The agreement on pipelines recently announced by the premiers of sa国际传媒 and Alberta is another step forward in sa国际传媒鈥檚 efforts to accommodate Alberta鈥檚 desire to ship oil through sa国际传媒 to Asia. Although there is nothing new in this endorsement, the announcement is important because it indicates that sa国际传媒 is open to a deal on pipelines if its five conditions are met.
The key question for British Columbians is: Are these five conditions set by Premier Christy Clark adequate to protect sa国际传媒鈥檚 interests? Unfortunately, the answer is no.
Two of the conditions 鈥� approval by the National Energy Board and meeting legal obligations to First Nations 鈥� are just a restatement of existing legal requirements and add nothing new to the approval process.
The next two conditions are the requirement of 鈥渨orld-leading鈥� oil-spill prevention and recovery systems. sa国际传媒 has convincingly documented that current standards in sa国际传媒 are woefully inadequate and certainly not world-leading. According to sa国际传媒鈥檚 own reports, oil-spill responses would recover only three to four per cent of spilled oil along the north coast, leaving the rest in the marine environment.
More important, even if sa国际传媒 had world-class standards, there would still be significant damage from oil spills because the best standards in the world do not prevent accidents. Enbridge maintains that it is an 鈥渋ndustry leader in pipeline safety and integrity,鈥� yet has an average of 74 spills a year on its pipeline system. The internationally recognized U.S. oil-spill risk analysis model forecasts that the Enbridge project will result in an average of one tanker spill over 1,000 barrels every seven to 17 years. Even Enbridge forecasts an average of one pipeline spill every two to four years.
If oil spills are inevitable, who will cover the damage costs? The only reasonable answer to this question is that those responsible for the accident 鈥� Enbridge 鈥� should cover the costs.
The problem is that Enbridge is unwilling to accept liability for spill costs. Enbridge has set up a limited-partnership company to ship oil that fully exonerates Enbridge from liability. The limited-partnership company is liable, but if damages exceed the financial resources of the company, the taxpayer is liable for the difference. As the $1-billion cost of Enbridge鈥檚 recent Michigan spill shows, damage costs can be significant.
Enbridge also refuses to accept liability for oil-tanker spills. The liability is held by the tanker companies, but the problem is that the government has capped the liability at $1.3 billion. Enbridge鈥檚 own estimates show that the damages for a large tanker spill would be $9.6 billion, well in excess of the $1.3-billion cap. Again, the taxpayer would be liable for the difference.
The last sa国际传媒 condition of a 鈥渇air share鈥� of benefits has generated the most controversy. As the premier points out, sa国际传媒 incurs 100 per cent of the marine risk and 58 per cent of the pipeline risk, but gets only eight per cent of the benefits. The problem is that sa国际传媒 has provided no definition of what a fair share is.
A more concrete condition is that sa国际传媒 receive a 鈥渘et benefit鈥� from any pipeline project, meaning that the benefits must exceed all the costs, including risks of oil spills and other environmental damage. The techniques for determining whether there is a net benefit are well developed and would provide an effective test of whether the pipeline project should be approved.
In sum, sa国际传媒鈥檚 five conditions might sound reasonable, but they are seriously deficient. Two of them simply restate existing legal obligations and provide no additional protection. One dealing with a fair distribution of benefits is too vague to be useful and needs to be replaced with a 鈥渘et benefit鈥� requirement. The two conditions dealing with world-class standards are laudable but will not prevent spills or the risk to sa国际传媒 of paying for the damages.
Clearly, sa国际传媒 needs to address this deficiency by strengthening the existing five conditions and adding a sixth condition that requires pipeline shippers to accept full liability for damages and specifies the damages that will be covered.
Finally, if sa国际传媒 wants to enforce its conditions, it needs to terminate the agreement it signed delegating its approval authority to Ottawa. Otherwise, sa国际传媒 is little more than a spectator relying on Ottawa to protect sa国际传媒鈥檚 interests.
Thomas Gunton is director of the resource and environmental planning program at Simon Fraser University and a former sa国际传媒 deputy minister of environment.
