This is a guest post by Ian Miron, Ecojustice staff lawyer. 

Proposed pipeline liability regime steps in the right direction, but leaves too much wiggle room for polluters.

At this very moment, Canada’s liability regime is woefully inadequate when it comes to making sure that polluters pay in the event of a pipeline rupture or oil spill. That means that Canadian taxpayers like you would shoulder an inappropriate degree of the risk in the event of a serious pipeline accident, like Enbridge’s Kalamazoo River spill in Michigan.

According to recent estimates, that spill — the largest in United States history — cost more than $1.2 billion to clean-up. By comparison, Canada’s strictest liability law would have only made Enbridge automatically liable for a paltry $40 million, while providing the company with an opportunity to wriggle off the hook for any further costs. 

Now consider that a number of controversial new pipeline projects have been proposed in Canada, each bigger than the last. Between Enbridge’s Northern Gateway (525,000 barrels per day), Kinder Morgan’s Trans Mountain expansion (890,000 barrels per day) and TransCanada’s Energy East (1.1 million barrels per day), thousands of Canadians may find pipeline infrastructure — locking us into a fossil-fuel economy for another generation — snaking right through their backyards.

Each project comes with an array of heavy environmental risks, including significant upstream and downstream greenhouse gas emissions. But for many Canadians, the very real threat of a major oil spill is a tangible and pressing concern, which is why it is absolutely imperative that Canada bring in a stricter, more comprehensive liability regime.

The good news is there is some progress to report. Earlier this month, the federal government introduced Bill C-46 in the House of Commons. If passed into law, Bill C-46 would completely overhaul the statutory liability regime for federally-regulated pipelines in Canada.

Here’s a quick look at a few encouraging developments and shortcomings of the bill:

The Good

     Polluters will be absolutely liable for harm caused by a pipeline spill.

• This means that the company operating a pipeline will be liable in the event of a spill even if it hasn’t been negligent and hasn’t broken any laws. Bill C-46 will also require a company to have enough financial resources to cover, in full, the absolute liability limit. That limit will be $1 billion for oil pipeline companies whose pipelines have the capacity to move at least 250,000 barrels per day. The limit for gas and other pipeline companies (as well as smaller oil pipeline companies) may be set out in a future regulation. It is also worth noting that Cabinet has the power to increase, but not to decrease the absolute liability limit for major oil pipeline companies.

  Polluters will be liable for environmental damages.  

• The bill makes polluters responsible for losses of “non-use value” of public resources, or environmental damages, even if those damages don’t affect the environment’s commercial (or “use”) value. Recognition of so-called “environmental damages” is rare in Canadian statutes, although it is well-developed in U.S. oil spill legislation. Polluters will also be liable for any actual losses or damages suffered by individuals and for any clean-up costs incurred by the government.

  New tools to recoup clean-up costs from polluters.  

• Bill C-46 creates several new tools that, if implemented, will enhance the National Energy Board’s ability to recoup clean-up costs from a polluter, including some that appear to allow the Board to recover more than the absolute liability limit. The bill also gives the Board the power, in certain circumstances, to recover costs associated with a spill from the pipeline industry at large, not just from the polluter. Cabinet will also have the ability to establish a special tribunal to hear and decide claims for compensation. Interestingly, any compensation awarded by the tribunal would be paid directly out of government revenue. This should make it easier for those affected by a spill to obtain compensation, but could leave taxpayers on the hook for this compensation if other tools aren’t used to recover money from the polluter.  

The Bad

     It’s too discretionary.

• Many of the new tools are discretionary, meaning that either the National Energy Board or politicians (i.e., Cabinet) get to decide whether or not they will be implemented. It is conceivable that some tools might not be implemented for political or other reasons, weakening the protection and peace of mind this bill is intended to offer Canadians. While Bill C-46 has the potential to make some important improvements to Canada’s pipeline liability regime, it’s too early to tell whether this potential will translate to real, on-the-ground benefits for Canadian taxpayers.

  It has significant gaps.  

