Legislature(2007 - 2008)BELTZ 211
02/25/2008 01:30 PM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| Transcanada Withdrawn Partners Liability Issues | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE JUDICIARY STANDING COMMITTEE
February 25, 2008
1:36 p.m.
MEMBERS PRESENT
Senator Hollis French, Chair
Senator Lesil McGuire
Senator Bill Wielechowski
Senator Gene Therriault
MEMBERS ABSENT
Senator Charlie Huggins, Vice Chair
COMMITTEE CALENDAR
Presentation: Tony Palmer, TransCanada Withdrawn Partners
Liability Issues
PREVIOUS COMMITTEE ACTION
No previous action to record.
WITNESS REGISTER
TONY PALMER, Vice-President
Alaska Business Development
TransCanada Corporation
Calgary, Alberta, Canada
POSITION STATEMENT: Provided information and responded to
questions related to withdrawn partners and liability issues.
WILLIAM MOGEL, Consultant
Legislative Budget and Audit
Saul Ewing Attorneys at Law
Washington D.C.
POSITION STATEMENT: Responded to questions related to withdrawn
partners and liability issues.
ACTION NARRATIVE
CHAIR HOLLIS FRENCH called the Senate Judiciary Standing
Committee meeting to order at 1:36:30 PM. Present at the call to
order were Senators French, Therriault, and McGuire. Senator
Wielechowski arrived shortly thereafter.
^TransCanada Withdrawn Partners Liability Issues
CHAIR FRENCH announced the committee will hear from Tony Palmer
with TransCanada and one other witness on the topic of liability
that may or may not exist with respect to former partners in a
previous gas pipeline proposal.
1:37:06 PM
TONY PALMER, Vice-President, Alaska Business Development,
TransCanada Corporation, explained that about 30 years ago the
ANNGTC (Alaska Northwest Natural Gas Transportation Company)
partnership was formed to pursue the Alaska portion of a natural
gas pipeline project. In 1976 Congress passed the Alaska Natural
Gas Transportation Act (ANGTA) for the Alaska section of the
project. It had nothing to do with the Canadian section.
MR. PALMER said that in November 2007 the two remaining ANNGTC
partners, both of which are controlled by TransCanada,
considered whether or not they could or should submit an
application for the AGIA license. "We concluded that we would
not do so due to the uncertainties from some historical
contingent liabilities." He said he will explain that in the
course of his presentation. He will also make it clear that
ANNGTC made no application under AGIA and has played no role in
the application that two other TransCanada entities did make
under AGIA.
1:38:53 PM
CHAIR FRENCH added that the two remaining partners are United
Alaska Fuels Corporation (UAFC) and TransCanada Pipelines USA
and when the partnership document was executed, UAFC was owned
by United Gas Pipeline Company (UGPC). He asked if that entity
was part of the TransCanada family when the partnership was
formed.
MR. PALMER said no, UGPC was an independent U.S. pipeline
company called United Corporation. A subsidiary of Foothills
Pipeline Ltd. purchased UAFC in the early 1990s.
MR. PALMER reiterated that ANNGTC was formed in 1970s to build
the Alaska section of the pipeline. The 11 original partners
comprised the bulk of the U.S. pipeline industry at the time.
Through the 1980s and 1990s partners withdrew until just the two
aforementioned TransCanada subsidiaries remained. Under the
partnership agreement all rights to be treated as partners were
forfeited when they withdrew. Section 15.9 of the partnership
agreement specifically states that the withdrawn partners have
rights for certain contractual payments and no other rights.
Pursuant to the Palin Administration's request, TransCanada
supplied the partnership agreement and responded to specific
questions.
CHAIR FRENCH asked what was happening in the gas business that
caused the other partners to withdraw.
