Filing Manual – Guide R – Transfer of Ownership, Lease or Amalgamation (NEB Act Paragraph 74(1)(a), (b) and (c))

Release 2012-01

An application filed pursuant to paragraphs 74(1)(a), (b), or (c) is usually followed by one or more of the following applications:

  • review or amend an NEB decision, pursuant to section 21 of the NEB Act;
  • leave to open, pursuant to section 47 of the NEB Act;
  • addition to or modification of facilities, pursuant to sections 52 or 58 of the NEB Act; or
  • tolls and tariffs, pursuant to Part IV of the NEB Act.

Leave of the Board is required under paragraphs 74(1)(a) and/or (b) of the NEB Act if a company intends to sell, purchase, transfer or lease pipeline facilities or assets that are regulated by the Board, or that would be regulated by the Board after the transaction.

The word “company” as defined in section 2 of the NEB Act encompasses entities incorporated (or continued and not discontinued) under provincial corporate legislation.

The information that is required for this portion of the application will be made available to the Board from two sources:

  • the company divesting the facilities; and
  • the company acquiring the facilities.

Goal

The application includes information describing:

  • the nature of the transaction that invokes section 74 of the NEB Act and the facilities involved;
  • the new owner and operator; and
  • the intended use of the facilities as well as any changes in the conditions of service offered.

Filing Requirements

The company divesting of the facilities must provide the following information:

1. Describe the nature of the transaction (i.e., is the transaction a transfer of ownership, lease or amalgamation).

2. Provide a map or maps of the pipeline and the relevant upstream and downstream facilities, and identify any pipeline facility that could become stranded as a result of the transaction.

3. Provide a confirmation that a copy of the records set out in section 10.4 of CSA Z662 and section 56(e) to 56(g) of the OPR have been provided to the new owner of the facilities.

4. The estimated cost to abandon the facilities.

The company acquiring the new facilities must provide the following information.

1. Identify the new owner and operator of the pipeline including the appropriate contact information.

2. The original cost of the asset, depreciation and net book value.

3. The purchase price of the asset.

4. Describe the intended long-term use of the facilities.

5. Describe any changes in the conditions of service offered on the pipeline, including the estimated toll impact.

6. If the records set out in section 10.4 of CSA Z662 and section 56(e) to 56(g) of the OPR do not exist, the applicant is to provide a plan detailing how it will acquire the information/records necessary to maintain and operate the facilities safely.

Guidance

Circumstances of Application

NEB Regulated to NEB Regulated

When the pipeline is already regulated by the Board, an Order or a Certificate of Public Convenience and Necessity would have been issued once the Board had determined that the facilities:

  • would be constructed and operated in a safe and an environmentally sound manner; and
  • were required for the present and future public convenience and necessity.

As a result, when a transaction involving the sale, conveyance, lease, purchase or amalgamation of an NEB-regulated pipeline is to occur, the Board needs assurance that, notwithstanding any changes in operation or configuration that are expected to occur, it would continue to be in the public interest to operate the facilities.

Both companies involved in the transaction are required to apply to the Board for leave to proceed with the transaction. It is strongly suggested that the companies jointly make the application. Subsequent to receiving leave from the Board to effect the transaction, the companies must notify the Board when the transaction has been completed. At this time, the company acquiring the facilities must apply under section 21 of the NEB Act (see Guide O) to have the existing Order or Certificate amended to reflect the transaction.

If the operation of the pipeline is to be changed, the acquiring company must also meet the requirements of the relevant section(s) of the OPR or PPR and possibly either section 52 or section 58 of the NEB Act.

Group 1Footnote 15 pipeline companies not regulated on a complaint basis may be required to apply under Part IV of the NEB Act if tolls and tariffs matters need to be addressed (see Guide P, Tolls and Tariffs).

Non-NEB Regulated to NEB Regulated

The acquiring company is required to submit the application and should apply concurrently under either section 58 or section 52 of the NEB Act (see Guide A), as if the pipeline was a new facility, for authorization to operate the pipeline. This would provide the Board with the information it requires to approve the pipeline and grant an order or certificate. The company may also be required to apply concurrently under section 47 for leave to open (see Guide T).

NEB Regulated to Non-NEB Regulated

The company divesting the pipeline is required to submit the application. Information provided in the application should satisfy the Board that the public interest would not be harmed by the transaction. The divesting company should also apply for the revocation or amendment, as appropriate, of the existing certificate or order.

Transaction Details

If possible, provide:

  • the certificate or order numbers for the NEB-regulated pipeline and related facilities; or
  • copies of the equivalent documentation issued by the present regulator of the pipeline if not NEB-regulated.

Otherwise, provide the:

  • legal name of the pipeline;
  • location; and
  • complete description of the pipeline and related facilities and the products to be carried.

In addition to providing the information identified above, also provide the:

  • proposed date of the transaction;
  • method of financing; and
  • the operating status of the pipeline.

New Owner Information

Provide:

  • the complete legal names of the proposed new company owner of the pipeline;
  • if the owner is different from the operator, the name of the operator and the relationship between the owner and the operator;
  • contact information for both the owner and the operator;
  • a copy of the Certificate of Incorporation; and
  • verification whether the province of incorporation is different from where the company will be carrying on business for the pipeline.

Maps

The map or maps should:

  • allow the reader to locate the pipeline geographically within a larger region, for example, a province;
  • include relevant details of upstream, downstream and surrounding facilities to enable to the Board to understand the relative importance and role of the subject pipeline;
  • identify the appropriate regulator if any of the relevant facilities are not NEB-regulated; and
  • indicate stranded or potentially stranded facilities.

Long-Term Use

If the long-term use is different from the present use of the pipeline, the acquiring company should provide a description of plans for the future use of the facility.

Changes

If there are to be any changes to the condition of service offered by the pipeline:

  • include a description of the status of the pipeline, (i.e., whether the pipeline is presently in operation, deactivated or abandoned);
  • explain any changes to the type of service, or terms and conditions of service; and
  • describe how these changes would affect the operation of the pipeline.

Describe any and all changes to who is financially responsible for liabilities related to the pipeline.

If a toll, tariff or negotiated settlement is presently in effect, describe any changes to the toll or tariff, other than change in ownership. If no toll, tariff or negotiated settlement is presently in effect but third party shippers are anticipated to require service on the pipeline, file a proposed tariff.

Group 1 pipeline companies not regulated on a complaint basis may be required to apply under Part IV of the NEB Act if tolls and tariffs matters need to be addressed (see Guide P, Tolls and Tariffs).

Abandonment Funding

Provide:

  • the total Abandonment Cost Estimate of the facilities being sold or transferred;
  • a proposal by the seller for its existing letter of credit, surety bond or trust for abandonment funding;
  • a draft copy of the purchaser’s letter of credit, surety bond, or trust agreement for setting-aside abandonment funds;
    • if using a trust to set-aside funds, the dollar amount of abandonment funds that will be in the purchaser’s trust upon its establishment;
    • if using a trust, a proposed trustee for the trust, and a description of whether or not the trustee is regulated under the Trust and Loan Companies Act;
    • if using a trust, a description of how the purchaser intends to collect, or contribute, funds to the trust, as applicable.

See Chapter 7 Referenced Documents, Abandonment Funding and Planning for documents that describe the requirements for pipeline abandonment cost estimates, set-aside and collection mechanisms and aother Board direction regarding abandonment funding.

Next Steps...

Next Steps...

File the completed application. Applicants are encouraged to include the completed relevant checklists from Appendix I.

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