Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 4 - Evidence

OTTAWA, Tuesday, December 9, 1997

The Standing Senate Committee on Transport and Communications, to which was referred Bill S-4, to amend the Canada Shipping Act (marine liability), met this day at 4:05 p.m. to give consideration to the bill.

Senator Lise Bacon (Chairman) in the Chair.


The Chairman: Our first witness this afternoon is Mr. Doug McRae from the Canadian Board of Marine Underwriters.

Before we commence, I should like to mention that we received a number of letters regarding Bill S-4. Copies of those letters, in both official languages, were sent to the members of the committee. I suggest that they be tabled with the clerk of the committee. The letters were from the following associations: the Canadian Maritime Law Association, Canadian Shipowners Association, and the Canadian International Freight Forwarders Association.

Is it agreed?

Hon. Senators: Agreed.

The Chairman: Please proceed, Mr. McRae.

Mr. N. Douglas McRae, Chairman, Legislation Committee, Canadian Board of Marine Underwriters: Honourable senators, Mr. Jaques and I will share equally in the presentation this afternoon.

Our association represents Canadian marine insurance underwriters in Canada. We represent people who write both commercial and pleasure craft insurance, and we are members of the international association known as the International Union of Marine Insurers, which regroups the marine associations of the nations of the world.

Marine insurance in Canada is quite important to us. Approximately 50 per cent of the marine insurance business that emanates from Canada is written in the Canadian market. On the liability side of marine insurance, an important player is not a Canadian insurer but a group of mutual companies that write shipowners liability insurance, known as the Protection and Indemnity Mutual Associations, or P&I clubs. They are the most important players when considering liability for large ships, particularly oil pollution liability coverage.

We do not have any comments to make with respect to the oil pollution aspects of Bill S-4. We are mainly concerned with the legal liability concerns for the smaller ships that are written in the Canadian insurance market and not the ones that concern the larger ships and which are almost exclusively written in the international markets, in particular by the protection and indemnity associations. Our comments are limited to the kinds of ships that are insured by Canadian insurers.

I will now ask Mr. Jaques to comment on the principles of limitation.

Mr. Maurice F.L. Jaques, Past President, Canadian Board of Marine Underwriters: The Canadian Board of Marine Underwriters are very much in support of the principle of limitation -- not only the fact that it exists but also the fact that it has existed for a long time. We also support the amendments and the increased limitations. There is an international regime governing limitation; but the limitations that are currently in force are woefully low, making it more difficult for the settlement of claims. Efforts are continually being made to find out how to try to break those limitations. If more realistic limits were imposed, as they are now being proposed, the result would be a much clearer picture in the marine insurance legislative claims activity. Consequently, it would be much easier for us to settle claims.

Further details are contained in the paper that you have before you.

For those of you who have not read our written submission, the current limitation could be as low as $140,000 for vessels up to 300 tonnes. That would be a combination of bodily injury and property damage. Clearly, that limit is very low and quite out of date.

It is worth repeating that, as a result, claimants can spend a lot of time and effort trying to avoid that limitation. Higher, more realistic limits would be much more appropriate and would make it much easier to reach settlement in serious cases.

Mr. McRae: The capacity of the Canadian insurance market and that of international insurers is completely adequate to cover the liability regime that is being implemented by Bill S-4. As I mentioned before, the very large ships are insured by the protection and indemnity associations and they are able to provide limits of $500 million of coverage with respect to pollution, and even higher limits for non-pollution events. The capacity of the Canadian market for ships up to 2,000 or 3,000 gross registered tonnes, which are the ones we insure, will be fully and adequately insured with limits of $10 million to $20 million, and our market is able to provide those limits.

Pleasure craft insurers will be looking at somewhat lower limits than that -- perhaps $1.5 million for the average pleasure craft. The people writing pleasure craft insurance will have no trouble providing those sorts of limits.

We also commented about the premium impact on commercial vessels. It is a very competitive marketplace, being international, and people who do not like the Canadian market are free to go offshore, and they do.

The impact of these changes of limit will be very minor. Essentially, we will look for long-term claims experience. We feel that the savings in litigation costs will offset the higher costs of the settlements. Over time, if claim settlements increase as a result of Bill S-4, we would expect that premiums would match them. However, as to the initial impact, there will probably be very little change, if any, in the premium structures for Canadian shipowners.

For those who currently buy very low limits of insurance, there is quite a wide market available for increased limits up to $5 million or $10 million at costs ranging from as low as $25 to $50 for pleasure craft up to $2,000 to $3,000 for a large commercial vessel. So there will not be much financial impact on shipowners in Canada as a result of this bill; it will only make things much easier for us.

As I mentioned, on the pleasure craft side these limits will be easily provided with very little, if any, increased cost. In those areas, we are thinking that $25 or $100 would adequately provide for the limits set in Bill S-4.