• For example, Bill C-46 doesn’t identify the absolute liability limit for gas and other non-oil pipeline companies, or for small oil pipeline companies. Instead, this limit might be set in the future by a Cabinet regulation. Likewise, Bill C-46 provides no clear guidance on the calculation of “environmental damages,” nor does it provide the government with the power to develop such guidance at a later date through regulation. Because recognition of this kind of damages is very new in Canadian statutes, this omission makes it less likely that a government will try to recover compensation and weakens the potential benefits of including these damages.

  It doesn’t impose unlimited absolute liability.

   
• Finally, and perhaps most crucially, Bill C-46 doesn’t impose unlimited absolute liability on polluters. In fact, Bill C-46 takes a step back by eliminating the government’s ability to recover clean-up costs for a pipeline spill under the Fisheries Act, which applies in certain circumstances to make a polluter absolutely liable, without limit. No liability regime can truly and comprehensively be termed a polluter pays regime unless and until polluters are made absolutely liable for the full costs of environmental harm. Although a liability limit of $1 billion for some companies is a good first step, we only need to look to Michigan and Kalamazoo River to know that the clean-up costs for a major spill can top that number — and that doesn’t include compensation for damages.

The Takeaway

Bill C-46 is a much needed, overdue first step towards a “polluter pays” regime for pipelines in Canada. In general, it could add a lot of good, innovative tools to the National Energy Board’s toolbox that could effectively protect Canadian taxpayers from paying the clean-up costs in the wake of a pipeline spill. How effective these tools will be is, unfortunately, left largely to the discretion of the Board and politicians. This lack of certainty about the degree to which polluters will be required to pay for their pollution undermines what is, in principle, a good first step.

This post originally appeared on the Ecojustice blog.

Image Credit: KARK 4 News via NRDC

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Canada’s National Energy Board announced on Thursday the approval of Enbridge’s request to reverse and expand a portion of the company’s Line 9 pipeline to allow for crude to flow east to Montreal, Quebec. This follows a July 2012 decision by the NEB to allow reversal of the western Line 9 segment from West Northover to Sarnia, Ontario. As a result, in the words of the NEB, “Enbridge will be permitted to operate all of Line 9 in an eastward direction in order to transport crude oil from western Canada and the U.S. Bakken region to refineries in Ontario and Quebec.”

Canadian activists urged the NEB to fully consider the high risk and small reward of reversing the pipeline, pointing to the “DilBit Disaster” — when another reversed-flow Enbridge pipeline spilled over 800,000 gallons of diluted bitumen into Michigan’s Kalamazoo River — as a warning for what could occur on the Line 9 route.

As DeSmog Canada has reported, Enbridge’s Line 9 shares the same design deficiencies as the company’s Line 6B, which burst in Michigan. Canadian environmental groups are crying foul over the agency’s non-transparent and restrictive public comment process.

“It’s pretty obvious the entire regulatory system is broken,” Adam Scott, spokesperson for Environmental Defence, told the Vancouver Observer. “They restricted the public’s ability to even participate.” Language in a 2012 budget bill allowed the NEB’s decision to be made without a comprehensive environmental assessment, and the Canadian public was forced to complete a lengthy 10-page application (and given a short two week warning to do so) to even earn the right to submit a public comment.

“There were roughly 150 folks who were actually even allowed to comment or write a letter, and this was also the first major energy project not to have to go through an environmental assessment, so it’s clear the whole system has been stacked against the public’s interest in favour of oil companies,” said Scott.

Nader Hasan of Forest Ethics agrees that the decisionmaking process was rigged.

“Our position is that the decision isn’t just wrong, it’s invalid,” said Hasan. “The rules of the game were rigged in favour of Big Oil. We believed and continue to believe this decision is fundamentally flawed because the process is fundamentally unfair.”

Forest Ethics is challenging the restrictive public comment process with a lawsuit, launched last year, which they hope will be settled in time to impact future NEB decisions. 

