Transport Committee on Feb. 11th, 2014

[Tim Meisner]

I'll answer the second part first. As I mentioned, the IMO, the International Maritime Organization, tracks 6,500 substances now, which they have classified as dangerous goods or hazardous and noxious substances. This would cover all those 6,500 substances should they be transported in Canada. That's also an evergreen list that is modified from time to time; as products became one of those, they would also be covered under this regime.

In terms of the number of countries that have actually signed on to the convention, was that the first part of your question?

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

I mean the number, but also the percentage of what that covers as far as the chemicals that are moving are concerned.

[François Marier]

Currently, eight countries including Canada have signed the convention or the protocol, subject to ratification. Signature doesn't mean ratification. It's just a signal of intent.

The important point to remember here is that this convention is a contributory convention, which means there are certain requirements for it coming into force. One of those requirements is not just the number of states that ratify the convention, but also the amount of contributing cargo that will be part of the fund. There's a magic number in the convention, and that's 40 million tonnes.

Once you have those numbers, 12 countries and 40 million tonnes of contributing cargo, being reported by those countries to support the fund, then you trigger the entry into force. That's how it works.

There are a number of countries, particularly in the European Union, that have very large ports that receive a significant amount of HNS, Rotterdam, for example, that could make up almost that 40 million tonnes right there.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

It's still a work in progress to some degree, but it does sound as though the vast majority or almost all of any goods coming to Canada or into our waterways would be covered under this, so there are no substances that would be coming from any other place that would be kind of outside the parameters.

[François Marier]

It's also important to remember that Canada is more of an exporter than an importer of hazardous noxious substances. There's a key advantage here. The contributions to the fund are placed only on importers and receivers, not on exporters.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Thank you.

I just wanted to follow up quickly, Mr. Meisner. There have been quite a few questions on this $400-million cap. I think it's important that we have a clear understanding that this isn't a number somebody has pulled out of their hat. This is a number that has been come to. I think it would really be helpful for us to have a good, clear understanding of where this number came from, and why it's placed where it is.

There has been some conversation on this, and there seems to be this sense that maybe we have to look at it as being an expanded number, but I get the sense that along with our international partners who are part of this convention, we have looked at this number and have said that we are fairly satisfied it will cover things off.

[Tim Meisner]

That's exactly right. It's a number that we determined through a lot of negotiation and discussion among all the members of the IMO. There are several countries involved. The figure of $400 million was determined to be a good figure that didn't put any undue hardship on those who would ultimately have to pay for it, because there currently has never been a spill internationally that would come anywhere near exceeding that amount.

I would also say that the convention does include a provision to make amendments to that particular number without having to go back to and re-ratify the convention. Should it need to be increased, or even decreased for that matter, there is a provision in there that would allow that to happen.

You're right; it is the discussion of multiple countries. We're one of the countries that signed on to it. This is not a unilateral Canadian $400-million figure, if you will.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Yes. Those countries would want to protect their taxpayers from improper exposure just as much as we would want to protect our taxpayers.

Mr. Meisner, you also talked in your opening statement about our marine safety regime and record. I wonder if you could expand on that comment a little bit. Again, in terms of these liabilities, we need to have them in place in case there is an incident, but I think we also want to talk about where we are with regard to the percentage of these incidents as compared with the amount of goods being shipped.

[Tim Meisner]

I think everybody knows that in Canada, for either oil or chemical, I don't think we've ever had what we would classify as a major spill, i.e., 10,000 tonnes. When we look at the oil regime, however, everyone points to what happened with the Exxon Valdez, so there's no guarantee that there wouldn't be a spill.

Our safety record is imposed through the Canada Shipping Act, and I think the record speaks for itself. The fact that we have no major incidents shows that we have a strong safety regime in place in terms of the requirements that a ship has to have, the requirements that the crew has to have, and the prevention activities that the ship and the oil handling facilities have to undertake.

Having said that, as I said, there is still no guarantee that you will never, ever have a spill, and thus our provisions in here. Also, on the chemical side, we would make sure there was a liability regime in place under the MLA to ensure that in the rare event it did happen, there would be coverage for those damaged by the spill.

[The Chair, Conservative, Larry Miller]

Your time has expired, Mr. Toet.

We'll move to Mr. Komarnicki, for five minutes.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

I have a couple of questions. First, with the aviation industry indemnity act, I know that the insurance markets, you say, tend to have some difficulty about how much it's going to cost or how much they're prepared to cover. Of necessity, perhaps, that means somebody else has to step in to cover the indemnity or the risk, which I take it would be generally the general revenue of the country, or the government would have to step into place.

