B.C. can't impose environmental laws that could kill Trans Mountain pipeline, court rules

British Columbia doesn't have the right to impose environmental laws that could kill the Trans Mountain pipeline expansion, the province's Court of Appeal has ruled.

In a unanimous decision released Friday, the province's top court said proposed legislation to limit the flow of increased amounts of "heavy oil" into B.C. would be in direct conflict with federal jurisdiction over interprovincial pipelines.

The five-judge panel found that, if introduced, the amendments to B.C.'s Environmental Management Act would essentially usurp the National Energy Board's role in approving projects in the national interest. 

"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," says the 66-page ruling, written by Justice Mary Newbury.

"At the end of the day, the NEB is the body entrusted with regulating the flow of energy resources across Canada to export markets … The project affects the country as a whole, and falls to be regulated taking into account the interests of the country as a whole."

The decision is a huge blow to B.C.'s NDP government and will likely be appealed to the Supreme Court of Canada.

Dennis Owen/Reuters

The B.C. Appeal Court judges were asked to consider three questions in relation to the proposed amendments, but at the end of the day, said they only needed to consider the first: Whether B.C. has the constitutional authority to introduce rules directly affecting the flow of diluted bitumen.

The other two questions were predicated on a Yes to the question of jurisdiction. As a result, the court didn't need to deal with them.

The Trans Mountain pipeline expansion would twin an existing 1,150-kilometre pipeline from Edmonton to Burrard Inlet in order to allow the export of diluted bitumen offshore. 

Kinder Morgan first proposed the project in 2013, but the federal government bought the entire pipeline last year for $4.5 billion after the company's shareholders expressed dissatisfaction with the delays.

The pipeline is on hold as Ottawa moves to rectify shortcomings identified in a Federal Appeal Court ruling last year that said the federal government had failed to adequately consult with First Nations, and had not fully considered the impact that shipping the oil would have on marine life.

B.C. argued the proposed environmental regulations could co-exist with the federal responsibility to oversee railways and pipelines, by ensuring the local environmental risks were governed by the level of government closest to the citizens most affected.

Darryl Dyck/The Canadian Press

'Trojan Horse'

But Ottawa claimed the rules were just a "Trojan Horse" designed to kill a project B.C.'s N.D.P. government previously vowed to defeat.

To reach a decision, the province's Appeal Court had to determine the "pith and substance" of the law, which includes the purpose and practical effects of the legislation.

Jonathan Hayward/The Canadian Press

The court said the evidence supported Canada's contention that the proposed legislation was aimed at the TMX project. 

"From this proposition, it is a short step to Canada's argument that the immediate purpose and undeniable effect ... is to provide a means by which the province may impede additional heavy oil originating in Alberta from being transported through British Columbia generally, and thus 'frustrate' the project in particular," the ruling says.

The decision notes that both levels of government have jurisdiction over aspects of the environment and have the right to introduce legislation to mitigate environmental harm.

But the judges found that jurisdiction over interprovincial pipelines was given to Ottawa through the Constitution Act to "deal with just this type of situation, allowing a single regulator to consider interests and concerns beyond those of the individual province(s)."

Newbury wrote the provinces and Ottawa should play important roles in the management of the environment, but said B.C.'s proposed regulation was not "legislation of general application, but is targeted at one substance in one (interprovincial) pipeline."