Monday, September 01, 2014
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Ewart: Ottawa’s $1B pipeline rupture liability rule a red herring

Spill prevention and preparedness bigger concerns than liability for giant corporations

By Stephen Ewart, Calgary Herald

Back-to-back days of federal announcements ensuring all financial liability for oil pipeline ruptures or offshore tanker spills falls to the polluting companies address public opinion more than environmental protection.

Bicoastal news conferences by cabinet ministers - tankers Tuesday in Saint John, N.B., pipelines Wednesday in Vancouver - are surely part a co-ordinated buildup to Ottawa's approval in June of the Northern Gateway pipeline from Alberta's oilsands to the B.C. coast. But the focus is on an issue that largely doesn't exist.

It's not a PR stunt as much as a red herring.

Natural Resources Minister Greg Rickford was in Vancouver to announce the "absolute liability" for all costs and damages - including up to $1 billion even if the company is not at fault - around interprovincial pipelines regulated by the National Energy Board if negligence is found to have caused the rupture.

A day earlier, Transport Minister Lisa Raitt revealed company liability for a tanker spill more than doubled to $400 million.

The federal government has listed three priorities for the safe transport of growing volumes of oil produced in Canada - prevention, preparedness/response and liability/compensation. Given the heightened public sensitivity to the risk of oil spills, Ottawa wants to reinforce that taxpayers won't be on the hook should something go wrong.

"We must do more, particularly in the area of liability and compensation to ensure that pipeline operators are fully accountable for their operations in all potential circumstances," Rickford said Vancouver.

Raitt said similar in Atlantic Canada, insisting "it is not the Canadian taxpayer" who will pay for an offshore oil spill.

With all due respect to taxpayers, liability could become an issue with foreign-flagged oil tankers, but it's the least pressing concern with pipelines.

The prospect of multinational energy infrastructure companies like Enbridge, TransCanada or Kinder Morgan - all of which have controversial pipeline applications before the NEB - not paying to clean up any spill is highly unlikely.

They can easily meet Ottawa's criteria that federally regulated pipeline companies must "demonstrate financial capacity" to cover a $1 billion cleanup.

TransCanada CEO Russ Girling said the company already "holds itself fully accountable for all costs of damages and cleanup resulting from a pipeline incident" and Ottawa formalized that accountability. Long-haul transmission pipelines are not mom-and pop businesses. There are billions of dollars of company assets in the ground. The obvious example is Enbridge's 2010 pipeline break that spilled 20,000 barrels of bitumen into the Kalamazoo River in Michigan. There was certainly criticism of Enbridge's immediate response to the rupture, but paying for the cleanup that's reportedly cost more than $1 billion has not been in doubt.

Natural Resources Canada acknowledges there has never been an incident where a pipeline company has been "unable or unwilling to step up" and cover the costs of an oil spill cleanup, but Ottawa wants its polluter-pay measures firmly in place.

The rules give the NEB power to assume control of a company's operations in an emergency, but Rickford acknowledged Wednesday it would only happen under "extreme and unlikely circumstances."

Former Natural Resources Minister Joe Oliver said last June that pipeline companies would have to show they had access to $1 billion to cover the costs of a cleanup. Under current NEB regulations, a pipeline operator is "completely liable for all costs to clean up a pipeline spill" if it's at fault. The NEB can hold the company accountable for responding in a manner that will protect the public, property and environment in addition to the cleanup and site remediation.

That occurred in 2012 when the Alberta Energy Regulator stepped in after a ruptured Plains Midstream pipeline spilled close to 3,000 barrels of oil into the Red Deer River system. The regulator issued its report on the spill in March and said there were "deficiencies in Plains' communications with stakeholders" so it directed all communications during the incident.

The AER regulates far more pipelines than the NEB - more than 400,000 kilometres versus 78,000 under federal jurisdiction - and a lot more small companies operating gathering and feeder pipelines than a handful of big multinationals operating transmission lines.

A final decision from the federal cabinet on Enbridge's Northern Gateway is expected by June following an NEB-led review completed in December. The federal Conservatives have been a strong advocate for tidewater access for Canadian crude and are expected to approve the pipeline despite opposition by First Nations along the route. Rickford cited the commitment to work with First Nations to respond to spills along often remote pipeline routes as the other key initiative in his announcement.

Ottawa intends to develop a strategy, with industry and Aboriginal communities, to integrate Aboriginal people into safety preparedness and emergency response for spills. That, to borrow Rickford's words, is where Ottawa really "must do more" if it wants pipelines built.

Stephen Ewart is a Calgary Herald columnist  

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