We should like to highlight a couple of sections of the bill that we think are very useful. The amending provision allows for changes in the limitation amounts without reference to a further act of Parliament. One of the difficulties of getting this international convention adopted in Canada led us to believe that it would be much easier if there were some regulatory method of changing limits with time as inflation creeps up. The bill provides for that very well in the proposed section 579.

Also, the interest rate provision in the proposed section 581 is very useful. It stipulates the rate of interest, which will avoid difficulties in arriving at the rate of interest to be applied to settlements.

Our conclusion is that this bill is an extremely valuable improvement in the legislative framework for Canadian shipowners, Canadian insurers and everyone who deals in the maritime sector. We hope, after a long wait, that this bill will get passage expeditiously. Finally, we would like to thank the committee for hearing us.

Senator Roberge: Thank you for joining us today and for sending us your brief in advance to give us an opportunity to read it.

Are there any oil tankers on the St. Lawrence or Great Lakes which are not P&I insured?

Mr. McRae: I do not believe so, sir.

Senator Roberge: Even the smaller ones?

Mr. McRae: I would have to research that with the officials at Transport Canada, but I believe that all ships carrying a certain quantity of oil are required to carry certification of financial responsibility before they enter Canadian waters.

Senator Roberge: They would be obliged either to get tremendous insurance in Canada or to join P&I?

Mr. McRae: Without exception they would be in P&I clubs which provide very high limits and the certification required under the convention.

Senator Roberge: That is a must?

Mr. McRae: Yes.

Senator Roberge: Have you had any experience in other countries as it pertains to the increase in premiums? What has happened in other countries when they have had increases in premiums? Were they substantial or just normal increases?

Mr. McRae: I do not have the answer to that question, but my understanding is that the cost of this protection indemnity insurance has been going down over the years, not up. It is a very stable market. The limitation convention, the Protocol of 1996, has just come in. I am not aware of any changes in P&I premiums as a result of it.

The Chairman: While I understand that the liability-limit changes in this bill reflect more up-to-date dollar figures, and are thus more fair to all, who benefits most from the changes? Is it the shipowners, the insurance companies, the cargo owners, or the public interest in general?

Mr. Jaques: Clearly, the prime beneficiaries will be people who are making claims; in other words, the public, the shipowners, or whoever, as they would have access to a regime which provides very clear guidelines. We anticipate that it will require less legal activity and a clearer base from which to make claim settlements involving injuries or property damage.

The Chairman: Does Canada do a good job with regard to negotiating the international conventions on which laws like this are based? Are our interests well protected and properly reflected in the results?

Mr. Jaques: I think Canada does an excellent job. Canada has highly respected international business people in all sorts of areas. Through our activity in groups such as the International Union of Marine Insurance, our views are well respected.

The Canadian Maritime Law Association, which is a highly respected group, works overseas with international counterparts and does a good job representing Canada and portraying it as a responsible international citizen.

Senator Roberge: In your opinion, why did it take so long for Canada to sign on to this international package?

Mr. McRae: We are in agreement that the delay was far too long. It took 17 years of urging by our association and the Canadian Maritime Law Association. The Canada Shipping Act is a long and difficult document. I suppose there was some difficulty getting the necessary legislation passed. It was dealt with by several different governments over a long period of time. It just seemed to be difficult to come to grips with.

Mr. Jaques: The marine industry has had problems, generally, having marine-related legislation passed by government. On the other hand, the current legislative agenda includes a number of shipping-related bills. However, generally, the marine industry has been very frustrated by the delays in having a number of these things come to fruition. We perceive a lot of it as not being a priority of government to get these things done. We are delighted to see it now. If you look at the Order Papers, a number of marine bills are now coming forward. Frankly, they are long overdue.

Senator Roberge: Having said all that, do you still believe that our reputation in international waters is good?

Mr. Jaques: Yes, I do.

Senator Forrestall: There has been some controversy about the inclusion of a definition of pollutant in this bill. Indeed, we will be making some changes to it. I hope the typographical errors are not mental lapses. If they are, we will have to go through the bill with a fine-tooth comb to find what else has been changed.

Do you see anything wrong with including in Bill S-4 a definition of pollutant? I am thinking in particular of the difficulties we get into with ballast water.

Mr. McRae: Senator, we are not up to speed on that issue. It is a new topic of which I just became aware today.

Our organization supports the international approach to dealing with matters such as the definition of pollutant. Therefore, we would probably support a position of defining pollutant in accordance with the international convention rather than having a made-in-Canada definition, something that might cause more difficulties than it would solve.

Senator Forrestall: Would it be less wieldy if it were in the Canada Shipping Act?

Mr. McRae: I believe that Bill S-4 would amend the Canada Shipping Act. The difficulty that would exist lies with Canada having a definition of pollutant that did not meet the definition of pollutant used by other countries. International harmony would suffer by having everyone define pollutant in a different way.

