On April 1, 2009, the Administrator attended the annual conference of the Shipping Federation of Canada inMontreal. This association, as its website notes, is incorporated byAct of Parliament and aims to represent and promote the interests of ship operators and agents involved in Canada’s world trade. It includes in its objectives the promotion of an environmentally sustainable and quality–oriented transportation system.Accordingly, the Administrator considers familiarity with the membership of this association to be a valuable source of contacts, especially where international shipping may be involved in ship-source oil pollution incidents.

At the invitation ofMr. John O’Connor, a member of the teaching staff in the Faculty of Law,McGill University, the Administrator attended lectures at the University on April 1, 2009 and again on March 31, 2010, to give law students an account of the operations of the SOPF. His remarks were in the context of a lecture on the operation of the national and international regime of liability and compensation for ship-source oil pollution. The talk on both occasions proved to be a most instructive, both for the students and for the Administrator, provoking a number of interesting questions from students. The Administrator hopes that this initiative will be repeated in the future as a means of raising awareness of future lawyers in this very specialized field of maritime law. Special thanks go to Mr. O’Connor for organizing this initiative.

The Administrator continues to followclosely the activities of the CanadianMaritime LawAssociation. As in the past, on April 16, 2009, the Administrator attended the meeting of members of the Association and governmental officials, organized under the auspices of Transport Canada.Where appropriate, the Administrator also attends open meetings organized by the Association on current trends in Canadian maritime law. Those meetings also afford opportunities to keep in touch with the membership of the Association.

The Canadian Marine Advisory Council (CMAC) is Transport Canada’s national consultative body for marine matters. CMAC held its semi-annual meetings in Ottawa from April 27 to 30 and from November 3 to 5, 2009. The Administrator and a marine consultant engaged by the Fund, Captain George Legge, attended some of the meetings. The Administrator follows with interest the ongoing discussion on all marine environmental issues addressed at the national CMAC sessions. He keeps abreast of the proposed regulatory framework for the prevention of oil pollution from ships of all classes. Of particular interest are the deliberations of the Standing Committee on the Environment. The Committee provides a forum for consultation and information sharing on such issues as oil pollution prevention and oil spill response.Also of interest are the discussions in the working group on marine oil pollution.

Below are a number of subjects reported on at CMAC that are of particular interest to the Administrator.

Marine Waste Disposal

During theNovember 2009 session Transport Canada reported to CMAC that it is continuing to develop and implement a waste management strategy for ships and shore-based facilities. Marine Safety gave a presentation on the waste survey it is currently undertaking with the Department of Public Works and Services Canada to estimate the amount of waste generated by commercial ships. Government Consulting Services has been contracted to conduct the survey. The scope of the survey will include sewage, greywater, oily bilge water and other ship-generated machinery residual oils. The study will not, however, include pleasure craft, fishing vessels and floating production storage and offloading vessels operated by the offshore oil exploration industry. The data collected will be used to inform proponents of new port development of the requirements for waste reception facilities. When consultation with themarine industry is completed, the report will be circulated to themembers of the CMAC Standing Committee on the Environment. It will be available on the CMAC website.

During discussion, it was noted that Transport Canada recognizes the importance of having adequate facilities in Canadian ports to receive engine room oily waste and other residual oils generated by ships. From an economic and practical standpoint, all Canadian port reception facilities have to be conveniently located to meet the operational requirements of the ship without undue delay. The reception facilities must also be affordable for all classes of ships. In order to ensure compliance with the MARPOL oil discharge regulations, in 2006 Transport Canada completed a study of waste reception facilities in Canadian ports. The study found that the facilities provided by commercial operators were adequate, but challenges lay ahead with port expansion and new terminals in remote areas. Concerns were raised about challenges associated with future oil and gas exploration in the Arctic. It seems that there are no waste disposal facilities in the high Arctic. Marine operators are apparently using community dumps. This issue will be addressed by the waste management study.

