Can Trudeau Pull Out Of The Kinder Morgan Deal

The Trudeau government will decide by July 22 whether to finalize the $4.5 billion dollar deal to buy the Kinder Morgan Trans Mountain pipeline or pull out of the deal. Pressure is mounting across Canada as millions of Canadians oppose the use of taxpayer money to nationalize a pipeline. Dozens of public town halls are planned to inform Canadians about the risks the pipeline poses to people and the planet.

Image credit: Directly Affected, Pipeline Under Pressure (Town Hall Toolkit)

West Coast Environmental Law is a British Columbia organization which “harnesses the power of law to solve complex environmental challenges.” It has worked closely with communities, NGOs (non-governmental organizations), the private sector, and all levels of governments, including First Nations, to seek legal solutions that protect and sustain our environment. A recent article by staff lawyer Eugene Kung asks, quite graphically, “So, what the #$&% happened?”

Kung’s thorough analysis of the deal is recommended reading. He asks several pointed questions: what motivated the sale; what did we buy; what is the potential cost to taxpayers; can the Trudeau government pull out of the deal. The remainder of this piece focuses on this last question.

Can the Trudeau Government Pull Out of the Kinder Morgan Deal?

Kung identifies “seven ways to terminate the sale within the purchase agreement.”

1. Canada has the right to terminate the agreement if Kinder Morgan does not meet its obligations set out in the agreement by the closing date. There are 17 obligations.
2. Kinder Morgan has the right to terminate the agreement if Canada does not meet or it is impossible for them to meet all of its obligations by the closing date. There are 10 obligations.
3. Canada and Kinder Morgan can mutually agree to terminate the agreement.
4. Kinder Morgan can terminate the agreement if they can find a better offer from someone else to buy the pipeline, although Canada will have the ability to match the new offer.
5. Either party can terminate the sale if it does not occur by December 31st, 2018.
6. Either party can initiate a process that could result in termination of the deal if the other party provides new information that breaches the agreement.
7. Canada can terminate the purchase if, before closing the sale, any of the assets or parts of the business are damaged or destroyed in a way that causes a “material adverse change.” However, there is a list of exclusions to the meaning of material adverse change. Conveniently, public protests, sabotage, court delays do not qualify as materially adverse.

According to Eugene Kung, “we have entered a new chapter in the Trans Mountain pipeline story that is destined to continue for years. The decision to nationalize the project is significant, and rather than dampening opposition, it has only deepened it on the ground – especially in BC.”

We Have A Moral Obligation

There are many reasons why the Kinder Morgan’s Trans Mountain purchase is so objectionable. But none is more compelling than our moral obligation to do our share to rid the world of fossil fuel emissions. And yet we are doing just the opposite. Canada has less than 0.5% of the world’s population but the planned Tar Sands expansion will use up 16% of the world’s carbon budget if we wish to keep warming below 1.5 degrees Celsius.