Natural Resources Committee on Feb. 5th, 2013

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

You mentioned that you went to a number of departments to find the tax information and the information on subsidization. I'm wondering about your experience obtaining information from the departments. Were you happy with the cooperation and the results you got from each of the departments?

[Scott Vaughan]

I'm glad you asked that.

I've been here five years now. For me, this report has been a model of cooperation with senior government officials, both in terms of working through some difficult files and in terms of the government accepting our recommendations, and also from the follow-up meetings we've had, particularly in the offshore oil and gas sectors.

I don't have the slightest doubt that this government is absolutely focused on closing the gaps we've identified. I say this because of meetings we've had with the Deputy Minister of Natural Resources, Monsieur Dupont, someone I respect enormously. I briefed the minister last week, as well as the commissioner of the coast guard. I don't have the slightest doubt this is how the system is supposed to work. We've identified inter-office gaps, and the government is committed to closing them.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

This is a sector that contributed $164 billion into our GDP last year, so it's important. At the same time, we need to look after the environment while we're supporting it as well.

[Scott Vaughan]

I agree.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Anderson. Your time is up.

We go now to Mr. Julian for up to seven minutes.

Go ahead, please, sir.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you very much, Mr. Chair.

Thank you very much, Mr. Vaughan and all your associates, for being here today.

We'll certainly miss you. You've left us with a report that is quite concerning. Any average Canadian reading through this would be very concerned about how irresponsible the government has been in approaching this issue.

I'd like to start with oil and gas. You raised the issue of the current absolute liability limit in Canada. Could you give us, very briefly, the liability limit in Canada compared with that of other countries, such as Greenland and Norway, and tell us how they've handled that liability issue more responsibly?

[Scott Vaughan]

I'll defer to my colleague, Ms. Leach.

The offshore oil and gas platform liability down the Atlantic coast is $30 million. For the Arctic, it's $40 million. Compared with that of other countries, in the United Kingdom, for example, it's $250 million. In Greenland and in Norway, they're both unlimited. Greenland has a threshold of a billion dollars in one of the demonstrations for safety, but unlimited in terms of liability across the board.

I mention those three because the conditions in Greenland and the United Kingdom are similar to conditions in Hibernia.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you for that.

Could you just reference very briefly the costs from one tanker spill, the Prestige, which is referenced in your report, and another, the Deepwater Horizon? What would the costs be? Then, given how appallingly low our liability limit is in Canada, could you talk a bit about who picks up the difference in the tab if, tragically, we end up with the same kind of shipwreck as the Prestige or the same kind of blowout as the Deepwater Horizon?

[Scott Vaughan]

We noted the Prestige as $1.2 billion, and then the cleanup—and that's aligned with the absolute liability limit of the federal government in terms of spills from tankers.

With regard to the Deepwater Horizon, the U.S. limit remains at $75 million; however, when the White House set up its commission of inquiry into the Deepwater Horizon, one of its conclusions was that this was absolutely too low. It was absolutely unrealistic.

The costs for the cleanup of the Deepwater Horizon are now running at about $40 billion, and the question then is who is going to pick that up. That is through a series of court actions, so it's going to be the company, obviously, but in addition there is compensation. There are civil suits, so the bill is still running on this one.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Would you think it is fair to say that what this government has done through negligence has led us to the edge of a liability cliff, where if we have an accident we simply are not covered, and Canadian families, Canadian taxpayers, could be left to pay astronomical costs?

[Scott Vaughan]

What I would say is that this hasn't been reviewed or updated in 20 years. To be fair, the government has attempted to in the past, but right now it stands at $30 million and $40 million. Given what we now know about the costs of these accidents—and it hasn't just been the Deepwater Horizon; there has been a blowout in Australia and a blowout in the U.K. as well in the last three years. So while these are rare, accidents happen, and our liability limit is quite a bit lower than other countries.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you for that.

You referenced one of the blowouts that was caused by CNOOC, which is the company the Conservative government just approved to take over Nexen. That is another reason Canadians are losing confidence in this government.

I'd like to move on now to the issue of nuclear liability. You have the issue around the cost of cleanup and nuclear liability. You certainly raised the issue around increasing absolute liability for the operator. This government has been pushing through legislation. Of course, we had you before us in the environment committee last spring, where you talked about the government ramming through the spring budget bill, which completely eliminated 99% of environmental assessments, you will recall. The government has the ability to ram bad bills through the House easily.

Why do you think they have been stalling on the Nuclear Liability Act? How important is it to look at that, to raise that liability so that Canadian taxpayers and families aren't caught having to deal with a nuclear disaster?

[Scott Vaughan]

What we say in the report is that right now it's at $75 million, and that really is significantly lower than other countries. The United States is at $12 billion, but we've also said that Natural Resources Canada has acknowledged that this is too low. They said they proposed up to around $625 million—I think I am right—but they've now gone through consultations and they said it probably should be more, around over $900 million.

My understanding—and I can't speak, by any means, on behalf of the government—is that they are looking at this now and they may be taking some action in that regard.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Okay.

My final question will be to spell out the overall deposits or funds in trust for the government that we talked a bit about this morning, and the issue of how much is currently set aside for nuclear liability. How much is currently set aside for mining, and how does the government evaluate whether or not that's adequate?

Finally, for oil and gas, on the issue of what is in trust currently to deal with what could be multi-billion dollar cleanup costs, how much have agencies in trust currently to deal with that?

[Scott Vaughan]

I'll try the first one, and I'll leave it to my colleague—

[The Chair, Conservative, Leon Benoit]

There's a minute left in total to answer, so choose the one you would like to respond to.

[Scott Vaughan]

Right.

For mining, it is $500 million, and that's for mines north of 60. We've said there are some problems with whether or not the government knows that's sufficient. We found three mines where it was clearly not sufficient, and we also said that 70% of the mining inspections required by regulation haven't taken place for mines north of 60. There was a fairly big deficiency.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

For oil and gas—

[Scott Vaughan]

Oil and gas in 12 seconds, Mr. Sloan.

[Bruce Sloan]

For the absolute liability of the $30 million, there are securities in place. There are also security limits for financial security up to $70 million.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Yes, but how much is right now on deposit? That was my question.

[Bruce Sloan]

It's $70 million.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

In total?

[Bruce Sloan]

Yes. Anything beyond that is financial capacity of the organization.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

That's not my question, but we'll come back to it.