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Bill C-46, Pipeline Safety Act (Third Reading)


Hon. Michael L. MacDonald moved third reading of Bill C-46, An Act to amend the National Energy Board Act and the Canada Oil and Gas Operations Act.

He said: Honourable senators, as part of the government's plan for responsible resource development, the government has pledged that Canada's natural resources will only be developed if a project is proven to be safe — safe for Canadians and safe for the environment. The proposed pipeline safety act is an important part of that commitment to ensuring world-class safety standards as we transport the energy we need to power our everyday lives. To do so, it is based on three key pillars: incident prevention, preparedness and response, and liability and compensation. This bill complements this work and will provide a world-class regulatory regime for Canada's pipeline sector — a regime that strengthens protection for Canadians and the environment.

Today, I would like to focus on the third component, liability and compensation — the role and responsibilities of the National Energy Board and how the pipeline safety bill will increase its powers. I believe it is important to understand how this bill would strengthen measures to compensate for damages to the environment in keeping with the polluter-pays principle. Under Bill C-46, our government will deliver on its promise to enshrine that principle in law, making it an important foundation of the pipeline safety regime. The polluter-pays principle assigns responsibility to the polluter for paying for damage to the environment, as well as the associated clean-up cost. This will create a strong incentive for industry to make environmental protection the focus of their operations.

Colleagues, between 2008 and 2013, 99.99 per cent of the oil and petroleum products transported through federally regulated pipelines in Canada arrived safely and without incident. This achievement reflects very well on the National Energy Board and Canada's pipeline operators, but there is always room for improvement.

In the case of energy transportation infrastructure, the government's goal is zero incidents. That's why, as part of our plan for responsible resource development, we have already strengthened the National Energy Board, enabling it to increase annual oil and gas pipeline inspections by 50 per cent and doubling the number of annual comprehensive audits. These inspections and audits are critical because they identify potential issues and prevent incidents before they occur.

We have also provided the National Energy Board with new powers to improve prevention by imposing tough monetary penalties against pipeline operators that don't comply with the regulations. The pipeline safety bill moves these yardsticks even further. Indeed, we are setting a new standard for pipeline safety to ensure that we have world-class protection, a system that prevents incidents from occurring and improves our ability to prepare and respond to such events, and to ensure that polluters pay through a tougher liability and compensation regime.

In terms of prevention, this bill strengthens the National Energy Board's damage prevention regime so that we can ensure continued safety of and around pipelines. We are also clarifying the audit and inspection powers of the NEB, as well as the obligations of the pipeline companies to respond.

Complementary to the bill, we have sought out the NEB's expertise and guidance on the best available technologies for constructing and operating pipelines. As new technologies are developed, we want to make sure they are put into practice and that our safety systems remain at the forefront.

On preparedness and response, we are amending the National Energy Board Act to require the operators of major oil pipelines to have a minimum of $1 billion in financial resources, a portion of which must be readily available to respond quickly to any incident. In an exceptional circumstance, where a company is unable or unwilling to respond immediately, the NEB will be given the authority and the resources, first, to take over response operations and, second, to recover the costs of those operations from the industry.

Bill C-46 will also strengthen our system of liability and compensation. Not only will pipeline operators face unlimited liability when they are found at fault, but they will also be automatically responsible for damages up to a set amount. This is called "absolute liability." It doesn't matter who or what causes the incident, the company will be responsible regardless. In the case of companies operating major oil pipelines, this liability will be $1 billion.

In addition, the bill will empower the National Energy Board to order reimbursement of cleanup costs incurred by other governments or individuals, and to recover its own costs for stepping in to coordinate a response. With this bill, we will create one of the strongest and most comprehensive no-fault liability regimes in the world. This includes recognizing all types of damages to the environment in addition to actual losses through three broad categories. I will to go through them on the basis of descending order of those who will be able to claim damages.

The first category relates to claims for loss or damage incurred by any person as a result of a spill. The scope here is quite broad and covers all actual loss or damage, including loss of income and future income. With respect to Aboriginal peoples, for example, it includes the loss of hunting, fishing and gathering opportunities. This includes the loss of what falls under the term "use value," which encompasses claims for damages to what are commonly referred to as ecosystem services. I will return to the concept of use value in a moment.

The second category covers the federal government, provincial government or any person who incurs costs responding to or mitigating the damage from an oil spill.

The third category covers claims related to the loss of what is referred to as the "non-use value" in terms of a public resource that is damaged by a spill. This typically applies to the federal government or a provincial government.

Colleagues, Bill C-46 sets out a regime that will enshrine the polluter-pays principle. What I have found most revealing and reassuring is the industry's reaction to these tougher rules and penalties. Like all Canadians, pipeline operators welcome a stronger National Energy Board with the financial resources to enforce its powers. This bill, backed by our funding commitment in Budget 2015, means that we will deliver both. It is the right bill at the right time, addressing the right issues. I ask you to support it.