Impacts in the United States

Though Enbridge's Line 9 terminates near Montreal, the flow reversal is an integral part of the company's plans to move diluted bitumen and crude from the Bakken shale to Eastern ports for export.

As we first reported on DeSmogBlog in 2012, internal documents revealed how Enbridge was resuscitating an old industry plan, once called Trailbreaker, to link the pipeline system in the American Midwest, where tar sands crude already flows, to a coastal terminal in Portland, Maine. Enbridge's Line 9, traveling through Ontario and Quebec, is a crucial link.

Image: NRDC

In 2012, 19 advocacy groups including the Natural Resources Defense Council, Conservation Law Foundation, Greenpeace Canada, the National Wildlife Federation, and 350.org released a report, Going in Reverse: The Tar Sands Threat to Central Canada and New England, that laid out the then-secret plans to connect Enbridge's Line 9 with the Portland-Montreal Pipeline. 

Who runs the Portand-Montreal Pipeline system? As the “Going in Reverse” report explains:

The Portland-Montreal Pipe Line is managed by two linked companies: the Montreal Pipe Line Limited, which owns and operates the Portland-Montreal Pipe Line with its wholly owned U.S. subsidiary, the Portland Pipeline Corporation.

The Portland-Montreal Pipe Line company, as well as Enbridge Inc., have been open about their intent to move tar sands oil east through central Canada and New England.

In 2011, Portland Pipe Line Corp. expressed publicly, “We’re still very much interested in reversing the flow of one of our two pipe lines to move western Canadian crude to the eastern seaboard,” treasurer Dave Cyr was reported saying. “We’re having discussions with Enbridge on their Line 9 and what it means to us.”

And then there's this: Montreal Pipe Line Limited is owned in large part by Imperial Oil Limited and Suncor Energy; both companies have major stakes in tar sands mining and refining operations in Alberta.

For the past two years, environmental groups and activists on this side of the border have been working to ensure that the 62-year-old Portland-Montreal Pipeline is never reversed. that travels through a number of ecologically-sensitive areas and crosses hundreds of waterways through Vermont, New Hampshire, and Maine. 

On Tuesday, Vermont residents of 13 towns passed resolutions during Town Meeting to prohibit the transport of tar sands crude through the pipeline. 

“Vermonters have already loudly signaled opposition to transporting tar sands across our rivers and farms, alongside lakes, and through communities of the Northeast Kingdom,” said Jim Murphy, National Wildlife Federation Senior Counsel. “A spill would have a devastating impact on our water supplies, wildlife habitat and tourism industry. And any transport of tar sands through Vermont would encourage growth of an industry that contradicts all of our state’s leadership and hard work on moving toward cleaner sources of energy.”

In South Portland, Maine, which hosts the potential export terminal, residents worked to pass a "Waterfront Protection Ordinance" on the ballot last fall, but were outspent 6-to-1 by Big Oil interests.  

The resistance of New Englanders might already be having an impact. While Enbridge was outspoken on a 2008 earnings call about the potential of linking its proposed tar sands pipelines to the Portland-Montreal Pipeline, this week a company spokesperson told VTDigger.org that Enbridge had "no interest" in using the Portland-Montreal Pipeline to move tar sands crude. 

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The largest onshore oil spill in US history – Enbridge's ruptured Line 6B that released nearly 3 million liters of tar sands diluted bitumen into a tributary of the Kalamazoo River in Michigan – finally has an official price tag: $1,039,000,000 USD. That's according to newly disclosed figures released by Enbridge in a Revised Application to expand another one of its pipelines, the Alberta Clipper.

The total cost, which includes clean up and remediation, was topped off with an additional $3,699,200 fine levied by the Pipeline and Hazardous Materials Safety Administration (PHMSA). According to the docket, Enbridge violated several laws involving pipeline management, procedural manuals for operations and maintenance, public awareness, accident reporting and qualifications among others.

