British Columbia cannot regulate Trans Mountain pipeline oil flows: court

CALGARY, Alberta (Reuters) - A British Columbia court ruled on Friday that the provincial government cannot regulate increased flows of heavy crude through the proposed Trans Mountain pipeline, removing a potential hurdle to the long-delayed project.

FILE PHOTO: A workman walks past steel pipe to be used in the oil pipeline construction of Kinder Morgan Canada's Trans Mountain Expansion Project at a stockpile site in Kamloops, British Columbia, Canada May 29, 2018. REUTERS/Dennis Owen/File Photo

The Trans Mountain expansion (TMX) project, which the Canadian government bought last year for C$4.5 billion ($3.35 billion) to help it get built, would nearly triple shipments of oil sands crude from Alberta to Canada’s Pacific Coast.

It has endured years of regulatory delays and fierce opposition from environmentalists, some indigenous groups and the British Columbia government. Justin Trudeau’s Liberal government will decide by June 18 whether to push forward with the project.

“This decision provides critical clarity for Trans Mountain, and future interprovincial pipeline projects,” said Chris Bloomer, CEO of the Canadian Energy Pipeline Association. “This kind of clarity is now needed around Canada’s environmental and regulatory processes to ensure Canada can attract new projects and investors.”

British Columbia last year filed a reference question to the provincial Court of Appeal, asking if it could change the Environmental Management Act to regulate any increase in flows of diluted bitumen from the oil sands.

On Friday five judges unanimously ruled the provincial government does not have that authority because Trans Mountain falls under federal jurisdiction.

“The amendment was targeted legislation that in pith and substance relates to the regulation of an interprovincial undertaking - the expanded interprovincial pipeline of Trans Mountain ...” the court said in the ruling posted on its website. “The amendment thus lies beyond provincial jurisdiction.”

British Columbia’s Attorney General David Eby said his government will appeal the decision, but Alberta Premier Jason Kenney urged British Columbia to end its legal challenge.

“British Columbia’s highest court has spoken, unanimously, and the time for obstruction of the TMX pipeline is now over,” Kenney said in a statement.

Canada’s two westernmost provinces have been embroiled in a dispute over Trans Mountain since British Columbia elected a government in 2017 that vowed to oppose the project.

Earlier this month Kenney, who won a landslide election victory in April with promises to stand up for Alberta’s beleaguered energy industry, enacted legislation enabling his government to restrict the flow of oil to British Columbia.

Alberta is home to Canada’s oil sands and the vast majority of the country’s crude reserves, but its oil trades at a steep discount versus global benchmark prices because of a lack of space on export pipelines.

Reporting by Nia Williams; Editing by G Crosse, Richard Chang and Tom Brown