Proceedings of the Standing Senate Committee on
Transport and Communications
Issue No. 44 - Evidence - November 20, 2018
OTTAWA, Tuesday, November 20, 2018
The Standing Senate Committee on Transport and Communications met this day at 9:31 a.m. to study the subject matter of those elements contained in Divisions 22 and 23 of Part 4 of Bill C-86, A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018, and other measures.
Senator David Tkachuk (Chair) in the chair.
[English]
The Chair: This morning we are beginning our study of the subject matter of those elements contained in Divisions 22 and 23 of Part 4 of Bill C-86, A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018, and other measures.
For our first panel today, we are pleased to welcome from Transport Canada Ms. Natasha Rascanin. I understand you are going to be presenting on behalf of Transport Canada and the Canadian Coast Guard. Is that correct? And Marc-Yves Bertin, Director General, Marine Policy; Julie Gascon, Director General, Operations, Canadian Coast Guard — welcome back — and Marc Sanderson, Acting Director General, National Strategies; and from Ship-source Oil Pollution Fund, Ms. Anne Legars, Administrator.
The floor is yours, Ms. Rascanin, followed by Ms. Legars.
Natasha Rascanin, Assistant Deputy Minister, Transformation, Transport Canada: Thank you for having us here today. I’m pleased to speak to you today about the proposed legislative amendments that stem from commitments made under the Oceans Protection Plan. I’ll start with a bit of context.
Canada’s current environmental response system supports safe and environmentally responsible shipping that allows Canadians to deliver our goods to and receive goods from global markets. The system is working. Having said that, as environments and technologies change, Canada needs to continue adjusting and improving. With these amendments, we are clarifying and strengthening the rules in some areas while becoming more flexible and nimble in others.
Over the past several years, the government has engaged broadly across all our coasts on potential enhancements to the current system. The input from this engagement is reflected in the proposed amendments.
As you well know, vessels can have environmental impacts even when there are no accidents or spills. These can include underwater noise, vessel strikes or shoreline erosion. The proposed amendments would enhance the government’s ability to put in place regulations, if they are required, to protect sensitive ecosystems, including endangered whale populations, from the impacts of routine shipping and navigation.
These regulations would be developed using the best available information and through the established consultation processes where all Canadians could and would contribute to their ultimate design.
To enhance the capacity to respond nimbly as the marine environment or wildlife behaviour changes, the proposed amendments would enable the Minister of Transport to adjust aspects of those regulations through a variation order. This would ensure that marine environments and life continue to be protected and provide the flexibility to ensure there are no unnecessary burdens on the shipping industry.
In order to address urgent risks to the marine environment and risks to marine safety where time is critical, amendments are proposed to allow the Minister of Transport to issue an interim order so that immediate action can be taken. This would allow for more information to be gathered to identify if a long-term solution is required. If a long-term solution is required, it would be developed in collaboration with Indigenous groups and stakeholders.
While best efforts are made to prevent accidents and spills, we cannot eliminate every risk and still need to be prepared to respond quickly and effectively. Ultimately, the way the system works, it’s the vessel owner and operators of oil handling facilities who are responsible for preventing, preparing for and responding to oil spills. However, if the polluter is unwilling, unable or unknown, the Canadian Coast Guard has the ability to respond. The proposed amendments would clarify that the Coast Guard can intervene earlier when there may be a spill from a ship, not waiting until the spill moves closer to grave and imminent areas. Taking earlier action could prevent environmental damage and higher clean-up costs.
To enable a more rapid response, the proposed amendments would allow the Coast Guard to enter or pass over private property to more quickly reach a potential or actual spill site to avoid a spill or prevent the situation from worsening.
To support more effective response decision making, proposed amendments would enable the Coast Guard to quickly access the best information by removing liability concerns for advisers or those providing assistance to a response. This may include accessing local or traditional knowledge and expertise.
We are also modernizing the Ship-source Oil Pollution Fund. Under the Oceans Protection Plan, the government committed to strengthening the polluter pays principle and modernizing the Ship-source Oil Pollution Fund.
Proposed amendments to the Marine Liability Act would provide unlimited compensation for all eligible claims from victims and responders of oil spills from ships. It would also provide for faster and easier access to funds for responders, and create a simplified and expedited process for small claims.
The proposed amendments would ensure readiness in the event of a catastrophic oil spill by making sure that compensation is available by enabling the Minister of Finance to temporarily provide a loan to the fund, and ensuring that the fund can be replenished in a manner consistent with the polluter pays principle by establishing a modern levy mechanism on oil receivers and exporters to replenish the fund.
Finally, amendments are proposed to enhance deterrence and enforcement, and encourage compliance with marine safety and environmental regulations. The proposed amendments would increase the administrative monetary penalty up to a maximum of $250,000 per violation. The current ceiling is $25,000 and was originally set in 2001, which is no longer reflective of today’s economic environment.
This is a maximum amount and is not meant to be punitive or have an excess burden on small businesses. It would be an effective deterrent for those who have a track record of non-compliance or risky behaviour, or for those few large operators that consider the current maximum penalty as just another cost of doing business.
The specific range of penalties is established within regulations which have an established consultation process.
We have also heard from some in the marine industry that there are regulatory barriers to developing and adopting innovative tools and technologies that could raise the bar in terms of marine safety and environmental protection. The proposed changes are responsive by enabling the Minister of Transport authority to provide time-limited exemptions from regulatory requirements and standards, which would provide enough time to test and evaluate these innovative technologies, systems and practices, and could help inform future government policy and regulatory development. Conditions may be placed in order to ensure that marine safety and environmental protections are maintained during the testing period.
Senators, thank you very much for the opportunity to speak with you today and we are ready to respond after our colleague, Ms. Legars, gives her remarks.
Anne Legars, Administrator, Ship-source Oil Pollution Fund: Thank you.
[Translation]
Mr. Chair and committee members, thank you for inviting me to appear before you today. I am the administrator for the Ship-source Oil Pollution Fund.
I am appointed by the Governor-in-Council, and my roles and responsibilities stem from Part 7 of the Marine Liability Act. As a result, I am the only person who authorizes money to be spent from the approximately $405 million fund for which I am responsible, but that money can only be spent for the purposes provided for in the act. Therefore, I am totally independent from the government.
Currently, I essentially perform three different roles or functions. The first is to assess the claims received and pay the portion deemed reasonable, which is the role of an administrative tribunal. My second role is to collect from the polluter or its insurer the amount thus paid, which is the role of a subrogated insurer. My third main role is to provide the financial interface between Canada and the international compensation funds by collecting and forwarding statistical information to determine Canada’s share of the financing of the international regime and by paying the Canadian contribution from the fund.
Bill C-86 would change my first two roles and would give me an additional role as a lender that advances money to the Canadian Coast Guard to fund its environmental response operations in exceptional situations.
Transport Canada consulted me at a high level on the changes to the compensation regime that the government announced more than two years ago as part of the oceans protection plan. However, I only became aware of the details of the proposed amendments when Bill C-86 was introduced in Parliament.
When I first read the bill, my two immediate concerns were as follows: Is the legislator’s intention clear when reading these amendments? I think it is vital that the law be as clear as possible since I must operationalize the will of the legislator through my daily decisions and actions. Moreover, will I be able to put in place the internal processes needed to implement these amendments in time for them to come into force?
After reviewing the clauses of the bill that are of immediate interest to the Ship-source Oil Pollution Fund — these amendments are in clause 23 of the bill — I believe I can answer these two questions.
[English]
More specifically, I have no issue with any of the proposed amendments in terms of providing me with sufficient clarity and guidance for the actual delivery of my mandate.
I also know that, taken together, these amendments clarify which elements of the liability and compensation regime align with international regimes versus the elements intended to be covered solely by the domestic regime, which means by the fund. This will be helpful.
As far as lead time for implementing these amendments, I note that claims-related amendments will require immediate adjustment from my office. These claims-related amendments are, first, the amendments allowing the Coast Guard to be compensated by the fund for anticipatory measures taken when no grave and imminent risk of a spill existed. My marine experts who assist me in assessing the claims for costs of such preventive measures will now have to make a double assessment when I receive such claims. First, were the preventive measures reasonable, i.e. engage the fund’s liability? And, if so, was there still a grave and imminent risk, i.e. is there the possibility of fund recovery against the insurer? I gauge that I can implement that within a few weeks. That is not an issue.
