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Court rules B.C. can’t restrict oil shipments

Will George (centre) speaks with organizers during a protest at the gates of Kinder Morgan’s Burnaby Mountain facility on Saturday, April 7, 2018. The next day, Kinder Morgan announced it is pulling all non-essential spending from its Trans Mountain pipeline project. JESSE WINTER / STARMETRO VANCOUVER

B.C.’s highest court has ruled that the province’s government cannot restrict heavy oil shipments flowing through its borders.

The ruling upends plans to set up a permitting system that threatened to stall the federally-owned Trans Mountain expansion project.

The unanimous decision delivered Friday by the B.C. Court of Appeal acknowledged the overlapping powers for environmental protection shared by the provinces and federal government, but stated that the proposed permit requirements for heavy oil shipments represented an unconstitutional attempt to regulate “federal undertakings.”

Regulation of the pipeline, which runs from Alberta’s oilsands to the B.C. coast, falls entirely in federal jurisdiction because it crosses provincial boundaries, the court said.

“Unless the pipeline is contained entirely within a province, federal jurisdiction is the only way in which it may be regulated,” reads the ruling.

READ MORE: Feds extend Trans Mountain decision deadline to June 18

The governing Liberals approved the pipeline expansion in late 2016, securing support from the B.C. government of the day with a $1 billion revenue sharing agreement. However, the approval was squashed by the Federal Court of Appeal in August 2018 over the lack of consultation with Indigenous groups and failure to conduct an environmental assessment of increased tanker traffic on endangered killer whales off the coast of B.C.

Ottawa purchased the pipeline project from Kinder Morgan the day of the court ruling, later announcing former Supreme Court justice Frank Iacobucci would oversee the next round of consultations with Indigenous groups — dubbed Phase III — in a bid to secure approval. In February, the National Energy Board’s (NEB) reconsideration report concluded it’s in the public interest to approve the project, though said it would be subject to 156 recommended conditions and issued 16 non-binding recommendations to the federal government.

But B.C.’s NDP government, which took office in 2017, is opposed to the expansion, though acknowledged that it doesn’t boast the authority to halt it as it falls under federal jurisdiction.

Instead, the government has proposed amendments to the province’s Environmental Management Act that would require a “hazardous substance permit” for the expansion of the pipeline.

As the Canadian Press reports, the application for the permit would require the detailing of the health and environmental risks of a spill, measures taken to minimize the impacts of a spill and financial means to respond, including the carrying of insurance.

The owner of the pipeline would also be required to create a fund for local governments and First Nations to help respond to any potential spills and to provide compensation.

B.C. justified the legality of the proposed amendments by arguing that the provinces are empowered under the Constitution to legislate on property and civil rights within their jurisdictions and issues that are a “merely local or private nature.”

However, the B.C. Court of Appeal ruled that the pipeline expansion project affected the entire country and would need to be regulated in such a manner, specifically by the federal NEB.

READ MORE: NEB says Trans Mountain is in public interest, despite threat to resident orcas

“The TMX (Trans Mountain expansion) project is not only a ‘British Columbia project.’ The project affects the country as a whole, and falls to be regulated taking into account the interests of the country as a whole,” reads the ruling.

“At the end of the day, the NEB is the body entrusted with regulating the flow of energy resources across Canada to export markets.”

Despite arguments from the federal government, Friday’s ruling refused to categorize the provincial permit system as a “smokescreen” designed to block or impair the Trans Mountain project but ceded that 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.”

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