Federal Court Of Appeal Lifts Injunction On Alberta's "Turn Off The Taps" Legislation

• Published date: 19 May 2021
• Subject Matter: Government, Public Sector, Litigation, Mediation & Arbitration, Energy and Natural Resources, Oil, Gas & Electricity, Constitutional & Administrative Law, Trials & Appeals & Compensation
• Law Firm: Borden Ladner Gervais LLP
• Author: Mr Michael Marion, Clay Jacobson, Brett Carlson and Brian Reigh

On April 26, 2021, the Federal Court of Appeal (the FCA) in Alberta (Attorney General) v. British Columbia (Attorney General), 2021 FCA 84 overturned the injunction granted by the Federal Court of Canada (the FC), in favour of British Columbia (BC), against Alberta's Preserving Canada's Economic Prosperity Act, SA 2018, c P-21.5 (the Act). The Act empowers Alberta to establish a licencing regime that permits Alberta to restrict exports of natural gas, crude oil, and refined fuels from the province. The FCA determined that BC's application, which also sought a declaration that the Act was unconstitutional, was premature as Alberta had not yet implemented an operational regulatory regime that would actually limit exports of natural gas, crude oil, or refined fuels to BC.

Overturning the FC decision and lifting the injunction placed on the Act represent a small victory for Alberta. However, contrary to some media coverage, the FCA did not uphold or otherwise make a declaration on the constitutional validity of the Act. Rather, the FCA merely lifted the injunction placed on the Act by the FC, while holding that it would be premature to render a declaration on the Act's constitutionality in the absence of its operational provisions.

Subsequent to the FCA's ruling, Alberta has allowed the Act to expire by virtue of its two-year "sunset clause." The province has indicated that the Act will be re-enacted at some point in the future with revisions and possible improvements reflecting the FCA's decision. Should a revised Act become operational, it is likely that BC will launch a renewed constitutional challenge.

This decision comes on the heels of the Supreme Court of Canada's decision in Reference re Environmental Management Act, 2020 SCC 1 (the BC Reference Case), which ruled that BC's attempt to regulate imports of "heavy oil" into the province was unconstitutional. It is likely that BC would rely on this decision to challenge Alberta's Act, which seeks to control exports of oil and gas commodities, in a future constitutional challenge.

Background

In May 2018, the Act, colloquially known as the "turn off the taps" legislation, received royal assent. The Act was passed against a backdrop of rising political tensions between Alberta and BC over the expansion of the Trans-Mountain pipeline and would effectively allow Alberta to control aspects of natural gas, crude oil, and refined fuel exportation.

In response, BC filed a claim with the Court of Queen's Bench of...