East Coast Environmental Risk Study

During the April 2009 CMAC meetings, Transport Canada presented information on the status of the ongoing study to assess the environmental risk associated with the transportation of oil along the southern coast of Newfoundland. Transport Canada, in partnership with the Department of Fisheries and Oceans and the Canadian Coast Guard, undertook this study in 2005 to assess the risk of an accidental oil spill. For the purpose of the study, federal officials worked in collaboration with the Provincial Department of the Environment and the local offshore marine industry, including other environmental groups. It was recognized that, due to the increase in offshore oil exploration and production on the east coast, tanker traffic was rising significantly, particularly in the Placentia Bay area. Some of the factors under review were, the increase in marine traffic, the size, age, and number of tankers transiting the coastal waters, the vessel traffic routing and management system, oil spill probability assessments, and the potential impact of oil spills on the marine environment.

During 2009, town hall meetings were held in communities along the coast with presentations about the study. Meetings were also held with targeted stakeholder groups, such as the oil and gas industry associations and representatives of the fishing industry, including environmental organizations. As a result of the consultation process, 25 recommendations were received from stakeholders and the general public. Transport Canada’s senior management are currently reviewing the recommendation.

Regulatory Reform

During the November session of CMAC an update was provided on the status of the Arctic Waters Pollution Prevention Act. The membership was advised that Bill C-3, an Act to amend the Arctic Waters Pollution Prevention Act, received Royal Assent on June 11, 2009, and came into force on August 1, 2009. The amendments enable Canada to extend its jurisdiction inArctic water from 100 nautical miles to 200 nautical miles from its baselines of the territorial sea.

National Aerial Surveillance Program

Transport Canada provided a presentation of this subject. Federal government departments and agencies are using available resources to combat oil pollution caused by passing ships. Transport Canada is responsible for the overall direction and coordination of the NationalAerial Surveillance Program (NASP). The objectives of the NASP include enforcement of the pollution prevention regulations, deterrence, emergency response and program support for other government departments and federal agencies, such as the CCG, Environment Canada, and the Royal CanadianMounted Police.

The Administrator is aware that the NASP is an essential component of the federal oil pollution prevention program. During the CMAC sessions in April the membership was provided with an overview of the goals and objectives of the NASP. The presentation addressed the effectiveness of the ongoing operational partnership arrangements among Transport Canada, Environment Canada, Fisheries and Oceans, Canadian Coast Guard and other government agencies.

At the November session, Transport Canada reported it has finished modernizing three maritime surveillance aircraft with state-of-the-art remote sensors to strengthen the aircrafts’ overall surveillance capability. Of these three aircraft two are Dash 8s, one is located in Moncton and the other in Vancouver. One Dash 7 is based in Ottawa and provides surveillance on the Great Lakes andArctic waters. The new Dash 7 was fully equipped with remote sensors and deployed forArctic surveillance during the 2009 shipping season. In addition to the Dash 7 and 8 aircraft, there is a chartered Beachcraft King Air 200 located in St. John’s. This aircraft is contracted for fisheries patrol off the coast of Newfoundland. It is also multi-tasked or conducts dedicated oil pollution surveillance flights as may be required.

Through the air surveillance program, Canada is striving to send a strong message that our marine environment must be protected. In all coastal areas the aircraft are a significant deterrent to wouldbe polluters. Transport Canada reported at the November session that a Cypriot-registered vessel was the first to be prosecuted from evidence collected by air surveillance with the new technology installed on the Dash 7 aircraft. This case resulted in a fine of $40,000 being directed to the Environmental Damages Fund.

The Administrator appreciates being invited to participate in the deliberations of the national CMAC sessions.

The Administrator was invited to attend the Regional Canadian Marine Advisory Council (Northern CMAC) meetings held in Quebec City from May 5 to 6, 2009, and inYellowknife, Northwest Territories from October 21 to 22, 2009. Due to prior engagements, the Administrator was unable to attend personally, but was represented by a marine consultant engaged by the Fund. The CMAC-N meetings are held semi-annually and usually take place in different northern communities. The participants at these CMAC-N meetings represent federal and territorial governments including a range of operators from the northern shipping industry. Discussions are co-chaired by representatives of the Department of Fisheries and Oceans (Canadian Coast Guard Central and Arctic Regions), and Transport Canada Marine Services, Prairie and Northern Regions.