Second, regarding claims-related amendments creating a simplified, fast track for small claims, my office has already developed forms for small claims as pilot projects. These pilot projects do not go as far as the proposed amendments, and I believe that the existing legislation would not have allowed it. However, they can be adjusted relatively quickly to meet the needs of the amended legislation.
We will have to address our internal management systems, including our information management system. Yes, it will require a number of weeks but we trust that the Coast Guard, our main claimant, will refrain from submerging us under a tsunami of small claims on day one after the implementation of Bill C-86. I’m confident, basically, that we can meet the demand on that side as well, as soon as the legislation comes into force.
For the finance-related amendments, they will not require immediate adjustment from my office as they cover circumstances that are unlikely to happen in the very near future. These finance-related amendments are enabling the fund to receive temporary funds from the federal government if depleted, and provide upfront emergency funding for the Coast Guard in exceptional situations.
That’s my new role as a lender but I will probably have time to prepare for that.
To summarize, I believe that I can work with these amendments and implement them in a timely manner. This said, I will be happy to answer your questions on the operation of the fund or to provide you with any data that you would need in this respect.
Thank you.
The Chair: Thank you very much. Ms. Rascanin, you mentioned there was extensive consultation and engagement on the proposed changes. How many meetings did you have? Could you give more detail? What do you mean by engagement or was it consultation, or both? I don’t know what you mean by engagement.
Ms. Rascanin: Thank you. Over the past several years in developing and putting forward the Oceans Protection Plan, and since then working with Indigenous partners and various stakeholders, we held many meetings. Engagement is consultation addressing specific issues. Over the past year, broadly, we have worked across all the three coasts in Canada to both build awareness of the Oceans Protection Plan but to also discuss the policy frame and potential amendments and overall direction of these legislative changes.
Leading up to the legislative tabling, there were 26 full meetings and engagement sessions with key partners and stakeholders specific to the intent of the legislative amendments. In August of this year, a discussion paper was issued for specific feedback and comment, as well, and we have received a number of comments on that.
The Chair: How many meetings did you have with the shippers?
Ms. Rascanin: I don’t have that broken out.
The Chair: They would be the most affected by this bill, I would think.
Ms. Rascanin: I think a number of people are affected by this bill, but the shippers are very much our key stakeholder group and we meet with them regularly. Certainly, discussions frequently happened. I don’t have the specifics.
The Chair: You don’t know how many meetings you actually had with them?
Senators, we have until 10:30 because there is a video group waiting for us on the West Coast. We’ll have to go to them at 10:30, so make them as short as I have made them.
[Translation]
Senator Miville-Dechêne: Good morning. I’m not an expert on these matters. I will take the liberty of repeating a criticism made by the Shipping Federation of Canada before the House of Commons committee, which called for the minister’s interim order powers to be limited. If I understand correctly, there is a fear that, since these interim orders can last a year or two, they can paralyse entire communities. Do you think these powers should be tightened and the amendments modified? Basically, I would like to hear from you on that.
[English]
Ms. Rascanin: Thank you.
The interim order authority sought in the legislation is for up to a year. It doesn’t necessarily mean it would be for a year but it is to allow a range of risks and interests to be addressed in situations that can’t always be anticipated, and some which can last for a number of months. An example of this would be whales moving into an area that they hadn’t been in before, like what has occurred in the St. Lawrence over the last few years.
An interim order allows for an adaptive approach where we are not setting a permanent regulation in place. There can be adjustments and adaptations made with industry stakeholders, which also occurred during the North Atlantic right whale situation in the St. Lawrence. Adjustments were made. Evidence can be gathered to decide, again in consultation, how a more permanent solution can be put in place.
The constant engagement and consultation is always an element that goes with that.
Senator Miville-Dechêne: Are you thinking of any amendments or any changes to what you are proposing to make this power more —
[Translation]
— in French, we would say in order to limit this power and, therefore, diminish the minister’s power a little.
[English]
Ms. Rascanin: We think with this proposed amendment we are providing the minister with the flexibility to deal with the range of possible unforeseen circumstances. Circumscribing that range could be a marine safety or environmental safety constraint, so no, this is the appropriate selection.
[Translation]
Senator Cormier: Thank you for your presentations. My question is for Ms. Legars. The Ship-source Oil Pollution Fund currently collects a levy on hydrocarbon movements by rail.
Ms. Legars: That’s another fund.
Senator Cormier: Another fund?
Ms. Legars: I manage two parallel funds under two different acts. The other fund is governed by the Canada Transportation Act.
Senator Cormier: What difficulties do you think you might encounter in collecting fees from ships to and from Canada? Do you need additional resources to do this? We understand that there should now be better control.
Ms. Legars: At this time, there is no need to collect further fees. I still have $405 million, an amount that remains stable and is even increasing. A lot of time will pass before $405 million is spent, and we will use that time, particularly with Transport Canada, to look at a possible mechanism and operations in order to have a levy again one day. However, it may not be needed for some time. We will have to ask ourselves how we will deploy our resources to do so. For the moment, this isn’t something that worries me, because we have the luxury of time to dot every i and cross every t, if you will, on the subject.
Senator Cormier: I have a question about the procedure for small claims. You mentioned the amounts set at $35,000 and $40,000 for the simplified procedure. What was your basis for determining these amounts? How are these amounts determined, and what are your thoughts on it?
Ms. Legars: You can ask Transport Canada, since it is the department that establishes them. From a statistical perspective, I looked at our last 100 claims, which date back to 2013-14, and found that 56 were $35,000 or less. This figure gives an idea of what we mostly do: We have a few big claims, but also a lot of small ones. In our pilot project, we set the threshold at $15,000, because our collection procedures start to become more aggressive above that amount.
Senator Cormier: What kind of actions or damages are we talking about?
Ms. Legars: Mainly costs related to clean-up or preventive measures. There may be loss of revenue for fisheries or the industry, but we don’t generally receive that type of claim. Historically, we have received mainly claims for costs related to clean-up or preventive measures. Nearly three-quarters of our claims come from the Coast Guard. The others come from the municipalities or port authorities, and they are always for costs related to clean-up or preventive measures.
Marc-Yves Bertin, Director General, Marine Policy, Transport Canada: The threshold was established based on a statistical analysis, as Ms. Legars mentioned. Of the 100 claims to date, the estimate is that those over $35,000 represent about 56 to 60 per cent of claims. Increasing that amount to $50,000, in an exceptional situation, would cover 75 per cent of claims.
[English]
Senator Wetston: Thank you for coming today. I want to ask you a question, and it’s not meant to be hypothetical. I think you are aware of what’s going on off the Grand Banks with the oil rig challenges with respect to the spills that are occurring. The question I have is — just so that I understand since we are in pre-study — if these amendments were all passed, in place and operating under this legislative scheme, what would the differences be between the current situations? Would they apply? How would they apply? Would there be any difference in the response? I take it that the Ship-source Oil Pollution Fund wouldn’t apply here because it’s an oil rig.
Ms. Rascanin: To keep it non-hypothetical, senator, and to give you the actual context, it’s the Canada-Newfoundland and Labrador Offshore Petroleum Board that is the lead agency responsible for this specific situation. That is how the legislation is set up. The Coast Guard and the National Environmental Emergency Centre are aware and available to support, but it is the board that is managing this situation. If it were exactly the same situation, none of these amendments would apply because it’s a different jurisdiction.
Senator Wetston: I see. Is that an issue we should be concerned about?
Ms. Rascanin: I don’t think that is an issue. We have full confidence that the board is working.
Senator Wetston: So you are saying they have all the authority, powers and capacity to respond in a similar situation, and that these amendments would not assist whatsoever in that circumstance?
Ms. Rascanin: I don’t know all the details. In a very global sense, that is what I’m saying.
Senator Wetston: You have a lot of activity here and I think on interim orders and on adjusting aspects of regulations — generally speaking, interim orders are not issued in an ex parte manner. Those authorities are challengeable by a judicial review in the courts, as you know. Your response was that we are going to provide broad authority for the minister to be able to respond to events as we deem them as necessary.
What I didn’t get from your response was how you’re going to provide the information to the minister, consult with stakeholders, the shipping industry and participants that would be affected by that prior to the issuance of such an order. The bottom line being that it cannot be arbitrary. How are you going to avoid that?
