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
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:
|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|
- Canada Gazette Part II – July 11 2018, Pipeline Financial Requirements Regulations (SOR/2018-142), page 2553
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.
The Board will begin consultation with regulated companies on guidance this fall.
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