On May 14, 2014, the federal Minister of Natural Resources, Minister of Transport, and Minister for the Federal Economic Development Initiative for Northern Ontario announced new measures designed to strengthen Canada's pipeline safety system. These new measures reinforce the polluter pays principle and give the National Energy Board ("NEB") greater regulatory control over Canada's pipeline system, and include the following:
- Introducing absolute liability for all NEB-regulated pipelines, meaning that companies will be liable for costs and damages irrespective of fault, and companies continue to have unlimited liability when at fault or negligence;
- Developing a strategy with industry and Aboriginal communities to increase Aboriginal peoples' participation in pipeline safety operations, including planning, monitoring, incident response, and related employment and business opportunities;
- Providing the NEB with authority to order reimbursement of any cleanup costs incurred by governments, communities, or individuals;
- Giving the NEB the ability to provide guidance on the use of the best available technologies used in federally-regulated pipeline projects, including materials, construction methods, and emergency response techniques; and
- Providing the NEB with authority and resources to assume control of incident response if a company is unable or unwilling to do so.
In July 2013, the federal government had also instituted administrative monetary penalties for individuals and companies that violate the National Energy Board Act. The penalties are up to $25,000 for individuals and $100,000 for corporations for each day of non-compliance with federal safety requirements.
Interestingly, these federal pipeline measures appear to be aimed at satisfying some of the five requirements set by British Columbia ("BC") in 2012 for approving oil pipeline projects. One of BC's requirements is that new pipelines must meet "world-leading" standards for both marine and land oil-spill response and prevention. One of the implications of the federal initiatives is that, once implemented, companies would be required to use the best available technology for project construction and spill cleanup.
Pursuant to the federal plan for Responsible Resource Development, the NEB has increased annual inspections of oil and gas pipelines by 50 percent, and doubled the number of comprehensive audits to improve pipeline safety across Canada. The federal government reports that between 2008 and 2011, 99. 999 percent of oil and petroleum products transported on federally regulated pipelines were carried out safely. On these pipelines, the rate of spillage in Canada was 57 percent lower than in Europe and 60 percent lower than in the United States over the past decade.
Together with the recently announced new rail safety and tanker safety regulations, these regulatory changes represent efforts by the Government of Canada to strengthen the overall regime for safely transporting oil, petroleum, and natural gas products, as well as enhancing Aboriginal engagement. We will continue to monitor this sector and will continue to update our blog as further events unfold.
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