New Liability Regime for Pipeline Companies

Regulatory Update from Nimonik

Bill C-46, a Bill before Parliament, proposes amendments to the National Energy Board Act (RSC1985,cN-7) and the Canada Oil and Gas Operations Act (RSC1985,cO-7).

The Bill’s stated goal is to “strengthen the safety and security of pipelines regulated by those Acts.” The proposed amendments would increase pipeline companies’ liability and establish a pipeline claims tribunal.

Specifically, the proposed amendments would:

• Establish the minimum liability for pipeline companies in the event of a spill, when there is no proof of fault or negligence. Large pipeline companies, who can transport at least 250,000 barrels per day, will be liable for a minimum of $1 billion. Future regulations will set the minimum liability for other companies.
• Establish unlimited liability for all pipeline companies in the event of a spill, when there is proof of fault or negligence.
• Require companies to hold sufficient financial resources to pay their liability. Companies may be required to hold certain types of readily-accessible resources.
• Provide for the establishment of a pipeline claims tribunal under certain circumstances.
• Make pipeline companies liable for abandoned pipelines.
• Give the National Energy Board (NEB) the authority to regulate facilities and excavations near power lines and pipelines. Violaters of NEB orders and regulations could be fined up to $1 million.

The proposed amendments are expected to receive royal assent in the near future. The proposed amendments would come into force one year after royal assent.

For more information about Bill C-46, including its status in Parliament, the full text of the Bill, and the Legislative Summary, please click here.

To read a backgrounder about the Bill, please click here.

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