Ted Morton says political and policy uncertainty threatening Trans Mountain Expansion pipeline construction
Ted Morton is accustomed to controversy. The political scientist was part of the conservative Calgary School that incubated Canadian politicians like Stephen Harper and a two-term Progressive Conservative cabinet minister (including a stint in Energy), and is now a fellow with the School of Public Policy, where he teaches classes on energy politics. A presentation he gave in Ont. about Alberta energy politics garnered some national attention because of its (not surprisingly) less than rosy view of policy from the Trudeau Liberals and the Notley NDP.
Last week at a conference in Toronto, Morton warned that the Canadian oil and gas sector is facing uncertainty from provincial and federal policy, uncertainty that other jurisdictions – such as the United States – don’t face.
“I’m particularly concerned about policies that are negatively affecting our competitiveness to attract new capital investment and more specifically failure on export pipelines and the uncertainty about the NEB [National Energy Board] regulatory process,” he said in an interview.
Even though he has been less visible since his defeat in the 2012 provincial election, Morton’s views on energy politics are important because they mirror those held by executives in many of the energy company C-suites in downtown Calgary.
One could even argue that Morton has put form to the gossip and grumbling that is common over scotches in the Petroleum Club.
One could also argue he’s done a much better job of it than Wildrose energy critic Drew Barnes and his counterpart in the PC Party, Rick Fraser. Expect those two, not the most articulate critics in the history of Alberta politics, to make liberal use of Dr. Morton’s slide deck between now and the 2019 election.
I caught up to Morton by phone Monday and we discussed energy policy for a good half hour. Since I have written about most of the issues he addressed in his presentation, he graciously agreed to do the interview as point and counterpoint.
Below is the exchange, lightly edited for clarity
Ted: I specifically focused on the three changes of government over the last three years. In Alberta, 2015, the NDP replacing the Conservatives. 2015 again, Trudeau and the Liberals defeating Harper and the Conservatives federally. Then most recently what appears to be the NDP-Green defeat of the Christy Clark Liberals in BC.
And each of those identifies new policies that have come out of the new governments that negatively affect the oil and gas sector. And the list is fairly long.
Markham: Why don’t we start with pipelines in British Columbia?
Ted: If we were talking about pipelines in British Columbia two months ago, I would’ve been quite positive. You had both the federal and the provincial governments onside after a long policy dance and then, of course, a relatively successful initial public offering by Kinder Morgan. But I’m very concerned that what appears to be the newly elected NDP-Green coalition government in BC will do what they said, which is use every means possible to stop the construction of the Trans Mountain Expansion pipeline.
Markham: What, in your opinion, can a provincial government do to stop an inter-provincial pipeline?
Ted: Nothing is more clearly federal jurisdiction than inter-provincial pipelines, and so, most of what they might do is probably unconstitutional or illegal, but they can chew up a lot of time and they could try to revoke the environmental permit that’s already been granted by the Liberal government.
Simple things like approval of routine construction permits could be used. And then there’s the whole issue of enforcing, if you like, law and order or dealing with the very strong civil disobedience that is anticipated at construction sites. Lf there’s a slack response, it would be very disruptive of construction.
None of those things by themselves perhaps is fatal to Kinder Morgan but it could chew up a lot of time and in this business, time is money and if days turn into weeks, and weeks turn into months, and months turn into years – they’re going to use that kind of grind-it-down strategy.
Markham: Just to take a couple of the examples you provide. That the BC environmental assessment certificate, they can revoke that but that particular certificate only applies to issues that are within the BC government’s jurisdiction. If Kinder Morgan doesn’t have that certificate, that doesn’t prevent them from going forward. That’s what I’ve been told by constitutional experts including Margot Young at UBC. So that doesn’t seem to be a limiting factor or even a delaying factor.
Ted: At the end of the day, I would agree with that legal argument, but the end of the day could be 6, 12 or 18 months from now.
Markham: I’m not sure why that would be because the National Energy Board acts with the authority of the federal government. Like two years ago when Burnaby was trying to not issue permits and was being a problem for Kinder Morgan. The National Energy Board simply moved in and said, “No, we overturn that.” And it was only a matter of a day or two. I’m not sure why that would be any different this time around.
Ted: Because the NDP-Green opposition has unlimited financial resources and therefore unlimited legal resources to drag this out in court. And of course, the climate change activists who are opposed to the completion of Trans Mountain are also very well-funded and will participate in any sort of judicial proceedings that are an attempt to stop or at least slow up completion.
In the abstract, I agree nothing is more clearly federal jurisdiction than inter-provincial pipelines, but that doesn’t mean determined opponents that are well-financed can’t burn up a lot of time with legal challenges.
Markham: I think it does, actually. The way that Professor Young described it to me – and this includes constitutional scholars Dwight Newman and James Coleman as well – is that the principle of “primacy” basically overrides any kind of objections and legal challenges from either the municipalities or from the provincial government. And those governments cannot do anything to impair the federal government’s authority or its ability to carry out that authority in a timely manner. And I think from what those legal scholars have told me, there is no chance of a protracted legal challenge in an area like this that’s so clearly federal jurisdiction.
Ted: I think the constitutional experts that you cite are probably right, but being wrong doesn’t prevent a determined opponent from going to court. And the supreme court may very well give the verdict or ruling that you described but again, I would just say it could take 12, 18 even 24 months to get there.
Markham: Okay, let’s move on. I agree with your comments about the eco-activists and their opposition to Kinder Morgan. I think it’s going to be another War of the Woods around that pipeline. What’s your take on the federal government’s resolve to bring in the RCMP, maybe even the army, to deal with that kind of an opposition?
Ted: I think the issue is precisely what you said. The question of the federal government’s resolve and more specifically, the resolve of Justin Trudeau. I think Mr. Trudeau likes to fancy himself has a progressive liberal. He certainly campaigned that way to win the 2015 Federal Election. He continues to pose that way a lot and I think he’ll be very reluctant, even though he has personally endorsed and his government has approved the Trans Mountain expansion. I think he’ll be extremely reluctant to use the full panoply of federal powers to deal with civil disobedience and protesters.
For the opponents, climate change isn’t just a political issue, it’s almost a quasi-religious crusade and so crusaders will go to great lengths to stop something that they think is fundamentally evil. And I think you’re going to see grandmothers and mothers and children chain themselves to bulldozers and I don’t think Justin Trudeau fancies seeing himself in the same way his father dealt with the PQ crisis in Quebec in 1970, which was pretty heavy-handed.
Markham: I don’t agree with that assessment. All of Trudeau’s climate change strategies and policies are riding on how he handles the pipeline. If he blinks, if he backs down, he’s done for. Not to mention the fact that he needs to support the oil sands because he needs the tax revenue to eventually balance the federal budget. So I’ll disagree with you on that one.
Ted: You’re certainly right on balancing the books, but again, I’m not sure he has the resolve. There’s a second issue there which is the parliamentary arithmetic. I’ll recheck my paper, but I think he has 47 MPs from Quebec and BC- 17 from BC and 30 from Quebec. And he’s only 13 MPs over the majority you need to form government in Ottawa. He needs to win the next election and every politician’s highest priority is the next election and he cannot afford to see his support in Metro Vancouver or in Quebec be eroded significantly by pipeline politics.
Markham: The counter to that is that the Prime Ministers’ Office has apparently done the calculations, which of course changes the worse it gets, but they claim that they’re only going to lose two seats and maybe at most four seats and that they think that they can withstand the assault.