NEB to introduce Administrative Monetary Penalties

The National Energy Board (NEB) has developed draft Administrative Monetary Penalties Regulations (AMP Regulations) and published them in the Canada Gazette, starting a 30-day public comment period. 

Under the proposed regulations, the NEB can issue a Notice of Violation to landowners who construct a facility or excavate without leave under Section 112(1) of the NEB Act or who fail to obtain leave of a pipeline company to drive vehicles or mobile equipment over a pipeline right-of-way under Section 112(2) of the NEB Act.  These violations are designated as Type-B violations and will result in a monetary penalty of between $4,000 and $100,000 for a corporation and between $1,000 and $25,000 for an individual.

Changes coming to the NEB Act in the Omnibus Budget Bill C-38

Here are a few of the changes coming to the NEB Act under Bill C-38, the omnibus "budget" bill:

• The Chair of the NEB can issue directives to the members of the NEB hearing any application "regarding the manner in which they are to do so";
• If the Chair is of the opinion that a time limit imposed on the hearing of an application is not going to be met, the Chair can change the composition of the panel or decide how to apply new Section 55.2 of the NEB Act (i.e. deciding to limit the ability to make representations to the Board):

"On an application for a certificate, the Board shall consider the representations of any person who, in the Board's opinion, is directly affected by the granting or refusing of the application, and it may consider the representations of any person who, in its opinion, has relevant information or expertise.  A decision of the Board as to whether it will consider the representations of any person is conclusive.";

•  All applications and proceedings before the Board are to be dealt with as expeditiously as the circumstances and considerations of fairness permit, but, in any case, within the time limit provided for in the Act;
• For Certificates of Public Convenience and Necessity under Section 52 of the NEB Act, the Board must submit a report and recommendation on an application within 15 months of the date on which a complete application has been submitted;
• Once the report has been submitted, Cabinet may direct the Board to issue or refuse a certificate, and must provide reasons for the decision in its order;
• The Board must make an order on a Section 58 exemption application within 15 months of receipt of a complete application
• Added to Section 112 (the control zone and crossing section) is a new suite of direct penalties for anyone contravening Section 112(1) (the requirement for leave from the Board to work within 30 metres of a pipeline easement - the 30 metre control zone) or Section 112(2) (the requirement for leave from the pipeline company for permission to cross the pipeline with a vehicle or mobile equipment): on summary conviction, a fine of up to $100,000 and/or imprisonment up to 1 year; on conviction on indictment, a fine of up to $1,000,000 and/or imprisonment up to 5 years.

One can definitely question how the last change relates to "Jobs, Growth and Long-term Prosperity", which is the "short title" for the Bill.  Pipeline landowners need to be aware that a failure to obtain the consent required under Sections 112(1) and 112(2) of the NEB Act (not just failure to comply with an order made by the NEB or an inspector resulting from non-compliance with those sections) will constitute a federal offence subject to prosecution under the Criminal Code.

Trans Mountain Pipeline LP ordered to pay $250,000 after oil spill

The Trans Mountain Pipeline is 1,050 kilometres in length and has a diameter of 610 millimetres, which is about 24 inches, for most of that length. The Trans Mountain Pipeline can transport approximately 300,000 barrels of oil per day and can transport different products in batches rather than being limited to transporting one product type at a time.  It has been in operation since 1953 and crosses the provincial boundary between Alberta and British Columbia.  Since it is an interprovincial pipeline, it is regulated pursuant to the federal National Energy Board Act and the National Energy Board Pipeline Crossing Regulations and is subject to the oversight of the NEB.

Trans Mountain has recently been ordered to pay $250,000 after the pipeline was damaged during excavation work, resulting in an oil spill.  A civil engineering company working for the City of Burnaby applied to Trans Mountain under Section 112 of the NEB Act for permission to excavate near the pipeline to complete works for a City storm sewer project.  A crossing agreement was signed and then the engineering firm retained a construction company to carry out the work.  During construction, no preconstruction meeting was scheduled or held between the construction company and Kinder Morgan, the pipeline company acting as agent for Trans Mountain. 

The Foreman for the construction company reviewed a services map in conjunction with the project plans and determined that the planned construction work would conflict with the location of the pipeline.  Kinder Morgan was advised of the potential conflict and requested to attend to locate and mark the pipeline in the area of the discrepancy.  An inspector attended and located the pipeline, the location being consistent with the newly provided service map and inconsistent with the project plans prepared by the engineering firm and approved by Kinder Morgan. 

Eventually, construction was being carried out on the site without the presence of an inspector from the pipeline company.  No complete location of the pipeline was requested and no preconstruction meeting was held.  Later, an excavator operator was widening the trench for the installation of an additional manhole when he pierced the pipeline.  Pursuant to this training, the excavator operator attempted to cover the puncture in the pipe with the bucket of his excavator in order to contain the escape of oil.  This led to a second puncture. 

In handing down its sentence, the Court noted:

There was no benefit which flowed to any of the defendants from the pollution here. The spill was, on the contrary, an accident which could and should have been avoided. Culpability for each of the defendants is at the low end of the spectrum. A combination of small errors by each party created the event. There were misunderstandings, there were erroneous assumptions, but there was not even what might be referred to as real negligence and there was certainly no deliberate wrongdoing. Care was taken, but not enough care.

The Court imposed fines of $1,000 on each of the three companies involved - the engineering firm, the construction company and Trans Mountain.  In addition, each company was ordered to pay $149,000 to the Habitat Conservation Trust Foundation.  Trans Mountain was ordered to pay another $100,000 to the B.C. Common Ground Alliance for the purpose of "identifying parties engaged in construction or excavation, organizing and planning DigSafe BC! workshops, and raising awareness about damage prevention for those undertaking excavations near underground utilities."

Read the sentencing decision at: R. v. B. Cusano Contracting Inc. et al.

Quebec Commission orders pipeline depth at 1.6 m or more than 5 feet

In its decision granting authorization to Gaz Metro for the expansion of its gas distribution pipeline facilities, the Commission de Protection du Territoire Agricole du Quebec (Agricultural Land Protection Commission) is requiring that the pipeline be installed at a depth of 1.6 metres (or more than 5 feet) through cultivated land.  The Commission noted that it requires a minimum depth of cover of 1.2 metres on private property, but in this case 1.6 metres was warranted.  The Commission ruled that Gaz Metro would have to be notified of any agricultural activity conducted to a depth of more than 60 centimetres. 

Note that Section 112 of the NEB Act requires a landowner to obtain permission from the pipeline company for any activities at a depth of more than 30 centimetres (or 1 foot).  The difference is depth of cover.  Under NEB regulation, pipelines need only be installed at a minimum depth of 2 feet as set out in the applicable CSA standard. 

If pipelines had to be installed at 1.6 metres' depth, would a 30 centimetre restriction be necessary?

Read the Commission decision (in French) at: Société en commandite Gaz Métro (Re).

NEB confirms that landowners required company permission to cross pipelines even for low-risk activities

In a letter addressed to Pipeline Crossings Working Group Members, the National Energy Board (NEB) has confirmed that Section 112(2) of the National Energy Board Act requires that landowners obtain company permission to cross pipelines with vehicles or mobile equipment for ANY purpose, even if the proposed activity is "low-risk".  The NEB is now proposing to issue an order under Section 112(5)(c) setting out exemptions to this requirement for "certain low-risk conditions where depth of cover, ground conditions, and pressure exerted by the vehicle or mobile equipment enable the safe crossing of pipelines." 

Read the NEB's letter at: LMCI Action 1.2 Letter to Pipeline Crossing Group.