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

[James Lunney, Conservative, Nanaimo—Alberni, BC]

Mr. Speaker, I listened with much interest to our colleague across the way. I have a lot of respect for my hon. colleague and for most of his remarks. If I overlook the partisan nature of the last five minutes, he made some very good points.

The member mentioned that we are bringing in new measures on pipelines and an absolute liability of $1 billion. He mentioned that there is Liberal support for measures around abandoned pipelines and so on. There are a lot of good measures coming in to build on an already tremendously successful pipeline record in Canada.

I think the member noted in his speech that there are some 73,000 kilometres of pipeline in Canada. Converted to miles, it is about 45,360 miles, with a few decimal points after that. That is almost two times around the world.

I will just make this point, and then I will pose my question. We had a pipeline going through Burnaby for more than 60 years, and most people in Burnaby did not even know it was there until someone, a few years ago, inadvertently put a backhoe through the pipeline and caused a minor spill. There has been no environmental disaster.

We have had a lot of furor, particularly in the community in Burnaby and other places, about pipeline security.

We have one of the largest and most secure pipeline systems in the entire world, and I appreciate the member acknowledging that. I wonder if the member would acknowledge that there has been a lot of media hype related to pipeline security, which has raised the angst of the public, and that it is a good idea to emphasize the safety record we have in this country, one that is enviable in the world. We are looking to work with our colleagues to make sure it is even better with the legislation before us today.

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, I must say, first of all, that I was impressed watching my colleague do the conversion in his head from kilometres to miles. He said he could not come up with the decimals, but I thought the rest was pretty precise. That was very impressive.

The member talked about how in a community in his riding there is a pipeline that has been there for 60 years, and people do not know it is there. One of the concerns we ought to have as we look at this bill and what the limits should be and how we regulate the pipeline sector is the concern that where there are pipelines that have been in place for 60 years they are being properly maintained and checked.

I am sure my colleague knows about the mechanisms used to run through pipelines. They are called pigs that go through pipelines. They are not actual pigs. That is the name of the machine that goes through the pipeline to examine the condition of the pipeline. We need to make sure that this is being done as it should be and that no pipeline is left in the ground longer than it ought to be, becoming a danger.

While it is true, as the member noted, and as I did earlier, that the safety record of pipelines in our country is enviable, it is not perfect, and we want to perfect it. The last thing we want in any community is a spill of oil or any kind of petroleum product, especially one that ends up in some of our fresh water or soil. That is a grave concern.

It is very important that we look at this in detail. I hope to be able to have a thorough study of this bill at committee.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I thank the member for his speech, and I share his skepticism with respect to whether we will have a thorough study in committee. However, hope springs eternal, and maybe in 2015 a committee will actually study it and make recommendations, and the government will actually make changes to the bill.

I would like to get the member's commentary on the $1-billion threshold for liability. As the member rightly points out, it is a no-fault threshold, and thereafter it is unlimited liability. In the matter of oil spills, particularly significant ones, $1 billion is actually just a rounding error. It is nothing in terms of the catastrophic effect an oil spill can have. To use my own community of Toronto as an example, if there were an oil spill and it leaked into Lake Ontario close to a water pipe intake, the consequences would be catastrophic

I wonder whether the committee might actually give some thought to whether $1 billion is a threshold. In fact, liability beyond $1 billion is limited by bankruptcy legislation. No company is immune from bankruptcy, and a company can hit its bankruptcy threshold pretty quickly in some of these things.

The third thing I would like the member to comment on is a terrorist incident. If there were a series of well-planned incidents by people who wished to do us harm, how would the liability play through, both for the $1-billion threshold and the post-$1-billion threshold?

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, on this question, I think it is important that the committee actually look at the options in terms of what the threshold should be for absolute liability.

It is kind of an odd coincidence that when the government has done its calculation, when it has weighed all the factors it thinks ought to be weighed, it so happens to have picked this round number of $1 billion. Why is that the number, and why do the Conservatives feel that it is the correct number?

That is why it is important to have experts talk to us about what might be the impact on the environment and on the industry if there was a different threshold. What is the argument for this particular threshold, and what are the arguments for other possible thresholds? I think the NDP is saying, basically, that it should be unlimited, but let us hear the argument on that and the impact it would have.

