As we discussed last year when the Pipeline Safety Act was passed, the
new legislation imposes greater obligations and liability on
companies that operate federally-regulated oil and gas pipelines. A
key part of the Pipeline Safety Act is the codification of
the "polluter pays" principle. The stated purpose of new
sections of the NEB Act is to "reinforce the
'polluter pays' principle by, among other things, imposing
financial requirements on any company that is authorized under this
Act to construct or operate a pipeline."
Among the important items being implemented through the new
legislation are the following:
Additional damage prevention requirements are imposed on
pipeline operators – both at the time of construction and
during operation. At the same time as the Pipeline Safety Act came into force,
new Regulations implementing the damage prevention
provisions of the new legislation also became effective.
Changes to the NEB Act will make any party whose
fault or negligence causes an unintended or uncontrolled release of
oil or gas (a "release") responsible for the resulting
costs, with no limit or ceiling on liability. The costs that can be
recovered include actual loss or damage 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. This liability
is joint and several, which means that the harmed parties can fully
recover from any party who is at fault.
The additions to the NEB Act will also impose liability of
up to $1 billion on a pipeline constructor and operator for a
release, even where no fault or negligence is shown. Those
companies that construct and operate pipelines will be required to
maintain financial resources necessary to pay the amount of their
without-fault liability exposure.
Claims against pipeline operators and constructors and those
other parties whose fault or negligence has caused a release may be
commenced up to three years after damages are suffered. This is
longer than the usual two-year limitation period for claims.
The Pipeline Safety Act also empowers the
NEB to regulate the abandonment of pipelines. This includes
oversight to ensure that pipeline companies remain liable for
post-abandonment costs and expenses.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
In Bank of Montreal v Bumper Development Corporation Ltd, 2016 ABQB 363, the Alberta Court of Queen's Bench enforced the "immediate replacement" provision in the Canadian Association of Petroleum Landmen 2007 Operating Procedure...
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