Kinder Morgan drops lawsuit against protesters

Kinder Morgan is dropping its lawsuit against several people protesting its recent pipeline study work on Burnaby Mountain, but at least one defendant plans to continue his fight.

The company is proposing to almost triple capacity of its Trans Mountain pipeline between Edmonton and Burnaby. In November and December it ran into opposition from protesters as it tried to drill into Burnaby Mountain as part of geotechnical study work to determine if the pipeline could be routed through it in a tunnel.

In response, the company filed a civil lawsuit against five named defendants—Adam Gold, Mia Nissen, Stephen Collis, Lynne Quarmby, and Alan Dutton— seeking damages it estimated at more than $5 million per month of delay.

The work went ahead after the company succeeded in getting court injunctions preventing protesters from getting in the way of its crews.

In December, the company said in a press release Friday, Trans Mountain offered to discontinue the lawsuit. “There was no financial incentive offered other than the commitment that Trans Mountain wouldn’’t seek court costs. Two of the five defendants agreed.”

“In the interest of conciliation, providing certainty for all involved,” the company said, it has filed a unilateral discontinuance which does not require agreement from the defendants.

“It does mean that Trans Mountain could be responsible for court costs, which the company is willing to pay, in order to demonstrate, without any doubt that it has no intention of pursuing civil action in this case.”

The move is delivering on a promise made by Kinder Morgan Canada president Ian Anderson not to pursue the lawsuit, the release said.

“Even though damages were suffered by the company as a result of the protests that occurred on Burnaby Mountain, Trans Mountain has maintained that it will not pursue compensation for these damages.”

While relieved, defendant Alan Dutton has no plans to go quietly.

A few weeks ago he went to B.C. Supreme Court in an attempt to have the lawsuit dismissed but was unsuccessful.

“We were expecting them to settle and they’ve done so,” Dutton said Friday. “There’s still some outstanding issues, and we have to explore them with my legal team but in my view the issue is not settled.”

Dutton said his lawyers will be looking into the matter of recovering his legal costs and being compensated for damage to his reputation and loss of his time dealing with the matter.

“We have tens of thousands of dollars spent defending ourselves in court and Kinder Morgan is just not going to get away with this kind of action,” he said.

“I’m just happy, though, that Kinder Morgan realizes the publicity nightmare that they’ve caused for themselves. I’m glad they’ve taken this course of action, and perhaps it’ll slow them down in the next phase as they approach their application to the [National Energy Board].”

Dutton said he’ll continue his campaign seeking provincial legislation to prevent SLAPP (strategic lawsuit against public participation) lawsuits, those designed to intimidate opposition into silence, which he claims this suit was intended to be.

For now, the end of the lawsuit means he can breathe easier.

“I’m actually quite happy but there’s still a long way to go yet.”

wchow@burnabynewsleader.com (Editor’s note: This article was originally published by the Burnaby News Leader, which ceased operation on October 1, 2015.

SFU prof takes on science policy critic role with Greens

by Jennifer Moreau

SFU professor Lynne Quarmby is taking on a science policy critic role with the federal Greens, even though she hasn’t run in an election yet.

Quarmby’s will evaluate government legislation and policy and whether it’s based on scientific evidence.

“I’m excited about it. I feel it’s a tremendous responsibility, but it’s also a great opportunity to bring my experience in science into the political arena,” Quarmby said. “(The Conservatives) have showed complete disregard for science, in particular, environmental science.”

Quarmby, who recently moved to Burnaby, is head of SFU’s molecular biology and biochemistry department and is running for the Greens in the new federal riding of Burnaby North-Seymour.

Quarmby made headlines as one of the five protesters named in a multi-million-dollar Kinder Morgan suit seeking an injunction against anti-pipeline protesters on Burnaby Mountain.

Green leader Elizabeth May is one of two Green party members who hold seats in Ottawa, but the party still appoints people to its shadow cabinet. All of the shadow cabinet members plan to run in the next federal election.

Burnaby wants details on Kinder Morgan advertising

City submits motion to NEB for info on costs of ads

by Jennifer Moreau

The City of Burnaby is taking aim at Kinder Morgan’s pro-pipeline advertising campaign and questioning whether consumers will end up paying for the publicity.

The city filed a motion Thursday with the National Energy Board asking for several things, including details on how Kinder Morgan is funding its ad campaign, and whether the money is coming from extra “firm service” shipping fees approved by the National Energy Board.

“It’s a bad policy, regardless of what aspect of the project proposal the fees are paying for. But if these federal government-sanctioned shipping fees are funding Kinder Morgan’s current multi-million-dollar ad campaign, it would be particularly inappropriate,” Burnaby Mayor Derek Corrigan said in a media release. “We want to know whether or not some of these ‘‘firm service fees’’ are being used to pay for the cost of Kinder Morgan’s advertising that is clearly nothing more than an attempt to improve their tainted corporate image.”

A couple years ago, the National Energy Board gave Kinder Morgan permission to charge some of its Westridge Marine Terminal customers firm service fees averaging an extra $1.45 per barrel of oil. Those fees total roughly $29 million annually, according to Ian Anderson, president of Kinder Morgan Canada. The money is used to offset the pipeline expansion’s development costs, so if the project is rejected, there is no risk to investors.

Robyn Allan, former CEO of ICBC, cried foul and suggested those costs would ultimately be passed onto consumers. Anderson refuted her argument in a letter to the Burnaby NOW last July, saying the oil will sell at a higher prices overseas.

