Top 7 Reasons You Can't Trust Kinder Morgan

TOP 7

REASONS YOU CAN’T TRUST

KINDER MORGAN #StopKinderMorgan

WWW.STAND.EARTH

KINDER MORGAN:

A RISK TO OUR COAST DISTRICT OF NORTH VANCOUVER WEST VANCOUVER

SQUAMISH NATION KER TAN

UNIVERSITY ENDOWMENT LANDS

ROU

TE

TSLEIL-WAUTUTH NATION CITY OF NORTH VANCOUVER

BELCARRA

TANKER TERMINAL

MUSQUEAM NATION

VANCOUVER

ANMORE

PORT MOODY

KIN DER MO PIP RGA ELI NE N BURNABY COQUITLAM

MORE TANKERS

6 MILLION LITRES

OF OIL SPILLS

PIPELINE

INCREASE THE RISK ANNUAL OIL TANKER TRAFFIC IN VANCOUVER TODAY...

... IF KINDER MORGAN BUILDS THEIR PIPELINE

HAVE ALREADY NEW

BEEN SPILLED WESTMINSTER

FROM THE EXISTING

TRANS MOUNTAIN

A NEW PIPELINE WILL PRODUCE

80 MILLION TONNES

OF GREENHOUSE

EMISSIONS

THAT’S LIKE ADDING

TWENTY-THREE

COAL PLANTS

REASONS

YOU CAN’T TRUST KINDER MORGAN

The pipeline and its tankers threaten fishing and other natural resources vital to First Nations in the area.

The pipeline will increase global greenhouse gas emissions by 80 million tonnes (that’s the equivalent of 23 coal plants)

Bitumen Production - 7.7 million tonnes CO2e Pipeline Operations - 1.1 million tonnes CO2e Bitumen refining and distribution - 17.3 million tonnes CO2e Combustion of final product - 53.8 million tonnes CO2e

1

5

HISTORY OF DODGING TAXES

HISTORY OF SAFETY VIOLATIONS

2

6

Total: 79.9 million tonnes CO2e

(Source: Jaccard, Mark and Hoffele, James. “Impact on GHG Emissions and Climate Targets of the Trans Mountain Expansion Project, MK Jaccard and Associates May 14, 2014)

MISLEADING INVESTORS

IGNORING FIRST NATIONS OPPOSITION

3

7

SHORTCHANGING CANADIANS

4

DEFRAUDING CUSTOMERS

IGNORING COMMUNITY OPPOSITION

1

HISTORY OF

DODGING TAXES

Kinder Morgan has a history of using its complex web of partner and subsidiary companies to avoid paying its fair share of taxes.

For example, in 2008, the county of Montezuma in Colorado found that Kinder Morgan used complex accounting methods to avoid $2 million in local property taxes.1 And in 2014, Kinder Morgan changed its corporate structure to avoid $20 billion in taxes.2

2 CANADIANS

SHORTCHANGING

Kinder Morgan has been particularly good at avoiding its fair share of Canadian taxes. Corporate taxes in BC and Alberta range between 25-27%.

Yet between 2009 and 2013, Kinder Morgan paid an average of only 0.9% in tax on its Canadian income.* In 2013, Kinder Morgan had a negative Canadian tax bill - it received at least $4.2 million in tax refunds even though it earned $167 million in Canada.3

99.991% OF KINDER MORGAN’S

CANADIAN INCOME IS TRANSFERRED

TO NON-CANADIAN SUBSIDIARIES.4

WHY DOES THIS

SOUND SO FAMILIAR?

3 INVESTORS

MISLEADING

Kinder Morgan has a history of using creative accounting practices and its complex web of subsidary companies to mislead investors.

Kinder Morgan was accused by business analysts of misleading investors through the use of complex accouting practices.5 Shareholders have also sued Kinder Morgan for transferring what was supposed to be pipeline maintenance funds into other companies.6 In 2015 Delaware officials found that Kinder Morgan kept money from the investors of one of its subsidiary companies. The state found that Kinder Morgan owed those investors over $100 million.7 Later in 2015, facing a potential downgrade of its debt to junk status,8 Kinder Morgan suddenly cut its dividend by 75%.

