Energy East Concern: What Help After an Accident?

In last week’s edition the article “Concern #2” talked about assessing the risks that Energy East could bring us, and how prohibitively costly insurance to cover against all those risks would almost certainly be. Well, TransCanada has been to town and we think we’ve been told that it doesn’t work that way. What we think we heard was that people that live near pipelines are supposed to trust that they’ll be taken care of when problems occur.

Perhaps one could be excused for assuming that during those many Open Houses and presentations to Municipalities and County, TransCanada had issued promises for how they would protect us against the impacts of their pipeline. Mostly what we got when we asked were platitudes of how unlikely a spill is, the “world class”, “state of the art” (pick your own buzzword) nature of the engineering, and how comprehensive and quick the response would be. So, after asking around the only promise that anyone remembers was this: if a spill contaminates your aquifer, TransCanada will bring you bottled water.

Now, I’d like to believe that they don’t just mean they’ll bring cases of plastic water bottles. Hopefully they mean that they’ll buy you a cistern and make a permanent arrangement – probably decades long – to have clean water trucked to your house weekly. Better yet: a water treatment facility and a network of pipes in the affected rural areas. After all, the average Canadian uses about 250 litres per day. And if you have a business like a farm with animals you need a lot of water to sustain it.

That’s ALL we recall hearing. Nothing about compensation for property value loss from spills or the risk of one, or productivity loss, health impacts, evacuation costs, business contingency costs, impacts during construction, posting of bonds, emergency responses and readiness costs, the use of chemical dispersants, cost of temporary and permanent water system replacement….the list goes on.

It would seem that TransCanada is making no promises, the obvious explanation for which is that they do not want to be accountable for anything more than the law legally requires. All this begs a deeper understanding of how we are supposedly protected from pipelines and their spills.

Some say to look at other spills to see how coverage applies. There are big recent examples from Kalamazoo and the Husky spill in Saskatchewan. But protection is determined by national and provincial laws. Kalamazoo is covered by US laws and Husky by the law of another province. Because Energy East is an inter-provincial pipeline, it would be covered by Bill C-46, introduced in 2015 and known as the “Pipeline Safety Act”. It will largely be administered by the NEB, so you’re excused if this doesn’t instill confidence.

The Pipeline Safety Act only came into force on the 19th of June this year, so examples of how well it can be applied do not exist. It has been lauded for two fundamental aspects: use of the “Polluter Pay” principle and the accountability for losses of “non-use value” (non-commercial value) to public resources and environment. It imposes a $1B (one billion dollar) cap on liability for the clean-up, but does not assign unlimited absolute liability, and it only applies to pipelines that ship over 250,000 barrels per day. Note that the Kalamazoo mess was from a pipeline that moved less dilbit than Energy East, that the clean-up didn’t get all the spilled product, and that the cost was over $1.2B US (not Canadian dollars) which did NOT include compensation to those impacted.

The Act goes further and empowers Cabinet to increase or decrease the liability limit. The NEB also has the authority to recover costs from the industry at large, and Cabinet can appoint a tribunal to examine cost recovery for people like us.  Unfortunately these approaches are discretionary and rare is the person who trusts the NEB, or who doesn’t suspect that industrial interests will have the bigger voice with Cabinet. Government can choose to pay compensation out of revenues, but that could potentially leave taxpayers footing the bill if industry cannot make good. Further, to make the pipeline company absolutely liable there has to be legally established proof of negligence. A hard task given that the keeper of evidence is the pipeline operator and that they have virtually no oversight.

In theory, TransCanada may have to pay for costs beyond simple clean-up, even though clean-up is never complete. But with a Carbon Bubble looming and the decline of the fossil fuel industry a necessity if we are to avoid full-scale anthropogenic climate change, the pipeline will almost certainly not be a profitable investment. As margins decrease, cost cutting measures like fewer integrity checks, less scheduled maintenance and fewer safety upgrades could increase the risk of a spill. I, for one, would not bet that TransCanada would have sufficient liquidity. If it goes ahead, I would want bonds or third party assurance, and that third party should not be you and I (government).

Where does this leave us?

  • With platitudes but no assurances.
  • An untested new law with a cap that is insufficient for the costs of a major spill.
  • An unproven process that requires you to take action to seek compensation via NEB and tribunals that don’t yet exist.

But why am I telling you about this? Given that Mayor Gordon has clearly stated that he is supportive of TransCanada’s Energy East project, should we assume he knows your concerns, that he is aware of the implications of the Pipeline Safety Act, and that he has seen research that will soothe your fears? Or should we assume something else? The problem is that he isn’t sharing any of this with us.

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