Finance Minister Bill Morneau during Wed. press conference.

How will Canada decide what are unconstitutional actions by BC if courts haven’t yet ruled on reference question about restricting dilbit shipments within British Columbia? – Young, UBC law prof.

Finance Minister Bill Morneau says Canada will financially backstop the Trans Mountain Expansion pipeline project in order to remove risk caused by the BC government’s opposition. The announcement only confirms that there is no imminent solution to the political and constitutional impasse between Ottawa and British Columbia, and that the controversy could get much worse before it gets better, if it ever does.

“If Kinder Morgan isn’t interested in building the project we think plenty of investors would be interested in taking on this project, especially knowing that the federal government believes it is in the best interest of Canadians and is willing to provide indemnity to make sure that it gets done,” Morneau said at a Wednesday morning press conference in Ottawa.

Negotiations are ongoing between Ottawa and Kinder Morgan, which last month ceased construction activity on the 1,000 kms pipeline and gave the federal government until May 31 to sort out the jurisdictional dispute with British Columbia, which claims it has the authority to restrict shipments of diluted bitumen within the province until a scientific advisory committee can make recommendations about required oil spill response strategies for both marine environments and on land.

“It’s not reasonable to expect a private sector actor to deal with disputes between governments. We’ve found a way, we believe, to deal with that political risk,” Morneau said.

Dennis McConaghy.

Dennis McConaghy notes that Morneau was careful and specific about the type of financial support Canada is willing to provide.

“The finance minister was very precise this morning that the indemnity was going to apply only to risks they deem to be unconstitutional and triggered by actions of the current BC government,” the former TransCanada VP said in an interview.

“He also indicated that the negotiation isn’t done yet and I would guess that there are still significant negotiations to unfold on the scope of this indemnity.

UBC law professor Margot Young questions how the pipeline company and Ottawa will define unconstitutional behaviour by BC when the courts haven’t yet ruled on that very question.

“The BC government has undertaken to act constitutionally. In fact, their reference to the court on precisely what they can do constitutionally is an implicit commitment to act according to the principles of constitutional law,” she said in an interview.

Prof. Nigel Bankes.

There will be “an interesting definitional question” about the language of the indemnity agreement, says Nigel Bankes, professor of and chair of natural resources law, University of Calgary faculty of law.

“Precisely what is the government of Canada agreeing to cover on behalf of Kinder Morgan? Is it, for example, participation by BC’s lawyers in this court case (judicial review of Canada’s “duty to consult” aboriginal peoples under Sect. 35 of the Constitution)? Is it compensation in terms of the delay that may be incurred in commencing construction activities until we get a decision from the BC Court of Appeal?” he said in an interview.

“The devil will be in the details.”

Young also argues that lending or giving taxpayer money to a private American company (Kinder Morgan is headquartered in Texas) will “annoy people opposed to the pipeline” and points out that the courts have still not rules on the Sect. 35 (duty to consult) judicial review currently before the Federal Court of Appeal.

Political scientist Keith Brownsey has a different take on Morneau’s announcement.

Prof. Keith Brownsey.

“I think it may affect public perception in a positive way. The federal government has signaled that this is a national project. It’s now involved at a financial level. That will send a signal, people will pay closer attention now,” the Mount Royal University professor said in an interview.

Brownsey says that Trans Mountain Expansion has been allowed to become a proxy for the integrity of the Canadian regulatory system and project approvals by the Canadian government.

“I think this is very important for the federal government. This is now a federalism issue, a question of jurisdictional authority between the provinces and the national government,” he said.

But he does agree with Young that Morneau’s announcement will not deter the BC NDP government or other opponents of the project.

Margot Young, UBC law professor.

“I don’t see how Premier John Horgan can back down from their opposition to Kinder Morgan. They will continue. Remember, this is a minority government maintained by three Green Party MLAs in the legislature and the Greens will never give up,” he said.

Horgan was not happy with Morneau’s announcement: “I think that is rhetoric and hyperbole on his part. There are fundamental challenges to that project that he well knows,” he told CBC. “For a Toronto-based finance minister to single out British Columbia as a problem here, he should look at the failure of Energy East, he should look at the failure of Keystone and a whole host of other projects.”

The Trans Mountain Expansion file is now officially a mess. As Young noted, Morneau seems to have hit the “sour spot,” where no one is happy and there appear to be no good options available.