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Alberta B.C. files constitutional challenge to Alberta’s law to cut off oil shipments

Premier of Alberta Jason Kenney, left, is urging British Columbians to blame B.C. Premier John Horgan, right, and his opposition to the Trans Mountain expansion for increases at the pumps.

The Canadian Press/The Canadian Press

British Columbia has filed a constitutional challenge to block Alberta Premier Jason Kenney from using a newly proclaimed law to cut off oil shipments, amid a deepening conflict over the Trans Mountain pipeline, petroleum shipments and gasoline prices.

Mr. Kenney’s decision to move ahead on legislation that was passed but never brought into force by the previous NDP government opened up the first of several legal fights for his United Conservatives, all focused on his central campaign pledge to push back against opponents of pipelines and the oil industry. Mr. Kenney proclaimed the law immediately after he was sworn in on Tuesday, but said he doesn’t intend to immediately begin turning off the taps.

The conflict is also playing into growing frustration in B.C. over gasoline prices that have topped $1.70 a litre at some stations.

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Mr. Kenney is urging British Columbians to blame Premier John Horgan and his opposition to the Trans Mountain expansion for increases at the pumps. Mr. Horgan, in turn, insisted that the gas-price issue has nothing to do with the Trans Mountain debate and instead called on the pipeline’s new owner, the federal government, to intervene by ensuring that more refined oil products reach the B.C. market.

Mr. Kenney, whose party unseated the New Democrats in the April 16 provincial election, accused Mr. Horgan’s government of holding up permits and said the B.C. Premier’s opposition, including participating in a Federal Court of Appeal case that ultimately stalled the Trans Mountain expansion, has been “deeply frustrating” for Albertans.

“We will do what’s necessary to protect our interests,” Mr. Kenney said in Edmonton on Wednesday. “The campaign to landlock Alberta’s resources, resulting in the failure of several pipeline projects to Canada’s West and East Coasts, has been economically devastating and has contributed to the jobs crisis in this province."

The Trans Mountain expansion project is currently stalled after a court ruling last year, prompting a subsequent review and additional consultations with First Nations. Federal cabinet faces a June deadline on whether to reapprove the project.

B.C. government lawyers will be in a Calgary courtroom next week seeking an injunction until the larger constitutional argument is heard.

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The Alberta law, initially known as Bill 12, gives Mr. Kenney’s government the power to halt energy exports to other provinces by requiring permits that would set limits on how much oil is shipped to specific destinations and how that oil is transported, if at all. The Premier has said he will only cut off gasoline and oil supplies to B.C. if he can’t persuade that province’s government to end its opposition, although he was vague about what exactly would trigger such retaliation.

B.C. argues in its court filings that the Alberta law is unconstitutional because it illegally seeks to punish another province. The legal filing uses Mr. Kenney’s own words to argue that point, noting that Mr. Kenney previously said Bill 12 would allow the province to “fight back” against the “NDP in Victoria." The lawsuit also notes that while the Constitution does give provinces the ability to control some aspects of interprovincial trade, refined and upgraded oil products are explicitly exempt.

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Alberta provides more than 80 per cent of the gasoline and diesel used in British Columbia, either through products that are refined before they are shipped or medium and light crude that is refined in B.C., mostly at a Parkland facility near Vancouver. Most of those products are transported through the Trans Mountain pipeline.

In its court documents, the B.C. government argues that it would be impossible to restructure a complex system to get fuel from another source.

Motorists in the Vancouver region are paying the highest gas prices in North America, with some stations currently charging above $1.70 per litre. Mr. Kenney drew a link to the Trans Mountain project, saying an expanded pipeline would free up capacity to ship gasoline and other refined products that currently compete for space with heavy crude destined for export.

“The B.C. government is doing everything it can to block the expansion of the very pipeline that would get Alberta oil and gas to the gasoline-constrained Lower Mainland,” he said.

Mr. Horgan acknowledged that part of the problem for B.C. gas prices is a shortage of refined products through Trans Mountain. He said the pipeline is currently carrying more crude oil and less refined fuel than it did a year ago.

However, he said there’s no guarantee an expanded pipeline would do anything to increase the gasoline supply .

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“The TMX proposal did not contemplate increasing refined product in any way,” he said.

Mr. Horgan said he has asked for a meeting with Prime Minister Justin Trudeau, whose government now owns the pipeline, to ensure more of the fuel coming through the pipeline ends up alleviating B.C.’s gas supply crunch.

Alexandre Deslongchamps, communications director for Natural Resources Minister Amarjeet Sohi, said in an e-mailed statement that Ottawa would work with provinces about energy supply issues but didn’t answer a question about Mr. Horgan’s request to ensure more refined products are shipped to B.C.

Crown-owned Trans Mountain Corp. said in a statement that it’s up to shippers to determine which products are pumped through the pipeline and where they end up, noting that demand has outstripped the pipeline’s capacity.

Regardless of any changes to gasoline shipments, Mr. Horgan said he will not change his mind about his main objection to the pipeline expansion: an increase in oil tankers carrying heavy crude out of the marine terminal in Burnaby.

He also said British Columbia is not dragging its heels on the roughly 1,200 permits required for the pipeline construction project.

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With a report from Shawn McCarthy in Ottawa

Editor’s note: A previous version of this story incorrectly said a refinery near Vancouver is owned by Chevron. In fact, it is now owned by Parkland.
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