The spill, which went unaddressed for over 17 hours, was exacerbated by Enbridge's failed response according to the US National Transportation Safety Board (NTSB). At a hearing last year the NTSB's chair Deborah Hersman likened the company to a band of Keystone Kops for their bungled response, which included twice pumping additional crude into the line – accounting for 81 percent of the total release – before initiating emergency shut down. The disaster revealed numerous internal problems within Enbridge that were further described by the NTSB as "pervasive organizational failures."

Communities along Talmadge Creek and the Kalamazoo River near Marshall, Michigan experienced sickness from the fumes associated with the spilled dilbit, or diluted bitumen, that blanketed miles of intersecting wetlands and waterways. Dilbit is a mixture of heavy oil from the Alberta tar sands and corrosive liquid chemicals, including benzene known to cause cancer in humans, that allow the viscous crude to flow.

The particular composition of dilbit is in part responsible for the spill's high costs – nearly 10 times more than any other onshore spill – because of dilbit from the tar sands which sinks in water, rather than floating like conventional oil. Enbridge, despite several attempts to clear the riverbed of remaining oil, spent nearly 3 years working on clean up of submerged oil.

As recently as March 2013 the US Environmental Protection Agency (EPA) ordered Enbridge to perform additional dredging in the Kalamazoo to clean up unrecovered oil along the river's bottom.

At the time of the spill Mark Durno, a deputy incident commander with the EPA told InsideClimate News "submerged oil is what makes this thing more unique than even the Gulf of Mexico situation." Because Enbridge did not disclose to federal and local officials the contents of the pipeline, it wasn't until a week later that responders knew what they were dealing with.

PHMSA records show that the defect that led to the 6 and a half foot gash in the side of Line 6B was detected at least three times before the incident, although neither Enbridge nor the federal regulator felt the damage required repair.

In a recently-released report addressing Enbridge's Line 9, pipeline safety expert Richard Kuprewicz claimed Enbridge "has a culture where safety management seems to not be a critical part of their operation."

Currently Enbridge has several proposed pipeline plans including the Northern Gateway Pipeline that would carry tar sands crude to the British Columbia coast and Line 9 that would transport tar sands crude to the eastern seaboard. Both lines would open the coasts to export opportunities. Local communities point to Kalamazoo and sinking dilbit as reasons coastal ports should not consider carrying tar sands crude on oil tankers bound for Asian or other shores.

Enbridge's most current application, a 'Certificate of Need for a Crude Oil Pipeline,' was presented to the Minnesota Public Utilities Commission this month as a part of Enbridge's "ongoing efforts to meet North America's needs for reliable and secure transportation of petroleum energy supplies" via the Alberta Clipper.

The Alberta Clipper, or Line 67, will increase its capacity from 570,000 barrels per day (bpd) to 800,000 bpd should the application be approved. The application is the second phase of Enbridge's proposed capacity increase for the Alberta Clipper. The first application, filed October 8, 2012, initially proposed the line be increased to 570,000 from 450,000 bpd.

Currently the line carries crude oil from Hardisty, Alberta to terminal facilities in Superior, Wisonsin where the line meets up with Enbridge's Mainline System for distribution across the US.

Image Credit: EPA

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A five year battle against a key component of plans to pipe tar sands bitumen through Quebec and to the eastern United States quietly came to an end this summer.

In mid-July, Montreal Pipe Line Ltd., owned by Shell Oil, Suncor and Imperial Oil, withdrew its request with the Commission de protection du territoire agricole (the Commission for the Protection of Agricultural Land of Quebec, or CPTA) for permission to build a pumping station on 2.4 hectares of agricultural land in the eastern part of the province. The pumping station was crucial for plans to reverse the direction of the 378-kilometre-long Portland-Montreal Pipe Line (PMPL), in order to send oil from Montreal to the port city of Portland, Maine, for export.

The decision to withdraw the request has been met with cautious celebration by those who have been opposing the project since 2008.

“To our committee, this is a victory,” said Jean Binette, president of the Comité pour l'environnement de Dunham (the Dunham Committee for the Environment, or CED), in a telephone interview with DeSmog. “But we're not fooling ourselves – this is most likely simply a postponement,” until projects like Enbridge's reversal of Line 9B from Montreal to Sarnia or TransCanada's Energy East pipeline comes though, he said.

