Securities Law & Instruments


Mutual Reliance Review Systemfor Exemptive Relief Applications - Limited partnership exemptfrom prospectus and registration requirements in connectionwith issuance of limited partnership units to existing unitholderspursuant to a distribution reinvestment plan whereby distributionsof income are reinvested in additional units of the limitedpartnership or whereby unitholders may directly purchase additionalunits of the limited partnership, each subject to certain conditions- first trade relief provided, subject to certain conditions.

Applicable Ontario StatutoryProvisions

Securities Act, R.S.O. 1990,c. S.5, as am., sections 25, 53 and 74(1).

Applicable Ontario Rules

Rule 45-502 - Dividend or InterestReinvestment and Stock Dividend Plans.

Applicable Instruments

Multilateral Instrument 45-102- Resale of Securities - section 2.6(4).














WHEREAS the local securitiesregulatory authority or regulator (the "Decision Maker")in each of British Columbia, Saskatchewan, Manitoba, Ontario,Québec, Nova Scotia, New Brunswick, Prince Edward Islandand Newfoundland and Labrador (the "Jurisdictions")has received an application from Fort Chicago Energy PartnersL.P. ("Fort Chicago") for a decision, pursuant tothe securities legislation of the Jurisdictions (the "Legislation"),that the requirements contained in the Legislation to be registeredto trade in a security and to file and obtain a receipt fora preliminary prospectus and a final prospectus (the "Registrationand Prospectus Requirements") shall not apply to certaintrades in units of Fort Chicago issued pursuant to a distributionreinvestment plan;

AND WHEREAS under theMutual Reliance Review System for Exemptive Relief Applications(the "System"), the Ontario Securities Commissionis the principal regulator for this application;

AND WHEREAS Fort Chicagohas represented to the Decision Makers that:

1. Fort Chicago is a limitedpartnership formed on October 9, 1997 under the PartnershipAct (Alberta). The business and affairs of Fort Chicagoare managed by Fort Chicago Energy Management Ltd. (the "GeneralPartner") pursuant to an amended and restated limitedpartnership agreement (the "Partnership Agreement")dated as of November 21, 1997, as further amended on March7, 2001.

2. The business of Fort Chicagoconsists solely of directly or indirectly participating inthe transportation, storage, marketing or processing of hydrocarbonsand directly or indirectly investing and managing investmentsin other parties who are engaged primarily in these activitiesor carrying on the business of a financial intermediary.

3. Fort Chicago currentlyholds a 26.026% interest in the Alliance Pipeline and thenatural gas liquids extraction and fractionation facilitieslocated near the terminus of the Alliance Pipeline. The AlliancePipeline transports natural gas from northwestern Albertaand northeastern British Columbia to the midwestern UnitedStates via Chicago, Illinois.

4. Fort Chicago has been areporting issuer, or the equivalent, in each of the Provincesof Canada since 1997, and to its knowledge is not in defaultof any requirements under the Legislation of any of the Jurisdictions.

5. Fort Chicago is a "qualifyingissuer" within the meaning of Multilateral Instrument45-102 Resale of Securities.

6. Fort Chicago is authorizedunder the Partnership Agreement to issue an unlimited numberof Class A limited partnership units ("Units") andone Class B limited partnership unit.

7. As of May 16, 2002, 73,564,509Units were issued and outstanding, and there were no outstandingoptions or warrants to purchase Units. The single Class Blimited partnership unit that was issued upon the formationof Fort Chicago was redeemed in accordance with the termsof the Partnership Agreement.

8. The Units are listed andposted for trading on The Toronto Stock Exchange (the "TSX").

9. The Partnership Agreementprovides that no Units may be owned by or transferred to,among things, a person who is a "non-resident" ofCanada, a person in which an interest would be a "taxshelter investment" or a partnership which is not a "Canadianpartnership" for purposes of the Income Tax Act(Canada).

