Ottawa confirms B.C.'s pipeline court case counts as a political delay that could cost taxpayers

The federal government confirmed Friday that B.C.'s use of the courts to fight the Trans Mountain pipeline expansion constitutes the kind of political delay that could trigger taxpayer-funded compensation for the builder.

Liberal government says Trans Mountain insurance policy 'will not be costly'

A sign warning of an underground petroleum pipeline is seen on a fence at Kinder Morgan's facility in Burnaby, B.C., where work is being conducted in preparation for the expansion of the Trans Mountain pipeline. (Darryl Dyck/Canadian Press)

The federal government confirmed Friday that B.C.'s use of the courts to fight the Trans Mountain pipeline expansion constitutes the kind of political delay that could trigger taxpayer-funded compensation for the builder. 

Finance Minister Bill Morneau said Wednesday the Liberal government is prepared to indemnify the project against the cost of "unnecessary delays" that are politically motivated.

If Kinder Morgan abandons the project, which it has threatened to do, the government's insurance policy would apply to whoever takes it over.

Though Morneau didn't expand on what would be considered a political delay, the parliamentary secretary to the environment minister did so Friday.

"The court case certainly is political uncertainty," Jonathan Wilkinson told CBC Radio's The House, though he wouldn't say whether the court delay means funds would flow immediately to Kinder Morgan.

At the end of April, the B.C. government asked the province's highest court to decide if it has the right to impose stricter rules for companies looking to ferry heavy oil, such as diluted bitumen, through B.C.

Finance Minister Bill Morneau says the government is prepared to shield the company against unnecessary delays that are politically motivated. 3:15

Morneau's attempt to reassure the industry that whoever completes the expansion will be backstopped by taxpayer dollars didn't come with an expected price tag, nor would Wilkinson estimate what Trans Mountain could end up costing the government.

The federal government holds authority over any public work that crosses provincial borders, and it intends to assert its power.

"We have the jurisdiction, and therefore the insurance will not be costly," Wilkinson said.

Last month, Kinder Morgan stopped all non-essential spending on its $7.4-billion project because of the months-long standoff between the B.C. and Alberta governments. B.C. has been working to block the pipeline for environmental reasons. Alberta says the project is crucial to its economy, which is hurt by the lack of pipeline capacity.

The expansion would add a second pipeline along Kinder Morgan's existing pipeline route to carry diluted bitumen from Alberta to the B.C. coast for export on tankers.

'Very risky project' for B.C.

B.C., however, remains unmoved by its neighbour's economic arguments.

"We've been clear from the start. We think this is a dangerous, very risky project for British Columbia," George Heyman, the province's environment minister, told The House's Chris Hall.

He was also critical of Morneau's jabs blaming B.C. and Premier John Horgan for the delays, saying it's "just wrong, and he knows it's wrong."

"Mr. Morneau appears perfectly willing to risk Canadian taxpayers dollars in the billions to bail out a Texan corporation, and willing to do hardly anything with respect to the very real risks faced by British Columbians," Heyman said.

Alberta responded to B.C.'s tactics by passing legislation that can be used to stop the flow of oil to their western neighbour.

Alberta Premier Rachel Notley has threatened she's ready to use Bill 12, passed this week, should B.C. continue to stall.

How did we get to the point where the feds are preparing to spend your tax dollars to get this project built? 2:03

"We are absolutely serious," Energy Minister Marg McCuaig-Boyd said. "This is about can we get anything done in Canada if a province doesn't respect a process and a federal approval of something?"

She said she's heard from investors who are interested in taking on Trans Mountain should Kinder Morgan back out of the project, but she declined to say who. Kinder Morgan has threatened to walk away by May 31 if it doesn't see a clear path forward.

Feuding provinces

No matter the outcome, the standoff has highlighted how dramatically interprovincial tensions can escalate. 

"I despair a little bit about the tit-for-tat that's going on between the two provinces," said Wilkinson, who is the MP for North Vancouver.

"It's not helpful for the federation in the long term."

B.C.'s Heyman and Alberta's McCuaig-Boyd agree the situation isn't ideal, but both say their provinces have slowly been pushed to the breaking point.

Heyman suggested Prime Minister Justin Trudeau become more involved to help minimize the conflict.

About the Author

Elise von Scheel

Elise von Scheel is a reporter with the CBC's Parliamentary Bureau. She is currently an associate producer for The House. Before joining the politics team, she was a reporter for CBC News in Ottawa. You can get in touch with her at elise.von.scheel@cbc.ca.