Reference re Environmental Management Act (British Columbia), 2019 BCCA 181

On Friday May 24th, the BC Court of Appeal held that BC’s proposed legislation blocking the Trans Mountain pipeline is unconstitutional. In a clear decision curtailing the provinces’ ability to interfere with federal undertakings, the Court reaffirmed that pipelines and railways cannot be subject to a patchwork of provincial laws. If upheld by the Supreme Court of Canada, the Court’s decision will provide considerable certainty for present and future federal projects.

The proposed legislation (the “Proposed Legislation”) prohibits anyone from possessing “heavy oil” in quantities greater than that possessed between 2013 and 2017, unless they obtain a discretionary permit from BC. The definition of “heavy oil” was such that it essentially only applied to synthetic crude oil that originated outside BC.

The Court held that the Proposed Legislation specifically targets federal undertakings (pipelines and railways) carrying oil across BC’s borders and, consequently, it is beyond BC’s jurisdiction. The federal government—not BC—has exclusive jurisdiction over federal undertakings, including interprovincial pipelines and railways.

The Court further held that unless an undertaking is contained entirely within a province, “federal jurisdiction is the only way in which it may be regulated.” The Court reasoned that if a patchwork of provincial and federal legislation applied, the operation of interprovincial undertakings would be stymied. New laws would apply each time a pipeline or railroad crossed a provincial border. For good reason, the constitution allocates jurisdiction over interprovincial undertakings exclusively to Parliament.

The Court rejected BC’s argument that the provinces have a superior claim to legislative jurisdiction over the environment: rather, environmental protection is a “more diffuse field in which both levels of government play important roles.” Moreover, a key component of the federal government’s jurisdiction is the minimization of environmental harm associated with interprovincial undertakings.

The Court also rejected BC’s argument that the constitutionality of legislation establishing a discretionary permit scheme cannot be evaluated until the discretion has been exercised. The legislation can and should be evaluated on its face.

This decision reaffirms Parliament’s exclusive authority over interprovincial undertakings, marking a major win for the interprovincial transportation industry. It is not the final word on the matter: BC has already announced that it will seek leave to appeal to the Supreme Court of Canada.