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Danielle Smith: BC should pay to indemnify Trans Mountain

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If Finance Minister Bill Morneau was expecting to inspire confidence with his press conference on Wednesday, he failed miserably.

I get that the federal government doesn’t want to negotiate in public, but what are we to make of Morneau’s statement that the federal government will indemnify Kinder Morgan against losses, but also that if the company backs out of the Trans Mountain pipeline project and someone else will step in to complete it, Ottawa will indemnify them too.

Say what?






WATCH ABOVE: Morneau outlines three steps being taken to promote Trans Mountain

Who, exactly, is going to step in to complete this project? If Kinder Morgan determines there is too much political risk to take it on, what private company is going to stand up and say, “We’ll do it!”

Did Morneau even listen to the testimony of Chris Bloomer from the Canadian Energy Pipeline Association  a few weeks ago, when he testified before a parliamentary committee that the regulatory environment was “suffocating” and “toxic” and that it is “preposterous” to think a pipeline proponent will commit billions of dollars to a new project in this environment?

LISTEN: Chris Bloomer from the Canadian Energy Pipeline Association

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Maybe that’s the point. Maybe pipelines in Canada will no longer be built by private companies. Maybe they will only be built by government. I have listeners who suggested that the federal government might back a deal with China or some other state-owned foreign enterprise. If so, you have to wonder what kind of concessions would have to be made to make that work.

Maybe it will be the Alberta Government dipping in to the Heritage Savings Trust Fund to build the project. Would Albertans be on board with that? One listener said he would back the province buying it, as long as it was returned to private hands with a sale of shares to the public within five years. Neat idea, but my guess is that’s not a viable solution either.


READ MORE:
Kinder Morgan CEO ‘appreciates’ feds’ offer but time short to save pipeline

How, precisely, would it work? The way we have built pipelines in this country historically is the proponent negotiates, owns and buys the right of way — it is not public property. Will the government just expect Kinder Morgan to simply hand over a portion of their right of way so government can build on it? As far as I can tell, Kinder Morgan has no plans to sell its existing pipeline. If it disrupts their current operations, who will compensate them for that? Or will the government just expropriate that pipeline from them, too?

LISTEN: Tim Pickering with Auspice Capital Investors responds to Bill Morneau’s comments on Trans Mountain

If that’s part of the plan, we are getting into Hugo Chavez territory. Who will want to invest private dollars into Canada if we start acting like a banana republic?

To me, this sounds like a federal government desperate to appear to have a solution, when in fact they don’t have a clue what to do.

Premier Rachel Notley has made good on her promise to pass Bill 12 to shut off the taps to B.C. Good for her and good for UCP Leader Jason Kenney for pushing her to do it. Both leaders deserve credit for their tough stances.


READ MORE:
Alberta to pass Bill 12 Wednesday; Notley ‘prepared to turn off the taps’ over Trans Mountain

Where is the legislation that Prime Minister Justin Trudeau promised a month ago after his hastily arranged meeting with Notley and B.C. Premier John Horgan? Where is the invocation of the federal declaratory power to get this project built in the national interest? Why aren’t they withholding infrastructure transfers to B.C. until they start complying with the law?

Investment analyst Tim Pickering says the biggest problem with the federal government’s strategy is that B.C. bears no consequences for its destructive and unconstitutional grandstanding.

Someone asked me what it would take for me to give the Liberals some credit on how they are handling this file. Well, for starters, they could have said that for every dollar the federal government had to pay to indemnify Kinder Morgan, they would be reducing federal transfers to B.C. by an equivalent amount.

That might have got Horgan’s attention.

Danielle Smith is host of The Danielle Smith Show on Global News Radio 770 Calgary. She can be reached at danielle@770chqr.com

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Kinder Morgan could win all the battles and still lose the war

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Of the 16 judicial challenges that the Trans Mountain pipeline project has survived so far, none is as important as one handed down this week by the B.C. Supreme Court.

The court actually ruled in two separate lawsuits, one filed by the City of Vancouver and the other by the Squamish Nation. But, make no mistake − it is the second that is so consequential and portends well for the company in terms of the legal matters still outstanding.

To understand why the Squamish case is so important, one has to go back to a Federal Court of Appeal decision in 2016 regarding Enbridge’s proposed $7.9-million Northern Gateway pipeline. Approved by the National Energy Board and the federal cabinet, the court found that Ottawa failed to properly consult First Nations communities along the planned route. That ruling effectively killed the venture there and then.

