As reported in Ricochet, there was an exit clause in the purchase agreement of Kinder Morgan’s Trans Mountain pipeline project that would have allowed the federal government to pay $10 million to get out of the deal.
According to the article, “the Trudeau government is paying $4.5 billion for two principle assets: the existing 67-year-old pipeline and the permits for the Trans Mountain expansion project that would nearly triple the pipeline’s capacity.”
However, the recent Federal Court of Appeal decision to quash the pipeline’s construction permits means the second asset no longer exists.
The article notes: “the purchase agreement with Kinder Morgan includes a ‘failure to close’ clause allowing the government to pull out of the deal, subject to a penalty of up to $10 million. Kinder Morgan could still sue the government, but given the material change to the assets the company is trying to sell, the government might have a strong defence.”
Kinder Morgan reported the value of its Trans Mountain pipeline system at $550 million, which might be worth $700 million today. “The difference between this figure and the purchase price was based largely on work already done on the expansion project ($930 million as of the end of 2017), and on the value of the plans and permits held by Kinder Morgan,” the article notes.
Still, on the same day Kinder Morgan shareholders overwhelmingly agreed to sell the pipeline project to Canadian taxpayers for $4.5 billion (and costs will definitely rise), federal Finance Minister Bill Morneau said Canada would move ahead with the pipeline, in the face of increasing public opposition.
The decision has pitted the Alberta government’s desire to expand bitumen extraction from the tar sands against the lack of consent from Indigenous peoples and mounting concerns about the how the project would threaten land, climate and waters in the event of a spill.
The Trudeau government is now obligated to restart and hold meaningful consultation with Indigenous peoples. A full review of the environmental impacts of increased tanker traffic in Pacific waters must also be completed. While this happens, Council of Canadians supporters and chapter activists across the country will continue to raise their voices about this broken pipeline plan and about the Trudeau government’s decision to leave taxpayers on the hook for it. We support a just transition for workers and a sustainable energy future for us all.