Facts
ACo owns and operates the Pipeline which is situated in Canada, and is responsible for the Reclamation Obligations in respect of the Pipeline. The ACo Reclamation Trust (the “Trust”), settled pursuant to the ACo Trust Agreement, is required to be maintained under an order made by the NEB. The Trustee is a licensed trust company. The trust is a discretionary trust whose beneficiaries are ACo and the Orphan Pipeline Fund (a federal not-for-profit corporation maintaining funds for the reclamation of abandoned pipelines in Canada, consistent with the NEB’s Reason for Decision MH-001-2013). However, the Trust is stated to be “maintained for the sole purpose of funding the Reclamation Obligations” and “distributions from the ACo Reclamation Trust to a Beneficiary or a third party are to be made for the sole purpose of discharging the Beneficiary’s Reclamation Obligations.” The Trust may not be revoked by its Beneficiaries or ACo, acting as a whole, or the Trustee. The NEB, in the exercise of its statutory authority, may direct the termination of the, and order such successive arrangements as are appropriate to fulfill the purpose of the Trust. If property remains in the Trust fund after all the Reclamation Obligations are discharged, then the Trustee, with the approval of the NEB, may distribute the fund among any of the Beneficiaries, including the Orphan Pipeline Fund, as the Trustee in its sole discretion sees fit.
Proposed transactions
Where the Pipeline ships third party products, ACo shall contribute monthly to the ACo Reclamation Trust an amount equivalent to the identifiable charges collected to pay for the future cost for the abandonment of the Pipeline. Where the product shipped is owned by ACo, funds will be contributed to the ACo Reclamation Trust monthly. The amounts contributed are based on the amount required to fulfill the Reclamation Obligations and is required to be pre-determined every five years by the NEB.
Rulings
Re the Trust qualifying as a qualifying environmental trust under s. 211.6(1), contributions by ACo being deductible under s. 20(1)(ss), “qualified investment” in s. 204(b) not being “prohibited investments” of the Trust under s. 211.6(1), and that ACo’s reasonable share of income etc. under s. 107.3(1) is 100%.