Marine Liability Act, Section 90(a)
Marine Liability and Information Return Regulations (SOR/2016-307)
International Convention on Civil Liability for Oil Pollution Damage, 1992 (re: Article VII of the Convention)
International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (re: Article 7 of the Convention)
Bill C-64: Wrecked, Abandoned or Hazardous Vessels Act, Section 130(1)(d)
Executive Summary
The International Maritime Organization's (IMO) International Convention on Civil Liability for Oil Pollution Damage, 1992 (1992 CLC) and the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (Bunkers Convention) were created to ensure that adequate compensation is available to cover oil pollution damage resulting from maritime casualties involving oil-carrying ships. Transport Canada’s (TC’s) Marine Safety Directorate issues certificates of insurance to demonstrate:
- That contracts of insurance (or other security) satisfy the requirements of the International Conventions; and
- That the insurance in place is adequate to cover possible oil pollution damage from ships.
Currently, all of the costs of providing marine insurance assessment and certification services are borne by Canadian taxpayers. However, the primary benefits of having these certificates are realized by the ship owners receiving these certificates, who can then call at Canadian and other signatory state ports and access those respective markets.
A key principle underlying any cost recovery initiative is that service recipients who receive a direct benefit above those enjoyed by the general public should pay a greater share of the costs. A fee for marine insurance assessment and certification services leading to the issuance of a certificate needs to be introduced to ensure that this principle is realized.
TC proposes to establish a new fee for providing the service of assessing and certifying the validity and adequacy of marine insurance in place to cover pollution damage under the Bunkers Convention, the 1992 CLC and the Wreck Removal Convention. Introducing a fee for this service would lessen the burden these costs place on Canadian taxpayers. Those who benefit the most from these services will start paying a portion of the costs of delivering the service.
TC performed a rigorous costing analysis, determining that the estimated full cost of assessing and certifying marine insurance is $109 per application. This estimate reflects a three-year average of the cost and effort required to provide marine insurance assessment and certification services, covering fiscal years 2015-2016, 2016-2017 and 2017-2018.
Through this Fee Modernization Proposal, TC is seeking to establish a new fee of $98 per certificate. The proposed fee takes into consideration the following factors:
- The benefit these services provide to companies and individuals;
- The fees other jurisdictions charge for similar services;
- The economic context of the marine industry, including stakeholder ability to pay fees; and
- The impact of rising fee levels on the industry.
The proposed fee would establish the cost recovery rate for marine insurance assessment and certification services at 90 percent.
By implementing a modern fee regime that asks the beneficiaries of services to pay a greater portion of the costs for these services, TC is promoting greater equity between modes and between service recipients and Canadians. This Fee Modernization initiative is part of a broader TC transformation plan to modernize our laws, regulations and services.
1.0. Context
1.1. The Importance of Having Marine Insurance
Transport Canada (TC) performs many activities that directly benefit the Canadian marine industry, including verifying the existence of valid and adequate marine insurance or other financial security for vessels operating in Canadian waters.
Under the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001, (Bunkers Convention) and the International Convention on Civil Liability for Oil Pollution Damage, 1992 (1992 CLC), a separate certificate attesting that insurance or other financial security is in place, in accordance with the provisions of the Convention(s), will be issued to each ship after the appropriate authority (i.e. Canada) has determined that the requirements have been met.
The International Maritime Organization (IMO)'s Bunkers Convention establishes strict liability for ship owners for oil pollution damage caused by bunker fuel onboard their vessel. Bunker fuel is considered to be any fuel used in the propulsion and operation of the ship and is carried on all motorized vessels and some non-propelled vessels (i.e. barges). The Bunkers Convention requires owners of vessels over 1,000 gross registered tonnes to maintain adequate insurance coverage for their liabilities under the Convention, before the relevant marine insurance certificate may be issued.
The IMO’s 1992 CLC was created to ensure that adequate compensation is available to cover oil pollution damage from tankers. The 1992 CLC makes ship owners strictly liable for oil pollution damage caused by oil carried as cargo and requires ship owners of tankers or barges carrying more than 2,000 tonnes of oil in bulk to maintain adequate insurance coverage for their liabilities under the convention, before the relevant marine insurance certificate may be issued.