The plan to reverse the PMPL, which has a capacity of 600,000 barrels per day, to send oil south was originally in conjunction with Enbridge Oil Inc.'s expansive Trailbreaker pipeline project, that would have sent tar sands bitumen from Alberta to Portland, for eventual refinement and export. While that plan was initially put on hold in 2009 and cancelled completely in 2012, Montreal Pipe Line Ltd. had held steady to its pipeline reversal plan up until this summer.

But with Trailbreaker off the table (or renamed to make residents think it was), Enbridge's planned reversal of Line 9B a ways off, and TransCanada's Energy East plan still seeking approval from the Quebec government, there was no reason for the company to continue with the application.

According to the company, the decision to withdraw the request was a purely financial one. Montreal Pipe Line, Ltd. (which, together with Portland Pipe Line Corporation, makes up Portland Montreal Pipe Line, Ltd.) had maintained an option on the parcel of land where they planned to build the pumping station. That option was up for renewal, and it no longer made financial sense to maintain the option, so the company allowed it to lapse, said spokesperson Denis Boucher.

Without ownership of the land, a request for rezoning from agricultural to industrial became moot. The campaign against the pumping station had nothing to do with it, said Boucher. “The decision was based on our company, on our needs, and not having an active project. We decided not to move forward with the project,” he told DeSmog.

The link between financial concerns and opposition may not be so distinct, though.

“It's an economic decision because it's costing them too much” to not be pumping oil, said Cameron Fenton, director of the Canadian Youth Climate Coalition (CYCC) and a former member of Climate Justice Montreal. During his time in Montreal, he helped organize solidarity actions with the residents of Dunham, and continues to organize against the tar sands and pipeline expansions. “The longer you stall them, the more it costs them.”

And the pumping station project has been stalled for over five years.

If you had asked at the beginning, though, you would have never expected this outcome.

In 2009, it seemed like the battle to keep the pumping station off of undeveloped agricultural land in the heart of Quebec farming territory was over before it had really began. Following consultations in 2008, the CPTA released a 2009 report approving the change in the use of the land, allowing for the pumping station to be built. There was also little popular support in 2008 for the newly formed CED (Dunham Committee for the Environment), said Binette.

People didn't think it was a big issue – the pipeline was underground, what trouble could it cause? –  explained Binette.

But for a few, the worries about tar sands oil coming through a pipeline built in 1950 was too big a risk. Dunham resident Stéphane Durand filed a lawsuit with the Administrative Tribunal of Quebec, alleging the CPTA had not done its due diligence in reviewing the project, and won. He also won an appeal by the company filed in the Court of Quebec.

Montreal Pipe Line was forced to resubmit their application to the CPTA in 2011. By then, it wasn't clear when oil would be coming from west to east. Two years later, despite growing pressure to move tar sands oil east, the pumping station is now off the table.

An integral part of keeping the fight going that long, said Binette, was the population of Dunham eventually coming around to their cause. Residents saw the 2010 Enbridge Line 6B leak that spilled over 830,000 gallons of tar sands bitumen into Michigan's Kalamazoo river, said Binette. The similarities between Kalamazoo and the eventual pipeline reversal in Dunham – both pipelines were built around 1950, and the Montreal Pipe Line would also carry the more abrasive (and more difficult to clean up) tar sands bitumen – made them realize this kind of accident could happen close to home.

South of the border, where the Kalamazoo spill has echoed even more strongly, organizers are expressing the same reserve as Binette.

“While the pulling of the plug for the building of the pumping station was welcome news to our ears, we are staying the course. Our campaign continues,” wrote 350 Maine's Sarah Lachance in an email to DeSmog. “We are well aware of the industry's determination to bring this poison to market and they are well aware of our determination to stop them.”

