Government agreement increases absolute liability, modernizes standards for offshore drilling

An agreement among the governments of Canada, Nova Scotia and Newfoundland and Labrador proposes raising to $1 billion offshore absolute liability for companies operating in the Atlantic offshore and in the Arctic.

That amount is considerably higher than the current $30 million for the Atlantic offshore and the $40 million for the Arctic.

“Today’s $1-billion milestone in our plan for Responsible Resource Development will ensure that accountability for operators in the Atlantic offshore is updated and in line with international standards,” Joe Oliver, Canada’s minister of natural resources, said in a statement Tuesday.

Canada’s offshore petroleum resources are jointly managed by the federal and provincial governments, notes the statement from Natural Resources Canada (NRC). Over the coming months, Ottawa will work closely with the Nova Scotia and Newfoundland and Labrador governments to finalize changes.

“Supporting jobs and long-term economic prosperity in Atlantic Canada and across our country demands a modern offshore liability regime that protects Canadian taxpayers,” Oliver said.

The federal and provincial governments have agreed to make the “polluter pays” principle explicit in legislation (it is currently implicit). “These changes will incentivize spill prevention by companies operating in the Atlantic offshore,” the NRC reports.

Other proposed changes include the following: 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 Offshore Boards with the authority to levy administrative and monetary 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.

Beyond the Atlantic Canada and Arctic offshores, the Government of Canada will continue to work on finalizing the proposed changes to federal legislation for the country’s other offshore areas.

The proposed legislative changes build on measures being taken as part of the federal government’s plan for Responsible Resource Development. Among other things, notes the NRC statement, the plan includes creating a world-class tanker safety system, increasing oil and gas pipeline inspections, doubling comprehensive audits of pipelines and implementing new safety measures for oil tankers.