Ms. Rascanin: It cannot be arbitrary, that is true, but if there are marine safety risks or if there are environmental risks, sometimes measures have to be put in place very quickly, depending on what the risks are.
If I use the example, again, of the St. Lawrence when slowdowns were implemented, we worked very closely with industry. There were weekly telephone calls with all the industry stakeholders to keep them informed, for them to provide input and to help adjust as new measures were put into place. That same process would be followed.
The Chair: Could they have done that without the government?
Ms. Rascanin: Could industry have done it?
The Chair: Would they have been safe without the government?
Ms. Rascanin: If they voluntarily slowed down to those speeds —
The Chair: They wouldn’t have wanted to hit whales, would they?
Ms. Rascanin: No, but that’s why they absolutely cooperated. We worked with them. That’s why the interim order worked very well.
The Chair: Thank you.
Senator MacDonald: You talked about the risk of a ship discharging a pollutant. Under the bill, the minister is authorized to take measures to repair, remedy, minimize or prevent pollution damage if he or she believes, on reasonable grounds, that a vessel has discharged, is discharging or may discharge a pollutant.
How do we determine if a ship may discharge a pollutant? What criteria would we apply to determine that?
Julie Gascon, Director General, Operations, Canadian Coast Guard, Fisheries and Oceans Canada: Thank you, senator. If an operating vessel encounters an incident, a lot of work goes on between the Canadian Coast Guard, Transport Canada and the shipowner of that vessel. In our current approach, it has to be an imminent threat. With the new amendments, it’s “may.” It removes from the responder’s perspective the question of whether we should proceed.
When a vessel goes aground, an assessment is made immediately by the ship’s crew. There is a review of the ship’s compartments and so on. The owner and the captain are in constant communication with the Canadian Coast Guard as to their assessment of the damage. The Canadian Coast Guard also works very closely with Transport Canada to assess the stability of the vessel and the extent of the damage.
Based on the report coming from the ship and the assessment of Transport Canada, the Canadian Coast Guard is able to determine whether that vessel may discharge a pollutant. They may then take the appropriate measures and actions that are required, as we are the lead federal agency responsible for any ship-sourced oil pollution.
In another case, for example, you’re familiar with the Kathryn Spirit in Beauharnois. I was the assistant commissioner at the time in Montreal, and it was a constant question: Is it an imminent threat or not? You are talking about a vessel that is tied up and recently abandoned next to a main source of potable water for Montrealers. There were a lot of concerned citizens.
So these new powers, this ability to respond, will allow us to work with partners — municipal, provincial and federal agencies — to take action much quicker. So we are welcoming of those amendments to allow us to be a better responder for Canadians.
Senator MacDonald: There’s an amendment to the Marine Liability Act that would add a process for claims for small amounts of under $35,000 in the case of an oil spill and $50,000 in the case of a significant oil spill. What criteria are used to determine whether an oil spill is significant? How are these numbers determined — the $35,000, $50,000?
Mr. Bertin: In terms of the definition of “significant,” the proposed amendments speak to both the scale and complexity of the situation. We’re talking about a significant or an exceptional occurrence.
With respect to the $35,000 and $50,000 thresholds, these are based on the statistical analysis of the claimants that were currently being received by the SOPF administrator. Basically, we are able to identify that a threshold of $35,000 would enable the fast-track process to be taken up by roughly about 50 to 60 per cent of claimants, whereas setting that threshold at $50,000, in the case of a significant incident, would enable 75 per cent of claimants to avail themselves of the simplified process.
It doesn’t mean due diligence isn’t required in the simplified process. Think of this as filing your tax claim via the Internet. On the one hand, you have to be able to demonstrate linkages and so forth in a simplified manner, but at the same time, you have to be able to demonstrate that you have the evidence — the paperwork and so forth — to back it up.
What we would be enabling through this proposed legislation is for the administrator to continue, after the fact, to audit and assess those claims and make sure that there aren’t any mispayments being conducted.
[Translation]
Senator Boisvenu: Welcome to our guests. I am relatively concerned about this bill, as much as I am about Bill C-69 on environmental assessments. When the powers of ministers are broadened, arbitrariness quickly sets in. However, encroachment on provincial responsibilities may come into play.
I would like to come back to the problem that the Gaspé and the North Shore experienced this summer following the cancellation of 50 per cent of cruise ship traffic. It had a negative economic impact on the small municipalities that have been mobilizing for years to receive these tourists. They set up tourist accommodations and offerings. Suddenly, however, an “arbitrary” decision is made about the speed of the cruise ships. The negative impact of this decision were felt throughout the St. Lawrence, the Gaspé and the North Shore.
When you make a decision like this, do you measure the economic impact on the small municipalities that live on this type of commerce?
[English]
Ms. Rascanin: Economic considerations are absolutely considered. It’s a question of looking at environmental and economic impacts, and consider how to work through both as much as possible.
That’s not in all situations. As I mentioned earlier, we worked with the cruise ship industry very closely in that particular instance to continue to take in their input and consider how to adjust and work through, where possible, amending those impacts.
But there was an unprecedented number of deaths of whales in that situation, and those have to be addressed.
[Translation]
Senator Boisvenu: If you have consulted the municipalities, shippers and businesses, could you provide the committee with all the documents and communications you had with the communities to demonstrate both that there was consultation and the reaction of those people to the loss of 50 per cent of their sales in such a short period of time? I believe the decision was made in April, when these people were already ready for the summer. In just a few weeks, they saw their livelihood disappear by half.
I would like you to provide the committee with all the documents you have in your possession on the communications you have had with the communities, on the reaction of these people, whether they agreed or not, and on what scientific basis you made the decision to reduce the speed of boats on the St. Lawrence River by 30 per cent.
[English]
Ms. Rascanin: We will have to get back to you with the actual discussions. I will say that we work very closely with, for example, the environmental agency from the United States, NOAA, which has done a lot of scientific work around that particular whale population. Determinations were made at what speeds the impacts on the whales are diminished.
I will also point out that after the slowdowns there were no more deaths of the whales attributed to strikes from ships.
Senator Boisvenu: My main concern is local industry, the local people who in a short time have been advised that you’re going to make a decision that will impact their economy on a local basis. That’s my main concern.
[Translation]
Senator Galvez: Thank you for being here. This discussion is very interesting.
I, too, am concerned for the people, the economy and the environment.
[English]
I think it’s important that we remain very flexible. I was surprised that you didn’t mention anything about what is going on and brought by climate change. There have been many accidents throughout the world, the States, here, ports and the oceans that have cost billions of dollars. I’m surprised when you say you have $400 million and that this is big money. In the face of a disaster, $400 million is almost nothing. It can go like that.
When disasters happen, it’s true that it’s important to have a very good insurance, and I’m very happy for these amendments that expand on that area. However, from what we have seen in other disasters, there is now a growing industry of vulture lawyers — except for my very good friend Senator Wetston. Sorry.
You know what I’m talking about. This happened at Lac-Mégantic in Quebec. The people were not protected and lawyers arrived and they convinced them. Then, instead of getting some funds to reconstruct and rebuild their lives, they are doubly penalized. I wonder if some care has been put into this issue.
My second question is this: We had a lot of whales in the Gulf of St. Lawrence found dead. Will these amendments change anything about what can be done to find the cause of these sudden deaths?
Ms. Rascanin: I’ll ask my colleague to start with your first question.
The Chair: Whales, predatory lawyers.
Ms. Gascon: We cover it all.
Mr. Bertin: In addition to the amendments that I referred to earlier in response to Senator MacDonald’s question, aimed at getting funds into the hands of people who need it more quickly, there is also another significant piece of this proposed legislation relating to the limit of liability being lifted. Currently, in the case of an oil pollution incident, the maximum compensation provided for an oil spill is roughly about $1.5 billion. That $1.5 billion is sourced from three areas. The first one is the shipowner and their insurance. The maximum amount of compensation available for an oil spill from the insurers is around $180 million.
The second source — and it was referred to earlier by Ms. Legars — is the international funds that exist. The international funds provide for roughly $1.1 billion. Then, under the current legislation, in the event of a spill, the maximum amount that would come from the fund that Ms. Legars manages would be in the vicinity of around $175 million.
