Transport Committee on Feb. 25th, 2014

[The Chair, Conservative, Larry Miller]

I call this meeting to order.

I'd like to thank our guests. In the room we have with us Captain Stephen Brown; Mr. Duncan Wilson; and by video conference, Ms. Anne Legars.

We're going to start with you, Ms. Legars, for 10 minutes, please.

[Anne Legars, Vice-President, Shipping Federation of Canada]

Mr. Chair, and committee members, thank you for having invited the Shipping Federation of Canada to testify before you this morning about part 4 of Bill C-3, the safeguarding Canada's seas and skies act.

The federation, incorporated by an Act of Parliament in 1903, is the representative in Canada of the owners, operators, and agents of ocean ships trading at ports across Canada from the Atlantic to the St. Lawrence and the Great Lakes to the west coast. The ships operated by our members carry Canada's imports and exports throughout the world. These ships are part of the world ocean fleet that sails around the clock, 365 days a year, from one country to another to deliver world trade.

These fleets are governed by a web of international conventions that cover the ship, its building and equipment, manning requirements, and operations, etc. These conventions are incorporated into Canadian law through the provisions and regulations flowing from the Canada Shipping Act, 2001. This world ocean fleet is also governed by a set of liability conventions. These liability conventions are incorporated into Canadian law through the Marine Liabilities Act, which will be amended by part 4 of Bill C-3, which we are here today to support.

These amendments to the Marine Liabilities Act do not come as a surprise to us as they are a step in a long process that started many years ago with the 1996 HNS convention, which did not gain much traction due to a number of implementation issues. Canada subsequently stepped in and provided leadership in the development of a protocol that solved these issues. The upgraded 2010 HNS convention therefore benefits from Canada's input.

The federation, along with industry and other stakeholders, has participated in the government's consultation and Canada's ratification of this upgraded 2010 HNS convention, and has expressed strong support for such ratification. We are not alone in that respect. The 2010 HNS convention has been targeted by the Comité Maritime International, which is the international association of maritime law national associations, and various international industry associations, as one of the priority conventions for worldwide ratification.

We support this international liability regime introduced by part 4 of Bill C-3 because we believe it is the most efficient way to offer efficient liability coverage for ship-source chemical spills. We believe so because for mobile assets that trade across the world on a continual basis, as ocean ships do, an international regime avoids the high transactional costs that would be attached to a fragmentation of national liability regimes, each of which would have its own rules, liability limits, paperwork, and so on. For us, the first element of an efficient regime is that it is an international regime.

Maybe of more interest to your side, the international regime contained in the 2010 HNS convention pools the risk and its financing among a large number of players, which minimizes the marginal cost of covering the risk for each of them. The international regime grants access to an international fund funded by HNS receivers at a higher limit of indemnification than shipowners alone could provide. Also, this regime is modelled on the ship-source oil pollution liability regime that has been in place and is functioning well.

For all these reasons, we respectfully submit to this committee that Parliament should pass the amendments to the Marine Liabilities Act that are contained in part 4 of Bill C-3, and it's why our organization sent a letter on January 23 to this committee to support the passing of this part of the bill.

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Brown for 10 minutes.

[Captain Stephen Brown, President, Chamber of Shipping of British Columbia]

Mr. Chairman and honourable committee members, good morning.

Formed in 1923, the Chamber of Shipping of British Columbia represents the full spectrum of international and domestic shipping-related interests in western Canada, including but not limited to international and domestic shipowners, BC Ferries, vessel agency companies, cargo interests, terminal interests, cruise lines, port authorities, pilotage, maritime lawyers, classification societies, marine surveyors, and marine support and service companies. In all, we have about 180 members representing around 80% of all commercial traffic doing business in the ports of British Columbia.

The importance of credible and robust accident preparedness and response capability is fundamental to all forms of transportation. Whether in aviation, road, rail, or the marine sector, we cannot deliver zero risk, but there is always the capability to manage and mitigate that risk.

In the marine sector, we use every tool at our disposal to do so, including the strict enforcement of International Maritime Organization and national regulations and values related to marine safety and the protection of the marine environment in all its forms; pre-vetting of tanker condition and history prior to entering Canadian waters; and Canada’s participation in two highly effective port state control regimes, the Tokyo memorandum of understanding and the Paris memorandum of understanding, under which each country undertakes to target and inspect a minimum of 20% of vessels calling at that country’s ports. In so doing, Canada enforces the highest standards of compliance, irrespective of a vessel’s nationality or the port of registration.

Also included among the tools we use are the compulsory carriage of electronic precision navigation and detection equipment and the compulsory pilotage of vessels by highly trained Canadian mariners having in-depth knowledge and experience of this country’s coastal waters and supervised by four federally regulated pilotage authorities. On the west coast of Canada, the Pacific Pilotage Authority administers the largest single compulsory pilotage district in the world. There is also the universal adoption of double-hull construction for tankers and the extensive use of highly effective tugboats to escort vessels in and out of harbour and otherwise as required.

