Natural Resources Committee on June 3rd, 2014

[Prof. William Amos]

Whether they pursue it or not would be a business decision. However, I think they would be less constrained by the question of affordability of insurance because they would simply be looking to their own resources. I think it's simply a matter of looking at whether or not a company is going to determine for itself the relative risks and benefits.

The crux of this legislation, and the crux of the idea of modifying liability, is that we want industry actors to engage in the free market of offshore drilling. If there are subsidies that relate to the damages they're going to have to pay, then that unbalances the free market. If the companies are evaluating the risks and benefits on the basis of what they're going to have to pay, and knowing that they're going to have to pay the full costs and that they may not necessarily be able to get insurance for that, that it's going to come right off of their bottom line, then that is going to impose decision-making that is based on reality, the real risk.

I think that's the most important thing for Canadian taxpayers. We don't want the Canadian taxpayers to be bearing any of that burden.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Regan.

We go now to the five-minute round, starting with Ms. Block, followed by Mr. Leef, and then Ms. Moore.

Go ahead, please, Ms. Block, up to five minutes.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much, Mr. Chair.

I do echo the comments of my colleagues in terms of thanking each one of you for being here. I appreciate the comments you have already made, as well as the answers you've provided to some of our questions.

We heard earlier that this legislation was developed in collaboration with a number of ministries, as well as three provinces.

Mr. Amos, you referenced a number of issues that you worked very hard on, both with NRCan officials as well as through conversations with the government. We know that there was consultation outside of government.

I'm wondering if you had an opportunity...or did you submit a brief or provide any guidance during the drafting of this bill?

[Prof. William Amos]

Ecojustice was consulted by Natural Resources Canada, and was invited, along with the Canadian Environmental Law Association, to a closed-door session, in October 2012, if I recall, along with representatives of the regulators and the offshore industry, including contractors, not just the operators. I think there is significant credit to be given particularly to the officials of Natural Resources Canada, who worked hard on this. I feel as though this is a good example of where the department actually recognized that there were serious issues with the Canadian regime.

That said, at the end of the day, there are political decisions that are being made around the core issues. I think those are key to focus on.

I have one final comment on the consultation issue. I'm not aware, and I would be pleased to hear from the government, what level and nature of consultation occurred with first nations on these issues, particularly in the north, where the Inuvialuit, for example, pursuant to the Inuvialuit Final Agreement, have very specific liability provisions built into their claims agreement. It is not clear to me what the nature of consultation was there. Obviously, these are integrated regimes. Their liability regime intersects with the one that's being proposed here.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you.

Were you able to provide in written form any recommendations to the government or to NRCan?

[Prof. William Amos]

Yes, we provided a number of recommendations that are consistent with those we've provided today.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Were any of the recommendations that you made prior to today included in the bill that we have before us?

[Prof. William Amos]

Yes, for example, the inclusion of the polluter pays principle. That's an important inclusion. It was included in the preamble. It could have been included in the purpose or objectives of the act. That would have been preferable.

Also, the issue of non-use damages or non-use values was incorporated, and that, as I said, is a positive thing. We're making sure that we give credit where credit's due. However, we also have to make sure that our perspective is also heard clearly when there's no regulation-making power available around non-use damages. That's a real challenge because right now we don't have any clarity as to what kind of non-use damages can be claimed or how they will be calculated. The legislation doesn't enable that clarification.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you.

Given everything that you've said today, I do believe I've heard you agree that $1 billion of absolute liability is definitely better than the $30 million for Atlantic Canada and $40 million for the Arctic. I'm wondering if you would then be able to comment on the unlimited liability for at-fault accidents and your perspective on that.

[Prof. William Amos]

The liability regime for offshore spills has always been characterized by having unlimited at-fault or unlimited fault-based liability. That's nothing new. That wasn't the issue before and nor is it the issue now.

I'm struggling to find the appropriate analogy. I'll simply say that $1 billion is just not enough; $1 billion of absolute liability is simply not going to cut it.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

But it is better than $30 million or $40 million. Correct?

[Prof. William Amos]

The new limit is better than it was previously. Obviously $1 billion is more than $40 million, but in light of recent catastrophic incidents and in light of the fact that the government now acknowledges that non-use damages can be claimed, that is an insignificant amount in the grand scheme of things.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Block.

We have three questioners left: Mr. Leef, followed by Ms. Moore, and then Ms. Crockatt.

Go ahead, please, Mr. Leef, for up to five minutes.

[Ryan Leef, Conservative, Yukon, YT]

Thank you very much, Mr. Chair.

Mr. Barnes, do you know how many companies operate in the offshore industry?

[Paul Barnes]

Worldwide or in Canada?

[Ryan Leef, Conservative, Yukon, YT]

In Canada.

[Paul Barnes]

We have, I would say, seven or eight that are active and probably another seven or eight that are not active but are partners with those that are active.

[Ryan Leef, Conservative, Yukon, YT]

How many years of activity have the companies been involved in offshore work?

[Paul Barnes]

Offshore exploration first began off Newfoundland in 1966 through a seismic operation. The first production didn't come until 1990.

[Ryan Leef, Conservative, Yukon, YT]

The first production was in 1990.

[Paul Barnes]

Yes.

[Ryan Leef, Conservative, Yukon, YT]

Do you have a ballpark figure of how many wells have been drilled?

[Paul Barnes]

I don't have those stats with me, but in Newfoundland it's over 200 wells and close to 100, I believe, in Nova Scotia. It's a smaller number in the north.

[Ryan Leef, Conservative, Yukon, YT]

How many spills have there been? How many accidents? These would be reportable accidents and spills.

[Paul Barnes]

Actually anything that gets spilled greater than one litre is reported. It could be a diesel spill from a platform. Everything gets reported. I don't have the numbers, but I believe there have only been two or three spills of any significant quantity, greater than 1,000 litres.