Bill C-46 (Historical)

Pipeline Safety Act

An Act to amend the National Energy Board Act and the Canada Oil and Gas Operations Act

This enactment amends the National Energy Board Act and the Canada Oil and Gas Operations Act in order to strengthen the safety and security of pipelines regulated by those Acts.
More specifically, the enactment, among other things,
(a) reinforces the “polluter pays” principle;
(b) confirms that the liability of companies that operate pipelines is unlimited if an unintended or uncontrolled release of oil, gas or any other commodity from a pipeline that they operate is the result of their fault or negligence;
(c) establishes the limit of liability without proof of fault or negligence at no less than one billion dollars for companies that operate pipelines that have the 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;
(d) requires that companies that operate pipelines maintain the financial resources necessary to pay the amount of the limit of liability that applies to them;
(e) authorizes the National Energy Board 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 any government institution the costs it incurred in taking any action or measure in relation to that release;
(f) requires that companies that operate pipelines remain responsible for their abandoned pipelines;
(g) authorizes the National Energy Board to order companies that operate pipelines to maintain funds to pay for the abandonment of their pipelines or for their abandoned pipelines;
(h) allows the Governor in Council to authorize the National Energy Board to take, in certain circumstances, any action or measure that the National Energy Board considers necessary in relation to an unintended or uncontrolled release of oil, gas or any other commodity from a pipeline;
(i) allows the Governor in Council to establish, in certain circumstances, a pipeline claims tribunal whose purpose is to examine and adjudicate the claims for compensation for compensable damage caused by an unintended or uncontrolled release of oil, gas or any other commodity from a pipeline;
(j) authorizes, in certain circumstances, that funds may be paid out of the Consolidated Revenue Fund to pay the costs of taking the actions or measures that the National Energy Board considers necessary in relation to an unintended or uncontrolled release of oil, gas or any other commodity from a pipeline, to pay the costs related to establishing a pipeline claims tribunal and to pay any amount of compensation that such a tribunal awards; and
(k) authorizes the National Energy Board to recover those funds from the company that operates the pipeline from which the release occurred and from companies that operate pipelines that transport a commodity of the same class as the one that was released.

Pipeline Safety Act

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I appreciated the question from my friend from Windsor West about the Kalamazoo pipeline spill.

However, I rise to put this to my friend from Surrey North. Actually, the $1.2 billion was spent after the Enbridge corporate culture was described by the U.S. regulators as a culture of corporate negligence. The $1.2 billion did not result in the cleanup of the Kalamazoo River. The Kalamazoo River remains contaminated with bitumen and diluent because they have been unable to figure out how to clean up this particular type of mess.

The pipelines that are under consideration for Canada are all being proposed to carry this mixture of raw bitumen mixed with fossil fuel condensate called diluent or dilbit.

Certainly it would be far more preferable not to put dilbit in pipelines at all, but to process it in Alberta. I wonder if the hon. member agrees.

[Jasbir Sandhu, NDP, Surrey North, BC]

Mr. Speaker, I like the “culture of corporate negligence”. That is the very culture that the Conservative government has been trying to protect. Canadians expect better. They expect our government to stand on their side. The government has failed to protect taxpayers.

[Kelly Block, Conservative, Parliamentary Secretary to the Minister of Natural Resources]

Mr. Speaker, I am very pleased to stand in my place and speak to this important piece of legislation.

The pipeline safety act is another example of our government's commitment to protecting both Canada's economy and the environment. Our government knows that the two do go hand in hand.

As Canadians know, our government is dedicated to creating jobs, economic growth, and long-term prosperity for everyone across this great land. That is our first priority. However, we also recognize that jobs and economic growth cannot come at any price. As the Minister of Natural Resources has said repeatedly, no project will proceed under our plan for responsible resource development unless it has been proven safe for Canadians and for the environment.

In fact, we have spelled it out very clearly as a commitment in our Speech from the Throne:

Our government believes, and Canadians expect, that resource development must respect the environment. Our Government's plan for responsible resource development includes measures to protect against spills and other risks to the environment and local communities.

The pipeline safety act is one more example of our government's promise made, promise kept approach to governing. I would like to read two more sections from our throne speech, because they outline the necessary action we promised to take on pipeline safety:

Our government will: Enshrine the polluter-pay system into law; Set higher safety standards for companies operating offshore as well as those operating pipelines, and increase the required liability insurance.

With Bill C-46, we are delivering, just as we promised and just as Canadians would expect from their government. I am truly proud of that. We are doing exactly what we said we would do.

Specifically, this new legislation for pipeline safety focuses on prevention, on preparedness and response, as well as on liability and compensation.