Generally, we support the international approach to keep law as internationally harmonized as possible.

Senator Poulin: Presumably, higher liability costs will mean higher insurance premiums to shipowners. What have shipping companies had to say about this?

Mr. Jaques: First, we would have to have a clear definition of what I would call "large commercial shipping" which we have described here as generally being covered by P&I clubs, which are international organizations. From the Canadian point of view, we are dealing with smaller commercial vessels and private yachts when it comes to liability.

At the moment, the market-place that deals with smaller vessels, including pleasure craft, would be quite surprised at the low level of premium. Primarily, our business is a reactionary business. Until we have statistical bases on which to adjust premium levels at some time in the future, we will include these higher limits for a very nominal fee. Our business does generally react. It is the only way we can work. We must base our premiums on statistical information. Until that comes along, we are prepared to start off in a very modest way.

Similarly, in terms of commercial P&I, they would treat it in the same way. It is very much experience-rated.

The Chairman: Do you think this bill will help to simplify the task of a claimant who loses cargo or suffers damage of some sort? The maximum amount that can be claimed will be known, but perhaps from whom to claim will not always be clear -- for example, in the case of a damaged container that has passed through several hands. Could you comment on a situation such as this?

Mr. McRae: The thrust of Bill S-4 deals more with the harmonization of Canada's regime for limitation of liability; in particular, the treatment of oil pollutants. Therefore, it would be more in the line of the Carriage of Goods by Water Act, I suspect, that we would look to for a definition of who the carrier was and how a claim would proceed rather than under this particular bill.

The Chairman: The question of liability seems rather complicated to a lay person. Although I believe you generally support the present framework, is it not rather complicated? Perhaps this is inevitable where international agreements are involved. Do you have any views on how matters might be simplified?

Mr. McRae: I am aware of an initiative within Transport Canada that might group these international conventions under one bill as opposed to having them under myriad sections of the Canada Shipping Act and separate acts. Perhaps there are some moves that could be made to make it a little easier for people to sort through the morass of legislation. I agree with you, senator, yes.

Senator Poulin: What would be the implication of us carrying on somewhat longer under the old liability regime?

Mr. Jaques: It is a limitation factor with which we are concerned. As I mentioned, in particular with regard to small craft, the current limitation is about $140,000. That is the total, all-in figure for a particular incident, accident or occurrence. Therefore, that would include bodily injury, major bodily injury, collision damage and any other damage that could arise from a particular incident. It is really not a satisfactory settlement for people who have had a particularly serious injury. Our industry recognizes that it is important for us to provide adequate coverage for individual accidents and, as I say, in particular, bodily injuries.

Mr. McRae: We do not deal with it in our paper, but there is the important aspect of Canada's adhesion to the new regime on oil pollution, which is another important reason for the bill to pass. It is not one that is critical to our association. However, it is important to Canada to get under the new regime of oil pollution.

Senator Angus: I realize that you said earlier that you had not yet focused on the issue of ballast water, since it just came to your attention today. Perhaps we could put it another way. I think you agree that the main thrust of the bill before us is to pass enabling legislation for Canada to accede to the limitation of liability convention which is an internationally recognized treaty in the area of limitation. On the other hand, it is to enable us to implement the Fund Convention and the Civil Liability Convention, of 1971 and 1976 respectively, as well as the protocols. Do you agree?

Mr. McRae: Yes.

Senator Angus: In any one of those three international conventions, is there any provision dealing with ballast water or defining pollutants as we find in this bill?

Mr. McRae: Not to my knowledge.

Mr. Jaques: Not to my knowledge.

Senator Angus: Did you come here today believing that Bill S-4 was identical in all substantial respects to Bill C-58 from the last Parliament?

Mr. Jaques: I think there are one or two minor modifications. However, generally, it follows very closely on that bill. If you wish, we can single out the specific areas.

Mr. McRae: This aspect of ballast-water contamination is certainly a brand new issue.

Senator Angus: It is a new issue. Was it not in Bill C-58?

Mr. McRae: No, it was not.

Senator Adams: When we talk about liability, is it between the port and the shipowner? As soon as you arrive at the dock is that port responsible? Does the shipowner have liability?

Mr. McRae: I am sorry, sir, I did not quite grasp the thrust of the question.

Senator Adams: When we speak of liability, if there is someone who owns the dock, such as if the government were to privatize -- or does the government have liability if anyone were to be injured on the dock? I was wondering if people work with insurance or liability, which is which?

Mr. Jaques: The main thing we are talking about is the liability attached to shipping; in other words, whether the ships or the pleasure craft would legally be held responsible. There are other areas as well, if I understand your question, such as people working on the dock. We get into some areas where Workmen's Compensation takes over, and there is a clear line there. That would have to be determined in any one particular incident. However, where Workmen's Compensation is involved, it takes precedence and they can determine if they wish to further hold the ship responsible for that.

