On Wednesday, Aug. 28, the National Energy Board (NEB) became the Canada Energy Regulator (CER). For further information please visit our Implementing the Canadian Energy Regulator Act information page

Financial Requirements

Pipeline Financial Requirements Regulations

The National Energy Board Act includes absolute liability and financial resource requirements for pipeline companies.  Companies operating pipelines are required to maintain financial resources to cover the costs of an unintended or uncontrolled release from a pipeline. Companies will be required to demonstrate and maintain financial resources that match, at a minimum, the amount of absolute liability applicable to them. A portion of the financial resources must be readily accessible to the company.

NEB-regulated companies operating pipelines that individually or in the aggregate have the capacity to transport at least 250,000 barrels of oil per day (major oil pipelines) are subject to an absolute liability limit of $1 billion. Absolute liability means that a pipeline operator must pay for any spill up to the limit (e.g. one billion dollars), regardless of whether there is proof of its fault or negligence. If a pipeline operator’s fault or negligence causes a spill or unintended release, there is no limit to liability. In other words, if a pipeline operator’s fault or negligence causes a spill, even if the cost to clean up and remediate a spill exceeds the absolute liability limit, the pipeline operator must pay the full cost.

Absolute liability limits for companies other than those operating major oil pipelines are set out in the regulation in Section 2 as follows:

Absolute liability limits for companies other than those operating major oil pipelines
Commodity Capacity (for oil pipelines) Absolute Liability Limit
Oil 50,000 – 249,999 barrels per day $300,000,000
Oil 1 – 49,999 barrels per day $200,000,000
Commodity Risk Value (for gas pipelines) Absolute Liability Limit
Gas Risk ValueTable Note a > 1,000,000 $200,000,000
Gas Risk ValueTable Note a = 100,000 – 999,999 $50,000,000
Gas Risk ValueTable Note a = 15,000 – 99,999 $50,000,000
Gas Risk ValueTable Note a = 1-14,999 $10,000,000
Commodity Transported in what state Absolute Liability Limit
a commodity – other than oil, gas, carbon dioxide or water in a liquid state by land or in a liquid or semisolid state; across a watercourse $10,000,000
a commodity – other than oil, gas, carbon dioxide or water in a gaseous or semi-solid state by land or in a gaseous state across a watercourse $5,000,000
carbon dioxide or water   $5,000,000

Regulations

Section 2 of the regulation, which sets absolute liability limits for all companies other than major oil pipelines, will come into force on the first anniversary of the date of publication of the regulations in the Canada Gazette, Part II.

Sections 1, 3, and 5 of the regulation, which respectively set out definitions, describe financial resource types the Board may order companies to maintain, and describe the requirements for pooled funds,will come into force 10 days following publication of the regulation in Canada Gazette II.

Section 4 of the regulation, which sets out the readily accessible portion of financial resources that will be required, will come into force 10 days after publication of the regulation in Canada Gazette II, for major oil pipeline companies, and on the first anniversary of the date of publication of the regulations in the Canada Gazette, Part II, for all other companies.

Guidance

The Board will begin consultation with regulated companies on guidance this fall.

Related information

NRCan website: Pipeline Safety Act Financial Regulations

Financial Regulation of Group 2 Pipeline Companies – Pipeline Safety Act Amendments

Canada Gazette, Part I – Oct 8 2016

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