Retaliation could turn pipeline fight ugly
After the B.C. government stepped up its fight against the Trans Mountain pipeline expansion, there were new calls for the federal and Alberta governments to consider retaliation.
While mechanisms are available to either override B.C. opposition or punish the province, several observers said Friday few options are palatable to federal or provincial governments.
United Conservative Party candidates Jason Kenney, Doug Schweitzer and Jeff Calloway have publicly mused about potential retaliation against B.C., with Schweitzer proposing to “kick” the province “out of the New West Partnership.”
They’re not alone in thinking B.C.’s hard line should be met with a comparably firm response, if the province is successful in blocking or significantly delaying the project.
“Both the federal government and the provincial government should look hard at levers they have because this is a serious threat to the national economy,” said Howard Anglin, who served as deputy chief of staff and as a senior adviser to former prime minister Stephen Harper.
Earlier this week, NDP cabinet ministers in B.C. revealed plans to appoint high-profile former judge Thomas Berger to review legal options to oppose Kinder Morgan’s $7.4-billion pipeline project. The province will also seek intervener status in a federal court challenge and ensure conditions are met for environmental approvals.
Schweitzer took to Twitter to condemn the move and seek support for his proposal to boot B.C. from the trade agreement involving the four western provinces.
To pull this off, Manitoba, Saskatchewan and Alberta would have to withdraw from the New West Partnership and form a new pact excluding B.C., according to economist Trevor Tombe, who called the proposal clever but perilous.
“While what B.C. is doing is not really in clear violation of the letter of that agreement, it’s certainly in violation of the spirit,” said Tombe, an associate professor of economics at the University of Calgary.
“But, at the end of the day, (removing B.C.) would just be bad for everyone. It’s really up to the federal government to exercise its authority to get the project done.”
B.C.’s NDP has long opposed Kinder Morgan’s expansion plans over concerns with potential pipeline spills, increased tanker traffic on the coast and Indigenous consultation.
After forming the government in B.C., Premier John Horgan vowed to use “every tool in the tool box” to block the massive pipeline expansion, which faces environmental and Indigenous opposition but offers Alberta oil producers access to new markets.
Alberta Premier Rachel Notley’s communications director said Friday “we don’t believe we’re at that point yet,” of having to consider retaliation against B.C., given their view the neighbouring province has softened its rhetoric from wanting to stop the pipeline to ensuring it meets high standards.
Ted Morton, a former energy and finance minister in Alberta, said the province has previously retaliated against policies it viewed as interfering with its economic interests. He pointed to Peter Lougheed’s decision in 1980 to cut Alberta’s oil production to about 85 per cent of its capacity in response to the National Energy Program.
Morton said curtailing production in the current case would hurt local producers while having a questionable effect on B.C.
Another proposal he’s heard bandied about involves Alberta imposing an excise tax on refined petroleum products, given that a chunk of fuels currently flowing through Trans Mountain are used in B.C.’s lower mainland.
“That would be paid for by B.C. drivers but, the catch is, it can’t be just on exports. It has to apply in Alberta, as well,” Morton said, noting the Alberta government could cut corporate or personal income taxes to make the policy revenue neutral.
Still, the move’s value “would be short-lived because there would be opportunities for British Columbia to import less expensive gasoline from refineries in Washington state.”
The federal government could also invoke its rarely used declaratory power, which would allow it to override provincial jurisdiction and take control of the pipeline file, Morton said.
The former energy minister said this option could come with the unintended consequence of setting a precedent for future federal governments to use this power down the road and potentially “take away jurisdiction from Alberta.”
Morton said none of these retaliatory options are necessary because he believes Kinder Morgan’s project will survive any legal challenges.
While the B. C. government could stall the project, the minority government in that province is unlikely to last much longer than 18 months, based on the lifetimes of other minority legislatures.
“Both the law and time are on the side of Kinder Morgan,” Morton said.