The Chamber of Shipping of British Columbia is supportive of Bill C-3 for many reasons, including but not limited to the regulated adoption of the incident command system by the Canadian Coast Guard, the extension of pollution prevention and response to include oil handling facilities, the removal of legal barriers to cross-border responders, the commitment to expansion of Canada’s national aerial surveillance system, the commitment to expand the number of designated ports for traffic control measures, the commitment to expand scientific research on non-conventional petroleum products, and the adoption of electronic navigation capabilities to further enhance Canada's existing system of navigational aids to mariners.

In combination with the 45 recommendations of the tanker safety expert panel contained in A Review of Canada’s Ship-Source Oil Spill Preparedness and Response Regime, which was submitted to the minister in November 2013 and published in December 2013, we believe that Bill C-3 is a milestone in progressing the government’s objective of implementing a world-class regime of marine safety and preparedness.

We have already submitted our comments to the panel’s report. These essentially focus on areas of cross-border reciprocity within Canada’s inland waters; marine salvage and firefighting preparedness; a future role for the regional advisory boards; and future governance and reporting, including an annual submission to Parliament on the status of Canada’s oil spill preparedness and response in the marine environment.

On the west coast of Canada, through the Western Canada Marine Response Corporation, we have spill preparedness and response capability far in excess of that currently mandated by Transport Canada. Even so, the west coast marine sector has been actively supportive of a review and upgrading of capability, in recognition of the fact that exceeding legislated compliance is not enough if the legislation itself is open to question. We have therefore long recognized that social licence to proceed with marine-related projects in the natural resource sector is dependent, at least in part, on public confidence in the level of risk mitigation and our state of preparedness in the event of an incident of any nature.

The 2010 report of the Commissioner of the Environment and Sustainable Development into the state of the Canadian Coast Guard’s preparedness for a pollution event in the marine environment speaks for itself. We are obviously very pleased to acknowledge the efforts under way to address the deficiencies detailed in the report, but this also underlines the dangers of sustained budget cuts over many years to an organization with such an essential role to play in spill preparedness and response.

Similarly, the 2012 report by the Commissioner of the Environment and Sustainable Development into Atlantic offshore oil and gas activities revealed further specific areas requiring attention.

In conclusion, Mr. Chairman, I thank you for this opportunity to appear before the committee. I look forward to taking any questions you may have related to our views on this important piece of legislation.

[The Chair, Conservative, Larry Miller]

Thanks very much, Mr. Brown.

Mr. Wilson, I'll turn it over to you for 10 minutes.

[Duncan Wilson, Vice-President, Corporate Social Responsibility, Port Metro Vancouver]

Thank you.

Mr. Chair, honourable committee members, Port Metro Vancouver very much appreciates the opportunity to present to the committee today on the importance of Bill C-3 and our perspective on it. As members may already be aware, Port Metro Vancouver is Canada’s largest and most diverse port, serving as a strategic gateway that is essential to fulfilling Canada’s trade objectives. It's also a significant economic force strengthening the Canadian economy. We are the most diversified port in North America, facilitating trade with over 160 trading economies and exceeding 130 million tonnes of cargo annually.

As the fourth-largest tonnage port in North America, we offer 28 major marine cargo terminals served by three Class 1 railroads, providing a full range of facilities and services to the international shipping community. To put that in perspective, approximately $0.5 billion a day in goods moves through Port Metro Vancouver, which represents approximately 20% of all of Canada's trade in goods.

The port is also a cornerstone economic driver for British Columbia’s economy, with one in twelve people in the region earning their living as a direct result of port-related activities. That amounts to about 80,000 jobs. These numbers only include jobs that are directly related to the supply chain. Clearly there are scores of other jobs in export and import industries, from forest workers to potash miners and from grain farmers to shopkeepers and small businesses right here in Ottawa.

At Port Metro Vancouver the creation and maintenance of the safest possible operating environment is a guiding principle for our organization. We are acutely aware of our responsibility for safeguarding the west coast’s natural heritage. We take great pride in our 50-year track record of service as Canada’s Pacific bulk oil gateway without experiencing a single navigational issue with an oil tanker.

With global demand for oil and liquid natural gas growing, we believe leveraging our ability to safely and responsibly transport these products will give us an advantage as we build our business in the sector and generate increased economic benefit to the communities in which we operate.

With that in mind, Port Metro Vancouver enthusiastically supports the proposed legislative changes contemplated in Bill C-3. Specifically, we welcome the changes to the Marine Liabilities Act, which will implement in Canada the liability schemes identified by the international conventions on civil liability for oil pollution damage, on civil liability for bunker oil pollution damage, and on the establishment of an international fund for compensation for oil pollution damage.

