Tuesday, December 4, 2018

The Standing Senate Committee on Transport and Communications has the honour to table its

FOURTEENTH REPORT

Your committee, which was authorized to examine 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, has, in obedience to the order of reference of Wednesday, November 7, 2018, examined the said subject matter and now reports as follows:

On November 20 and 21, 2018, the Standing Senate Committee on Transport and Communications (the committee) held two meetings to study the provisions of the budget implementation bill concerning amendments to the Canada Shipping Act, 2001 (CSA, 2001)and the Marine Liability Act (MLA). Thecommittee heard from officials from Transport Canada, Fisheries and Oceans Canada and the Ship-source Oil Pollution Fund. Additionally, the committee heard from Québec-Océan, the Clear Seas Centre for Responsible Shipping (Clear Seas Centre), Ecojustice, the Western Canada Marine Response Corporation, the Chamber of Shipping and the Chamber of Marine Commerce.

Division 22 of Part 4 of Bill C-86 proposes changes to the Canada Shipping Act, 2001. The main changes are as follows:

• Expanding the application of the CSA, 2001 to Canadian vessels worldwide and to all foreign vessels and personal watercraft in Canadian waters, including Canada’s exclusive economic zone;

• Authorizing the Minister of Transport to make regulations with respect to the protection of Canada’s marine environment from the impacts of navigation and shipping activities;

• Empowering the Minister of Transport to make interim orders of up to one year with respect to any regulation-making power in the CSA, 2001, subject to there being an immediate direct or indirect risk to marine safety or to the marine environment (an extension to three years is possible with Governor in Council approval);

• Authorizing pollution response officers and accompanying persons to enter private property to proactively address potential pollution events; and

• Increasing the maximum amount of administrative monetary penalties under the SCA, 2001 from $25,000 to $250,000.

Division 23 of Part 4 of Bill C-86 proposes changes to the Canada Shipping Act, 2001. The main changes are as follows:

• Removing the Ship-source oil pollution fund’s (SOPF) per accident limit of liability;

• Authorizing the SOPF to borrow from the Consolidated Revenue Fund, in the event that the fund is depleted by an accident;

• Allowing the SOPF levy to be updated on an annual basis and making it applicable to both receivers and exporters of oil;

• Authorizing the Minister of Fisheries and Oceans to receive up-front emergency funding of up to $50 million from the SOPF;

• Expanding the expenses reimbursable by the SOPF to include economic losses; and

• Providing the Administrator of the SOPF with the authority to create a simplified claims process for claims below $35,000 in the case of a normal oil spill and $50,000 in the event of a significant incident.

Witness Observations

Powers of the Minister of Transport

In their testimony before the committee, officials from Transport Canada and Fisheries and Oceans Canada emphasized the need for the Minister of Transport to “enhance [their] capacity to respond nimbly as the marine environment or wildlife behaviour changes.” Officials highlighted the proposed interim order and environmental regulation-making powers suggested under the bill, while also speaking to the commitment of maintaining a dialogue about the economic and social consequences of the decisions that are made.

Mr. Ginsberg from Ecojustice spoke favourably of this addition, noting that the proposed powers would be valuable in the protection of migratory cetaceans. Professor Mathieu Cusson from Québec-Océan supported this argument, stating that there remained significant knowledge gaps in marine research and that interim orders would provide the government with the flexibility to test different regulatory approaches prior to setting them down into regulations.

Ms. Gee and Mr. Swanson from the Chamber of Shipping and Mr. Burrows from the Chamber of Marine Commerce both expressed concern that a general power to issue interim orders of up to one year represented a significant departure from the 14 days included under the Aeronautics Act and Transportation of Dangerous Goods Act. Mr. Ginsberg from Ecojustice was also supportive of the interim order measure, however, he suggested that extending an interim order to two or three years may be desirable, given the long process of regulation-making and the formalities required for seeking Cabinet approval for an extension.

