[All] NEB is finally asking the hard questions

Mon Oct 29 02:25:12 EDT 2018

 Hello everyone

I'm in the middle of dialogue right now with Enbridge, the NEB and various participants in a pre hearing process that is designed to foster debate as to whether or not there should be a hearing regarding the sale of Enbridge Line 10 to Westover Express which is a firm out in Vancouver but wholly owned by United Refining Co. in the US.
In a nutshell here's what's happening. 
Enbridge Line 10 oil pipeline was expanded recently from a 12 inch line to a 20 inch pipe. A section of the pipe was abandoned because it is too close to existing gas lines and the new install location is down the street through the Hydro Corridor. The pipeline is designed to bring Bakken Oil from Pennsylvania to the Westover Terminal for shipment East through Enbridge Line 9. 
When I heard about the sale I had a couple of issues:
1. The company selling the pipeline doesn't actually own it. Enbridge Pipeline Inc. sold their portion to Enbridge Income Fund in 2015. 2. There was no fiscal data about the new firm acquiring it. 3.  Enbridge wanted to transfer all the conditions of the existing Master Limited Partnership agreement to this mysterious new firm. 
So I wrote to the NEB and applied a case law legal move that can be invoked either in the courts or during a permit application process. Since the NEB is a quasi jurisdictional body and this is about the need for a new CPCN certificate, it was the perfect scenario. 
So here is the law I used. It is from the court ruling of The Yaiguaje v. Chevron Corporation case.  The Amazonian tribe came to Toronto to sue Chevron Canada after Chevron spilled oil on their lands. The tribe came to Canada to seek justice but they lost their case because they couldn't specify any transgression against Chevron Canada as a corporate entity specifically. They were using it as a means to get to the parent company. Although the method failed for them, the case law they used fits what I've got going  because I can easily prove Enbridge's fraud at both the Canadian level and the parent company level. The decision of Yaiguaje Vs. Chevron is online here:
https://www.canlii.org/en/on/onca/doc/2018/2018onca472/2018onca472.html?autocompleteStr=yaiguaje%20&autocompletePos=10

It states: 
Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co., (1996), 28 O.R. (3d) 423(Gen. Div.), affirmed: (1997) 74 A.C.W.S. (3d) 207 (Ont. C.A.). That case held, at pp. 433-34, that“courts will disregard the separate legal personality of a corporate entity where it is completelydominated and controlled and being used as a shield for fraudulent or improper conduct.”The test requires more than ownership, but "complete domination of the subsidiary corporation” suchthat the subsidiary does not function independently or is a “puppet” of the parent: paras. 69,72. 
It also says: 
The starting point is the decision of Sharpe J., as he then was, in Transamerica. Justice Sharpe rejected the notion that the test for piercing a corporate veil is “anything like a just and equitable standard” (p. 433). Relying on Gower: Principles of Modern Company Law, 5th ed. (London: Sweet & Maxwell, 1992), he found, at p. 433, that there are only three circumstances where the court will pierce a corporate veil: (1) When the court is construing a statute, contract or other document; (2) When the court is satisfied that a company is a “mere facade” concealing the true facts; and (3) When it can be established that the company is an authorized agent of its controllers or its members, corporate or human. 

It was easy to use because  Enbridge Inc. created Enbridge Energy Partners in the US specifically to claim taxes on Canadian tax free MLP schemes. The company sent money to the US, then Enbridge Energy Partners was used to pay all the Canadian employees while getting service fees and tax rebates as a US company. Big problem was: They have ZERO EMPLOYEES. It was confirmed in a document I found to the US SEC from Fulbright and Jaworski L.L.P.dated April 28, 2009 on behalf of Enbridge Energy Partners L.P. regarding Form K-10 for the FiscalYear Ended December 31, 2008 filed February 19, 2009, File No. 1-10934. The report admits over and over again, they have no employees. Fullbright and Jaworski's report here:  https://www.sec.gov/Archives/edgar/data/880285/000119312509089950/filename1.htm