Investors now call this ‘Getting Kindered.”9

4 CUSTOMERS

DEFRAUDING

An FBI investigation determined that between 1997 and 2001, Kinder Morgan systematically defrauded its own customers, including the Tennessee Valley Authority. For example, at a facility in Illinois, Kinder Morgan used certified scales to weigh incoming coal, but an altered scale that made the outgoing coal they sold to customers seem heavier.10

Kinder Morgan began as a subsidiary of Enron, the scandal-filled company that defrauded its clients and shareholders through creative accounting that hid its real debts and liabilities.11 Kinder Morgan founders Richard Kinder and William Morgan were both executives at Enron but left only a few years before the collapse. Richard Kinder has been called “The Luckiest Ex-Enron Employee.” His successor at Enron is currently serving a 24-year jail term. 12 Other Kinder Morgan executives also had roles at Enron. Current Kinder Morgan CEO Steven J. Kean was Executive Vice President at Enron. He was accused of insider trading at the disgraced company in 2002.13 Kinder Morgan Chief Tax Officer Jordan A. Mintz was charged by the US SEC for hiding fraud while he was Managing Director of Corporate Tax at Enron.14 Other former Enron employees currently working as executives at Kinder Morgan include David P. Michels and Dax A. Sanders.15

5

A HISTORY OF

SAFETY VIOLATIONS

Kinder Morgan has a very long history of safety violations. Kinder Morgan has been responsible for at least 1800 oil and chemical spill violations since its incorporation in 199716. In 2014, the financial magazine Barron’s analyzed Kinder Morgan’s financial statements and found that the company might not be spending the resources necessary to responsibly maintain its pipeline and storage assets.17

RECENT SAFETY PROBLEMS AT KINDER MORGAN 2003

2014

2007

2015

Kinder Morgan bribed a ship captain to illegally dump waste into the sea. The company eventually pled guilty and paid a fine of $240,000.18

Over 250,000 litres of oil spilled from a pipeline in Burnaby, eventually draining into the Burrard Inlet.

The spill forced 250 residents from their homes.

Kinder Morgan was ordered to pay $150,000 for the spill.19 In 2007 Kinder Morgan was also fined $613,000 for mixing an illegal solvent into gasoline and diesel, which caused vehicles to break down.20

2009

300,000 gallons of oil spilled out of a Kinder Morgan pipeline in the town of Belton, South Carolina. The oil was found mixed with local groundwater.24

Kinder Morgan was sued by the City of San Diego for failing to properly clean an oil storage system that was polluting local water.25

2016

A Kinder Morgan subsidiary submitted misleading information to the US Federal Energy Regulatory Commission around water quality issues of one of its pipelines.26

The US Pipeline and Hazardous Materials Safety Administration charged Kinder Morgan for illegally having its pipelines placed too close to sensitive areas such as schools and hospitals.21

“WE STRUGGLE TO UNDERSTAND HOW

2010

THE LARGEST PORTFOLIO OF TRANSMISSION AND STORAGE

Kinder Morgan was fined $1,000,000 for lying in its permit applications and violating the Clean Air Act.22

2011

A Kinder Morgan facility was the site of a large oil spill and the largest major fish die-off in a decade in Portland, Oregon.23

KINDER MORGAN

CAN SAFELY OPERATE

ASSETS IN THE INDUSTRY

FOR JUST A FRACTION

OF ITS PEERS’ EXPENDITURES.” BARRON’S, FEBRUARY 22 2014 17

LOCAL OPPOSITION

Opposition to Kinder Morgan’s pipelines has been growing across North America.

In the Metro Vancouver area, the company faces local opposition from citizens, First Nations, and municipal governments.