Otherwise, the definition of liability is fairly separate. One is liability clearly attached to the ship while a ship is operating, and the other involve shore matters, if I understood your question correctly.

Senator Adams: Normally a small business needs about $2 million in accident liability but it is still responsible to pay a percentage of Workmen's Compensation. Is there much difference between that and the situation where a contractor pays his employees $6.25 an hour and he has a $1-million contract? Does it work the same way?

Mr. McRae: I am afraid I cannot answer that question, I am not familiar with the area.

The Chairman: Our next witnesses are from the Shipping Federation of Canada. They are Captain Ivan Lantz and Sonia Simard.

Please proceed.

Ms Sonia Simard, Executive Assistant to the President, The Shipping Federation of Canada: Honourable senators, just a few words on the Shipping Federation of Canada. The federation represents owners, operators, charterers and agents of vessels doing Canadian commerce overseas.

To be more specific, our membership includes about 79 companies which represent over 90 per cent of ocean vessels trading to and from ports in Atlantic Canada, the St. Lawrence River and the Great Lakes.

We are here to support those aspects of Bill S-4 that are aimed at bringing Canada's maritime liability regime in line with the international convention on the subject.

As you are well aware, the essence of this legislation was introduced in the previous Parliament under Bill C-58. The federation, along with other parties within the marine community, supports the legislation.

Regrettably, Bill S-4 is not identical to Bill C-58 and it introduces a new clause that creates or has the potential to create substantial problems for the industry.

We are referring to the fact that Bill S-4 incorporates a clause that defines pollutant as including aquatic organisms and pathogens. That inclusion has the potential to expose our industry to significant unforeseen liability. We believe that the department introduced those terms in an effort to address the issue of introduction of harmful aquatic organism into our national water through ship ballast.

A few moments ago, I heard some questions on the issue of ballast. I could take a few moments just to the importance of ballast water for marine transportation.

What we are discussing here is water that is stored in specific tanks within a vessel. The aim of ballast water is to immerse the vessel deeper so that it will have increased stability and also increased handling capacity.

Ballast water is usually pumped out of the vessel during or immediately prior to loading or unloading cargo. It is essential for the safe movement of vessels.

It is important to stress that the federation supports the government's attempt to address the ballast water issue. However, we respectfully submit that Bill S-4 is not the proper vehicle to address this complex matter.

I will summarize the four points that support that claim and thereafter we can proceed to questions.

First, we believe that the definition of pollutant found in Bill S-4 leads to significant consequences that have not been fully discussed or analysed. The terms aquatic organism and pathogen, which are included under the definition of pollutant are so general that they create a regime where any aquatic organism that makes its way into the ballast water of a ship could be considered a pollutant.

To be more specific, we could say that those terms are so generalized that they would create an obligation or a requirement to have sterilized ballast water on the ship to ensure that there is no exposure to liability. This is a measure that neither Canada nor other countries that I am aware of have yet succeeded in achieving.

Bill S-4 introduced a new definition of pollutant, one that could expose our shipowners to a severe and significant level of responsibility. To be more specific, we are speaking about criminal liability of up to $1 million and we are also speaking about unlimited strict civil liability.

We should have referred in our brief to sections 677 and 678 of the Canada Shipping Act. Those are the sections that state the unlimited strict civil liability. We will be forwarding to the chairman a copy of those articles as well. We state here our concern for the consequences and the fact that they have not been fully discussed.

The second point we should like to bring to this committee concerns the process that led to the adoption of that strict approach. Bill C-58, which is the predecessor to Bill S-4, dealt solely with the issue of liability as provided in international conventions. It did not include a definition of pollutant. The way it is written in the current bill is that it was dealt with in an auxiliary bill, which is Bill C-73, which was presented in the House of Commons for first reading in the last Parliament. That bill died on the Order Paper.

Regretfully, the controversial definition of ballast water has been parachuted into Bill S-4. Bill S-4, as you are well aware, is at a different level in the parliamentary process.

Considering this process, we believe that the proposal to define aquatic organism as a pollutant requires much more discussion with the industry; as well, it has never been addressed by the House of Commons or the Senate.

Accordingly, we consider Bill S-4 to be aimed mainly at codifying the limitation of liability as introduced in international treaties, and it should not deal with a matter as controversial as the definition of pollutant as proposed.

Indeed, we fear that the introduction of that section could amount to significant delay in the passage of Bill S-4 and that would serve neither the industry nor the government.

Third, the approach of imposing strict civil liability seems rather severe considering that, at this stage, a preliminary review has failed to identify any other national legislation in which the definition of pollutant includes aquatic organism; neither could we find strict liability penalties for the discharge of ballast water.

