THE STANDING JOINT COMMITTEE OF THE SENATE AND THE HOUSE OF
COMMONS FOR THE SCRUTINY OF REGULATIONS
LE COMITÉ MIXTE PERMANENT D'EXAMEN DE LA RÉGLEMENTATION DU SÉNAT
ET DE LA CHAMBRE DES COMMUNES
[Recorded by Electronic Apparatus]
Thursday, April 29, 1999
The Standing Joint Committee of the Senate and the House of Commons
for the Scrutiny of Regulations met this day at 8:30 a.m. for the
review of statutory instruments.
Mr. Gurmant Grewal (Joint Chairman) in the Chair.
The Joint Chairman (Mr. Gurmant Grewal (Surrey Central, Ref.)): Good
call the meeting to order. Before
we hear our witnesses, I have two brief announcements.
At the end of the meeting, we must discuss the possible trip by the
committee to Australia. Our next meeting is on May 13.
ORDER AMENDING THE FEES PROPOSED BY WESTERN CANADA MARINE RESPONSE
CORPORATION, GREAT LAKES RESPONSE CORPORATION OF CANADA, EASTERN
CANADA RESPONSE CORPORATION LTD., ATLANTIC EMERGENCY RESPONSE TEAM
(ALERT) INC., AND POINT TUPPER MARINE SERVICES LTD.
The Joint Chairman (Mr. Grewal): If members recall, at our
last meeting on March 18
we wanted to hear from the officials of the Department of Fisheries
and Oceans, and they are appearing before our committee today. We have
Mr. Michel Leclerc, Acting Director of Legislation and Regulatory
Affairs; Mr. Gerry Bartram, Senior Advisor on Environmental Response
Policy; and Mr. Bruce Bergen, Senior Counsel to the department.
I will now ask Mr. Leclerc to make a presentation, and then we will
have some time for questions and answers.
Mr. Michel Leclerc (Acting Director, Legislative and Regulatory
Affairs, Department of Fisheries and Oceans): Although we are pleased
to appear before this committee today, I regret our appearance was
requested because committee members may believe that the Department of
Fisheries and Oceans has been unwilling to answer certain questions
asked by Mr. Bernier respecting fees paid to response organizations.
Hopefully, today's meeting will dispel such impressions and provide
committee members with useful information on the workings of the
environmental response regime.
As you may be aware, Parliament created a new regime to provide
protection to Canada's waters in 1993, after public opinion was
galvanized by the Exxon Valdez oil spill in neighbouring Alaska and,
in a separate incident, when quantities of oil fouled the B.C. coast.
This private sector regime is entirely financed and managed by the
interests whose economic activities may pose a threat to the marine
environment. Fees are set and collected under this regime by industry,
not by government. We have provided Mr. Onu with a note for committee
members that explains this regime, its importance and its origin.
I should now like to ask Dr. Bartram to point out very briefly the
highlights of that note, and to provide you with context in assessing
the issues before you.
Mr. Gerry Bartram (Senior Advisor, Environmental Response Policy,
Department of Fisheries and Oceans): Does everyone have the note that
we supplied yesterday?
The Joint Chairman (Mr. Grewal): Yes.
Mr. Bartram: This regime is unique, and is an early example of
government/private sector partnering. I propose to give you a few
highlights of that note to assist you, and provide you with some
context as you examine the questions that are before you.
My first point, referring to the note, relates to the importance of
the regime. As Mr. Leclerc said, the regime was put in place to
provide protection against oil spills to Canadian waters for spills up
to 10,000 tonnes, which is the level of preparedness recommended by
David Brander-Smith at the beginning of this decade in a major panel
investigation on tanker safety, following the catastrophic Exxon
Valdez spill in Alaskan waters. Because of this regime, the private
sector, i.e. what we in a policy sense call potential polluters, take
on the responsibility of entirely funding and managing this level of
preparedness in all regions of Canada. Not a penny of taxpayer money
goes to fund that network of equipment depots, an investment of
approximately $55 million, trained personnel, plans, contingency plans
and continual exercising to ensure that, in the event of a spill of a
magnitude that would be catastrophic, Canadian waters are protected.
That is the importance of the regime.
The unusual nature of the regime is that it is a private sector based
regime. Following the publication of David Brander-Smith's report,
which recommended a major investment in oil spill preparedness in this
country, the private sector said to the government of the day that
they could provide this level of security; however, what they wanted
to do was organize and manage it in their own way on a business basis.
The government of the day put into effect legislation to permit such a
partnering to take place, with the private sector funding and
managing, and government providing technical oversight to ensure that
the private sector did what it promised, that is, provide full
protection for those waters to that level on an ongoing basis.
There is the fundamental role. In the event of a spill, Canadian Coast
Guard ensures that the preparedness clicks in and that all necessary
measures are taken to respond to the spill. Between spills — and we hope
we will not have a spill of that magnitude — the private sector funds
and manages the regime. It is important to note that it is the private
sector that sets and collects the fees that are paid for this regime.
Government does not collect these fees.
In setting up the regime, Parliament gave government levers to
regulate on the technical side, but provided no regulatory powers to
create financial regulations. That was part of the arrangement with
the private sector, part of the understanding, that this was a
self-managed regime within a context of minimal regulation.
