B.C. ruling removes roadblock for Trans Mountain pipeline

The Trans Mountain pipeline expansion overcame a major roadblock with a recent unanimous B.C. Court of Appeal ruling in favour of federal jurisdiction over the project.

B.C. ruling removes roadblock for Trans Mountain pipeline
Calgary energy lawyer Vivek Warrier says that while there was an ‘audible cheer’ in Alberta after the decision, it is still very difficult to point to a timeline for the pipeline.

The Trans Mountain pipeline expansion overcame a major roadblock with a recent unanimous B.C. Court of Appeal ruling in favour of federal jurisdiction over the project.

“You could probably hear an audible cheer from Alberta when the ruling came down, because it was what we thought was a very clear decision by the B.C. Court of Appeal that affirmed that Trans Mountain is an interprovincial undertaking, that is subject to federal jurisdiction,” says Vivek Warrier, co-head of the energy and oil and gas industry team at Bennett Jones LLP in Calgary.

But with the federal cabinet yet to approve the project, stakeholders and First Nations consultations underway and an upcoming federal election, the decision on the pipeline — scheduled to drop in June — is still uncertain, Warrier says.

“I think it's worth reiterating that there's still a ways to go,” he says. “. . . it's very difficult for us to, with any certainty, point to a timeline for which we can say that Trans Mountain will either be approved or shelved.”

On May 24, in Reference re Environmental Management Act (British Columbia), a five-judge panel of B.C.’s highest court found that proposed amendments to the province’s Environmental Management Act are unconstitutional. The amendments would create hazardous substance permits and require applicants to show they had measures in place to prevent a leak of those substances and give a director under the act the authority to issue the permits.

In the court’s reasons, Justice Mary Newbury wrote that the “pith and substance” of the amendments to the act could restrict an “interprovincial undertaking,” making those amendments unrelated to the relevant subjects of exclusive provincial legislation in the Constitution Act — “property and civil rights in the province” and “matters of a merely local nature” — and so should be subject to parliament’s jurisdiction.

The province argued its amendments were to prevent pollution within the province and ensure hazardous substances are handled appropriately, says Warrier. But it was clear and implied by the court that the amendments were intended to halt the Trans Mountain pipeline not by targeting the infrastructure itself but the oil that ran through it, he says.

“They had drafted it in a clever way, but it was pretty clear to most lawyers in this space that they were interfering in matters of federal jurisdiction,” Warrier says.

The Trans Mountain Pipeline Expansion would twin an existing pipeline running from Edmonton, Alta. to Burnaby, B.C., which delivers crude oil to refineries and ports on the coast. The pipeline has been in operation since 1953, and its expansion would increase its capacity to 890,000 barrels per day from 300,000 and add almost 1,000 kilometres of new pipe, according to the National Energy Board. The pipeline expansion “has the potential” to cause a seven-fold increase in tanker traffic on B.C.’s coast, states the court’s decision.

Greg McDade is managing partner at Ratcliff & Company LLP and was counsel for the City of Burnaby, an intervenor in the case. McDade says the ruling is “disappointing” since the trend in Canadian constitutional law since Friends of the Oldman River Society v. Canada (Minister of Transport) (1992) has been toward “co-operative federalism.”

Friends of the Oldman River Society established the idea that provincial jurisdiction and federal jurisdiction could live together and, ironically, was about Alberta arguing for provincial authority over federal jurisdiction when the province was trying to build a dam, says McDade.

“But this court applied older law to say that pipelines are exclusive federal undertakings, and so the province can't legislate to protect itself,” he says.

As it deals with a constitutional question, the court’s ruling has an automatic right to appeal in the Supreme Court. McDade says that, if the ruling is not overturned, it will be used by companies “to suggest they didn't have to comply with provincial legislation that would make their lives uncomfortable.”

Because the law behind trans-provincial projects developed in the time of John A. MacDonald and Wilfrid Laurier, as railways were opening up the country, the ruling raises the issue of how the law applies to modern circumstances, says McDade.

“The bigger question to the court has to decide on is to what extent, in the 21st century, can the federal government impose, on an unwilling province, the safety and environmental risks of a federal project?” he says.

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