Vessel Traffic Services

During the May session, Transport Canada advised that work continues on developing the proposed Northern Canada Vessel Traffic Services (VTS) Regulations, otherwise known as the mandatory NORDREG. These new regulations, which are not yet in force, are intended to promote safe and efficient navigation and environmental protection, and support the commitment to establish mandatory vessel reporting in Canada’s northern waters.When in force, the regulations will establish a traffic service zone for waters of northern Canada. They will prescribe which vessels must obtain clearance to enter, proceed within, or depart from the VTS zone.

Transport Canada recognizes that a large percentage of vessels operating in Arctic water are currently reporting into NORDREG on a voluntary basis because of the advantages that the service provides.

Arctic Environmental Response

At the October meetings a presenter provided an overview of the CCG’s responsibilities and contingency plans to respond to a marine oil spill in the Arctic. The CCG is the lead federal agency for preparedness and response throughout the region north of 60 degrees latitude. In this respect, the CCG has developed individual response strategies for local communities. This includes storing of equipment as well as providing training to local people on the use of the equipment in order to respond to spill incidents.

There was discussion about the type and amount of oil pollution clean-up equipment currently stored at Churchill, Iqaluit and Tuktoyoktuk, including air transportable spill response equipment at the CCG depot in Hay River, Northwest Territories. The meeting was advised that in addition to existing caches of equipment, CCG has designed new deployable site specific Arctic Community packs of clean-up equipment, which will be deployed throughout Arctic communities during the current fiscal year. The equipment will be stored in 55 containers that will be located in different communities. For example, in total, the containers will store over 50,000 feet of oil containment boom, plus other oil pollution counter-measures equipment.Moreover, the CCG icebreakers will continue to carry first-response spill equipment and the crew members are trained in its use.

As reported in previous Annual Reports, shipowners do not have contractual arrangements with a certified response organization during operations in Arctic water. In fact, there are no response organizations for waters north of 60 degrees latitude. TheArctic sealift operators consider that there is a risk that an oil spill may occur during fuel oil transfer by floating hose from ship to shore in a number of communities. To mitigate this risk, the commercial oil tankers, which are deployed for fuel delivery during the annual sealift operations, are equipped with oil pollution counter-measures equipment. The fuel transfer hoses and other lightering equipment utilized by these ships are designed specifically for Canadian Arctic operations.

In addition to the training provided to the ship’s personnel before departure from southern ports, the oil tanker operators conduct oil spill exercises and pollution prevention deployment drills upon arrival on-site in the northern communities. These training exercises are designed to provide an opportunity for the ship’s crew to practice oil spill equipment deployment under real conditions when oil is pumped ashore through floating hoses, and during barge off-loading activities. Some of the pollution counter-measures equipment used during these exercises is provided by the Canadian Coast Guard from the Quebec Region. In addition, equipment is provided by La Fédération des cooperatives du Nouveau-Québec. Representatives of FCNQ and the Nunavik government are on hand during the oil spill exercises as observers. Further, Transport Canada arranges for a Ship Safety Inspector to be present at the training evolutions.

Regulatory Reform

Transport Canada informed attendees at CMAC about progress on the Canada Shipping Act, 2001, regulatory reform project, including the importance of public consultations. Participants were reminded that specific issues that they would like addressed will be brought to the attention of the appropriate Standing Committee of the National CMAC Secretariat.

A representative of the Department of Environment and Natural Resources (ENR), Government of the Northwest Territories (GNWT) presented and read a paper that GNWT would like to have on record with respect to issues relating to the freezing-in of fuel laden petroleum barges in ice. This freezing-in is done across the Northwest Territories for the purpose of over-wintering fuel storage in large quantities. Specifically, ENR states that it does not support freezing-in fuel laden petroleum barges, except in the case of an emergency where no reasonable alternative exists. ENR proposes that wide consultation is required with communities, agencies, regulators, and other stakeholders prior to the development of guidelines or regulations for this practice.

