Pipeline Financial Requirements Regulations

Pipeline Financial Requirements Regulations Her Excellency the Governor General in Council, on the recommendation of the Minister of Natural Resources, pursuant to subsections 48.12(6)a, 48.13(7)a and 48.14(3)a of the National Energy Board Actb, makes the annexed Pipeline Financial Requirements Regulations. S.C. 2015, c. 21, s. 16 R.S., c. N-7 Definitions The following definitions apply in these Regulations. Act means the Canadian Energy Regulator Act. (Loi) authorized, in respect of a pipeline, describes a pipeline whose construction and operation have been authorized under Part III of the Act, but not a pipeline whose construction has not begun or a pipeline under construction that does not contain any commodity; a pipeline that, by order of the Commission, has been deactivated or decommissioned; or a pipeline that, with leave of the Commission, has been abandoned. (autorisé) Limits for classes of company The following amounts are prescribed for the purposes of paragraph 137(5)(b) of the Act: $300,000,000, in respect of a company that operates one or more authorized oil pipelines that individually or in the aggregate have the capacity to transport at least 50,000, but fewer than 250,000, barrels of oil per day; $200,000,000, in respect of a company that operates one or more authorized oil pipelines that individually or in the aggregate have the capacity to transport at least one, but fewer than 50,000, barrels of oil per day; $200,000,000, in respect of a company that operates one or more authorized gas pipelines whose risk value is at least 1,000,000; $50,000,000, in respect of a company that operates one or more authorized gas pipelines whose risk value is at least 100,000 but less than 1,000,000; $50,000,000, in respect of a company that operates one or more authorized gas pipelines whose risk value is at least 15,000 but less than 100,000; $10,000,000, in respect of a company that operates one or more authorized gas pipelines whose risk value is at least one but less than 15,000; $10,000,000, in respect of a company that operates one or more authorized pipelines that transport a commodity — other than oil, gas, carbon dioxide or water — in a liquid state by land or in a liquid or semi-solid state across a watercourse; $5,000,000, in respect of a company that operates one or more authorized pipelines that transport a commodity — other than oil, gas, carbon dioxide or water — in a gaseous or semi-solid state by land or in a gaseous state across a watercourse; $5,000,000, in respect of a company that operates one or more authorized pipelines that transport carbon dioxide or water. Calculation of risk value For the purposes of paragraphs (1)(c) to (f), the risk value is calculated by multiplying the square of the pipeline’s maximum outside diameter, measured in millimetres, by the maximum operating pressure, measured in megapascals, and, if the company operates two or more pipelines, the risk value is that of the pipeline with the highest risk value. Multiple commodities If a company operates an authorized pipeline that transports two or more commodities, and the limits of liability in respect of those commodities are not the same, the limit of liability applicable to the company is determined in accordance with paragraph 137(5)(a) of the Act and subsection (1) as if the company were transporting only the commodity that results in the highest limit of liability. Multiple varieties — same commodity If a company operates an authorized pipeline that transports two or more varieties of the same commodity, the limit of liability applicable to the company is determined in accordance with paragraph 137(5)(a) of the Act and subsection (1) as if the company were transporting only the variety that results in the highest limit of liability. Multiple unconnected pipelines — different commodities If a company operates two or more authorized pipelines that are unconnected and transport different commodities, the limit of liability applicable to the company is determined in accordance with paragraph 137(5)(a) of the Act and subsections (1) to (4) as if the company were operating only the pipeline that results in the highest limit of liability. Financial resources For the purposes of subsection 138(2) of the Act, the Commission must choose from among the following types of financial resources: an insurance policy; an escrow agreement; a letter of credit; a line of credit; participation in a pooled fund referred to in subsection 139(1) of the Act; a parent company guarantee; a surety bond or pledge agreement or an indemnity bond or suretyship agreement; cash or cash equivalents. Readily accessible financial resources — 5% A company that operates one or more authorized pipelines referred to in paragraph 137(5)(a) of the Act or paragraphs 2(1)(a) to (d) must maintain at least 5% of the amount of financial resources referred to in subsection 138(1) of the Act in types that are readily accessible. Readily accessible financial resources — 2.5% A company that operates one or more authorized pipelines referred to in paragraphs 2(1)(e) to (i) must maintain at least 2.5% of the amount of financial resources referred to in subsection 138(1) of the Act in types that are readily accessible. If the Commission specifies the types of financial resources that must be readily accessible to a company, it must choose from among the following types: Requirements of pooled fund For the purposes of subsection 139(1) of the Act, a pooled fund must be located in Canada and must be used solely for the purpose of meeting the financial requirements imposed under the Act; a pooled fund must be administered by a representative of the participants that has been approved by the Commission; the terms on which a pooled fund is to be administered, and any changes to those terms, must be approved by the Commission; subject to paragraph (e), the minimum amount of a pooled fund that must be readily accessible is $250,000,000; and if the minimum amount of readily accessible financial resources falls below $250,000,000, the amount must be restored to that level within 10 business days after the day on which it falls below the minimum. Administrator of the pooled fund The administrator of a pooled fund must no later than April 30 of each year, provide the Commission with audited financial statements and evidence demonstrating that readily accessible financial resources in the fund have been maintained in accordance with paragraphs (1)(d) and (e); notify the Commission within one business day after the day on which any of the following changes occurs: the addition of a participant to, or the withdrawal of a participant from, the fund, a reduction in the amount of readily accessible financial resources in the fund, other than a reduction attributable to an interest charge, a banking fee or any other fee or expense that is related to the administration of the fund and authorized under its terms; and provide the Commission with the telephone number, email address and mailing address of a contact person. 10th day after publication The following provisions come into force on the 10th day after the day on which these Regulations are published in the Canada Gazette, Part II: sections 1, 3 and 5; and section 4, with respect to a company referred to in paragraph 48.12(5)(a) of the Act. First anniversary after publication The following provisions come into force on the first anniversary of the day on which these Regulations are published in the Canada Gazette, Part II: section 2; and section 4, with respect to a company referred to in section 2.