What Ottawa can do next to save the Trans Mountain pipeline
OTTAWA -- Pressure is mounting on the federal government to use money or the Constitution to back up its claims that the Trans Mountain pipeline expansion project will be built, no matter what.
Prime Minister Justin Trudeau's cabinet is in Ottawa today for an emergency meeting following news that Kinder Morgan is suspending all non-essential spending on the pipeline until it and its investors feel secure the project won't be derailed by strong opposition from the British Columbia government.
Jason Kenney, leader of Alberta's United Conservative party, said Tuesday that since Trudeau had no qualms withholding more than $60 million from Saskatchewan for not joining the Liberal carbon tax plan, he should follow suit by withholding transfers to B.C. for blocking a pipeline over which it has no jurisdiction.
Kenney said on Twitter that the B.C. government started a "constitutional crisis" and thus far Ottawa hasn't hit back at them with anything.
"Federal transfers to BC's treasury accounted for $8.9 billion this fiscal year, or almost 17 per cent of BC's budget," he said. "Even a small financial backlash from Ottawa could imperil the province's balanced budget."
Under the Pan Canadian Framework on Clean Growth and Climate Change, the federal government provided $2 billion in per capita funding for climate change projects but it was available only to provinces that signed onto the framework. Saskatchewan, the only province that didn't sign on, won't get $62 million in guaranteed funding under the program, although it can apply for specific project-based funding along with other provinces and municipal governments.
Natural Resources Minister Jim Carr says Canada will consider financial, legal and regulatory options, but insists the government has approved the pipeline in the national interest and, one way or another, it will be built.
Under the Constitution, interprovincial transportation, including pipelines, and projects deemed to be in the national interest, fall within federal jurisdiction. The Trans Mountain pipeline expansion, to triple the capacity of the existing pipeline between Edmonton and Burnaby, B.C., falls into both categories.
Financially, the federal government could step in with funding to either insure the risk taken by the pipeline's investors or buy an equity stake in a bid to give some reassurance the pipeline will get built. Or it could adopt the Kenney proposal to withhold funding from B.C.
Legally, it could sue the B.C. government, although it's unclear what kind of lawsuit could be waged until B.C. actually follows through on its threat to regulate against increased oil flowing through the pipeline to export markets outside B.C.
"There's not a lot (B.C.) can do, in my view, that would withstand scrutiny if challenged in court," said University of Waterloo politics professor and constitutional expert Emmett Macfarlane. "But as of right now, what we're seeing is mostly rhetoric, not action, and that limits the federal government's options from a constitutional perspective."
Macfarlane also discouraged the use of trade retaliation, as Alberta Premier Rachel Notley has threatened.
"The threats of retaliation in areas like interprovincial trade are not only bad policy and damaging to federalism, they're also constitutionally suspect," he said.
Until this week, the federal government seemed to be hoping expected victories from ongoing lawsuits over the pipeline would force Horgan to back off. One of those suits, alleging Canada didn't properly consult Indigenous groups and other stakeholders, is expected to be decided as early as next week.
The federal government is confident it will win that case. The city of Burnaby is also in court trying to overrule a National Energy Board decision saying the city could not refuse to issue building permits to the pipeline in order to prevent it from proceeding.
Pressure is already being levelled against the Horgan government by business and labour groups in B.C. and elsewhere, as well as by the Alberta government. Notley this week said she will introduce legislation that would let Alberta reduce oil flows to B.C., restricting domestic supplies of gas that would send already high prices at the pumps soaring and leave B.C. consumers and businesses bearing the brunt of the impact of this fight.
Earlier this year, Notley terminated negotiations with B.C. to buy electricity, and temporarily barred imports into Alberta of B.C. wine, hoping to pressure Horgan's government to get out of the pipeline's path.
The Vancouver Board of Trade issued a news release demanding the B.C. government withdraw its opposition and urging Canada to take whatever action necessary to exert its jurisdiction.
Tempers over the pipeline development have been running hot since Kinder Morgan's Sunday announcement. Protest groups and MPs from the NDP and Green Party who oppose the pipeline say they can taste victory.
Infrastructure Minister Amarjeet Sohi, whose Edmonton seat could be at risk if the pipeline doesn't get built, reacted strongly to New Democrat MP Kennedy Stewart's tweet saying "we're winning."
"Next time you fly between B.C. & Ottawa, give thanks to thousands of oil workers who enable you to do your job, while you & Horgan sabotage their livelihood," Sohi responded. "Rest assured, your victory lap is temporary. We will use all available tools to get (Trans Mountain) built."
A small group of protesters showed up Tuesday outside the Ottawa constituency office of Environment Minister Catherine McKenna, hoping to pressure the cabinet not to make any decisions that allow the pipeline to go forward.
On the opposite side, a group called Rally 4 Resources was to hold a rally outside a government building in Calgary later in the day, hoping to compel the Canadian and Alberta governments to find a way to get the pipeline built.