6 FIRST NATIONS

OPPOSITION FROM

A large number of local First Nations, including the MUSQUEAM, SQUAMISH, and TSLEIL-WAUTUTH, have deemed the Kinder Morgan project illegal under their unextinguished indigenous laws.

In 2014, the Supreme Court of Canada unanimously declared Aboriginal Title on a large area of land in BC. The decision also made First Nations’ consent a practical requirement for pipeline construction and other capital projects.27

SEVENTEEN

FIRST NATIONS

IN BC AND ALBERTA

ARE ALREADY OPPOSED TO THE

KINDER MORGAN

PIPELINE

KINDER MORGAN

HAS BEEN

STOPPED

BEFORE

“THE KINDER MORGAN

PIPELINE PROPOSAL

AND THE OIL TANKERS

ASSOCIATED WITH IT ARE INCREDIBLY DISASTROUS

FOR VANCOUVER”

GREGOR ROBERTSON, MAYOR OF VANCOUVER 28

7

COMMUNITY OPPOSITION

Kinder Morgan faces fierce opposition from local communities. In 2012, the BC Union of Municipalities passed a motion opposing pipelines that increase tanker traffic on the coast.29 The following municipalities have voted to oppose the Kinder Morgan Pipeline.30

ANMORE • BOWEN ISLAND • BURNABY • COQUITLAM • DELTA • LANGLEY CITY • LIONS BAY • MAPLE RIDGE • NEW WESTMINSTER • NORTH VANCOUVER CITY • NORTH VANCOUVER DISTRICT • PITT MEADOWS • PORT COQUITLAM • PORT MOODY • RICHMOND • SURREY • VANCOUVER • WEST VANCOUVER • WHITE ROCK • VICTORIA

Public opposition has already stopped two Kinder Morgan pipelines in the United States together worth a total of $4 billion.

NORTHEAST ENERGY DIRECT Proposed to run from New York through Massachusetts to New Hampshire, the pipeline was met with significant community and political opposition. Cancelled in April 2016.31

PALMETTO PIPELINE Originally to run from Belton, SC to Jacksonville, FL, the Palmetto Pipeline met fierce local opposition, including from lawmakers in South Carolina and Georgia. It was shelved in Spring, 2016.32

NOTES INSIDE COVER:

Tankers: Trans Mountain Pipeline Webpage (http://www.transmountain.com) Trans Mountain Pipeline Spills: Between 1961 and 2013 the Trans Mountain Pipeline has spilled 5,799,700 litres of hydrocarbons (Kheraj, Sean. “Historical Background Report: Trans Mountain Pipeline 1947-2013, York University) Pipeline Emissions: The Trans Mountain pipeline expansion is expected to produce 79.9 million metric tonnes CO2e of upstream and downstream emissions (“Impact on GHG Emissions and Climate Targets of the Trans Mountain Expansion Project.” MK Jaccard and Associates, May 2014).

18. Rogoway, Mike. “Port operator gets penalty for dumping.” The Oregonian, Apr 23, 2008: http://www.oregonlive.com/business/oregonian/index.ssf?/ base/business/1208917515292290.xml 19. “Three companies plead guilty to Burnaby oil spill.” CBC News, Oct 3, 2011: http://www.cbc.ca/news/canada/british-columbia/3-companies-pleadguilty-to-burnaby-oil-spill-1.1005862 20. “Kinder Morgan Consent Agreement and Final Order Fact Sheet.” US Environmental Protection Agency, May 2, 2007: http://www2.epa.gov/ enforcement/kinder-morgan-consent-agreement-and-final-order 21. Correspondance with Mr. Richard D. Kinder, U.S. Department of Transportation, Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety, Sep 1, 2009: http://primis.phmsa.dot.gov/comm/ reports/enforce/documents/520071008/520071008_FinalOrder_09012009_ text.pdf 22. Summary of Criminal Prosecutions. Environmental Protection Agency, Feb 17, 2010: https://cfpub.epa.gov/compliance/criminal_prosecution/index. cfm?action=3&prosecution_summary_id=2065

