2018 Marine Liability Act Amendments and the Wrecked, Abandoned or Hazardous Vessels Act : What it means for the Ship-source Oil Pollution Fund

Context Announced in November 2016, the Oceans Protection Plan is investing $1.5 Billion nationally to improve marine safety and responsible shipping, protect Canada’s marine environment and offers new possibilities for Indigenous and Coastal communities. This announcement included legislative amendments to the Canada Shipping Act, 2001 and the Marine Liability Act (MLA) to modernize the Ship- source Oil Pollution Fund (SOPF). It also included the introduction of new legislation, the Wrecked, Abandoned or Hazardous Vessels Act (WAHVA). Data Sources: http://pm.gc.ca/eng/news/2016/11/07/prime-minister-canada-announces-national-oceans-protection-plan https://www.tc.gc.ca/eng/marinesecurity/initiatives-234.htm http://www.acpa-ports.net/industry/industry.html Transportation in Canada 2015 Addendum; Table EC5

Overview of changes to the Marine Liability Act Elements of SOPF modernization : Removal of the SOPF’s limit of liability Modernized SOPF Levy Proactive Response Emergency Funds Expedited Small Claims Process Pure Economic Losses Administrative Monetary Penalties Data Sources: http://pm.gc.ca/eng/news/2016/11/07/prime-minister-canada-announces-national-oceans-protection-plan https://www.tc.gc.ca/eng/marinesecurity/initiatives-234.htm http://www.acpa-ports.net/industry/industry.html Transportation in Canada 2015 Addendum; Table EC5

1. Removal of the SOPF’s Limit of Liability The amendments removed the SOPF’s per incident limit of liability (last limit in 2018-19 was $175 million per incident) Policy Objective: Claimants can receive 100% of their admissible assessed claims – no need for pro- rating in the event of a significant oil pollution incident How: The balance of SOPF would be available to pay admissible claims for compensation If the balance is insufficient, the Minister of Finance has the ability to grant a loan to the SOPF from the Consolidated Revenue Fund Loan would be recovered by imposing or re-imposing the levy or an additional levy on receivers and exporters of oil Data Sources: http://pm.gc.ca/eng/news/2016/11/07/prime-minister-canada-announces-national-oceans-protection-plan https://www.tc.gc.ca/eng/marinesecurity/initiatives-234.htm http://www.acpa-ports.net/industry/industry.html Transportation in Canada 2015 Addendum; Table EC5

2. Modernized SOPF Levy The SOPF levy was modified from a per-shipment levy to an annual levy Policy Objectives: Align with the reporting and contributing requirements of the international conventions, reduce administrative burden, and ensure SOPF can be replenished There are no needs to re-impose a levy at this time How: Require receivers and exporters of persistent and non-persistent oil to report and, if re-imposed, pay a levy on an annual basis Issue an additional levy to repay a loan from the Consolidated Revenue Fund, if needed Next Steps: Amend regulations under the MLA to require reporting of oil exports to bring into force remaining sections of the amendments Data Sources: http://pm.gc.ca/eng/news/2016/11/07/prime-minister-canada-announces-national-oceans-protection-plan https://www.tc.gc.ca/eng/marinesecurity/initiatives-234.htm http://www.acpa-ports.net/industry/industry.html Transportation in Canada 2015 Addendum; Table EC5

3. Proactive Response SOPF liable for costs and expenses incurred by the Canadian Coast Guard under new authorities in Canada Shipping Act, 2001 to intervene earlier if there may be a threat of pollution Policy Objectives: Allow for compensation for reasonable costs incurred under new authorities Ensure liability of the shipowner and IOPC Funds are aligned with the international conventions How: Ensure the liability in Part 6 of the MLA is for “grave and imminent threat of pollution” Provide for compensation from the SOPF for reasonable costs for measures taken proactively where there may be a pollution threat Data Sources: http://pm.gc.ca/eng/news/2016/11/07/prime-minister-canada-announces-national-oceans-protection-plan https://www.tc.gc.ca/eng/marinesecurity/initiatives-234.htm http://www.acpa-ports.net/industry/industry.html Transportation in Canada 2015 Addendum; Table EC5

4. Emergency Funds Provide emergency funds to the Canadian Coast Guard in case of a significant oil spill. Policy Objective: Provide up front funding to responders to respond to a significant oil pollution incident How: Minister of Transport can direct the Administrator to release up to $10M upon request of the Minister of Fisheries and Oceans Should this amount prove insufficient, the Administrator could be directed to release up to an additional $50M with the approval of the Governor in Council The CCG would use funds to respond and compensate third parties for their response actions under CCG’s direction Cannot be used for small dilapidated or abandoned vessels or when intervening when there “may” be a threat of pollution Any emergency funding provided to the CCG would need to be reimbursed back to the SOPF or submitted as part of a claim within two years Data Sources: http://pm.gc.ca/eng/news/2016/11/07/prime-minister-canada-announces-national-oceans-protection-plan https://www.tc.gc.ca/eng/marinesecurity/initiatives-234.htm http://www.acpa-ports.net/industry/industry.html Transportation in Canada 2015 Addendum; Table EC5

5. Expedited Small Claims Process Establish a streamlined system for submitting small claims to the SOPF Policy Objective: Establish a fast-track process for small claims on an attestation basis with adequate oversight and audit for the Administrator How: Sets small claims cut-off at $35,000, representing about 75% of all claims to SOPF Can be raised to $50,000 by Administrator for a significant incident, to expedite large claim volumes Claimants attest they meet the basic criteria and need to claims within one year of loss Only covers losses, damage, costs and expenses actually suffered or incurred – not pure economic losses or anticipated future losses (section 107(3)) Does not apply to response organizations or damage outside of Canada Administrator can audit these claims, request documentation and recover any amounts paid Data Sources: http://pm.gc.ca/eng/news/2016/11/07/prime-minister-canada-announces-national-oceans-protection-plan https://www.tc.gc.ca/eng/marinesecurity/initiatives-234.htm http://www.acpa-ports.net/industry/industry.html Transportation in Canada 2015 Addendum; Table EC5

