Who's in charge?

Good Sunday Morning,

oil's_deep_state.jpgHas the federal government — along with certain provincial governments — been captured by Canada’s energy sector? That's a question asked by Bruce Livesey in this analysis published last week.

Bruce writes: "Kevin Taft, a former leader of Alberta’s Liberal Party (2004-08) believes so. He’s the author of a new book, Oil’s Deep State. 'In Canada, the fossil fuel industry has captured really key democratic institutions and in some ways has captured so many of them that it has formed what I call a deep state,' explains Taft. 'So democracy stops functioning for the people and begins to function first and foremost for the fossil fuel industry.

"Those who believe the oil industry has become a deep state point to how the political elites, whether Liberal, Conservative or NDP — from Justin Trudeau to Stephen Harper to Rachel Notley — go to bat for the industry, even if it means Canada’s greenhouse gas emissions rise and jobs are needlessly lost. Or how Canada has never forced the oil industry to curb emissions — even as the impacts of global warming become more catastrophic. And why Canada is highly unlikely to reach its targets under the Paris climate agreement.

He quotes Elizabeth May to underscore his point: “As things now stand, there is no chance in the world that Canada is aimed towards our Paris targets.”

kindermorganfunding.jpgWe have been frustrated for months now with the Liberal Government's determination to ignore the hard evidence and frantically push their talking points. The duplicity seems consistent. We need a pipeline and extract more oil to lower Green House Gasses. Bankrolling a Texas Oil giant is in Canada's national interest. The NEB process is broken but we'll accept it's kangaroo court decision as "sound science". We need to sell the farm to get provinces to agree on a carbon tax but if they don't we'll go it alone.

Perhaps, as some have suggested, it's just the Liberals being Liberals; standing on the fence and broadcasting one message to the left and one to the right. Or perhaps the corporate lobby's tentacles have so deeply ensnared those who advise our decision makers, that it is their agenda that is being delivered.

Robyn Allan takes us on a little journey to follow the money in this in-depth exploration she just published in the National Observer. She points out that Kinder Morgan’s shareholders have almost nothing at risk — somewhere around $200 million.

"For Kinder Morgan to proceed it will likely want Ottawa to protect its shareholders from exposure beyond what they now have at stake. The “adequate protection of shareholders” Kinder Morgan seeks, when Kinder Morgan has almost no skin in the game, is a very expensive proposition for Canadian taxpayers."

Turns out "Kinder Morgan has a business reason for its staged theatrics. It is embedded in the default provisions of the $5.5 billion loan facility agreement the company has with Canada’s banks."

The financing consists of a $4 billion construction line to support the Trans Mountain expansion project capital costs, a $1 billion construction contingency line available for project overruns, and a $500 million credit line available for general corporate working capital. Allan reports that Kinder Morgan began drawing on the loan facility agreement shortly after it was entered into last June.

"According to the loan agreement, suspension of all (or substantially all work relating to the development, construction and completion of the project) qualifies as a loan default event. However, if Kinder Morgan publicly establishes that the reason for the project suspension is due to circumstances beyond its control, the facility [loan agreement] is not compromised."

Kinder Morgan, an Enron derivative, has had trouble financing this project for some time. When they did raise $1.7 billion from Canadian Investors they sent it to their parent company in Houston to pay down debt. The same parent company that was supposed to arrange the financing for this project. Now they have to raise $2 billion more in equity (to secure the loans?) and $2.1 billion as financial assurances against land-based environmental risk to meet their project approval conditions.

This is what a blank check looks like

But none of this is setting off alarm bells in Ottawa. In a move some call desperate, dangerous and even delusional, Bill Morneau actually is now asking Canada's Pension Funds to assist and throw good money after bad. That's your pension funds, your retirement.

TheEnergyMix article goes on to report that: "Indemnification means the federal government would legally agree to bear any financial losses incurred by Kinder Morgan because of yet-to-be-defined ‘politically motivated delays.’ Those costs would be covered either directly or indirectly through reimbursement by the Canadian taxpayer.

"Horgan responded that 'Morneau is trying to use our government as an excuse, as the federal government puts taxpayer money on the line to backstop risks to private investors, while completely ignoring the risks to B.C. The fact is, we’ve been issuing permits in a fair and timely manner, and have proposed new regulations that are now referred to court to confirm our jurisdiction.'”

Morneau said the offer would extend to any investor that took the project over from Kinder Morgan. Probably because when Kinder Morgan Canadian Chair and CEO Steve Kean acknowledged Morneau’s kind offer, he wasn’t moved. “The time period for reaching a resolution is short and, if we don’t reach a resolution by May 31, as we’ve said, it’s hard to conceive of a scenario under which we can proceed,” he told the Canadian subsidiary’s first annual meeting in Calgary.