Allan maintains that will drive up crude costs in Canada, and refineries will pass those costs onto consumers.

The city is asking the NEB to step in and issue orders to obtain Kinder Morgan’s projected advertising costs and details on how they are funded, as well as an order to make sure Kinder Morgan’s firm service fees aren’t used for advertising costs. The city also wants the NEB to order Kinder Morgan to inform the public on the extent of the pipeline expansion and its potential risks and impacts.

In the motion, the city’s lawyer, Greg McDade, notes that some of the advertising has appeared in Burnaby newspapers and had been targeting Burnaby residents.

Scott Stoness, a vice-president with Kinder Morgan Canada, said the company’s advertising campaign is part of Kinder Morgan’s efforts to engage with and provide information to as many British Columbians as possible.

“The information highlights Trans Mountain’s company history, culture, and commitment to safety,” he said in an emailed statement to the NOW. “Consumers are not paying for our advertising, as (the) price of gasoline in the Lower Mainland is mostly dependent on world market prices. Prices paid by local consumers at the pumps are driven by world oil prices, not Alberta oil prices, so any increase in price per-barrel as a result of Alberta producers accessing world markets due to expanded pipelines does not mean higher gasoline prices for locals.”

Stoness explained that many factors affect gas prices, including taxes, refining costs, seasonal fluctuations and general rules of supply and demand.

“The cost of crude oil makes up less than 50 per cent of the ultimate price you pay at the pump,” he said.

When Mother Earth Has Nothing Left To Give, We Must Slow Down

When Kinder Morgan’s Trans Mountain pipeline expansion project review began in April 2014, it was on a fast track to approval. The 2012 changes to the National Energy Board Act established a truncated process that would have seen a decision on this massive project by fall 2015.

However, the project has since hit multiple snags, including a delay in any approval until spring 2016, unprecedented protests relating to Kinder Morgan’s drilling activities on Burnaby Mountain, and increasing community and First Nations opposition.

One of the drivers of this frustration is the NEB’s continued refusal to hold public hearings in the part of the country that will arguably be most directly affected by the proposal: Burnaby, the pipeline terminus and the point at which the bitumen would be loaded onto tankers to travel through the Salish Sea.

Thus, in 2014, First Nations and indigenous groups that wanted to give oral evidence to the NEB panel about their traditions, their worries, and their way of life were required to attend at other locations in the province.

In late October, representatives of four United States Tribes — the Lummi, Suquamish, Swinomish, and Tulalip Tribes — travelled up the Fraser Valley to Chilliwack to share their history, their concerns, and their worries about the Kinder Morgan expansion with the NEB. This is one of the lesser-told stories of 2014.

The four tribes have lived on the coast and relied on the Salish Sea for their way of life since time immemorial. Like the Tsleil-Waututh First Nation — whose lands and waters are in and around the tanker terminal in Burnaby — they are all Coast Salish nations. While most people recognize the Canada-U.S. border as the political separation between the two countries, for the Coast Salish, that border is simply a line on a piece of paper. Better than most, they understand that the potential environmental and cultural harms Kinder Morgan’s project could inflict won’t stop at the border.

Along with their representatives from Earthjustice — Ecojustice’s sister organization in the United States — these tribes are taking a strong stand with Canadian First Nations to oppose this pipeline. The importance of place is such that these tribes are dedicating time, resources, hearts, and minds to opposing Kinder Morgan’s proposal.

The reason is simple: The way they see it, Mother Earth has nothing left to give.

One by one, indigenous elders, leaders, youth, and fishermen stood before the NEB panel. They spoke of their connection with the sea and its resources and how any expansion of tanker traffic would further harm their lives, their economies, the ongoing practice of traditional ways of life, and the tribes’ continual efforts to protect the health of the Salish Sea. They expressed their deep concerns about increased threats to the Salish Sea, such as the risk of a catastrophic accident and oil disaster — something that seems inevitable with the large-scale pipeline expansion.

The testimonies shared by these Tribes and other Coast Salish Nations are a potent reminder that deep knowledge and connection to land and sea is something that we all need to develop.

From the fur trade, to forestry, to oil and gas development, Canada’s industries have a long history of drawing down resources and moving on — showing little concern for the finite capacity of the natural world or respect for connection to place. But that pattern cannot continue indefinitely. Tar sands extraction is more extreme than previous resource grabs. Not only are we running out of oil to extract and forests to log, the atmosphere is hitting the point where it can no longer absorb our carbon emissions without grave climate impacts.

We must learn from people who have a deep connection to place and accept that the earth has limits that must be respected. We must recognize that the harmful impacts from this pipeline will not respect international borders.

Communities like the U.S. Tribes and Canadian First Nations that have been here since time immemorial remind us that we who live here now have a duty to protect our home. Unless we do, we will continue down the path laid out by multinational energy companies, where nature and the opposition of local communities are seen as mere logistical challenges to be overcome by re-routing pipelines through mountains and writing fat cheques. And eventually we will still have to come to terms with the reality that Mother Nature has no more to give.

This piece was written by Ecojustice staff lawyer Karen Campbell. Ecojustice is one of Canada’s leading charities using the law to protect and restore Canada’s environment. Learn more at ecojustice.ca.