Both conventions require that adequate marine liability insurance for each ship be in place. Without proof of such insurance, vessels cannot enter port at countries that are signatories to the conventions (e.g. Canada), thus limiting a merchant’s number of potential ports of call and the number of markets their goods can be shipped to. Marine insurance services therefore benefit vessels owners by allowing access to ports and opening up economic opportunities.
The marine insurance service also ensures that foreign vessels entering Canadian waters whose flag state (i.e. home country) does not participate in the 1992 CLC and Bunkers Conventions also have adequate insurance in case of an oil spill. This is because vessels from non-signatory states do not have a domestic authority that can provide insurance attestation services. Therefore, TC provides the insurance assessment and certification service, thus allowing these vessels to also call at ports in Canada and at ports of signatory states.
Under both the Bunkers Convention and the 1992 CLC, certificates are issued annually to show that a contract of insurance or other security that satisfies the requirements of the conventions are in force and that the insurance is adequate to cover possible oil pollution damage. The flag state under which the vessel is registered issues the certificates and can also issue certificates for vessels that are registered in a state that is not a signatory to the convention (i.e. a non-state party). Flag states reciprocally recognize certificates issued by other flag states.
For Canadian vessels and for vessels from non-state parties, such as those vessels flagged in the United States (U.S.), these certificates are issued by the Marine Safety Directorate at TC. As noted above, to call at ports of states that are party to the conventions, a vessel must carry valid marine insurance certificates. Due to this requirement, vessels flagged under non-party states must seek certification from a party state. For U.S.-registered vessels, this is very often Canada. It is likely that the same U.S. vessels will also approach Canada for certification under the upcoming Wreck Removal Convention, allowing them to then call at ports that require that certification. Certificates must be carried on board and be available for production to any duly authorized officer.
As per Sections 56(1) and 74(1) of the Marine Liability Act, the requested certificates shall be issued by the Minister for those vessels who require them. Through this service, Canada fulfills its obligations under both the Bunkers Convention and the 1992 CLC. The certification confirms that there is adequate insurance in place to cover pollution damage and the evidence of that insurance is certified by Transport Canada, representing the Canadian Government, as a party to these Conventions.
By providing CLC and Bunker certificates, Canada is attesting to the fact that these vessels are properly insured in the event of an oil pollution incident, granting them the ability to call at Canadian ports and access Canadian markets.
As a result, Canadian tankers and large vessels are able to operate in Canadian and foreign waters without the risk of being detained or otherwise hindered due to oil pollution insurance issues. Vessel owners benefit from this service as it confirms their compliance with the Bunkers Convention and the 1992 CLC and allows them to call at ports which are party to the Conventions.
Canada being a signatory of these Conventions contributes to the overall competitiveness of Canadian shipping companies, by allowing them to take advantage of business opportunities as a result of foreign countries allowing Canadian vessels in their waters.
1.2. The Growing Complexity of Marine Insurance in Canada
As Canada becomes a state party to new marine insurance conventions, the number of insurance assessments will dramatically increase, which in turn, will dramatically increase the number of TC analyst hours required to assess and certify marine insurance and then issue the relevant marine insurance certificates. As a result, rising costs to continue to deliver these services will not be offset by any revenue inflows. These new conventions and their resulting impacts are discussed below.
Nairobi International Convention on the Removal of Wrecks, 2007: (Wreck Removal Convention) makes vessel owners strictly liable for locating, marking, and if necessary, removing a wreck that poses a hazard. It also requires owners of vessels of 300 gross registered tonnes and above to maintain insurance or other financial security to cover the potential costs related to the removal of the wreck and to provide claimants the right to recover their losses through direct action against the vessel owner’s insurer.
Bill C-64 Wrecked, Abandoned or Hazardous Vessels Act: The adoption of Bill C-64 will make the Wreck Removal Convention part of Canadian law. Certificates will be required as a result of Canada’s accession to the Wreck Removal Convention. Consequently, the number of certificates issued by TC will increase. The projected costs of issuing these additional certificates were factored into the proposed fee.
As of October 18, 2018, Bill C-64 is in its second reading in the Senate and planning for the coming into force of this Act is underway.
2010 Hazardous and Noxious Substances (HNS) Convention:
The HNS Convention is an international convention created to compensate for damages caused by spillage of hazardous and noxious substances during maritime transportation. Canada ratified the Hazardous and Noxious Substances (HNS) Convention on April 23, 2018 becoming one of the first state parties to ratify this international Convention.
