Evidence of meeting #13 for Transport, Infrastructure and Communities in the 41st Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was liability.
A recording is available from Parliament.
Conservative
Lawrence Toet Conservative Elmwood—Transcona, MB
So the $400 million is actually quite adequate, in your opinion.
Vice-President, Shipping Federation of Canada
Yes, and also, remember that if over time, say 10 years from now, the international community, including all the signatory states, believe that this limit should be upgraded, there are provisions in the conventions to do that quickly.
Conservative
Lawrence Toet Conservative Elmwood—Transcona, MB
Correct. That's my understanding also.
Captain Brown, would you want to add to that, or you, Mr. Wilson?
Capt Stephen Brown
I think Ms. Legars is absolutely right. I'm not aware of anybody breaking those liability limitations.
I met with the tanker safety expert panel yesterday afternoon in Vancouver, and not to dwell on that too much, but as you may know in phase two of their research and mandate they are now working on the HNS convention. We spoke at length about a number of issues related to how we would respond and how we would pay for the HNS convention. One of the long discussions that we had, for example, when it comes to HNS, is that a lot of those substances today are carried on container ships and there have been incidents. I think last year there were three major incidents involving container ships carrying HNS. So when you're looking at the costs involved in an HNS incident, it's a very complex regime in the sense that it can take place in the middle of a stack of containers on a very large container ship, and so in terms of who pays, how they pay, responsibility levels, declaration of cargoes, it's a very complex web of responsibility. But, as Ms. Legars said, when it comes to the actual limitation in terms of a cleanup, I don't think we've reached that level.
Conservative
Lawrence Toet Conservative Elmwood—Transcona, MB
Yes, and just for clarification, once you've worked your way through the web, the liability coverage is still adequate.
Conservative
Lawrence Toet Conservative Elmwood—Transcona, MB
Mr. Wilson, I was just wondering if you could expand on one comment that you made in your opening statements. You mentioned removing legal barriers that would hinder spill response by preventing Canadian organizations from participating in cleanup efforts. Could you speak to that for a minute, how this bill is addressing that particular concern?
Vice-President, Corporate Social Responsibility, Port Metro Vancouver
There are a number of things that in the past potentially inhibited that. From a liability point of view, for example, U.S. responders weren't necessarily indemnified if they came into Canada, and I know that has been an issue. Also if you're not central to, if you're not part of the organization, if you're not WCMRC and you're responding, you need to have some security that you will be protected. But to my knowledge, the biggest gap was the cross-border issue and I don't know if Captain Brown has a comment.
Capt Stephen Brown
Yes, that was the crux of the issue, in the sense that in our part of the world, on the west coast, Canadian responders, if they went to the assistance of the United States authorities, had responder immunity and we were not providing that responder immunity of this side of the border. So one of the recommendations we made to the panel is that this be fixed. It also extends to some degree to the issue of, if dispersants are used or alternative response techniques as referred to in the tanker safety panel report, what level of liability might accrue from that.
Conservative
NDP
Hoang Mai NDP Brossard—La Prairie, QC
Thank you, Mr. Chair.
I would like to come back to the cap for liability.
Captain Stephen Brown, you went into that and then Mr. Watson's time was up. Can you tell us about what happens? I know that in practice we haven't exceeded the amount of liability or cap that happens.
If I understand correctly, according to the legislative summary of Bill C-3 there's a cap of $230 million for the HNS liability for shipowners, and then after that the HNS fund kicks in, which is about $500 million. Then, if it exceeds that, what happens? Who has to pay for that? Can you explain to us?
Capt Stephen Brown
I'm not sure from reading the bill what the intention is. However, a parallel mechanism has been recommended by the tanker safety panel in the event of an incident involving an oil spill, whereby the Canadian consolidated revenue fund would actually be used to support the ship-source oil pollution fund.
So if we are going to be consistent, the logical way perhaps might be to go in the same direction of using the consolidated, but then, there has to be a user pay, and there has to be government recovery of any amount of money expended in support of the cleanup and the recovery.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
How would the government get back...? We understand that if it exceeds that amount....
Just for clarification, Mr. Watson, it was November 5, 2013, legislative summary on Bill C-3. I'm referring to page 4, 1.4.2.2, just for your information.
You're saying that the government will pay for it and then we'll recover that amount. How?
