Filing Manual – Guide R – Transfer of Ownership, Lease or Amalgamation (CER Act section 181)

Table of Contents

1. Goal
2. Filing Requirements
3. Guidance

A company must not complete certain transactions unless the Commission has granted leave, by order, under section 181 of the CER Act. This includes:

• selling or otherwise transferring, or leasing, in whole or in part, a pipeline or abandoned pipeline to any person;
• purchasing or otherwise acquiring, or leasing, in whole or in part, a pipeline or abandoned pipeline from any person; or
• if a company is authorized to construct or operate a pipeline or owns an abandoned pipeline, amalgamating with any other company

(collectively, Proposed Transaction)

The failure to obtain the required leave under subsection 181(1) of the CER Act before completing a Proposed Transaction is designated as a violation in Schedule 1 of the Administrative Monetary Penalties Regulations.

The meaning of "pipeline" and "abandoned pipeline" in the context of a section 181 application is set out in section 2 and subsection 181(2) of the CER Act and captures pipelines that are regulated by the CER or would be regulated by the CER after the Proposed Transaction. The definition of pipeline includes connected works such as tanks, pumps, valves, compressors, and meter stations.

A section 181 application may, depending on the circumstances, include or be followed by one or more of the following applications:

• Variation or transfer of a certificate(s) under section 190 of the CER Act.
• Variance of a decision(s) or order(s) under section 69 of the CER Act.
• Leave to open under section 213 of the CER Act, or a leave to open exemption under section 214.
• Certificate or order authorizing operation under sections 183 and 214 of the CER Act, respectively.
• Implementation or modification to tolls and tariffs under sections 225 to 240 of the CER Act.

For a sale, transfer, lease, or purchase under paragraphs 181(1)(a) and (b), the applicant is:

• the company proposing to sell, transfer, or lease (become the lessor of) the pipeline or abandoned pipeline (Seller);
• the company proposing to purchase, acquire, or lease (become the lessee of) the pipeline or abandoned pipeline (Purchaser); or
• both the Seller and Purchaser depending on whether the pipeline or abandoned pipeline is entering into, remaining in, or leaving the CER's jurisdiction.

In the case of a proposed amalgamation under paragraph 181(1)(c), the applicant is the company whose pipeline or abandoned pipeline is presently regulated by the CER (or both companies, if they both have a pipeline or abandoned pipeline regulated by the CER).

Top of Page

Goal

The application includes information to satisfy the Commission that the public interest would not be harmed as a result of the Proposed Transaction to sell, purchase, lease or amalgamate.

Top of Page

Filing Requirements

Detailed filing requirements are specified in the Transfer of Ownership, Lease, or Amalgamation Application Form. The filing requirements in the Form cover topics such as:

• applicant(s) and application details;
• operations;
• notification and engagement;
• pipeline specifications, operating status, and maps; and
• financial matters, including abandonment funding and financial resources.

Top of Page

Guidance

R.1 Guidance for instances where the pipeline or abandoned pipeline is currently regulated by the CER and would remain regulated by the CER after a Proposed Transaction (i.e., CER Regulated to CER Regulated)

• The Seller and the Purchaser are strongly encouraged to apply jointly. In these circumstances both the Seller and Purchaser involved in the Proposed Transaction are required to apply for leave to sell and leave to purchase, respectively, prior to completing the transaction. Both the Seller and the Purchaser need an order of the Commission under paragraph 181(1)(a) and (b), respectively.
• After the Commission grants leave under section 181, the companies must notify the CER when the transaction has been completed.
• Companies must apply to have the existing order(s) or certificate(s) amended to reflect the transaction (e.g., under sections 69 or 190, see Guide O), which may be included in the section 181 application.
• If the operation of the pipeline is to be changed, the Purchaser must also meet the requirements of the relevant section(s) of the CER Onshore Pipeline Regulations (OPR) or CER Processing Plant Regulations (PPR), and possibly either section 183 or section 214 of the CER Act.
• Group 1 pipeline companies^Footnote 31 not regulated on a complaint basis may be required to apply under the CER Act if tolls and tariffs matters need to be addressed (see Guide P ‒ Tolls and Tariffs).

R.2 Guidance for instances where the pipeline is not currently regulated by the CER and would become regulated by the CER after a Proposed Transaction (i.e., Non-CER Regulated to CER Regulated)

• The Purchaser is required to submit the application for leave under paragraph 181(1)(b) of the CER Act.
• The Purchaser should concurrently submit a facilities application under either section 214 or section 183 of the CER Act (see Guide A as applicable) for authorization to operate the pipeline. This would provide the Commission with the information it requires to approve the pipeline and grant an order or certificate as appropriate.
• To operate a pipeline, a company is also required to apply for leave to open under section 213 (see Guide T as applicable) or a leave to open exemption under section 214. Pipelines that may be exempted from leave to open include pipelines that have already been constructed.
• The Commission expects companies to demonstrate that a pipeline entering CER regulation can be operated safely.

R.3 Guidance for instances where the pipeline or abandoned pipeline is currently regulated by the CER and would no longer be regulated by the CER after a Proposed Transaction (i.e., CER Regulated to Non-CER Regulated)

• The Seller is required to submit the application for leave under paragraph 181(1)(a) of the CER Act. The Seller must also apply for the revocation or amendment, as appropriate, of the existing certificate(s) or order(s) for the pipeline or abandoned pipeline.
• The Seller should include information in its application about the Purchaser, including contact information and an explanation of the Purchaser’s ability to finance the ongoing operations of the pipeline or, if the pipeline is already abandoned, any post-abandonment activities.
• The Seller should also provide confirmation that the regulator that would gain jurisdiction over the pipeline or abandoned pipeline has been or will be notified of the transaction.
• The Seller must include a proposal for the treatment of any abandonment funds set aside in a trust (e.g., to keep funds in trust or to release funds from trust to the Purchaser, the Seller or to shippers, etc.).

R.4 Guidance where the Proposed Transaction is an amalgamation with another company

• When a company with a CER-regulated pipeline or abandoned pipeline is amalgamating with another company, the company(ies) with CER authorizations are required to submit the application for leave under paragraph 181(1)(c) of the CER Act.
• In order to give sufficient time for the Commission to assess the application, it is strongly recommended that the application for leave to amalgamate be submitted at least 40 days prior to the scheduled amalgamation close date.
• The company with CER authorization(s) should also apply for amendment(s), as appropriate, of the existing certificate(s) or order(s) for the CER-regulated pipeline or abandoned pipeline.

 

Top of Page