Canada Puts Price on Pipeline Liability
Pipeline companies in Canada will be held responsible for at least $1 billion in damages if their network leaks—no matter who is ultimately to blame.
The "absolute liability" policy is just one part of a suite of measures that Canada is implementing to enhance pipeline safety, Minister of Natural Resources Greg Rickford and Minister of Transport Lisa Raitt announced May 14.
According to Rickford, the measures are part of the government's plan for "Responsible Resource Development," which strengthens environmental protection, enhances Aboriginal engagement, and streamlines the review of major resource projects.
'Consistent, Significant Action'
"Our government is demonstrating consistent, significant action to further enhance Canada's pipeline safety system," Rickford said.
The rate of spills on federally regulated pipelines in Canada was 60 percent lower than in the U.S. and 57 percent lower than in Europe over the last decade, according to the Natural Resources Ministry.
All pipelines regulated by the country's National Energy Board will be held to the "absolute liability" policy. That means companies will be liable for $1 billion in costs and damages for major oil pipelines, irrespective of fault, with unlimited liability when at fault or negligent.
Pipeline companies will also be required to have a minimum level of ready financial resources to quickly respond to pipeline incidents.
The measure drew support from Brenda Kenny, president and CEO of Canadian Energy Pipeline Association, which represents the country's transmission pipeline companies.
"While the industry already has a very robust emergency response system in place, we welcome opportunities to improve and want to reassure the public that pipeline companies remain committed to having the financial capacity and personnel to immediately respond to any incidents," Kenny said.
The National Energy Board will have the authority to order reimbursement of cleanup costs incurred by governments, communities or individuals, as well as the authority and resources to take control of incident response if a company is unable or unwilling to do so.
The board already has the authority to prosecute for certain violations of the National Energy Board Act, with fines ranging from $100,000 to $1 million and imprisonment from one to five years.
In case of a severe spill or incident, the government will backstop the initial cost of clean-up and remediation, but the board will be on the hook for recovering those costs from pipeline companies.
Additionally, the board will provide guidance on the use of the best available technologies for federally regulated pipeline projects, including construction methods and materials and emergency response techniques.
Under "Responsible Resource Development," the NEB has increased the number of pipeline inspections by 50 percent annually and doubled (from three to six) the number of annual comprehensive audits to identify potential issues.
The new measures also work to develop a strategy with industry and Aboriginal communities to increase Aboriginal Peoples' participation in pipeline safety.
Major pipeline projects are facing opposition from Aboriginal peoples throughout Canada, but the government hopes to increase their participation in the oil and gas industry.
Aboriginal peoples make up hundreds of recognized First Nations across Canada, and governments must consult with them to build on unresolved land-claim areas.
Opposition from Aboriginal peoples has threatened to stall multiple pipeline projects, including the controversial Enbridge Northern Gateway. The Canadian government is expected to issue its final ruling on the 1,177-kilometer (731 miles) project in the next few weeks.
First Nations have already filed lawsuits against the project's recommendation for approval, and some said they will do "whatever it takes to stop this project, short of violence," CBC.ca reported. Potential actions include everything from more lawsuits to physically lying in the path of construction, the report said.
Another major project, TransCanada Corp.'s Energy East Pipeline, will have to consult with the 180 different Aboriginal communities along its proposed route, according to TheGlobeandMail.com.
According to the government, over 400,000 Aboriginal youth will enter the workforce in the next decade, creating an "unprecedented opportunity" to address the need for more oil and gas workers. In 2012, over 13,500 Aboriginal people worked in the country's energy sector.