My hon. colleague talked about bankruptcy. I think another consideration here is insurance. It is not just a question of whether the company itself goes bankrupt in a case like this. It is also a question of whether the insurance company also goes bankrupt. One would expect the insurance to cover the consequences of a spill and to cover the liability provided for in the legislation, whether it is unlimited liability where fault is found or absolute liability where no fault is found.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, with friends like me, he does not need any enemies. This is actually an opportunity to have a real debate about this liability, as opposed to the usual nonsense that passes for debate around here.

I wonder whether the concept of pooled insurance would be a concept the committee might consider. It may well be similar to Lloyd's of London. The insurance company would take the first hit on the liability, and thereafter some form of Lloyd's-type insurance, either from the industry itself or from Lloyd's, would actually pick up the balance.

I appreciate the significance of the cost of the premiums, but on the other hand, as they say in the economics trade, these are externalities. These externalities are things that heretofore we have not actually factored into the cost of transporting carbon. We feel it is perfectly fine to pollute the environment, the water, the air, and that sort of thing and not price it, as opposed to other forms of energy generation. These are the kinds of things I would like to see a committee get into.

Does the member accept the minister's statement that it is 99.99% safe? There seem to be a heck of a lot of incidents in the newspaper about spills, small and large.

[The Deputy Speaker, NDP, Joe Comartin]

The member is going to use up all the time, and the member for Halifax West is not going to have an opportunity to respond.

The member for Halifax West.

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, I appreciate your intervention.

I do not think I can answer all the points and questions my hon. colleague raised. It is remarkable. In my time in this job, I have found it interesting how often some of the most fascinating debates around here happen within our own Liberal caucus. It is great to have discussions, because we need to have that kind of debate around here.

I think this question of pooled insurance is one we ought to consider. We have to have enough companies in the sector to make it worthwhile. For instance, in the nuclear sector in the U.S., apparently there are enough to do it, while it would not work here in the nuclear sector. Perhaps it might work well in the pipeline sector. It is a good question to raise in committee. I hope we will have the chance, with a good study of the bill, to do so.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

Mr. Speaker, I will be sharing my time with the member from Saskatoon—Humboldt today.

Let me begin by saying I am very pleased to have the opportunity to speak to the pipeline safety act and its critical importance to all Canadians.

Most Canadians hardly think twice about the impact pipelines have on their day-to-day lives. These energy highways are essential for delivering energy that Canadians need to heat our homes, power industries, and fuel our vehicles. When Canadians turn up the thermostat, we hardly bat an eye. We tend not to consider where energy comes from. Like mine, 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 safely and seamlessly every single day.

Behind the scenes is a vast network of federally regulated pipelines. There are some 73,000 kilometres throughout Canada. These pipelines transport $100 billion worth of oil and natural gas each year. When we stop to think about it, energy fuels our daily lives and pipelines carry that energy. Pipelines are used to move oil from producers to refineries and on to customers right across the country. Whether we travel by car, bus, train, boat, or airplane, our journey is fuelled by energy that was most likely transported by pipelines at some point.

The oil and gas sector is tremendously important to Canada. It generates almost 8% of Canada's gross domestic product. As members know, energy is our leading export. Central to all of this economic activity are Canada's pipelines. In fact, 94% of all Canadian transportation is fuelled by energy from petroleum products moved by pipelines.

One thing is certain: pipelines are the cornerstone of Canada's oil and gas sector and are also an important national industry. In 2012, pipelines added nearly $9 billion to Canada's gross domestic product and over 6,800 jobs. They also account for between $40 billion and $55 billion in private sector investment each year. That is a lot of dollars being invested in the Canadian economy.

It seems that Canadians cannot pick up a newspaper or turn on the television these days without hearing about pipelines. Some Canadians have concerns about pipelines after a few recent incidents, but when it comes to safety, Canada's record is outstanding. In fact, our pipelines are among the safest in the world. Between 2008 and 2013, 99.999% of oil delivered through federally regulated pipelines arrived safely. As a result, our pipeline safety record easily tops that of Europe and the United States. What is more, during the last three years, 100% of the liquids spilled by these pipelines were completely recovered. Therefore, pipelines have proven to be one of the safest means of delivering the energy we all use.

