June 30, 2015 § Leave a comment
On June 18, 2015, the new Federal Pipeline Safety Act (Bill C-46) received Royal Assent. The Pipeline Safety Act includes amendments to the National Energy Board Act and the Canada Oil and Gas Operations Act.The amendments are effective June 18, 2016.
Key amendments include codification of the “polluter pays” principle, which will make any party whose fault or negligence causes an unintended or uncontrolled release of oil or gas responsible for the resulting costs, with no limit or ceiling on liability. The costs that can be recovered include actual damages from the release, as well as the costs of a Government, Aboriginal governing body or other party that takes action in response to the release.
The amendments to the NEB Act will also impose liability on a pipeline operators and constructors for a release, even where no fault or negligence is shown. In the case of a pipeline with the capacity to transport at least 250,000 barrels of oil per day, the limit of this strict liability is $1 billion. For other pipelines, the limit will be set through new regulations. The statute of limitations to initiate these claims is three years after damages occur but no later than six years after the date of the release. Liability for these claims is joint and several. Accordingly, a plaintiff may recover all the damages from any of the defendants regardless of their individual share of the liability. Companies that construct and operate pipelines will be required to maintain financial resources necessary to pay the amount of their strict liability exposure. The NEB may consider the company’s financial statements, letters of credit and insurance in determining whether this requirement is met. Pipeline companies may be allowed to participate in a “pooled fund” to cover their exposure. Stay tuned for the details to come through new NEB regulations.
The Pipeline Safety Act also clears the way for new rigorous regulation of pipeline abandonment. Extensive new powers are established that allow NEB to oversee pipeline abandonment, including requiring financial assurance from owner/operators to cover the costs related to abandoned pipelines. The Pipeline Safety Act establishes a new as-required tribunal to adjudicate claims for damages from pipeline releases and authorizes NEB to designate a third-party to oversee repairs and remediation if the operator fails to comply with NEB direction.
May 27, 2014 § Leave a comment
On Friday, May 23, 2014, leading into the Memorial Holiday weekend, the White House published its semiannual regulatory agenda (Unified Agenda) describing its plans for approximately 60 departments, agencies, and commissions across the federal government. Marking the fourth consecutive time the Obama administration has decided to slide its regulatory agenda under the door on the eve of a major federal holiday, the approach is becoming predictable.
According to the published agenda the following items impacting natural gas and oil transportation by pipelines and oil by rail are slated for this summer:
- A proposed rule by PHMSA to require excess flow valves on natural gas pipelines running through buildings beside single-family homes is slated for August 2014. The excess flow valve issue has been a focus of NTSB and Congress since the 2010 San Bruno explosion.
- PHMSA is scheduled to release a broad reassessment of hazardous liquid pipeline safety regulation, including rules regarding leak detection in July 2014. This was called for in the Pipeline Safety Act reauthorization in 2011.
- PHMSA plans to formally propose new crude-by-rail safety standards in July 2014. It is no surprise that new rules for tank cars are coming; how strict the standards advanced by the administration is yet to be revealed. Look for more information here when the rulemaking process begins.
A complete list from the Unified Agenda for the Department of Transportation can be found here:
May 25, 2014 § Leave a comment
The Subcommittee on Railroads, Pipelines, and Hazardous Materials held a hearing on May 20, 2014 to review the 2011 Act. The hearing was opened with remarks by Chairman Jeff Denham (R-CA), who stressed the importance of a risk-based approach to pipeline safety driven by private investment. “We believe in a risk-based, data-driven approach to pipeline safety that focuses private investment in pipeline safety on those areas of higher risk. As PHMSA develops rules to implement the mandates contained in the 2011 act, it is critically important that we must provide regulatory certainly necessary for pipeline owners and operators to plan infrastructure investments, and do so with input from the safety community and industry.”