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Kinder Morgan was always aware of the concerns expressed by aboriginal groups in northern B.C. that there had been insufficient consultation around the Gateway project. Both Enbridge, and the federal government at the time, had been publicly criticized for the poor job they had done in trying to get First Nations groups educated about both the overall project and the measures being undertaken to mitigate potential risks. Kinder Morgan was determined not to make that mistake, determined that inadequate conferral would not be something that killed its project. It pushed the federal government on this front, too.

That First Nations groups would one day launch court actions to try and stop it was a given. And the Squamish, among other aboriginal groups, complied.

Of all the lawsuits levelled against the project, Kinder Morgan was still most nervous about the ones involving First Nations. Courts at all levels had, in recent years, sided heavily in favour of Indigenous groups, when it came to areas such as land rights and consultation.

There’s always been a feeling that if anything was going to threaten Trans Mountain, it would be a legal ruling that sided with a First Nations group opposed to the project – which is why Justice Christopher Grauer’s decision this week is so consequential.

While going to great pains to make it clear what his two rulings were not about – whether the project should go ahead, whether it is in the national interest or whether it presented unacceptable risks to the environment – he said in the case of the Squamish that he was satisfied that the consultation that took place as part of the NEB’s assessment process was adequate.

“I find that … consultation and accommodation sufficient to satisfy section 35 of the Constitution Act, 1982, had occurred, was reasonable and entitled to deference,” Justice Grauer ruled in dismissing the Squamish’s petition.

Of course, this is not the end of it. It never is with this project. There is still the reference question that the B.C. government is sending to the courts on jurisdiction. And the Federal Court of Appeal is soon expected to render a decision in a massive case, involving, among others, several First Nations groups along the coast and the B.C. Interior. It also centres around the question of consultation, and whether there was enough of it prior to the NEB and the federal cabinet approval of the pipeline expansion.

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It doesn’t necessarily follow that because the B.C. Supreme Court has ruled that consultation was sufficient, the federal appeal court will, too. But most legal observers believe that Justice Grauer’s decision certainly bodes well for Kinder Morgan, which must be anxiously awaiting the federal court’s verdict. Whether the company still has the stomach to go ahead with this endeavour is another matter.

If the company sells the project to Ottawa and walks away, which it could, it would be a seminal moment in the history of resource development in this country. Despite what federal Finance Minister Bill Morneau might say, there does not appear to be a lot of suitors waiting in the wings to take over this project should Kinder Morgan decide to wash its hands of it. (And increasingly, that is a view that many are subscribing to).

In the end, the project could end up surviving every court challenge thrown its way and still not proceed. Why? Because people may not have the appetite for the on-the-ground fight that still lies ahead. First Nations groups may lose their legal challenges, but win in the court of public opinion, especially after images of protesting aboriginal elders being carted away by Mounties or the army start being broadcast around the world.

Kinder Morgan could win all the battles and still lose the war.

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Police lay charges in alleged Calgary-based, $20-million Ponzi scheme

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Two Calgarians have been charged with fraud in connection with an alleged Ponzi scheme that netted more than $20 million from investors.

Following a decision by the Alberta Securities Commission (ASC), police claim Arnold Breitkreutz, 70, and Susan Way, 67, defrauded hundreds of Albertan investors by using their funds “contrary to what investors were told.”

Police say the pair took in over $27 million dollars in 2014 and 2015 and used the funds to pay off other investors instead of being used for mortgage lending.

“This has been an extremely complex investigation involving substantial resources, interviews and time,” Sgt. Doug Johnston with the RCMP Federal Serious and Organized Crime unit said in a release. “We are pleased to be able to conclude this investigation with charges and extend our gratitude to the various agencies who provided support to the RCMP.”

The ASC decision back in March found Breitkreutz and Way ran a Ponzi scheme through Breitkreutz’s company, Base Finance. The RCMP began looking into Breitkreutz, Way and Base Finance in 2015 after the ASC brought the Ponzi scheme to law enforcement.

The commission said Breitkreutz, Way used Base Finance to deceive investors into thinking they were putting their money into mortgages held by the company, rather than in a loan to an undisclosed entrepreneur involved in U.S. oil and gas developments, according to the regulator panel’s decision.