 

http://newsalberta.ca/2015/01/23/when-mother-earth-has-nothing-left-to-give-we-must-slow-down/

City of Burnaby seeking more answers on pipeline

City asks 640 questions in second round of information requests in Kinder Morgan pipeline hearing

by Jennifer Moreau

The City of Burnaby wants more answers on Kinder Morgan’s pipeline plan, but the mayor isn’t getting his hopes up.

Last Thursday, the city filed 200 pages – with 640 questions – in the second round of information requests for the National Energy Board hearing on the plan to expand the Trans Mountain pipeline.

“Based on the disrespect for our questions that Kinder Morgan has demonstrated to date, we are not optimistic about getting meaningful responses,” Mayor Derek Corrigan stated in a media release. “Nevertheless, because it is the only option available to us, we will again try to get answers within the framework of the flawed National Energy Board process through which this proposal is being reviewed.”

The NEB used to allow intervenors to orally cross-examine companies in pipeline hearings, but those questions now have to be put in writing, hence the information requests. The city’s latest questions probe the company’s emergency response plans and the project’s impact on health, safety and the environment.

According to the mayor, 62 per cent of the city’s first list of questions, filed in the initial round of information requests in May last year, went unanswered or only partially answered. The city, along with other intervenors, complained about the non-responses.

“So while this should simply be an opportunity to ask new questions – which we are doing- it has, disappointingly, also become a second attempt to get our first questions answered,” Corrigan said.

The City of Burnaby’s first question relates to Kinder Morgan’s emergency management plan, as the city wants an unredacted copy. On Friday, the NEB released a decision allowing Kinder Morgan to keep parts of overall emergency response program redacted. (See related story here.)

When the NOW contacted Kinder Morgan with questions, the company sent an emailed statement from Scott Stoness, one of Kinder Morgan Canada’s vice-president.

“Jan. 15 was the deadline for information requests as part of the regulatory review, and we will be reviewing all questions, including the (information requests) filed by the City of Burnaby. The questions cover a variety of subjects including safety, security, and emergency and spill response, and many of the questions are very detailed and involved. We welcome the questions from the City of Burnaby. Kinder Morgan is committed to a transparent and full process as has been defined by the NEB. Trans Mountain will answer all questions that fall within the scope of (the) NEB hearing.”

Meanwhile, the City of Vancouver has filed close to 600 questions for Kinder Morgan with similar complaints, that more than one-quarter of its questions from the first round weren’t answered. The provincial government also filed more than 110 pages of questions. Kinder Morgan has until Feb. 18 to respond.

Province needs more details on Kinder Morgan’s emergency plan

by Jennifer Moreau

The National Energy Board is allowing Kinder Morgan to keep parts of its emergency management plan for the Trans Mountain pipeline system redacted for commercial, security and privacy reasons, despite the provincial government’s insistence on more details.

The provincial government asked for the missing information, along with an oil spill response plan, in a Dec. 5 motion filed with the NEB.

“The province has found the redactions made by Trans Mountain to be excessive, unjustified and prohibitive. The redactions thwart the province’s examination of the EMP (emergency management program) documents, and preclude a thorough understanding of Trans Mountain’s EMP by the board and all intervenors,” the government’s motion reads.

Some of the missing information includes people’s names and phones numbers, bomb threat checklists and valve locations. A section on the Burnaby tank farm is missing information on site drainage and maps for the terminal and the evacuation zone.

But in a decision released last Thursday, the NEB sided with Kinder Morgan.

“In this instance, the board is satisfied that sufficient information has been filed from the existing EMP documents to meet the board’s requirements at this stage in the process,” the response reads. The board went on to explain that the province will be privy to some of the missing documents as Kinder Morgan consults “implicated parties” to update the plans for the proposed pipeline expansion.

Pending NEB approval, Kinder Morgan plans to twin the Trans Mountain pipeline, which would nearly triple the line’s capacity from 300,000 barrels per day to 890,000, while increasing tanker traffic nearly seven fold.

As for the oil spill response plan, the NEB cited Kinder Morgan’s line – that it can’t file what it doesn’t have – because Kinder Morgan is waiting for information from Western Canada Marine Response Corporation, the company in charge of cleaning up oil spills on water.

Several municipalities wrote to the NEB in support of the province’s request for more information, including Burnaby, Vancouver, Surrey, Langley, Abbotsford, North Vancouver and West Vancouver, as well as First Nations bands and environmental groups.

Kinder Morgan filed most of its emergency management plan with the NEB last October, which means the documents are publicly available through the board’s website. Kinder Morgan initially wanted to keep the documents secret for proprietary reasons, which the NEB sometimes allows. In this case, the board ruled that public interest outweighed Kinder Morgan’s request to keep the plan confidential.

Burnaby Mountain ‘warrior’ stands up for us all

Author
Betty Krawczyk

Dear Editor:

Burnaby Mountain Warrior? It only takes one. And Alan Dutton, a retired professor, certainly takes that title in my opinion. He is the only one with the guts and the ability to stand up to what has been a conspiracy between the courts of this province, the resource extraction corporations and both provincial and federal governments. What do I mean by conspiracy?

Because all three of the above conspire to facilitate the use of injunctions to impose the intellectually conniving perceived rights of corporations over the natural rights of the earth and Her inhabitants. When citizens try to stop an obvious harm to land, waterways and habitat for all living things, the corporations turn to the courts. They know the B.C. courts are their friends. Most judges in B.C. were corporate lawyers before becoming judges. They are used to fighting for the artificially perceived rights of death dealing corporations rather than the natural rights of living things to clean water, food, and air to breathe.

