• Legilsation leaves companies on hook for spill cleanup costs
  • Trudeau blames lack of public confidence for project delays

Prime Minister Justin Trudeau’s government will proceed with a pipeline safety law passed by its predecessor, one that makes Canadian companies liable for rivals’ clean-up costs in certain cases.

Natural Resources Minister Jim Carr confirmed this week the government will allow the Pipeline Safety Act, which enshrined a “polluter pay” principle on spill costs, to take effect in June as scheduled. It was passed last year before the election with broad support and could have been enacted earlier if the government chose.

Trudeau’s Liberals -- frequently critical of the previous Conservative government’s record on pipeline regulation -- will enact the law as they roll out a new climate test for proposals such as Kinder Morgan Inc.’s Trans Mountain pipeline and TransCanada Corp.’s Energy East. It’s part of a bid to boost public confidence in Canada’s environmental review system, which the prime minister has argued is to blame for stalled projects.

“Pipeline safety has to be a priority,” Carr told reporters Monday in Toronto. “Unfortunately, over the last number of years public confidence has eroded, so it’s our challenge and it’s our policy to restore that public confidence, and certainly safety issues are very important.”

New Requirements

Under the Pipeline Safety Act, liability is unlimited in cases of an uncontrolled spill found to be a company’s fault. In the event a company responsible is unable to pay, the law instructs the National Energy Board to recoup cleanup costs from other pipeline firms so long as the government of the day approves the move. Liability is capped at C$1 billion ($746 million) for large pipelines if a company is found neither to be at fault nor to have acted negligently, and the law authorizes the NEB to order companies to set aside funding for their abandoned pipelines.

The law was approved by the House of Commons last year after a committee amended its wording. It previously said the NEB “may” seek to recover spill cleanup costs from rival companies, with Treasury Board approval, and was strengthened to read that it “shall” do so.

The Trudeau government declined to speed up enacting the law to ensure the NEB and pipeline industry can “prepare and adjust to the new requirements,” Carr’s office said in a written statement.

The Canadian Energy Pipeline Association supports the bill and has worked with government to implement it, spokeswoman Alexandra Frison said in an e-mail Tuesday. The law will take effect June 19.

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