Key dates in establishing the regime — at point number 3 in our
note — are
familiar to you. From 1989 to 1991, the catastrophic spills that
prompted a public outcry for environmental protection, and the
determination by government to massive upgrades in Canada's
preparedness; 1991 to 1993, industry providing and consulting
extensively to provide its network; 1993 to 1995, legislation in
place, regulations created, and these response organizations, which
are the tools industry uses to provide protection, set up.
Then, in 1995, regulations were proclaimed and certification takes
place at the fees proposed. That is the subject of this meeting.
Point five, the current fee process, I need not dwell on that process
as that will be the subject of our discussion here. It is safe to say
that government oversight is limited to the opportunity for clients
paying fees into the regime to object, and due diligence follows an
In the opinion of DFO, we believe that in scrutinizing the objections
that followed the first round of fee proposals, and in guiding and
advising the minister on a fee decision in the spring of 1998, we
followed the letter and the spirit of the act.
I shall now turn to the current fee process. The response
organizations are required to propose fees every three years.
Therefore, they have proposed fees a second time as of the fall of
We have performed our due diligence and advised the minister on those
fees, and we are poised now with an order for the minister to approve
or amend four of the five RO fees. We have held back on that out of
respect for this committee, given the questions that you are asking.
We simply note that, and advise the committee that we have that second
Finally, I wish to bring to your attention, as part of the reform of
the Canada Shipping Act, that we are clarifying the fee process and
introducing the power for government to make financial regulations for
the response organizations in future. Clearly, given our learning
experience in the past three years, that is now necessary.
A discussion paper was published as of December. For interested
members of the committee, I have a copy of that paper with me. A
report, which we are required to make every two years to Parliament,
was tabled this fall on the operation of the regime.
Thank you for this opportunity to appear before you.
Mr. Leclerc: In closing, I should like to make two points with respect
to questions that have been posed by counsel to this committee. First,
with respect to the publication of the established fees, DFO takes the
view that the process followed by the department, while different from
the one advocated by Mr. Bernier, conformed to the Canada Shipping Act
and provided the public with the necessary notice on the fees that
response organizations were permitted to charge. Thus, the effect was
the same as the slightly different process proposed by Mr. Bernier
and, we would submit, produced results intended by the act.
Mr. Lee: On a point of order. Mr. Chairman, Mr. Leclerc is doing his
best here to provide some preliminary answers to questions that he is
anticipating will arise. However, he is characterizing some
suggestions that have been forwarded to the department in the past as
being Mr. Bernier's view. I did not want the record to go on any
further without noting that there is no view of Mr. Bernier in this
regard. There is only the view of the committee, and the requirements
of the statute.
No one is personalizing the statutory requirements here. There may be
a difference of views between the committee and the department, but it
is unfair for Mr. Leclerc to place our counsel on the front lines
here. The witness has misunderstood what is happening.
I would ask Mr. Leclerc to please consider replacing the words Mr.
Bernier with the committee. That would assist the record.
Mr. Leclerc: Mr. Chairman, I apologize to the committee members if
that was the impression that was created. I was referring to comments
received from counsel to the committee. I understand that those
comments represent the views of this committee. Thank you for pointing
that out to us.
I only have one other point to make. In our view, the order signed by
the minister is not retroactive.
That concludes our presentation. We are available to answer committee
Mr. Lee: Mr. Chairman, I apologize to Mr. Leclerc for pre-empting him
so close to the end of his remarks.
In any event, I congratulate the department for doing a great job in
inventing and putting together the response organization mechanisms. I
believe it is working, that it is good for the taxpayer, and it looks
like it is good for the environment.
That having been said, that is a macro approach. This committee does
not always look at the macro situation. We are required by mandate to
look at the micro aspects, some might suggest in a microscopic way.
Yet, we are required to ensure that there is legal compliance.
I have itemized four separate things that I should like to go into.
First, you have been asked to assure us that there is a record of
establishment of fees by the ROs. What constitutes that record? We
have not had a reply as to what constitutes the record of
establishment of a fee by an RO.
Second, it is our understanding that there was no final list of fees
ever published by the department. It is our view that there must be a
final publication of those new proposed fees by an initial RO before
those fees are valid in law.
Third, as I read the statute, I do not see any authority for
retroactive charging of fees in an initial RO scenario.
Fourth, while not in compliance with the provision of the act that
requires the minister to appoint a person as an investigator, the
minister has appointed three persons as investigators in relation to
scrutinizing the first set of proposed fees.
I shall start with the first item. We had asked you to advise us about
the record of establishment of fees by the RO. Are you able to tell us
whether or not you have asked for or identified what record of
establishment exists in the ROs?
Mr. Leclerc: To answer that question, it is important to point out the
process that we went through. When the minister signed his order, the
response organizations were advised soon thereafter that a fee level
had been approved. They advised us verbally that they would establish
fees in accordance with the minister's order.
Although the order was not required to be published, given that the
department was already publishing the order with the fees, and that
the response organizations had informed us that they would be
establishing fees in accordance with that order, and given that the
sequence contemplated in the Canada Shipping Act was respected, it was
our view that by publishing the order and fees, we were publishing a
copy of the list of the fees as required by the CSA.