As the Minister of Natural Resources said when he launched this debate, the amendments in this act send a clear message. The Government of Canada will ensure that Canada's pipeline safety system is world class, that first nations are involved in pipeline safety operations, and that taxpayers are protected. These are fundamental responsibilities for a federal government, and we are fulfilling our obligations fully and directly.

I am also pleased to see that members opposite have agreed that Bill C-46 is another important step in our efforts to ensure that Canada is a world leader in pipeline safety. As the member for Hamilton Mountain said, “I would be less than honest if I did not acknowledge that the amendments appear to be a step in the right direction”.

Moreover, the member for Skeena—Bulkley Valley said, “This may sound strange, but I have looked forward to some version of such a bill for many years”. It is strange, since New Democrats are completely opposed to all form of resource development. However, we appreciate that they recognize an excellent piece of legislation when they see one.

Just as important, it appears that all sides of this chamber have finally acknowledged that Canada's energy sector is the key engine driving our economy. The oil and gas industry alone contributes almost 8% to our gross domestic product. It employs 360,000 Canadians directly and indirectly, and it generates more than $23 billion annually in government revenue to help pay for social programs like health care, education, and infrastructure.

At the same time, pipelines are crucial to the safe transport of oil and gas across our country and to markets beyond our borders. As we have heard many times during this debate, Canada has an enviable record on pipeline safety. Of all the oil and product transported through about 73,000 kilometres of federally regulated pipelines in Canada, 99.999% of it has arrived safely.

My colleague from Nanaimo—Alberni captured this point very well with a reference to his home province of British Columbia. He said:

We had a pipeline going through Burnaby for more than 60 years, and most people in Burnaby did not even know it...

As my colleague for Stormont—Dundas—South Glengarry said:

...most homes in Canada are heated with natural gas, all of which is delivered by pipelines, but Canadians do not need to give it a second thought because it all happens so safety and seamlessly every single day.

Canada has a reputation for building and operating pipelines safely. This is one of our country's many strengths, and our government is determined to keep improving upon this record. That is why we have already implemented other important measures. For example, we gave the National Energy Board new authority to levy administrative monetary penalties and additional resources to increase its inspections and audits each year. As a result, oil and gas pipeline inspections have increased by 50% a year and comprehensive audits of pipelines have doubled.

The pipeline safety act would move those yardsticks even further. I would like to highlight a few examples. At the top of the list is the proposal to enshrine in law the polluter pays principle, to ensure that polluters would be held financially responsible for any costs and damages they cause. The legislation would also introduce absolute no-fault liability and require companies operating pipelines to hold minimum financial resources for incident response. For companies operating major oil pipelines the requirement would be set at $1 billion. As well, the pipeline safety act would, in exceptional circumstances, provide the NEB with the authority and resources to take control of incident response and cleanup when a company is unable to do so. Also, the new legislation would expand NEB authority to recover costs from industry for that backstop.

Furthermore, we are working with aboriginal communities and industry to enhance the participation of aboriginal peoples in all aspects of pipeline operations, from planning and monitoring to responding to incidents. This would ensure that aboriginal peoples participate fully in related employment and business opportunities.

These are all right and good measures. They are perfect examples of how our government is leading the way in protecting the well-being of Canadians, our communities and the environment. They also remind us of how safety standards can and should be enhanced as technologies evolve and regulations are improved.

The pipeline safety act delivers on all of these fronts. It ensures that Canadians keep setting the bar when it comes to the safe transport of oil and gas. I urge all members to support this valuable piece of legislation.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I know it is a degree of precision, which we do not often get in this place but references to pipelines generally, in this place and in the media, refer to oil pipelines or gas pipelines. In fact, as far as I know, all the pipelines that are currently being promoted, whether Keystone or Enbridge, Kinder Morgan or energy east, are actually about shipping raw bitumen to tidewater to get it sent to other countries for refining. It is actually not even crude oil. It is pre-crude. It is bitumen mixed with dilutant, otherwise called dilbit. It does pose different threats in the case of a spill and because of those different threats, the cap at $1 billion would be unlikely to recover the costs for polluters.

I would like to ask the hon. parliamentary secretary if there has been an analysis, with which she is familiar, of the different costs between cleaning up dilbit, dealing with crude and dealing with refined product.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, we know that between 2000 and 2011, federally regulated pipelines boasted a safety record of over 99.99%. Pipeline companies would remain fully liable when they are found at fault or negligent in the unlikely event of a spill.

An analysis of historical examples demonstrates that this level of absolute liability and financial capacity provides world-class coverage. The average cost of major pipeline spills in North America has resulted in cleanup costs in the range of $20 million to $50 million.