The government would have to cover it in any event, so does it make a difference whether you have ministerial approval versus a royal prerogative? What are the differences between the two? How much is involved in one as opposed to the other? If you're going to deal with ministerial authority, are there some objective baselines or parameters under which an authority could be issued or not, and if not, is there any recourse to a minister's decision on the authority subsequently?

That's for whoever would like to answer.

Go ahead, Mr. Dawson.

[Dave Dawson]

It's a contingency. I want to repeat that. The industry has to purchase on the market its own insurance up to a certain level, and the government has stepped in with the current program because it's deemed that the amounts of the market rates aren't feasible for the industry. Also, the fact is that our American friends have a program in place where they in fact have almost a full insurance industry of their own. Those two factors together have made us continue this program.

Going forward it's important, should this proposed act pass, that the minister have the powers and be accountable to the country and to you for them. We designed it so that he could react more quickly, because right now, if something were to happen or there were a change required, it's a significant amount of time.... I think you can appreciate that it's under royal prerogative, but that's not an instantaneous action, by any measure.

Also, in the case of my example of wanting to send a plane to a foreign country to rescue Canadians, that too has been proven to be too much of a burden under the current program. There was an example where it took a great amount of time to respond to that.

I think the measures that will be in place going forward would be that the minister would establish a rate or amounts, contributing factors, define the program, and then on an ongoing basis would report back to cabinet. If something were to happen or it was decided to make a change to the program, within 90 days the minister would come back and say, “Here's why I changed it.” On a more ongoing basis, assuming no changes were made, he would report back to cabinet on a two-year basis and explain that.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

When I asked you if there were any baseline requirements before the authority is issued, is the answer “not really”? If the decision is made to put a particular third party at risk with no insurance, then automatically would the minister have to issue the authority? Is that how it would work?

[Dave Dawson]

Yes. In the instance where we are asking a plane to go on Canada's behalf.... Is that the example you're...? Yes, then it is sort of a blessing: you are covered, go.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

All right.

Under the amendments to the Marine Liability Act, obviously the shipowners or the shippers would have a responsibility for contributions to the fund however it's arrived at. For the international fund itself, which is involved as well, are there any concerns or difficulties in terms of who contributes? How do you track who contributes? Are there some that don't but should?

[Tim Meisner]

Just to be clear, it is, as I said, a joint responsibility between a shipowner and the cargo owner. The shipowner's responsibility is having sufficient insurance to pay for liability, should it happen. The contributions to the fund would be the cargo owner's responsibility. The way it's set up through the convention, the contributions to the fund would only happen after the fact.

As Mr. Marier mentioned earlier, there's a series of steps that have to be in place before that happens. First is the legislation. Second, we would need to have regulations that impose reporting requirements on those who would be responsible for paying. Then we'd have the years of receipts of those responsibilities. Should an incident happen, those parties would be billed by the international organization after the fact. All the countries would have their importers and exporters billed.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

You would have a system in place to track all of the cargo owners and all of their transactions, and then the assessment would be made after the fact on.... Is it a proportional basis on the amount of usage, value, or...?

[Tim Meisner]

You would have all the importation of product, and you would have that internationally, so you would divide that by the amount of damages, and they would all pay proportionally across the world.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Mai, you have five minutes.

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

Thank you, Mr. Chair. I will share my time with Mr. Sullivan.

I have a few short questions for you, Mr. Lachance. You talked about 400 oil handling facilities. Perhaps you can tell us later roughly where they are located. In the meantime, I would like to ask you some other questions.

You say that a new monitoring system will be implemented. Training will have to be provided. Can you tell us how many people are currently working on that and how many will be working on it? I am asking this question because, as Mr. Sullivan mentioned, the Auditor General was very critical of Transport Canada regarding its objectives in terms of systems monitoring and rail safety monitoring. I was told that Transport Canada did not have the required resources to achieve its own objectives.

Do you currently have any objectives when it comes to the new system? Could you tell us what kind of resources you have available and how many people are working on that?

[Sylvain Lachance]

Once the new system has been implemented, all of our marine safety inspectors will be trained and be able to carry out those inspections. We currently have about 314 inspectors for all of Canada, but that can vary from one day to the next. We are currently in the midst of hiring 50 new inspectors. The inspectors receive operational support from regional offices and headquarters experts.

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

Can you give us an idea of how the inspectors are spread out among the 400 facilities?

[Sylvain Lachance]

We have inspectors everywhere. Of course, since these facilities interface with ships, they are located on the coasts or along the St. Lawrence Seaway. We have some in Newfoundland and Labrador, the Maritimes, Quebec, Ontario, the Prairies, the north and the Pacific region. Currently, our facilities' transfer rates vary between 150 m³/h and 2,000 m³/h. Most of the procurement takes place in the Pacific region.

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

Great.

How much time do I have left?

[The Chair, Conservative, Larry Miller]

You have two and a half minutes.