MR. PALMER summarized that the project was formulated and
received approvals in the mid to late 1970s and completion was
to be in the early 1980s. However, in the late 1970s a number of
changes occurred in the natural gas business including changes
in the supply/demand balance and in the price of natural gas. At
that time both the U.S. and Canada went from a shortage of
natural gas to a period of surplus. Despite the best efforts of
the sponsors and governments on both sides of the border, the
project was deferred. By 1981 it was clear that the project
wouldn't proceed on schedule, but there would be delivery of
"prebuild" gas from Western Canada. "In 1981 and 1982 we
constructed-in Canada-the prebuild sections of this project …
because the Alaska project was going to be deferred-at that
point-for 7 years." As time passed more gas was found in the
Lower 48 and Canada and gas prices dropped. Clearly in the short
term the gas wasn't needed. Between 1981 and 1984 partners were
withdrawing. "That is what was happening in the gas business and
the result for this project was deferral. As we've seen today,
that project has been deferred an additional 25 years."
1:43:57 PM
SENATOR WIELECHOWSKI joined the meeting.
SENATOR THERRIAULT noted that withdrawn partners forfeited
rights to be treated as partners, but they were entitled to
contractual rights. He asked if they obtained those contractual
rights at the time that they withdrew.
MR. PALMER explained that Section 4.4.4 of the original
partnership agreement gave partners specific contractual rights
for repayment under certain circumstances. The thought was that
a partner that withdrew would have an opportunity for repayment
of the original capital contribution plus a return. The original
partners contributed about $24 million each. The original cost
of capital rate approved by FERC was 14 percent. Had the project
proceeded in the early 1980s, the assets that were developed
would have been used to develop the project. Those assets
included engineering environmental and legal work to get
permits; a certificate from FERC; and rights of way. The project
didn't go forward but the contractual right to payment was
specific and in the original partnership agreement.
1:46:36 PM
MR. PALMER said the withdrawn partners are entitled to payment
only in certain circumstances. First is when ANNGTC builds the
pipeline, which it does not contemplate doing. Second is if
payment would not cause undue hardship on the partnership.
1:47:28 PM
SENATOR WIELECHOWSKI asked if any of the withdrawn partners have
indicated they are owed payment or if they have been asked to
sign a waiver of rights.
MR. PALMER replied no withdrawn partner has filed or threatened
to file a claim against the partnership. "We would not have
expected one. This partnership has not constructed the
pipeline." Several years ago TransCanada tried to reconstitute
the partnership with the withdrawn partners but that was not
successful. "But they have never posed a claim to us in the 30
years of the partnership."
CHAIR FRENCH read the final sentence in Section 4.4.4(i) that
says, "This right of reimbursement shall be subordinate to the
rights of any creditor of the Partnership." He asked what it
means from a business perspective to have debt that's
subordinate to someone else's.
MR. PALMER said it means that not only must ANNGTC build the
pipeline and not only must any payment not impose undue hardship
on the partnership, but if there are creditors this right of
reimbursement would stand behind that. In terms of
prioritization, this claim would stand below any debt that was
financed. Clearly you wouldn't expect parties that might finance
this project to agree to be behind such a potential claim from
former equity holders since it's risen to $9 billion. That is 24
million for each party compounded at 14 percent for 30 years.
Clearly the original assets that were developed don't have a
value anywhere near that.
1:51:14 PM
SENATOR WIELECHOWSKI asked if dissolution documents have been
filed and when the last partnership meeting took place.
MR. PALMER replied there have been no dissolution agreements
filed and the last partnership meeting was held several years
ago. Other than the unsuccessful reconstitution effort by
TransCanada subsidiaries in the early part of the decade, the
partnership has been relatively inactive for several years.
CHAIR FRENCH noted that the last partner withdrew 14 years ago
in 1994 leaving two partners that are wholly owned subsidiaries
of TransCanada.
MR. PALMER clarified they're indirect subsidiaries of
TransCanada. He continued to say that the remaining TransCanada
partners in ANNGTC are not the AGIA applicants and they have
neither current nor future duties to the withdrawn partners.
