VICTORIA — The Alberta government has suspended its ban on wine from British Columbia which was part of an ongoing dispute between the provinces over the Trans Mountain pipeline.

Alberta Premier Rachel Notley took the step after the B.C. government said it will not proceed with proposed regulatory restrictions on the increase of diluted bitumen transportation through the province and would turn to the courts to address the issue instead.

"I think it's fair to say in a small way today B.C. blinked," Notley told reporters Thursday, in response to the B.C. government's announcement.

B.C. Premier John Horgan said his government will ask the courts if it has the right to protect its environment by restricting diluted bitumen in the pipeline.

A spokesperson for Horgan rejected Notley's suggestion that the province had "blinked."

"I wouldn’t say we blinked at all. We continue to assert our right to stand up for the interests of British Columbians and we expect that the courts will confirm we have the jurisdiction to do so," Jen Holmwood told BNN in an email.

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Horgan said Thursday his government is filing a constitutional reference case on the issue, which has been at the centre of a heated dispute between B.C. and Alberta.

"We believe it is our right to take appropriate measures to protect our environment, economy and our coast from the drastic consequence of a diluted bitumen spill," Horgan said in a statement. "And we are prepared to confirm that right in the courts."

He said the federal government declined an invitation to join the province in the reference question.

Horgan denied that the province was backing down in the dispute, saying the intention is to have cooler heads prevail.

He said he wants B.C. and Alberta to be good neighbours, but the rest of Canada needs to know how strongly British Columbia feels about protecting its coastline.

Alberta Premier Rachel Notley recently imposed a ban on B.C. wine in retaliation for a pledge last month by Horgan to reject increased levels of oil through the Trans Mountain pipeline until the province reviews spill safety measures.

The B.C. New Democrat government is against expansion of the Kinder Morgan Canada pipeline from Edmonton to Burnaby, although it has already been approved by the federal government.

Alberta sees Horgan's actions as an illegal way to kill the expansion.

Notley and Prime Minister Justin Trudeau have made it clear that only Ottawa, not the provinces, has the authority to decide what goes in trans-boundary pipelines.

Federal officials have been meeting with their B.C. counterparts to find a solution to the impasse. Notley, who has also scuttled talks to buy B.C. electricity, says she will take further retaliatory action if there is no progress in the talks.

She has been meeting with a 19-member committee made up of business people and academics to find ways to put more heat on B.C. She also launched an online protest petition against Horgan, which now has more than 36,000 names.

On Wednesday, the Alberta government took out full-page ads in B.C. newspapers warning that Horgan's government is "trying to break the rules of Confederation."

Horgan said his efforts to safeguard B.C.'s interests have generated a disproportionate reaction from Alberta.

"The actions by the Alberta government threaten an entire industry and the livelihoods of people who depend on it," he said. "We have taken steps to protect our wine industry from the unwarranted trade action by the government of Alberta."

With files from BNN.