Canadian Government Reduces Proposed Operator Emergency Fund for Pipeline Incidents

The Canadian government is proposing a five percent decrease in emergency funds that pipeline operators are required to have on hand for short-term costs of pipeline spills and other incidents relating to pipelines.

The proposal under the Pipeline Safety Act, if approved, would require operators in Canada to have 5 percent of their company liability on hand to immediately help with cleanup costs. When drafted over a year ago, the proposal required operators to have on hand 10 percent of their liability.

The proposed reduction comes as a result of extensive research done on the country’s history of pipeline incidents and now better reflects the costs of previous pipeline spills.

If approved, this fund requirement would be the first under pipeline regulation in Canada.

Although seen as a reduction in company liability regarding pipeline spills, Natural Resources Canada stated that the regulation actually imposes new financial requirements on operators to make sure they are financially prepared to cover costs relating to pipeline incidents.

The proposal is undergoing a 30-day discussion period and should be finalized by early 2017.