Supreme Court decision a win for Canadian fuel consumers
Earlier this month, in a rare, unanimous decision from the bench, the Supreme Court of Canada (SCC) dismissed the BC government’s appeal of last year’s BC Court decision that amendments to BC’s Environmental Management Act, designed to impose additional permitting requirements on the movement of heavy oil through the province, were unconstitutional.
The BC Court concluded that the proposed amendments unconstitutionally sought to regulate a ‘federal undertaking’, and potentially stop the Trans-mountain pipeline expansion project (TMX) – an interprovincial project that had already been approved by the National Energy Board and Cabinet. The SCC agreed, reaffirming the federal government’s primacy over the regulation of interprovincial trade and infrastructure; an important reaffirmation of Canada’s constitution and division of powers.
While the case focused specifically on issues related to TMX, its implications were much broader. It was for this reason that Canadian Fuels was an intervenor in both the initial reference to the BC Court of Appeal, and in the subsequent appeal to the SCC.
The proposed amendments, if approved, would have created significant uncertainty for the fuels sector by enabling an unpredictable and fragmented regulatory environment that could create barriers to the timely, ‘on-demand’ delivery of refined fuels to Canadians, and reduce infrastructure investment necessary to meet present and future fuel demand. Crude oil shipped by pipeline is an essential feedstock for Canada’s refineries. In addition, approval of the proposed amendments would have opened the door to BC, or other provinces, implementing similarly restrictive legislation directly targeting refined fuels.
The fuels sector is a key component of Canada’s critical energy infrastructure. Beyond refineries, safely and reliably supplying Canadians with the fuels they need involves a complex national logistics network of pipelines, ships, railways and trucks. Fuels move from refineries to end users within provinces and between provinces. In addition, imports and exports are critical elements of balancing regional and seasonal supply and demand.
Multiple and duplicative regulatory regimes compromise the effective and efficient operation of this national network and are a drag on investment essential to sustaining and renewing it. Equally compromising is a lack of regulatory clarity and predictability. We support a strong regulatory system of environmental protections, but that system needs to be coherent and consistent for complex industries and supply chains like ours to meet Canadians’ needs and expectations effectively and efficiently.
There’s good reason why Canada’s constitutional framework gives Parliament exclusive jurisdiction over the regulation of interprovincial projects like pipelines. It prevents provincial governments from constructing obstacles for national energy projects, by creating a multijurisdictional patchwork of impediments that could imperil Canada’s economic growth and Canadians’ energy security. All Canadians should be thankful that the 9 Justices of the SCC understood this and reaffirmed federal paramountcy in this space.