But what are these injunctions? Most people know that in some way injunctions make people stop protesting a contested area like Burnaby Mountain, and some even know these injunctions are precipitated by something called SLAPP suits. What is a SLAPP suit? When I heard the actual legal title I was astonished. SLAPP stands for Strategic Lawsuit against Public Participation. How anti-democratic! And blatantly anti-public! And anti-everything except the rights of courts, governments and the corporations they serve. However, with a copy of a SLAPP suit in hand to show they have civilly sued a protester, the corporation can take this back to the court and ask for an injunction (or even before the suit is filed). The judge will most certainly give the corporation the injunction requested (they refuse so rarely it isn’t even worth mentioning) et voila!

Now anybody who steps up to try to block any bit of the corporation’s right to do whatever they chose to do to an area will now be breaking a judge’s order.

The court seems to be taking a slightly different tack with Burnaby Mountain protesters than they did with me in the logging protests; instead of the humiliating demand for an apology to the court that I refused, the protesters are agreeing to some sort of settling out of court. Except for Mr. Allan Dutton, who is refusing to settle and is challenging the right of the courts to give out injunctions instead of using the Canadian Criminal Code to deal with protesters.

Okay, so how would that fix things if the Criminal Code was used instead? The Criminal Code has instructions for just about any crime or misdemeanour one can think of. Blocking a road is against the law. So is refusing to move when a police officer commands it. So the police would simply arrest whoever was breaking the law. And then in court a protester could have an actual trial where the contest would be between the protester and the corporation instead of between the protester and the judge for breaking the judge’s order. That’s why the corporations so love injunctions.

The protester can’t argue in court his or her reasons for trying to stop a destruction of the earth when one is arrested under an injunction. There is no defence for breaking a judge’s order. The question just becomes one of if the protester knew about the injunction and if he or she broke the injunction by refusing to move. That’s it. That is what the Strategic Lawsuits Against Public Participation (SLAPP suits) culminate in, injunctions and humiliating retreats for the protesters.

Except occasionally, for whatever reason, a protester will refuse to retreat. Like Alan Dutton.

This resounds among the populace. It’s heartwarming. It’s hopeful. Courage is inspiring and it’s also contagious.

Alan Dutton, I understand, is to be back in the courtroom Jan. 19. I wish I could be there. Those of you who can, will you please attend and bear witness? And report the results? A warrior is going to be on the stand.

Betty Krawczyk, by email

Protester fails in court challenge to Kinder Morgan legal attack: Vows to fight back

Author
GENE MCGUCKIN

A failed two-day court challenge to an anti-democratic, corporate legal attack is the latest chapter in the 2014 Battle of Burnaby Mountain over the Kinder Morgan tar sands pipeline expansion project.

The B.C. Supreme Court ruled January 14 that stifling Alan Dutton’s right to protest was not the primary purpose of a multi-million-dollar civil suit and, therefore, his application for a summary dismissal of the case was denied. In an unexpected additional blow, he was ordered to pay the company’s costs for the action.

As revealed in an wide-ranging interview with the Vancouver Sun, the setback has left Dutton unbowed.

A retired academic and active member of Burnaby Residents Opposing Kinder Morgan (BROKE), Dutton has indeed been an active protester in the anti-pipeline battle. His challenge sought judicial recognition that he became a victim of strategic litigation against public participation (SLAPP) when he and four other defendants were sued October 30 by KM.

With the support of fellow BROKE members Dutton filed his mid-December application for a summary judgment to include dismissal of Kinder Morgan’s damage claims and an “Order for special costs payable by the Plaintiff to the Defendant.”

In its suit, the energy giant accuses the defendants of conspiracy to commit illegal acts of trespass, nuisance, assault, intimidation and intentional interference with contractual relations. Their acts, the claim says, resulted in “unlawful interference” with “field studies” required by the National Energy Board’s (NEB) review of the expansion project.

A related Kinder Morgan court document projects that each month of delay would cost the company $5,643,000 in expenses, as well as $88 million in lost revenues.

Dutton vows to appeal the court’s ruling, if there are grounds to do so. “I never committed any of the alleged conspiracy, assault, trespass, etc.,” he told this writer. “The charges against me were never proved and don’t have to be under the rules the court followed. Those rules disadvantage and silence defendants in the face of huge lawsuits by large corporations.”

Just before Christmas the energy transnational offered to “discontinue” the suit if defendants agreed not to claim costs. That deal was taken by the other four defendants, whose legal expenses had been paid by an enthusiastic public response to an on-line crowdfunding appeal.

Now, it is not so clear the deal actually settled the suit. A lawyer to two of those defendants barged into the Dutton hearing and was finally permitted to address the court. He expressed his clients’ unease that a discontinuance of the lawsuit was not as final as a dismissal and left them open to further action.

Dutton declined Kinder Morgan’s deal in order to fight the suppression of free speech and freedom of assembly, which he sees as the SLAPP suit’s real goal.

“The issue here is our democracy and the fundamental right to protest,” Dutton told the Burnaby NOW. “It’s to show people we can fight big multinational corporations, and we can be successful.”

On the first morning of Dutton’s application hearing, B.C. Civil Liberties Association Executive Director Josh Paterson, held a press conference with Dutton’s lawyer Neil Chantler. Paterson told reporters that Dutton “is basically making the argument that the reason for which this lawsuit is brought is actually improper and was to shut down people’s lawful and democratic expression.” The BCCLA also put out an “advisory” on the case.

