The B.C. government has thrown yet another wrench in the gears of the Canadian provincial comity with a declaration that it will create a new regulatory process for pipeline approval and restrict how much bitumen can be moved through pipelines into the province.
The government, led by Premier John Horgan, also announced it will create an “independent scientific panel” to evaluate B.C.’s ability to deal with potential spills, potentially tacking on another two-year delay for the Kinder Morgan Trans Mountain pipeline expansion.
Apparently, in the eyes of the B.C. government, the National Energy Board, which has overseen pipeline operations and cleanups for 28 years, is not up to the task.
Alberta Premier Rachel Notley immediately called the proposals illegal, unconstitutional and “political game-playing and political theatre.”
Horgan’s response? Basically, we’ll see you in court.
Notley also recently cancelled negotiations of a planned purchase of electric power from B.C., and removed B.C. wine imports in Alberta, although cooler heads have since prevailed – at least for the moment.
There are three ways to look at B.C.’s actions:
- as a partial rejection of federal control over transportation infrastructure and use;
- as paralysis-by-analysis that can drag out the review process long enough to cause investor flight;
- as a repudiation of the Notley/Prime Minister Justin Trudeau plan to buy social licence for pipelines with an aggressive show of climate-policy implementation.
In the first instance, B.C.’s action is clearly a challenge to federal jurisdiction over transportation. But as law professor Dwight Newman observes, Canada’s Constitution is crystal clear on this point, putting interprovincial transportation in the exclusive domain of the federal government.
This aspect of the Constitution, Newman notes, has been affirmed in numerous court cases. Newman makes a powerful argument that, absent the constitutional principles that give Ottawa control over interprovincial transportation of all sorts, there “very possibly would have been no national railways, and no Canada to speak of.”
In the second case, B.C.’s actions can be seen as a tactic to slow the proposed Trans Mountain expansion, increase its cost and uncertainty, and change the economics of the project.
We’ve seen this play out before, when TransCanada cancelled its plans for the Energy East and Eastern Mainline pipeline projects due to additional red tape announced by the federal government.
Also last month, Kinder Morgan reiterated that if the Trans Mountain project continues to face “unreasonable regulatory risk,” it may not proceed with building the pipeline.
It’s a well-known tactic of energy obstructionists: if you can’t block oilsands production, block paths to markets.
Finally, the B.C. government’s action is a hard slap at Notley’s plans to essentially buy off pipeline opponents with an explosion of climate change policies. Those include banning coal-power generation, escalating carbon taxes, hard caps on carbon-emission reductions, additional limits on air emissions from the oil and gas sector, and more spending on every green dream on the wish-list of pipeline opponents. Money will flow to electric car subsidies, renewable energy mandates and subsidies, even a new agency focused on energy-efficiency programs.
And what has she purchased for Albertans with this massive increase in tax-and-spend governance?
Federal approval of two pipelines, with almost zero buy-in from opponents of pipeline construction, including B.C.’s government.
How long will Notley continue to try to buy the un-buyable at the expense of Alberta taxpayers?
With its latest moves, B.C.’s NDP government (propped up by the Green Party) has shown it doesn’t respect federal authority over transportation infrastructure and demonstrated a blatant disregard for the economic well-being of Albertans (while gladly using the gasoline and aviation fuel that Alberta sells). B.C. is treating Alberta like a trading partner to be blockaded on a whim.
B.C. is already the lowest-ranked Canadian jurisdiction for investment in oil and gas in the Fraser Institute’s annual survey of upstream oil and gas executives. Now, B.C.’s government has badly weakened interprovincial relations, challenged federal regulatory authority and revealed that the concept of public approval is nothing but a pipe dream.
Kenneth Green is senior director of the Centre for Natural Resource Studies at the Fraser Institute.
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