Most countries are still considering the most efficient way to manage ballast water. At the international level, countries are discussing a common approach for operational requirements for ballast water. Should they exchange ballast water at sea? Should they do it within a 200-mile zone? They are still discussing how to safely exchange ballast water. Canada appears to be the only country at this stage to consider using pollution penalties for addressing discharge of ballast water.

Again, considering this approach, we submit that such an unilateral pact needs to be discussed further. That being said, we would not like to leave this committee with the impression that the federation does not wish to address the issue of ballast water. On the contrary -- and this is our fourth and final point -- we submit that Bill C-15, a bill in front of the House of Commons at first reading stage, deals with ballast water and is the appropriate vehicle to address this matter.

As you may be aware, Canada has already adopted voluntary guidelines for the management of ballast water. Bill C-15 will give the government the regulatory authority to transform those voluntary guidelines into mandatory requirements.

If Parliament wished to go one step further and address strict liability for discharge of ballast water, the federation submits that any discussion on that subject should be done under Bill C-15. We believe that this approach will be the best means to ensure that there is a consistent approach to both liability and ballast-water-handling requirements.

To conclude, the federation recommends that the provisions in clauses 4 and 5 of Bill S-4 which define pollutant be deleted and that any discussion of ballast water be conducted under the auspices of Bill C-15. We also recommend that Bill S-4, once amended, be adopted, as soon as possible, to ensure that Canada's maritime liability regime is at the same level as other international conventions.

Senator Forrestall: What percentage of your fleet is foreign registered? Could you put a number on it?

Ms Simard: We represent foreign flag vessels. There are Canadian companies dealing with foreign flag vessels, but most of our members are dealing with foreign flag vessels.

Senator Forrestall: Perhaps I did not put it clearly. Do you have 90 vessels?

Ms Simard: We represent 350 steamship lines which may have many other vessels.

Senator Forrestall: How large is the Canadian-owned blue water fleet today?

Captain Ivan Lantz, Manager, Marine Operations, The Shipping Federation of Canada: The Canadian Shipowners Association represents a Canadian domestic fleet of "Great Lakers" numbering about 89 ships at this time.

Senator Forrestall: Those are just the lakers. We have no other blue water vessels.

Mr. Lantz: Those are just the lakers. I do not know how many offshore vessels are Canadian-flagged and engaged in international trade offshore. It is in the minority; that is for sure.

Senator Forrestall: That is here on the East Coast. That is on the lakes. What about on the West Coast?

Mr. Lantz: I do not know.

Senator Forrestall: It is obvious that I will not get the size and shape of the Canadian shipping industry out of either of you this afternoon. I am just curious.

We are dealing with law and international law. I have no right to tread in these areas, but I am concerned about the application of Canadian law to foreign registered ships. I am interested in pursuit issues. What happens if we contaminate the waters of -- although I do not know how you would do it -- New York Harbour with pollutants from the ballast tanks of a Canadian-owned ship registered in Bermuda? Would that make sections like this, in the Canada Shipping Act or wherever, easier to facilitate?

Mr. Lantz: The Canada Shipping Act, in applying its pollution regulations and provisions, deals with Canadian ships in any waters, including Canadian flagships, and any ships in Canadian waters.

That is not an uncommon feature for marine law. That is how they deal with ships trading internationally or domestically.

Senator Forrestall: You suggest that this should be dealt with under Bill C-15. Is it not already there? Will Bill C-15 rely on this bill when it is incorporated?

Mr. Lantz: No. Bill C-15 has a requirement, as described at page 4 of our presentation:

More specifically, Section 18 of Bill C-15 will provide the government with a regulatory power "for preventing pollution by the discharge of ballast water by ships, including pollution by aquatic organisms or pathogens".

That provision is in there so that the Governor in Council can make regulations that will control the way in which ballast water is managed, discharged, exchanged at sea, or whatever other requirements may come along. However, since Canada has been the author of ballast water management since 1988, it is highly desirable that we have what we have authored within our own legislation.

Ms Simard: I should like to reply to two points in your question. First, you were referring to the U.S. and pollution in the Port of New York. It may be important to be aware that the U.S. has its own guidelines which are becoming a mandatory requirement for the handling of ballast water; thus, the U.S. has also taken the path of addressing the problem of the discharge of ballast water through operational requirements dealing with ballast water and not through pollution penalties as Canada is suggesting here.

Second, what we have suggested is not specifically to introduce the definition of pollutant in Bill C-15. What we are suggesting is that Bill C-15 gives the government the authority to adopt mandatory regulatory processes for the management of ballast water, and that any other discussion on any other subject, be it liability or other subjects related to ballast water, should be conducted under Bill C-15 and not under separate bills.

There is already a means to address ballast water discharges, and that is through that regulatory requirement, which is the international path that is currently adopted by the international community.