10. According to the termsof the Partnership Agreement, the General Partner shall, tothe extent that it has cash available to do so, and subjectto certain adjustments relating to U.S. tax withholdings,make quarterly (or monthly, as may be determined by the GeneralPartner in its sole discretion) distributions of the distributablecash (if any) of Fort Chicago to the holders of Units ("Unitholders").

11. The Partnership Agreementdefines "distributable cash" for any particularperiod as the amount by which Fort Chicago's cash on handat the end of such period (including amounts borrowed by theGeneral Partner on behalf of Fort Chicago and the net proceedsreceived by Fort Chicago from the issuance of Units or othersecurities) exceeds: (i) unpaid administrative expenses forthat and any previous period, (ii) amounts required for thebusiness and operations of Fort Chicago during such period(including anticipated repayments of amounts borrowed); and(iii) any cash reserve that the board of directors of theGeneral Partner determines is necessary to satisfy Fort Chicago'scurrent and anticipated obligations or to normalize quarterly(or monthly, as the case may be) distributions of cash toUnitholders.

12. Fort Chicago is not a"mutual fund" under the Legislation as the holdersof Units are not entitled to receive on demand an amount computedby reference to the value of a proportionate interest in thewhole or in part of the net assets of Fort Chicago, as contemplatedby the definition of "mutual fund" in the Legislation.

13. The General Partner, onbehalf of Fort Chicago, intends to establish a distributionreinvestment plan (the "Plan") pursuant to whicheligible Unitholders may, at their option, direct that eligiblecash distributions paid by Fort Chicago in respect of theirexisting Units ("Cash Distributions") be appliedto the purchase of additional Units ("Additional Units")to be held for their account under the Plan (the "DistributionReinvestment Option").

14. Alternatively, the Planwill enable eligible Unitholders who wish to reinvest theirCash Distributions to authorize and direct the trust companythat is appointed as agent under the Plan (the "PlanAgent"), to presell through a designated broker (the"Plan Broker"), for the account of the Unitholderswho so elect, that number of Units equal to the number ofAdditional Units issuable on such reinvestment, and to settlesuch presales with the Additional Units issued on the applicabledistribution payment date in exchange for a premium cash paymentequal to 102% of the reinvested Cash Distribution (the "PremiumDistribution Option"). The Plan Broker will be entitledto retain for its own account the difference between the proceedsrealized in connection with the presales of such Units andthe cash payment to the Plan Agent equal to 102% of the reinvestedCash Distributions.

15. Eligible Unitholders whohave directed that their Cash Distributions be reinvestedin Additional Units under either the Distribution ReinvestmentOption or the Premium Distribution Option ("Participants")may also be able to directly purchase Additional Units underthe Plan by making optional cash payments within the limitsestablished thereunder (the "Cash Payment Option").The General Partner shall have the right to determine fromtime to time whether the Cash Payment Option will be available.The Cash Payment Option will only be available to Unitholdersthat are Participants.

16. All Additional Units purchasedunder the Plan will be purchased by the Plan Agent directlyfrom Fort Chicago on the relevant distribution payment dateat a price determined by reference to the Average Market Price(defined in the Plan as the arithmetic average of the dailyvolume weighted average trading prices of the Units on theTSX for the trading days from and including the second businessday following the distribution record date to and includingthe second business day prior to the distribution paymentdate on which at least a board lot of Units was traded, suchperiod not to exceed 20 trading days).

17. Additional Units purchasedunder the Distribution Reinvestment Option or the PremiumDistribution Option will be purchased at a 5% discount tothe Average Market Price. Additional Units purchased underthe Cash Payment Option will be purchased at the Average MarketPrice.

18. The Plan Broker's primafacie return under the Premium Distribution Option willbe approximately 3% of the reinvested Cash Distributions (basedon presales of Units having a market value of approximately105% of the reinvested Cash Distributions and a fixed cashpayment to the Plan Agent, for the account of applicable Participants,of an amount equal to 102% of the reinvested Cash Distributions).The Plan Broker may, however, realize more or less than thisprima facie amount, as the actual return will varyaccording to the prices the Plan Broker is able to realizeon the presales of Units. The Plan Broker bears the entirerisk of adverse changes in the market, as Participants whohave elected the Premium Distribution Option are assured apremium cash payment equal to 102% of the reinvested CashDistributions.