Ms. Gee suggested that a more narrowly defined interim order power may be preferable. Mr. Burrows recommended that “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.” Mr. Ellis from the Clear Seas Centre mirrored this suggestion, stating that “decisions should be evidence-based and consider the best information available at the time.”

On the matter of the authority to delegate ministerial responsibility to provincial, municipal and indigenous actors contained in clause 689 of the bill, Ms. Gee expressed concern that other levels of government were insufficiently informed of the CSA, 2001 to be able to enforce it consistently. Mr. Ellis from the Clear Seas Centre was of the opposing view that this clarification better reflected the current approach taken in marine response and would provide greater certainty when local actors are called in to support disaster response efforts.

Concerns were also raised by the Inuvialuit Regional Corporation (IRC), in a written brief, that the Minister of Transport’s proposed exemption power for research vessels may infringe upon the Inuvialuit Final Agreement that requires on-shore and off-shore research activities within the region to be co-managed with the IRC. The IRC recommended an amendment to acknowledge existing Indigenous and treaty rights.

Response to oil spills and environmental incidents

Clarifications to the CSA, 2001 included in Bill C-86 would allow the Canadian Coast Guard to respond more proactively to vessel accidents and spills. Government officials suggested that this measure would reduce environmental damage and cleanup costs. Furthermore, it was suggested that the addition of civil immunity for pollution response officers and new authorities to enter private property would allow for more timely response to pollution events.

Professor Mathieu Cusson, Mr. Lowry from the Western Canada Marine Response Corporation, Mr. Ellis and Mr. Ginsberg were all supportive of proactive measures taken in pollution response. Mr. Ellis also added that the civil immunity provisions were important for American pollution response organizations, as civil liability was of great concern when responding to pollution events in boundary waters.

Amendments to the Ship-source Oil Pollution Fund

The Administrator of the SOPF told the committee that the amendments contained within Bill C-86 would not greatly affect her mandate or her organization’s ability to process claims for oil pollution damage. While the bill proposes changes to how the levy on oil products that funds the SOPF would be structured, the Administrator signaled that the levy had not been collected since 1976 and that the present reserve of roughly $400 million would be sufficient to meet the fund’s needs at present.

Professor Mathieu Cusson posited that the SOPF’s reserve of $400 million may be insufficient in the event of a significant oil spill or marine event and suggested that additional funds may need to be raised.

Mr. Burrows, Mr. Swanson and Mr. Ellis focused their remarks on the proposed compensation of purely economic losses under the SOPF.  They stated that pure economic loss, losses that are not tied to the damage of physical property, are generally not compensable in Canadian tort law and may have unintended consequences, as claims for damages become further removed from the source of the pollution damage. It was suggested by Mr. Swanson that if economic losses were to be compensated through the SOPF, it should be made clear in the legislation who will be eligible for compensation, in what circumstances and to what extent.

Committee Observations

On the basis of the testimony it heard, the committee makes the following observations.

Some members of the committee were concerned by witness statements that the duration of interim order powers granted to the Minister of Transport under Division 22 is unusually long, with up to one year passing prior to the requirement of obtaining an extension from the Governor in Council. Other members were generally concerned by the potential lack of transparency in the order-making process and its subsequent enactment.

While the legal effect of the following clauses remains adequate, in consideration of their accessibility, the committee notes that the French-language version of Division 22 contains certain linguistic ambiguities that may merit review; notably, at subsections 10.1(2) and 35.1(3) of the Canada Shipping Act, 2001, the provision is read with difficulty, while at subsection 130(2) of the Canada Shipping Act, 2001, the conjugation of the verbs does not appear to accord.

The committee would like to draw attention to the significant impact that regulatory decisions can have on communities, particularly Indigenous communities and smaller communities where employment is concentrated in a small number of industries. Consultation on, and consideration of, the potential social and economic outcomes for communities affected by an interim order or regulation is essential. Therefore, the committee strongly encourages the government to ensure that the development of interim orders and regulations reflects the results of serious consultations of affected communities and takes into account their concerns.

Respectfully submitted,