This legislation would remove that per incident limit of liability, which currently stands at, roughly, $175 million, which means that the Government of Canada would make itself available to cover any amounts above $1.5 billion in the case of a significant event.
That’s important because at the end of the day, if something significant were to occur that would cost more than $1.5 billion, it means that the victims as well as responders who are looking to be compensated would not see their claims prorated and therefore only receive a portion of their justifiable amounts of compensation.
Ms. Rascanin: Regarding your question on science and whales, these flexibility powers that are proposed in the amendments would help react to unforeseen situations for sure. In terms of science, in the St. Lawrence all the whales that were found dead were sent for necropsy — a veterinarian examination as to the cause of death — to understand more readily what is causing it. And there is a lot of investment in various sciences in enhancing the understanding of impacts on whales, such as ship strikes or vessel noise that are being funded under initiatives under the Oceans Protection Plan and the Whales Initiative that were just recently announced.
The Chair: How did they die?
Ms. Rascanin: I don’t have the exact numbers. Some were blunt force trauma, very consistent with the ship strike situations.
The Chair: Two, three, one?
Ms. Rascanin: Does anybody have the number? Four.
The Chair: Four.
Ms. Rascanin: Others were entanglements and others were not definitively determined.
[Translation]
Senator Gagné: I arrived late, so I don’t know if you have addressed this issue. Why were the changes proposed in this bill not included in Bill C-64? This is an omnibus bill, so why in this bill rather than in Bill C-64?
[English]
Ms. Rascanin: Bill C-64 is abandoned vessels, so the very specific nature of that legislation and the readiness for it at the time it was tabled led to those amendments being put forward. All the amendments in that legislation relate to abandoned, derelict and wrecked — I can’t remember all the adjectives — but the various types of vessels, so it’s a different situation.
Senator Manning: Thank you to our witnesses.
Again, in this piece of legislation we have increased fines or levies that will be brought forward in the case of a polluter. From experience with Fisheries and Oceans Canada, the Coast Guard or Transport, I wonder about the effectiveness of these fines. We go from 50,000 to, I think you said, 250,000. For some major oil companies that’s pocket change. I wonder how effective the levies and the fines have been on those who pollute. As I say, the number of dollars, it sounds like a lot when you go from $50,000 to $250,000. When you’re talking about multi-billion dollar industry, what’s the effect of the fines? Do we need to take a different route to deal with polluters other than levies and fines?
Ms. Rascanin: I would say the majority of industries we work with comply with the rules. I want to make that clear. There are many highly compliant and responsible entities working out there.
What we found for those very few that don’t follow the rules is that the current regime is insufficient. This maximum of $250,000 is a deterrent that we’ve observed across other legislation as being a good level of deterrence, but there is an escalating set of fines. The $250,000 would be used only in fairly extreme situations. In other legislation where we have had experience, it does demonstrate a good deterrence factor.
Senator Manning: I agree. Most people follow the rules, follow the law and we’re fortunate, as we are a coastal country.
In cases where we have levied fines against polluters, what is our collection rate?
Ms. Rascanin: I’d have to get back to you on that.
Mr. Bertin: If I can add, with respect to the Marine Liability Act, we’re talking about a reporting and collection regime, if I can call it that.
This isn’t actually about hitting polluters. It’s about having a reporting regime where importers and exporters of petroleum products report how much commercial activity they’re handling with these commodities, then, should the levy be instituted — if there’s a need because the health of the fund is no longer where we judge it to be sufficient — then there would be a levy collection instituted.
Right now that levy has not been instituted since 1976. It was actually instituted in 1972 and collected for a few years only. After reaching an amount of roughly $36 million, if memory serves, we stopped collecting. Through interest accumulation, it’s now reached, roughly, $405 million, $410 million. What we’re talking about in terms of proposed offences and administrative monetary penalties in the proposed legislation are around failure to report or failure to keep adequate documentation.
The proposed legislation for the Marine Liability Act amendments are not aimed at attacking or going against instances of pollution per se. That would be covered under a different statute.
Ms. Rascanin: You were talking about the administrative monetary penalties scheme. I do have here that in the last three years, approximately 150 of these kinds of administrative monetary penalties were administered. What I don’t have is the dollar value.
Senator Manning: The percentage of how many people.
Do we have an issue with flags of convenience with the ships?
Ms. Rascanin: Not systematically, but sometimes there can be.
[Translation]
Senator Dawson: I would like to come back to the subject of predatory lawyers. What happened in Lac-Mégantic was that lawyers arrived immediately, signed contracts and received millions of dollars from governments and insurance companies, even though they did nothing.
[English]
I agree, you’re not the only one that’s not predatory. I married a lawyer and I’m the father of a lawyer. I know a whole bunch of them. They are not predatory. You’re not the only exception.
That being said, in that case, does your fund, Ms. Legars, stop people from doing it? If you know that there’s somebody profiting from a crisis, and in this case it was millions of dollars in Lac-Mégantic, what would you recommend to us so that we could give you the tools to not make these people profit from these situations? Senator Galvez is right.
[Translation]
The number of crises like this are going to increase, and the number of predators will probably increase as well. The only thing that is decreasing is the number of whales.
I’d like to be able to give you the tools to prevent people from coming forward in environmental crises, be it in your field or others, and asking for money. I want the funds to go to the people who deserve it and not to others.
[English]
The Chair: Multiply. Go ahead, witness.
Ms. Legars: One of my goals is to be as user-friendly as possible. I’m really trying to progress as much as I can with regards to being user-friendly. My goal is that a claimant shall not need to hire a lawyer to file a claim. It has to be “stupid simple” — and some people may say that I’m not here yet but it’s at least what my goal is. I’m taking any advice from people who think that things are too complicated.
The goal of the small claims provisions is to have something that is stupid simple; you fill it in and, basically, yes, it will be assessed at some point. Because I don’t want to be a money-maker if someone files fake claims repeatedly. So I need to do my job.
But that is surely the goal of the regime, to be as user-friendly as possible and to avoid claimants having to hire lawyers — so they can keep 100 per cent of what they are awarded.
[Translation]
Mr. Bertin: What is interesting about Ms. Legars’ activities is that a person can turn either to the owner and the owner’s insurers, or to the fund, which can provide compensation. Then this fund will recover the money, which simplifies things. When there is an incident, the fund officers and international funds intervene directly on the ground to ensure that people know they exist and are aware of the services they can provide.
[English]
The Chair: Senator Gagné, do you have a supplementary?
Senator Gagné: I have just a comment.
The Chair: Go ahead.
Senator Gagné: It’s a very short comment.
[Translation]
Senator Gagné: I would like to say something. With regard to the use of the term “stupid simple,” we must make things clear and accessible to the public, but we must also ensure that we don’t treat Canadians like this. Regardless, it is extremely important to be able to achieve a goal, to reach out to the client and to provide a clear and simple process. That’s my comment.
[English]
Senator Wetston: I’m not going to get into the debate about lawyering. If only society was less complex and we weren’t confronted by an 850-page omnibus bill.
Other than that, I want to ask a simple question about the fund and the railways shipping oil. What has your experience been when it applies to the shipment of oil by rail? Have you had any experiences with that? Does the legislation and the amendments effect that in any way whatsoever?
Ms. Legars: As mentioned, it’s a totally different legislation. However, the legislation on the rail fund was somehow inspired by the legislation on the ship fund, which is the Marine Liability Act. The rail fund was established after the incident of Lac-Mégantic, so I don’t deal with the Lac-Mégantic thing. Since this legislation on the rail fund was enacted, I had no incident because it would need to be a really big incident. It’s for excess liability only.
So that’s the difference between the two regimes. With rail, I’m strictly for excess liability, but on the ship side I’m an option. The claimant can choose to go against the wrongdoer — the one who causes the damage — the shipowner, or the insurer because they have a direct right of action against the insurer, or they can go to me.
Basically I’m taking on my shoulders, as mentioned by Transport Canada, the cost of the litigation. I pay, then I go after the shipowner and insurer. I collected the levy.
It was before the Ship-source Oil Pollution Fund existed. Its predecessor had another name, and it was in the early 1970s. When the Ship-source Oil Pollution Fund was enacted in 1989, it inherited all this accumulated money in the fund.
So, as mentioned, if a levy was reinstated, yes, I would collect it, but I don’t need it for now.
The Chair: Senator Boisvenu?
