Securities Law & Instruments

Headnote

Issuer is a connected issuer, but not a related issuer, in respect of registrants that areunderwriters in proposed distribution of trust units by the issuer - Underwriters exempt fromthe independent underwriter requirement in the legislation provided that issuer not infinancial difficulty.

Regulations Cited

Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., ss. 219(1),224(1)(b) and 233.

Rules Cited

Proposed Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts (1998), 21 OSCB 788.


IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO, BRITISH COLUMBIA,ALBERTA, QUEBEC, AND NEWFOUNDLAND

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
SCOTIA CAPITAL INC., BMO NESBITT BURNS INC., TD SECURITIES INC., NATIONAL BANK FINANCIAL INC.,

AND

PEMBINA PIPELINE INCOME FUND

MRRS DECISION DOCUMENT


WHEREAS the Canadian securities regulatory authority or regulator (the "DecisionMaker") in each of Ontario, British Columbia, Alberta, Quebec, and Newfoundland (the"Jurisdictions") has received an application from Scotia Capital Inc. ("Scotia Capital"), BMONesbitt Burns Inc., TD Securities Inc., and National Bank Financial Inc. (collectively, the"Filers") for a decision, pursuant to the securities legislation of the Jurisdictions (the"Legislation"), that the requirement (the "Independent Underwriter Requirement") containedin the Legislation which restricts a registrant from acting as an underwriter in connectionwith a distribution of securities of an issuer made by means of prospectus, where theissuer is a connected issuer (or the equivalent) of the registrant unless a portion of thedistribution at least equal to that portion underwritten by the non-independent underwriteris underwritten by an independent underwriter, shall not apply to the Filers in respect ofa proposed distribution (the "Offering") of Trust Units (the "Offered Units") of PembinaPipeline Income Fund (the "Issuer"), pursuant to a short form prospectus (the"Prospectus") expected to be filed with the Decision Maker in each of the provinces andterritories of Canada;

AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System" or "MRRS"), the Ontario Securities Commission (the"OSC") is the principal regulator for this application;

AND WHEREAS the Filer has represented to the Decision Makers that:

1. The Issuer, an open-ended, single purpose trust established under the laws ofAlberta, is a reporting issuer under the Legislation of each Jurisdiction and is notin default of any requirements of the Legislation.

2. The business of the Issuer, whose principal office is located in Calgary, Alberta, isrestricted to investing in investments permitted solely under Section 132(6) of theIncome Tax Act (Canada). At present the Issuer's investments consist solely ofsecurities of Pembina Pipeline Corporation ("Pembina"). Pembina is an Albertacorporation which owns oil and natural gas liquids pipeline systems. The Issuerowns all of the issued and outstanding common shares of Pembina and its 11.75%unsecured subordinated notes due October 25, 2027.

3. The trust units of the Issuer are listed on The Toronto Stock Exchange.

4. The Issuer filed a preliminary short form prospectus dated September 15, 2000 (the"Preliminary Prospectus") in the Jurisdictions.

5. The Filers along with CIBC World Markets Inc. and RBC Dominion Securities Inc.are proposing to act as underwriters in connection with the Offering. Each of theFilers and the other proposed syndicate members is registered as a dealer in thecategories of "broker" and "investment dealer" under the Legislation.

6. Pembina maintains a $235 million extendible revolving credit facility, a $170 millionone-year non-revolving term credit facility due July 31, 2001 and a $25 millionoperating facility (collectively, the "Credit Facilities"). The Credit Facilities aremaintained with a syndicate of Canadian banks, including The Bank of Nova Scotia,Bank of Montreal, The Toronto-Dominion Bank, and National Bank of Canada(collectively, the "Lenders"). As at August 31, 2000, Pembina was indebted to theLenders in the amount of $390 million. The majority of such indebtedness wasincurred to fund the purchase, on July 31, 2000, of Federated Pipe Lines Ltd.("Federated"). Pembina is in compliance with the terms of the Credit Facilities.

7. The net proceeds from the sale of the Offered Units will be used by the Issuer topurchase securities of Pembina, which will in turn use the funds to repay a portionof the indebtedness incurred under the Credit Facilities for the purchase ofFederated.

8. The Filers are wholly-owned subsidiaries of the Lenders.

9. The nature of the relationship among the Issuer, the Lenders and the Filers hasbeen described in the Preliminary Prospectus and will be described in theProspectus.

10. The Lenders did not and will not participate in the decision to make the Offering orin the determination of its terms.

11. The Filers will not benefit in any manner from the Offering other than the paymentof their underwriting fees in connection with the Offering.

12. By virtue of the Credit Facilities, the Issuer may, in connection with the Offering, beconsidered a connected issuer (or the equivalent) of each of the Filers.

13. The Issuer is not a related issuer (or the equivalent) of the Filers or of any of theother members of the underwriting syndicate.

14. The Prospectus will contain the information specified in Appendix "C" of draft Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts (the "MJ Instrument").

15. The Issuer is in good financial condition, is not in financial difficulty, and is notunder any immediate financial pressure to proceed with the Offering and has notbeen requested or required by the Lenders to repay the amounts owing under theCredit Facilities. The Issuer is not a "specified party" as defined in the MJInstrument.

AND WHEREAS pursuant to the System this MRRS Decision Document evidencesthe decision of each Decision Maker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Maker with the jurisdiction to make the Decisionhas been met;

THE DECISION of the Decision Makers, pursuant to the Legislation, is that theIndependent Underwriter Requirement shall not apply to the Filers in connection with theOffering provided the Issuer is not a related issuer (or equivalent) to the Filers at the timeof the Offering and is not a specified party, as defined in the MJ Instrument, at the time ofthe Offering.

September 28th, 2000.

" J.A. Geller"      "Robert W. Davis"