Also, neither the two remaining TransCanada partners nor any
other TransCanada entity owes any duty to the withdrawn
partners. "We have no obligation to continue pursuing a project
that was formulated some 30 years ago…where the last partner
withdrew some 14 years ago." There is not a non-compete clause
in that partnership agreement and no TransCanada entity is
prohibited from pursuing a different project. When Congress
passed ANGPA in 2004 that enabled other parties to pursue a
project under a specific piece of legislation.
MR. PALMER said with regard to TransCanada's AGIA applicants,
there are two separate entities to pursue the project in each
country - Foothills Pipelines in Canada under the Northern
Pipeline Act and TransCanada Alaska Company LLC in Alaska under
ANGPA. "The co-applicants are not, nor have they ever been,
partners in ANNGTC. They are completely separate legal
entities." The AGIA application also does not contemplate the
use of any assets owned by ANNGTC. So the original assets
developed by that partnership have not and will not be used
going forward.
CHAIR FRENCH asked him to expound upon what those assets are.
MR. PALMER replied they include the original FERC certificate, a
federal right of way, coastal zone management permits, and
extensive engineering and geotechnical work.
CHAIR FRENCH asked if the FERC certificate is the same type that
will be pursued under a new pipeline proposal.
MR. PALMER replied the certificates are similar but not
identical.
1:55:21 PM
SENATOR WIELECHOWSKI asked if the Canadian rights of way (ROW)
belong to the partnership.
MR. PALMER said no; the structure in Canada is completely
separate from the one in the United States. The legal entities
are separate, the regulatory approvals are separate, and the
pipelines were to physically interconnect at the border.
SENATOR WIELECHOWSKI asked if any information obtained through
the ANNGTC partnership is being used to pursue an AGIA
application.
MR. PALMER replied, "We have used none; we intend to use none."
MR. PALMER said to follow on the previous question he'd address
the Canadian section of the line. He explained that Foothills
Pipelines Ltd. was certificated under the Canadian Northern
Pipeline Act to build the Canadian section of the pipeline.
Foothills Pipelines Ltd. is a separate legal entity from ANNGTC.
TransCanada owns 100 percent of Foothills today. "There are no
withdrawn partner issues in Canada. There never were any
withdrawn partner issues in Canada. Foothills has no potential
future contingent liability and ANNGTC does not hold any
authorizations under the Northern Pipeline Act or otherwise for
any facilities in Canada. And vice versa Foothills holds no
certificates in the U.S. under ANGTA."
MR. PALMER said that TransCanada Alaska Company LLC will deal
with the Alaska side of the border for the application under
AGIA. That entity has no liability to ANNGTC or to any of the
withdrawn partners. The application contemplates that the
capital expenditures and the scheduling will start from scratch.
When ANNGTC looked in the fall as to whether or not it
should pursue the project, it examined a contingent
liability of potentially $9 billion growing at 14
percent a year versus the value of those assets, which
were significantly diminished from what they had been
30 years ago when the project was going to proceed
immediately. We also considered the cost to construct
the Alaska component of the project. Those of you that
have examined in detail our application would see the
capital cost of constructing the Alaska portion of the
project is in the order of $10 billion. We knew that
ANNGTC could not compete with any third-party by
incurring $10 billion to construct the project plus an
additional 9 [$9 billion] and be competitive with any
third party. That was impossible. We concluded that it
was not viable to proceed.
Also the…administration asked us a key question and we
responded…earlier this year that we've put forward an
additional safeguard. In the highly unlikely event
that there's ever a claim comes home to TransCanada
from any of these withdrawn partners and we have to
pay money to those-and I hope we've described for you
that we think that will never occur-but if it does we
will not include it in the rates to the customers. We
think that's the critical issue for shippers. We think
that's the critical issue for the state that is
clearly a tax collector and royalty collector. We've
made that clearly and definitively in our response to
a request from the state.