19. All activities of thePlan Broker on behalf of the Plan Agent that relate to presalesof Units for the account of Participants who elect the PremiumDistribution Option will be in compliance with applicableLegislation and the rules and policies of the TSX (subjectto any exemptive relief granted). The Plan Broker will alsobe a member of the Investment Dealers Association of Canadaand will be registered under the legislation of any Jurisdictionwhere the first trade in Additional Units pursuant to thePremium Distribution Option makes such registration necessary.

20. Participants may electeither the Distribution Reinvestment Option or the PremiumDistribution Option in respect of their Cash Distributions.Eligible Unitholders may elect to participate in either theDistribution Reinvestment Option or the Premium DistributionOption at their sole option and are free to terminate theirparticipation under either option, or to change their election,in accordance with the terms of the Plan.

21. Under the DistributionReinvestment Option, Cash Distributions will be paid to thePlan Agent and applied by the Plan Agent to the purchase ofAdditional Units, which will be held under the Plan for theaccount of Participants who have elected to participate inthat component of the Plan.

22. Under the Premium DistributionOption, Cash Distributions will be paid to the Plan Agentand applied by the Plan Agent to the purchase of AdditionalUnits for the account of Participants who have elected toparticipate in that component of the Plan, but the AdditionalUnits purchased thereby will be automatically transferredto the Plan Broker to settle presales of Units made by thePlan Broker on behalf of the Plan Agent for the account ofsuch Participants in exchange for a premium cash payment equalto 102% of the reinvested Cash Distributions.

23. Under the Cash PaymentOption, a Participant will be able, through the Plan Agent,to purchase Additional Units up to a specified maximum dollaramount per distribution period and subject to a minimum amountper remittance. The aggregate number of Additional Units thatmay be purchased under the Cash Payment Option by all Participantsin any financial year of Fort Chicago will be limited to amaximum of 2% of the number Units issued and outstanding atthe start of the financial year.

24. No brokerage fees or servicecharges will be payable by Participants in connection withthe purchase of Additional Units under the Plan.

25. Additional Units purchasedand held under the Plan will be registered in the name ofthe Plan Agent (or its nominee) as agent for the Participants,and all Cash Distributions on Units so held for the accountof a Participant will be automatically reinvested in AdditionalUnits in accordance with the terms of the Plan and the currentelection of that Participant.

26. The Plan permits fullinvestment of reinvested Cash Distributions and optional cashpayments under the Cash Payment Option (if available) becausefractions of Units, as well as whole Units, may be creditedto Participants' accounts with the Plan Agent.

27. The General Partner reservesthe right to determine, for any distribution payment date,the amount of partners' equity that may be issued throughthe Plan.

28. If, in respect of anydistribution payment date, fulfilling all of the electionsunder the Plan would result in Fort Chicago exceeding eitherthe limit on partners' equity set by the General Partner orthe aggregate annual limit on Additional Units issuable pursuantto the Cash Payment Option, then elections for the purchaseof Additional Units on such distribution payment date willbe accepted: (i) first, from Participants electing the DistributionReinvestment Option; (ii) second, from Participants electingthe Premium Distribution Option; and (iii) third, from Participantselecting the Cash Payment Option (if available). If Fort Chicagois not able to accept all elections in a particular category,then purchases of Additional Units on the applicable distributionpayment date will be prorated among all Participants in thatcategory according to the number of Additional Units soughtto be purchased.

29. If the General Partnerdetermines not to issue any partners' equity through the Planon a particular distribution payment date, then all Participantswill receive the Cash Distribution announced by Fort Chicagofor that distribution payment date.

30. A Participant may terminateits participation in the Plan at any time by submitting atermination form to the Plan Agent, provided that a terminationform received between a distribution record date and a distributionpayment date will not become effective until after that distributionpayment date.

