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Pipeline companies required to have $1B cleanup funds

Major crude oil companies must have $1B available for potential spills

Posted: Jun 26, 2013 3:24 PM ET

Last Updated: Jun 26, 2013 7:07 PM ET

Companies running major pipelines through Canada will be required to have at least $1 billion on hand to clean up damage, the federal government has announced.

Natural Resources Minister Joe Oliver said in a Vancouver news conference that companies operating major crude oil pipelines will need to keep the funds available to respond to any incident.

The funds could be in the form of insurance, lines of credit, third-party guarantees or other "assured sources."

A similar increase to the liability cap for offshore drilling companies was announced earlier this year.

The news release also said the government will make the “polluter pays” principle (that those who produce pollution should handle the costs of managing it) a formal part of the law instead of an implied portion.

"We will ensure that all companies operating pipelines have the capacity to respond to any incident and to remedy damages," Oliver said.

The announcement applies to pipelines regulated by the federal government, not others under the jurisdiction of provinces such as B.C.

“British Columbia’s government is conducting its own review of pipeline safety, and we are working with them,” said Oliver in a news release.

“These federal measures being announced today are a major contribution to the combined efforts of both levels of government on this issue.”

Harsher penalties coming for safety violations

The federal government and its agencies have already made a few other pipeline safety announcements in 2013.

In February, Oliver announced new penalties for companies breaking pipeline safety laws — up to $25,000 per day for individuals and $100,000 per day for companies for every day they fail to comply.

Those upgraded fines were announced in 2012’s omnibus budget Bill C-38 and came a week after a report by Canada’s environment commissioner said fines for damages caused by spills and other industrial accidents were much lower than in other countries.

The tougher fines will be put into place starting July 3.

In April, the National Energy Board (NEB) said it was introducing more accountability regulations for federally regulated oil and gas pipelines.

For example, pipeline company executives have to submit annual reports on pipeline projects that can be audited by the NEB and appoint new “accountable officers” to spread safety goals through the workplace.

There are also new policies to encourage employees to speak up about hazards or incidents without fear of being disciplined.

Opponents of the controversial Alberta-B.C. Northern Gateway proposal said the moves aren't good enough.

"Enbridge proved in the hearings that they are completely ill-prepared to deal with oil supertankers navigating our coast," Nikki Skuce of ForestEthics told The Canadian Press.

"Previous federal cuts to emergency response and the coast guard just added to evidence that our coast would be devastated by guaranteed mishaps if this project were to go through."

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With files from The Canadian Press

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