Between 2004 and 2015, the operators of Base Finance raised more than $137 million from upwards of 250 investors.

Breitkreutz and Way have both been charged with fraud over $5,000 and theft over $5,000.

“Conditions of their release include not to contact certain investors, to report to the RCMP regularly, to surrender their passports and remain in Canada, and not to deal with land or money or securities of others,” police said in a release.

The pair will appear in court on May 28 in Calgary.

RRumbolt@postmedia.com

On Twitter: @RCRumbolt

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Trump administration seeks WTO panel to resolve wine dispute with Canada

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The Trump administration said Friday it requested that the World Trade Organization set up a dispute settlement panel to rule on its claim of Canada‘s “discriminatory” trade practices involving U.S. wine.

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The dispute with Canada relates to policies at the provincial level that limit grocery store access to American wines. The marketplace for alcohol in several big Canadian provinces is controlled by government-run enterprises and liquor control boards, and in some cases they own and operate state-run retail networks.

Friday’s action specifically relates to the province of British Columbia, where liquor authorities in 2015 amended rules to allow regular grocery stores to start selling wine and liquor but in doing so separated U.S. and other imported wine from B.C.-only product. Even so, American wine industry executives say the U.S. industry continues to have market access issues in other Canadian provinces, including Ontario and Quebec.

Last year, the U.S. held consultations with Canada on the wine issue, but those talks failed to resolve the matter. The request for establishment of a WTO dispute panel is the next step in the settlement process.

The trade action was jointly announced by U.S. Trade Representative Robert E. Lighthizer and Agriculture Secretary Sonny Perdue, who requested that the WTO set up a dispute settlement panel to look at “unfair regulations” that govern the sale of wine in grocery stores in B.C.

According to the announcement, B.C.’s policy of excluding imported wine from grocery store shelves gives “substantial competitive advantage” to B.C. wine. “These regulations appear to breach Canada’s WTO commitments and have adversely affected U.S. wine producers.”

Canada is the largest single country market for U.S. wine, according to the Wine Institute, a trade organization representing more than 1,000 wineries and related businesses in California. California-produced wine is the No. 1 table wine category in B.C., and the retail value of U.S. wine sales to all of Canada last year was almost $1.1 billion.

“Wine Institute greatly appreciates the Trade Representative’s continued efforts to end these discriminatory practices and hold Canada accountable for their WTO obligations,” said Robert Koch, president and CEO of the Wine Institute. “Canadian consumers should have the same access to the vast array of the world’s great wines.”

Koch said his organization will continue to push “for equal treatment of imported and domestic wine by all Canadian provinces. Policies supporting B.C., Ontario and Quebec that provide favorable distribution and retail access, discounted excise taxes, and local bottling requirements for the benefit of domestic producers are contrary to Canada’s commitments to the WTO.”

The 2015 regulations adopted in B.C. allowed grocery stores in the province a so-called “wine on shelf” option to sell wine anywhere within the store but only BC-produced wine on grocery store shelves. Also, U.S. and other imported wine was only allowed to be sold in B.C. grocery stores where there was a separate so-called “store within a store” option.

“The B.C. policies would allow for imported wine to be in grocery stores within these completely separate [‘store within a store’] stores,” said Charles Jefferson, vice president of federal and international public policy for the Wine Institute. “But today I’m not aware of any grocery stores that have actually set up those kinds of arrangements.”

Yet, Jefferson said it’s “very hard to speculate” about the financial impact of the B.C. regulations on U.S. wine producers. “It’s really hard to see what the potential impacts are other than we know we’re being excluded from those consumers who are in the grocery store,” he said.

U.S. wine has an estimated 10 percent share of the B.C. marketplace.

“The practice of discriminating against U.S. wine is unfair and cannot be tolerated any longer,” Perdue said in a statement. “Our wine producers rely on export markets and they deserve fair treatment, especially by our northern neighbors in British Columbia.”

Lighthizer stated, “Discriminatory regulations implemented by British Columbia are unfairly keeping U.S. wine off of grocery store shelves, and that is unacceptable. Canada and all Canadian provinces, including B.C., must play by the rules. The Trump administration will continue to hold our trading partners accountable by vigorously enforcing U.S. rights under our trade agreements and by promoting fair and reciprocal trade through all available tools, including the WTO.”

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