[Lois Brown, Conservative, Parliamentary Secretary to the Minister of International Development]

Mr. Speaker, my colleague spoke a bit about the engagement that the government wants to have with aboriginal communities as we move forward with pipelines. I wonder if she could talk just a little more about the opportunities that this is going to present for our aboriginal youth, employment opportunities and moving forward with new places and new careers.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, the natural resources sector is the largest private employer of first nations people in Canada. In the next decade, over 400,000 aboriginal youth will be entering the workforce, creating an unprecedented opportunity to address the need for new workers in the oil and gas industry. In 2012, more than 13,500 aboriginal people worked in the Canadian energy sector. We have developed this plan closely with industry and aboriginal communities to provide training for aboriginal communities on pipeline monitoring and response. This would allow first nations to continue to make important contributions as a full partner in the development of our natural resources.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Mr. Speaker, my colleague quoted her colleague from Nanaimo—Alberni and said that he thinks people in Burnaby did not realize that a pipeline ran through their community. I am not sure how my colleague made this determination. However, putting that aside for now, I can assure her that after the 2009 Kinder Morgan spill, she would be hard-pressed to find a resident in Burnaby, in fact the Lower Mainland, who does not realize that a pipeline goes through that community in the Lower Mainland.

My question to my colleague is why smaller pipelines are exempt. These are important, as she is pointing out, in the transportation of oil. Why are the small pipelines exempt and why is there so much discretionary authority being given to the NEB and the Governor in Council instead of creating the certainty that even industry would want and require?

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, the fact is that we are doing exactly what we said we would. We have been very clear that through this legislation our government is ensuring that Canada's pipeline safety system is world class, that first nations are involved in pipeline safety and operations, and that taxpayers are protected. We held a technical briefing, at which time that question was asked, and it is my understanding that regulations will provide further precision for companies that are transporting less than 250,000 barrels per day.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, I am pleased to rise today on this important bill to have the polluter pays principle apply to some of the government's legislation, which has been long sought after in this chamber. Therefore, Bill C-46, an act to amend the National Energy Board Act and the Canada Oil and Gas Operations Act, will be receiving our support to send it to committee.

There are some issues with this bill. It is lacklustre in some components, whether that be with respect to the clarity of the National Energy Board's oversight or liability. We have talked a bit about that today. However, the significant Achilles heel of the bill is the determination of the cleanup costs for companies that reach the $1-billion liability limit. That might sound like a lot of money on the surface, but in reality we have had spills that have cost more than $1 billion in terms of cleanup. I will speak to one in my area. Although it is an American example, our energy is integrated and it happened in a river that is connected to the Great Lakes tributary system. It affected the largest clean water supply. This is important not only with respect to the environment and water consumption for individuals but also to the general economy. We have ships that service all of the Great Lakes right out to the oceans, as well as tourism worth hundreds of millions of dollars with respect to the ecosystem. To give some perspective, over 800,000 U.S. gallons of oil escaped into the Kalamazoo River from a 30-inch pipeline. It got into the water system and required $1.2 billion U.S. to clean up. Given the value of our dollar today, that would be much higher than it was at the time. The reality is that it affected us.

To give those who are listening to the debate today an idea, a lot of effort and public money was spent to clean up the Great Lakes and other ecosystems. Therefore, it is not just about the damage and the problems that are caused at the moment a spill occurs, it is also about undermining all of the public investment that has been done to try to restore some of our ecosystems because we have treated them poorly so many times.

Most recently, we were able to celebrate the release of the sturgeon back into the Kalamazoo area, which is important to both the ecosystem and tourism sectors. A lot of hard work has been done to improve the terms and conditions by which we can use those and we have turned a negative into an asset. Therefore, when a spill takes place we cannot think of it in the context of that one moment, that one spill and that one time. When we look at the spills we have had across the country, there have also been legacy costs due to other related effects on the community, with respect to loss of use of water resources or land. Canadians have been quite clear and have consistently shown poll after poll that they do not have any confidence with respect to companies being able to clean up and contain oil spills affecting land and, in particular, water. A few years back, we saw some more modest spills that had shown up unexpectedly in the Detroit River when people found oil washing up on the shore. The company had no idea there was a spill.

Ironically, at one point in time if companies were fined for an oil spill or received a corporate fine or penalty, they could claim it as a tax deduction. I am proud that in 2004 the New Democrats fought to get that law changed so that they could no longer write off the costs of polluting. Not only did the polluter not pay, it was rewarded because it was a business-related expense at the time. That can no longer happen and is a step forward.