Despite the possibly fleeting nature of this win, the CYCC's Fenton said it is significant because it represents the first victory in the recent wave of protests against pipeline development and the expansion of the tar sands. The fight against the pumping station – and the pipeline reversal by extension – predates the battle against the Northern Gateway, Keystone XL and now Energy East. It shows that victories are possible, he said.

But, it could be a bumpy road ahead. With the Energy East and Line 9 reversal still on its way, Binette said that eventually Montreal could see 1.3 million barrels of oil come to the city per day. And with TransCanada talking about sending their oil to St. John, New Brunswick for refining, he said there's no doubt that eventually there could be enough oil coming through to re-invigorate the PMPL reversal and bring a new pumping station proposal.

“It buys us some time, but we're not going to ignore what's happening – we're following it closely,”  he said.

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Last week marked the third anniversary of the largest inland oil spill in US history. On July 25th, 2010 a 41-year old Enbridge pipeline in Michigan tore open spewing over three million litres of diluted tar sands bitumen or dilbit from Alberta into the Kalamazoo River and the surrounding area. Three years later the spill from the Enbridge pipeline known as Line 6B is still being cleaned up with the cost nearing one billion US dollars. The Kalamazoo spill drew wide spread attention to the dangers of shipping dilbit through North America's oil pipeline system. Now environmental organizations and residents of Ontario and Quebec fear Enbridge's plan to ship dilbit from Sarnia, Ontario to Montreal, Quebec through the 37-year old Line 9 pipeline. They worry this will put their communities at the centre of the next 'dilbit disaster.'   "What happened at Kalamazoo could happen here with Line 9," says Sabrina Bowman a climate campaigner with Environmental Defence based in Toronto.   "People in Ontario and Quebec need to know the Line 9 pipeline is very similar in age and design to the ruptured Line 6B in Kalamazoo," Bowman told DeSmog Canada.  

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“Line 9 was built at the wrong time with the wrong materials, and forms part of a pipeline system in which ruptures and leaks on very similar pipes have happened on a fairly regular basis,” stated Ontario Pipeline Landowners Association (OPLA) lawyer John Goudy in his final argument at the Line 9A hearing in London, Ontario in May 2012.

The 37-year old Line 9 pipeline runs from Sarnia to Montreal. The pipeline's operator – Enbridge – wants to increase the capacity of Line 9 from 250 000 barrels per day (bpd) to 300 000 bpd. Enbridge also wants to ship 'heavy crude' such as bitumen from the Alberta tar sands through Line 9.

Line 9 is almost identical in age and design to the Enbridge pipeline at the centre of the largest inland oil spill in US history – Line 6B of the Kalamazoo spill in Michigan. The 41-year old Line 6B pipeline ruptured in 2010, spilling over 800 000 gallons (3 million litres) of bitumen into the Kalamazoo River and the surrounding area. The cleanup is still going on and could cost up to one billion (US) dollars.  

“We are not anti-pipeline or anti-oil. We just want respect for our livelihoods and safe pipelines,” says Dave Core founding president of the Canadian Association of Energy Pipeline Landowner Associations (CAEPLA).

Design Deficiencies of Line 9

OPLA's argument against shipping bitumen through Line 9 is the pipeline suffers from “historical deficiencies”. Line 9 is covered in an outdated external protective coating called single-layer polyethylene tape (PE tape). A section of PE tape became unglued from Line 6B allowing water to corrode the pipe resulting Line 6B's rupture in 2010 according to the US National Transport and Saftey Board. 

The Canadian Energy Pipelines Association (CEPA), an industry group, warned in 2007 against the use of PE tape on new pipelines because it can stretch or become unglued from a pipeline, creating pockets of water that cause pipeline corrosion. CEPA concluded PE tape was ineffective in mitigating the effects of stress corrosion cracking (SCC) on pipelines.

Enbridge's Line 6B.

OPLA has also pointed out Line 9's pipe-wall thickness (6.35-7 mm) for most of its length is 30% thinner than a pipeline with the same diameter (762 mm) going into the ground today.  Enbridge’s engineering assessment admits this high diameter-to-pipe-thickness ratio makes Line 9 “susceptible” to mechanical damage. 