Robyn Allan calls this "Kinder Morgan’s hidden condition #3"

Enron-Complex.jpg"Kinder Morgan Inc. (KMI), CEO Steve Kean (also Chair and CEO of KML, and former chief of staff and head of government relations for Enron) confirmed that, “Even if we have the other [two] things in place, we still need to see a resolution of [the Federal Appeal]…” referring to the court case challenging Federal Cabinet approval of Trans Mountain’s expansion heard by the court in Vancouver, last fall.

"Resolution, according to Kean, is an unequivocally favourable ruling for Kinder Morgan with no further court action possible — “final clarity,” he called it. He said that even if there are “things” that the court recognizes that need more work — as was the case with the court ruling on the judicial review of the Northern Gateway approval — Kinder Morgan has decided that this would be too much to bear.”

Is this a Texas multinational corporation giving an ultimatum to the Supreme Court of Canada?

Mike De Souza sheds some light on why this may be happening. Newly-released court documents obtained by the National Observer suggest that Prime Minister Justin Trudeau’s government engaged in “gamesmanship,” acted in “bad faith,” and then “sought to suppress the evidence” of its actions in order to approve a major west coast pipeline in 2016.

It seems lawyers for the Tsleil-Waututh Nation (TWN) have argued that there is enough evidence to warrant re-opening the case and allowing the court to assess newly-released federal records and other documents, prior to making its ruling.

We are focused on Kinder Morgan because it's urgent but there are plenty of other examples of this kind of corporate capture.

tailing-sands.jpgLast fall, the Alberta Energy Regulator (AER) approved a previously rejected plan from Suncor that allows the company 70 years after the mine closes in 2033 to sign off on its reclamation requirements. Mitchell Anderson wrote in the Tyee last week that "Collectively, tailings ponds now cover 25,000 hectares in northern Alberta and contain a poisonous brew of organic acids, benzene, lead and fine clay particles that have not significantly settled out in 50 years. The result is lakes of toxic yogurt impounded by the largest earthen structures in the world."

The turn of the next century? Really? You expect this dirty oil company to still be around to clean up this mess 85 years from now? How far do you have to bury your head in the oilsands to believe that line? I suspect the executive stock options will have been exercised and Suncor will have joined the legions of other companies like Air Canada, General Motors, Nortel, Kodak and Sears who have either restructured to shed their obligations or just disappeared.

So when people put themselves on the line to stand up against this corporate takeover of our democracy it's not a frivolous act. Throughout history people have stood up for what is right and just, even if it meant challenging the laws of the day. The suffragettes, Rosa Parks, Gandhi, Martin Luther King and Nelson Mandela to name a few.

Over the last few days, in response to opinion pieces written in local newspapers, some Green Writers had this to say:

"I can't believe that Rachel Notley is separating us from Alberta/Canada to the extent I heard on CBC yesterday morning -- wanting to cut gas/oil being sent to BC now. The panel on Wednesday [that included Elizabeth] made clear that it would be much more economically wise to keep the dilbit in Alberta and sell it within Canada."

"Our legal system grants injunctions to companies regularly, but if a First Nations group wants an injunction to protect their land, it's not likely to happen. In this case, there are numerous legal challenges, at least one of which is likely to be successful, but while these arrests and trials have been speedy, the appeal process is so slow that irreparable damage could well be done by the time we know whether or not the appeals of the NEB approval will be upheld in law."

"The process by which the Kinder Morgan pipeline was approved was governed by what can best be described as a kangaroo court. It enabled the NEB, (many of whom were industry insiders) to push through bad decisions. The public was excluded from hearings. There was no opportunity for cross-examination. They had the power to over-ride a duly elected council whose citizens are directly impacted by the decision and First Nations whose traditional territory is impacted without meaningful consultation or consent. No evidence was ever allowed regarding climate or environmental impact. Prime Minister Trudeau admitted publicly the process was flawed, but approved the pipeline anyway."

So if you want to stand up to this corporate takeover of our most precious democratic institutions, don't be silent. Talk to friends, write letters to your pension fund and to the editors of newspapers, attend public lectures, ask questions, share on social media. They may be bigger than we are, but there are more of us.

Until next week,


"It is our job to work tirelessly for justice, for peace, and for a planet that can survive with a human civilization that thrives. This is the challenge that we take on as Greens." Elizabeth May, October 19th, 2015

This weekly missive is authored by Thomas Teuwen, our SGI EDA coordinator. Opinions expressed are his own. We welcome your comments and feedback. If you were sent here by a friend and would like to subscribe to our weekly email simply click here. You can also go to the archives section of our SGI website to read back issues. And if you are on twitter please join in on this hashtag.

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