Transport Committee on Feb. 27th, 2014

[Dr. Rashid Sumaila]

Usually to make that comparison you have to compare with countries that Canada likes to compare itself with. You wouldn't want to compare Canada to Nigeria, for example, right? That would not work because their system is completely crazy.

If I think of the U.S., which is the closest, I would think that Canada is matching up with the U.S., but the U.S. has been pushing a lot recently. I quoted Obama telling the U.S. Coast Guard to look into this even deeper. In comparing it to the U.S., the closest, they're probably just a little ahead, from what I understand.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Bill C-3 helps to close the gap though. Okay.

Earlier, colleagues talked about the tanker safety panel. Do you have any thoughts or contributions with respect to their work from your perspective?

[Dr. Rashid Sumaila]

I've been reading a lot about all that they are trying to do to make it safer. You have the double hull and all those things, so there's a big effort to improve that. That is good. That will reduce the chances of spills, I think. That is also good.

In our report, the one we did last year about the northern gateway, we considered safety very closely. What we concluded was that usually the problem really arises when something happens. There's a small chance of it happening. So, if it doesn't happen, it's all well and good, but when you have the big one hitting you, this is where the pain is really high. All this work will help reduce a lot, but it will not eliminate it. That is what worries me: when the big one comes. You can see that in the Gulf of Mexico, right? We had lots of promises from BP about how good they are at this. It happened, and for weeks they didn't even know what to do, just sitting and shaking. That's the kind of thing that bothers most of us.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Earlier witnesses talked about the importance of responder immunity and the enhancements under Bill C-3 to facilitate international responder immunity. Could you speak to that as well, Professor?

[Dr. Rashid Sumaila]

All I can say is that when you have international cooperation in things like this, it's always a good thing because then you can move resources very quickly and try to come together to solve the problem. It's a good initiative. That's what I can say.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Right. After looking at Bill C-3, are there any areas that you would recommend we further pursue?

[Dr. Rashid Sumaila]

I talked about the cost of cleanup and the response if something were to happen. That is the piece I'm still struggling with. As I said, the current total coverage is well below some of the potential costs that would come. The question is how we cover that. This has been discussed a lot. I look at the SOPF, the fourth tier, in which Canada has a lot... When I look at the data, I think at the moment we have $380 million, roughly, in that fund. I don't think there's new money going in there, except the interest or investment income that goes into it. The question is how we can enlarge that fund to protect us from big events.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

To your knowledge, has that fund been drawn down at all?

[Dr. Rashid Sumaila]

No, I think it's about $380 million at the moment, according to the data I have, so, no.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you, Professor.

Mr. Wright, still on the issue of responder immunity, you spoke about the importance of Bill C-3 fixing this important issue. Then you suggested that it be expanded to deal with situations when ships aren't present. What specific situations are you concerned about? Can you perhaps provide any examples of these situations occurring in the past?

[Scott Wright]

Sure. The two main members that we have are oil handling facilities and ships. Because it's the Canada Shipping Act, a ship needs to be involved in an incident. I'll give you an example.

If we are responding to an oil handling facility that has had a leak from their shore-based facility or their dock and there's no ship present, we are not covered by responder immunity. Similarly, we have the resources to respond to oil entering the marine environment from a pipeline, from rail, or from a truck and we're not covered under responder immunity. So, our shareholders are putting themselves at risk if we go respond to a marine incident that does not involve a ship. We think that responder immunity should be applied across the spectrum of potential spills to the marine environment.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Okay. Still on this topic, could you speak to the benefits of the requirements for oil handling facilities to develop to demonstrate their oil-spill preparedness and response plans? Could you speak to that issue for us?

[Scott Wright]

Yes, certainly it is important for the facility to have a response capability. It is in the oil handling facilities standards within the Canada Shipping Act, so they're required to have containment initiated within one hour and recovery of product within six hours. It is important for them to have a capability, because in effect they are the first response while we're mobilizing and getting on site.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Do you interact with oil handling facilities with respect to the development of these plans? Do you provide input?

[Scott Wright]

We have done it, but it's not essential. There are lots of consultants that can help to do a great job with it.

Once our oil handling facilities do have plans, we encourage them to share them with us. We also will practise with the teams at the oil handling facility to ensure that we understand what their first response would be, and what we can do at that particular facility to help contain and recover oil.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Excellent. Thank you very much.

[The Chair, Conservative, Larry Miller]

Thank you.

We'll now move to Mr. Sullivan for five minutes.

