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A pump jack draws oil from the ground near a hydraulic fracturing operation near Bowden, Alta., Tuesday, Feb. 14, 2012.Jeff McIntosh/The Globe and Mail

The Harper government is failing to protect Canadians' health and environment from the pollution risks associated with the resource industry boom across the country, the Federal Environment Commissioner said in a report to Parliament.

In a series of audits released Tuesday, Commissioner Scott Vaughan pointed to several shortcomings, including the absence of regulations for toxic chemicals used by the oil industry and the lack of preparedness for major tanker accidents off the West Coast or for catastrophic oil spills on the East Coast.

Mr. Vaughan said Ottawa continues to subsidize the oil industry despite a commitment to the G20 to end such support. However, the government is dramatically scaling back its support, and is reviewing outdated liability limits that could leave taxpayers on the hook for billions of dollars after a major accident.

The environmental auditor said Ottawa needs far more vigorous enforcement to keep pace with the anticipated growth in investments in pipelines, offshore drilling, oil-sands development, shale-gas production and mining, though opposition critics have accused the government of slashing environmental assessments in recent budget bills.

"We know that there is a boom in natural resources in this country and I think what we need now – given the gaps, given the problems we found – is a boom in environmental protection in this country as well," Mr. Vaughan told reporters. "These need to move hand in hand. You can't have environmental protection trying to catch up with legacy issues that have been left because of a boom in natural resources."

Failure to address those risks will not only result in damage to human health and the natural environment, but will cause economic loss because it will be more expensive to clean up than prevent problems, he said.

Later at a committee hearing, Mr. Vaughan said he believed the government was committed to closing the gaps he had identified in environmental protection.

New Democratic Party Leader Thomas Mulcair seized on the report during Question Period to accuse Prime Minister Stephen Harper of ignoring environmental risks and letting big polluters off the hook.

Mr. Harper conceded the country will need a stronger environmental effort to keep pace with resource development, and said his government will take advice from the commissioner's report as it bolsters its policies.

"I think the government has already been clear that responsible resource development means that as we see the growth in resource development over the decades to come, there will have to be enhanced measures of environmental protection," the Prime Minister said.

In his report, the environmental auditor took aim at Ottawa's hands-off approach to hydraulic fracturing – a rapidly growing and controversial oil-industry practice in which companies inject chemically laced water deep underground to extract natural gas and oil. Oil companies are relying on the process known as fracking to unlock shale gas deposits in northeastern British Columbia and Alberta, and are eyeing both Quebec and New Brunswick as promising locations for shale-gas development. As well, drillers are now using the same approach to unlock "tight" oil deposits in Alberta, Saskatchewan and Manitoba.

However, the industry is exempted from federal rules that require companies to report on chemicals released into the environment, and as a result, Environment Canada and Health Canada have been unable to assess the risks posed by hydraulic fracturing, known as fracking.

"A complete list of substances used in Canada is not known," the report said.

In the House of Commons, Mr. Harper said regulation of the hydraulic fracturing is a provincial responsibility. The British Columbia Oil and Gas Commission has for the past few years forced companies to list all chemicals they use in fracking, while the Alberta regulator announced a similar requirement last December.

The environment commissioner also found serious shortcomings in the preparedness of the federal government and the federal-provincial regulator for a major spill off Newfoundland and Labrador, where companies are drilling to depths several kilometres beneath the ocean floor.

Last week, Newfoundland's provincial energy company, Nalcor, identified four new sedimentary basins in the icy waters of the Labrador Sea as prime spots for further exploratory drilling. And the Quebec government is working with Ottawa to open up the Gulf of St. Lawrence to oil exploration.

But Mr. Vaughan said regulators are unprepared for a spill like the one that blackened the Gulf of Mexico in 2010, killing marine life and contaminating habitat.

While the Canada-Newfoundland and Labrador Offshore Petroleum Board has done a good job managing day-to-day environmental concerns, it and the federal government "need to do more to prepare for a major oil spill," the report said.

At the same time, the report warned of serious shortcomings in Ottawa's liability regime for offshore oil exploration, maritime tanker traffic and nuclear plants. In most cases, the liability limits faced by operators have not been raised in decades, leaving taxpayers' on the hook in the event of a major accident.


Fracking: Its science and risks

The drilling technique known as hydraulic fracturing, or fracking, is behind the enormous growth in production of both natural gas and oil in North America – but there is debate about the safety of the practice.

On average, fracturing a shale gas well requires 11 million litres of water, and chemicals make up between 0.5 and 2 per cent of the fluid. The fracking is typically done in impermeable rock some hundreds of metres – sometimes thousands of metres – beneath fresh water aquifers, but drinking-water sources can be polluted if the well is poorly constructed.

According to the environment commissioner, 800 substances are known to be used or suspected to be used in fracturing, and many of them are known to be toxic. A U.S. presidential commission concluded last year that there are real risks of contamination of ground water and surface water, but that the dangers can be minimized with proper drilling operations along with strict regulation and enforcement.

Still several provinces and states – notably Quebec, Nova Scotia and New York – have de facto bans on hydraulic fracturing. For its part, Ottawa has asked the Council of Canadian Academies to assess the potential environmental impacts, and its report is expected later this year.

- Shawn McCarthy