However, we are still left with some problems related to this bill. As I have noted, Canadians do not have confidence in the cleanup. Part of the problem that we have with the bill is that the National Energy Board's ability to act and investigate would not be sufficient.

I would point to the poor track record of the Conservative government. It is important that we did some see some action related to the horrible incident in Lac-Mégantic, but for some time now, we have been warning about some of the problems that the government has in relation to self-regulation.

I was on the transport committee when we tabled a report on rail safety in this chamber. I cannot say what was done when we were in camera, but I can say that the report did not have a dissenting opinion put with it. That was odd, because there were things that were clearly missing in the report that we tabled. A report prior to that talked about the safety management systems and how there was a culture of fear at CN and CP.

With a self-regulating body, are people going to feel strong enough and confident enough to go forward and challenge some of the industries that clearly have the ear of the Conservative government? This is a concern that I have with the National Energy Board. As we move to the self-regulation aspect, having seen cuts to the regulatory oversight, is that going to be enough? I do not think that it will be. That is what causes me major concern about this bill. It is the liability and accountability.

I would like to conclude with this. As I mentioned, in terms of their confidence in cleaning up oil spills, only 27% of Canadians are confident that the Government of Canada is able to respond effectively to a significant oil spill on water. That is significant. That lack of confidence from Canadians would be felt from coast to coast to coast and on our inland operations where we get our freshwater supplies.

We will move this bill to committee, but we will be asking significant questions to try to figure out why there is a $1 billion cap and why taxpayers should be on the hook for negligence.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I would like to get some clarity on the issue of pipelines, because it depends on who we talk to within the New Democratic Party about the energy east pipeline. I believe that the Leader of the Opposition has commented to the effect that he is somewhat bullish regarding the development of the energy east program. Some of his colleagues have even been a little bit bolder in their opposition to it.

Can the member provide some clarification? It has a lot to do with pipeline safety. There is no doubt about the need for energy east. Could the member provide some clarification on the whole project? What is the NDP's position?

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, we have been very clear. Generally speaking, our position on natural resources is that we should be in control of them by appropriately managing them and making sure that when we use them, it is done with the polluter pay principle and is sustainable. That is how we believe Canada's natural resources are best suited for use.

[Craig Scott, NDP, Toronto—Danforth, ON]

Mr. Speaker, among the provisions in the bill that have caused me a little bit of concern is one that limits the prescription period for liability claims to an absolute cap of six years. The limitation is three years from the time damage appears and materializes, which is a principle that we tend to recognize in tort and liability law generally. However, no matter when damage may materialize, whether health or environmental, there is an absolute cap of six years.

I wonder if my colleague feels that this is a problem, in that it seems to cut off at the knees the idea that medium- and long-term damage could materialize. That damage would not be claimable.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, I thank my colleague for the question. It is a point I had written down but never did bring up in my comments.

This is a very important point, because we would be limiting the window in which damages can be claimed. That window should be open. If damages take place, the polluter should pay for them. Whether the damage is discovered sooner or later should not be a factor.

It could take years to determine the source point of environmental damage or leakage. It may not be as obvious as in the case of the Kalamazoo River. It could be a longer-term problem with a pipeline that could basically be absolved from the process. Again, it is similar to that of setting $1 billion for damages. Why are we setting these caps with arbitrary numbers?

What we should be doing is making sure that the funding is going to be there to pay for it and that the proper insurance is in place. Second, no matter when the damage takes place, the company must be held responsible.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I thank my hon. colleague for Windsor West for his speech and for again raising this issue of the pipeline rupture and spill in Kalamazoo, Michigan. I think it is particularly instructive to look at that, because it was a pipeline carrying dilbit.

Certainly this was the first dilbit spill that the United States Environmental Protection Agency ever had to deal with. It reported that it was basically impossible to clean up and it brought Enbridge back to the site over and over to try to clean it up.

I referred earlier to Enbridge's culture of negligence. U.S. regulators referred to Enbridge's response as Keystone Kops. Enbridge had a pipeline spill alert with high-tech equipment that would ring in a control room the minute there was a rupture. In fact, the alarm bells did ring, but the Enbridge guys in the control room went around shutting off the alarms because they did not believe them. They did not believe there was a rupture. They thought there was a malfunction somewhere else in the system. When the next shift came on, they did not warn them that all these bells had been ringing. The next shift came on and started pumping raw product right out through a broken pipeline, and that is when most of the spill occurred.

The legislation is fine as far as it goes, but I would like my friend's comments. Now that we know that dilbit is virtually impossible to clean up, why would we put it in pipelines at all?