US Emissions from coal in 2014 were 1713 metric tonnes CO2e. US Energy Information Administration: https://www.eia.gov/environment/emissions/ carbon/)

23. Learn, Scott. “Oil spill, fish kill at Port of Portland terminal under investigation.” The Oregonian, Oct 25, 2011: http://www.oregonlive.com/ environment/index.ssf/2011/10/oil_spill_fish_kill_at_port_of.html

There were 491 US Coal Plants in 2014. US Energy Information Administration: http://www.eia.gov/electricity/annual/html/epa_04_01.html

24. Courey, Sarita. “Kinder Morgan pipeline leak reaches 300,000 gallons in South Carolina.” Savannah Morning News, Dec 15, 2015: http://savannahnow. com/news/2015-04-30/kinder-morgan-pipeline-leak-reaches-300000gallons-south-carolina

FOOTNOTES AND CITATIONS: 1. Mimiaga, Jim. “Kinder Morgan case goes to Colorado Supreme Court.” Cortez Journal, March 30, 2016: http://www.cortezjournal.com/ article/20160330/NEWS01/160339976/Kinder-Morgan-case-goes-toColorado-Supreme-Court 2. Allan, Robyn. “Kinder Morgan stock under siege, pipeline expansion a shaky bet.” National Observer, Aug 13, 2015: http://www.nationalobserver. com/2015/08/13/opinion/kinder-morgan-stock-under-siege-pipelineexpansion-shaky-bet 3. Allan, Robyn. “How Trans Mountain Pipeline Delivers Max Profits to U.S. Investors by Avoiding Paying Canadian Taxes.” Desmog Canada, Nov 18, 2014: http://www.desmog.ca/2014/11/18/how-trans-mountain-pipelinedelivers-max-profits-u-s-investors-avoiding-paying-canadian-taxes.

4. ibid.

5. Hedgeye, a financial risk and research company, accused Kinder Morgan of misleading investors through complex and bizarre accounting practices.

“Kinder Morgan’s Rebuttals Don’t Hold Up.” Hedgeye, Sep 26, 2013: https:// app.hedgeye.com/insights/30913-kinder-morgan-s-rebuttals-don-t-hold-up 6. Bary, Andrew. “Kinder Morgan: Trouble in the Pipelines?” Barron’s Magazine, Feb 22, 2014: http://www.barrons.com/articles/SB500014240531 11903713804579394913023088996 7. Hals, Tom. “Kinder Morgan on hook for $171 mln judgement tied to El Paso deal.” Reuters, Dec 2, 2015: http://www.reuters.com/article/kindermorgan-elpaso-lawsuit-idUSL1N13R2W920151202 8. Carroll, Joe and Polson, Jim. “Billionaire Kinder’s Pipeline Giant Drops Under Junk Threat.” Bloomberg, Dec 2, 2015: http://www.bloomberg.com/ news/articles/2015-12-02/billionaire-kinder-s-pipeline-giant-plunges-asjunk-status-looms 9. Nadel, Mike. “I’ve Been ‘Kindered’! But Not Even Kinder Morgan’s Unkind Cut Can Devastate The Dividend Growth 50.” Feb 25, 2016: http:// seekingalpha.com/article/3931926-kindered-even-kinder-morgans-unkindcut-can-devastate-dividend-growth-50 10. Whittington, Ron P. “Track record plagues Kinder Morgan in pipeline operations.” Savannah Morning News, Jan 20, 2016: http://savannahnow. com/news-pipeline/2016-01-09/track-record-plagues-kinder-morganpipeline-operations 11. Farrell, Sean. “The world’s biggest accounting scandals.” The Guardian, Jul 21, 2015: https://www.theguardian.com/business/2015/jul/21/the-worldsbiggest-accounting-scandals-toshiba-enron-olympus

25. Prystupa, Mychaylo. “San Diego to sue Kinder Morgan $246M for failed oil spill clean up.” National Observer, May 28, 2015: http://www. nationalobserver.com/2015/05/28/news/san-diego-sue-kinder-morgan246m-failed-oil-spill-clean 26. Serreze, Mary. “MassDEP: Kinder Morgan misled FERC in bid to cut state forest trees for Berkshire county pipeline.” The Republican, Apr 15, 2016: http://www.masslive.com/news/index.ssf/2016/04/massdep_kinder_ morgan_needs_cl.html 27. Fine, Sean. “Supreme Court expands land-title rights in unanimous ruling.”

