Energy companies may get bill for oil spills

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Ottawa considering ‘significant’ legislation to force corporations to pay for damages: Kent


Environment Minister Peter Kent says the Harper government plans to introduce new rules that would address the gap in the country’s existing legislation, which leaves taxpayers footing the bill for damage caused by the oil and gas industry.

Photograph by: Sean Kilpatrick, The Canadian Press Files , Postmedia News
Offshore oil developers and pipeline companies that cause accidents could soon be on the hook for billions of dollars in liabilities from new legislation under review by Prime Minister Stephen Harper’s cabinet, Post-media News has learned.

Environment Minister Peter Kent said the Harper government plans to introduce “significant” legislation to close what environmentalists have long described as a gap in Canada’s existing rules and laws that now leave taxpayers responsible for damage caused by industry.

“I can’t break cabinet confidence, but I can assure you, we are well aware (of concern), not only as it pertains to diversifying markets and increased pipeline traffic, but in terms of liability for offshore drilling,” Kent said.

Under existing federal rules, companies that do offshore drilling face maximum cleanup costs of up to $40 million for environmental damage in the north and up to $30 million elsewhere, when no fault or negligence is proven, but critics have warned that this represents a fraction of the cost of multimillion-or multibillion-dollar disasters such as Alberta-based Enbridge’s July 2010 pipeline rupture, which spilled more than three million litres of oil into the Kalamazoo River in Michigan, or BP’s April 2010 Deepwater Horizon explosion in the Gulf of Mexico. There is unlimited liability for companies when fault or negligence is proven. BP has just agreed to a $4-billion settlement with the U.S. justice department to avoid criminal charges. This does not include cleanup costs and civil liability.

Environmentalists and opposition critics have also expressed concerns looking ahead to potential Arctic drilling. They have denounced a series of recent pipeline spills in Alberta as well as a Petro Canada offshore drilling ship accident in November 2004, near Newfoundland and Labrador, that spilled about 165,000 litres of oil at an exploration site on the Atlantic Ocean.

Natural Resources Minister Joe Oliver said that recent regulatory changes to increase inspections and standards are part of what he described as “world-class standards” in Canada based on a polluter-pay principle. “Our government is committed to periodically assessing financial liability to make certain that Canada’s polluter-pay system remains among the strongest in the world,” Oliver said in an email.

The Canadian Energy Pipeline Association said it supports the polluter-pay principle but is “not supportive of legislation that attempts to be punitive.”

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