Hoping his action would discourage future SLAPP suits and help bring anti-SLAPP legislation back to B.C., Dutton accepted that he could face growing legal expenses. Crowd-funding and other donations had covered most of his legal costs before this week’s hearing. But this challenge and the court’s unexpected turn-about on awarding costs have added thousands more in legal expenses.*

Kinder Morgan ‘s suit came after a two-and-a-half year battle against its plan to “twin” a 60-year-old pipeline not designed for, but now carrying, tar sands diluted bitumen through Burnaby to a supertanker marine terminal on the municipality’s northern border.

Kinder Morgan ‘s latest revision to the intended route for the “twinned” pipeline has it tunneling under Burnaby Mountain, home of SFU and of a large municipal conservation area.

Kinder Morgan ‘s expansion project would triple the bitumen being piped through suburban Burnaby to nearly 900,000 barrels per day. It would also triple — to five million barrels — the storage capacity of a tank farm on the side of Burnaby Mountain (uphill from residential neighbourhoods, schools, parks, etc.). And it would increase seven-fold, to 400 loads a year, the super-tanker traffic under two bridges across the narrow, busy Burrard Inlet, which is flanked by Vancouver and four other cities in addition to Burnaby.

Opposition to the project has centred on concerns about climate change, as well as about spills on land (already happened) and water, toxic fumes from the marine terminal and tank farm, fire and leaks from the latter (with no response plan in place), and earthquakes affecting the tunneled pipeline section.

Burnaby-Douglas NDP MP Kennedy Stewart has been a steady, engaged and persuasive voice against the Kinder Morgan expansion, while Burnaby North Liberal MLA Richard T. Lee has been living on another planet.
Burnaby Mayor Derrick Corrigan and his entire city council have held and attended several public meetings explaining their objections in detail.

In addition, the city fought several losing court battles to stop Kinder Morgan work on Burnaby Mountain. Those activities resulted in a September opinion poll that revealed an astonishing 93 per cent of citizens were aware of the Kinder Morgan expansion project and 68 per cent of those were opposed. Affirming this result was Corrigan’s November 15 re-election to a fifth term with 68.5 per cent of the vote and a three-peat of his party’s sweep of council seats.

BROKE, through holding community meetings and rallies and through its website, has worked diligently to educate and mobilize the community against the project since it announcement in 2012.

This past summer and fall, another small group calling themselves “caretakers” came together on the mountain to provide vigilant patrols of areas where Kinder Morgan crews were expected to work. As the fall unfolded, another layer of “land defenders” formed around the “caretaker” nucleus.

In late October, some protestors came into confrontation with a crew of contractors hired by Kinder Morgan to do work at several sites on and around Burnaby Mountain. This led with startling rapidity to the lawsuit and an application to B.C. Supreme Court for an injunction barring protesters from several areas on and around the mountain.

That injunction, which the B.C. Supreme Court did grant, gave birth to a pair of 24/7 work camps ringed by police. It also drew hundreds of protesters to the mountain day after day. Between November 19 and 27, over 100 people “crossed the line” into no-go zones ordered by the court and were arrested, only to have their contempt-of-court charges thrown out when Kinder Morgan revealed it had given the court the wrong GPS coordinates to designate the no-go zones.

Meanwhile, various other constitutional and procedural challenges to the Kinder Morgan project and to the NEB review process of it have been launched by the City of Vancouver, by the Tsleil-Waututh Nation, by a citizens group and by Robyn Allan, an economist and former president and CEO of the Insurance Corporation of BC who has become a formidable anti-pipeline crusader.

Dutton pledges to continuing the fight and is still committed to new anti-SLAPP-suit laws, “a fight both the BCCLA and West Coast Environmental Law have indicated they would support,” he said.

Gene McGuckin is a resident of Burnaby who worked for 29 years in a Burnaby paper recycling mill. He is a member or BROKE and of the Vancouver Ecosocialist Group.

*In an email to this writer Dutton emphasized that a new fundraising effort is underway, again primarily through crowd-funding.

Pipeline protester fights Kinder Morgan lawsuit

by Stefania Seccia, QMI Agency

VANCOUVER — A Burnaby, B.C. man argued in court on Tuesday that a multi-million-dollar lawsuit filed by Kinder Morgan’s Trans Mountain Pipeline is an attempt to stifle democratic activities.

Alan Dutton, a member of Burnaby Residents Opposing Kinder Morgan Expansion and a defendant in the $5.6-million lawsuit seeking damages against the protesters, is refusing to settle out of court.

In B.C. Supreme Court on Tuesday, Dutton said the case was an abuse of process and highlighted the need for anti-SLAPP (Strategic Lawsuit Against Public Participation) legislation.

Josh Paterson, the executive director of the B.C. Civil Liberties Association, said it’s up to the defendant and his counsel to prove that the lawsuit filed by Kinder Morgan was a strategic lawsuit against public participation.

“From our perspective, we’ve said that there needs to be legislation in this province that makes it easier and faster for so-called SLAPP lawsuits to be identified and disposed of,” he said.

Paterson said the province had legislation in place until 2001 that expedited the court’s determination as to whether a case was a SLAPP suit.

The BCCLA is calling on the province to reinstate such legislation.

While B.C. Minister of Justice Suzanne Anton was unavailable for an interview, a ministry spokesperson said the province “is in line with most Canadian jurisdictions which do not provide for what is sometimes described as ‘anti-SLAPP’ legislation.”

