Trans Mountain pipeline restrictions out of province’s hands, court rules

B.C. attorney general says province will appeal ruling

B.C. does not have the authority to stop the flow of crude oil through the federally owned Trans Mountain (TMX) pipeline from Alberta to Burnaby, B.C.’s Court of Appeal ruled May 24.

But the B.C. government disagrees with the unanimous decision, and will appeal to the Supreme Court of Canada, Attorney General David Eby said Friday morning.

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"We continue to believe that we have the authority and responsibility to protect our environment and economy, so we will be exercising our right to appeal to the Supreme Court of Canada," Eby said in a press conference.

Alberta Premier Jason Kenney said he hoped the ruling puts an end to B.c.'s attempts to obstruct the pipeline's expansion.

“British Columbia's highest court has spoken, unanimously, and the time for obstruction of the TMX pipeline is now over," he said in a press release. "I look forward to working with B.C. and the federal government to realize the enormous benefits of this project, which is supported by clear majorities in both our provinces and across Canada."

Premier John Horgan’s NDP government last year asked the court to rule on the constitutional legitimacy of amendments to the provincial Environmental Management Act, which would have restricted the flow of diluted bitumen from Alberta through B.C.

In a unanimous decision of five judges, the court ruled the legislation was aimed at the $7.4 billion TMX pipeline expansion project.

That plan, initially proposed by U.S.-based Kinder Morgan (NYSE:KMI), which later sold the pipeline to Ottawa, would have seen a twinning of the old pipeline and a significant increase in crude flow to the company’s Westridge dock in Burnaby.

Premier John Horgan has insisted that a proposed amendment to the Environmental Management Act was not designed to prevent the $7.4 billion expansion of the Trans Mountain pipeline, but only to restrict one specific oil product – diluted bitumen. Horgan recently pointed out that his government has continued to issue provincial permits required for the expansion.

But the court determined that any provincial restrictions on diluted bitumen would, in fact, halt the expansion and pose "an immediate and existential threat to a federal undertaking that is being expanded specifically to increase the amount of oil being transported through British Columbia.

 “Even if it were not intended to ‘single out’ the TMX pipeline, it has the potential to affect (and indeed ‘stop in its tracks’) the entire operation of Trans Mountain as an interprovincial carrier and exporter of oil,” said the 66-page ruling written by Justice Mary Newbury.

She said unless a pipeline is wholly contained in a province, it is subject to federal jurisdiction.

As TMX is interprovincial, she said, it becomes a federal undertaking and falls under the exclusive power of Parliament, not the Victoria Legislature.

Newbury said the provincial law “would prohibit the operation of the expanded Trans Mountain pipeline in the province until such time as a provincially appointed official decided otherwise.

“This alone threatens to usurp the role of the NEB (National Energy Board), which has made many rulings and imposed many conditions to be complied with by Trans Mountain for the protection of the environment.”

Newbury said the project is not just a British Columbia one and affects the country as a while.

At a press conference Friday, Horgan said, "I'm disappointed with the decision of the appeal court," and said he would leave it to Eby to determine whether to appeal the decision. The Trudeau government has set June 18 as the date by which it plans to make a decision on whether or not to approve, for a second time, the Trans Mountain expansion.

Meanwhile, B.C. is involved in another legal battle related to Trans Mountain. It has asked the Alberta Supreme Court for injunction and a ruling that would nullify Bill 12, the new Alberta law that Premier Jason Kenney has threatened to use against B.C. by restricting the flow of oil and refined petroleum products, which could potentially leave B.C. with a serious shortage of gasoline, diesel and jet fuel.

TMX has been a lightning bolt for controversy.  Activists fear the increase in oil flow meant an increase in coastal tanker traffic and increased risk of maritime oil spills.

Horgan has earlier said his government has already issued 309 permits needed for the pipeline expansion, and has no plans to obstruct the pipeline through permitting.

He said B.C. has not disrupted or delayed the permitting process.

“At no time over the past two years have we disrupted or delayed the permitting process in any way beyond those that would be required to protect the interests of British Columbia,” Horgan said.

Citing data from 2017 and 2018, Horgan has said refined fuel products flowing on the TMX pipeline has decreased from 37% to 27%, because the amount of oil for export increased from 9% to 21%.

As Business in Vancouver has reported, an unusually high number of oil tanker shipments through Vancouver to Asia, especially China, took place in 2018.

That likely means that imports of refined product from Washington, at much higher costs, have likely increased.

“So there is less refined product coming into the Lower Mainland now with the existing pipeline and no commitment from TMX to do something about that with the twinning of the pipeline,” Horgan said.

Trans Mountain says it is a neutral conveyor, and that it is up to shippers who have pipeline allocations to decide what to ship on the pipeline.

When the court reference was requested, the Canadian Association of Petroleum Producers (CAPP) called the move discriminatory and redundant and "just another stall tactic to tie the project up with more red tape after Ottawa gave in the green light 18 months ago."

CAPP said Ottawa needed to exercise its constitutional authority and move the project forward.


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