Taken in combination, this not only ensures Canadian alignment with international best practice but also provides appropriate compensation, up to $730 million, for victims of any damage or environmental contamination caused by oil.

Additionally, we fully support the amendments to the Canada Shipping Act contained in Bill C-3, which build on the current requirements for pollution prevention and response at facilities that handle oil.

We also support increasing Transport Canada’s ability to oversee the marine operation and enforce regulation by providing marine safety inspectors with the tools they need to ensure compliance, the introduction of new offences for contravention of the act and increased penalties relating to pollution, and the removal of legal barriers that would hinder spill response by preventing Canadian organizations from participation in cleanup efforts.

Further to supporting these legislative steps, Port Metro Vancouver would additionally recommend that the government take steps to implement recommendations made by the tanker safety panel in their report on Canada’s ship-source oil spill preparedness and response regime.

Recognizing the complexity of this task, Port Metro Vancouver commends the tanker safety panel on its thorough report. In particular, we want to acknowledge the panel’s incorporation of a number of Port Metro Vancouver's recommendations that were outlined in our submission of June 2013. These include a risk-based geographic-specific assessment to determine responder capacity, adequate resourcing and training of Canadian Coast Guard personnel, and the establishment of a fund for research and development of oil spill preparedness through collaboration between industry and government.

In addition, we recently provided additional comments to Transport Canada on the tanker safety panel report that we feel will further strengthen the regime.

First, we believe the government should prioritize the establishment and operation of the Canadian Coast Guard incident command system, making that agency the lead in incident response and reporting. This can be supported by Transport Canada and Environment Canada resources.

Port Metro Vancouver would also strongly support the enhancement of shore-based radar for vessel traffic services operated by the Canadian Coast Guard’s marine communications and traffic services branch. These additional resources would address coverage gaps along the main tanker routes into Vancouver as well as elsewhere on the coast, increasing safety in areas where there is tanker traffic.

We would further recommend that the government move to require all tankers entering Canadian waters to make arrangements with salvage providers that would include services such as marine firefighting, similar to salvage requirements that are delineated in the United States Oil Pollution Act of 1990.

Finally, I would like to outline an initiative that would complement the intentions of Bill C-3. We would encourage the Government of Canada to support the establishment of a centre of excellence for the safe marine transportation of oil and LNG commodities in Canada. A centre of excellence would act as a leading independent source of information on best practices for shipping oil and LNG, while promoting and facilitating research and regulatory frameworks that deliver the highest standards of safe and sustainable shipment.

We believe Canada would greatly benefit from an institution operating for the purpose of identifying and coordinating research and development of oil and LNG shipment technologies, promoting industry best practices, and encouraging open dialogue with stakeholder communities. A centre of excellence would also come to serve as a trusted source of information, education, and awareness for safe handling techniques for oil and LNG storage, marine transportation, spill prevention, preparedness, and operational response. It would additionally provide a structured framework for evolving research and the scientific monitoring of environmental and social effects related to the shipment of oil and LNG commodities.

In conclusion, let me once again reiterate Port Metro Vancouver’s support for Bill C-3and its contents. We believe this legislation to be a concrete first step in the solidification of a world-class operating environment. We will always be supportive of initiatives that build safety and security into our operations, and in that context we would encourage the committee to support the passage of this bill.

Thank you for your time today. I'm happy to take any questions.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now go to questioning.

Mr. Mai, you have seven minutes.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Thank you, Mr. Chair.

I want to thank the witnesses for participating and for making their presentations.

Ms. Legars, we have asked some questions about company liability. If the bill is passed, ship owners' or shipping companies' liability will be limited to $230 million, I think. Can you tell us in concrete terms whether companies already have insurance to protect themselves in case of hazardous spills?

[Anne Legars]

Currently all the shipowners are covered by insurance, but for the HNS there is no.... Basically when you have no specific regime, the fallback regime is the one integrated under part 3 of the Marine Liability Act, and your liability is capped depending on your tonnage, and depending on the type of liability.

The limits are much lower than the ones under the HNS convention, and you don't have access to reform. The fallback liability regime is the one under part 3 of the Marine Liability Act, which incorporates another convention on the civil liability of ships. So it's a kind of general provision that applies if you don't have another specific convention applying. When you have crude oil or bunker oil, you have other conventions, other regimes that kick in with higher limits, and there is access to the international fund.

Now with the HNS convention, another specific regime would apply and would set higher limits, which, if my memory serves me right, are $185 million for the shipowner's liability when the spill is from packaged HNS and $160 million when it's from HNS carried in bulk. On top of that, you have access to the international fund that allows the claimant to basically be covered up to $400 million.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Are you saying right now that a shipowner's insurance liability is less than the maximum $185 million or $160 million, as you mentioned, or is it higher?

