The Constitution gives Parliament sole authority over interprovincial pipelines, so why is Ottawa negotiating payments with B.C.?

On July 2, Prime Minister Mark Carney signed the Canada-British Columbia Cooperative Prosperity Agreement with B.C. Premier David Eby in Vancouver, then flew to Calgary to announce, beside Premier Danielle Smith, Alberta’s submission of a million-barrel pipeline to the Major Projects Office.

The Calgary stage supplied the spectacle. The Vancouver document carried the payload. It committed Ottawa to negotiate a legally binding framework grounded in the agreement’s principle that British Columbia should share in the “economic upside” of a project it also acknowledges the province does not want. An annual pipeline operator payment to British Columbia heads the list of mechanisms to be settled by Dec. 1.

Economist Jack Mintz rightly called the arrangement, in these pages, “extortion, plain and simple,” a Strait of Hormuz-style transit tariff. A royalty pays for the right to extract a resource that the collecting province owns. But B.C. does not own the resource and has no right to extract it; Alberta owns it in the ground and collects the proper royalty. Whatever a recurring payment would purchase, extraction is not it.

Mintz faults Ottawa for blessing a demand it should have resisted. That framing casts Ottawa as a bystander watching a province misbehave. While no toll yet exists, no amount is fixed, and no operator is bound, the record rather shows Ottawa is helping create the plan rather than merely observing it. What exists is a commitment to negotiate a pay scheme by a central government, never mind that its declared program runs the other way.

Let us recall the origins and fate of the scheme. Then-Premier Christy Clark thought of it first. In 2012, she set a fair share of the economic benefits as her fifth condition for any heavy oil pipeline crossing her province, and in 2017, she collected: Kinder Morgan agreed to pay British Columbia up to $50 million a year for 20 years.

Clark’s successors wanted more than a bargain with a company. In 2018, the Horgan government proposed a permit scheme built to control heavy oil moving through the Trans Mountain pipeline. The B.C. Court of Appeal ruled unanimously in 2019 that regulating an interprovincial pipeline belongs exclusively to Parliament, and in 2020, the Supreme Court dismissed the province’s appeal from the bench. The attorney general whose office carried that losing appeal was David Eby. The premier who signed the July 2 agreement is the same man. Eby is a master of consistent contortion.

The contortion has a fiscal logic. Eby has gone all in on liquefied natural gas to rescue B.C.’s strained finances, and the bet leans on Alberta more than he admits. That dependence helps explain his search for new revenue from Alberta’s petroleum economy.

As Falice Chin documented in March, drilling in the shared Montney basin is sustained by its liquids, above all the condensate that oilsands producers buy to dilute bitumen for pipelines. Producers drill for the diluent; the export gas is largely the byproduct. B.C.’s gas revenues, Chin notes, are “partially underwritten by demand from Alberta’s oilsands.”

Having conceded on gas and on the power of royalties, the premier has arrived at collecting from a resource his province neither owns nor produces.

The motive is Eby’s. The means are Ottawa’s. What the Constitution denies a province acting alone, a deal with the feds can place within reach. B.C. cannot pass a law aimed at making the pipeline pay; the courts settled that. But Ottawa, which regulates the pipeline, approves the project and owns the existing line, can make payment part of the new arrangement.

The July 2 text even recites that the federal government holds the authority to approve and build pipelines across provincial boundaries, then accepts that B.C.’s co-operation is conditional on the revenue commitments.

In effect, Ottawa has agreed to negotiate payment for exercising a power the Constitution assigns exclusively to Parliament. Ottawa wrote down that the power is federal, then agreed to negotiate a price for using it, payable to a province that holds no lawful claim. The Constitution assigns the jurisdiction to Parliament; the agreement nevertheless commits Ottawa to bargaining over its exercise.

Consider the timing. In June 2025, Bill C-5 became the One Canadian Economy Act, the statute behind the prime minister’s promise to strip all federal barriers from internal trade by Canada Day. A year and a day after that Canada Day, the same Carney government agreed to negotiate an annual charge tied to the movement of Alberta oil across British Columbia to the ocean. The statute lifts paper burdens from goods crossing provincial lines. The new agreement envisages a cash burden on oil, doing the same thing.

Let’s not expect the courts to fix it. In R. v. Comeau, the 2018 case concerning beer crossing provincial boundary lines, the Supreme Court read section 121’s promise of free admission down to forbid only measures whose primary purpose is restricting trade. Any government with a competent drafting team can recite another purpose. Still, a future challenger would enter the agreement into evidence, since money for passage, stated plainly as “economic upside,” is the very thing the section still forbids.

The presumption is already travelling well. At Charlottetown recently, Manitoba Premier Wab Kinew said he was “willing to entertain” an Alberta-to-Ontario pipeline. The remark made headlines as a concession, though Parliament holds the jurisdiction. The July 2 agreement reinforces the mistaken presumption that passage across a province is something to be negotiated rather than governed by constitutional jurisdiction.

Mintz is right about the nature of the thing. Where his account falls short is the exculpation of Ottawa, which convened the parties, accepted the principle, and fixed the deadline, against its own declared principles and a Supreme Court signal to uphold the B.C. legal decision. Those are the acts of a participant, not a bystander.

Confederation promised Alberta admission to a common market; the July 2 agreement opens negotiations over a never-ending fare. And although Eby is the one in covetous need, the toll booth is federal.

Dr. Marco Navarro-Génie is the Vice-President of Research and Policy at the Frontier Centre for Public Policy. An expert on radical revolutionary movements and political identity, he is a recipient of the King Charles III Coronation Medal for exemplary public service. He is the author of three books, including the 2023 release Canada’s COVID: The Story of a Pandemic Moral Panic, co-authored with Barry Cooper.