[Mike Sullivan, NDP, York South—Weston, ON]

Thank you to the witnesses.

I'm going to come back to the notion of liability and to something Mr. O'Connor said, that no matter how you slice up the liability, Canadians will pay. Is this because the oil companies and the ship owners and the transportation to other countries have no relationship whatsoever to our systems? Or is it simply because we have a big coast and a lot of oil going through it, and it's more likely to happen there than in other places?

[John O'Connor]

No, that's not what I was trying to say. Simply stated, at my association we believe Canada would benefit from joining the international convention on HNS, just like we did with oil. Why would we benefit? It would give us access to very important funding and expertise if ever there were to be a spill in Canada, which of course we hope there won't be, but if there were to be, we would have access to the funding.

By the way, Canada is not a place where there have been a lot of oil spills and chemical spills, luckily. I think we have a good record and we're going to, I'm sure, even improve upon that record.

When I was saying that the unlimited liability aspect doesn't really work and comes down to Canadians, it's because it's simply a fact of life in our view, and that is that you can tap into these funds and benefit from the funds as best you can, because they're contributed to by people from around the world. In other words, if there is a spill in Canada that's HNS, up to the limit of funding that is available, it's going to be partly contributed to by Japan, partly by Spain, etc. All countries contribute, just like Canada would contribute if there's a spill over there; we'd contribute our slice of that funding.

We want access to that fund. But the idea of unlimited, you have to understand that when you join an international convention, you have to respect the convention. The convention says in black and white that the ship owner has a limit and you can't ask him for more. It says in black and white that the fund has a limit and you can't ask them for more. In other words, even though it's a lot of money, it's a limited amount of money. If you have a spill that exceeds that, what do we do? Our recommendation is SOPF for another tier.

If you were to try to make it unlimited, the only way to do it, joining the convention.... You can't go back to the ship owner. You can't go back to his insurer. You can't go back to the fund. You can only go to the SOPF. That's why the expert tanker panel suggested.... They didn't suggest it be done; they said that maybe the government should look at the possibility of making the SOPF's contribution for oil unlimited— unlimited, which means no limit.

We say that you can do that, but if you do it, the taxpayers and/or the consumers are going to have to pick up the tab at the end of the day.

[Mike Sullivan, NDP, York South—Weston, ON]

That's because the SOPF is a uniquely Canadian fund, as opposed to the HNS fund, which is international. I'm getting that now.

On the issue of whether or not there's ever been a spill.... I really appreciate your comments about this. The convention isn't in place, so we can't know if there's ever been a spill. Transport Canada admitted to us that they have not done a risk analysis. They don't know what kind of spill would generate what kind of cost, because they've not done the risk analysis. The preparedness panel has not actually studied HNS yet. They're working on it next.

We are unsure of what the ultimate cost could be, but there is a fear among Canadians based on things like Exxon Valdez, Lac-Mégantic, etc., that costs will ultimately be borne by the taxpayer and that's not good. The HNS fund topped up by SOPF sounds like a really, really good idea.

If that's the case and there's been no risk analysis, it's kind of an abundance of prudence. Would you not agree?

[John O'Connor]

I don't think I would say it's an abundance of prudence; I would say that it's very smart to be prepared, both on the funding side and on the preparedness side.

If you go back to 1989—I'm not sure that any of you were involved, but I was—when we were looking at the CLC convention, the oil convention, we didn't have very many studies about preparedness in Canada for oil either.

The first thing we decided to do was to make sure that we enjoined the convention so that the funding was available. It's like an insurance policy. The second thing was to make sure that the SOPF covered an additional tier, just as we're proposing for HNS. The third thing was to get ready for that spill.

That's what we did with oil, and that's why Mr. Wright is sitting there. His organization was one of the ROs that was created under the legislation that we finally put together with you guys.

What we're saying is that we should do the same steps for HNS. We go liability, SOPF, and we get ready as quickly as we can, because we don't know how much it's going to cost, but I'm assuming that it can be expensive, and we should be ready.

[Mike Sullivan, NDP, York South—Weston, ON]

Professor, are you aware of any risk analysis that anybody has done regarding oil and/or HNS in the Salish Sea?

[Dr. Rashid Sumaila]

The answer is no, there isn't any. I have been trying to get a study going in that respect, but there is no study of which I am aware, no.

[Mike Sullivan, NDP, York South—Weston, ON]

Thank you.

[The Chair, Conservative, Larry Miller]

We'll go to Mr. Komarnicki for five minutes.