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Pipelines are currently the safest and most efficient method of transporting large volumes of crude oil and petroleum products over long distances.
Canada has a comprehensive and rigorous pipeline safety regime of enforcement mechanisms and penalties administered by the National Energy Board (NEB), an expert, arms-length and independent regulator.
Companies operating inter-provincial and international pipelines in Canada are required to follow strict rules and regulations. Pipelines and equipment must meet Canadian Standards Association specifications which are considered among the most stringent in the world. Safety, integrity and emergency response programs specific to each company’s infrastructure are regularly reviewed and audited by the NEB. The tools also include ongoing pipeline monitoring, inspections and site visits, as well as the ability to issue mandatory compliance orders.
Penalties administered by the NEB range from severe action, such as revocation of licence to operate, to a suite of existing financial penalties and penal sanctions and proposed new prevention measures, such as administrative monetary penalties.
The NEB also has the authority to prosecute for certain violations of the National Energy Board Act, with fines ranging from $100,000 to $1,000,000 and imprisonment from one year to up to five years.
In the event of a pipeline rupture or spill, the company is liable for all clean up and remediation costs. Companies can also be prosecuted and, if found guilty, fined under the National Energy Board Act. Violators may also be subject to prosecution and fines under other federal legislation and provincial legislation should the environment, species and wildlife, or waterways be affected.
Pipeline regulations require that sediment and water content be less than 0.5 percent by weight to protect pipelines from corrosion. This standard applies to all forms of crude oil, including bitumen, transported by federally regulated pipeline.
Under the Government’s Responsible Resource Development plan, pipeline safety has been further strengthened by providing $13.5 million over two years to the NEB to increase the number of oil and gas pipeline inspections by 50 percent annually. It also doubles, from three to six, the number of annual comprehensive audits to identify potential issues and prevent incidents from occurring.
Economic Action Plan 2012 also provides the NEB with authority to impose administrative monetary penalties. The administrative monetary penalties add to regulatory tools by providing the NEB with authority to administer penalties of $25,000 for individuals and $100,000 for companies for each day of not addressing regulatory infractions identified by the NEB. The administrative monetary penalties provide the means to strengthen safety in a preventative manner, and penalties can be cumulative should the regulatory infractions not be corrected.
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