Canada may insist that pipeline companies put up letters of credit (L/Cs) to cover the costs of damage caused by fuel spillages from pipelines.

The measure is contained in proposed amendments to the National Energy Board (NEB) Act and the Canada Oil and Gas Operations Act.

Polluter pays

If enacted, the new legislation will include several measures designed to strengthen the safety and security of pipelines and provide new powers for the NEB, Canada's independent energy regulator.

The bill will enshrine the 'polluter pays' principle for the first time in NEB legislation, with pipeline companies taking full responsibility for the costs and damages caused by spillages of oil, gas or any other commodity.

Reserve funds

The bill will require pipeline operators to hold a minimum amount of C$1 billion in reserve for repair and abandonment costs.

This amount must be readily accessible, so NEB is empowered to demand companies hold the reserve in a specified manner, including L/Cs as well as guarantees, bonds or insurance.

The bill had its first reading in the Canadian parliament earlier this month.

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