“The challenge with such legislation is determining the basis for dismissing a civil claim prior to a hearing on its merits,” the spokesperson wrote in a statement.

The decision on whether a case is legitimate or not is up to the court’s discretion, according to Section 18 of the Supreme Court Act, which outlines general criteria for what constitutes a frivolous claim.

Trans Mountain deferred comment about the court case until it is officially concluded.

The case will be back in court on Wednesday.

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How Trans Mountain Project Will Pump Profits to Its Texas Owners

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Author
Robyn Allan
U.S.-based Kinder Morgan says its Trans Mountain expansion project represents financial and economic benefit to the Canadian economy, and our federal and provincial public treasuries.

Who would spend a year investigating such claims, rooted as they are in complex tax law, regulations and corporate structure? I did.

What I found made me conclude the opposite — Kinder Morgan drains financial wealth from our economy and does not pay its fair share of taxes.

I have written about the project’s complicated design to yield meagre tax revenues for Canadians in a previous Tyee article.

Now let me examine just how Canadian Kinder Morgan Canada Inc. is. The answer: hardly at all.

Pop the hood and take a look at Kinder Morgan’s inner workings and the idea that this is a Canadian company operating for the good of Canadians is dispelled quicker than Kinder Morgan can say injunction.

If you are bored by arcane discussions of corporate structure and governance, that may be just what Kinder Morgan is hoping.

Please bear with me. It’s critical we know who really runs, and benefits from, Kinder Morgan Canada Inc.

From the boys who brought us Enron

Kinder Morgan Canada is little more than a Canadian face for one of the 50 richest American billionaires, Richard Kinder, and his Houston, Texas, based executive team — many of them the same boys who brought us Enron.

Enron was a U.S. energy giant responsible for one of the biggest accounting frauds in history. According to Robert Roach, U.S. Senate counsel and chief investigator into Enron’s collapse, Enron’s executives began falsely inflating revenues and cheating on taxes way back in 1992 (page 16 Volume 1 of 2). When it became apparent what they were up to, the house of cards imploded. Enron filed for Chapter 11 bankruptcy on Dec. 2, 2001.

It is common knowledge that Richard Kinder — chair and CEO of Kinder Morgan — worked at Enron for 16 years. By the late 1980s he was vice-chairman of Enron’s Board, becoming its president and chief operating officer (COO) in 1990. Kinder was instrumental (see page 109 and 119) in helping establish some pretty creative tax avoidance structured transactions the company became infamous for.

Kinder and his partner William Morgan — another key player at Enron — bought Enron Liquids Pipeline Company from Enron in early 1997. What is not generally understood is Kinder himself set Enron Liquids Pipeline Co. on its path five years before he bought the company. Kinder was a member of Enron Liquids Pipeline Co.’s Board of Directors when the company filed its initial public offering (IPO) with the U.S. Securities and Exchange Commission (SEC) in 1992.

It is also not common knowledge that at least four other key Kinder Morgan executives employed in senior positions today are Enron alumni. Three of them were with Enron when it went under and the SEC eventually brought one before the U.S. District Court on fraud charges.

Current Kinder Morgan elite who held senior positions at Enron include Steven J. Kean, Kinder Morgan’s president and COO. Kean was Enron’s executive vice-president and chief of staff in charge of human resources, government affairs, public relations, corporate communication and administration when the company filed for bankruptcy. From 1997 to 1999 he was Enron’s senior vice-president of government affairs. Kean spent 12 years at Enron — he started with the energy giant in 1989. What’s strange is that Kean’s corporate bio on Kinder Morgan’s site makes no mention of the dozen years Kean spent at Enron.

Kean must be clever. While executive vice-president at Enron he sold (page 53) more than $5.1 million in Enron stock including more than 60,000 shares on Jan. 31, 2001. The highest price Enron shares reached was $90.75 in August 2001. A year after Kean sold more than 60,000 shares at $80 each, Enron’s stock closed at 42 cents a share.

Jordan H. Mintz is Kinder Morgan’s chief tax officer and a member of the board of various Canadian Kinder Morgan subsidiaries. Mintz was the vice-president of Enron’s tax division from 1996-2000 and became general counsel for Enron Global Financial in October 2000. He joined Kinder Morgan in 2006. The U.S. government’s Securities and Exchange Commission sued Mintz in 2007 for violating anti-fraud laws, aiding and abetting Enron’s violations of anti-fraud and periodic reporting provisions, and lying to auditors while he was general counsel.

In January 2009 the SEC settled its lawsuit against Mintz — he paid a civil penalty and was suspended from practicing as a lawyer before the SEC for two years.

Two other senior Kinder Morgan executives are Enron alumni — Dax Sanders, now Kinder Morgan’s vice-president of corporate development and David P. Michels, Kinder Morgan’s vice-president of finance and investor relations. Both were hired into Enron’s Analysts and Associates Program — Enron’s boot camp that fed aggressive university grads into Enron’s work force at mid-level positions where they would rotate through different corporate divisions within Enron. Analysts and Associates learned how to structure complex deals, obtain financing, work the trading floor and generally became steeped in Enron’s corporate culture.

A pocket full of radicals

Dividend growth is key to Kinder Morgan’s stock price, but dividend growth needs revenue growth. This is why Trans Mountain’s new pipeline is so important to Kinder Morgan. The company plans to triple pipeline capacity while siphoning away more than five times the financial return. Kinder Morgan predicts (page 3) $850 million a year in cash flowing out of the Canadian economy to U.S.-based shareholders when Trans Mountain’s expansion becomes operational.

