'Rhetoric and hyperbole': Horgan fires back at finance minister over feds' Trans Mountain backing - Canadanewsmedia
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'Rhetoric and hyperbole': Horgan fires back at finance minister over feds' Trans Mountain backing

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The federal finance minister singled out B.C. Premier John Horgan's efforts to thwart the Trans Mountain pipeline expansion Wednesday, as he outlined measures Ottawa is taking to remove "politically motivated" investment risks.

Speaking in Ottawa, Bill Morneau said his government is willing to compensate Kinder Morgan — or any other company interested in building the pipeline — against any financial loss due to the actions of the B.C. government.

"We're prepared to indemnify the project against any financial loss that derives from Premier Horgan's attempts to delay or obstruct the project," Morneau said.

Finance Minister Bill Morneau announced Wednesday that the Canadian government is willing to compensate Kinder Morgan against any financial loss due to B.C.'s attempts to obstruct the Trans Mountain pipeline expansion. (Chris Wattie/Reuters)

Speaking to reporters following an event in Vancouver, Horgan fired back at Morneau's characterization of the dispute.

"I think that is rhetoric and hyperbole on his part. There are fundamental challenges to that project that he well knows," Horgan said.

"For a Toronto-based finance minister to single out British Columbia as a problem here, he should look at the failure of Energy East, he should look at the failure of Keystone and a whole host of other projects."

Morneau accused the B.C. government of attempting to delay or obstruct the Kinder Morgan project. 0:42

Morneau declined to say how much Ottawa would be willing to spend to back the pipeline expansion.

Notley 'ready and prepared to turn off the taps'

Alberta Premier Rachel Notley responded to the comments from Ottawa by immediately passing her government's Bill 12 Wednesday afternoon.

The Preserving Canada's Economic Prosperity Act gives Alberta's energy minister the power to restrict shipments of oil and gas leaving that province.

Alberta Premier Rachel Notley speaks to reporters at a news conference in Edmonton on Wednesday. (Jason Franson/Canadian Press)

"If the path forward for the pipeline through B.C. is not settled soon, I am ready and prepared to turn off the taps," Notley said

Any restriction in supply could send already high gas prices in B.C. even higher. Notley did not say when Alberta would plan to use the legislation.

The B.C. government was quick to respond saying it considers Alberta's legislation unconstitutional.

Attorney General David Eby said B.C. would immediately go to court if the legislation is used.

"If they attempted to use it, we would be in court seeking an injunction to prevent them from using it and any damages that flowed from that type of action, we would be seeking to recover those," he said.

Eby has also written to Alberta calling for the legislation to be tested in court for constitutionality before Bill 12 is proclaimed.  

But Liberal opposition leader Andrew Wilkinson doubts going to court would do much to ease the potential spike in gas prices, should Alberta use its new legislation.

He instead called on the B.C. government to drop its opposition to the pipeline expansion.

"Are we going to watch the pump prices go through the roof for three years, while it goes through the courts? Going to court is not an answer to solving a problem through gentle Canadian negotiation," he said.

Wilkinson also said the B.C. government should consider providing some relief from gas prices that are already high through a break on the provincial gas tax.

Legal challenges

Kinder Morgan has set a deadline of May 31 to decide whether it will continue with the Trans Mountain project, which has federal approval. 

The pipeline expansion is facing uncertainty due to court action by the B.C. government over environmental concerns.

B.C. has filed a reference case with the province's top court to determine if it has jurisdiction to limit expanded shipments of heavy oil through the province.

Horgan has said clarity is needed to ensure the B.C. government protects its coastline, but critics say the move is a tactic to delay or block the project by creating uncertainty.

Protesters block a transport truck attempting to deliver heavy equipment to a Kinder Morgan site in Burnaby, B.C., in March. (THE CANADIAN PRESS/Darryl Dyck)

Meanwhile, an environmental law group in B.C. is expressing concerns about the federal government's plan to provide financial support for the pipeline expansion.

In focusing on the actions of the B.C. government, Ottawa is ignoring other legal risks the project faces, said Eugene Kung, a staff lawyer at West Coast Environmental Law.