Capt Stephen Brown
I don't want to speak for the government because this specific point is not covered in the bill in terms of the excess—
Capt Stephen Brown
The parallel, as I mentioned, is what is proposed with the ship-source oil pollution fund, borrowing money in excess of $1.4 billion of liability for cleanup from the Canadian consolidated revenue fund.
The recovery of that money in the case of an incident involving oil would be a levy on oil imports and exports, and the recommendation is quite clear on that point. In terms of recovery, potentially, if the government were to decide to go in this direction on other substances, it would be a similar mechanism to recoup any expenditure, and it could be a levy on those substances in terms of their transportation through Canadian ports. There are many options open, actually.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
From where I stand, there is nothing in Bill C-3 that talks about....There is no talk about levy, and that's why you're saying we need to have a conversation about it—
NDP
Hoang Mai NDP Brossard—La Prairie, QC
From what we understood when we spoke to Transport Canada, I think right now our concern is that if we exceed that cap—and I understand that in practice it never happened—but if we exceed that cap of maybe $230 million plus $500 million, let's say $730 million, Canadian taxpayers will have to pay, and we won't be able to go back to the shipowners or to the people who are involved because there is a legal cap. They are capped to $230 million maximum.
Madame Legars, you mentioned $185 million and $160 million. Can you correct me if I'm wrong in terms of saying that the shipowners are capped? If we were to exceed the amount that the HNS fund kicks in afterwards, would Canadian taxpayers have to pay for the cleanup, unless there is something in practice that you can tell me? Is there a levy that would be comparable to what happens with the oil fund?
Vice-President, Shipping Federation of Canada
Under the conventions, yes, a shipowner's liability is capped. Then you have this international fund that is capped as well, so, if you don't have enough money, what do you do? Well, it's not in the convention; it is for each country to decide what they will do. One solution is, if you don't have enough money in the pot to pay for all the claimants, each claimant gets paid on a pro rata basis. So that's one solution. The other solution is that the state decides to kick in and put some kind of mechanism in place. It's for each state to make their own policy decision on that.
From a shipowner's perspective, what we want is that, once our liability has been defined under the convention, it's like a building block. You keep it and you can put things around it, but you don't touch the building block. After that the ship liability and the need of levels of insurance and all of that is governed strictly by the convention. So if after that the Canadian government, for example, wants to build something else around that block, they can do that, of course.
What was mentioned on the oil regime with a tanker panel—because the recommendation that Captain Brown just mentioned was around the oil spill regime—was that if there is not enough money at the international level with $1.4 billion, the Canadian fund will still advance money based on some money that would be given by the government. It's an advance. The government would basically be a banker providing money to the Canadian fund so that the Canadian fund indemnifies.
After that, there is a provision under the act where the government already has the ability to raise money on the oil terminals and can reactivate this levy. This levy was in place for a number of years when the regime was established, and then they had lots of money and they didn't need more at the Canadian level of fund, so they stopped collecting this levy, but this levy could still be reactivated or maybe reactivated at another level. You could index and CPI it or whatever and start collecting from the oil handling facilities on a post-event basis to replenish this money with interest to the government. So that's one of the things that was put as a recommendation in the tanker panel report.
Actually we said that we were okay with this recommendation as far as it doesn't touch our liability and it doesn't touch the convention, because the convention is a block. You can build things around it if you don't touch the convention. This is true for oil because we are talking about the oil spill regime here that is already in place and has been running for many years, and so on and so forth.
But actually this regime is slightly different because you have more substances and it's more complicated because they can be in a package form or they can be in containers, as explained by Captain Brown. But still the underlying concept and model is the same one, that you have the shipowner's liability first capped at a certain level, and then you have access to a fund that is funded by the receivers of the product. So that's the same concept; it's just a little bit more complicated because you have many types of products and many ways of carrying them.
February 25th, 2014 / 9:55 a.m.
Conservative
Ed Komarnicki Conservative Souris—Moose Mountain, SK
Thank you, Mr. Chair.
Thank you to the witnesses for appearing before us.
I'm going to focus somewhat on the responder side of things. I know in questioning from Mr. Toet you talked about responder immunity. I gather this bill is a significant improvement in that area mostly because, if a responder is to take part, they want to be sure that their liability is covered. Is that liability limited to just civil liability or is it civil and criminal liability? Is it significantly robust to cover all possible types of incidents relating to responder responsibility?