CHAIR FRENCH added that an independent attorney also looked at
the issue and decided that the contingent liability couldn't be
added to rate payers.
1:59:29 PM
MR. PALMER, turning to other issues, explained that last week
ANNGTC withdrew the application it filed in 2004 under the state
ROW Act. ANNGTC has held and paid for a federal ROW for 20 some
years, but that will expire in 2010. The TransCanada Alaska
Company LLC has no rights to that federal ROW and it wasn't used
in its AGIA application. "TransCanada Alaska Company LLC intends
to submit new applications according to our schedule in 2011 for
both federal and state rights of way for the pipeline project
proposed in our AGIA application."
MR. PALMER emphasized that ANNGTC believes there would be no
merit to any claim that a TransCanada entity would be required
to pay ANNGTC's contingent obligations to withdrawn partners if
the pipeline project proposed in the AGIA application is placed
in service. Since TransCanada entities have no liability, it
necessarily follows that other parties involved in the project
wouldn't either. "Our co-applicants have already unconditionally
and unequivocally committed not to include in the project rates
any amounts that any TransCanada entity may somehow in any
unlikely case be required to pay as a result of those contingent
claims." He reiterated that no claim has ever been made or even
threatened by withdrawn partners.
MR. PALMER summarized the AGIA application by TransCanada Alaska
Company LLC has nothing to do with ANNGTC, its long history, or
its contingent obligation to withdrawn partners. A claim has
never been made or threatened by withdrawn partners. TransCanada
has offered an additional safeguard by indicating that it
commits to never including any potential ANNGTC liabilities in
project tolls. "Although this matter has been debated somewhat
in the press, we hope we have been fully responsive both to the
administration and to this committee today."
2:02:12 PM
CHAIR FRENCH highlighted two areas where the public may be
confused. One is the overlap in the corporate structure between
former ANNGTC partners and current AGIA partners. Referring to a
corporate flowchart he said it appears as though one of the AGIA
partners is a wholly owned subsidiary of TransCanada Pipeline
USA Ltd. and a former ANNGTC partner. On the other side of the
corporate structure a former ANNGTC member is at the bottom of
the corporate chart and an AGIA applicant is above it. To the
layman it appears as though there's a corporate overlap even
though they're clearly distinct legal entities from a business
standpoint.
MR. PALMER responded as follows:
Clearly as a business man, those are separate and
distinct legal entities. And there are no
obligations…firstly for the ANNGTC partners that are
remaining in TransCanada's corporate structure to
pursue this project. They have no obligation to the
withdrawn partners to pursue the project. Many of
those withdrawn partners withdrew some 25 years ago.
As you described, the last non-TransCanada party
withdrew 14 years ago. … They are no longer pursuing
this project under ANNGTC. They are not precluded from
competing for this project-could have made an AGIA
application. In fact, some of the parent companies of
the former partners at least considered making an
application under AGIA. They had no non-compete
obligations as did not the TransCanada ANNGTC
remaining partners. So there is no obligation from
TransCanada's entities that remain in ANNGTC to pursue
that project. They have no obligations to the ANNGTC
partners other than a contractual right to payment if
ANNGTC completes the project. I've described to you
why ANNGTC is not a viable entity and cannot proceed
with it. So that firstly deals with the remaining
TransCanada entities. If those entities are not
precluded from pursuing a different project, then
surely the separate and distinct legal entities that
we've put forward are not obliged and have no
obligations to those original partners.
2:05:35 PM
SENATOR McGUIRE asked why the partnership wasn't dissolved.
MR. PALMER replied TransCanada will have to consider that
circumstance in the future, but at present it's focused on
pursuing the AGIA application. There isn't any urgency to
dissolve the partnership, but the remaining two partners have
concluded that ANNGTC can never viably advance a project. He
understands why the question is posed but it doesn't affect the
AGIA application or the project if it proceeds.