Trans Mountain’s expansion is the biggest single project on Kinder Morgan’s capital expenditure back log. It represents more than 30 per cent of planned expenditures. Without Trans Mountain, Kinder Morgan’s financial prospects severely diminish. Kinder Morgan won’t back down from Trans Mountain’s expansion without a tough fight and they will never give the impression they aren’t winning. Their stock price can’t afford it.

This may be why former Enron employee and Kinder Morgan vice-president of corporate development Dax Sanders characterized the Trans Mountain Expansion project as a done deal. He was speaking at the Bank of America Merrill Lynch Global Energy Conference in Miami on Nov. 14, 2014.

Sanders assured (minute 25) his audience that Kinder Morgan is “very optimistic” about the pipeline and that the company is “expecting the NEB authorization… the federal government is enormously supportive of it… the real opposition is some of the few pockets of the more radical views in the lower mainland; in Burnaby and Vancouver.”

It hard to understand how Sanders can characterize a majority of British Columbians opposed to Kinder Morgan’s twinning — including the mayors and municipal representatives of Vancouver, Burnaby and the entire North Shore — as a “few pockets of the more radical views.”

All roads lead to Houston

All Kinder Morgan’s big decisions are made in Houston. Whether it’s in-house legal, human resources, project financing, information technology, communications, audit, tax planning, insurance — the orders come from Texan deal makers.

Kinder Morgan Canada Inc. is an operating arm of the U.S. multinational. Its president, Ian Anderson — who many of us recognize from TV ads — has two people directly reporting to him aside from an executive assistant: a vice-president of operations and engineering, and a vice-president of regulatory affairs and finance. All other corporate functions report to Houston.

On operating matters, Anderson himself reports to Steven Kean. When he files stock trading statements with the U.S. SEC, Anderson identifies himself as a Kinder Morgan Inc. vice-president.

This is where the complex corporate structure begins to come into the picture and helps reveal Kinder Morgan Canada Inc. as more of a mask than a face. Kinder Morgan Canada Inc., registered in Alberta, does not own the Trans Mountain Pipeline system, nor does it own any pipeline, storage, terminal or other assets.

Corporate structure

As shown by the Corporate Structure Chart I’ve prepared to accompany this article, Trans Mountain’s system is owned by corporate entities that feed from Trans Mountain Pipeline LP registered in Alberta, through a myriad of entities.

Click to enlarge (some browsers may require a second click to further enlarge image). Kinder Morgan corporate chart prepared by Robyn Allan. Graphic design by Karl Jensen.

Some of these are ULCs. ULC stands for Unlimited Liability Company. These unique entities only exist in Nova Scotia, Alberta and B.C. They can offer tax minimization opportunities to U.S. parent companies because of their special treatment under the U.S.-Canada Income Tax Treaty.

Trans Mountain Pipeline LP feeds into entities including Trans Mountain Pipeline ULC registered in Alberta, onto Kinder Morgan Canada Company ULC registered in Nova Scotia.

Then we cross the border and into Texas with Kinder Morgan Operating LP “A,” to Kinder Morgan Energy Partners Ltd., to Kinder Morgan GP Inc. to undisclosed entities and onto Kinder Morgan Inc. All U.S. entities are registered in Delaware because of lax laws, but their head office is in Houston, Texas.

The only corporate shares Trans Mountain’s operator Kinder Morgan Canada Inc. owns is its 25 per cent interest in Western Canadian Spill Services Ltd. (WCSS), a terrestrial spill preparedness and response organization that books profits because oil spills can, and do, happen. WCSS’ other shareholders are Enbridge Pipelines Inc., the Canadian Association of Petroleum Producers (CAPP) and the Explorers and Producers Association of Canada.

Kinder Morgan Canada Inc. operates more than Trans Mountain. It also operates the Puget Sound and Trans Mountain Jet Fuel pipelines, Westridge marine terminal, Vancouver Wharves and the North Forty terminal. Kinder Morgan Canada Inc. plays a minor role with the Cochin condensate import pipeline because Kinder Morgan product pipelines group out of Houston, Texas — Kinder Morgan Operating LP “D” — is responsible for operating the actual Cochin system.

The flow of funds gushing away from the Canadian economy takes a slightly different route than the rights over ownership of assets. But the difference is significant — it helps directors and officers as well as the corporate entity itself avoid liability, and assists in minimizing taxes. Companies bother with complex and sophisticated corporate structures because they pay. Whether or not the structure is outside the spirit of the law or represents tax evasion is a matter for the Canada Revenue Agency to investigate and determine.

Limited Partnership unit holders do not have any say in the day-to-day running of a business if they want to protect their limits of liability to what they have invested in the Limited Partnership. This is one reason why, for example, Trans Mountain Pipeline LP would send 99.99 per cent of its partnership unit based financial returns to Kinder Morgan Cochin ULC, but only 0.01 per cent to its general partner, Trans Mountain Pipeline ULC.

The funds then flow to Kinder Morgan Canada Co. — a ULC registered in Nova Scotia and a little bit to Kinder Morgan Terminals Canada — a ULC registered in Alberta. A simpler, more direct and less lucrative route would be to have Trans Mountain as a wholly owned company of Kinder Morgan Inc. in the U.S.