(Note: Here's the kicker. It wasn't only Enbridge doing this. It was ALL the major pipeline companies including Kinder Morgan and TransCanada. Here is a news story about how this system was used: https://business.financialpost.com/commodities/energy/why-canadian-pipeline-companies-are-moving-billions-in-assets-to-u-s-subsidiariesI didn't mention it because it was outside the scope of this hearing but this system was used by KPMG and I have the info on that.  Also Economist Robyn Allen blew the whistle on the fact Kinder Morgan transferred TransCanada to a company that wasn't even authorized to run a pipeline. https://www.burnabynow.com/news/robyn-allan-raising-questions-about-neb-process-1.1751545 which mirrors what I'm seeing with Enbridge and their entities.) 
Enbridge's response was pretty basic claiming that our questions were out of scope: https://apps.neb-one.gc.ca/REGDOCS/Item/View/3594349
But the NEB disagreed and started asking the hard questions in the second Information Request wanting to know more about about Westover Express. Westover Express got nervous and tried to file a confidentiality request for the response. That is here: https://apps.neb-one.gc.ca/REGDOCS/Item/View/3614130

But, it looks like that request flew out the window because in the second Information Response sent by Enbridge they admitted that Westover Express was created on March 26, 2018 specifically for the sake of buying line 10 and they don't have any assets or liabilities but are a wholly owned subsidiary of United Refining in the US. So the total mess is revealed here.  Enbridge wanted to transfer all the conditions of a Canadian MLP to a US based entity that has no money or corporate history. It's just a shell company in BC. Enbridge also wrote this and I will highlight the important parts: 

b) Westover Express’ parent company, United Refining Company, is aprivately-held company and is not subject to any requirement that itfile an annual report. Westover Express is providing in Attachment2.2b), in a separate filing, a current financial statement for United,Enbridge and Westover ExpressApplication for Sale and Purchase of Line 10NEB File OF-Fac-Oil-W170-2018 01Enbridge and Westover Express Response to NEB IR No. 2Filed September 18, 2018Page 4 of 8 which is confidential and subject to a request for confidential filing inaccordance with section 16.1 of the National Energy Board Act. 

You can view this here: https://apps.neb-one.gc.ca/REGDOCS/Item/View/3613689

So Enbridge made an application to keep the latest Q4 information of United Refining confidential. It was at that point I called out Enbridge on the lie. United Refinery Co. has the link to all their financial reports on their website here:   http://www.urc.com/misc/sitemap/index.php and if you click the term SEC files it takes you to the Edgar pages with the quarterly reports publicly posted.  
(Reference note:  In Canada all Canadian Quarterly reports are published on SEDAR at  https://www.sedar.com/) 

Since this NEB process isn't an actual hearing I am not limited to any restrictions on how many letter of comments I can give to the NEB but it is still part of the quasi jurisdictional process. My letter of comment calling out the lie is here: https://apps.neb-one.gc.ca/REGDOCS/Item/View/3612369
Now this weekend, I received the response from the National Energy Board and based on the info I've provided they are making another information request IR 3 from Enbridge and they want these answers by Nov. 2nd .They are asking the following: 
Request: a) Explain how the information in the Financial Statement referred to inreference ii) has consistently been treated as confidential informationby URC. b) Discuss and describe any material differences between the publicly available financial information filed by URC with the SEC and thefinancial information that is the subject of the section 16.1 request. c) Justify the assertions of Westover Express as to: c.1) how the broader public interest is promoted by non-disclosureof the financial information subject to the section 16.1 request;and c.2) any material loss or gain or prejudice to URC’s competitiveposition disclosure would cause, in light of the responseWestover Express gives to 3.1(b). 

Full Info Request IR 3 is online here: https://apps.neb-one.gc.ca/REGDOCS/Item/View/3643083

I don't know what Enbridge and Westover Express are going to say but either way,  it should be interesting. 
To follow all the letters of comment Google the term:  Enbridge Line 10 pipeline sale NEB 
Louisette

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