Mr. Lee: Perhaps you missed my specific focus. Several ROs have
embarked on procedures whereby they establish fees. If I am paying the
fee, I may wish to ask the RO: Would you please show me the document
under which you have established the fees? We have asked you for a
copy of such a document. Is there one in existence? From your answer,
you are indicating to me that there is not.
Mr. Leclerc: I think by my answer I am telling you that we do not have
it in our possession. I am also telling you that the specific
instrument that the members may be looking for is not the instrument
that most people would expect.
I think it is important. I would ask my colleagues to step in to
assist me, because there is a point to be made about the nature of the
arrangements that the ROs enter into with their clients.
Mr. Lee: I understand that a consultation process went on here. I
understand that every RO knew what the score was on April 2 or April
3, 1998, when the minister gave his order that authorized the fees. I
am not saying anyone was blind-sided here. However, if I were paying a
fee, I would like to see the document whereby the fee was established,
because the statute requires the RO to establish the fee.
There may not be such a document. At best, it is sloppy bookkeeping or
sloppy management, but let us move on from that.
If there is no such document — and I suggest there should be — then
perhaps we ought to be asking an RO.
The Joint Chairman (Mr. Grewal): Mr. Leclerc, if I
understand correctly, there is
no document to establish the fees to be charged?
Mr. Leclerc: We do not have the document in our possession.
The Joint Chairman (Mr. Grewal): Was any document ever prepared?
Mr. Leclerc: I imagine there was.
The Joint Chairman (Mr. Grewal): Would you send us a copy
of that document?
Mr. Bruce Bergen (Senior Counsel, Legislative Services Branch,
Department of Fisheries and Oceans): In April of 1998, the department,
in making the minister's order and in dealing with the response
organizations when they were establishing fees, was cognizant of the
fact that the statute does not provide for any particular instrument
that the ROs must use to establish their fees. In hindsight, the
department perhaps should have asked for a document of that nature,
but the department did not do so at that time.
We have received letters from each of the response organizations,
indicating that they did establish their fees in April of 1998,
following the notice they received indicating that the minister had
approved the fees. We do have that document.
As Mr. Lee pointed out, the fees were incorporated within the
arrangements or the contracts between the response organizations and
their clients. We took the view that this could take a form to be
determined by the ROs and their clients. That might have been quite
informal, but it was not something into which the department felt it
could inquire. In hindsight, perhaps it would have been better to make
Mr. Lee: We will now have to make those inquiries. It is as simple as
the ROs getting together for a meeting, which they have done from time
to time, and deciding as a body to establish the fees. If they have
not done that yet, there is a certain weakness there.
I realize that we are talking about a small club of operators. There
are not thousands of individuals and corporations involved. Rather, we
are talking about a group of people in the transportation business and
in the shipping business.
Mr. Bergen: It is important to note that the fees were approved by the
minister to be established by each and every response organization. In
essence, the establishment of the fees by the response organizations
is something that the response organizations do themselves with their
clients, and within their corporate structure. The department does not
know whether they would pass a corporate resolution, or simply send a
letter to their customers or clients saying, These are the fees
approved by the minister, and, accordingly, we are establishing the
fees in that manner.
Mr. Lee: We cannot accept that an RO can do this on the back of an
envelope in a phone booth, or in the front of a pickup truck one
evening, because someone said, You better make a list of fees. That
is not the way we allow the public to be charged fees. That is my
The Joint Chairman (Mr. Grewal): I understand that, but I
heard words to the effect
that there may be a document or there might be a document. We need
more information on the question of whether the document is there. If
so, we would like that document sent to this committee.
Mr. Lee: My second point is that as we see the record here, no final
list of fees was ever published by the minister in the Canada Gazette,
as required. That, we believe, is a statutory requirement. Can you
confirm that the minister has never published a final set of fees, as
approved by the minister?
Mr. Leclerc: Could you repeat the question, please?
Mr. Lee: The law requires that the minister publish the list of fees
that he or she has approved in the process. I understand that no final
list of fees, as approved by the minister, was ever published?
Mr. Leclerc: I think the requirement is for the minister to publish
fees established by the ROs under the Canada Shipping Act.
Mr. Bartram: The answer to the question is yes. A final list of fees
was published on April 18 because that was the list that the minister
published in publishing his order.
Mr. Lee: I will ask counsel to assist me in this.
The Joint Chairman (Mr. Grewal): There is a misunderstanding on this point.
Mr. François-R. Bernier (General Counsel to the Committee): The statute
requires that ROs propose fees. Those fees are reviewed by the
minister, and he gives his approval to the proposed fees. Essentially,
he is approving a draft. The order approving the draft was published.
It is not required to be published under the act. ROs must establish
the fees, and then the minister is under a legal duty to cause the
fees so established to be published. That is the publication that
never took place.
Mr. Lee: Mr. Chairman, that is the question I have asked. I understand
that no publication of the proposed final fees was ever made. The
witnesses have said the final list of fees was published. If that is
the case, would the witnesses please provide us with the particulars
of the publication of that list of fees?