Significant Incident Section 91(1): Significant incident means a discharge of oil that, due to its severity, size or location and to its impact — actual or potential — on the environment, requires extraordinary resources to respond to it Expedited Process for Small Claims (section 106.1(3)): If, in the Administrator’s opinion, a discharge of oil from a ship constitutes a significant incident, the Administrator may increase the limit to $50,000 Allows for the Administrator to raise the amount eligible for the attestation-based process when faced with potentially large number of claims Emergency Funds (section 110(1)): The request for emergency funds is linked to a “significant incident”, which is intended to be spill well beyond any spill faced in Canada in the last 30 years Data Sources: http://pm.gc.ca/eng/news/2016/11/07/prime-minister-canada-announces-national-oceans-protection-plan https://www.tc.gc.ca/eng/marinesecurity/initiatives-234.htm http://www.acpa-ports.net/industry/industry.html Transportation in Canada 2015 Addendum; Table EC5

6. Pure Economic Losses Ensure that the SOPF can compensate for “pure economic losses” Policy Objective: Clarify that the SOPF can compensate for pure economic losses – when one’s property has not been damaged – in alignment with the international conventions given Canadian courts have typically been reluctant to cover these losses How: Specifying that these losses are covered in sections 101 and 103 Provide greater certainty that indirect damages (e.g., tourism operator affected but did not suffer physical damage to their property or for measures to mitigate economic losses) can be compensated Ensure that the SOPF compensates in the same manner as the IOPC Funds Data Sources: http://pm.gc.ca/eng/news/2016/11/07/prime-minister-canada-announces-national-oceans-protection-plan https://www.tc.gc.ca/eng/marinesecurity/initiatives-234.htm http://www.acpa-ports.net/industry/industry.html Transportation in Canada 2015 Addendum; Table EC5

7. Administrative Monetary Penalties Establish administrative monetary penalties (AMPs) Policy Objective: Provide an additional set of tools to encourage compliance with the MLA by establishing AMPs for certain offences in the MLA which ensures consistency with the Fund for Railway Accidents Involving Designated Goods How: Specifies that failure to file information returns, failure to keep records, failure to provide information, failure to pay a levy, obstructing or hindering the Administrator, and moving a ship that is detained can be subject to AMPs Maximum amount of the AMP is $50,000 for an individual or $250,000 for a corporation Transport Canada will work with the SOPF for administering the AMPs

Overview of the Wrecked, Abandoned or Hazardous Vessels Act Aims to protect the marine environment and coastal communities from the burden of wrecked, abandoned, dilapidated or hazardous vessels, including strengthening vessel owner responsibility and liability prohibit vessel abandonment and irresponsible vessel management enable the federal government to take proactive action on vessels of concern (including hazardous equipment or cargo from a vessel) bring into Canadian law the Nairobi International Convention on the Removal of Wrecks, 2007 consolidate numerous related provisions currently found within the Canada Shipping Act, 2001 (specifically related to the Salvage Convention and the Receiver of Wreck) and the Navigation Protection Act. Data Sources: http://pm.gc.ca/eng/news/2016/11/07/prime-minister-canada-announces-national-oceans-protection-plan https://www.tc.gc.ca/eng/marinesecurity/initiatives-234.htm http://www.acpa-ports.net/industry/industry.html Transportation in Canada 2015 Addendum; Table EC5

Wreck Removal Convention Implemented in Part 1 of WAVHA Extended to apply to all Canadian waters Operational Elements: New obligations for the reporting of wrecks to the CCG CCG will conduct hazard assessments of the wreck; criteria set out in Convention New powers to direct owners of wrecks that pose a hazard to locate, mark or remove it Data Sources: http://pm.gc.ca/eng/news/2016/11/07/prime-minister-canada-announces-national-oceans-protection-plan https://www.tc.gc.ca/eng/marinesecurity/initiatives-234.htm http://www.acpa-ports.net/industry/industry.html Transportation in Canada 2015 Addendum; Table EC5

Wreck Removal Convention Liability and Insurance Elements: Vessel owners are strictly liable for the costs of locating, marking and/or removing a hazardous wreck No limit on the liability of the owner as Canada took a reservation on LLMC 96 Owners of vessels of 300 gross tons and above will be required to maintain insurance or other financial security up to the limits of LLMC 96 Applies to all Canadian vessels and foreign vessels calling at Canadian ports and terminals Direct action may be taken by claimants against the insurer

MLA vs. WAVHA When is it oil pollution preventive measures or response versus wreck removal or addressing a derelict and abandoned vessel? Will the coming-into-force of WAVHA result in fewer or more claims to the SOPF? How will costs and expenses between the owner and the SOPF be apportioned? What about situations where there is limited cover for two risks under the same limited insurance? Data Sources: http://pm.gc.ca/eng/news/2016/11/07/prime-minister-canada-announces-national-oceans-protection-plan https://www.tc.gc.ca/eng/marinesecurity/initiatives-234.htm http://www.acpa-ports.net/industry/industry.html Transportation in Canada 2015 Addendum; Table EC5

Questions & Contacts For more information: François Marier Manager/Senior Policy Advisor International Marine Policy Transport Canada Tel: (613) 993-4895 E-mail: francois.marier@tc.gc.ca