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Politics It may be time for Trudeau to buy in on Trans Mountain

You can expect to be buying into a pipeline soon. If you’re a Canadian taxpayer, that is, and especially if you’re Albertan. Your governments might never actually own the thing outright, but in all likelihood they’ll be pumping money into it and taking on a hefty chunk of the risk.

When pipeline company Kinder Morgan threatened to abandon the expansion of the Trans Mountain pipeline last weekend, it set off a frenzy of fanciful thinking from those who want to save it.

There were calls to slash transfer payments to British Columbia, for Ottawa to declare constitutional emergency powers, for a referendum, or Supreme Court reference, and hollow demands for “leadership.”

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But there are two plausible paths to meet Kinder Morgan’s conditions: Either Justin Trudeau gets B.C. Premier John Horgan to make a shocking flip-flop and renounce opposition to the pipeline at a meeting Sunday – or the path forward for Trans Mountain will be paved with public money.

It’s a mess. Alberta briefly banned B.C. wine and threatens to cut off its oil. Right now, Mr. Trudeau looks like he is mired in it. He promised a national bargain: A pipeline to carry Alberta oil to tidewater and also a carbon price to reduce emissions. Without Trans Mountain, it will fall apart.

But it could end another way: with Alberta Premier Rachel Notley buying into the pipeline with federal backing, taking on the risk Kinder Morgan doesn’t want to bear, and construction starting in earnest this summer. Mr. Trudeau would crow that his government is getting a pipeline built when Stephen Harper couldn’t.

There will still be angry protests from local residents and some First Nations. That doesn’t mean the Liberals are gambling their 18 B.C. seats – some feel two or three might be threatened. Buying in would bolster Mr. Trudeau’s arguments for a carbon tax, and soothe business fears about Canada’s investment climate. Alberta United Conservative Leader Jason Kenney endorses the idea, so federal Tories would find it hard to object. It would turn Mr. Trudeau’s political problem on its head.

This is now a back-to-the-wall question for Mr. Trudeau. Let’s remember Kinder Morgan’s condition: They want to be certain, by May 31, that B.C. won’t block completion of the project.

Kinder Morgan’s chief executive, Steve Kean, said the company doesn’t want to start pouring in $200-million to $300-million a month on construction if it can’t finish it. Kinder Morgan can deal with regular risks but not a provincial government that is “openly in opposition,” Mr. Kean said.

But countering B.C.’s opposition is like shadow-boxing. Interprovincial pipelines are explicitly federal jurisdiction under the Constitution, and Mr. Horgan hasn’t taken concrete steps to try to block it yet – he’s said he’ll ask a court to determine what powers the province has. Mr. Kean said Kinder Morgan doesn’t want to take a risk.

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There’s little doubt that Ottawa has sweeping legal jurisdiction: the Supreme Court previously ruled that Ottawa’s reach extends to all works that are integral to an interprovincial pipeline project. In January, the National Energy Board found that federal jurisdiction overrides the municipal bylaws of Burnaby, B.C. The Federal Court of Appeal declined to even hear Burnaby’s appeal.

But no specific legal challenge is settled until a court rules. B.C. hasn’t even filed a case yet. Even if Ottawa’s jurisdiction is ironclad, no court will rule before May 31.

That rules out other magical thinking, too. NDP Leader Jagmeet Singh suggested referring the issue to the Supreme Court, but the court would not issue its opinion by next month. One pundit even suggested a referendum, presumably in weeks.

Some, such as independent Senator Doug Black, argued that the federal government should use the Constitution’s declaratory power to place any work related to the pipeline under federal jurisdiction. But there’s doubt that provision would even apply − and at any rate it too could face a legal challenge that would not be settled next month. There’s is no legal route to certainty in seven weeks.

The Conservatives insist Mr. Trudeau must take “concrete steps” now – but won’t say which ones. The party’s natural resources critic, Shannon Stubbs, said in an interview that the Conservatives have called for Mr. Trudeau to issue a plan to get the pipeline built. What would it entail? A plan, she said. What would be in it? That, Ms. Stubbs said, is what Mr. Trudeau should outline in a plan.

There were tenuous proposals to squeeze Mr. Horgan, too. Ms. Notley threatens to cut off oil to B.C., which would also hurt Alberta’s oil industry. Mr. Kenney suggested Ottawa slash transfer payments to B.C. – but there are laws that prevent Ottawa from arbitrary reductions in the three major transfer payments B.C. receives.

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Mr. Trudeau will press Mr. Horgan in other ways. But there might be nothing that can make him cry uncle. His New Democrats have a minority in the legislature, and depend on three Green Party MLAs to survive. The B.C. Premier doesn’t need to succeed in blocking Trans Mountain, but he needs to be seen fighting it.

That would leave money. Ms. Notley, whose slim re-election chances will be none without the Trans Mountain expansion, said she’s willing to take on the financial risk that Kinder Morgan won’t bear, or even buy the pipeline – becoming a patient investor that will be undeterred by B.C. challenges. She met Finance Minister Bill Morneau on Wednesday to discuss a possible deal.

It’s doable. Kinder Morgan’s entire Canadian subsidiary has a market value of about $6-billion. That subsidiary is supposed to finance the pipeline expansion with borrowing. The governments would probably not actually buy the company − instead they would probably do some kind of risk-sharing transaction involving less money. But Alberta and Ottawa would still be buying a risk.

If Mr. Trudeau can’t arm-twist Mr. Horgan, he’ll have to take that risk. There’s no magical solution, but he can escape his pipeline conundrum − by buying in.

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