[Translation]
Senator Boisvenu: You said earlier that your decision this year regarding the Gaspé was made following consultations with the marine community and local businesses. Could you provide an account of the losses you’ve estimated, given that you are making a decision based on the environment and the economy? Could you provide the committee with an estimate of the losses that these businesses announced before the decision was made?
[English]
Ms. Rascanin: We will have to provide what we can separately.
The Chair: Thank you witnesses.
Senator Miville-Dechêne: I have a quick question; it’s a comment on the language.
[Translation]
Senator Cormier: It’s just a comment about the French wording of the bill. I absolutely don’t understand what is written when I read the following, and I quote:
(2) L’arrêté prend effet dès sa prise et cesse d’avoir effet à celui des moments ci-après qui est antérieur aux autres :
I truly think there is important work to be done to review the bill in French, at subclause 10.1(2).
[English]
The Chair: Keep that in mind for when we make our report to Finance.
For the second part of our meeting, we are pleased to welcome Mr. Bruce Burrows, President, Chamber of Marine Commerce. From the Chamber of Shipping, we have Ms. Bonnie Gee, Vice President, and Peter Swanson, Partner, Bernard LLP.
Thank you for attending our meeting. We’ll begin with Ms. Gee by video conference.
Bonnie Gee, Vice President, Chamber of Shipping: Thank you for the opportunity to present our concerns with respect to Divisions 22 and 23 of Bill C-86 that propose amendments to the Canada Shipping Act and the Marine Liability Act. I’m joined by a member of our board of directors, Peter Swanson, senior partner at Bernard LLP. The Chamber of Shipping has welcomed the various initiatives under the Oceans Protection Plan, as industry believes there is a need to modernize the legislative framework for international shipping, to better protect our oceans and further diversify Canada’s trade overseas.
Our members, who are the marine transportation companies responsible for delivering Canada’s international trade, are urging the development of a cohesive and holistic strategy for its marine transportation system. Such a strategy must recognize that Canada’s commitments to marine safety, security and environmental protection are achieved through its international influence at the International Maritime Organization, and that competitiveness is maintained through global standards and a level playing field for international shipping.
Section 689 specifically expands paragraph 10 of the Canada Shipping Act to authorize the administration and enforcement of the act to other levels of government, including provinces and Indigenous groups. If there is an intent to delegate authorities to a province, for example, we would be concerned about the capability of a delegated authority to fulfill such a complex mandate and the increasing potential for a patchwork approach to administering Canada’s waterways, which are shared in most regions with the U.S.
International shipping transports the majority of Canada’s imports and export volumes and is a global industry that has made significant progress through the International Maritime Organization on marine protection, safety and security. Ship owners require predictability and consistency when making capital investments and selecting trade corridors. Section 690 enables the minister to make interim orders under paragraph 10.1 of the Canada Shipping Act where immediate action is required with a direct or indirect risk to marine safety or the marine environment. The necessity for such a provision is accepted. However, the process for imposing an interim order must be supported by evidence and take into consideration all other consequences of the measures put into place.
We support our colleagues in recommending that the section be amended to limit the duration for an interim order to a maximum of 14 days and after it is made, unless extended by Governor-in-Council for a period of up to two years. This would be consistent with other pieces of legislation administered by the Minister of Transport. I would now invite Mr. Swanson to address amendments to the Marine Liability Act.
Peter Swanson, Partner, Bernard LLP, Chamber of Shipping: If I understood, Mr. Chair, I was not going to go next. But I’m happy to if you want me to.
The Chair: Please, if you could.
Mr. Swanson: I’m going to talk a bit about the proposed amendments to the Marine Liability Act, and specifically the Ship-source Oil Pollution Fund. I’m going to focus primarily on sections 723 and 726 of the bill. Those two provisions deal with the expansion of liability to include claims for economic losses. And I just want to identify for the committee that it’s a fairly significant expansion of liability for the fund, and potentially shipowners to the extent the fund would be subrogated to pursue those claims against the shipowner. The language is broad, and it says “any kind of loss, damage, costs or expenses arising out of actual or anticipated oil pollution damage, including economic loss caused by oil pollution suffered by persons whose property has not been polluted.”
I note there is a typo in our submission.
That is a significant and very broad change to our existing laws. On behalf of the Chamber of Shipping, we have some concerns about the broad expansion of liability to include economic loss claims where there is no actual physical damage to property. The law, as it currently stands, would not include recovery for that type of loss and there are sound policy reasons why that is so. If the expansion does become law, then it really does create indeterminate liability in the sense that almost any sort of economic loss claim can be pursued. And I included some examples in the third paragraph of our submission.
Effectively, economic loss has historically been tied, from a legal point of view, to actual damage to property. When it’s not tied to damage of property that means there can be a very expansive liability regime. For example, if there is an oil pollution spill in a city and hotels feel that they have fewer customers attending the hotel, that would form the basis for a claim for economic losses by the hotel owner. Tour operators and shop owners, similarly. Questions, for example, of claims in relation to commuters that might not be able to get into their offices because a bridge has been temporarily closed because of a pollution event — does that mean the commuters are able to claim for increased travel costs or loss of time at the office? It is a very expansive change to the liability regime. It will be subject only to the imagination of crafty lawyers and it will ultimately be imposed on the courts to try and determine the scope of that liability.
To give you a bit of background, the civil liability regime is governed by the Marine Liability Act. The Marine Liability Act incorporates two key international conventions that deal with ship-source pollution and compensation for oil spills. The first being the Civil Liability Convention, which is the convention dealing with spills from tankers — in other words, ships that carry oil as cargo. The other is the Bunkers Convention, which relates to discharges from ships that carry oil for fuel. Both of those regimes have been incorporated expressly into the Marine Liability Act.
They do not deal with the regulatory regime. In other words, the fines that might be imposed on a shipowner. Those are found in the Canada Shipping Act, the Fisheries Act, the Migratory Birds Convention Act and, to the extent applicable, the Canadian Environmental Protection Act. Civil compensation for ship source pollution is regulated both internationally and domestically. Canada has been a very active player in the international regime for the development of international conventions and has historically implemented those conventions in a way that is consistent with the international obligations. Economic loss is not something that is recognized as compensable under either of the conventions.
The other point I think is important to remember is in relation to ship source pollution. By reason of the conventions and their incorporation into Canadian law, it’s a very strict liability regime. Ship owners who happen to discharge oil are generally strictly liable. There is no requirement that claimants prove the shipowner was negligent. If oil emanated from the ship, they are responsible civilly without proof of negligence or any other act or omission. There are very limited defences. I have set out the three defences. It’s only if there is an act of war or similar events or a natural phenomenon of exceptional nature where the shipowner might be able to avoid liability, or if the discharge was caused by an act or omission by a third party with intent to cause the damage, or if there was negligence on the part of the government in relation to navigational aids or maintaining lights.
The starting point is strict liability. Liability is not unlimited. I heard earlier witnesses speak about the limits of liability that are set out in the conventions and the Marine Liability Act. For a small vessel of under 5,000 tons, liability is capped about $8.2 million, depending on the calculation used. For the largest ships, according to my calculation yesterday, it is about $164 million.
So there is the notion that liability is not limited, but it’s not just the amount; it’s that the types of claims that can historically be made are pollution damage claims. That is what this change is looking to address — that issue. What historically may have been pollution damage claims — which are defined terms in the Marine Liability Act, Civil Liability Convention and the Bunkers Convention — the idea is that the polluter who is strictly liable has some limits on their liability and it is limited to actual pollution damage. In other words, clean-up costs. If ships or other facilities are covered in oil, obviously the removal expenses are covered. If somebody’s property is damaged and they are not able to use that property for a period of time they would be in a position, and are currently in a position, to make a claim for loss of use of that property. Also, environmental damage, if there is an actual remediation of the environment, that is already compensable. What is not currently compensable is the idea that, even if your property is not in any way damaged by the pollution event, you may still suffer some form of economic loss and are entitled to claim.
This is the point that I think is important. It is a big change from our current legal system, not just in relation to ship source pollution, but in relation to tort law generally. Canadian case law — including the Jervis Crown case that is referred to in our submission from the Supreme Court of Canada — recognizes there needs to be some limits on recoverability. The idea of being able to recover in circumstances where there has been no physical damage to your property is limited by our current legal system in any context, not just in a ship source pollution context. Moving away from that and creating through legislation a basis for claiming economic loss where property is not damaged is a significant change to our law. I would submit that, in the circumstances, it is something that needs to be very carefully considered.