Line 6B of the Kalamazoo spill had the same pipe-wall thickness and diameter of Line 9. Enbridge is currently replacing Line 6B with a new pipeline with thicker walls and a lower diameter-to-pipe-thickness ratio.

There is no indication Line 9 will be replaced by a new pipeline.

Being a pipeline landowner in an expanding resource economy 

OPLA and CAEPLA represent the interests and rights of farmers and other rural landowners with oil and gas pipelines going through their property. The construction of Line 9 in 1975 sparked the pipeline landowner movement in Ontario. Two southwestern Ontario farmers mortgaged their farms to fight for compensation for soil degradation caused by Line 9's construction and won. One of the two farmers went on to found OPLA in 1993.

As the Canadian government pushes for more pipelines to be built to export bitumen, the rights of pipeline landowners are being reeled back.

Dave Core of CAEPLA told the Canadian Senate in a presentation earlier this year the 2012 omnibus bill C-38 introduced criminal penalties for landowners violating a contentious section of the National Energy Board Act; section 112. Depending on the conviction, the penalty for violations of section 112 is a $100 000 – $1 000 000 fine or up to 5 years in prison.  

Section 112 restricts landowners from driving their equipment over a buried pipeline on their own property without the permission of the pipeline's operator first. Land cultivation deeper than 30 centimetres within the pipeline's “safety zones” is not permitted. Safety zones can be as wide as thirty metres on either side of the pipeline's eighteen metre wide right-of-way. This effectively creates a 78-metre wide strip of land pipeline landowners cannot properly farm or utilize.

Landowners' disputes with pipeline companies can only be brought to the National Energy Board (NEB). Up until recently the NEB referred to itself as the partner of the energy industry, not the independent regulator it is mandated to be. Landowners have complained for years there is a 'revolving door' between the NEB and energy industry. The pipeline industry group CEPA's current president Brenda Kenny worked for the NEB from 1986 – 2001 .

“You get the feeling the NEB listens, but it does not really hear,” says Margaret Vance, president of OPLA.

“The NEB listens to landowners’ concerns because they have to, but they rarely do anything about them,” Vance told DeSmog. Vance is a farmer near Woodstock, Ontario.

Pipeline Companies Are Not Required to Remove Out-Of-Service Pipelines

One of OPLA's biggest concerns with Line 9 and other aging pipelines is pipeline companies are permitted to leave 80% of an out-of-service pipeline in the ground.  

“It is not safe and it is a liability for us,” says Vance.

OPLA unearthed an NEB discussion paper from 1985 on pipeline abandonment in the NEB archives while preparing for the Trailbreaker pipeline project hearings in 2007. The discussion paper stated pipeline companies should set aside funds for the removal of out-of-service pipelines. A fund was only recently established for partial removal of abandoned pipelines.

“The day the province (Ontario) wants abandoned pipelines out of the ground you can be sure it is not going to be the companies who profited from the pipelines who will have to pay for their removal. It is going to be landowners,” Vance told DeSmog.

Line 9 public hearings are expected to take place in October. The NEB could make its final decision on Line 9 as early as January 2014.

Image Credit: Environmental Defense

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A tax loophole exempting tar sands pipeline operators from paying an eight-cent tax per barrel of oil they transport in the US is costing the federal Oil Spill Liability Trust Fund millions of dollars every year. With expected increases in tar sands oil production over the next five years, this loophole may have deprived US citizens of $400-million dollars worth of critical oil-spill protection funds come 2017.

According to a report by the US Natural Resources Committee the federal government pays for immediate oil-spill response from the Liability Trust Fund which is supported by an excise tax on all crude oil and gas products in the US.

But in 2011 the Internal Revenue Service exempted tar sands oil from the tax, saying the substance did not fit the characterization of crude oil.

