Pipes are seen at the Kinder Morgan Trans Mountain facility in Edmonton, Alta., on April 6, 2017.JONATHAN HAYWARD/The Canadian Press
Alberta Premier Rachel Notley is threatening to launch a legal – and trade – battle over British Columbia's plan to block the Trans Mountain oil pipeline, measures that could include targeting the westernmost province's $10.7-billion Site C hydroelectric dam.
In an emergency cabinet meeting on Wednesday, Ms. Notley said her government is studying a range of legal and economic responses to a regulation B.C. is proposing that would prohibit increased shipments of heavy crude through the province.
The move, announced a day earlier by B.C. Environment Minister George Heyman, would effectively stymie Kinder Morgan Canada Ltd.'s $7.4-billion Trans Mountain pipeline. In prepared remarks delivered to the media before the meeting, Ms. Notley cited "interprovincial trade in electricity" as one area for potential retaliation.
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The Premier did not take questions, but her office later said that could mean not buying power from the Site C dam, a massive hydroelectric project on the Peace River in northeastern B.C. that is years from completion.
"The government of Alberta will not – we cannot – let this unconstitutional attack on jobs and working people stand," Ms. Notley said in prepared remarks.
"Alberta contributes mightily to the economic security of every Canadian – including every British Columbian. In return, we simply expect our fellow citizens to play by the rules and allow us to get a fair return for our products. The B.C. government has thumbed its nose at the principle. And for that there must be consequences."
Alberta's threat of economic reprisals intensifies a years-long dispute between the two provinces over plans to export oil-sands products from the West Coast. Taking a hard line with B.C. could blunt criticism from the right that Ms. Notley's toughened environmental rules have done little to pave the way for new pipelines.
Trans Mountain would nearly triple shipments of landlocked Alberta bitumen through suburban Vancouver to overseas markets.
Prime Minister Justin Trudeau approved the project over the objections of coastal cities and some Indigenous groups in late 2016, but it faces court challenges. B.C.'s NDP Premier, John Horgan, has vowed to use every tool available to fight it.
This week, the province surprised Ms. Notley's government and the oil industry with a plan to impose a regulation to prohibit expanded shipments by rail and pipeline of diluted bitumen until an advisory panel reports on whether the extra-thick crude can be effectively cleaned up after a spill in water.
The move raised the prospect of further delays for Trans Mountain, which Kinder Morgan Canada has said is already a year behind schedule. Spending on the 590,000-barrel-a-day expansion has been reduced while the company seeks construction permits.
Mr. Horgan was unavailable for comment on Wednesday, but Mr. Heyman said the regulation is only a proposal, and his ministry will take most of this year and possibly into next to consult with First Nations and other stakeholders before making changes.
"I'm not sure consultation is a basis for legal action," he said in an interview. "We're simply doing what we think is our right and responsibility to protect our coastline and environment under the [provincial] Environmental Management Act.
"We understand that the pipeline has a federal certificate. We have joined with others, First Nations and municipalities, in challenging whether that certificate should have been issued or was properly issued, but it currently exists and we understand that our duty … is to ensure that the permitting required by the province of B.C is conducted in a fair and consistent and open manner."
Legal experts said the regulation would be vulnerable to court challenges.
"To the extent that this is meant to imperil Trans Mountain, there really is a very clear federal jurisdiction with respect to matters such as pipelines or railways that cross provincial borders and are federally regulated," said Alan Ross, a regional managing partner with Borden Ladner Gervais LLP.
"I don't think that the Environmental Management Act gives them the right to supersede or go beyond the federal jurisdiction on interprovincial commerce and interprovincial infrastructure."
Site C, on the Peace River in northeastern B.C., is scheduled to be completed in the mid-2020s. Although the B.C. Utilities Commission never mentioned the possibility of the province selling any of the power it will generate to Alberta in its final report last November, hydro power could help Alberta meet its commitment to phase out coal-fired power plants.