On December 8, 2014, Canada’s Minister of Natural Resources, announced the introduction of Bill C-46 (Bill), designated as the Pipeline Safety Act, amending theNational Energy Board Act and the Canada Oil and Gas Operations Act. The Bill’s aim is to enhance Canada’s pipeline safety system by increasing the liability of pipeline operators and the control of the National Energy Board (NEB). In particular, the Bill’s amendments:

  • reinforce the “polluter pays” principle;
  • confirm that liability of pipeline companies is unlimited if an unintended or uncontrolled release of oil, gas or any other commodity is a result of fault or negligence;
  • establish the limit of liability, without proof of fault or negligence, at no less than $1 billion for companies that operate pipelines with capacity to transport at least 250,000 barrels of oil per day and at an amount prescribed by regulation for companies that operate any other pipelines;
  • require that pipeline companies maintain the financial resources necessary to pay the amount of the limit of liability that applies to them;
  • authorize the NEB to order any company that operates a pipeline from which an unintended or uncontrolled release of oil, gas or any other commodity occurs to reimburse government institutions the costs incurred in taking any action in relation to the release;
  • require that pipeline companies remain responsible for their abandoned pipelines;
  • authorize the NEB to order pipeline companies to maintain funds to pay for the abandonment of their pipelines;
  • authorize the Governor in Council (GIC) to authorize the NEB to take, in certain circumstances, any action the NEB considers necessary in relation to an unintended or uncontrolled release of oil, gas or any other commodity from a pipeline; and
  • allow the GIC to establish, in certain circumstances, a pipeline claims tribunal to examine and adjudicate claims for compensation for damage caused by an unintended or uncontrolled release of oil, gas or any other commodity from a pipeline.

According to a news release issued by the Government of Canada, other non-legislative changes will occur to increase pipeline safety, including:

  • enhanced involvement of Aboriginal communities in pipeline safety operations; and
  • guidance sought from the NEB on best available technologies.

In effect, the Bill will place a significant onus on pipeline companies to ensure that: (a) operations do not result in releases; and (b) if such releases occur, necessary financial resources to meet any liability exist. Accordingly, pipeline companies should consider their safety and financial obligations in light of ongoing operations and business plans to ensure they meet legislated requirements once the Bill’s amendments are brought into force.