"No matter how much money the government pours into this project, it still faces significant risks," Kung said. "Particularly the legal risks associated with the ongoing court challenges that could derail the project completely."

Seven First Nations are among more than a dozen groups challenging the approval of the pipeline expansion in Federal Appeal Court.

The challenge is based on principles of Aboriginal title and the Crown's constitutional duty to meaningful consultation with First Nations.

Until those issues are resolved in the courts, Ottawa should not be giving assurances the project can proceed, said Chief Judy Wilson, the secretary-treasurer of the Union of British Columbia Indian Chiefs.

"I think a lot of it was grandstanding and a lot of trying to reassure the shareholders and the investors, which was really hollow," she said of Morneau's comments Wednesday.

Shareholders meet in Calgary

Morneau's comments on financial backing for Trans Mountain ​come as Kinder Morgan Canada's stakeholders met in Calgary on Wednesday.

Ottawa says the twinned pipeline would create 15,000 jobs, 9,000 of which would be in B.C.

Discussions with the company on how large a cheque Ottawa may be willing to write to move the project forward continue in Calgary, Morneau said.

In a statement, Kinder Morgan Canada chairman and CEO Steve Kean said Morneau's comments were appreciated and he confirmed that talks are continuing.

"While discussions are ongoing, we are not yet in alignment and will not negotiate in public," he said.

With files from Yvette Brend

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Class action lawsuit over McDonald's Happy Meal toys approved by Quebec judge

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A judge has authorized a lawsuit to proceed against McDonald’s Canada over the marketing of Happy Meals to Quebec children.

Montreal lawyer Joey Zukran sought authorization for a class action lawsuit, arguing promotion of the popular meals constitutes illegal advertising to children.

READ MORE: McDonald’s faces class action lawsuit in Quebec for advertising to kids

The decision Wednesday by Quebec Superior Court Justice Pierre-C. Gagnon paves the way for the case to be heard on its merits.

WATCH BELOW: This is what happens to a McDonald’s burger after six years







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The province’s consumer protection law — among the strictest in Canada — prohibits commercial advertising directed at children under the age of 13.

READ MORE: Not so Happy Meals: McDonald’s faces class action lawsuit in Quebec

Zukran’s lawsuit claims that displays inside the restaurants showing off toys that come with Happy Meals violate the law.

A spokesman for McDonald’s Canada says the company is fully aware of its obligations under Quebec’s advertising laws and doesn’t believe the class action has merit.

The suit would cover anyone who has purchased a Happy Meal or an individual toy at a Quebec McDonald’s restaurant for a child under the age of 13 since Nov. 15, 2013.

WATCH BELOW: One woman’s McDonald’s success story






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Varcoe: Alberta can't have oil 'racing out of the ground at $10 a barrel,' says premier

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Premier, Rachel Notley speaks to media after announcing an investment in the University of Calgary by transferring the University Research Park to the University of Calgary at the CMG Building in Calgary on Thursday November 15, 2018. Darren Makowichuk/Postmedia


Darren Makowichuk / DARREN MAKOWICHUK/Postmedia

Rock, meet hard place.

Premier Rachel Notley’s government finds itself in a no-win position as Canada’s oilpatch has splintered over the issue of the province implementing production cuts to deal with a glutted pipeline system and bargain-basement crude prices.

Some large producers like Canadian Natural Resources and Cenovus Energy believe the government should use its powers to mandate temporary oil output reductions.

Refiners who benefit from lower feedstock prices, such as Suncor Energy, Imperial Oil and Husky Energy, insist market forces will solve the problem, not the heavy hand of government.

The province has tried, so far, to keep the debate low key.

It now sees the issue erupting into a full-fledged public donnybrook between two powerful sides.

Speaking Thursday, Notley kept her options open.

The price discount for Western Canadian Select (WCS) heavy crude, sitting around US$40 a barrel, is a “very, very serious problem” for the industry and the province, and “we know we need to work very, very quickly to address it,” she told reporters in Calgary.

That would seem to imply the government might be willing to take action, as other solutions — waiting for new pipelines or ramping up oil-by-rail exports — will take months to kick in.

“There is a lack of consensus within the industry about the best way forward,” Notley added.

