Reducing taxpayer liability for offshore drilling and nuclear accidents

Canadian taxpayers may not realize it, but we are all collectively liable for billions of dollars in damages in the event of a major oil spill or a terrible accident at a nuclear power plant. (link to video of my question in Question Period)

By law, operators of nuclear power plants and offshore drilling projects get their liability for accidents capped. If damages from an accident exceed these limits, taxpayers cover the difference. (If the operator is found to be at fault for the accident, its liability is unlimited.)

The problem is that the liability caps are very much out of date. For example, an offshore drilling operator in the Atlantic ocean needs to cover only the first $30 million in damages caused by an accident.

Scott Vaughan, the Commissioner of the Environment and Sustainable Development, raised this issue in his fall 2012 report to the House of Commons, which was tabled earlier this month. Vaughan works under the Auditor General of Canada and provides reports to Parliament that are supposed to be independent of the government of the day.

As Vaughan’s report points out, the BP Deepwater Horizon spill in the Gulf of Mexico cost upwards of $40 billion. That’s more than 1,000 times the Canadian liability cap!

The Conservative government was clearly concerned with the recommendation that liability caps for offshore oil and gas drilling be increased from $30 million (Atlantic ocean) or $40 million (Arctic ocean) to somewhere at least in the ballpark of the cost of a large oil spill.

The government signalled its concern just a week before the tabling of the Commissioner’s report, when Conservative ministers floated the trial balloon of introducing legislation to increase the liability cap.

Generally speaking, Canada’s offshore drilling liability caps lag far behind those of other countries. At least one oil-producing country, Norway, has no liability cap at all.

Related to this is the woefully low liability limit (currently $75 million) for nuclear power operators, which is again much lower than that of other countries. It should be something like $650 million or more, a number that was proposed in previous legislation that the government did not push through the House.

We have challenged the government to table stand-alone legislation to increase the liability caps for operators of nuclear power plants and offshore drilling rigs. We don’t want this to be buried in an omnibus bill. Instead we want the new proposed liability caps to be properly studied and discussed at committee. Moreover, we don’t want to have to vote against raising these liability caps if they are buried in an omnibus bill that contains other, objectionable legislation.

The Conservative government has actually tabled three separate bills in the past six years to try to raise the liability caps for nuclear power operators. What I’ve heard from the Conservatives about those past bills is this:
“The legislation would have been passed if the NDP had not opposed it last time” — David Anderson, parliamentary secretary for the Minister of Natural Resources, in Question Period
“Were you aware that this legislation was actually defeated in Parliament by opposition parties” — Michelle Rempel, parliamentary secretary to the Minister of the Environment, in Natural Resources committee as a question to Commissioner Scott Vaughan.

But the real story is different, and makes me wonder how serious the government is about raising the liability caps for nuclear power operators (I hope I am wrong).

The previous legislation to raise nuclear accident liability caps was:
1) Bill C-5 got through committee and reached concurrence at report stage in 2008, but then the Prime Minister got around the fixed-date election law and called an election.
2) Bill C-20 got through second reading and reached committee in 2009, but died when Prime Minister Harper prorogued Parliament.
3) Bill C-15 got first reading in 2010, and sat there for a year until the 2011 election.

Since the 2011 election of a Conservative majority, no legislation has been introduced, in contrast to the years when there was a minority government. I do not know why the Conservative majority government has not taken the opportunity to get the previously introduced legislation passed (they’ve pushed through omnibus bills and law-and-order bills) and reduce taxpayers’ liability for damage from a nuclear accident.

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[…] cost of electricity in Ontario. The Canadian public covers most of this liability (plants are capped at $75 million in gross liability), so this risk is largely externalized, as it was in […]