Oil Companies, Not Citizens, Should Cover Spill Damages

It is time for Canada to take a long, hard look at its offshore oil liability laws and ensure that in the event of a major spill, Canadian taxpayers are not the ones left to foot the massive clean-up bill, Ecojustice said today.

Existing laws cap oil companies' liability at $40 million or less in the event of a spill off of Canadian shores, according to a new Ecojustice briefing, Who pays when an oil spill occurs off Canada's coasts? Answer: the Canadian taxpayer. Major spills, however, cost billions to clean up. For example, costs for the BP spill in the Gulf of Mexico are expected to top $100 billion, or 20 per cent of Canada's entire federal debt.

"When offshore oil companies are given statutory guarantees that their spill liability cannot exceed $40 million for operations in Canada, it arguably increases the risk of environmental damage, since liability caps make it economically attractive for industry to take risks," said Will Amos, director of the uOttawa-Ecojustice Environmental Law Clinic.

"The cap indicates that federal and provincial governments have made conscious decisions to remove a disincentive to engage in economic activity that can cause irreparable environmental and economic damage."

With National Energy Board's review of safety and environmental requirements for Arctic offshore drilling underway, the time is right to conduct a comprehensive re-examination of Canada's offshore oil liability regime. The review however, will not examine offshore oil operations on the East coast or the all-important leasing process that precedes drilling.

"The process does not go far enough, so it remains to be seen how the federal government will ensure that Canadian taxpayers are not left to assume the financial - let alone environmental - risks of this economic activity," Amos said.

In the wake of the BP spill, the United States has begun debate over the elimination of its $75 million cap. Now Canada must follow suit, Amos said.

"The liability limit amounts to a public subsidy of the offshore oil industry," he said. "The Canadian taxpayer's exposure to the proven financial risks of ecological catastrophe begs a comprehensive and independent review of these industry-friendly rules."