Wednesday, March 26, 2014

Liability cap for NL's offshore not nearly enough

I gave the above 10-minute speech on oil-spill liability in the House of Commons on Tuesday, March 25, 2014.

Mr. Speaker, I stand in support of Bill C-22, the energy safety and security act. It is measured support. The act deals with both offshore oil and gas operations and the nuclear liability and compensation act, but I am only prepared to speak on oil and gas.
My riding of St. John's South—Mount Pearl in my province of Newfoundland and Labrador is not exactly known for its nuclear industry, although the word “nuclear” could be used to describe my province's dislike of the Conservative government, a nuclear dislike that will redline in 2015. I could not pass that up, Mr. Speaker.

The issues surrounding oil and gas development are paramount in Newfoundland and Labrador. Oil and gas have made us a rich province, a have province. For too long, Newfoundland and Labrador was seen as a drain on Confederation, although that was never the case. The contribution of our ore, our fish, our hydro, our forestry, and our people to the rest of Canada and the world are practically immeasurable.

Today, officially on paper, we are a net contributor to Confederation and are proud of it. That is due, in large part, to offshore oil fields such as Hibernia, Terra Nova, and White Rose. The $14-billion Hebron development is due to come on stream in 2017.

Then there is the potential, the incredible, massive potential. This past September, the news broke of a major oil find off Newfoundland, a reservoir of light crude believed to hold as much as 600 million barrels of recoverable oil, the 12th largest oil discovery in the world in the past four years. That discovery, which happened in August, is the third recent find in the Flemish Pass basin in the North Atlantic in recent years.

The potential for oil off Labrador, which is practically frontier, virgin territory, is through the roof, and the exploration is not nearly what it is in the North Sea.

I had a meeting just a couple of weeks ago with the head of Nalcor, the crown corporation in Newfoundland and Labrador responsible for energy development. The member for St. John's East and I met with the head of Nalcor, and I can tell the House that the future of oil and gas in my province is incredibly exciting. Ed Martin, the CEO of Nalcor, had a hard time containing his excitement, and it was good to see on his face.

As parliamentarians, we must ensure that worker health and safety and the environment are first and foremost, front and centre, and protected at all costs. Bill C-22 maintains unlimited operator liability for fault or negligence. In other words, if there is an oil spill and a company is found negligent and responsible, the blame is 100% theirs. There is no limit on the liability, no cap on the liability, and that is the way it should be.

In the case of no fault, the bill increases absolute liability in the Atlantic to $1 billion from $30 million. That is an increase of $970 million. That may sound huge, and there is no doubt that it is huge, but is it enough? That is the question. Is a $1-billion cap on no fault enough to cover the damage from an environmental catastrophe?

The United States has an absolute liability cap of $12.6 billion U.S. versus, again, our absolute liability cap of $1 billion Canadian. That is a difference of more than $12 billion Canadian. I would say that the absolute liability amount is not enough, certainly not compared to the United States. Do Canadians, do Newfoundlanders and Labradorians, deserve at least the same amount of liability protection as the United States? Yes, we do. The answer is obvious. Of course we do.

The 2010 British Petroleum spill in the Gulf Mexico was expected to cost as much as $42 billion for total cleanup, criminal penalties, and civil claims. British Petroleum is reported to have already spent $25 billion on cleanup and compensation.

In addition, it faces hundreds of new lawsuits that were launched this spring, along with penalties under the Clean Water Act that could reach $17 billion. Therefore, how far would our absolute liability cap of $1 billion go? It would not go very far. It would be a drop in the oil barrel. A $1 billion liability cap is not enough. It is a start, but it is not enough. It is not nearly enough.

This bill references the polluter pay principle explicitly in legislation, to establish clearly and formally that polluters will be held accountable. This bill is most definitely an improvement upon the current liability regime, but it is not enough to protect Canadians or the environment. In fact, it continues to put Canadians at risk. More specifically, it continues to put Newfoundlanders and Labradorians at risk.

The reality is that the $1 billion cap is not enough. It is not sufficient. The artificial cap actually acts as a subsidy to energy companies by reducing the cost of insuring the risks that they create. Energy companies make a fortune. They make billions of dollars a year, and yet we would be subsidizing them and increasing the risks to ourselves. That does not make sense. If this were truly polluter pay, the polluter would be responsible, period.

Norway and Greenland have unlimited absolute financial liability for oil spills. To point out the irony, Norway has unlimited liability for a spill in its own waters, but as the owner of Statoil, the company that made the recent oil discovery off Newfoundland, it would have a cap in our waters. Does everyone see the difference?

What is most scary about Bill C-22, the energy safety and security act, is that it provides for ministerial discretion to reduce absolute liability levels to below the legislated level of $1 billion. That discretionary provision could undercut the advantages of the legislated cap. It leaves the door open for reduction of absolute liability levels for certain projects as a form of economic incentive for oil and gas development that the government wants to encourage. Therefore, if the government of the day wants to lower the $1 billion cap, it can. That is where the word “scary” comes in, especially when the $1 billion liability cap is not nearly enough to deal with a massive spill.

To conclude, New Democrats support this bill at second reading, but we would also push for expanded liability and the implementation of global best practices. Worker health and safety and the environment should be first and foremost in our oil and gas industry, and certainly not left to ministerial discretion to potentially lower what is already inadequate liability. Why can this country not lead the way in environmental protection? Why are the Conservatives accepting anything less?

This is a step forward; make no mistake, this is a step forward. However, why should we expect anything less than a leap?

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