Sealift Operations

During the meetings, both in Quebec and inYellowknife, presentations were made by several shipping companies about the annual sealift operations, and the delivery of oil products to Arctic communities. Also, the participants provided an overview of the oil spill exercises conducted regularly by the sealift shipping companies.

The Administrator has a direct interest in becoming more aware of the issues surrounding the transportation by sea of oil products throughout the High Arctic.

The Administrator was represented by a marine consultant at the 32nd Arctic Marine Oil Spill Program (AMOP) technical seminar held in Vancouver from June 9 to 11, 2009. These technical seminars on environmental contamination and response are sponsored by the science and technology branch of Environment Canada. The objective is to improve the knowledge base and technology for combating Arctic and marine oil spills. It is an international technical forum about oil spills in any environment as well as other oil spill-related topics. There were discussions during the threeday conference about a broad range of technical development, operational approaches and contingency planning.

The presentation, Waste Management Guidelines for Remote Arctic Regions, emphasized that oil spill response operations in remote areas can generate large volumes of oily and operational waste materials that must be transferred and either recycled or disposed. The amount of waste generated by shoreline treatment response operations is not directly related to the volume of spilled oil nor to the location. It is a function of methods selected by the spill management team.Arguments were presented about allowing natural recovery. The presentation summarized a study conducted by a working group of theArctic Council to develop general guidelines and strategies for oil spill management inArctic Regions.As a result, aWasteManagement Calculator as a user’s guide (computer software) was developed as a planning tool to help decision makers.

Other programs included case studies and recent oil spill experiences, such as the presentations by a representative of the International Tanker Owners Pollution Federation Ltd. One of these presentations addressed the difficulties, financial and operational, of engaging volunteers at major spills – the Hebei Spirit incident in Korea was mentioned as an example. Similar problems were experienced in the recent San Francisco Bay incident involving the Cosco Busan. Volunteers have to be provided with safety clothing at considerable cost and without training their efforts were not necessarily considered worthwhile and cost-effective.

The displays provided at the meetings were informative and they covered a range of oil pollution clean-up equipment and latest technologies. This up-to-date information is valuable for the Administrator in the process of investigating and assessing claims filed with the Fund. The seminar coordinator expressed appreciation that the Fund was again represented at the Environment Canada AMOP Conference.

During the AMOP technical seminar held in Vancouver the marine consultant working for the Administrator took advantage of the opportunity to visit the CCG’s marine environment equipment storage facility in Richmond. The depot maintains an inventory of clean-up equipment, containment barges and auxiliary equipment utilized in the Pacific Region to contain and recover oil at sea and from contaminated beaches. The inventory includes booms, skimmers, boats, sea-trucks, containment barges and other storage tanks for recovered waste oil. There is also a large amount of shoreline clean-up treatment equipment and mobile command communication units. The equipment used in oil spill incidents out off the Richmond base is standardized with that of other depots in the Pacific Region, such as at the CCG base inVictoria. This standardization reduces training requirements and facilitates deployment of resources to react to oil spills throughout the region.

The first-hand knowledge and information obtained during these visits are very beneficial. The Administrator is interested in visiting other Coast Guard regions and continuing the ongoing cooperation and working relationship between both agencies.

The Administrator was invited to present a paper on the operations of the SOPF at the above mentioned workshop in Seattle, July 22 and 23, 2009. The workshop was attended by representatives of the U.S. Oil Spill Liability Trust Fund, set up under the Oil PollutionAct of 1990 (OPA 90), members of the U.S. Coast Guard, as well as members of the Canadian Coast Guard.Although the U.S. is not a party to the international regime, a representative of the IOPC Fund was also in attendance. This was appropriate, since in the event of major trans-frontier oil spill caused by a tanker, the IOPC Fund would be available for Canadian claimants.

