Canada's National Energy Board Slammed for Kalamazoo Spill

Canada's National Energy Board shares as much blame as U.S. pipeline regulators for the disastrous billion-dollar Enbridge Kalamazoo spill in Michigan, say critics.

In its summary and final reports on the costly Enbridge bitumen rupture the U.S. National Transportation Safety Board not only lambasted the Calgary firm for "deficient integrity management procedures" but slammed U.S. regulators for weakly upholding the law.

Whenever a pipeline regulator delegates too much authority to the regulated to assess their own system risks and correct them, the fox is left to guard the henhouse concluded NTSB's Deborah Hersman.

"Regulators need regulations and practices with teeth, and the resources to enable them to take corrective action before a spill. Not just after."

The NTSB Final Report said that the US Pipeline Hazardous Materials Safety Administration (PHMSA) was as much to blame as Enbridge for the largest onshore oil spill in U.S. history due to "weak regulations" as well as "ineffective oversight of pipeline integrity management programs."

Yet the integrity of hazardous liquid pipelines that start in Canada and deliver crude oil or bitumen to the United States is a shared responsibility of Canada’s National Energy Board and the PHMSA.

Canadian, US regulators share oversight

In 2005 both federal pipeline regulators signed a memorandum of understanding with respect to enforcement and inspections. Whenever rules differ pipeline companies including Enbridge are required to meet the requirements of the regulator with the most rigorous standards.

"The NTSB Report is clearly an indictment against the NEB, and hence indirectly, the government of Canada because the Board is responsible for the same regulatory oversight as PHMSA in the U.S," says independent economist Robyn Allan.

"Had the NEB been performing its regulatory role effectively, we would have expected Enbridge's problems to have been identified and addressed well before now," adds the former CEO of British Columbia's insurance corporation.

In fact the office of Canada's Auditor General came to similar conclusions in a scathing 2011 report on the transportation of hazardous materials.

The Commissioner of the Environment and Sustainable Development reported that the NEB often identified problems on its 71,000 kilometres of pipeline system, but rarely followed up with companies: "there is little indication that the Board takes steps to ensure that the identified deficiencies are corrected."

Moreover the Board did not properly monitor emergency procedures manuals and failed to communicate deficiencies in a timely manner: "We have concluded that the Board's oversight of companies' emergency procedures manuals is deficient," went the report.

The NEB has but a budget of $7 million and a staff of 63 to check on company compliance with the law for a pipeline system pumping hydrocarbons worth tens of billions of dollars every year.

Landowners sounded alarm

Many of the issues outlined by the Auditor General have also been repeatedly raised by one of Canada’s most outspoken landowner groups, the Canadian Association of Energy and Pipeline Landowner Associations (CAEPLA).

In 2011 the group even presented information to the House of Commons Energy Committee arguing that the board was not paying enough attention to safety, landowners or aging pipelines. (Half of the NEB regulated pipelines are more than 30 years old. Nearly 2,000 kilometres are of "unknown age.")

Dave Core, one of the founders of CAELPA told The Tyee that Enbridge's behavior in the United States directly reflects a history of lax regulatory standards at home.

"Enbridge is a Canadian company. The pipeline control room is in Edmonton, in Canada. Where did Enbridge learn its values? Canada. Who sets those values? The NEB. The NEB is supposedly the police of the pipeline network. Who are the real Keystone Kops?"

According to Core the NEB extols something called "goal oriented" regulations instead of prescriptive regulations.

That means that pipeline companies "are given the broad objective of being safe and having no spills" but the NEB has not yet determined what that means or how you get there, explains Core. Under this type of regulation, companies aren't held liable for spills and accidents because there are no enforceable minimum standards set in place.

If Canadian car drivers operated under "goal oriented" regulations there would be no speed limit nor any consequences for driving through a four-way stop, adds Core.

Past scrutiny of Enbridge by NEB

The NTSB Final Report not only criticized the company's safety culture but revealed that it had a long and troubling history of major oil pipeline leaks and ruptures.

In fact U.S. statistics on pipeline spills greater than five gallons between 1986 and 2011 "show that Enbridge releases represent the second and fifth largest crude oil spills and that the company is included in three of the top 15 releases."

Moreover both the NTSB and the Transportation Safety Board of Canada (TSB) have investigated "previous Enbridge leaks and ruptures that resulted from defects not remediated through the Enbridge integrity management program."

In 2008 a NEB audit identified several problems with Enbridge pipeline safety protocols and recommended major improvements for evaluating cracks and corrosions in its pipelines to prevent failures. It is not clear if the NEB followed up on its findings.

The NEB, which plans to hold a pipeline safety forum next year, says it is working "to identify and act on key safety and environmental protection issues relevant to regulated companies' performance." They include implementing highly integrated and effective management systems and "growing a robust and sustainable safety culture."

On Aug. 8 the NEB finally inspected Enbridge's Edmonton control room after a two year long NTSB investigation trounced the company's safety culture and management and embarrassed the nation's oil and gas industry.

After days of indecision and denial the NEB's Joint Review Panel assessing the environmental impacts of the proposed Northern Gateway pipeline finally asked Enbridge to submit copies of the NTSB final report as evidence on how the company reacts to bitumen spills in waterways.

Despite being the author of the largest spill in U.S. history, Enbridge had not entered any parts of the Kalamazoo investigation for the public record. The company's initial Gateway application does not even mention that bitumen does not float but sinks in water.

NEB statistics show a trend of increasing leaks and incidents in Canada’s federally regulated pipeline system as it is posed for rapid expansion. A 2011 report on safety and the environment found that gas leaks were steadily increasing while liquid releases "in many cases increased above the ten-year average."

In 2012 the number of reported pipeline incidents voluntarily reported by industry to the NEB had nearly doubled over the last decade and now average nearly one hundred a year.

That figure is for most, but not all, of the petro-product carrying pipelines in Canada. For 13 per cent of the nation's 71,000 kilometre pipeline length there is no data.