Pipelines and fairy dust: The federal government acquires the Kinder Morgan pipeline assets and changes the game

For anyone living in British Columbia and Alberta over the past nine months, it's clear that the civil war between the two provinces over the Kinder Morgan Trans Mountain pipeline had to be resolved.

Tony Wilson
Boughton Law

For anyone living in British Columbia and Alberta over the past nine months, it's clear that the civil war between the two provinces over the Kinder Morgan Trans Mountain pipeline had to be resolved. And with the federal government's takeover of the pipeline assets and the project on May 29 (turning it into a federal undertaking), it has been resolved, although differently than B.C. might have expected.

As we all know by now, Alberta requires a tidewater port to ship oil and bitumen to higher-paying foreign markets instead of having to sell its oil to the United States at a steep discount that amounts to approximately $40 million per day. The existing Trans Mountain pipeline has been shipping oil and other petroleum products to a port in Burnaby since 1953 without a major incident (and without many people even knowing there's a pipeline under their feet). The expansion would twin the pipeline's capacity and run parallel to the existing pipeline for about 90% of the current route. It will also increase oil tanker traffic in Vancouver's Burrard Inlet.

Alberta has a number of persuasive economic arguments in favour of pipeline expansion, including: "Our oil pays for this Confederation and all your cushy social programs, so don't mess with us or we'll stop your lumber from coming across our border," which I find to be quite persuasive. There's also the "Don't mess with us or we'll have a referendum to join the United States" argument, which is also convincing. And don't forget the "How can you hypocrites oppose petroleum shipments when you're still driving cars and using petroleum products?" argument.

Alberta has a number of legal arguments as well, but perhaps the most important one is the "rule of law" argument: Transportation of oil and other products through interprovincial pipelines and the shipment of those products by tanker to foreign markets is within the exclusive legislative jurisdiction of the federal government and the federal government has approved the project.

Although there is opposition from some B.C. First Nations, 33 First Nations have signed benefit agreements with Kinder Morgan and want the project to go ahead so that they will have jobs and opportunities for their people.

The Green Party and other environmentalists have a common narrative: Oil products cause global warming. It's a sunset industry. Bitumen is really dirty and we should not allow transportation of bitumen and other oil products across B.C. to be shipped to other parts of the world because it will mean an increase to the carbon footprint. And, of course, it's unsafe to ship oil and bitumen by pipeline (forgetting the fact that it's a lot less safe to ship oil by railcar).

Seemingly, they ignore the fact that the world still uses oil and Canada continues to import oil from repressive regimes such as Saudi Arabia where they imprison, murder and behead dissidents. So, I suppose if you're Al Gore or Naomi Klein, Alberta is an easier target than Saudi Arabia because you can fly or drive to all those protests without being imprisoned, murdered or beheaded!

I'm not sure the Greens and the environmentalists realize that by preventing the Kinder Morgan pipeline from being built, it will force the rest of the world to continue to buy Saudi oil instead of Alberta oil, thereby enriching a repressive theocracy (and other repressive governments who sell oil on the global market). Until oil is illegal, Canada should sell what oil we have until something more carbon neutral is commercially available.

So where does that leave B.C.? On the one hand, the current minority government says it doesn't want the pipeline project built and has vowed to use "every tool in the toolbox" to stop it, claiming that it has the right to determine what products are shipped within its borders and protect its coastline. To that end, there's a reference case going to the B.C. Court of Appeal right now asking the court whether B.C. has the jurisdiction to regulate hazardous substances brought into the province through an interprovincial undertaking (such as a pipeline). It also asks whether federal legislation would nullify any ability of the province to regulate such substances.

Before the federal government took over the project on May 29, I presumed the strategy in the Court of Appeal was to "play to lose" (and to rag the puck in the process, hoping that Kinder Morgan would walk away). The fact is, if B.C. has the constitutional jurisdiction to regulate the sort of products coming across its borders from Alberta (oil), then Alberta has the constitutional jurisdiction to regulate the sort of products coming across its borders from B.C. (lumber and everything else B.C. ships through Alberta). Did B.C. not think of that little flaw in logic?

As another example of the dangers of inhaling and exhaling at the same time, B.C. is also in the Alberta courts challenging the constitutionality of Alberta's Bill 12, which gives Alberta the right to "turn off the taps" to all oil shipped to BC. Said Alberta Premier Rachel Notley about this little conundrum: "On the one hand, they don't want our oil; on the other hand, they're suing us to give them our oil."

Don Braid of the Calgary Herald put it differently: B.C. is discovering that it is powered by something more than fairy dust.

Prime Minister Justin Trudeau's decision to step in and acquire the project may well be his "Just Watch Me" moment. It's already made a lot of people happy that the federal government has finally put its big-girl pants on. But it's also made a lot of people angry, including taxpayers. In any event, it's not the first time the federal government has acquired an interest in a major infrastructure project in the national interest and it won't be the last. Frankly, it was the only decision it could make that would break the deadlock.

I'd like to think the federal government's acquisition may also come as a relief to the B.C. NDP, which can claim to their political masters (and hostage takers) in the Green Party that they fought the good fight and used all the tools in their toolbox to stop it but were outfoxed, out-maneuvered and outspent by those dastardly federal Liberals.

But there's something else at play here. In the fall, B.C. will hold a referendum seeking to instigate a proportional representation regime for future provincial elections. If there's one lesson to be learned from the Kinder Morgan affair, it's this: Small fringe parties that hold the balance of power will use that power at every opportunity to hold minority governments hostage to their agenda. If proportional representation is passed in B.C., I believe it will cement the influence of the Green Party for years to come and give it the balance of power to hold successive minority governments (Liberal or NDP) hostage to their anti-development agenda.


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