31. Fort Chicago reservesthe right to amend, suspend or terminate the Plan at any time,provided that such action shall not have a retroactive effectthat would prejudice the interests of the Participants. AllParticipants will be sent written notice of any such amendment,suspension or termination.

32. The distribution of AdditionalUnits by Fort Chicago pursuant to the Plan cannot be madein reliance on certain existing registration and prospectusexemptions contained in the Legislation as the Plan involvesthe reinvestment of distributions of the distributable cashof Fort Chicago and not the reinvestment of dividends, interestor distributions of capital gains or out of earnings or surplus.

33. The distribution of AdditionalUnits by Fort Chicago pursuant to the Plan cannot be madein reliance on registration and prospectus exemptions containedin the Legislation for distribution reinvestment plans ofmutual funds, as Fort Chicago is not a "mutual fund"as defined in the Legislation.

AND WHEREAS under theSystem, this MRRS Decision Document evidences the decision ofeach Decision Maker (collectively, the "Decision");

AND WHEREAS each of theDecision Makers is satisfied that the test contained in theLegislation that provides the Decision Makers with the jurisdictionto make the Decision has been met;

THE DECISION of the DecisionMakers pursuant to the Legislation is that the trades of AdditionalUnits by Fort Chicago to the Plan Agent for the account of Participantspursuant to the Plan shall not be subject to the Registrationand Prospectus Requirements of the Legislation provided that:

(a) at the time of the tradeFort Chicago is a reporting issuer or the equivalent underthe Legislation and is not in default of any requirementsof the Legislation;

(b) no sales charge is payablein respect of the distributions of Additional Units fromtreasury;

(c) Fort Chicago has causedto be sent to the person or company to whom the AdditionalUnits are traded, not more than 12 months before the trade,a statement describing:

(i) their right to withdrawfrom the Plan and to make an election to receive CashDistributions instead of Additional Units on the makingof a distribution by Fort Chicago, and

(ii) instructions on howto exercise the right referred to in paragraph (i) above;

(d) the aggregate numberof Additional Units issued under the Cash Payment Optionof the Plan in any financial year of Fort Chicago shallnot exceed 2% of the aggregate number of Units outstandingat the start of that financial year;

(e) except in Québec,the first trade in Additional Units acquired pursuant tothis Decision in a Jurisdiction will be a distribution orprimary distribution to the public unless the conditionsin paragraphs 2 through 5 of subsection 2.6(4) of MultilateralInstrument 45-102 Resale of Securities are satisfied;

(f) in Québec, thefirst trade (alienation) in Additional Units acquired pursuantto the Plan will be a distribution or primary distributionto the public unless:

(i) Fort Chicago is andhas been a reporting issuer in Québec for the 12months immediately preceding the trade;

(ii) no unusual effortis made to prepare the market or to create a demand forthe securities that are the subject of the alienation;

(iii) no extraordinarycommission or other consideration is paid in respect ofthe alienation; and

(iv) if the seller ofthe securities is an insider of the issuer, the sellerhas no reasonable grounds to believe that Fort Chicagois in default of any requirement of securities legislation;and

(g) disclosure of the initialdistribution of Additional Units pursuant to this Decisionis made to the relevant Jurisdictions by providing particularsof the date of the distribution of such Additional Units,the number of such Additional Units and the purchase pricepaid or to be paid for such Additional Units in:

(i) an information circularor take-over bid circular filed in accordance with theLegislation; or

(ii) a letter filed withthe Decision Maker in the relevant Jurisdiction by a personor company certifying that the person or company has knowledgeof the facts contained in the letter,

when Fort Chicago distributessuch Additional Units for the first time, and thereafternot less frequently than annually, unless the aggregatenumber of Additional Units so distributed in any month exceeds1% of the aggregate number of Units outstanding at the beginningof the month in which the Additional Units were distributed,in which case the disclosure required under this paragraphshall be made in each relevant Jurisdiction (other thanQuébec) in respect of that month within ten daysof the end of such month.

June 19, 2002.

"Robert W. Korthals"                    "HaroldP. Hands"