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May 18, 2018
Alberta Passes Bill 12 Allowing Province to Restrict Exports of Oil and Gas to B.C.
The Alberta government passed Bill 12 – Preserving Canada’s Economic Prosperity Act on May 16, 2018, giving the province the ability to limit the export of oil and gas from the province. Bill 12 is aimed squarely at the Government of British Columbia’s opposition to the Trans Mountain pipeline project, a pipeline running from Edmonton, Alberta to Burnaby, British Columbia.
As we discussed in prior posts (here, here and here), British Columbia recently enacted regulations that would stop pipeline companies from increasing bitumen shipments through the province. The expected effect of the regulation would be to stop the planned expansion of Kinder Morgan’s Trans Mountain pipeline. Kinder Morgan recently announced that it was “suspending all non-essential activities and related spending on the Trans Mountain Expansion Project” on account of continued opposition from the B.C. government.
Bill 12 gives the province the authority to require companies to obtain a licence before exporting oil or gas from Alberta via pipeline, rail or truck. Companies would not be automatically required to apply for an export licence. Rather, licences would only be required if the energy minister determined that it was in the public interest, including whether there was adequate pipeline capacity to maximize the return on Alberta’s oil and gas resources. Companies that do not comply with the act may face fines up to $10 million per day.
The Government of British Columbia immediately responded to news of the passing of Bill 12 by questioning the constitutional validity of Bill 12, calling it “manifestly unconstitutional” and urging the Alberta government to not proclaim Bill 12 into force until it has been referred to the Alberta courts to assess its constitutionality, as the British Columbia government did with its pipeline regulations. The Alberta government responded by saying that it would not be referring Bill 12 to the courts as it was confident in its constitutionality authority.
Meanwhile, also on May 16, 2018, the federal Finance Minister announced that the federal government is willing to indemnify Kinder Morgan and its investors for any financial loss due to British Columbia’s opposition to the Trans Mountain pipeline. No details were provided as to the extent of compensation offered. Kinder Morgan set a deadline of May 31, 2018, to clarify its ability to construct through British Columbia.