Winnipeg Free Press

Winnipeg Free Press (Newspaper) - July 10, 2024, Winnipeg, Manitoba WINNIPEGFREEPRESS.COM ● B7 BUSINESS WEDNESDAY, JULY 10, 2024 Manitoba hints at ‘regulatory changes’ in wake of March shutdown of fuel link Oil, gas pipeline oversight gaps in spotlight M ANITOBA has fallen be- hind neighbouring prov- inces in taking steps to safeguard against environmental risks relating to the oil and gas in- dustry, despite numerous calls at na- tional and provincial levels for better oversight practices. Both Saskatchewan and Ontario ramped up regulatory oversight and improved transparency following critical auditor general reports that flagged significant issues, including infrequent inspections, poor documen- tation of monitoring and enforcement activities, a lack of staff resources and inadequate public reporting. Those provinces previously relied heavily on the industry regulating it- self, a practice still followed in Mani- toba — and one that raises alarm bells among experts. “Effective regulatory oversight … is important to reducing the risk of company non-compliance and to pro- tecting the safety of Canadians and the environment,” Canada’s auditor general wrote in a 2015 review of fed- eral pipeline management. In the wake of a major Imperial Oil fuel pipeline shutdown for preventa- tive repairs in March — coupled with dwindling staffing numbers and in- spections — Manitoba’s government said it’s aware of gaps in how it mon- itors provincially regulated oil and gas pipelines. “This Imperial Oil incident has really highlighted some of the gaps, perhaps, in governmental oversight,” Environment and Climate Change Minister Tracy Schmidt said in a re- cent interview. More than 6.5 million litres of oil and related fluids have spilled from Manitoba’s 5,000-kilometre pipeline network in the last 16 years, but no fines have been issued. The province has conducted just 13 documented in- spections in five years. The province plans to add more in- spectors and Economic Development, Investment, Trade and Natural Re- sources Minister Jamie Moses has hinted his government may pursue “regulatory changes” in the future. “With the safety of Manitobans in mind and the safety of the environ- ment in mind, we want to make sure that we hold industry to the highest standards, make sure that we’re work- ing more proactively with them and ensure that we’re increasing our over- sight and inspections,” he said. Increased scrutiny The growth of Canada’s oilsands through the 2000s and early 2010s, punctuated by a handful of high-pro- file spills, led to increased public scru- tiny of the oil and gas industry — and new attention from auditors. The federal auditor general led the charge with a review of dangerous goods transportation — including oil and gas pipelines — in 2011. Canada’s Energy Regulator (then called the Na- tional Energy Board) is responsible for more than 70,000 km of cross-country pipelines and conducts inspections and enforcement. The auditor found the federal monitoring program was generally “sound” but lacked con- sistent documentation of monitoring activities and rarely followed up on companies with deficient operations. Saskatchewan’s provincial auditor followed with a damning review of pipeline oversight practices a year later, ultimately finding the govern- ment “did not have effective process- es” to regulate what was at the time a 90,000-km pipeline network. (Sas- katchewan now has more than 100,000 km of pipelines.) “There are requirements under this legislation that are not being acted upon,” Bonnie Lysyk, then Saskatch- ewan’s auditor, said. “Failure to regu- late pipelines effectively could harm people or the environment.” Alberta’s sprawling oilsands had a sour record of two pipeline spills per day for nearly 40 years when provin- cial politicians called for an audit of the Alberta Energy Regulator, which was eventually conducted in 2015. Later, Lysyk — appointed auditor general for Ontario in 2013 — deliv- ered a scathing review of the Tech- nical Standards and Safety Authority that oversees 110,000 km of Ontario pipelines. “Despite risk of soil and water con- tamination and two oil pipeline leaks that occurred in 2013, the (authority) does not inspect pipelines but instead relies on the pipeline operators to con- duct their own inspections,” she said in the 2018 report. “The (authority’s) own current over- sight processes are not fully effective in ensuring public safety.” While recommendations to each regulatory body varied, auditors found similar deficiencies across jurisdic- tions — particularly when it came to inspections, documentation and public transparency. Auditors recommended collecting more detailed and consistent infor- mation from industry to keep track of their pipeline operations. Ontario, Saskatchewan and the Canada Energy Regulator were also urged to provide more data — including spill reports, monitoring activities and enforcement updates — to the public. Manitoba relies on many of the same practices highlighted in those reports, but has never undertaken a similar re- view. “We’re dealing with some particu- larly old (regulatory) frameworks that have significant identified deficien- cies,” University of Winnipeg pipeline oversight expert Prof. Patricia Fitzpa- trick said. Oversight overhaul For many years, Saskatchewan’s pipeline regulations closely mirrored Manitoba’s: the responsibility for in- spections fell to an understaffed prov- incial department, where inspectors regularly reviewed reports provided by oil and gas companies but rarely inspected sites. Lysyk made five recommendations to improve Saskatchewan’s pipeline oversight, including developing writ- ten policy for evaluating compliance with pipeline regulations and assess- ing the resources needed to properly fulfill the department’s mandate. The gaps in Saskatchewan’s over- sight system would not come into sharp focus until a Husky Energy pipeline ruptured two years later, spilling more than 200,000 litres of crude oil into the North Saskatchewan River. “This is the most significant (en- vironmental) incident that’s ever hap- pened in this province,” Saskatchewan Crown prosecutor Matt Miazga said when Husky Energy later agreed to pay nearly $4 million in fines. The spill was attributed to river- bank shifting (the same stress that led Imperial Oil to shutter the Winnipeg Products Pipeline in March). Munici- pal drinking water intakes were shut down for months; James Smith Cree Nation and Little Pine First Nation reported fish spawning beds contam- inated. “We