The workshop proved to be most instructive, highlighting the basic differences between the Canadian regime of liability and compensation, which is closely tied to the international regime, and the U.S. regime which, in its current version, was established after the Exxon Valdez incident of 1989. Those differences are likely to be a significant factor in the event of trans-frontier oil spills caused by ships.

One of the chief differences between the U.S. regime and the Canadian regime, at least from the perspective of the SOPF, is that the Oil Spill Liability Fund can finance response measures in advance of any claim being made. The SOPF, like the IOPC Fund, on the other hand, are essentially claims based funds. This means that in Canada the costs and expenses for response measures, for example, by the Canadian Coast Guard, must be incurred before they become eligible for submission as a claim either against the SOPF and, where appropriate, the IOPC Fund.

These and other differences, for example, in the realm of environmental damage, between the two regimes are worth some reflection with a view to finding ways and means to reduce their impact in the event of a major oil spill of which, luckily, up until this point in time there have been very few. Future workshops are planned and the Administrator, if invited, intends to participate.

In past reports, the Administrator has regularly drawn attention to the problem of derelict and abandoned vessels. The problem is particularly acute in small craft harbours, which have only limited financial resources at their disposal to address the problem of vessels abandoned in their harbours. This problem has been raised with the Administrator by various parties on a number of occasions. In July the Administrator met with representatives of the Small Craft HarboursAssociation of British Columbia in Vancouver to discuss the issue. While no solution was identified, the Administrator did gain further insight into the problem and has offered to meet again with representatives to explore options. Many of these vessels are ticking time bombs that if not dealt with in a timely fashion will become a hazard to the environment. As the condition of these vessels deteriorates, they also raise safety issues. Failure to act in a timely fashion is therefore likely to increase the costs of eventual measures that must be taken to avoid environmental damage.

As already mentioned, there is a growing interest abroad in the operations of the Canadian fund.As the Administrator has learnt, serious consideration is being given in some jurisdictions for the setting up of a domestic fund. The Administrator attended the Shanghai International Maritime Forum, held from September 15 and 16, 2009. The organizers of the forum requested the attendance of the Administrator to present a paper on the operations of the SOPF. The paper covers the history of the Canadian fund, outlines the claims handling procedures of the fund and describes the interrelationship of the Canadian fund with the IOPC Fund. The paper was well received and has been included in the conference papers.

At a meeting in Beijing, prior to the Forum, with the Chinese Academy of Transportation Sciences the Administrator provided further details on the operation of the SOPF. The Administrator learnt that the Chinese government is quite far advanced in plans to set up its own domestic fund. From the documentation that was provided to the Administrator it is clear that the Chinese fund will follow closely the claims criteria established by the IOPC Fund even though there is no immediate plan for China to join the international regime. It is of interest, however, that Hong Kong Special Administrative Region is a member of the IOPC Fund.

Further details on Chinese plans for a domestic fund are provided in the next section.

On October 19, 2009, a delegation consisting of 14 people visited Ottawa from the ChinaAcademy of Transportation Science, and other institutes of theMinistry of Transportation in Beijing. The delegation was hosted jointly by the Administrator and Transport Canada.

The purpose of the visit was to study first-hand Canada’s domestic Ship-source Oil Pollution Fund. The Administrator was advised that the ChinaAcademy of Transportation Science was drafting regulations for the establishment of a domestic ship-source oil pollution compensation fund. It would be funded by contributions from receivers of persistent oil cargoes (or their agents) which have been transported by sea to a Chinese port. It is understood that the regulations would cover any shipsourced pollution and any ship-related operation that causes, or may cause, pollution damage in waters under the jurisdiction of the People’s Republic of China.

The delegation provided the Administrator in advance with an overview of the subjects they would like to discuss. These subjects addressed basic information, including history of the Fund, administrative regulations, organizational structure, role and responsibilities and operational management procedures. In addition, the subjects covered compensation principles and the scope and nature of compensation.

