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Canada argues British Columbia pipeline law oversteps authority

Canada has called a British Columbia law a "Trojan horse" aimed at thwarting the federal government's authority to regulate interprovincial pipelines.

The federal government is asking the British Columbia Court of Appeal to invalidate a proposed law that would give the province the right to limit the transportation of certain substances within its boundaries for environmental reasons. Canada claims the law is aimed at blocking the expansion of federally owned Trans Mountain Corp.'s pipeline network within British Columbia. Lawyer Jan Brongers, representing the federal government, made the Trojan horse analogy in court March 20.

"It's one that is designed to appear as constitutionally acceptable local environmental protection measures," Brongers said of the law, according to the Canadian Broadcasting Corp. "But in substance, it's an unconstitutional initiative that's only logical reason for being is to limit federally-regulated pipelines and railways from moving additional heavy oil."

The five-member appeal panel is considering the issue as a so-called reference case, in which a law is directly forwarded to the courts by the government for review. The province proposed the law in January 2018 for "restrictions on the increase of diluted bitumen ... transportation until the behavior of spilled bitumen can be better understood." The law appeared to take aim at a plan to almost triple the capacity of Trans Mountain, then owned by Kinder Morgan Inc. The capacity hike would increase the line's ability to carry the tar-like oil from northeastern Alberta to a marine terminal in British Columbia's populous Lower Mainland region.

The federal government bought Trans Mountain in 2018 citing national interest after Houston-based Kinder Morgan threatened to abandon the expansion. Work on the project has been halted since the purchase under a separate ruling by a federal court. The British Columbia Court of Appeal is scheduled to hear arguments in the matter through March 22. It has not given a timeline for a ruling.

In its initial filing with the court, the federal government said the law's "pith and substance is the regulation of interprovincial oil transportation" and when applied to projects like Trans Mountain "it would place such undertakings at the mercy of the province's discretion to permit increased heavy oil shipments." Under Canada's constitution, the federal government regulates energy exports and transportation between provinces through the National Energy Board.

About a dozen groups including the Canadian Energy Pipeline Association, other provincial governments, First Nations groups and Trans Mountain rival Enbridge Inc. have made submissions to the court. The case is Court of Appeal file number CA45253.