The words proposed in the bill give no limit. It provides no context. It does not in any way provide a court, or the Ship-source Oil Pollution Fund for that matter, any guidance or limits on where to draw the line. If there is to be this type of expanded liability, I would suggest there is a need to put in some defining lines so that not just anyone is able to make a claim. I suspect if this goes through, the Ship-source Oil Pollution Fund is going to be very busy even when there is a small spill, because there are going to be a lot of people who come forward and say, “My day changed, I had to do something differently that day; even though I had no physical impact or injury I believe my day changed; I therefore have a claim and I am coming to the fund for that amount.”
It is a very significant transformation of our law, not just our ship source pollution law, but our general law. I appreciate that this is only going to apply in the ship source pollution context, but it is a very significant change. Unless anyone has any questions, those are my remarks.
The Chair: Thank you very much.
[Translation]
Bruce Burrows, President, Chamber of Marine Commerce: Good morning, honourable senators.
[English]
Thank you, Mr. Chair and members of this committee, for the invitation to speak.
I’m happy to be here to provide the Chamber of Marine Commerce’s views on the legislation before you today, Divisions 22 and 23 of Bill C-86, amending the Canada Shipping Act, the CSA, and the Marine Liability Act, the MLA.
CMC had the pleasure of speaking before the House of Commons counterpart committee on November 8 regarding this bill. I will note that my comments today reflect our concerns from that hearing. As for the relevant divisions before this committee, I note that Transport Canada only launched broad consultations on the CSA and MLA in mid August, which concluded on October 26. We were surprised to see legislation then tabled on October 29 in the house. It’s amazing what can happen over a weekend.
Notwithstanding our good relationship with Transport Canada, I believe it’s out of place to make amendments to the CSA and MLA in an omnibus bill implementing the budget.
I would like to make clear that the marine mode in Canada is the safest and most environmentally attractive means of transportation. Every year, more than 230 metric tonnes of cargo is transported through the Great Lakes and St. Lawrence River waterway. Moving this cargo safely is the top priority for the marine transportation industry, which works to maximize protection of people, property and the environment.
Comprehensive regulatory oversight, investments in advanced navigation technology and sound safety practices have produced significant safety achievements, and more investments continue to be made by the industry.
In our experience, we believe that a collaborative approach is required to identify priorities that are of concern to Canadians when it comes to making new regulations, policies or introducing legislation. At the end of the day, the marine industry operates in a number of geographic areas that are particularly sensitive environments, but the people living there are still in need of marine services.
In the proposed amendments to the CSA, we have commented on three areas of change: the introduction of interim orders, expanded regulatory powers for marine environment protection, and the new ability to amend certain regulations by order.
We recognize the goal of rapid response during marine pollution incidents and the intent for powers to issue interim orders when warranted. However, in lieu of taking specific amendments forward at this time and to complement legislation, we suggest this committee recommend there be robust policies in place dictating use of these orders only in urgent or unforeseen circumstances with significant risk, as intended, and that a commitment in principle is made to consult to the extent possible under the circumstances.
The policies and procedures must ensure that interim orders are not used to circumvent the regulatory process or evidence-based decision making and do not sidestep the collaboration government currently has with the marine sector. Our recent experience with the North Atlantic right whale speed restrictions justifies this cautionary approach.
Rapid intervention measures could have significant impacts and unintended consequences on voyage planning, safety, shipping schedules, contractual commitments, fleet planning and competitiveness, all of which impact communities, businesses and jobs that depend on marine shipping to grow.
Notwithstanding the short-term nature of such an order, we believe there is a need for ensuring adequate consultation with the marine industry and other affected industries. The marine industry has much to offer in identifying concrete measures, weighing alternatives and assessing industry impacts to inform decision making.
In terms of regulation-making powers on marine environment protection, we can’t stress enough that science and evidence are essential to the development of any new regulatory measure to ensure they are effective and points to our great record of voluntary measures to protect the environment. In fact, these voluntary measures and guidelines, such as those promoted and implemented through Green Marine, have proven to be successful in the past in many areas of ship operations. It’s been a very helpful program.
When supported by evidence and developed in consultation with the industry, voluntary measures are an effective tool and provide more flexibility over regulation.
In sum, we are cautious about the proposed changes, as it is critical that these kinds of expanded powers are limited, with proper safeguards. We also want to ensure such powers are used in collaboration with industry to improve safety and protect the marine environment.
On the remaining questions of amendments to the Marine Liability Act, and despite the complexity and extent of those changes, our initial sense, subject to further analysis, is that the changes are manageable.
I’m happy to take any questions you may have. Thank you.
The Chair: Thank you very much. I’m going to be leaving the chair at eleven o’clock, and it will be Senator Dawson.
[Translation]
Senator Miville-Dechêne: My question is sort of for all three of you because your presentations are somewhat along the same lines. I would like to hear your comments on the following problem. I understand what you are saying about needing evidence before you can intervene. However, I’m thinking about marine mammals, the fact that sometimes quick intervention is the only way to save lives. Take whales for example, because you mentioned that this was a case where action was taken too quickly. Yet, it seems to me that there are lives at stake, and we all unfortunately experience some bureaucratic delays when it comes to using certain regulations.
How do you keep things in perspective? I understand that you are defending the industry, but at the same time, this bill is trying to restore the balance so that we can act a little more quickly, if necessary.
I don’t know who wants to answer.
Mr. Burrows: If I may, I’ll answer in English.
[English]
If I can take a first crack at that, and perhaps our colleagues on the West Coast want to follow.
The whale example, as is suggested, is an interesting one. Unfortunately, we are worried that this may be an example of moving too quickly. We very much support the notion that when there is a significant risk, we do move quickly but with consultation.
The whale case is an example of a lack of efficient or proper consultation. We were already voluntarily monitoring with slower speeds through the Gulf of St. Lawrence, and then very quickly the order was brought in. The government sort of contorted like a gymnast at Cirque du Soleil to find a regulatory measure that could be used to warrant the introduction, but the problem really was the fact that on the north shore, in particular, there was an immediate and very negative impact on the service from one community to the other.
Much of that community on the north shore is very dependent, both from a goods perspective and a people-moving perspective, on the marine sector. Without warning, in addition to the cruise industry, there was a massive impact with millions of dollars of economic damage.
In the end, as a result of consultation through this year, we are now finally in a place with a dynamic solution, which could have been achieved had the government consulted with us properly before. In this year’s environment, we do slow down to 10 knots when there is evidence of whale activity.
We have a number of measures in place in the marine sector where we are voluntarily monitoring whale activity. Groupe Desgagnés, one of my members, the CSL Group and others have trained their crews on how to spot whales and collect data. We have been doing that, actually, for two or three years. We are doing it very successfully on a voluntary basis in the Restigouche area and in the Saguenay Fjord. We’re reducing, on a voluntary basis, when we move into whale feeding grounds. We are, obviously, avoiding sensitive areas that are frequently used by beluga herds.
According to Parks Canada, speed reductions between 2013 and 2016 resulted in nearly a 40 per cent reduction in the risk of ship collisions to whales. So things are working well, and we have to make sure we consult before any haphazard orders come into place.
Senator Miville-Dechêne: I understand very well your concerns. However, this is a case where sometimes going really fast, having to intervene quickly, for government is the difference between having animals who die or do not die. I was wondering if there shouldn’t be some more leeway from the government to intervene as there is on those particular amendments.
Senator Dennis Dawson (Deputy Chair) in the chair.
Ms. Gee: On the East Coast, there is a different situation than what we’re facing on the West Coast. On the West Coast, it’s not a situation where our particular species at risk, the southern resident killer whales, are threatened by vessel strikes. They are actually threatened by acoustic disturbance, the lack of prey and the contaminants in the water.
We have been under threat of a potential interim order for a period of time. The industry has actually been working on voluntary measures for the last three years with the Port of Vancouver. We’ve actually slowed down our vessels during the high-risk periods in a certain area within Haro Strait on the West Coast. Those voluntary measures have proven to be more effective than had an interim measure been imposed which mandated a vessel slowdown on the West Coast because our vessels were actually slowing down in the shared waters of Haro Strait on the U.S., as well as the Canadian portion.
