Days after environmental assessment hearings into the proposed Northern Gateway project wrapped up, Natural Resources Minister Joe Oliver announced a suite of new pipeline safety measures.
Speaking at a news conference in Vancouver, Oliver said this fall the federal government will put forward legislation to enshrine the polluter-pay concept into law and require all companies operating major oil pipelines to have at least $1 billion available to pay for clean up costs in the event of a spill. In the past, the National Energy Board has required companies to show financial capability on a case-by-case basis, but the new rules establish a minimum amount.
The federal government has ultimate jurisdiction over inter-provincial pipelines, but it's not clear if the new rules will help Northern Gateway gain support provincially. Premier Christy Clark has said her government doesn't support the Alberta-to-Kitimat project as currently conceived because it fails to meet its five conditions surrounding environmental protection, First Nations consultation and economic benefits.
"British Columbia supports actions to increase pipeline safety and oversight," the provincial environment ministry wrote in an email to the Citizen after Oliver's announcement on Wednesday. "B.C. has five bottom-line requirements that must be met before it can support any new oil pipeline project. The federal government's new measures support our call for best practices."
Due to the start of the new provincial legislative session in Victoria on Wednesday, Oliver was unable to meet with his provincial counterparts on this trip to B.C., but said future meetings are planned.
"We're very much aware of the conditions which Premier [Christy] Clark put on her approval of the Northern Gateway and we will continue those discussions," Oliver said. "We've had a very good relationship in the past and I'm certain it will continue."
Forest Ethics Advocacy campaign organizer Sven Biggs said his organization believes Wednesday's announcement doesn't bring Northern Gateway any closer to meeting the province's conditions.
"[Northern Gateway's] friends in Ottawa and Calgary are working hard to find a way to mollify Christy Clark and get the province onside with their proposal," Biggs said. "But I think if the province is serious about their five standards that there is no way this project or any other tarsands pipeline can meet them."
Under the new rules, each company will be responsible for proving the $1 billion capacity to the National Energy Board and the proposed legislation is expected to apply to both new and existing pipelines. Companies can use cash, bonds, lines of credit, insurance or other financial instruments to prove they can respond to a spill, if required.
"We agree that the public must have confidence companies have the financial capability to fully respond to a pipeline spill," Northern Gateway spokesman Ivan Giesbrecht said. "There is no financial limit on that responsibility. Northern Gateway will take full financial responsibility."
Although the government has set a $1 billion minimum threshold, companies are on the hook for more if clean up costs exceed that figure. The most expensive onshore spill in North America was from an Enbridge pipeline in Michigan in 2010. To date, that clean up has cost $820 million and is ongoing.
"What we're talking about here is a financial backup that the operator has to establish for the regulator before they can go ahead. It's very unlikely - in fact it's never happened - that a pipeline accident would exceed $1 billion, but if it did, the company would still be liable," Oliver said.
Oliver touted the safety of pipelines and pointed out that 99.996 per cent of the 1.2 billion barrels of crude oil transported annually arrive at their destination without incident, but Biggs said the mere fact that such a large financial capacity must exist, shows that the risk of pipeline spills are too high.
"You don't set up a billion dollar fund for a spill that's never going to happen, you set it up because the honest truth is that spills are a part of operating oil pipelines," he said.
The new legislation would also clarify the National Energy Board's mandate around compliance audits and ensure that companies are responsible for abandoned pipelines.
As previously announced, the National Energy Board will soon have the authority to levy monetary penalties against companies not in compliance with regulations. Beginning on July 3, the agency will be able to fine individuals up to $25,000 per day and companies up to $100,000 per day without having to go through the court process.