Mr. Leclerc: We agree with the committee that there is a three-point
process here. First, the minister approves a fee level; then the fees
are established by the ROs, after which the minister causes a copy of
those fees to be published in the Canada Gazette. There is a
chronological order in which those events take place.
The minister signed his order on April 2, 1998. The department then
advised the response organizations that the minister had approved a
fee level. They informed us that they would establish fees in
accordance with that order. Hence, when we published the order with
the fees, we were actually publishing the fees as established by the
response organizations. In our view, the requirements of the Canada
Shipping Act have been satisfied.
We agree that there is no statutory requirement in the Canada Shipping
Act to publish the minister's order. We published it for the sake of
transparency. We published it to make known to the public the
minister's order and the fees that would be charged by response
organizations, which is the primary purpose of publishing the fees.
That is our understanding.
Mr. Lee: We do not have any problem with the department publishing the
minister's order. We have never objected to that. We simply want to
see that the department has published the final list of fees as
required by the statute. In our view, that list has not been
published, and that is our problem. We do not have a problem with the
minister publishing his order. He can publish his daily agenda in the
Canada Gazette if he wants, but we insist on compliance with the
Mr. Wappel: It is obvious, colleagues, that the department believes it
has complied with the act. We do not think so, but that is their view.
To begin, who is Sharon Ashley?
Mr. Leclerc: Sharon Ashley was the former director of legislative and
regulatory affairs at the Department of Fisheries and Oceans.
Mr. Wappel: Where is she now?
Mr. Leclerc: She is currently acting director general at Aboriginal
Mr. Wappel: She had some difficulty responding to our letters in a
timely fashion. I note that in September of 1998, when you wrote, Mr.
Leclerc, you were acting director. Are you still acting director?
Mr. Leclerc: Yes.
Mr. Wappel: We then followed up with a letter of September 28 to Ms
Ashley, because your letter made no mention of the fact that Ms Ashley
had gone, and that you were replacing her. I guess we are supposed to
assume that when we see A/Director under your name. Is that right?
Mr. Leclerc: That is right.
Mr. Wappel: It might have been courteous to notify our counsel that Ms
Ashley had gone and that you were replacing her.
In any event, we wrote to you on September 28 and had to follow up
with you, since we received no answer, on January 28. Why is that? Did
you not get the letter?
Mr. Leclerc: Part of the reason for the slowness in responding is the
complexity of the issues that were being raised.
Mr. Wappel: Let us look at the complexity, if that is your excuse. Let
us look at section 660.4(2) of the act. Step one is to propose some
fees. That is not particularly complex, is it? You propose some fees.
Mr. Bergen: A response organization that is applying for a certificate
of designation shall propose fees.
Mr. Wappel: Under step two, the minister causes a copy of that list of
proposed fees to be published. That is not complicated, is it?
Mr. Bergen: That was done in 1995.
Mr. Wappel: It is not complicated, intellectually, to publish a list
of proposed fees, is it?
Mr. Bergen: No.
Mr. Wappel: The next step is that if people have any objections, they
file them. Is that right?
Mr. Bergen: That is correct. In fact, in 1995, I believe a total of 31
objections were received. A few of them were later withdrawn.
Mr. Wappel: Subsection (5) reads:
Where a notice of objection is filed, the Minister shall appoint a
person to investigate whether the charging of the proposed fee would
be fair and equitable. Is that complicated?
Mr. Bartram: There is one nuance. If you read the clause to the end,
you will find that shall becomes may.
Mr. Wappel: Yes. That is brilliant drafting, but that is fine. Is
there any dispute that a person is singular?
Mr. Bartram: I do not dispute that.
Mr. Bergen: No. Certainly it says a person.
Mr. Wappel: What legal authority, then, did the minister have to
appoint three people to investigate the proposed fees?
Mr. Bergen: I think that, although the statute clearly says a person,
at times it is open to interpret a statute as the singular meaning the
plural, or the plural meaning the singular.
Mr. Wappel: What authority is there for that? Is that in the
Mr. Bergen: It is in the Interpretation Act.
Mr. Wappel: What section?
Mr. Bergen: I do not have the section before me.
Mr. Leclerc: It is in the Interpretation act, but the fact that a
panel of three members was appointed does not mean that all of them
had the powers of commissioners under the Inquiries Act. In fact, it
is our understanding that Dr. Gold had the power of commissioner and
that the other two panel members were there to assist him in his
Mr. Wappel: Was that made clear?
Mr. Bartram: None of us were there at the time, but I looked at the
correspondence and, frankly, it was not made clear.
Mr. Wappel: Although it is pretty simple.
Mr. Bartram: Dr. Gold was appointed as the chairperson and the other
two were appointed as members.
Mr. Bergen: That was because of their specific expertise, I believe.
Mr. Wappel: If the department is seriously maintaining that the word
person in this act can mean persons, I should like you to forward to
this committee your legal authority for that proposition. Otherwise, I
should like you to accept that a person is a person, singular. We need
not dwell on that any more today, but I would ask you to provide us
with your legal authority for maintaining that, in this statute, when
it clearly says a person in subsections (5) and (6), that can legally
be read as persons.