To refer back to an earlier point, sometimes voluntary measures are much more effective than what can be imposed through an interim measure.
Regarding interim orders, if there is an immediate risk such as what happened on the East Coast, yes, we feel there is a place for that. But there needs to be a re-evaluation of the consequences of those orders once they’re imposed.
Senator Galvez: I understand that we are talking about two different industries: one that is the cruises and tourism industry and the other the cargo industry that, for example, brings goods which may spill or cause disaster in the marine environment.
Concerning the industry of tourism and cruises, I have never been on a cruise, but I have many friends who have been on cruises. They try to convince us to go on cruises. But some of the comments that I hear is that this industry has to find a balance between quantity and quality. My friends that go on cruises complain a lot about how fast these stops are. Just a few hours down, do some tourism, come back and do as many stops as possible instead of stopping fewer time and for a longer time to experience the enjoyment that cruise tourism can offer. What is your opinion on that?
My second question is about liability. You both have spoken a lot about liability. I understand your preoccupation about having many people requesting small amounts of reimbursement. There are many complaints because of indirect impacts. However, when I look at the big disasters which have occurred and where pollution has occurred, it has become very evident that the industry knows how to limit this liability. There are smaller companies with whom the disaster is associated and the liability stops with the small company. The bigger owner, somewhere else in the world, is never reached by the reclamations. So it’s relatively easy for a small company to claim bankruptcy and then that’s it, the liability stops there.
Can you please comment on these two issues? Thank you.
Mr. Swanson: I’m happy to comment on that.
The current legal regime which exists in Canada under the Marine Liability Act for civil compensation actually has insurance requirements within the legislation. For example, any foreign ship coming to Canada is required to have on board a certificate of financial responsibility for pollution claims or damage. Effectively they’re required to have that insurance for the maximum amount recoverable under Canadian law.
Importantly, in the context of the Bunkers Convention at least, but I also think the Civil Liability Convention, there is the ability of direct action against the insurance company. So the idea that the shipowner might go bankrupt and the insurer is then off the hook is not really the way the system works. The system actually has already addressed that problem, and the resolution of that problem already exists in our current Marine Liability Act.
As to small companies and large companies, again it really does not matter because they are all required to have insurance, big or small. More importantly, that is, in part, why we have a Ship-source Oil Pollution Fund. Sometimes there might be an oil spill, usually more often than not it is a small one, where it is described as a mystery spill, in other words, the source is unknown. So the Ship-source Oil Pollution Fund, fortunately, is there to address claims that arise in a mystery spill context.
If for some other reason recoverability is not possible against a shipowner, again the Ship-source Oil Pollution Fund exists to provide compensation.
In relation to small claimants, Ms. Legars spoke about what Ship-source Oil Pollution Fund already does. That fund already provides a mechanism. People have the option of either going against the shipowner or they can go directly to the fund and leave it to the fund to go after the shipowner.
There is a fairly robust system which already exists, and in large part it is a system where compensation is not attainable by reason of the company being big or small or by reason of the company not having adequate insurance. The reality is, big or small companies, if they have ships coming to Canada, they must have financial security and proof of it on board the ship.
The Deputy Chair: Mr. Burrows, do you want to add something?
Mr. Burrows: Senator Galvez mentioned a point about safety at the beginning of your comments and question. I want to pick up on that, if I may.
A key testament to our success in protecting the environment is the decline in the magnitude and number of oil spills. In fact, they’re down tenfold from the 1970s, while carriage of oil has actually doubled. This is very much due, in part, to design changes of ships since the 1990s and regulations around the carriage of oil.
A study from Clear Seas, out in the West Coast, determined that since the mid-1990s there’s not been a single major spill from oil tankers or vessels in any Canadian waters. In addition, compared to pipeline and rail, marine tanker transport is found to result in the fewest number of accidents on the basis of millions of barrels of oil transported.
Here in the east, where we also move related products, the safety record is really terrific, much safer compared to the land alternatives. The rate of collision-related injuries for example for Great Lakes shipping is 17 times lower than the national rate for Canadian freight railways.
Think of Lac-Mégantic as an example. And it is 70 times lower than the U.S. class rate railways which have a worse safety record but they are in competition for good movements in the Great Lakes and St. Lawrence region.
I wanted to put those facts on the table, which is contrary sometimes to the perception.
[Translation]
Senator Boisvenu: First of all, welcome to our guests.
Mr. Burrows, we all remember the collapse of cod fishing in the Gulf of St. Lawrence and Newfoundland. The federal government at the time had received dozens of messages resulting from scientific studies that showed a steady decline in that fish. Today, we are facing a disastrous economic situation that has challenged the existence of many small communities that made a living from that fish.
I look at how the federal government has managed all marine transportation this year and the impact on cetaceans and the tourism industry. I have the impression that the same scenario is repeating itself. Was the perilous situation that the Gulf of St. Lawrence whales are in already announced, or are we facing a situation that suddenly emerged this year or last fall? I’m trying to understand the urgency of such situations that jeopardize the local economy when quick decisions are made without preparing people to make this shift. What is your perception of the situation of cetaceans in the Gulf of St. Lawrence, among others?
[English]
Mr. Burrows: Senator, your question is regarding the North Atlantic right whale. By context, this is an issue that existed for a number of years further down south in the Bay of Fundy and off the coast of Massachusetts, and then suddenly, last summer, it migrated up into the Gulf.
We had a lot of experience with the situation down the Bay of Fundy, and we looked at alternatives. Again, the evidence suggests that moving the lanes as opposed to slowing vessels down is the way to go, and we did that. That’s why we had some concern about the knee-jerk reaction with the right whale situation in Canada, where suddenly we were forced to go down to 10 knots. That was quite disruptive.
Finally, this year, after lots of consultation with industry — again my point earlier — we have a much more manageable situation. The whale population is down a bit in the Gulf this year versus last year. We’ve had no strikes whatsoever. I should caution that the majority of the problem relates to entanglement in fishing nets as opposed to ship strikes. However, it’s been successful this year. There is no evidence of any ship strikes. There may be some evidence still of some net entrapment, but I think it’s a situation that’s now being managed pretty well.
It’s hard to predict the future, but I suspect we may see an even lower population in the Gulf next year with migration back, perhaps, to further south. It’s not entirely predictable. We’ll see.
We have this dynamic arrangement in place where we have different lane options to reduce speed only when sighted. The government is, thankfully, increasing the resources on the sighting front. So I think we’ll probably a better situation and plan in place come next spring.
[Translation]
Senator Boisvenu: Do you have an idea of the economic loss, for both the maritime industry and for the communities?
[English]
Mr. Burrows: Certainly, economic loss, I believe, has been much greater in the fishing sector than the shipping industry. Having said that, I haven’t seen a good tabulation of the numbers. The cruise industry was probably hit the worst on the shipping side in terms of economic loss. They had to cancel a number of trips last year. I think they still are operating with fewer trips this year because of the slower schedules going down to 10 knots, which is a more significant reduction, I should add, for the container ships and the cruise ships. The big cargo ships tend to be slower anyway. They might average 13 knots. So reducing down to 10 isn’t as big an impact for most of my members. But I don’t have a good number, unfortunately, in terms of total economic impact. We’re working on that.
Senator Wetston: Thank you very much. Could panel members give me an idea of the extent of GDP in Canada that is accounted for by shipping by marine commerce. That would obviously include the actual economic contribution of the shipping industry as well as the import/export components associated with shipping in and out of Canada. Do you have any numbers to provide the committee?
Mr. Burrows: That’s a very good question. We recently looked at the economic impact in detail of the Great Lakes and St. Lawrence region. This is a $6 trillion economy in the Great Lakes and St. Lawrence region. If I may focus on that for a moment. If you were to carve it out, this is the eight states and two provinces, that would be the world’s third-largest economy.
Looking at that region, the marine sector is contributing about $60 billion in activity; 329,000 jobs in this region are associated with the marine industry. We’re moving about every year. These are annual numbers. That is about 320 million tonnes of cargo worth about $100 billion every year. That’s a sense of what that is. How that relates on an even bigger basis, I don’t have good numbers.
Senator Wetston: Is there anything from the west, in Vancouver?