During the meeting with the delegation, the separate power-point presentations covered a general summary of the Canadian marine liability and shipping laws, and Canada’s oil pollution compensation regime. Representatives from Transport Canada and the Canadian Coast Guard assisted with responses to the written questions submitted by the China Academy of Transportation Science.

The visit ended with a tour of SOPF offices where members of the Chinese delegation had further opportunity to ask questions on the general operations of the Fund. The leader of the delegation, Mr. Zhuang Changbo, Deputy Director General of the Academy of Transportation, expressed his appreciation, on behalf of the delegation, saying that all members were quite pleased with the meeting and had found it worthwhile and very informative.

The Administrator was represented by a marine consultant at the 36th Atlantic Regional Environmental Emergency Team (REET) conference held in Moncton, New Brunswick, on October 28 and 29, 2009. The conference focused on perspectives about oil spill incidents, technology updates, counter-measures, case studies, lessons learned, crisis communication, and international contingency planning. The participants, industry and government, represented a broad scope of expertise currently available to respond during environmental emergencies, including ship-source oil spills.

By way of background, REET includes a number of federal, provincial, First Nations, municipal and other agencies which have expertise, information and responsibilities relevant to environmental emergencies and environmental protection. Private industry and industry associations also participate in REET as they have an interest in ensuring that trained and equipped personnel are available to deal with oil spills when they occur.

During an active response operation, a senior manager of Environment Canada normally chairs the REET meetings, which provide the On-Scene Commander from the Canadian Coast Guard, or the response organization, with consolidated environmental and scientific information such as spill movement, trajectory forecasts, and advice respecting weather forecast. In addition, REET may approve the use of chemical dispersion and other shoreline treatment techniques.

The Administrator appreciates being invited to participate in the REET conferences. Frequently, the Administrator will give a presentation during the meetings to explain the mandate of the Shipsource Oil Pollution Fund, and address the sort of documentation required when a claimant files a claim with the Fund.

At the invitation of the Canadian Coast Guard College, the Administrator attended the On-Scene Commander (OSC) Course held in Sydney, Nova Scotia in November, 2009. The Administrator provided information on the availability of the SOPF for claims based on costs and expenses for responding to ship-source oil spills in Canada. The one-week OSC course is designed for on-scene commanders responsible for coordinating and directing the overall response to marine pollution incidents. The object is to make participants, drawn both from the Canadian Coast Guard and from industry, familiar with the types of plans, processes, organizational structures and resources required to respond to major incidents that could threaten the environment. The course focuses on anticipating and preparing on-scene commanders for the demands and pressures that arise during major or moderate spills.An obvious element of any oil spill incident is the subsequent actions to recover the costs and expenses associated with response activities.

The Administrator provided information on the history of the Canadian fund since its establishment in 1973, emphasizing its evolution from a fund essentially of last resort to its current status as a fund of first resort. The Administrator noted that the Canadian fund is set up for the benefit of claimants, not for the shipowner who bear prime responsibility for spill caused by their ships. The fundamental principle on which the Canadian regime, contained in the Marine Liability Act, is based remains the “polluter pays” principle. The Administrator also stressed the point that good record keeping is essential for the successful prosecution of a claim. Where the Administrator makes an offer of compensation, he is bound to take all reasonable steps to recover the amount paid out of the fund from the party (usually the shipowner) responsible for the spill. He therefore looks to the claimant for proof of the claim. Hence the importance of good record keeping, which should commence as soon as the decision is made to take response measures.

The Administrator also sat on a panel, together with representatives from the Coast Guard Emergency Response Unit, the International Tanker Owners Oil Pollution Federation and the British Coastguard Administration to respond to questions from course participants on cost recovery in Canada and worldwide. All in all, the Administrator found the course to be a useful exercise and a very good opportunity to get to know key players that would be involved in the event of a major oil spill in Canada.

In January the Administrator met with the Commissioner of the Canadian Coast Guard and his deputy to discuss a variety of subjects of mutual interest. Regular contact with senior management of the Coast Guard is considered beneficial, given that many claims handled by the SOPF originate with the Coast Guard.