“My job at the end of the day is to be here for the people of Alberta. This resource is a resource that belongs to all Albertans and so we can’t have it racing out of the ground at $10 a barrel for a really long period of time.”

Again, this would seem to imply curtailment is a possibility.

The provincial treasury is one of the biggest losers from wide oil price differentials — WCS dropped below US$14 a barrel at one point Thursday, a record low — and the recent blowout is slicing into royalties and taxes paid by producers.

But then comes this remark from the premier.

“It’s not an easy case. Both sides make very good points,” she said.

“It’s our job to do our research and look at which approach is best and to also look at the other options … that are at our disposal — that perhaps parties are able to find more consensus on — that will also bring about the kind of outcomes that we are looking for.”

Well, if you’re looking for consensus, the government stepping in like OPEC to mandate production cuts of 200,000 barrels a day (bpd) doesn’t seem like a magical elixir for success.

Imagine the conversations between the government and oilpatch CEOs trying to determine who has to shut in their oil, and for how long.

The Lougheed government used a system of allowable production levels several decades ago, but would this mechanism contravene modern free trade agreements?

That’s unclear.

It also appears the province would have to change some of its existing legislation that currently allows for pro-rationing because it doesn’t include bitumen or heavy oil.

As Notley acknowledged, it’s a “complicated conversation.”

Alberta estimates the oil price differential caused by a lack of pipelines is costing the Canadian economy about $84 million a day, including $18 million to the province.

Here’s a fun fact to put it all into perspective: The implied price of bitumen today is half the price of a bottle of water or pop.

In a chart published Thursday, RBC Capital Markets analyst Greg Pardy stacked up the price of a Snapple, Coke and Evian against a barrel of Western Canadian Select crude.

The price for molasses-like bitumen — adjusted to reflect the cost associated with diluent — is lower.

“We peg the (implied) bitumen prices in Alberta at about $0.83 — or less than one-half the retail price of a Diet Coke, Evian and other beverages,” Pardy wrote.

This would be funny, if it weren’t so harmful to the people whose jobs rely on the industry, or the province, which needs energy revenues to pay for schools, hospitals and public services.

In a report Thursday, analyst Phil Skolnick of Eight Capital said voluntary output cuts already announced by companies will knock out about 140,000 bpd of oil production, and that should normalize crude inventories in Western Canada in less than three months.

A broader shut-in program would speed up the process.

Skolnick estimates the current price differentials, if they remain, would cost Alberta about $4 billion in royalties annually.

This isn’t simply an economic argument. There is also a huge political calculus for the government to consider.

If the NDP government reduces output and it drives away investors — and future capital investment — over fears about the risk of central planning, it could come with a steep political price, just months before the next provincial election.

“This is dangerous from a number of perspectives,” said political analyst David Taras at Mount Royal University.

“My guess is she doesn’t do this unless some more major players come on board.”

But that hasn’t stopped both sides from speaking out.

“To protect the interest of all Canadians, the company would be supportive of the Alberta government temporarily imposing mandatory production cuts,” said MEG Energy CEO Derek Evans in a statement.

Husky Energy, an integrated producer that recently launched a hostile takeover bid for MEG, feels decidedly differently.

“The market is working,” said Husky’s Kim Guttormson in an e-mail. “Market intervention comes with an unacceptably high level of economic and trade risk.”

In the end, the province could end up adopting several options in tandem.

A solution involving the federal and provincial governments investing in locomotives to ship more oil out of Alberta seems like a simpler, albeit slower, plan.

The province submitted a business proposal to the federal government last week regarding rail, and it’s being examined by Ottawa.

On the issue of differentials, the premier said we should expect to see something from the province “within weeks, perhaps sooner.”

That is a short amount of time to make a very important decision.

But the province — like the oilpatch — doesn’t want to be uncomfortably stuck between a rock and a hard place any longer than is necessary.

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com

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New Ontario regulations dash expansion hopes for some cannabis retailers

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Available now: Cannabis Professional, the authoritative e-mail newsletter tailored specifically for professionals in the rapidly evolving cannabis industry. Subscribe now.

Some cannabis retailers could be shut out of operating multiple stores in Ontario as a result of new grower ownership limits issued on Thursday.

