Canada’s Pipeline Safety System

Pipelines are a safe, efficient and reliable way to move Canadian energy to consumers. In 2015, almost 1.3 billion barrels of crude oil and petroleum products were safely transported by Canada’s federally regulated pipelines. On average each year, 99.999 percent of the oil transported on federally regulated pipelines moves safely.

The Pipeline Safety Act received Royal Assent on June 18, 2015 and came into force on June 19, 2016. The Act strengthens Canada’s pipeline safety system based on prevention, preparedness and response, and liability and compensation.

Prevention

The Canada Energy Regulator (CER, formerly the National Energy Board) is the federal agency responsible for regulating the more than 73,000 kilometres of pipelines that fall under federal jurisdiction.

The CER’s regulatory oversight supports the Government of Canada’s objective of zero incidents by aiming to prevent incidents from ever occurring. In this regard, the CER received funding to increase the number of pipeline inspections and comprehensive audits it conducts each year to identify issues before they arise.

Companies operating pipelines are required to anticipate, prevent and mitigate potentially dangerous conditions associated with their pipelines. They must design safety, security, emergency, integrity management and environmental protection programs, which are reviewed and audited by the CER.

The CER has committed to making pipeline safety documents more readily available to the public to ensure the process is transparent and publicly accountable.

Through the Pipeline Safety Act, the polluter pays principle has been enshrined in Canadian law to ensure polluters are held financially responsible for any costs and damages they cause. Companies operating pipelines are responsible for them from their construction until they are abandoned, including any related costs.

To protect against unintentional damage to pipelines, CER regulations are harmonized with the provinces.  The regulations set a ‘prescribed area’ where any ground disturbance or building is prohibited without first contacting the company operating the pipeline. This safeguard will help prevent damage to pipelines from occurring.

Preparedness and response

In the unlikely event that an incident does occur, federal and provincial regulators must be notified immediately by law and the CER will exercise its authority to protect the public, workers, property and the environment. The CER can issue orders to companies with respect to response, cleanup and remediation. Companies can be fined or prosecuted for violations of the Canadian Energy Regulator Act, with fines ranging from $100,000 to $1 million and penalties that include imprisonment from one to five years.

The CER can also issue administrative monetary penalties ranging from $25,000 for individuals to $100,000 for companies per infraction, per day.

Under new safety measures, all companies operating a pipeline will be required to demonstrate a minimum level of financial resources to ensure they can respond quickly in the unlikely event of an incident. For companies operating major oil pipelines, this level will be set at $1 billion. If the operator is unwilling or unable to shoulder its responsibilities, the Government of Canada can provide the CER with the resources to take control of spill response, cleanup and remediation, and the CER will be authorized to recover any costs incurred from the industry.

Liability and compensation

Companies operating pipelines are liable on an unlimited basis if they are at fault or negligent. The Pipeline Safety Act introduces absolute liability for all pipelines; this is set at $1 billion for companies operating major oil pipelines, with other classes of operators and limits established in regulations. The CER will also be able to order companies to reimburse individuals and governments for costs incurred in relation to an incident.

Enhancing Indigenous engagement in pipeline safety

Indigenous participation is a key part of Canada’s pipeline safety system. The Government of Canada is working to better integrate Indigenous peoples in pipeline development, safety and operations, including in construction, emergency response planning, pipeline monitoring and related employment and business opportunities.

Safer pipeline system

The CER regulates pipelines throughout their life cycle – from pipeline design and application, construction and operation through to abandonment. The robust system protects the safety of Canadians and the environment, respects the rights of Indigenous peoples, and supports a resilient and sustainable energy sector.

Canada has reinforced its strong pipeline safety system by emphasizing prevention, by ensuring companies are prepared to respond quickly in the event of an incident and making sure that the companies - not Canadians - are liable for all costs.