Every day, Canadian pipeline companies move about three million barrels of oil. Moving the same amount of oil would require 15,000 tanker trucks or 4,200 railcars. Transporting oil through pipelines also consumes less energy and causes fewer greenhouse gas emissions.

However, we know we can always do better, and when it comes to the safety of Canadians and the safety of our environment, there is no second best. That is why new pipeline safety legislation is so important. With this legislation, the Government of Canada is building on its already impressive safety record through a suite of measures in the areas of prevention, preparedness and response, and liability and compensation. We are taking action to strengthen pipeline safety and modernize the National Energy Board Act.

This legislation proposes preventative measures that will clarify the rules and responsibilities of pipeline owners to prevent pipeline incidents, increase safety for Canadians, and better protect the environment. It will ensure that pipeline operators have the financial resources to respond in the unlikely event that an incident occurs. For example, major oil pipeline operators will be required to show proof of $1 billion in financial resources. In addition, they will be required to carry a certain portion of these resources as cash on hand in order to ensure an immediate response.

New regulations would also give the National Energy Board the power to directly administer tough new penalties that would address contraventions quickly so that larger issues would not arise in the future. We would enshrine the polluter pays principle in law so that polluters, not Canadian taxpayers, would be held financially responsible for the costs and damages they caused.

The bill also introduces absolute or no-fault liability. This means that pipeline operators would be held liable even when fault or negligence has not been proven. For companies operating major oil pipelines, the amount of absolute liability would be set at $1 billion. The pipeline safety act would also give the NEB authority to take control of incident response and cleanup if a company is unable or unwilling to do so. At the same time, it would expand the authority of the National Energy Board to recover costs from industry if the NEB ever steps in and takes charge.

Beyond the legislation itself, our government is taking a wider approach to pipeline safety and resource development. We are deeply committed to working directly with aboriginal peoples in all aspects of pipeline safety operations, including planning, monitoring, incident response, and related employment and business opportunities. We believe that aboriginal peoples must be partners in everything we do, from ensuring the safety of our pipeline system to protecting our marine environment from incidents to sharing in the benefits of developing our resources. That is why our Conservative government is working with aboriginal peoples to ensure the responsible development of our resources and the long-term prosperity of our communities for the benefit of all Canadians.

Taken together, these measures would ensure that Canada's pipeline safety system is world class and among the safest in the world. Building safe pipelines is something Canadians have done well for decades now; with the proposed legislation, we are making Canada's robust pipeline safety system even safer.

When it comes to the handling of oil and gas, our government should and will strive for the highest safety standards possible. Canadians expect and deserve nothing less. Canada's pipelines carry the products that fuel our economy, support the livelihoods of thousands of Canadians, and support our day-to-day high quality of life. I am a big promoter of continuing the great record we have.

[Bruce Hyer, Green, Thunder Bay—Superior North, ON]

Mr. Speaker, my dad was an investment banker and taught me from the time I was two that the first rule of business is “Buy low, sell high.” Here in Canada, we buy the world's most expensive oil in the east. We have an 80% dependency on oil from places like Arabia, Nigeria, and Venezuela, oil that has a large carbon footprint and is very expensive, and we sell at a huge discount in the west.

Yes, we want safer pipelines. This act is not going to do it without some major changes, but the real question for the member is this: does he understand that we have to reduce our use and export of oil, that we need to transport it more safely, and that this bill is not going to do what we really need to do, which is to stop putting all of our eggs in the oil basket?

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

Mr. Speaker, diversity is, of course, a key to the success of our Canadian economy. Yes, I agree with the member opposite that we have to look at all alternatives for energy, but when we have a 99.999% success rate using pipelines to transport oil, it is incumbent on us to continue to look at this as a very viable option. With this new act, we would even improve on that record.

As long as we are going to use oil as an energy source, we need to do the best job we can in transporting it. Pipelines have one of the finest records so far, and this act will do nothing but improve that record.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, there is no doubt that the issue of pipeline safety is of great concern for Canadians from coast to coast to coast. We understand and appreciate the need to capitalize on the potential of Canada's contribution of a very important energy source, but in looking at the legislation, one cannot help but be somewhat disappointed, in the sense that the government seems to be offloading quite a bit through regulations and the National Energy Board. The government could have been more precise in terms of how it is going to deliver that world-class pipeline safety.

My question for the member is this: does he not believe that the government has fallen short, in terms of having stronger legislation that would have provided assurance to Canadians that we are in fact serious about going forward?

