Feds move to ensure offshore Arctic oil drillers can cover spill clean-up costs

Liability, proof of financial resources upped to $1 billion


Companies wanting to do offshore oil drilling in the Arctic must now show they have the money to pay for any environmental damage they cause.

Joe Oliver, federal natural resources minister, announced June 18 in Halifax that that federal and provincial governments have also agreed to make explicit the “polluter pays” principle in legislation.

Oliver said the amount of liability for offshore oil companies wanting to work in the Arctic will increase from $40 million to $1 billion — similar to the new $1 billion-bar for offshore Atlantic oil companies.

This means that the operator of an activity where there is a spill would be liable for $1 billion in clean-up costs and compensation without any proof of fault or negligence.

The government also is increasing the proof of financial capacity for the offshore companies to the same $1 billion limit.

As part of the assessment of whether an operator could meet its financial obligations in case of a spill, regulators must be assured that the operator has financial assets of at least $1 billion — and regulators may require more if deemed necessary.

Other proposed changes to legislation include:

• allowing governments to pursue financial compensation for environmental damages from operators responsible for spills;

• requiring the public release of environmental and emergency preparedness plans;

• providing the offshore boards with the authority to levy penalties for non-compliance with laws, regulations or orders; and,

• providing the offshore boards with the necessary tools to conduct environmental assessments under the Canadian Environmental Assessment Act 2012.

“As the North continues to grow and develop, we must ensure it is done in a responsible manner,” Nunavut MP Leona Aglukkaq said in a government news release. “Today is another step in ensuring the environment is protected and we take steps to prevent oil spills from happening.”

Canada’s offshore petroleum resources are jointly managed by the federal and provincial governments.

Oil companies have given Nunavut a pass on offshore oil drilling so far, even though the High Arctic is estimated to hold about 300 million barrels of oil.

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