Mr. Bergen: I think we should look into this issue a little further
and reply to the committee about the events of 1995, which none of us
were there to witness. Dr. Bartram has made an important point about
that panel of three persons.
Mr. Wappel: Thank you. We will wait for your answer.
Subsection (7) says that the person who holds an investigation shall
send a report.
Subsection (8) says that the minister may, by order, approve or amend
a proposed fee. In this case, he presumably amended it. It says that
the response organization shall establish its fee accordingly.
Mr. Leclerc's letter of March 2 to this committee says that the
designated response organizations established their fees on these
specified dates. How did they establish their fees?
Mr. Leclerc: We did not ask them which instrument they used to
establish their fees. It is our understanding that, as the body
responsible for establishing their fees, the instrument is up to them.
Mr. Wappel: Is it the position of the department that it has no
obligation whatsoever to determine that the fees were legally
Mr. Leclerc: We considered the verbal notification that the fees were
being established in accordance with the minister's order as adequate
proof that those fees had been established in accordance with the
Mr. Wappel: Do you think that is prudent?
Mr. Leclerc: There is another point to be made about this: The
minister's approved fee levels were published in the Gazette on April
Mr. Wappel: We will get to that. Do you think it is prudent to rely on
the oral assurances of ROs that they have established their fees?
Mr. Leclerc: Given the nature of the system, it is always better to
have an instrument in place, but the information from the response
organizations that they had established fees in accordance with the
minister's order was satisfactory under the circumstances.
Mr. Bartram: First, I would say yes, because it is a market-based
system and the ROs had no choice but to establish the fees as approved
by the minister.
Second, the minister, in publishing the final list of established fees
on April 18, made it clear to the whole fee-paying world that only
those fees could be charged.
Third, they are charged in private sector contracts between parties.
The minister has no ability under the act to examine the terms and
conditions of those contracts. They are private contracts between
Fourth, given the public nature of the established fees, through
publication in the Canada Gazette, should an RO be so foolhardy as to
attempt to charge its clients a fee other than that approved by the
minister, the client can cite the published order, can make a
complaint to the minister, and can refuse to pay the fee. It is as
simple as that. It is a private sector system.
Mr. Bergen: I would add this to Dr. Bartram's comment: Because those
fees are incorporated into the contractual arrangements between the
response organizations and their clients, and because it would be
clear — especially following publication on
April 18 — to the clients that
the ROs could only establish their fees if they were approved by the
minister, one remedy the client would have would be a remedy in
contract. In other words, the client could sue on the contract.
Mr. Wappel: The second part of subsection (8) states that the minister
shall cause a copy of the fee to be published in the Canada Gazette.
We understand your position is that by publishing his entire order,
subsumed in which is his approval of the fee, and your position that
the ROs could do nothing but accept that fee, you have complied with
the spirit, and I believe you said the letter, of the act. It is my
view that that may be true as far as spirit goes, perhaps, but as far
as letter goes, that was not the case. However, that is neither here
According to your notes, the proposed fees were established by the ROs
on April 2 and 3, 1998. The fee order — and let us take your generous
interpretation of the act — was published April 18, 1998. How can these
organizations charge these fees from 1995?
Mr. Bergen: In 1995, when the response organizations applied for
certificates of designation and were designated as response
organizations and began to enter into arrangements with their clients,
those contractual arrangements would have had to make some provision
for the payment or service that the response organization provides,
which is a service of oil spill preparedness. When the contracts were
entered into, although the Department of Fisheries and Oceans does not
have any statutory authority to seek copies of the contracts, or to
mandate the way in which the issue of payment for services is
addressed in those contracts, it would have been open to the response
organizations and their clients to include a provision in each and
every contract that would address the issue of fees.
Conceivably, a contract could provide that fees would be paid at the
level proposed by the response organizations until such time as a fee
is approved by the minister. Accordingly, the response organizations
are able to establish their fees in accordance with subsection (8) of
Mr. Wappel: Is there anything in the section that we have been
discussing, or anything in the entire act, that supports your view? Is
there anything that gives the organizations authority to charge the
fees? Suppose from 1995 to 1998 they charged fees higher than the
minister established. Could they do that?
Mr. Bergen: Conceivably, they could do that.
Mr. Wappel: They could have charged no fees?
Mr. Bergen: The act is silent on the form of the arrangements and
contract between the response organizations and their clients, as well
as the manner in which the response organizations and their clients
could address this issue of fees. The example you have cited is quite
By the same token, it is possible that the response organizations and
their clients could have agreed that no fee would be paid from the
time that a contract was first entered into until such time as the
minister approved the fee, the RO established the fee, and then for
the period of time prior to that day, that fee could have been paid by
the clients. Beyond this issue we are discussing about the minister
approving fees, there is no statutory authority for the department to
delve into the issue of the contracts between the response
organizations and their clients. I think that really hearkens back to
the point made by Dr. Bartram that this is a private sector based
regime. It was clear that the private sector did not want that sort of
interference in their contracts or arrangements.
Mr. Wappel: What about subsection (11)?
Mr. Bergen: Do you have a specific question?