Understanding the corporate structure helps us see how millions of dollars a year generated from Kinder Morgan’s Canadian activities can be repatriated to the U.S. with very little Canadian tax obligation. According to Kinder Morgan, over the past five years for Trans Mountain alone, an average of $172 million a year flows to the U.S. with an annual average tax burden of $1.5 million a year — Trans Mountain received a cash tax refund in two of them.

It is not only distributable cash flow that Kinder Morgan Inc. in the U.S. siphons from the Canadian economy. The Houston based parent charges Kinder Morgan Canada Inc. for corporate services such as in-house legal, human resources, tax advice, auditing, information technology, procurement and insurance.

As well, Kinder Morgan Inc. — the 100 per cent indirect parent of Trans Mountain — is the sole-source financing for all Kinder Morgan activities in Canada. This means interest and fees related to project financing flow to Houston. This effectively removes an opportunity for our financial sector, and Canadian investors, to participate domestically and directly in these federally regulated transportation systems, including the $5.4 billion expansion project.

As the Corporate Structure Chart shows, Trans Mountain’s pipeline system begins as a limited partnership with 0.01 per cent of its units owned by its general partner Trans Mountain Pipeline ULC and 99.99 per cent of its units owned by Kinder Morgan Cochin ULC — the company that owns the Cochin pipeline system.

Recall that ULC stands for Unlimited Liability Company, and that these unique entities, existing only in Nova Scotia, Alberta and B.C., can diminish taxes to U.S. parent companies because of their special treatment under the U.S.-Canada Income Tax Treaty.

Kinder Morgan Cochin ULC imports condensate into Alberta to mix with bitumen so it can be exported back out as diluted bitumen. Cochin used to export propane from Canada until mid-2014. Condensate production and shipment from the U.S. is a Kinder Morgan profit centre.

Trans Mountain’s expansion means every barrel of diluted bitumen exported from Kinder Morgan’s Westridge marine terminal in Burnaby will include 30 per cent condensate imported from the U.S. Trans Mountain’s expansion is not the “made-in-Canada” crude oil export opportunity as is being pitched by Kinder Morgan. What’s more, co-mingling financial returns from Trans Mountain with Cochin’s net results can represent further financial opportunities to Kinder Morgan.

The Corporate Structure Chart higher in this article shows that after Kinder Morgan Cochin ULC has absorbed its returns from Trans Mountain with its operation of the condensate import line and returns from its partnership units in Kinder Morgan Canada Terminal LP, 99.93 per cent of distributable funds flow from Kinder Morgan Cochin ULC to Kinder Morgan Canada Company ULC and 0.37 per cent to KM Canada Terminals ULC.

Kinder Morgan Canada Company is a ULC registered in Nova Scotia with all but two of its directors and officers based in Houston. Mintz is the vice-president and chief tax officer of Kinder Morgan Canada Co. ULC.

Kinder Morgan Canada Co. is a company on paper. It is 100 per cent owned indirectly by Kinder Morgan Inc. through two disclosed and at least one or more undisclosed entities. Kinder Morgan Inc. purchased its 100 per cent ownership in all the Canadian entities as part of its $76 billion acquisition on Nov. 26, 2014. The purchase allows Kinder Morgan Inc. to legally inflate the value of the purchased assets to achieve significant tax write-offs — $20 billion over 14 years turning Kinder Morgan Inc. into a tax shelter according to Rich Kinder.

As part of my right as a qualified expert intervenor at the Trans Mountain expansion project, reviewed and regulated by the National Energy Board, I asked Kinder Morgan to provide a complete corporate structure and reconcile its public claims regarding its financial and tax contribution to the Canadian economy contradicted by its reports to investor analysts in the U.S. Kinder Morgan refused arguing that the request was outside the scope of the public interest review. The National Energy Board sided with Kinder Morgan.

Kinder Morgan’s unwillingness to be transparent and accountable is frustrating. The complicity in this by Canada’s regulatory agency — the National Energy Board — is in my view tragic.

The corporate structure illustrated in the chart accompanying this article is based on a selected rendering submitted to the National Energy Board by Kinder Morgan and independent research I have conducted which relies on numerous outside publicly available sources including federal and provincial corporate registries. Best efforts have been made to be accurate. It should be noted that Kinder Morgan has more than 250 individual corporate entities with as many as 20 registered in Canada — six of them ULCs. The corporate structure provided here focuses on the Trans Mountain system and its related entities.

The Trans Mountain expansion project is a project fronted by a very Canadian sounding Kinder Morgan Canada Inc. when it’s actually driven by Richard Kinder and his executive team in Houston, Texas, many of them ex-Enron employees. Their interests are not our interests.

Canadians are being asked to decide whether a three-fold expansion of Trans Mountain’s pipeline capacity is in our economic interests. At the very least we deserve to know who is running the show, how decisions are made, who gets the money and where it’s going.

Let me repeat. There is nothing I have found in the past year of my research into Kinder Morgan that supports the claim that the Trans Mountain expansion project represents a net financial or economic benefit to the Canadian economy, or federal and provincial public treasuries. It’s just the opposite — Kinder Morgan drains financial wealth from our economy and does not pay its fair share of taxes.

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Robyn Allan is an economist, former president and CEO of ICBC and qualified expert intervenor at the National Energy Board hearing into whether the Trans Mountain Expansion project is in the public interest of Canada. Find her previous articles for The Tyee here.