Cory Morgan: Supreme Court’s Bill C-69 Ruling Is a Hard Reality Check for the Feds

Workers lay pipe during construction of the Trans Mountain pipeline expansion in Abbotsford, B.C., on May 3, 2023. The Canadian Press/Darryl Dyck

Commentary

Canada’s Supreme Court made a landmark decision in its ruling that the federal Impact Assessment Act (Bill C-69) is unconstitutional. C-69 has been dubbed the “No More Pipelines Act” in Western Canada and provincial governments have been battling the legislation in Canadian courts since its inception.

The court ruling sets the Liberal government back on its heels as it must re-evaluate its environmental agenda. Prime Minister Justin Trudeau has made battling climate change his personally defining issue and he has just lost his prime tool in pursuing his goals.

Bill C-69 gave the federal government authority to assess and approve or shut down major resource projects in Canada. Plans for the creation of pipelines, mines, and even new highways could be halted by federal authorities via the act. The problem for the federal government is those developments all fall under provincial authority, and now the courts have affirmed it.

In May 2022, the Alberta Court of Appeal ruled that Bill C-69 was unconstitutional, calling the legislation a “breathtaking pre-emption of provincial authority.” The federal government immediately appealed the ruling to the Supreme Court and has now lost that battle. It appears their environmental zeal blinded them to constitutional reality. The Supreme Court has given the Trudeau government a hard reality check.

Western Canadian provinces are eager to expand and develop their natural resources, including oil and natural gas. World demand for those resources continues to rise, but a lack of Canadian infrastructure for the development and exportation of products has hampered Canadian companies. The Energy East pipeline was regulated out of existence. The Northern Gateway pipeline was outright shut down by the government, and the Trans Mountain pipeline expansion has been mired in delays and budget overruns since the federal government chased out private investors and took over the project.

Due to a lack of ability to export products and having only one prime foreign customer, Canada sells oil at a discount that ranges from $15 to $30 per barrel when compared to world prices. This has long frustrated Canadian producers as the only solution for this price differential is to expand the pipeline capacity to Canada’s coastlines, but it has been nearly impossible to get approval to do so.

Threats of emission caps coupled with bills such as C-69 have chilled investment within Western Canada. The risk has been too high for investors to consider long-term investments in Canadian projects when those projects could be shut down at any time by the federal government under C-69.

Provincial governments in Western Canada are jubilant in the face of the latest ruling as are energy producers. We can’t expect an influx of investment and new natural resource project applications yet though as we still don’t know how the federal government is going to react to the ruling.

Will the Liberal government attempt to redraft the bill in a way that may pass constitutional muster under judicial scrutiny? To do so would be to render the bill toothless. If the federal government doesn’t have the authority to halt projects, the regulations placed upon them can be ignored.

The federal government has embraced some very aggressive emissions targets as they try to bring Canada to a net-zero emission status in a relatively short time period. Critics have called the targets impossible, and they will be even more so if oil and gas development in Canada continues to expand. While Canada’s oil and gas sector has made great strides in emission reduction with cleaner practices and initiatives such as carbon capture, it remains among the top industries for emissions intensity.

For the Trudeau government to accept the Supreme Court ruling on C-69 it will have to accept its emissions targets will never be met. Canada’s government of late has been marked by stubborn pride, and backing off on trying to control provincial industries offers a humbling I don’t think the government is willing to embrace.

As the saying goes, there’s more than one way to skin a cat. The government can keep drafting and passing legislation with the intent of hampering the Canadian oil and gas industry even while knowing it isn’t constitutional. As we saw with Bill C-69, it took over four years for the legislation to be shot down by the courts. If the bills keep coming and going, the uncertainty will devastate development in Canada’s oil and gas sector just as surely as C-69 intended. It would be an unprincipled way to meet a policy goal, but it would be effective.

Is Trudeau willing to accept a loss and start trying to work with provinces rather than impose legislation upon them?

I wish I could say I believe he is, but I doubt it.

Proponents of Canadian oil and gas can and should celebrate the recent ruling. The battle over resource development isn’t over yet, however.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.