By Elyn Underhill, Associate Counsel with Bernard LLP
Bill C-86 entitled “A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures” (or “Budget Implementation Act, 2018, No. 2” for short) was given royal assent on December 13, 2018. The bill was first introduced in parliament by the Minister of Finance on October 29, 2018. It was an omnibus bill which included many budget-related legislative amendments and some significant amendments to the Canada Shipping Act (CSA) and the Marine Liability Act (MLA) and other acts. The bill was long (about 850 pages in length) and was described as “clownish” in size by the NDP when the House of Commons Speaker was asked to split up the bill for the purpose of voting on it. That request was refused and as a budgetary bill it moved through the legislative process quickly.
Significant changes have been made to the CSA and the MLA. The October 30, 2018 press release issued by the federal government regarding the legislative changes states: “These changes deliver on commitments made under the Oceans Protection Plan to enable the government to respond to marine pollution incidents faster and more effectively, and to better protect marine ecosystems and habitats.” The amendments are to improve marine safety and environmental protection by:
- Modernizing Canada’s Ship-source Oil Pollution Fund, including unlimited compensation for victims and responders in the event of an oil spill from a ship;
- Strengthening the legal authority to regulate marine vessels in order to protect the marine environment including, for example, to protect endangered whale populations;
- Authorizing the Minister of Transport to issue interim orders to allow for immediate actions to be taken to address a pressing risk to marine safety or to the marine environment;
- Enabling more proactive, rapid, and effective response to oil spills in Canada’s waters, while maintaining the polluter pays principle; and
- Supporting research and innovation to enhance marine safety and environmental protection.
It seems rather curious that these important changes were buried in the 850 pages of the omnibus budget bill.
Section 10(1)(c) of the CSA has been amended to allow the Minister of Transport or the Minister of Fisheries and Oceans, with respect to the Ministers’ responsibilities under the CSA, to enter into agreements or arrangements respecting the administration or enforcement of any provision of the CSA or its regulations; and it authorizes any person with whom an agreement or arrangement is entered into to exercise the powers or perform the duties under the CSA that are specified in the agreement or arrangement. It is not clear which Ministers’ responsibilities are intended to be delegated. The press release does not provide any details. The delegation of responsibility to the provinces or other groups raises some concerns. To how many bodies will these responsibilities be delegated and how can we be sure that the administration and enforcement of the Act will be exercised in a consistent manner across the country? Do these groups have the knowledge, skill and expertise required to fulfil what could be a very complicated mandate? It is anticipated that constitutional challenges may be raised as a result of this delegation of responsibility.
The Minister of Transport now has the power under section 10 (2.1) of the CSA to exempt a person or vessel from the application of any provision of the Act or regulations if the exemption would allow the undertaking of research and development in respect of any type of vessel, technology system, component, procedure or practice that may enhance marine safety or environmental protection.
Section 10.1 is added to the CSA to allow for interim orders. Under this provision the Minister of Transport may make an interim order (i.e., an order that could be contained in a regulation under the CSA) if he or she believes that immediate action is required to deal with a direct risk to marine safety or to the marine environment. The section does not provide any guidance on when such an interim order should be made.
The CSA is amended by the addition of section 35.1 which provides authority for the creation of regulations respecting the protection of the marine environment from the impacts of navigation and shipping activities including regulations respecting the design, construction, and manufacture of vessels and their machinery and equipment; the machinery and equipment required on a vessel; certificate requirements; compulsory routes and recommended routes; the operation, navigation and anchoring of vessels; and the loading or unloading of vessels. Presumably these regulatory powers will be used to prohibit the loading and unloading of certain commodities. Penalties for breach of these regulations could be significant: a fine of not more than $1,000,000 or imprisonment for a term of not more than 18 months, or both.
The amendments to sections 168.3, 175(2) and 180(1) of the CSA will allow the Ministers/pollution response officers to act proactively where a party “may” rather than “is likely to” discharge oil. The wording will substantially increase the ability of Ministers’/oil pollution officers’ power to intervene. The use of the word “may” will no doubt lead to litigation. Query: Is a 10 per cent chance or less something that “may” happen?
Section 180(2) now provides that where the Minister of Fisheries and Oceans takes measures to repair, remedy, minimize or prevent pollution damage from a vessel by selling the vessel or its contents, the Minister may give the person acquiring them valid title to the vessel or its contents free from any mortgage or other right that is in existence at the time of the disposition. It is unclear how this provision will work in practice as normally a buyer of a vessel in circumstances where there are claims to the vessel by parties other than the owner of the vessel, will be looking for a court order conveying clear title to the buyer.
Section 101(1) of the MLA is amended. It extends the liability of the Ship-source Oil Pollution Fund to include “economic loss caused by oil pollution suffered by persons whose property has not been polluted.” Allowing recovery for economic loss will increase the exposure of the fund, the cost of which will ultimately be borne by the shippers, receivers and carriers who capitalize the fund.
The MLA has been amended to provide for an expedited process for small claims against the Ship-source Oil Pollution Fund. The small claims limit is $35,000 or other amount set by regulation or in the case of a “significant incident” is $50,000 or other amount set by regulation and does not include claims for economic loss. The claim is to be assessed within 60 days by the Administrator of the Ship-source Oil Pollution Fund and the Administrator has the power to investigate and reassess the claim within three years of the occurrence which gave rise to the claim.
The limit of liability per occurrence of the Ship-source Oil Pollution Fund has now been removed and section 110 provides for emergency funding. Where emergency funds are necessary to respond to an incident, the amendments provide for the direction of funds (to a maximum of $50 million per fiscal year) to the charge of the Ship-source Oil Pollution Fund. This additional funding would be temporary in nature and would be repaid through a supplementary levy borne by oil receivers and exporters.
Note that some of the amendments to the MLA come into force on a day to be fixed by order of the Governor in Council. It will be interesting to see what the effect of these potentially significant changes to the CSA and MLA will be, especially considering that the amendments were part of an omnibus bill where there was limited opportunity for input from interested parties.
Elyn Underhill is a lawyer with Bernard LLP and can be reached at Underhill@Bernardllp.ca.