Energy industry, legal experts push back against Kenney’s B.C. pledge

JAMES KELLER
CALGARY
MAY 3, 2019 

Jason Kenney proclaimed the law, previously known as Bill 12, within hours of taking office this week, escalating Alberta’s attack on B.C. for its opposition to the Trans Mountain pipeline expansion.

Alberta Premier Jason Kenney’s decision to press ahead with a law allowing his government to cut off oil shipments to British Columbia faces two significant threats: a risky court battle and the possibility of inflicting pain on the province’s already struggling oil industry.

Mr. Kenney proclaimed the law, previously known as Bill 12, within hours of taking office this week, escalating Alberta’s attack on B.C. for its opposition to the Trans Mountain pipeline expansion. The B.C. government immediately responded with a constitutional challenge, which will have its first court hearing in Calgary on Tuesday.

Mr. Kenney has said he doesn’t intend to use the law immediately, insisting it would be a last resort.

Oil producers have been cautious about weighing in on the debate about Bill 12, though several have urged the two governments to avoid any disruption of shipments to B.C.

“We understand and share the frustration of the premier – and of Albertans,” wrote Mel Duvall, a spokesman for Husky Energy Inc., in an e-mail.

“We sincerely hope it will never come to needing to use the legislation. Any market intervention by government can have unintended consequences and shake investor confidence.”

Earlier in the week, the CEO of Suncor Energy Inc. told reporters in Calgary that Bill 12 represented a “fairly significant intervention” that would hurt the company.

“We’re hoping that through the government’s negotiations this can get sorted out, because the last thing we want to do is have an impediment in serving our customers,” Mark Little said.

And Parkland Fuel Corp., whose refinery in Burnaby relies on Alberta crude to produce gasoline and diesel, urged the provinces to find another way to resolve the conflict.

“Any measure that restricts the supply of oil to British Columbia would be negative for the economies of both B.C. and Alberta,” the company said in a statement.

The Canadian Association of Petroleum Producers declined to comment specifically on Bill 12. It issued a statement from CEO Tim McMillan that simply reaffirmed the group’s support for the Trans Mountain expansion.

Richard Masson, a former head of the Alberta Petroleum Marketing Commission who is now a fellow at the University of Calgary School of Public Policy, predicted that any interruption related to Bill 12 would be short-lived.

“The producers can survive a little bit of pain. It hurts them some, but it would be way more impactful on consumers,” Mr. Masson said in an interview.

“The impacts on the B.C. consumer and the economy would be felt so quickly and so sharply. I don’t think it would last weeks. I think it would last days.”

At any rate, legal experts have cast doubt on Mr. Kenney even getting the chance to inflict such pain on B.C.

Joel Bakan, a law professor at the University of British Columbia, predicted B.C. will get an injunction and Alberta will eventually lose in an “open and shut” case. He said that while provinces have the power to restrict natural resource exports in some circumstances, they can’t discriminate against other provinces – which is precisely what Mr. Kenney says he wants to do.

“Premier Kenney did not do himself any favours by directly targeting B.C. in his remarks, because that simply feeds the narrative that the whole purpose behind this law is to target British Columbians,” Prof. Bakan said in an interview.

Michael Hurst, whose Calgary-based law firm, Dentons, has argued that Bill 12 could withstand a legal challenge, said it could depend on what the eventual licensing system looks like.

"It is entirely possible that it would restrict the export of the controlled commodities in all directions,” he said. “The possibilities are actually quite broad.”

With a report from The Canadian Press