2:07:28 PM
CHAIR FRENCH pointed out that from a public perspective the two
projects overlap. The former partnership was going to build a
pipeline along the highway route to Canada and the current
proposal is for different subsidiaries to build a pipeline along
the same general route. He asked if it's a different project or
if it's a different set of subsidiaries building the pipeline
that makes it different.
MR. PALMER replied there are some similarities, but there are
also clear distinctions between the project contemplated by
ANNGTC 30 years ago versus the project today. They are separate
legal entities operating under separate legislation. ANNGTC was
pursuing a project under ANGTA while the current TransCanada
applicant within Alaska is pursuing a project under ANGPA. Both
projects are to build a pipeline along a similar route from
Prudhoe Bay to the Alaska/Yukon border. The current project will
connect at the border with Foothills Pipelines. Just as there
was no commercial connection before, there will be no commercial
connection under the AGIA application. Also it's been clearly
stated that TransCanada owns 100 percent of ANNGTC and
TransCanada Corporation owns 100 percent of TransCanada Alaska
Company LLC so there are no withdrawn partnership issues because
TransCanada is the only owner.
2:10:17 PM
CHAIR FRENCH asked about physical differences between the two
projects such as pipe size and thruput.
MR. PALMER said the original project expected the volume to be
2.3 bcf/day and pipe diameters varied. Some were smaller and
some were larger. At that time there were no restrictions on
diameter, volume or pressure. Today the pressure is clearly
higher and hopefully the volume will be 4.5 bcf/day. The actual
route hasn't been defined but it's expected to be a very
similar.
CHAIR FRENCH asked if FERC certification happened before open
season 30 years ago. He understands that now open season happens
first.
2:12:04 PM
MR. PALMER explained that the gas business was very different 30
years ago and he doesn't recall that there was an open season.
He believes that all the original pipelines that were partners
were merchant pipelines, meaning that they bought gas and sold
it to local distribution companies. They did not transport gas
for third parties as is done exclusively today. The original
partnership agreement indicates that almost all the parties
intended to become shippers. Only TransCanada Alaska said only
that it may become a shipper.
SENATOR McGUIRE asked if he knows of any legal opinions related
to piercing the corporate veil and other issues he raised that
might be helpful to the committee.
MR. PALMER said that any discussions that TransCanada has had
with its attorneys are subject to privilege. The administration
asked the same question and received the same answer.
2:14:12 PM
CHAIR FRENCH relayed that he asked legislative legal for a
memorandum about piercing the corporate veil and that's in the
packet. Copies are available to any interested reporter or
member of the public, he added.
SENATOR WIELECHOWSKI asked if any of the withdrawn partners got
back any of their original investment.
MR. PALMER replied they did not receive any refund of original
capital contributions. Under Section 4.4.4 withdrawn partners
received a contractual right to recover their original
contributions plus a return under the aforementioned conditions.
Exiting partners often leave behind any rights, but that wasn't
the case here. "If the project was constructed by ANNGTC and the
other conditions were met, they had an opportunity for recovery
of their original contributions plus a return."
2:15:33 PM
SENATOR THERRIAULT asked if he agrees with the legal opinion
that FERC wouldn't allow TransCanada to charge back through the
tariff structure any of the potential $9 billion liability.
MR. PALMER replied that he read the legal opinion but since
TransCanada has unequivocally stated that it wouldn't seek
repayment he didn't give it extensive review.
SENATOR WIELECHOWSKI asked what work was done as a partnership
to advance the project after the 11 original partners each
contributed about $25 million.
MR. PALMER explained that the partnership was formulating
applications to FERC, it was doing engineering work, it was
doing environmental work, and it was doing field work. It was on
a path to complete the project. The partnership did in fact
obtain a FERC certificate and other permits. It did the normal
work that a pipeline group - partnership as opposed to company -
would do to advance and complete a project and be ready to move
forward to construction. That's what the $250 some million was
expended on. "But at the point where the project was going to
proceed the marketplace changed." That changed marketplace
didn't allow the project to get customers or go forward. The
ultimate result was a failed project. By 1981 some of those
original partners were withdrawing despite having spent $24
million just three years earlier.