Ms. Gee: I can respond to that. Last year, the Clear Seas Centre for Responsible Marine Shipping, which I believe will be appearing before you tomorrow, recently conducted a national study. Their estimate is that the impact of marine shipping is equal to approximately 1.8 per cent of the Canadian economy and about $30 billion. We can certainly provide the committee with the link if you’re interested.
Senator Wetston: If you don’t mind providing it to the clerk, that would be helpful.
I’m finding this very interesting. Lawyers are being manhandled at this committee today, you’ve heard that, but I’m going to try and avoid it.
You’re going to hear from your wife when you return home. I just want to mention that, deputy chair.
I don’t take any issue whatsoever, Mr. Swanson, with your view of the economic loss, and I recognize the comments that you’re making. But when I look at your submission, you’re treading carefully here by saying that if it’s going to be included in the legislation, you need to be very careful in the consideration, the terms and the nature of the claims that might be made.
What are you getting at there? Are you suggesting that somehow or another the government amend this bill by including criteria or other factors to guide the application of economic losses in these circumstances? Is that what you’re suggesting?
Mr. Swanson: Yes, I am. I am concerned that it is so expansive and broad without any kind of limitation at all. As I alluded to, it is going to be limited only by the craftiness of lawyers that can think of claims to present, and then impose the obligation to determine whether it is a legitimate claim or not on the courts.
Ultimately, the courts will need to work through that issue, if that is where we go, because there needs to be some limit in the sense that there has to be some claim that is too far and does not come within the parameters. It will be up to the courts, I think, to make that determination.
In a way, it creates a lot of uncertainty. That uncertainty, ultimately, results in a lot of litigation and courts struggling to determine what is an appropriate line to draw.
Senator Wetston: This will be very quick. Maybe it’s for Mr. Burrows, but perhaps Mr. Swanson or Ms. Gee.
This interim order authority, obviously, would trouble participants because they would be concerned about the exercise of that authority and under what circumstances. I did ask that question of officials, and I would personally always be concerned about it myself.
I recognize the emphasis that you place on voluntary standards and why you would support that, but is your greater concern having the authority to issue these interim orders, or is your concern using the interim authority? Your concern might be the excessive reliance on it. Can you help me with how you view the provision and the exercise of that authority by the minister?
Mr. Burrows: I’ll start. It’s not the power of the order itself. It is how it’s used and, perhaps, also the excessive nature.
Again, we’re not arguing with the principle of putting these interim orders in place. That’s why I’m recommending there be some robust policies behind the use of the orders and guidelines and clear direction from the department that those orders would only come in when there is significant risk. The industry is quickly consulted, and then the orders can take place.
It’s how the orders are used that we have some concern with. If a good set of policies and guidelines were put in place by the government, after this legislation passes, assuming it passes, I’d be happy with that.
Senator Wetston: Mr. Swanson or Ms. Gee, any comments on that?
Mr. Swanson: I don’t, but Ms. Gee might.
Ms. Gee: I would say our concern is in terms of how it would be applied. There certainly should be a discussion with those that are impacted as the consequences could be quite wide-ranging. We’re concerned there could be incidents where there are several knee-jerk reactions without proper consideration of the impacts to the broader supply chain, for instance.
As you know, vessels wait a long period of time before they can actually receive all their grain cargo. We have vessels waiting in anchorages here for extended periods of time and an interim order that would further extend that delay in the movement of cargo would not be well received, not only by the marine community but shippers at large.
Senator Wetston: Thank you both.
Senator MacDonald: Good to see you again, Mr. Burrows. Welcome to our guests in Vancouver.
You mentioned consultations that went on last year after the right whales started showing up dead in the Gulf of St. Lawrence. You seemed to imply there was adequate consultation then.
In terms of this bill and how it’s evolved over the last couple of months, what level of consultation was there with your industry? Are you pleased with it? Do you think it was adequate? We had departmental witnesses in here earlier who said there was substantial consultation. Would you agree with that, or do you have another opinion?
Mr. Burrows: I inferred earlier — and maybe I’ll be a little clearer — that I think initially there wasn’t adequate consultation. It was brought in with haste, perhaps without the highest regard to the impacts, both from a service and economic perspective.
Having said that, we then moved into a period of adequate consultation. We’ve had considerable consultation since then. We have a good working-group basis with the government. I think it’s working well now. We’ve hence created what we call a dynamic arrangement, which is in place now. That could have been put in place had there been adequate consultation initially.
Senator MacDonald: I am interested in discussions you had with regard to the right whale stuff. It’s a big issue. There are about 400 of these animals. Nobody realized they were going to shuttle from the Gulf, using the Bay of Fundy. Has there been a determination from your discussions with the government — because I didn’t ask the witnesses today — of how many of the deaths were related to actual strikes, how many of the strikes were by heavy vessels, how many of the strikes were by fishing vessels and what percentage of the fatalities are coming from entanglements? We weren’t really told that. Do you have any data on that?
Mr. Burrows: The only way to determine those are to have thorough necropsies done. They did sample necropsies last year. We haven’t had any incidents this year at all. Last year, as I said, a majority of the incidents — and I think there were 12 deaths — resulted from entanglement.
As I said, with the dynamic arrangement in place, we’ve had, obviously, a much more successful result this year.
Senator MacDonald: Would you agree with the statement that — I think you already mentioned it — the location is more important than the speed of the ships in terms of their impact? One of the biggest issues is the lack of progress when it comes to the evolution of fishing gear and the lack of direction from DFO and some of these departments, like Environment and Climate Change Canada, when it comes to upgrading, alternating or improving the fishing gear used?
Mr. Burrows: Yes, I would agree. Location, as you suggest, is critically important. On the shipping side, again, looking at the Bay of Fundy experience as well, the answer seems to be — because we can change our location quite easily. We have different shipping lane options, so that’s convenient for us. So we don’t need to necessarily slow down as long as we’re moving out of the location where the whales are.
The key here is to get a good handle on where the whales are at. That’s very much top of mind with DFO. They’re putting some new technology in place, and will be in the spring, to better monitor where the whales are.
On the fishing side, you’ll have to speak to the fishing industry, but there’s very active engagement about technological changes that could be put in place to deal with the entanglements and the fishing gear.
Senator MacDonald: I have just one comment. It’s important to note that if we had a pipeline going to the East Coast, we could take half a million barrels of oil coming through our waters in the Gulf of St. Lawrence, the St. Lawrence estuary and the Bay of Fundy — we could take all of that risk out of the water.
The Deputy Chair: That was a statement more than a question. You only have three minutes left.
[Translation]
Senator Cormier: My question is for Mr. Burrows and concerns the consultation process. We often hear this idea of the government’s lack of consultation.
In practical terms, if you were to establish a protocol to determine how to conduct a consultation, in a case where, for instance, whales were threatened, could you tell me what those steps would be so that I can understand how it would be possible, in an emergency, to consult the industry sector?
My question is for Mr. Burrows, but our witnesses in Vancouver could answer, as well.
[English]
Mr. Burrows: If I can answer on behalf of the chamber, we have a rapid-response process in place on these sorts of issues ourselves. We already have a working committee set up with the Shipping Federation of Canada, for example. We have some pretty good science-based staff in place — biologists and environmentalists — who know the region well. They’re working closely with the government now. It’s just a question of putting a quick call into the working group. It doesn’t take long; it can be done in 24 hours to convene the group by conference call, because we have the group in place now, to say, “Look, we have a situation. We have just identified a problem, based on our experience, for example, with the North Atlantic right whale. What should we do?” We can pretty quickly respond to a government call in that regard before the interim order is actually put in place.
So give 24 to 48 hours for the working group to respond to the Minister of Fisheries or the Minister of Transport.
[Translation]
Senator Cormier: Am I to understand that such expertise doesn’t exist within the government? That’s what you seem to be saying. Isn’t that right?
[English]
Mr. Burrows: I was trying to respond from the shipping sector side where we have expertise. I’m not suggesting the government doesn’t have expertise. They certainly have the whale-based expertise.
They’re getting better. We still have more work to do in terms of identifying where the whales are. That’s the key here. But yes, they have the expertise.
The working group is both government, industry and East Coast, Dalhousie-based scientists who are also part of this protocol if can I call it that.
The Deputy Chair: Thank you, Mr. Burrows, Mr. Swanson and Ms. Gee for your presentations.
(The committee adjourned.)