Stiff new fines are in store for sloppy digging or other misbehavior — by any company or person — that causes leaks and spills from Canadian long-distance pipelines under federal regulation,

At a recent industry safety conference in Calgary, National Energy Board (NEB) Chairman Gaetan Caron vowed to make use of penalties enacted in June by the Conservative government in Ottawa. The stiffened safety regime was included as balance in a pro-development regulatory reform package that set limits on popular participation in project approval hearings and reduced the frequency and length of environmental assessments.

The legislation gave the NEB power to levy “administrative monetary penalties” for violations of safety and environmental rules. The board was authorized to impose fines of up to C$100,000 on corporations and C$25,000 on individuals. In cases of repeated violations the totals could go much higher.

Caron pointed out that no ceilings were set on fines that can be levied both per day and per infraction for persistent misbehavior. “We will, without exception, require everyone — including regulated companies, third-party contractors and individuals — to follow the NEB rules and regulations,” the NEB chairman said.

The regulatory reform package also exempted the board from federal budget cuts by providing it with an extra C$13.5 million to hire new staff. Inspections and audits are being increased for all companies under NEB jurisdiction, Caron said. “The companies we regulate must perceive compliance monitoring and enforcement to be unrelenting and ever-present,” he said.

The biggest spill in recent memory on a Canadian federally regulated pipeline resulted from digging by a construction contractor in the Vancouver suburb of Burnaby, BC.

In July, 2007 an excavator working on a sewage line broke the Trans Mountain oil conduit from central Alberta to the Pacific Coast. A black geyser sprayed about 250,000 liters (1,600 bbl) of crude into the neighborhood and a nearby ocean inlet. The mess cost C$15 million (U.S. dollar at par) to clean up.

An investigation by the Transportation Safety Board of Canada concluded in 2009 that the diggers used an inaccurate map that was based on a 1957 drawing of the pipeline route, and that lack of respect for proper procedures and poor communication contributed to the accident.

In mid-2011 two construction contractors and the pipeline pleaded guilty to a 21-count indictment alleging violations of British Columbia’s Environmental Management Act. The companies were only fined $1,000 each. But each of the firms paid a total penalty of $150,000 including mandatory contributions of $149,000 apiece to a BC wildlife habitat preservation group. The pipeline company donated an additional $100,000 to an educational and safety training program.

The 2010 BP well blowout in the Gulf of Mexico triggered “a monumental shift” that has affected the oil and gas industry everywhere it operates in North America, Caron said.

As a result of the American disaster and smaller spills later in Alberta, “Canadians have begun actively questioning the inherent risks and benefits associated with oil and gas exploration, production and transportation,” said the NEB chairman. “Now, more than at any other time in our history, there is growing interest in what regulators are doing to protect the public and the environment.”

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