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A worker monitors water in Talmadge Creek in Michigan after oil spilled from a ruptured pipeline, owned by Enbridge Inc., in July 2010.

Paul Sancya/The Associated Press

A B.C. government lawyer hammered away at the president of the proposed Northern Gateway pipeline Friday, saying that while the parent company, Enbridge, is promising to clean up oil spills, it has created a corporate structure to limit how much it would have to pay.

"From the perspective of British Columbians, this doesn't look good," Elisabeth Graff told John Carruthers at federal hearings on the $6-billion line that would ship Alberta crude to B.C.'s coast.

Ms. Graff questioned Mr. Carruthers over the decision by Calgary-based Enbridge to hive off the Northern Gateway project as a limited partnership, with Enbridge having a 50 per cent stake and private investors covering off the rest.

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That, noted Ms. Graff, means Enbridge would only be liable for an equivalent amount of liability in the case of a major catastrophe, such as the $800-million oil spill on an Enbridge pipeline in southern Michigan in 2010.

"Are you willing to acknowledge this is a complex organizational structure that limits the liability of a corporate giant that definitely would have sufficient funds?" she asked. "What we're left with is an entity which you tell us has the financial resources necessary to cover any type of spill, but we're still doubting whether that is possible."

"No, I just fundamentally can't accept that," replied Mr. Carruthers, adding Northern Gateway and its investors would not invest in such a megaproject only to see it sunk by an environmental catastrophe.

"Because of the investment, everyone would want to make sure there's proper funding available in case of a spill," he said.

He said the issue is not the corporate organizational structure but whether a spill will be cleaned up properly and paid for by the operators. That will happen, he said, through adequate insurance and in-house savings. The project is expected to realize an annual net income of more than $300-million.

"British Columbians would need to know there's an effective response to any spill [and] we're very much aligned with that," he said.

Mr. Carruthers and six Enbridge economists have been taking questions this week from interveners, including the B.C. government, as part of a federal joint panel review of the pipeline.

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The three-member panel is to make a recommendation to the federal government by the end of next year on whether the pipeline is needed given oil supply and demand, and whether the line can be built and sustained safely.

Mr. Carruthers said the decision by Enbridge to hive off Northern Gateway and take on investors is simply sound and commonly accepted business practice.

B.C. estimates $81-billion in tax revenue will be accrued by the pipeline over 30 years, with $36-billion going to the federal government, $32-billion to Alberta and just $6-billion to B.C.

B.C. Premier Christy Clark has said her government won't consider signing off on the deal until it gets a better percentage of the profits and it's satisfied with steps taken to prevent spills and clean them up should they occur.

On Thursday, B.C.'s Environment Minister Terry Lake underlined provincial concern by personally attending the hearings.

On Friday, Janet Holder, Enbridge's senior executive in charge of Northern Gateway, attended.

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Outside the hearing, Ms. Holder told reporters the company has no intention of saddling B.C. citizens with a polluted mess or a large cleanup bill.

"We're doing everything in our power to mitigate against a spill," Ms. Holder said.

"Believe me, Enbridge doesn't want a spill. It's not what we're in the business for. We're in the business of moving very safely, environmentally sound and in a sustainable way, product from one spot to another."

When the hearings began Friday, there was some question whether Ms. Graff would be allowed to ask any questions at all.

Panel chair Sheila Leggett shut down Ms. Graff's line of questioning Thursday. She said the Edmonton hearings are to focus on finances, and economics and insurance issues would be better heard by an upcoming panel in B.C. that is to hear evidence about pipeline safety and emergency preparedness.

However on Friday, Ms. Leggett allowed broad questions on spill liability after Ms. Graff and Enbridge agreed the topics had sufficient stand-alone economic merit.

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"We are now in agreement … that Edmonton was the right venue to ask these questions," Mr. Lake told reporters Friday.

The provincial government, which has moved cautiously on the controversial $6-billion pipeline proposal, made a splashy debut at the joint review panel hearings in Edmonton on Thursday, with the appointment of what Ms. Clark dubbed "the 'A' team" of legal counsel.

With a report from Justine Hunter, The Globe and Mail

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