no longer fish in the river. We no longer trap on or near reserve lands. We no longer farm on or near re- serve lands,” Little Pine Chief Wayne Semaganis said during legal proceed- ings. “We no longer drink water drawn from reserve lands.” In the years that followed, Saskatch- ewan invested in strengthening its inspection, investigation, penalty and audit powers, according to a 2020 news release that said the province had “fully addressed” all of the auditor’s pipeline safety recommendations. Other jurisdictions have strength- ened oversight in response to the audit reports, moving toward the national standard set by Alberta and British Columbia’s energy regulators. As Fitzpatrick explains, Alberta, B.C. and the Canada Energy Regulator use a risk-based management system where inspectors look into pipelines on a periodic basis, informed by factors including compliance history, pipeline sensitivity and location. While Fitzpatrick isn’t convinced this approach is a “best” practice, it is an improved approach. Unlike other jurisdictions, Alberta’s auditor general found the regulator was “adequately performing its func- tion of overseeing pipeline safety and reliability” and had “well-functioning systems” to regulate its pipelines. The Alberta Energy Regulator over- sees more pipelines than any other Canadian jurisdiction with more than 440,000 km — enough to cross Canada 59 times. Its 70 field inspectors conduct an average of more than 1,400 pipeline inspections annually. Ontario’s audit report pointed to the Alberta system as an example of in- dustry best practices. Saskatchewan adopted a similar policy in the wake of the Husky Energy spill. According to Alan Andrews, an environmental lawyer working with Vancouver based non-profit Ecojus- tice, British Columbia’s energy regu- lator takes a similar approach, and has started to crack down on high-risk companies with more frequent in- spections and escalating fines. “All Canadians should benefit from the same level of protection from the risk of spills, regardless of which province they live in,” Andrews said. Regulators need to be “properly armed with the powers and expertise and capacity they need to get the job done,” Andrews said, adding they need to be independent from industry. He added staff need to conduct “in- spections, monitoring, enforcement and, crucially, issue fines that are at least equivalent to the damage that has been done.” Limited staff In Manitoba, there are few inspect- ors — and few inspections of pipelines. After two recent hires, the province now has three petroleum inspectors to oversee more than 4,000 producing wells and 5,000 km of active pipelines. There were just 13 formal pipeline inspections in the last five years. Pub- lic information about spills, monitor- ing and enforcement is inconsistent, if accessible at all. Despite policies that lead to limited inspection capacity, formal documen- tation and public reporting of spills and incidents, Manitoba’s auditor gen- eral has not conducted any review of pipeline oversight. In an interview, Tyson Shtykalo said he is aware of work other auditors have done with respect to pipeline oversight, but has not identified it as a priority at this time. Shtykalo’s office aims to conduct five performance audits, which look at anything from regulations to the ef- ficacy of the work of government and publicly funded organizations, each year. With limited resources and a steady list of financial audits that must be done annually, Shtykalo said his of- fice chooses audits that will have the most significant public impact. “We want to make sure that the work we’re doing is spread across the public sector,” Shtykalo said. “And then an important consider- ation is … if we devote the time and resources to a project or an audit, that the ultimate report and recommenda- tions we make are adding value to the public assembly.” julia-simone.rutgers@freepress.mb.ca JULIA-SIMONE RUTGERS TYLER CLARKE / BRANDON SUN FILES A pump jack west of Virden. The province of Manitoba has three petroleum inspectors on staff to monitor more than 4,000 producing wells and 5,000 kilometres of active pipelines. Target stops accepting personal cheques, citing payment method in decline NEW YORK — U.S. retail giant Target will no longer accept personal cheques from shoppers as of July 15, another sign of how a once ubiquitous payment method is going the way of outmoded objects like floppy disks and the Rolo- dex. The Minneapolis-based discounter confirmed the move in a statement to The Associated Press on Tuesday, cit- ing “extremely low volumes” of custom- ers who still write cheques. Target said it remained committed to creating an easy and convenient checkout experi- ence with credit and debit cards, “buy now, pay later” services and the Target Circle membership program, which ap- plies deals automatically at checkout. “We have taken several measures to notify guests in advance” about the no- cheques policy, the company said. Target’s decision leaves Walmart, Macy’s and Kohl’s among the major U.S. retailers that still accept personal cheques at their stores. Whole Foods Market and the Aldi supermarket chain previously stopped taking cheques from customers. Shoppers have pulled out cheque- books increasingly less often since the mid-1990s. Cash-dispensing ATMs, debit cards, online banking and mobile payment systems such as Venmo and Apple Pay mean many young adults may never have written a cheque. Cheque usage has been in decline for decades as Americans have largely switched to paying for their services with credit and debit cards. Amer- icans wrote roughly 3.4 billion cheques in 2022, down from nearly 19 billion in 1990, according to the Federal Re- serve. However, the average size of the cheques Americans wrote over the 32- year period rose from US$673 in 1990 — or US$1,602 in today’s dollars — to US$2,652. The drop in cheque-writing enabled the Federal Reserve to sharply reduce its national processing infrastructure. In 2003, it ran 45 cheque-processing locations nationwide; since 2010, it has operated only one. Rising incidents of fraud are also making people shy away from cheque-writing. It’s being fuelled by organized crime that is forcing small businesses and individuals to take addi- tional safety protections or to avoid sending cheques through the mail alto- gether. — The Associated Press ANNE D’INNOCENZIO ‘We’re dealing with some particularly old (regulatory) frameworks that have significant identified deficiencies’ — University of Winnipeg Prof. Patricia Fitzpatrick ;