Mr. Wappel: It states that after the minister has approved a new fee
or an amended fee, that fee shall be applicable. From when is that fee
applicable? It is not from the date the contracting parties decide it
shall be applicable but, rather, from the date of publication in the
Canada Gazette of the proposal for it. Does that not indicate that the
statute decides when the fee becomes applicable and not the
Mr. Bergen: This is a difficult issue.
Mr. Wappel: It seems pretty clear to me.
Mr. Bergen: Subsection (11) refers to a new fee or an amended fee. It
is not clear in our view that the new fees or amended fees refer to
the first fees that are proposed by a response organization at the
time that they apply for certificate of designation as required in
At that time, the response organization files a list of the fees that
it proposes to charge. The process that you have set out in
subsections (3) through (8) applies.
Interestingly enough, subsection (9) requires that where a response
organization proposes to charge a new fee or proposes to amend a
fee — which are the terms used in subsection (11) — the
provisions of the
publication through approval by the minister process apply with such
modifications as the circumstances require to the proposed new or
One can take two views here. I think that a proposed few is a new fee,
and, accordingly, that the retroactivity provision applies. However,
on a very strict construction of the statute, I think there are those
who would say that that is not what Parliament intended.
The other view is that the proposed fee is a unique fee because it
appears but once, that is, when the response organizations apply for a
certificate of designation. Accordingly, if the retroactivity
provision does not apply to a proposed fee, what is the solution?
Mr. Wappel: I assume the solution would be to recognize the problem
and amend the statute, rather than try to work around it as if the
problem did not exist.
Mr. Bartram: You will be happy to know that, in fact, we are amending
the statute to simplify all this and to make it right.
Mr. Bergen: In the end, based on advice from those of us in the
Department of Justice, the Department of Fisheries and Oceans
concluded that the one thing that is different about a proposed fee as
opposed to a new fee or an amended fee is that the fee proposed by the
response organization at the time it applies for a certificate of
designation, after which it is able to contract with its clients, is a
fee that both parties are aware has been proposed. They are aware that
that proposed fee may in fact be amended or approved at a different
level by the minister pursuant to subsection (8). Accordingly, those
parties may contract to deal with that eventuality, recognizing that,
possibly, subsection (11) does not apply to that proposed fee.
I agree with you, Mr. Wappel, that it is not so clear. We in the
department had to debate this quite a bit. We decided that the actions
we took were, perhaps, the better course of action. As Dr. Bartram
said, a reform process is, indeed, under way.
Mr. Bartram: That touches on the policy question, too, which deals
with the intention of the act. That is one of the things that we were
confronted with in trying to interpret this process and this statute
intelligently, given the situation that we are faced with here.
Here the act clearly intends a private sector regime that provides a
high level of preparedness and is financed through fees paid by
potential polluters. It also clearly intends that the response
organizations be in place, and somehow financed. They are financed
through fees. The minister's order makes no reference to
retroactivity, and is therefore not retroactive as an order, but the
arrangements that the ROs have with their clients are between parties,
and fees may be paid as part of those arrangements, or fees may be
adjusted as part of those arrangements. It is not part of the
minister's due diligence, nor does he have the power to look at those
Mr. Bernier: I would like to direct members' attention to the excerpt
of the statute attached and to the definition of response
organization in section 654, which refers to any person or body in
Canada in respect of which a certificate of designation is issued by
the Commissioner, that is the Commissioner of the Canadian Coast
Guard, pursuant to subsection 660.4(1). If we go to subsection
660.4(1), it tells us that the minister may, in respect of an area,
issue a certificate of designation.
Clearly, we have a problem here. The statute, on the one hand, tells
us that the Commissioner of the Canadian Coast Guard is responsible
for the issuing of certificates, and on the other hand, another
provision in the act tells us that it is the minister. Is the
department aware of this problem? What is the view that has been
formed by the department in terms of the possible legal consequences
on the validity of the designations that have been effected in these
Mr. Bergen: Yes, I think the department is aware of the difference
between the definition of response organization and the provision of
subsection 660.4(1). That is something that will be fixed during the
statutory reform process. The point to be made is that the response
organizations were, in fact, designated by the commissioner. We would
take the view that the commissioner is indeed the minister's delegate,
and that the actions of the minister in subsection 660.4(1) may be
taken by the commissioner as well. In fact, in this regime where there
is a fair degree of administration of the statute involved, these
actions are indeed largely taken by the commissioner or by his
officials acting on his behalf, and, accordingly on behalf of the
Minister of Fisheries and Oceans.
Mr. Bernier: Mr. Bergen just referred to the fact of the statute
involving a fair amount of administration. That is after we have just
heard how this was a purely private arrangement between people, and
that the department has nothing to do with it. Suddenly we find the
department quite involved.
Mr. Bergen: I was referring to activities such as publishing fees in
the Canada Gazette and that sort of thing. In subsection (3) we see
that the minister shall cause a copy of the list of fees to be
published. That is obviously not something that the minister would
Mr. Bernier: The comment was made earlier that the letter and spirit
of the law had been followed in the establishment of the fee process,
on the proposed fees, the original fees. It took the minister nearly
three years to approve fees from the time those fees were published.
