Ottawa Cuts Proposed Pipeline Clean-Up Fund by Half
The Canadian government has slashed by half the amount of money it wants pipeline companies to have “readily available” to deal with spills and other accidents. The change appears in revised regulations proposed under the Pipeline Safety Act, which lower the amount required to be held ready from 10% to 5% of a pipeline company’s legally-mandated maximum liability.
The higher amount was contained in draft proposals issued a year ago, the Canadian Press reports. Under existing pipeline rules inherited from the previous Conservative government, CP notes, “no such fund was required.”
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The proposed regulations would set varying requirements on pipeline companies to demonstrate their ability to cover clean-up costs from spills in their networks. “A large company with capacity to transport at least 250,000 barrels of oil per day [would need] to demonstrate it can cover clean-up bills of $1 billion,” CP explains. “The ‘readily available’ fund requirement at 5% would thus be $50 million, versus $100 million at 10%.”
Smaller pipeline companies would be required to show they had ready funds based on lower “absolute liability” of $200 or $300 million, depending on their size.
Natural Resources Canada, which issued the draft regulations, said they were commensurate with “the two largest spills in Canada between 2007 and 2014 that cost $137 million and $42 million, respectively, to clean up,” according to CP.
Environmental Defence denounced the change as a “weakening” of measures designed to ensure that resources are available to clean up spills, raising “questions about the oil industry’s power in Ottawa.”
But an NRCan spokesperson pointed to the absence of any pre-spill funding mandate until now. “In fact, these regulations would impose new financial requirements to ensure pipeline companies are financially prepared to cover the costs related to an incident.”
Canadian Energy Pipeline Association President Chris Bloomer said the updated percentage “more accurately reflects the ready cash required to initiate response,” adding that it “in no way reduces the ultimate liability of operating companies.”
Earlier this year, the National Energy Board instructed Canada’s major pipeline companies to post their spill response plans online by the first of this month.