06/26/2013 03:09 EDT | Updated 08/26/2013 05:12 EDT

Joe Oliver Announces Pipeline Safety Rules Demanding $1-Billion Safety Cushion From Operators


VANCOUVER - Major pipeline companies will have to show federal regulators they have access to $1 billion to cover the costs of an oil or gas spill under new rules aimed at easing public concerns about pipeline safety.

Natural Resources Minister Joe Oliver said the federal government will also enshrine in law the "polluter pay" principle for oil and gas pipelines to ensure taxpayers are not left on the hook for cleanup costs.

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

The funds can be in the form of insurance, financial assets, third-party guarantees, lines of credit or other assured sources. The new rules will apply initially to new pipelines under federal regulation, but the requirement will eventually expand to existing major oil and gas pipeline companies.

Federally regulated pipeline companies will also have to appoint a senior manager, who will be held accountable for ensuring the company is in compliance with regulations.

As of July 3, under previously announced revisions to federal regulations, the National Energy Board will have the authority to directly fine companies up to $100,000 a day for infractions and individuals up to $25,000 a day. That is in addition to the ability to pursue criminal charges in cases of negligence, he said.

Canada has a robust safety system in place, Oliver said, but changes and improvements are ongoing.

He suggested the changes are not in response to the opposition that has greeted several major pipeline projects, from the Keystone XL line that would take Alberta oil sands products south, to the Northern Gateway line that would deliver it to a tanker port on the B.C. coast.

But he did reiterate that Canada is losing billions of dollars a year because western Canadian oil is not reaching Asia and other countries.

"If Canadians are to benefit fully from this resource potential, we need a safe and reliable transportation infrastructure including pipelines and tankers, so our products can reach Asia, the United States and around the world," the minister said.

The announcement comes two days after federal review panel hearings concluded on the controversial Northern Gateway proposal. The panel's report to the minister is due by the end of the year.

Evidence is closed, and the panel will not be able to take into account the Wednesday announcement.

"We want to continue to improve the safety and security of our pipeline system and our maritime system as well. You can't just snap your fingers and get things done instantly," Oliver said in response to questions about the timing.

He rejected the suggestion the changes, coming as they do after the panel has stopped taking evidence, offer a trump card should panel members say no the Northern Gateway project.

The B.C. government announced earlier this year that it has commissioned its own study on land-based pipeline spill response.

Provincial Environment Minister Mary Polak was not immediately available to comment, but an email response from the ministry said B.C. supports actions to increase safety and oversight.

"The federal government's new measures support our call for best practices," said the unattributed email.

In April, the federal review panel looking into Northern Gateway released a list of 199 potential conditions the project might face should it be approved, including $950 million to cover clean-up, remediation and any other damage that might result from the project. That would include access to at least $100 million within 10 business days of a large spill to cover immediate costs.

Oliver pointed out that last year the number of pipeline inspections conducted by the National Energy Board increased from 100 to 150 and the number of safety audits doubled, from three to six. There has not been any incident in Canada where a company has not paid the cost, Oliver said.

Opponents of the Northern Gateway project said the changes are too little, too late.

"Enbridge (TSX:ENB) proved in the hearings that it will adversely impact our wild salmon watersheds if its pipelines are built," said Nikki Skuce, of ForestEthics in an email.

"The company keeps spilling — Enbridge just had three spills in Alberta due to terrain instability with the floods — and yet it has done no studies on terrain stability along the proposed Northern Gateway route. Trust them? No thanks."

Skuce said First Nations, municipalities, the provincial government, environmental groups and many others who took part in the hearings rejected Northern Gateway and would continue to do so regardless of new pipeline penalties.

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