Is that the spirit and letter of the law? Is that type of delay what
Parliament intended in the establishment of fees?
Mr. Bergen: I do not believe that anyone intended that there would be
that sort of delay between the initial publication of the fees by the
response organizations and their eventual approval by the minister, or
between establishment by the response organizations and publication. I
think that those who were involved in the drafting of the statute,
those in industry who were involved in the development of this regime,
did not foresee that that sort of delay would indeed take place.
The experience was simply that there were unanswered questions that
had to be dealt with, and the appointment of the panel or of the
investigator, and that appointment took a fair bit of time. The report
of the panel took a fair bit of time in developing. There were a
number of objections to examine. Following the receipt of the report
of the panel, the Department of Fisheries and Oceans felt that, in
order for the minister to make an informed decision about the approval
or amendment of the fees, additional work was required. I believe the
whole process simply took a lot longer than anyone ever intended it
would. I do not think there was any attempt by the department to
circumvent the intention of Parliament. It was just that the process
took a lot longer than they thought it would.
Mr. Bartram: Mr. Chairman, I can supplement that answer, if you wish.
The Joint Chairman (Mr. Grewal): Very briefly. We will be
ending this meeting at 9:45.
Mr. Bartram: As brief as I can, I would note that the department made
every effort to conform to the process laid out in the act, appointed
an investigator and informed that panel. The investigator,
approximately a year after the fees were first proposed, delivered his
report. That report, however, was a very difficult one for the
minister to implement. The minister asked for advice on fair and
equitable fees. The investigation panel produced a report that said
that the whole regime should be changed but did not give the minister
the data needed to approve or amend fees as he was required to do
under the act. Therefore, the minister continued to do further
financial due diligence in an effort to set fees. That was the reason
for the delay.
Mr. Bernier: I should like to turn to Mr. Leclerc's statement that the
impression — and that was his word — might have been created that the
department was not replying to the committee. If members will look at
my letter of April 23, 1998, which is appended in Appendix B, that
letter is numbered. There is on the first page point number 1. That
deals with the failure of the minister to publish. If you turn to page
2, the fourth full paragraph is numbered 2. That paragraph begins a
discussion of the issue of the retroactive application of the fees by
I then obtained a reply on September 14, 1998, from Mr. Leclerc. That
reply deals exclusively with point number 1, the issue of publication.
I wrote back some 14 days later and pointed out that his letter
completely ignored the issue of the date of coming into force of fees
established pursuant to the relevant provision of the act, an issue
that was dealt with in point 2 of my letter. I then go on to discuss
some of the reply that had been given on the issue of publication.
Mr. Leclerc replied on February 8, 1999, again exclusively discussing
the issue of publication, and not addressing point 2 of my original
letter, although I had clearly pointed out that that point had not
That prompted me to write back on February 12, as follows:
As was clearly indicated in my subsequent letter of September 28,
1998, your reply to my letter of April 23rd did not address the second
issue laid out in that letter. I now have your letter of February 8,
1999 in which you further discuss the matter of publication but fail,
once again, to deal with the issue of the coming into force of these
orders. As my request for a reply on this issue was both clear and
explicit, I can only conclude that you are deliberately refusing to
provide an answer.
On March 2, Mr. Leclerc sent a letter in which he stated that the
response organizations are those corporations that made these orders
on this and that date, namely, April 3 and April 2 for one of them.
That does not deal with the issue of the retroactive application by
those response organizations of those orders, which was the issue
raised in my second point. On March 18, I then conveyed the
committee's invitation to appear.
Can the witnesses understand why the committee might have gained the
impression that a reply was not being given? Would that not be more
than an impression but a fact? To this day, we still do not have a
reply from the department on that issue. I should like to suggest that
it is more than merely an impression here. It is a fact. Will the
committee be given a reply on that issue, Yes or No?
Mr. Leclerc: We will be providing a reply to you shortly after this
meeting. I apologize to the committee for the delays in responding to
you. The issue is a complex one. As Mr. Bergen pointed out, we had
some work to do in examining the full impact of the issues. It was a
difficult question to answer for us and we wanted to ensure that the
committee was properly informed, and that we provided a response that
did not prejudice the governance framework for this important regime.
If committee members feel in any way that disrespect by the department
was a motivating factor in these delays, I want to dispel that notion
right away. We take this committee's work and its comments very
seriously. Sometimes it takes a bit longer to provide an adequate
response. That is my answer to your question.
The Joint Chairman (Mr. Grewal): How long will it take before you
might send us that information?
Mr. Leclerc: I will endeavour to do so within the next week.
Mr. DeVillers: On that point, Mr. Leclerc, you indicate that it was
not out of disrespect for the committee. In a case like that, would it
not be simpler to communicate to the committee the difficulties you
are having in providing the response rather than totally ignoring it,
which leaves the committee with only that impression?
Mr. Leclerc: You are right. Perhaps that should have been made clear.
In the case of the change of directors in our units that Mr. Wappel
has noticed, I did not formally notify the committee of the change in
leadership in our group because, as acting director, I have been
writing to the committee on a number of other files and it was my
impression that committee members would take note of the fact that a
change of leadership had occurred.
