British Columbia challenges Alberta wine ban in oil row

VANCOUVER (Reuters) - British Columbia said on Monday that it will formally challenge a ban of its wine by Alberta under Canada’s national free-trade pact, as a battle between the two provinces over a crude oil pipeline expansion project rages on.

British Columbia (B.C.), a top Canadian wine producer, said it had notified oil-rich Alberta it was seeking consultation under Canadian Free Trade Agreement’s (CFTA) dispute settlement process as it looks to end Alberta’s ban of B.C. wine.

Alberta halted purchases of wine from its western neighbor earlier this month, after B.C. proposed new rules to block increased oil shipments through the province, potentially holding up Kinder Morgan Canada Ltd's KML.TO planned C$7.4 billion ($5.9 billion) Trans Mountain pipeline expansion.

Alberta, Canada’s energy heartland province, is a major supporter of the project, while British Columbia is fiercely opposed. It was approved by Canada in 2016, though construction has been delayed by permitting issues.

British Columbia has defended its proposed rules, saying it has every right to take steps to protect its land and waters, while Alberta says the rules are outside of the province’s jurisdiction as the pipeline is federally regulated.

The spat has led to Alberta forming a task force to find new ways to strike back at B.C., while British Columbia has proclaimed April as B.C. Wine Month and has ramped up the promotion of its wine within its borders and abroad.

Reporting by Julie Gordon in Vancouver; Editing by Lisa Shumaker