Senator Forrestall: However, you do agree that some maritime management should include a definition and regulatory powers to make it work.

Ms Simard: Definitely, and the federation would support regulatory power to address ballast water requirements, as those regulatory requirements reflect the voluntary guidelines we have helped to develop with the government. You are right, senator.

Senator Forrestall: I cannot come to grips with a single act having two sections dealing with the same problem, one of them half-way there and the other one all the way there. I do not understand the need for it in this legislation if it is already in Bill C-15 in an expanded way, which it is not in Bill S-4.

Ms Simard: We share the same problem of comprehension. We do not believe it should be in both. We believe that the discussion of ballast water should be addressed in Bill C-15 with the regulatory powers.

Senator Forrestall: Were you consulted about this?

Ms Simard: As we mentioned, the inclusion of aquatic organisms in the definition of pollutant took place at first reading in the House of Commons. No debate had yet taken place on the bill and the federation most likely would have participated in the debate.

Senator Forrestall: The bill has been written with certain provisions in it and you are suggesting to me that you have not yet been contacted to discuss it.

Ms Simard: We are suggesting that we would not have agreed to include aquatic organisms in the definition of pollutant. It may have been discussed in many fora, but we would have wanted to appear before the committee when Bill C-73 took that path. The federation could not support such a definition.

Bill C-73 was a compendium of miscellaneous amendments to the Canada Shipping Act. Some of those subjects were discussed in a forum called the CMAC forum, which many industry representatives attended and where many subjects were discussed. However, I do not believe that there was any consensus on the inclusion of aquatic organisms within the definition of pollutant.

Senator Roberge: You mention in your brief that you have some serious concerns about the process by which this was developed. Can you elaborate on that?

Ms Simard: The process that we are trying to underline here is that a definition of pollutant, including aquatic organisms, was included in Bill C-73, which contained many other miscellaneous amendments at first reading, and this bill died on the Order Paper. The clause was "parachuted" in -- perhaps my choice of word is not the best, but that is what comes to my mind. It was parachuted from Bill C-73 to Bill S-4, and Bill S-4 is supposed to codify what is currently in international practice. The definition of pollutant including aquatic organisms does not belong to international practice yet. It may, but it does not now. Neither does it belong in Bill S-4. That is the problem.

Senator Roberge: I understand that. However, I wish to get more technical. Were you consulted, or did you try to be consulted, by those who prepared this bill?

Ms Simard: On the definition of pollutant?

Senator Roberge: No, on Bill S-4.

Ms Simard: Yes. The predecessor of Bill S-4 was Bill C-58, which was extensively debated.

Senator Roberge: I am aware of that, but I am speaking about Bill S-4. Were you contacted on Bill S-4? When did you receive Bill S-4.

Ms Simard: I believe it was available on the Internet a month ago or three weeks ago.

Senator Roberge: And you only found out about this today?

Ms Simard: Yes. I would venture to say that perhaps the industry overlooked this addition to Bill S-4. While it is no excuse, the industry was working under the assumption that Bill S-4 reflected Bill C-58, and we had given our blessing to Bill C-58. Our oversight was corrected last Friday when we re-read the bill and found that it was not the same as Bill C-58.

Senator Roberge: So you did not read Bill S-4 at that point.

Ms Simard: We read Bill S-4 six days ago.

Senator Roberge: The serious concern about the process should not be directed toward the government. The serious concern about the process should be directed at the industry.

Ms Simard: If this is what you are aiming at, we are more than ready to take the blame for the oversight but we have to address the matter now.

Senator Roberge: We are not trying to blame you but you are saying we are at fault because of this.

Ms Simard: Perhaps that sentence was poorly drafted, but it was aimed only at underlining the fact that we had thought Bill S-4 reflected Bill C-58 and found out that it did not.

Senator Roberge: I guess that is a good lesson. The next time you receive a bill, you will read it as soon as you receive it.

Senator Spivak: You mentioned that Canada has adopted voluntary guidelines as far as ballast water is concerned. How long have those guidelines been in place? How have they been enforced? Is it by self-policing? We all know of the terrific problem with zebra mussels and other things.

Mr. Lantz: Those voluntary guidelines, produced by government and industry collectively, came into effect in May, 1989.

Senator Spivak: How long have the zebra mussels been here?

Mr. Lantz: I believe the zebra mussel was made known to me in September, 1988, when I received a letter from the Commissioner of the Coast Guard explaining that particular problem.

Senator Spivak: What is the enforcement mechanism? I know they are voluntary guidelines but how does anyone know whether they are being followed or not?

Mr. Lantz: There is a monitoring mechanism. A reporting form accompanies the guidelines, which are widely distributed.

The focus is on the Great Lakes. Ships entering the Great Lakes with ballast on board fill out this form and hand it to a Seaway official.

