CAEPLA BLOG

How Can Government Be Trusted to Regulate Industry if it Cannot Even Regulate Itself?

Posted on June 15, 2020

 

The government owned Trans Mountain Pipeline experienced a serious spill over the weekend.  

The government will be investigating the spill on this government owned and government regulated pipeline. 

Trans Mountain is owned by the government because government regulation forced its previous owner, Kinder Morgan, to abandon the pipeline it was attempting to expand.

The stated purpose of government regulation is to protect the environment from things like oil spills, something industry is not considered capable of preventing by itself. 

Government does not believe industry is able to self-regulate.

Now that a significant spill has occurred on the government's own pipeline, it does not appear government is able to self-regulate, either.

So why does government regulate at all?

How can government be trusted to regulate industry if it cannot even regulate itself?

How can the Canadian Energy Regulator (CER) be trusted when it is government regulation itself that drives pipelines out of private ownership and into government hands?

This incident is an example of why CAEPLA has been warning of the perils of both government regulation and government ownership of energy transport.

Ottawa is in an absurd conflict of interest with the Trans Mountain Pipeline and expansion project.

The pipeline must be sold to private investors immediately to prevent more spills like this one, and to put a stop to already spiralling budget overruns on the project.

But that's not all.

Ottawa needs to get out of the business of regulating pipelines altogether.  It needs to restore the discipline of the market, insurance industry, and courts to the energy transport sector.

BLOOMBERG

The Trans Mountain pipeline in British Columbia resumed operation on Sunday after an oil spill occurred over the weekend.

Workers from the state-owned pipeline responded to the spill at the Sumas Pump Station in Abbotsford, B.C., after an alarm went off at the pipeline control center early Saturday, the company said in a release posted on its website. The pipeline was restarted at about 2 p.m. local time on Sunday.

The cleanup is taking place after 940 to 1,195 barrels of light crude were released and contained at the station. The company continues to work with local authorities, indigenous groups in the area and regulators, it said in the statement.

The Trans Mountain pipeline carries about 300,000 barrels a day of crude oil and some fuels from Alberta to the Vancouver area, where it connects to a marine export terminal as well as to another line that supplies refineries in Washington state.

The incident is related to a small, 1-inch diameter piece of pipe connected to the mainline, the company said. Trans Mountain has initiated an investigation, adding that “monitoring has not identified any risk to the public or community.”

It comes at a sensitive time for Trans Mountain, as work on a planned expansion is under way amid fierce opposition from some residents of British Columbia, including indigenous communities, who say the pipeline is a threat to the environment.

Canada’s federal government purchased the pipeline two years ago from Kinder Morgan Inc. after the company threatened to pull the plug on a planned expansion after years of regulatory and legal challenges.

— With assistance by Ann Koh