This exemption has come under scrutiny this week after Exxon Mobil's Pegasus pipeline ruptured in Mayflower, Arkansas, releasing 300,000 litres of tar sands oil and water into a residential neighbourhood and surrounding wetlands. Because the line carried tar sands-derived oil from Alberta, Exxon was exempt from paying into the spill liability fund for the corrosive fuel's potential cleanup.

The Pegasus pipeline was built in the 1940s to carry regular crude north from the Gulf Coast. In 2006, Exxon reversed the flow of the 1300 kilometre line in order to transport tar sands diluted bitumen from Illinois to the coast.

According to the Natural Resources Committee, "the spill response fund is currently at risk from running out of money because of the combined costs of BP's Deepwater Horizon spill and Enbridge's Kalamazoo spill of tar sands oil…And Enbridge could still file a claim against the fund to recoup some of its costs because the company has spent well over the liability cap of $350 million for such spills."

The Enbridge disaster in Michigan's Kalamazoo river has cost over $820 million, making it the most expensive onshore cleanup in US history.

Enbridge, the company currently vying to build a 1172 kilometre-long pipeline from Alberta to the British Columbia coast, currently has no spill-response plan – for either onshore or offshore spills – prepared for the project.

During cross-examination in the Northern Gateway Pipeline hearings in BC, Enbridge admitted they will have no spill response plan until six months before the proposed tar sands line will begin operation. 

An investigation in the Enbridge Kalamazoo disaster found the company – due to "pervasive organizational failures" – improperly respond to the pipeline breach. The US National Transportation Safety Board likened Enbridge employees to the Keystone Kops – a clumsy, incompetent troups of cops from the silent films of the early 20th century.

The estimated cleanup cost for conventional oil run at about $2000 per barrel of oil. Tar sands diluted bitumen cleanup is estimated to cost an average $29,000 per barrel of spilled oil.

The Oil Spill Liability Trust Fund was established in the wake of the Exxon Valdez oil spill, when the enormous costs of oil spill recovery were first understood on a grand scale, to ensure adequate cleanup funds were available to protect local residents and ecosystems.

As Climate Progress reported in 2010, Exxon refused to shoulder the cost of cleanup in the Valdez, where more than 11 million gallons of crude oil contaminated almost 3000 kilometres of shoreline.

"Exxon fought paying damages and appealed court decisions multiple times, and they have still not paid in full. Years of fighting and court appeals on Exxon’s part finally concluded with a U.S. Supreme Court decision in 2008 that found that Exxon only had to pay $507.5 million of the original 1994 court decree for $5 billion in punitive damages. And as of 2009, Exxon had paid only $383 million of this $507.5 million to those who sued, stalling on the rest and fighting the $500 million in interest owed to fishermen and other small businesses from more than 12 years of litigation.

Twenty years later, some of the original plaintiffs are no longer alive to receive, or continue fighting for, their damages. An estimated 8,000 of the original Exxon Valdez plaintiffs have died since the spill while waiting for their compensation as Exxon fought them in court."

And as DeSmogBlog's Ben Jervey reports, Exxon has a long and litigious history of evading cleanup costs.

The US is facing a dramatic increase of tar sands oil imports. As the National Resource Committee estimates, production in the Alberta tar sands is projected to rise to over 2.7 million barrels per day in 2017. The tar sands industry projects figures as high as 5 million barrels per day in 2030 and 6 million per day in 2035. Currently approved projects have the capacity to produce 5.2 million barrels per day. 

“Tar sands is already the dirtiest, riskiest oil around. It shouldn’t get a free ride from the U.S. taxpayer when it comes to paying into this vital spill response fund,” said Rep. Markey, the Ranking Member of the Natural Resources Committee. “Oil companies already receive outrageous tax subsidies that total billions of dollars and there is no defensible reason for this oil spill free ride to be added to that dubious list of loopholes.”

Regardless of how many barrels of tar sands oil will be traversing US soil, none of them should be exempt from spill liability taxes. If anything, corrosive diluted bitumen should be taxed more for the inherent dangers it present to local ecologies and communities during its production, refining, and transport. 

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