Supreme Court dismisses B.C. bid to limit heavy oil shipments across the province

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The Supreme Court of Canada has unanimously dismissed British Columbia’s bid to control the amount of heavy oil shipped across the province, eliminating the provincial government’s opposition to the expansion of the Trans Mountain pipeline as an obstacle to the project.

After a one-day hearing, the bench deliberated for less than half an hour before Chief Justice Richard Wagner announced the decision, upholding a lower court ruling that what B.C. is proposing would be unconstitutional because only Ottawa has oversight of the federally owned and regulated Trans Mountain pipeline, or TMX.

The provincial government had asked the court to rule on whether it has the power to regulate the transport of heavy oil through its territory.

Joseph Arvay, the high-profile constitutional lawyer the B.C. government hired to lead the reference case, argued in court that the province was simply seeking the authority to protect its environment “from the harm caused by hazardous substances, in particular heavy oil or bitumen.”

Mr. Arvay maintained that the NDP government of B.C. was not anti-pipeline, and disputed the argument from the government of Alberta, which intervened in the case, that B.C.’s sole purpose in seeking control over transportation of oil shipments was to thwart the pipeline project.

The two provinces have been in a long-running conflict over the Trans Mountain expansion, which would triple the capacity of the existing pipeline, providing access to new overseas markets for Alberta’s landlocked oil.

After a morning of tough questions from the bench, Mr. Arvay appeared to acknowledge the mood in the court: “If I’m not going to win the appeal, then I don’t want to lose badly,” he told the court before making his final argument. He said there was no evidence to support Alberta’s claim that the proposed regulations were designed to stop the Trans Mountain project.

But members of the bench challenged the province’s intent.

Justice Malcolm Rowe noted that B.C.’s New Democratic Party made it clear before the last provincial election that it was committed to trying to stop the pipeline. “Because that’s what they said they were going to do. I believe them.”

The New Democrats led by John Horgan campaigned in 2017 on a promise to use “every tool in the toolbox” to stop the pipeline project, citing the heightened risk of a catastrophic marine oil spill that an increased amount of oil tanker traffic would bring.

Once in government, Mr. Horgan and his cabinet were given legal advice that such a policy could not be pursued. Instead, his government went to court to determine whether the province has the authority to use a system of permits to regulate heavy oil transport – whether by pipeline, rail or road. It submitted draft regulations and asked the court to provide an opinion on whether they would be within B.C.’s jurisdiction, whether they could apply to substances transported from another province, and if any existing federal law would render them invalid.

In court, B.C. had allies from the municipal governments of Vancouver and Burnaby, environmental organizations, some First Nations, and some provinces, including Quebec.

Lined up against B.C. were the federal government, the governments of Saskatchewan and Alberta, and a large roster of business organizations representing the oil and transportation sectors.

Jan Brongers, counsel for the federal Attorney-General, told the court the “dominant characteristic” of B.C.’s proposal was regulating transport of oil between provinces. “And our constitution assigns authority for regulation of such transportation to the federal government," he said.

The lawyer for Trans Mountain, Maureen Killoran, said the project has faced years of opposition and obstruction, leading the original owners, Kinder Morgan, to sell the pipeline to the federal government in 2018. “We need certainty restored,” she told the court.

B.C. Attorney-General David Eby told reporters he was disappointed with the ruling. There are no further avenues for legal appeals, but he said “we’ll certainly be doing what we can, within our jurisdiction, to protect our economy and our environment.”

Alberta’s Minister of Justice and Solicitor-General, Doug Schweitzer, on Thursday called the court decision an “end to the British Columbia government’s campaign of obstruction against Alberta energy.”

“By ensuring that B.C. must respect the federal government’s rigorous process in approving TMX, this outcome will have major ramifications for the project and its profound importance to Albertans and all Canadians,” he said in a statement.

The president of the Business Council of Alberta, Adam Legge, said he had expected the decision, but was relieved nonetheless. The council’s membership includes Alberta energy companies, and Mr. Legge said they would be extremely pleased with the ruling.

“For a province to dictate what can and can’t flow within pipelines would have opened a Pandora’s box of what can and can’t be transported on roads or over airspace. Where does it end?” he told The Globe and Mail.

In a statement, president and CEO of the Canadian Association of Petroleum Producers Tim McMillan said he was pleased but not surprised. “It is time to unite behind the completion of this nation-building project so Canadians can start to benefit from selling our responsibly produced resources to global markets,” he said.

With a report from Emma Graney in Calgary

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