Canada will probably win legal fight with BC over Trans Mountain Expansion, but at what cost?

Trans Mountain Expansion
George Heyman, BC environment and climate change strategy minister. Photo: National Observer.

Federal government enjoys exclusive constitutional jurisdiction over inter-provincial pipelines, can over-ride Province, municipalities on Trans Mountain Expansion permitting

British Columbia’s strategy of delaying permits for the Trans Mountain Expansion pipeline may be working. Project proponent Kinder Morgan says that it is pushing back the start of construction nine months and if there is further “regulatory uncertainty,” investors may have to consider shelving the project. The permit issue  has touched off a spat between the BC and Canadian governments over just how much legal jurisdiction provinces and municipalities have to delay a federally approved project.

According to George Heyman, BC environment and climate change strategy minister, Kinder Morgan needs about 1,200 permits from provincial authorities, but only 66 have been issued thus far. The former director of the BC chapter of the Sierra Club left no doubt who he thinks is at fault.

trans mountain expansion
Ian Anderson, Kinder Morgan Canada CEO.

“Quite frankly, they’ve yet to be approved because Kinder Morgan has failed in their responsibility to do the environmental research and present the environmental plans that are needed to support approval of the permits,” the minister told Vancouver media last month.

“They’ve failed to do, in many cases, adequate First Nations consultation to support the approval of their permits. Kinder Morgan should look at themselves for any delays they are experiencing.”

The BC NDP campaigned against Trans Mountain Expansion during the spring election and vowed to do everything within its power to stop the project once it formed government this summer, which is probably why the company sees the issue quite differently.

The Texas-based pipeline operator asked the National Energy Board, which represents the exclusive constitutional jurisdiction of the federal government over inter-provincial pipelines and has the power to grant permits if provincial and municipal governments refuse, to set up a “standing panel” to that would review permit progress in BC, according to James Coleman, a professor of energy law at the Dedman School of Law at Southern Methodist University.

Last week, Natural Resources Minister Jim Carr fired a broadside at BC by public endorsing the idea of a standing panel.

“Canada filed a letter to the National Energy Board, indicating the Government’s support for establishing a Standing Panel to determine ongoing compliance by Kinder Morgan for the project conditions of the Trans Mountain Pipeline Expansion,” he said in a statement.

Trans Mountain Expansion
Jim Carr, natural resources minister. photo.

“The Government is supportive of establishing a process that would assist in resolving any conflicts over the issuance of municipal or provincial permits and avoid unnecessary delays to project construction or regulatory compliance.”

Heyman blew his stack.

“The federal government should get its nose out of British Columbia’s business unless we’re … violating federal laws. We are not,” Heyman told the Canadian Press.

Heyman is being disingenuous.

As Coleman has explained many times in my columns, not only does the Canadian Constitution give Ottawa exclusive jurisdiction over inter-provincial pipelines, but provinces and municipalities cannot use their regulations or bylaws to “impair” federal powers, according to the principle of “primacy.” Case law upholding federal authority stretches back to 1953.

The issue is not if BC is “violating federal laws,” but if the BC government is unreasonably holding up permit approval, thereby unduly delaying construction and “frustrating” federal authority.

Trans Mountain Expansion
James Coleman, Dedman School of Law.

“Ultimately, the question will be ‘Does this frustrate the NEB’s mandate and the federal approval of the pipeline. What makes it tricky is that the province and the different municipalities have the right to go through a permitting process, etc.,” Coleman said in an interview.

“Kinder Morgan is trying to prove that the delays that they’re experiencing are not just run-of-the-mill delays, they’re actually putting the project in danger.”

Here’s what the company had to say about the affect further delays might have:

As stated in a November 14, 2017 motion presented to the NEB, “it is critical for Trans Mountain to have certainty that once started, the Project can confidently be completed on schedule.” If uncertainty around permitting and judicial processes extends further into 2018, TMEP would expect to reduce its 2018 budgeted spend and the previously announced unmitigated delay to a September 2020 in-service date could extend beyond September 2020. Further, as stated in the November 14 motion, if TMEP continues to be “faced with unreasonable regulatory risks due to a lack of clear processes to secure necessary permits . . . it may become untenable for Trans Mountain’s shareholders . . . to proceed.”

Coleman says that Kinder Morgan invoking its shareholders impatience is a clear signal to governments, regulators, and the courts – several legal challenges are still underway – that it is serious about resolving the permitting issue.

Heyman hasn’t said how BC will respond to Carr’s challenge.

Will the NDP contest the NEB standing panel in court? Or will it stare down the Trudeau Government, daring it to over-ride the Province, knowing that the looming 2019 election will be part of the Liberal’s calculated response?

My guess is it will be the latter. Carr has already signaled his response: “The Government has taken an important step to ensure that when a natural resource project is approved, it proceeds in a timely fashion and continues to generate economic benefits for all Canadians.”

Coleman says, ultimately, Canada will probably win this battle. But in the meantime, expect BC to make the federal Liberals pay the highest possible political price for the victory.

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  1. KM construction has to be stopped, until the Federal Court of Appeals renders its decision. Dump the TMX pipeline, to save beautiful BC.

  2. KMX has to be built because the cost to canada is too high stop it. It’s gone through the process. Now build it. If the feds back down then all provinces will think they can do the same. And so go’s canada.rule of law is destroyed along with the country.

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