One of the concerns, or the question that I have, is how that impacts shipowners right now. Will some of them not be able to pay for the extra liability insurance or is that not a concern?

[Anne Legars]

No, that's not an issue, because first of all, the risk is very low, so you know you can be insured for that specific risk. Of course incrementally you have to pay more, but because it's something that is marginal, it doesn't double your insurance costs. It's a kind of marginal increase of your insurance cost, especially when it's something that is under an international convention, because the whole fleet, internationally, is covered, and under this convention the risk is also shared with the receivers of HNS.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Thank you very much.

To Captain Stephen Brown, in part 5 the amendments to the Canada Shipping Act deal with oil handling facilities. Are you satisfied with the safety measures that are included in the bill?

[Capt Stephen Brown]

Yes. I think the extension of the regime to include oil handling facilities was a very logical step to be taken.

One of the questions we have regularly been asked is what happens in the event of an incident in a marine facility that eventually finishes up with an impact on the marine environment, and where might the responsibility lie?

I think for the facilities themselves, number one is to be required to have a response plan and be certified in the same way that a response organization like eastern Canada marine response or Western Canada Marine Response is certified, to have individual oil handling facilities certified by Transport Canada.

That's not to say that they haven't previously had arrangements in place, but now it's essentially formalizing that certification. It also clarifies the fact that if there is an incident, you don't need a ship to be involved for one of the response organizations to implement a response.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Thank you very much.

Mr. Wilson, how comfortable are you with the exchange of information you have with the shipowners in order for you to respond to some of the problems you may have or the accidents that may occur?

[Duncan Wilson]

I think we have every reason to be proud of the high standards we have in place. Captain Brown was referring earlier to some of the tanker transit procedures we have in place on the west coast. Of course all ships are double-hulled. We require all loaded tankers leaving the port to have two pilots on board rather than one. We require them to transit during slack water, in daylight, at high tide, and typically with tethered tugs attached to the vessel to steer it safely to dock should there be an issue. We've never had a navigational issue with a tanker.

I think the other thing that's important to note is that the terminals, when they are making decisions about which vessels will call at the terminal, are very, very careful about who they're contracting with. Well in advance of a ship arriving in our port, plenty of information is available about that vessel, so we're quite confident on the safety—

[Hoang Mai, NDP, Brossard—La Prairie, QC]

I don't think I have much time, and I have one more quick question.

[The Chair, Conservative, Larry Miller]

It will have to be very quick.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Yes.

Are you concerned about the fact that we're limiting the responsibilities for either shipowners or in the...including the fund? There's a limit; I forget how much.

[A voice]

[Inaudible--Editor]

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Combined, yes.

[Duncan Wilson]

I think this is part of the solution. The tanker safety panel's report also made some recommendations in this regard. One of the things they recommended was taking the cap off the ship-source oil pollution fund.

I mean, if you look at the cost of a major spill, clearly it's very difficult to insure against that amount of money. We support the polluter pay principle, but there does need to be that backstop of government being prepared to step in, in a crisis.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Mr. McGuinty, seven minutes.

[David McGuinty, Liberal, Ottawa South, ON]

Thanks, Mr. Chair.

I'd like to hone in, Captain Brown, on part of your written brief. I'll recite the following from page 3:

On the west coast of Canada, through Western Canada Marine Response Corporation we have spill preparedness and response capability far in excess of that currently mandated by Transport Canada. Even so, the west coast marine sector has been actively supportive of a review and upgrading of capability in recognition that exceeding legislated compliance is not enough if the legislation itself is open to question.

Are you questioning the legislation?

[Capt Stephen Brown]

The legislation that I'm questioning is the existing legislation, which is to say that you're required to have 10,000 tonnes of response preparedness and response capability under the Canada Shipping Act today.

The response organizations are required to have that level of response capability under that legislation, as it exists today, and that's the legislation that Captain Houston's panel is referring to in its recommendations.

On the west coast of Canada, we currently have 28,000 tonnes of response capability based in the Western Canada Marine Response headquarters, and scattered up and down the west coast. What we have found in public consultations is that with tankers considerably more than 10,000 tonnes, even up to 300,000 tonnes—in the event should the Northern Gateway be approved—the public perception is that there is not enough response capability.

Certainly, in the marine sector, we agree with those questions that are being asked. When I make that comment, it's in the context of 10,000 tonnes of response capability, and you're going to be bringing in much larger tankers than 10,000 tonnes; therefore, in order to generate the social licence that you need, you need to clearly demonstrate that you have an adequate level of response capability.

[David McGuinty, Liberal, Ottawa South, ON]

Translate that into simple English for me. Is it sufficient or insufficient now?