Yes, we have a great record on pipeline safety, but there is more that we could have done through legislation, as opposed to being so dependent upon regulation. I would ask him to comment on that.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

Mr. Speaker, the member agreed that our record is great, and it is nice to hear that from an opposition member. I must say, though, that the previous government's record was not necessarily great. We lived through a period of time of about 13 years when that particular government's record was not great.

Now our government is doing what it is supposed to do. We are supposed to keep Canadians safe and we are supposed to keep our economy growing and going forward, and this is what the act is all about. It would push the economy of this wonderful country forward and ensure that we deliver energy in a safe, secure manner. The bill would do nothing but that.

[The Deputy Speaker, NDP, Joe Comartin]

Resuming debate, the hon. member for Saskatoon—Humboldt.

I advise the member that he will have approximately six to six and a half minutes before we end the debate for question period.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Speaker, like many members who arrive late on Monday mornings as a result of flights, I unfortunately have not been able to listen to all of the remarks of my hon. colleagues, so I hope I do not engage in too much duplication in my remarks.

By way of quick summary, as someone who has been on the natural resources committee, I would point out that I quite enjoy doing legislation like this. The pipeline safety act and the other safety acts we have done clearly demonstrate how we as a government and as responsible legislators try to bring together natural resources and the environment to provide for safety and to deliver results for all Canadians. This is something that we sometimes take for granted here in this country, because we have a modern society, a technologically advanced society, a clean society and clean industry that in many parts of the country is based on natural resources.

Other parts of the world do not necessarily have this. They produce natural resources and products for world markets, but they do not always have the safety, the technology, or the culture and mentality to deliver and produce natural resources in a safe way. That is why I enjoy talking about issues such as the pipeline safety act. Canada does have extraordinary expertise with respect to pipelines and an extraordinary safety record. The environment and oil production can go hand in hand.

I will make some comments on what I think a few other people will already have said in this debate, but which need repeating.

Building and operating safe pipelines is something that Canadians have done well for decades. Federally regulated pipelines in Canada have transported 99.999% of oil safely. Our environmental performance has been strong. It is world class. As technology and regulations are improved, safety standards are raised.

The government has structured its plan based upon four key objectives. First of all, we make regulatory review processes for major projects and pipelines fit in a more timely and predictable way. Another goal of all of our legislation involving natural resources and issues like pipelines is to reduce duplication. We also try to strengthen protections for the environment in everything that we do. Our government is also strongly committed to engaging first nations in every aspect of resource development.

Across Canada the opportunities for prosperity in aboriginal communities from infrastructure and resource development have never been greater. It is one of the reasons the government is determined to forging a strong and lasting relationship with aboriginal peoples in Canada in the development of oil and gas resources. There are not many economic opportunities for many aboriginal communities located in rural areas, except for natural resources.

Over the past year, as part of its responsible resource development plan, the government has initiated a series of new measures to ensure the safe development of natural resources. We introduced new enforcement mechanisms and monetary penalties for non-compliance, along with new legislation, regulations, standards, and environmental requirements. Oil and gas pipeline inspections have increased by 50% a year and comprehensive audits of pipelines have doubled.

The government has also brought in tough new measures for oil tankers to ensure the safe transportation of our energy resources through our waterways. With respect to the Safeguarding Canada's Seas and Skies Act, an expert panel reviewed Canada's current tanker safety. As Canadians can see, we are committed to safety from the second oil is pumped from the ground right up until the time it is delivered and leaves not only our lands but our waters as well. Building on these measures the government is taking steps to improve the pipeline safety record and ensure that it remains truly world class.

The new legislation focuses on prevention, preparedness, response liability, and compensation. It takes concrete action to strengthen pipeline safety and would modernize the National Energy Board Act.

I am just going to summarize my remarks by saying that in everything we do, we should have in mind a motto that goes something like this:

Good, better, best,
Let's never rest.
Our good is better;
Our better is best.

That rule should apply to everything in this place, and especially to environmentally sensitive legislation. Legislation like this would help to protect Canada's environment while our natural resources are developed.

The House resumed from January 26 consideration of the motion that Bill C-46, An Act to amend the National Energy Board Act and the Canada Oil and Gas Operations Act, be read the second time and referred to a committee.