5 billion.
“At the end of the day, the (National Energy Board) is the body entrusted with regulating the flow of energy resources across Canada to export markets,” Justice Mary Newbury wrote in her decision, which also noted “the TMX project is not only a ‘British Columbia project’.”
“The project affects the country as a whole, and falls to be regulated taking into account the interests of the country as a whole,” Newbury wrote.
The decision is also a blow to the efforts of B.C. Premier John Horgan, whose minority government is supported by the province’s Green Party, to “use every tool in the toolbox” to block the pipeline.
“We will be exercising our right to appeal this to the Supreme Court of Canada,” B.C. Attorney General David Eby said following the ruling, adding the cost of the appeal would be a fraction of the cost of a potential oil spill.
There’s no guarantee the Supreme Court will agree to hear an appeal of a case for which there was no dissenting opinion, said Canadian Energy Pipelines Association president and CEO Chris Bloomer.
“A lot of time and money was wasted on this adventure,” Bloomer said, adding the outcome was widely expected but the ruling still provides “a ray of clarity in an otherwise cloudy world of uncertainty around pipelines.”
Still, Bloomer expects there will likely be more challenges. “There’s always an ability for people to bring cases forward but there’s been a lot of court action on this so we must be plumbing the depths of the legal aspects of this going forward,” he said.
Alberta Premier Jason Kenney said in a release that the unanimity of the decision means the “time for obstruction of the TMX pipeline is now over” and the long-delayed pipeline project should move forward.
“It will allow Alberta to realize a fair price for our natural resources and create new jobs, and it could provide much-needed relief at the pump for British Columbians,” Kenney said.
The decision also provides the federal government a clearer path toward re-approving the Trans Mountain pipeline expansion, which would carry 590,000 barrels of oil per day from Alberta to the B.C. coast.
“This is still a pretty uncertain environment,” said Tristan Goodman, president of the Explorers and Producers Association of Canada, which represents mid-sized oil and gas producers.
He said Ottawa has a number of decisions to make in the coming weeks, including the decision on whether to re-approve TMX and whether to pass Bill C-69, a controversial new law related to pipeline regulation being amended in the Senate.
Trudeau has repeatedly said the pipeline is in the national interest. He first approved TMX in November 2016, but the Federal Court of Appeal overturned those approvals in August 2018 because affected First Nations weren’t properly consulted.
Since then, the federal government has instructed the NEB to reconsider the project’s impact on marine wildlife and has re-launched Indigenous consultations. Prime Minister Justin Trudeau is expected to make an announcement by June 21.
“It’s going to be a fascinating four weeks ahead of us,” said Dennis McConaghy, a former pipeline executive and author of a book on delays to another pipeline, Keystone XL.
“What this really avoids is any disruption in Trudeau making a decision on TMX re-approval by June 21,” McConaghy said, adding that he didn’t expect new court cases against the project until it is approved. “Until Trudeau approves TMX, there’s really nothing to do.”
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