Ottawa is proposing regulations that would require companies operating major crude oil pipelines to prove a financial capacity of $1 billion to respond to incidents such as oil spills, Natural Resource Minister Joe Oliver announced in Vancouver Wednesday.
Pipeline companies will be able to use numerous financial instruments such as bonds, lines of credit, cash, assets and liability insurance to prove it has the required $1 billion. In the event a company operates a network of pipelines, that financial capacity will be applied to the network, not each individual line.
No definition of major crude pipelines has yet been drafted, but size, volume, length and terrain covered will all be factors in determining the definition.
The proposed changes will only apply to federally regulated pipelines.
Companies operating existing pipelines will be given a yearlong transition period to meet the new demands.
The $1 billion safety net is part of a suite of proposals announced by the federal government that includes establishing a “polluter pay” mechanism that ensures companies responsible for any environmental damage will pay for all cleanup costs.
Other planned changes are:
- for Ottawa to work with provincial governments in order to solidify consistent restricted zones around pipelines in which people cannot dig or build (currently, the feds and the provinces have different definitions of zones where activities such as excavation work can be done);
- to bolster the National Energy Board’s (NEB) legal power to compel pipeline companies to provide any information it may request;
- to ensure pipeline operators are responsible for abandoned pipelines;
- in the event a pipeline is abandoned and not removed, to give the NEB jurisdiction on the pipeline and the ability to enforce sanctions on the applicable company for any negative effects the pipeline may produce; and
- to require pipeline companies to draft clear environmental response plans and make those plans available to the public.
Today’s announcement comes on the heels of other pipeline regulations announced in April. Those requirements were:
- that pipeline companies implement a security program that protects employees and the environment;
- that companies develop and implement an emergency management program with clear emergency preparedness and response procedures; and
- that companies appoint a senior employee to oversee such programs.
In February, the government outlined strict financial penalties for those caught breaking pipeline safety rules. As of July 3, individuals can now be fined a maximum of $25,000 per day, while companies can be fined a maximum of $100,000 per day. Those fines can be applied daily the violation in question is resolved.
“Our government is developing our natural resources in a way that enhances jobs, long-term prosperity and environmental protection,” said Oliver.
“The measures announced today strengthen Canada’s already strong pipeline system even further. Our vast resource wealth is being developed responsibly, supporting Canada’s growth and generating revenue for critical social programs.”
There are 98 companies currently regulated by the NEB.
Each year, 1.2 billion barrels of oil are transported in Canada. Between 2000 and 2011, an average of 3,715 barrels of oil were leaked per year.