2:19:25 PM
SENATOR THERRIAULT asked about the report to FERC about the
escalating debt and if there's been a similar report every year.
MR. PALMER explained that each year through 2006 ANNGTC has
filed FERC Form No. 2. It describes the contingent liability,
calculates the number, adds the annual AFUDC, and theoretically
puts forward an asset value. Clearly though, neither the asset
nor the contingent liability exist. The final footnote in the
FERC Form No. 2 refers to the key contingency on the liability.
That is that ANNGTC is not required to make the filing because
today it isn't a natural gas pipeline. Perhaps some of the
confusion stems from ANNGTC having made those voluntarily
filings, he said.
2:21:16 PM
WILLIAM MOGEL, Attorney, Saul Ewing Attorneys at Law, Washington
D.C., explained that he was retained by the LB&A Committee to
assist on legal matters arising from the AGIA process.
CHAIR FRENCH asked him to summarize his reasoning and the
conclusions he came to in the 1/15/2008 memorandum with respect
to payment allegations of the ANNGTC withdrawn partners.
MR. MOGEL explained that he was asked to look at the question as
a FERC expert to answer whether or not FERC would permit
TransCanada LLC and Foothills Pipelines Ltd. to recover, through
the rates of their proposed AGIA pipeline, the approximately $9
billion in obligations to withdrawn partners. He concluded that
FERC would not permit that for two primary reasons. First, the
AGIA applicants for the Alaskan portion are different legal
entities from the [ANNGTC] partnership. Second, the $250 million
plus interest that was expended were not costs that would be
used and useful to a new pipeline company. It's long been a
hallmark of public utility regulation that to allow a company to
recover a return on an asset, it must be both used and useful.
This wouldn't be construed that way, he said.
2:24:12 PM
SENATOR WIELECHOWSKI asked if he's familiar with partnership law
and if he's aware of the facts of the ANNGTC partnership. In
particular he's referring to Section 4.4.4(i) and if he has an
opinion on whether withdrawn partners would have a right to
repayment if the pipeline proceeds.
MR. MOGEL replied he's generally familiar with partnership law
and he has reviewed the partnership agreement that's been
referred to today. He believes that under the language in the
aforementioned section, the withdrawn partners would only have a
right to repayment under the conditions Mr. Palmer described.
That is if the partnership line became operational and if the
repayment could be made without causing undue hardship. "That's
the clear meaning of that language as far as I'm concerned."
2:25:35 PM
SENATOR WIELECHOWSKI asked if the withdrawn partners would have
a right to repayment if TransCanada did build a line and it was
operational.
MR. MOGEL replied, "If the partnership built the Alaskan portion
of the pipeline it'd be my view that they would have a right to
recover their investment plus interest. But not 'TransCanada,'
it'd be the partnership as the legal entity."
SENATOR WIELECHOWSKI responded, "Even though TransCanada was an
important partner to this partnership program and the plan is
very similar if not identical to what had been discussed in this
agreement, it's your opinion that the…withdrawn partners - this
partnership - would not have any right to receive compensation
under 4.4.4 or any other provision of this contract."
MR. MOGEL explained that if the partnership was one of the AGIA
applicants of TransCanada and it built the Alaska segment of the
line, Section 4.4.4 gives withdrawn partners certain rights upon
the happening of two conditions
SENATOR WIELECHOWSKI asked if he's saying that if one of the
partners of the original partnership goes on its own to create a
pipeline that is similar to the one contemplated in the
partnership, they would not be entitled to any benefit under the
contract in that scenario.