Senator Spivak: Does anyone do an inspection?

Mr. Lantz: Yes. The St. Lawrence Seaway Authority in conjunction with the United States Seaway Development Corporation, the U.S. counterpart of the Seaway, have inspection programs in place. They are carried out by the U.S. Coast Guard and the Canadian Seaway inspectors.They inspect ballast waters collectively. Of course, it is a U.S. requirement that ships must exchange their ballast prior to entering U.S. waters in the Great Lakes.

Senator Spivak: Why are ships exchanging ballast water? Could they not just take it back with them?

Mr. Lantz: Without any cargo on board, a ship can have between 30 per cent and 40 per cent of its cargo-carrying capacity in ballast water. If a ship kept that ballast water on board, it would be cutting off its cargo capacity by 30 per cent to 40 per cent, which is quite extensive.

Senator Spivak: What do the guidelines say? Where is this ballast water supposed to be dumped?

Mr. Lantz: The guidelines suggest that the ballast water be exchanged in deep, mid-ocean water. The ships empty out the original ballast water and take in clean, fresh sea water in the deep ocean -- 2,000 metres or more deep.

Senator Spivak: This eliminates the chance that any organism or pathogen from a foreign country could enter our waters.

Mr. Lantz: Yes.

Senator Spivak: I take it that the process is bothering you because there has not been enough international consultation. I am led to believe that the definition does not necessarily bother you because the definition is just as much a problem in Bill C-15 as it is in Bill S-4. If you are worried about the fact that we cannot define it, we will not be able to define it in Bill C-15 either.

Mr. Lantz: The inclusion of pathogen and aquatic organism within the context of the definition of a pollutant in this particular context, at these particular sections of the Canada Shipping Act, is the reason it leads to such a huge liability on the shipowner by the civil penalty.

Senator Spivak: I understand the issue of liability. However, Bill C-15 refers to pollution, including pollution by aquatic organisms or pathogens. Will there not be the same problem of definition under Bill C-15 as there is in Bill S-4? It could be anything unless they define it very strictly.

Obviously your concern is the liability issue. Are you opposed, then, to the terms aquatic organisms or pathogens being a trigger or a cause of liability?

How is it any different under Bill C-15? If pollution and aquatic organisms are linked together, they will have to be defined. Is it a question of penalty, enforcement or liability? What exactly is your major concern?

I understand the consultation and the process. That is obvious. Apart from that, what is your concern?

Ms Simard: You are right to stress that there will be a problem with the definition of pollution in Bill C-15, but the aim of Bill C-15 is to give regulatory power to deal with the management of ballast water.

On the one side is Bill S-4, which attempts to deal with ballast water by making pollution a crime. On the other is Bill C-15, which attempts to deal with ballast water by taking preventive measures, which is not a penalty approach. It deals with the management of ballast water. That is what we support.

Senator Spivak: You prefer regulation which does not have the context of liability. However, would there still not be a cause of liability if someone wanted to sue under Bill C-15?

Ms Simard: A tribunal would probably look at international practice. At this stage, international practice does not state or attach strict liability to pollutants by aquatic organisms. The United States have elected to address it through ballast water requirements.

Senator Spivak: Are they not linking the issue of pollution and ballast water? Or in the international field, do they link the two? I am trying to distinguish between linking ballast water and pollution, and the cause of liability. I understand your concern. How strict is your objection to liability and aquatic organisms?

Ms Simard: Our objection is based on our understanding of what is done at the international level.

As Senator Robichaud raised, we have been working on this matter for only six days. Our review of international practice did not show that we should elect to attach strict liability. The federation is saying that since the marine community evolved in an international field and there is a need to be consistent, it is difficult for Canada to take the lead and introduce strict liability when other countries have not reached that stage. We would like a consistent regime.

Senator Spivak: In other words, if there is to be liability, you want it to be decided in an international forum. You are not necessarily opposed to liability; you simply wish it to be through an international forum. Do I have that right?

Ms Simard: We would like it to reflect international practice. An international forum is the result of national legislation pulled together.

Senator Angus: Your organization supported Bill C-58. You examined it carefully and made representations. You were comfortable with Bill C-58 before Parliament prorogued.

Did you see the press release that accompanied Bill S-4?

Ms Simard: Yes, we did.

Senator Angus: Is it correct to say that the press release represented the bill as being substantially the same as Bill C-58?

Ms Simard: Yes, I believe that is correct.

Senator Angus: Is it also not a fact that the underlying principle of this bill is to help Canada get into line with its trading partners and have uniformity of international maritime law in these three areas -- limitation of liability, the fund convention and the liability convention as regards pollution?

Mr. Lantz: Absolutely.

Senator Angus: Did you have a chance to read the speech I gave in the Senate on the second reading of Bill S-4?

