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Does environmental law help prevent high risk spills? In at least one area, the law makes a unique contribution to making things worse. We  encourage investors, insurers, and other financial players to take  ultra high risks by  capping their exposure to third-party damages.  Canada’s Nuclear Liability Act, for example, limits the liability of the nuclear industry for a Chernobyl style accident to the relatively tiny amount of $75 million. (A bill  to increase the cap to $650 million  received first reading in April, again.)

Offshore drilling benefits from a similar, enormous, hidden subsidy. The American Oil Pollution Act limits liability to $75 million. Congress now proposes to retroactively change this to $10 billion although BP has undertaken  to pay full compensation. Canada has even lower caps. For example, the Canada-Nova Scotia Oil and Gas Spills and Debris Liability Regulations, SOR/95-123 under the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act,  put a $30 million cap on third-party liability.  If an accident happens,  the general taxpayer,  the natural environment, and nearby communities will bear any extra costs. Thus, profits are privatized while the  public bears the risk. No wonder oil companies take big risks, and make big money. It’s time for these caps to go. And if that changes who drills and where, so much the better.

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