MR. MOGEL told him that he's raising a different issue. What he
reviewed and spoke to in the memorandum was the specific
language of the partnership agreement. "There may be other law
that may be involved here as to what right if any a partner has
to former partners. But that is not something I covered in my
memorandum and it's not something I've looked at."
2:28:00 PM
SENATOR WIELECHOWSKI said he realizes it wasn't covered in the
memorandum; he was just curious if he had an opinion.
MR. MOGEL replied his opinion is that it's a good question on a
different issue.
SENATOR McGUIRE suggested the committee look at the issue of
partnership law and specifically Sections 15.2-15.9 of the
partnership agreement. Section 15.8 makes it clear the
partnership continues to exist until there's an event of
dissolution. It specifies that when new partners are added or
when partners withdraw the partnership will continue. She
suggested the committee ask what rights and obligations any
partnership might have to a succeeding partnership. Intellectual
property could be involved, for example.
SENATOR WIELECHOWSKI suggested that the committee might want
answers to these questions. He understands that FERC may not
allow the contingent liability to be added to the tariff and
that's good, but if TransCanada has a potential $9 billion
contingent liability that's a concern for everyone.
2:30:23 PM
CHAIR FRENCH summarized that Mr. Mogel gave two conclusions.
First that there wouldn't be a liability and second that if
there was a liability it wouldn't be added to the tariff. He
asked him expand on the second conclusion.
MR. MOGEL explained that the information that was prepared in
connection with the filing in the late 1970s with regard to
route, capacity, pipeline, etcetera probably wouldn't be
applicable in today's environment. If that same legal entity
were to go before FERC to recover the original investment plus
interest, he believes that FERC would say that the work is out
of date and it's not used and useful in the proposed pipeline.
Thus there is no opportunity for recovery or a return on the
investment.
2:31:48 PM
CHAIR FRENCH asked what the basis is for that rule.
MR. MOGEL replied it's an old rule in utility law that a utility
is only able to recover a return on an investment that is used
and useful for the ratepayer. For example, if an Illinois
natural gas utility purchased a golf course in California and
then tried to recover the cost of the acquisition, it would have
difficulty proving that the golf course is used and useful to
the Illinois ratepayers.
CHAIR FRENCH summarized the reasoning, which is that even if
several unlikely events happened and TransCanada and the AGIA
partners found themselves saddled with the enormous liability,
none of the expenditures would be used or useful in the
construction of the current AGIA pipeline.
MR. MOGEL clarified that his conclusion would be that
significantly all, rather than none, of the expenditures would
not be used or useful.
CHAIR FRENCH asked Mr. Palmer if he'd like to address any of the
issues Mr. Mogel raised.
2:34:01 PM
MR. PALMER restated that the TransCanada AGIA applicants are not
and never have been partners in ANNGTC. "They are separate and
distinct entities." TransCanada Alaska Co., LLC and Foothills
Pipelines Ltd. never have been partners in ANNGTC and the ANNGTC
partners do not plan to build the pipeline they originally
contemplated. Since ANNGTC is not constructing the original
project it does not have a liability to the withdrawn partners.
It follows that separate and distinct entities pursuing a
separate and distinct project also would not have any liability.
SENATOR WIELECHOWSKI, referring to the list of partners on pages
1-2 of the partnership agreement, asked with which organization
he was affiliated.
MR. PALMER explained that in 1978 TransCanada was not affiliated
with any of the listed entities. However, in the early 1990s
Foothills Pipelines Alaska Inc. purchased United Alaska Fuels
Corporation, which is listed as a party on page 2, Section 1.6,
of the 1978 ANNGTC partnership agreement. TransCanada Pipelines
USA Ltd. joined the partnership in 1980. That is outlined in
Amendment No. 3, page 3, Section 1.11.
At ease from 2:38:39 PM to 2:42:03 PM.
CHAIR FRENCH thanked Mr. Palmer and adjourned the meeting at
2:42:21 PM.
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