Ms Simard: Yes, I did.

Senator Angus: I would like to read you a paragraph. I said the following:

As far as I can determine, the principles of this legislation are not in any way controversial, nor in dispute amongst Canadians. On the contrary, the legislation is long overdue, long awaited and much needed by Canada's maritime industry.

Do you agree with that?

Mr. Lantz: Yes.

Senator Angus: However, you have now come here and raised a point, so obviously there is some controversy about Bill S-4 in the industry; is that right?

Ms Simard: Yes.

Senator Angus: As I understand you, Ms Simard, you are saying there has been introduced in Bill S-4 something that has nothing to do with uniformity of international maritime law; is that correct? In fact, it is something quite out of sync with the principles of the bill; is that right?

Mr. Lantz: Yes, absolutely.

Senator Angus: Therefore, it would be like the bill as you knew it and as you understood Bill C-58 to be. The main thrust of Bill S-4 was to do the things we have just discussed, whereas this provision you have described to us about pollutants is a totally different subject-matter. Is that a reasonable conclusion for me to draw?

Ms Simard: It is. We are concerned, yes.

Senator Angus: It is like apples and oranges, two different things.

Ms Simard: It appears, from our reading of international practice, that the ballast water position does not represent what is adopted currently. It is not a codification of those international conventions.

Senator Angus: When Transport Canada drafts bills or regulations affecting your industry, is it normal practice for the department to consult with your industry?

Ms Simard: Yes, that is the practice. However, I want to make the point that we are not appearing here to dispute the consultation process.

Senator Angus: Because it has not yet taken place.

Ms Simard: We feel that there should have been hearings on Bill C-73 in order to bring it to another level of the legislative process, and this has not taken place.

Senator Angus: I am not criticizing you. I am trying to get confirmation from you that there is normally a consultation process. There was consultation on the predecessor to Bill S-4 that did not contain this particular definition, but there has been no consultation with your industry on this provision.

Mr. Lantz: That is correct.

Senator Angus: Did you receive with the press release, or in any other document furnished to you by Transport Canada, a list of minor, non-substantive differences in Bill S-4 as opposed to Bill C-58? Did you ever receive a list of 19 points?

Ms Simard: I did not.

Senator Angus: You do not recall seeing anything.

Ms Simard: I did not get that list.

Senator Angus: It was on your own reading of the bill six days ago that you suddenly found this point.

Ms Simard: Yes.

Senator Angus: What are you seeking from this committee? Is there some amendment you should like to propose?

Ms Simard: We believe that the language in clauses 4 and 5 dealing with "pollutant" should be deleted from Bill S-4 and that the bill should then be adopted.

Senator Angus: As is?

Ms Simard: As is.

Senator Angus: To what page of the bill are you referring?

Ms Simard: On page 8, clause 4 of the bill reads:

The definitions "pollutant" and "ship" in section 654 of the Act are replaced by the following:

It should be modified to read:

The definition "ship" in section 654 of the Act...

We would also like to remove the phrase "'pollutant' means," as well as subclauses (a) and (b), and leave only "ship," which belongs to the new definition.

Senator Angus: You want to amend this legislation by changing clause 4 on page 8 to read as follows:

The definition "ship" in section 654 of the Act is replaced by the following:

You want then to go down to "ship" and remove everything else above it.

Did you discuss this with any officials from Transport Canada when you discovered it? I believe that both of you, in your work at the federation, are involved in government affairs.

Ms Simard: We had two conference calls, as a matter of fact.

Senator Angus: Were they amenable to this amendment?

Ms Simard: The representatives of the government stated their will to look into the matter. They raised concern about the effect this could have on Bill C-15, but they did not terminate the conference call on a negative note.

Senator Angus: Was it a video call? Could you see their red faces?

Ms Simard: No, we could not see their red faces.

Senator Angus: Are any of the representatives you spoke with here today in the committee room?

Ms Simard: I believe they are.

Senator Angus: Perhaps, Madam Chairman, we could hear why that drastic thing was done.

The Chairman: We will be sitting again on Thursday. If we need to hear from members of Transport Canada, we can do so at that time.

Senator Roberge: Madam Chairman, the witness did not finish because there is also a reference in clause 5 at the bottom of page 8.

Ms Simard: We would like clause 5 to read as follows:

The definitions "Civil Liability Convention", "Convention ship", "Fund Convention", "owner", "pollutant", and "ship" in section 673 of the Act are replaced by the following:

"Civil Liability Convention" means... "Convention Ship" means... "Fund Convention" means... "owner" of a ship" means --

We believe that the phrase "`pollutant' means" should be deleted.

The Chairman: Everything that deals with "pollutant" should be deleted. I think we heard you well this afternoon. We can hear from members of Transport Canada on Thursday and make the proper changes.

Thank you very much for your presentation.

The committee adjourned.