After a few months of correspondence, I realized that letters were
continuing to be addressed to Ms Ashley, the former director. At that
point, I then wrote a letter to the committee advising them that I had
been appointing acting director.
Mr. DeVillers: When there are difficult questions, it would simply be
a matter of communicating that you are working on it. I am sure the
committee would understand. When there is just a wall of silence, it
Mr. Leclerc: We apologize for that. We will endeavour in the future to
keep you better apprised of what work we are doing on particular
Mr. Wappel: That was the exact point I wanted to make.
Mr. Bernier: I have one additional point, Mr. Chairman. The witnesses
agree that all those response organizations are corporate bodies. Is
Mr. Bergen: Yes.
Mr. Bernier: As corporate bodies, they function by way of resolution.
Is that correct?
Mr. Bartram: Not necessarily.
Mr. Bernier: I would think that legally — and perhaps Mr. Bergen wants
to answer this — when a corporate body talks, it talks by way of
resolution. It has a board of directors.
Mr. Bergen: Yes; I am sure the response organizations must adhere to
the legislation regarding the manner in which they function, but I am
not so clear on that. In fact, I do not think I can offer a view as to
whether an action such as the establishment of response organization
fees would require a resolution.
Mr. Bernier: We have a statute that provides that a corporation may
establish and prescribe fees. I put it to you that the way for that
corporation to exercise that power is by way of a resolution, and that
is what I would expect to find.
In my letter of March 18, I asked for a copy of the resolutions
adopted by each organization. Will the department undertake to ask
about that? Apparently it has not bothered itself with that issue up
to now. It has assumed compliance with the statute, which is very
wonderful. Will it now bother itself to contact the response
organizations and ask them whether they even established fees
following the approval of the draft by the minister?
Mr. Bergen: Indeed, Mr. Bernier, we have done that. We have received
confirmation by letter from each and every one of the response
organizations that they did establish their fees immediately following
the approval of those fees by the minister, when they were notified.
Mr. Bernier: They can send you a copy of the relevant resolution,
Mr. Bergen: They did not indicate in those letters that they had
passed corporate resolutions.
Mr. Bernier: Will you ask them for a corporate resolution?
Mr. Bergen: We can do that.
Mr. Bernier: You indicated that the Point Tupper Marine Services
established its fees, according to the letter from Mr. Leclerc of
March 2, on April 2, 1998. According to an earlier letter from Mr.
Leclerc dated September 18, the approval order of the minister was
only communicated to each response organization on April 3. How could
Point Tupper establish fees the day before the minister's approval
order was even communicated to it?
Mr. Bartram: The text of the letter from Point Tupper Marine Services
said that they had established their fees effective April 2. It may
have been a miscommunication.
Mr. Bernier: There is a date of coming into force — at least
to Point Tupper.
Mr. Bartram: To return to your previous question, I cannot assure the
committee that we can supply it with corporate resolutions from each
of the ROs. Some ROs have corporate resolutions, but I am not sure
that all do. I do not think we have the ability to ask them that.
Mr. Wappel: You do not think you have the ability? Of course you can
Mr. Bartram: We can ask, but we do not have the power to demand.
Mr. Lee: We do.
Mr. Bernier: One additional point must be made, and I am making this
observation to members of the committee: If the department had
complied — that is, the minister had complied with his legal duty to
publish the fees established by response organizations — as he is
directed to do by statute — none of these questions would be necessary.
The department would not have to assume, or presume, conformity
between the fees and the minister's approval order. It could verify
that compliance because the final fees would be published. We would
not have to ask for copies of the resolutions and dates of coming into
force, or proof of the official existence of the response organization
fees because they would have been published as required by the act of
It was observed earlier that Mr. Bernier had suggested a different
process in terms of publication. I found that objectionable as well
because the process that I am suggesting — that is, according to
you — is
the process ordered by Parliament. It is as simple as that. It is not
my view but Parliament's view of the process that is to be followed.
Mr. Lee: I understand from your remarks today that the department is
considering proposing legislative amendments to these sections. It
would be useful for us to get a sense of just what is being amended. I
should like you to ask the minister to allow the department to
indicate to our committee the proposed legislative amendments that are
in mind. That should be done as quickly as the department can move to
the amendments. I think the process might be helpful.
Mr. Leclerc: We can certainly try to do that. I must remind you that
the amendments to the Canada Shipping Act are co-sponsored by two
ministers, namely, the Minister of Transport and Minister of Fisheries
and Oceans. In order to do that, we must have the agreement of two
Mr. Lee: Let me put it simply: If you cannot do that for us, please
let our committee know through correspondence to our clerk or counsel.
If that is the case, then the committee will write to both ministers.
If you cannot organize that, for whatever reason, please let us know.
We will do what we think is best.
The Joint Chairman (Mr. Grewal): Before we continue out meeting
in camera, I should
like to thank the witnesses for coming here this morning. The
committee is looking forward to receiving the letter that you promised
to send within a week, as well as the copies of the documents that we
need, in particular the established fee and some of the other
documents which contain information that it was made clear in the
discussions that we need.
We will continue in camera at this point in time.
The committee continued in camera.