Thank you, Mr. Chair.
I'm just going to go quickly through this deck. This is the same deck that we presented to the Senate standing committee last Tuesday night. We just wanted to provide them and you with a brief overview. You may know all of these things already, but we thought that providing an overview of the legal and regulatory frame would be useful. This deck provides a summary of the legislative framework, safety and liability provisions, the environmental assessment processes, and a lot of our emergency response plans.
If you go to slide 3, two key acts govern petroleum activity on Canada's frontier lands. First is the Canada Petroleum Resources Act, the CPRA, which deals primarily with rights issuance and royalties. Under the CPRA the Minister of Northern Affairs, in northern Canada, and the Minister of Natural Resources, in southern Canada, may issue expiration licences, significant discovery licences, and production licences. The second piece of legislation is the Canada Oil and Gas Operations Act, CAGOA. It promotes safety and the protection of the environment. It's basically the legislation that's used for governing the safety and protection of the environment and the operations. Those are the two key pieces of legislation that underline the federal system.
If you go to slide 4, you will see that in Newfoundland and Labrador and in Nova Scotia, we set aside in the 1980s the issue of jurisdiction in favour of joint management regimes. We set up boards in both of those areas. The rights and resources are administered and managed by the offshore petroleum resource boards, which report both to our minister and the respective provincial ministers. Certain decisions, such as issuing a licence and other things, require joint ministerial approval and are called fundamental decisions. So we have a separate system set up, administered jointly with the provinces, in these two areas; but again, the principles go back to those two key pieces of legislation.
In the non-accord areas, the regulator is the National Energy Board. It is responsible for administering CAGOA, meaning that it regulates petroleum activity in all of Canada's frontier areas that are subject to the act, including Canada's Arctic offshore in the non-accord areas. The NEB is the lead agency in the event of an emergency, for example, in the Arctic, or any other frontier lands subject to CAGOA that are outside of the accord areas.
In those areas NRCan is responsible, as is INAC in the north, for collecting, managing, and administering royalties and land tenure management. As we mentioned, the NEB is the regulator in these areas.
You can now turn to slide 6.
Before carrying out work or activities related to oil operations, operators must obtain appropriate authorizations and approvals from the appropriate regulatory board. In order to obtain an authorization, an operator must ensure that it has satisfied all legal and regulatory requirements concerning the work or activity. The authorization can include the approval of certain documents, plans or other issues, as specified in regulatory requirements, or the approval of specific activities carried out pursuant to an authorization.
We can now move on to the next slide.
Here we are underlining that we have two different areas, the accord and non-accord areas.
Prior to an area for exploration in the north being opened up, as Mimi mentioned, aboriginal groups are notified and provided the opportunity to identify areas of environmental sensitivity and those of special interest for cultural reasons. The dialogue explores the concerns that may be raised about oil and gas activities initiated by the issuance of licences. In the Atlantic areas, prior to an area being opened up the boards will carry out what's called a strategic environmental assessment, an SEA. These perform largely the same function: they help to identify environmental issues at early stages, which can assist the boards in determining whether or not to open an area to exploration.
The next slide is there just to underline that environmental assessments are then required prior to any drilling. They are required at various other stages. Project-specific environmental assessments are required prior to the regulatory boards' authorization of offshore petroleum-related work or activities, and every project requires an environmental assessment.
Slide 9 just outlines the ladder of responsibility. The primary responsibility is with the operator. As René mentioned, the operator is responsible for preventing, mitigating, and managing oil spills, and they are liable for the costs of cleaning up a spill and paying for losses or damages. An operator is legally required to demonstrate a certain amount of financial capability before undertaking activity, which is referred to as financial activity. It's the minimum required by the boards. It can vary, depending on the project. The general practice has been overall responsibility of about $350 million in tiers. The operators have unlimited liability if they are sued by others and are found negligent. So these are basic minimums the boards insist on. The financial responsibility is not a limit or a cap on the operator's liability, which is unlimited. Again, the liability provisions are basically just to establish certain minimums.
Slide 10 outlines that emergency management systems are in place at various levels. At the operational level, operators must submit a detailed emergency response and an oil spill response plan as part of their application to drill a well. Operators must be members of a Transport Canada certified response organization. Membership in these organizations allows caches of spill-response equipment and expertise and manpower to be brought in to assist. The regulator's role can range from monitoring activities to the authority, in a very extreme case, to actually stepping in and taking over if they feel a spill is not being properly managed.
We now turn to slide 9. The Department of Natural Resources manages 10 emergency response plans, each of which is adapted to a specific type of incident. The department conducts regular simulation exercises, which are intended to assess various emergency scenarios. The latest offshore emergency simulation exercise was conducted by our department on March 25, 2010, together with the Canada - Newfoundland-and-Labrador offshore petroleum board. All that to say that we have plans in place and are conducting exercises quite regularly.
Slide 12 gives you an overview of the rules and responsibilities of various federal agencies in order to respond to oil spills. As you have seen, four of these agencies are here today in order to give you an overview of our responsibilities.
The last slide says that the Government of Canada is watching events in the Gulf of Mexico for lessons learned. We've taken a number of steps. On May 11 the NEB announced it would be conducting a comprehensive review of Arctic safety. On May 12 the Province of Newfoundland and Labrador announced an independent assessment of offshore spill prevention and response. On May 13 a joint decision was issued between the Department of Natural Resources and Nova Scotia extending the moratorium on oil and gas exploration in the Georges Bank area. On May 20 the Canada-Newfoundland and Labrador Offshore Petroleum Board announced a number of additional measures on Chevron's drilling project in the Orphan Basin. On June 10 the NEB announced its preliminary scope for the review it's now undertaking of the activities it regulates in the north.
The bottom line is that we have a strong regulatory system in place. We have independent regulators who are very experienced. We've taken a number of steps since the incidents in the gulf to further heighten our vigilance on it, and we will be watching very closely, because we know there are lessons we can and will learn from that tragedy.