The province’s regulations say a cannabis retailer can’t be more than 9.9 per cent owned by a producer if it wants to operate more than one store. That means, for instance, that Alcanna Inc., which is 25 per cent owned by grower Aurora Cannabis Inc., would have to overhaul its ownership structure in order to run shops in Ontario.

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Tokyo Smoke, which is 100 per cent owned by grower Canopy Growth Corp. and has opened cannabis stores in other provinces, would also have to either revamp its structure or abandon retailing if it wanted to go ahead with its plan to open a chain of stores in Ontario.

The industry has been waiting for more clarity on whether companies owned in part by producers – affiliates – can open more than one store. The unveiling of these regulations comes three months after the new Ford government said it would overhaul the way recreational cannabis was going to be sold in the province.

Lawyers are closely reading the new rules and devising ways their clients could restructure their businesses or create new corporate structures to get a bigger slice of the market without breaching the regulations.

One route could be a franchising model, says Chad Finkelstein, a lawyer at Dale & Lessmann LLP in Toronto. Other options, he says, include being a lender – as long as there isn’t an option to convert that debt into shares or receive stock on default – or charging service fees for use of trademarks. Or growers might also be able to enter into a limited partnership arrangement with another company that would actually operate the stores.

“Lawyers are definitely looking for every angle in how to interpret these new laws,” he added. “It’s all hands on deck.”

Cannabis retailers have been racing to lease space for their stores in Canada’s largest province without knowing details of the rules. The new rules provide them with some guidance, although municipalities still have until Jan. 22 to ban stores.

Ontario said Wednesday that cannabis must be sold in standalone stores, essentially shutting out pharmacies and grocery stores from selling recreational cannabis within their existing outlets.

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Canopy is looking at a franchising model, co-CEO Bruce Linton suggested to analysts Wednesday before the regulations were released. Franchise stores are wholly owned by their independent operators, not by the company itself. And franchisors have control over a franchisee’s method of operations as opposed to the franchisee itself.

“We would be quite fine with the locations which we have under – I’ll call it control – that they became franchises,” Mr. Linton said. “They are operated by others, but they carry our brand because really, for us, retail does give you a little bit of torque.”

Mr. Linton said Canopy wants to have stores in order to get access to customer data. Besides franchised stores, Canopy believes it will be able to run a store at each of its four Ontario production sites, he said. The Ontario regulations say each licensed producer can have one store at each facility.

Edmonton-based Alcanna, the former Liquor Stores N.A. Ltd., plans to create a separate company in Ontario to comply with the regulations, CEO James Burns said.

“I don’t think we’ll have any difficulty at all in getting a structure for the Ontario cannabis business, which will be a separate entity that will comply with the rules.” Aurora would not have more than 9.9 per cent of the new Ontario structure’s ownership even though it controls 25 per cent of Alcanna in all, Mr. Burns said.

There’s still uncertainty.

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The definition of “affiliate” in section 2 suggests that growers could hold a stake of no more than 50 per cent in non-voting shares of a retailer and control of voting shares of up to 9.9 per cent. But section 7 states that a corporation wouldn’t be issued a retail license if growers or their affiliates own more than 9.9 per cent.

“There’s a bit of a contradiction there to the tune of about 40 per cent,” Mr. Finkelstein said. “It doesn’t matter if it’s voting shares or non-voting shares, if an LP owned any shares that amount to more than 9.9 per cent then the company applying for a license will not get one.”

Retailer Spiritleaf, which is owned by Inner Spirit Holdings, conforms with the Ontario rules because its stores already are franchised, each one owned by a different operator, said Dave Marino of Marino Locations Ltd., which advises Spiritleaf on retail sites. As well, Spiritleaf complies with the regulations because its parent, producer Newstrike Brands Ltd., owns less than 9.9 per cent of Spiritleaf, he said.

On Wednesday, Ontario published a news release that said cannabis retailers will be allowed to operate no more than 75 stores each. The province said cannabis stores have to be at least 150 metres from a school; the shops can be open daily from 9 a.m. to 11 p.m. Ontario will start accepting retail applications on Dec. 17. Physical stores can start operating by April 1 in Ontario while currently recreational cannabis is only sold online by the government through its Ontario Cannabis Store.

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