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For the second week in a row, politically-appointed members of Canada’s pipeline safety enforcement agency have agreed to reverse penalties imposed by inspectors against Enbridge Inc. for alleged violations, citing a lack of evidence.
The National Energy Board sent two letters last Friday, Feb. 12 to Enbridge, Canada’s largest pipeline company, confirming that it was rescinding two fines, worth $104,000, explaining that its inspector or inspectors failed to make strong enough cases to uphold the proposed penalties.
The letters were published on the NEB website one week after the regulator announced it had reduced two other separate fines, worth $200,000, down to a single fine for $76,000 for environmental and property damage.
The new letters also follow a recent audit, released by the federal environment commissioner, Julie Gelfand, that found the regulator was struggling to ensure pipeline companies are following the rules and respecting conditions required for safe pipeline operations.
The $76,000 fine is the only penalty remaining out of four cases in which the NEB had initially proposed fines worth a total of $304,000 against the Calgary-based energy company. All four of the fines were challenged by Enbridge, shortly after they were announced in 2015, prompting the NEB's reviews.
The regulator reduced the $100,000 fine for the property damage — caused in Cromer, Manitoba — down to $76,000 after confirming that the pipeline operator had violated the NEB Act and broken 15 promises to protect the environment as part of its work to replace segments of its Line 3 pipeline between Hardisty, Alberta and Superior, Wisconsin, National Observer reported last week.
Enbridge did not immediately respond to requests for comment about the reviews.
In both of the two newest cases, the inspector or inspectors who proposed the fines maintained that the evidence indicated — on a balance of probabilities — that Enbridge had committed the violations by not respecting mandatory conditions of its operations, the letters said.
In one of the cases, a previous letter from the NEB alleged that Enbridge had changed design specifications, such as wall thickness and maximum operation pressure of a pipeline, without getting permission.
Harper-appointed NEB members disagree with Enbridge fines
But three members of the NEB, two of which were appointed by the previous Conservative government of former prime minister Stephen Harper, disagreed. These board members, led by the NEB chair, Peter Watson, said that they agreed with Enbridge’s arguments that there was not enough evidence to confirm that it deserved the fines.
As a result, the NEB eliminated one fine worth $64,000 and another worth $40,000 related to the separate allegations. One of the board's new letters also noted that Enbridge was also previously issued a fine for one of the allegations —for $16,000 — related to it changing engineering designs, without getting permission.
Enbridge first spoke out against the wave of fines last year, following negative media coverage last March.
It said, at the time, that it believed the NEB was adopting new standards, noting that the regulator was publishing information about the fines — also known as Administrative Monetary Penalties (AMPs) — before notifying a company or giving it the chance to question the allegations through a review.
The fines were imposed using rules introduced by the former Harper government in 2012, coming into force in 2013, to make it easier for the NEB to penalize companies, when needed. The government promoted the rule changes in a 2012 taxpayer-funded advertising campaign designed to convince the public that federal authorities were punishing companies that broke environmental laws.
The advertising was meant to respond to criticism that the former Conservative government had gutted Canada’s environmental laws through major changes introduced with its 2012 budget.
“Currently the NEB is taking a much more assertive approach to the use of AMPs and Enbridge has been assessed penalties, as detailed in recent news coverage,” Enbridge said in a statement on March 27, 2015. “Enbridge assesses each AMP to determine whether there are grounds for a review or any additional considerations to present to the board that may reduce or eliminate the assessed penalty amount. If no grounds for review are determined, Enbridge remits the penalty.”
Enbridge had also said that it took “full responsibility” for ensuring that the design of its projects met or exceeded standards needed to protect the environment and ensure public safety.
“Enbridge continues to strive to construct our facilities to meet all approved conditions and is seeking clarity from the regulator on the imposition of AMPs, and their evolving expectations for industry,” the company said last year. “In the meantime, we have taken additional steps to scrutinize our projects to ensure that all requirements have been met based on the regulator’s new approach.”