National Energy Board Ministerial Briefing Binder – NEB & Pipeline Safety Act

BACKGROUNDER

6.5

FOR INFORMATION

Security: Protected B
Date: 4 November 2015

The Pipeline Safety Act (Bill C-46) seeks to amend the National Energy Board Act (NEB Act) and, to a much lesser extent, the Canada Oil and Gas Operations Act (COGOA).
Safety and environmental protection are the NEB’s top priorities. Legislative changes that strengthen safety and environmental protection align well with the NEB’s strategic goals, and the NEB supports measures that strengthen our processes and those of the companies we regulate.
The Bill contains a variety of major components:

Financial Liability and Resources (“Polluter Pays Principle”)

Absolute liability of at least $1 billion for companies authorized to construct and operate a pipeline or pipeline system that individually or in aggregate has the capacity to transport at least 250,000 barrels of oil per day. This is expected to capture all Group 1 companies.
Absolute liability for all other NEB-regulated companies or classes of companies will be established in Governor-in-Council (GIC) regulations.
Each company must maintain financial resources to pay the absolute liability limit that applies to it, or any greater amount that the Board specifies, until leave to abandon is granted. GIC may set in regulation the portion of a company’s financial resources that must be readily accessible to the company.
Companies may meet all or a portion of their financial resources obligations through participation in a pooled fund that is established by industry and subject to GIC regulations.
The Board may order a company that has an unintended or uncontrolled release to reimburse any federal, provincial, or municipal government institution, any Aboriginal governing body, or any person reasonable costs and expenses incurred while taking actions or measures in relation to the release. This amount can exceed the absolute liability amount that applies to the company.
These new financial obligations would apply to both existing pipelines and new applications.
Companies still have unlimited liability when proven in the courts to be at fault or negligent.

If a company does not have, or is unlikely to have, the financial resources to pay expenses related to a release or is not complying with Board Orders related to that release, GIC can “designate” that company. Upon designation, the NEB can take any action or measure it considers necessary in relation to the release or authorize a third party to do so.
GIC may establish a pipeline claims tribunal to adjudicate compensation claims related to the release caused by a designated company. The NEB will provide administrative support for the tribunal and pay its costs and awards (with reimbursement from the federal budget).

Currently, companies must apply to the NEB in order to abandon a pipeline. The NEB then holds a public hearing to decide whether the abandonment would be in the public interest. If so, the NEB issues an Order that usually includes conditions that must be met before abandonment is complete, which the NEB verifies through submissions, site-inspections, and audits. All costs associated with the abandonment are paid by the company, including clean-up of the surrounding area.
Bill gives the NEB jurisdiction to prevent, mitigate, and remediate any post-abandonment impacts, and also provide that companies would remain liable for post-abandonment costs and damages.
Authority for the NEB to assume control of abandonment or an abandoned pipeline if a company is not complying with a Board Order. Funds would be available from money or securities set aside by the company.
New provisions include: new definition of “abandoned pipeline”, new authority for the Board to make regulations in this area, new powers and scope for Board Orders and conditions, and new powers for inspection officers.

The Bill establishes a positive obligation: “no person shall construct a facility across, on, along or under a pipeline or cause a ground disturbance within the prescribed area unless it is authorized by the regulations and done in accordance with them.”
30 meter safety zone around pipelines will no longer be in the Statute. Instead, the regulations can specify the safety zone and, if desired, align with provincial regulations.
The Bill gives the NEB authority to create damage prevention regulations for COGOA pipelines.
The Bill’s damage prevention provisions will complement and build upon the process already underway for amending the National Energy Board Pipeline Crossing Regulations, Parts I and II. Only minor changes to the proposed regulatory amendments are expected to be needed in order to make them consistent with the Bill.

Inspection Officer powers expanded to include ability to direct a company or person causing a ground disturbance or constructing a facility to provide information orally or in writing.
Bill confirms that inspection powers include the power to conduct audits.
Current inspection and enforcement authorities in COGOA are limited to preventing “serious bodily injury.” The amendments would extend enforcement powers to environmental protection, safety, and security, and set a lower threshold for the use of those powers.

New 6 month time limit for consideration of oil and gas export licences upon receipt of a complete application (NEB determines when an application is complete). Clock stops when the NEB requires the company to provide additional information, and extensions are possible (i.e. Minister can extend by 3 months, and GIC can extend by another 3 months). To date, the NEB has processed oil and gas export licences in less than 6 months, and will work diligently to address the current influx of license applications in a timely manner.
Eliminates GIC approval for name changes and ownership transfers of certificates and licences (except where terms and conditions are imposed).
NEB reporting cycle amended to follow the fiscal year rather than the calendar year.
Removal of mandatory retirement age for Board Members.