Alberta could be on shaky ground in B.C. lawsuit over Bill 12, Calgary legal expert says

A leading Calgary legal expert says B.C.'s lawsuit against Alberta over its threat to turn off the petroleum taps could find Rachel Notley's government on thin constitutional ice.

The B.C. government filed a statement of claim in Alberta's Court of Queen's Bench on Tuesday, over legislation that allows Alberta to restrict oil and gas shipments to B.C. in retaliation for that province's efforts to block the Trans Mountain pipeline project.

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Bill 12 passed last week in the Alberta Legislature in response to B.C.'s continued opposition to the pipeline expansion.

Nigel Bankes — a law professor and the chair of natural resources law at the University of Calgary — weighs in.

This The Homestretch interview has been edited for clarity and length. Listen to the full conversation here.

Q: What's the basis of B.C.'s actions today?

A: Bill 12 is the bill that purports to give the province the authority to require exporters of natural gas, refined product and oil to require licences before they engage in that export activity.

Q: What are the two main opposing points of view?

A: Alberta says we can justify this legislation on the basis of section 92A of the Constitution, the 1982 resources amendment.

B.C. though, says you have got to fulfil two conditions in order to rely on that legislation: The law must be in relation to primary production and the law must be non-discriminatory in its application.

B.C. says there are elements of Alberta's legislation which fall on one or the other of those conditions.

Q: Does B.C. have a case?

A: B.C.'s case is strongest and Alberta's is weakest in relation to refined product because when you look at the definition of primary production in the 92A amendment, it appears to exclude refined product.

In relation to discrimination, I would say it's simply too early to tell because the legislation on its face is non-discriminatory.

We need to wait for the implementation of it by the government, that will require the minister to make an order and a set of regulations. At that time, we can look at that and say, is it in fact discriminatory?

Q: Could Alberta be bluffing at this point?

A: What would be Alberta's strongest card and maybe we should lead with that.

Our strongest position would be to say, we are going to restrict the export of oil, a primary product, and we are going to do so in a non-discriminatory way so every exporter takes a 10 per cent hit, or whatever it is.

Q: Part of B.C.'s claim talks about irreparable harm? Where does that fit in?

A: It doesn't fit at the moment, because the only remedy B.C. is seeking is a declaration. It will play in when and if B.C. also asks for an injunction.

The scenario here would be, Alberta actually rolls out the order and the regulation, implements things and then proceeds to turn off the tap.

At that point the attorney general of B.C. will apply for an injunction. One of the essential elements of an injunction would be to show irreparable harm.

Q: Is B.C. premature in filing this claim or is this just a natural progression of this conversation?

A: It's one of each.

It's premature on the question of discrimination, because we haven't seen the implementing order and regulations.

On the question of refined product as primary production, that's ready to go. We don't need more to be able to determine whether that part of the legislation is valid.

Q: On what basis would an injunction be granted?

A: It would principally be the question of irreparable harm, meaning harm that couldn't be compensated by damages and also the balance of convenience.

B.C. will say there are all sorts of people that will suffer harm as a result of this. Some of that will be economic, but some may be threats to health. The loss of the ability to buy oil to generate.

B.C. will have to establish that argument to get the injunction, should we get to that point and let's hope we don't.

Q: What are the next steps in this?

A: We are not going to settle the constitutional issues by the end of May. We might settle the scope of this indemnity, but I think that in itself is a difficult question, not a constitutional question, but a nice contract-drafting question.

What is in, that the feds will cover, and what is out?

Q: What other questions are outstanding?

A: The one thing I would like to learn more about from our province, what is the legal opinion they are relying on when they say refined products are covered by section 92A?

I would love to see that opinion.

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With files from The Homestretch