Globe and Mail, Jun 26, 2014: http://www.theglobeandmail.com/news/ national/supreme-court-expands-aboriginal-title-rights-in-unanimous-ruling/ article19347252/ 28. Kane, Laura. “Trans Mountain pipeline expansion ‘disastrous’, says Mayor Gregor Robertson.” CBC News, May 27, 2015: http://www.cbc.ca/news/ canada/calgary/trans-mountain-pipeline-expansion-disastrous-says-mayorgregor-robertson-1.3090501 29. “Assessing the risks of Kinder Morgan’s proposed new Trans Mountain pipeline.” Conversations for Responsible Economic Development, 2013.

30. List of municipalities includes those who have voted against the Kinder Morgan Pipeline either as a member of Metro Vancouver or within their own city councils.

31. Chesto, Jon. “Kinder Morgan shelves $3 billion pipeline project.” Boston Globe, Apr 20, 2016: https://www.bostonglobe.com/business/2016/04/20/ kinder-morgan-shelves-billion-new-england-pipeline-project/ iEafnAP2P41o0B9tmM0lEI/story.html 32. Coyne, Amanda. “Palmetto Pipeline project suspended.” The Greenville News, Apr 1, 2016: http://www.greenvilleonline.com/story/news/ environment/2016/04/01/palmetto-pipeline-project-suspended/82513656/ BACK COVER: Quotation Source: “Tsleil-Waututh Nation Opposes Trans Mountain Pipeline at Kinder Morgan Inc. AGM in Houston, TX.” Tsleil-Waututh Nation, May 7, 2015: http://twnsacredtrust.ca/tsleil-waututh-nation-opposes-trans-mountainpipeline-at-kinder-morgan-inc-agm-in-houston-tx/ * A previous version of this report stated that Kinder Morgan paid an average of only 0.09% percent in tax on its Canadian income between 2009-2013.

The proper figure is 0.9% and has been corrected here.

12. Ovide, Shira. “Richard Kinder: The Luckiest Ex-Enron Employee.” The Wall Street Journal, Oct 17, 2011: http://blogs.wsj.com/deals/2011/10/17/richardkinder-the-luckiest-ex-enron-employee/ 13. Dunbar, John. “Enron top brass accused of dumping stock were big political donors.” The Center for Public Integrity, Jan 9, 2002. https://www. publicintegrity.org/2002/01/09/3210/enron-top-brass-accused-dumpingstock-were-big-political-donors 14. “SEC sues top Enron lawyers for hiding fraud.” The New York Times, Mar 29, 2007: http://www.nytimes.com/2007/03/29/business/ worldbusiness/29iht-enron.1.5071803.html?_r=0 15. Kinder Morgan Web page: http://www.kindermorgan.com/about_us/ 16. “Assessing the risks of Kinder Morgan’s proposed new Trans Mountain pipeline.” Conversations for Responsible Economic Development, 2013.

17. Bary, Andrew. “Kinder Morgan: Trouble in the Pipelines?” Barron’s Magazine, Feb 22, 2014: http://www.barrons.com/articles/SB500014240531 11903713804579394913023088996

PUBLISHED BY STAND. MAY 2016

“THE RISKS

ARE TOO GREAT

AND FAR OUTWEIGH ANY

SUPPOSED BENEFITS.”

CHIEF MAUREEN THOMAS, TSLEIL-WAUTUTH NATION

#StopKinderMorgan