The HNS Convention sets out a shared liability regime to compensate claimants for damages arising from the international or domestic carriage of HNS by seagoing vessels.
This Convention will come into force 18 months after ratification by at least 12 states which, in the preceding calendar year, received a minimum of 40 million tonnes of bulk HNS cargo. In addition, four of the 12 states must have a total registered vessels' tonnage of at least two million gross tonnes. It is currently expected that the HNS Convention will come into force sometime in the year 2022 or 2023. Given that this Convention will likely not come into force for several years, the estimated increase in certificates and resulting resource impact of this new initiative have not been factored into the new proposed fee.
As an original state party, Canada fully expects to have ships from countries not party to the HNS Convention coming to Canada. These ships will be required to obtain their marine insurance certificate under the HNS Convention in order to be allowed to call at Canadian ports and ports of other signatory countries.
For more information please visit the TC website on HNS: https://www.tc.gc.ca/eng/policy/acf-acfi-hns-overview-2609.htm
2.0. Issue
Currently, there are no fees being charged to obtain a certification attesting to the validity and adequacy of marine insurance in place to cover pollution damage under the Bunkers Convention, the 1992 CLC and, in the near future, the Wreck Removal Convention. The service is being provided to ship owners for free and Canadian taxpayers are shouldering the full cost of that service.
3.0. Objective
TC proposes to establish a new fee for providing the service of assessing and certifying the validity and adequacy of marine insurance in place to cover pollution damage under the Bunkers Convention, the 1992 CLC and the Wreck Removal Convention. Introducing a fee for this service would lessen the burden these costs place on Canadian taxpayers. Those who benefit the most from these services will start paying a greater share of the costs to deliver this service.
4.0. Fee Modernization at Transport Canada
Some TC services have been provided to individuals and industry free of charge while fees for other services have not been updated in 20 years and do not reflect what it really costs the department to deliver them. As a result, Canadian taxpayers have been bearing more of the costs of providing services to transportation stakeholders.
Furthermore, the Service Fees Act (SFA) changed the legal framework governing fee setting and represents the Government commitment to modernize its services and deliver value to Canadians. The SFA applies to all fees, the ones that currently exist and the ones that TC is working on creating.
Over the next few years, TC will:
- Introduce new fees;
- Increase existing fees; and
- Simplify fee structures.
Fee modernization will be achieved mainly through regulatory changes. It is expected that more than 600 fees will be updated or created through this initiative. Fee modernization is part of a broader transformation plan to:
- Modernize our laws, regulations, rules and standards; and
- Ensure we continue to:
- Uphold safety and security; and
- Support innovation in the transportation sector.
5.0. Current Environment
5.1. Statutory Framework
Section 90 (a) of the Marine Liability Act gives the Governor in Council the power to make regulations “imposing a fee for the issuance of a certificate under section 56 or 74.” Section 56 refers to the International Convention on Civil Liability for Oil Pollution Damage, 1992 (re: Article VII of the Convention). Section 74 relates to the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (re: Article 7 of the Convention).
Section 130 (1)(d) of Bill C-64, Wrecked, Abandoned or Hazardous Vessels Act will give the Governor in Council the authority to make regulations “imposing a fee for the issuance of a certificate under section 25”. Once enacted, this Act will complement the Nairobi International Convention on the Removal of Wrecks, 2007 (re: Article 12 of the Convention).
The relevant statutory provisions can be viewed at the following links:
- Section 90 of the Marine Liability Act:
- Regulations made under the Marine Liability Act:
- Marine Liability and Information Return Regulations (SOR/2016-307)
- Section 130 of Bill C-64, Wrecked, Abandoned or Hazardous Vessels Act (currently in the House of Commons, 3rd reading):
- International Convention on Civil Liability for Oil Pollution Damage, 1992 (re: Article VII of the Convention):
- International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (re: Article VII of the Convention):
- International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 2010 (re: Article 12 of the Convention):
5.2. Current Fees
There are currently no fees for the service provided by TC respecting the issuance of insurance-related certificates under the various marine international conventions.
6.0. Cost Analysis
TC undertook a comprehensive costing exercise to estimate the cost of delivering marine insurance services. The exercise adhered to the Treasury Board of Canada Secretariat’s (TBS) Guidelines on Costing and followed TC’s Cost Recovery Costing Policy to arrive at a defensible and transparent cost estimate.
6.1. Determining Full Cost
Costing for cost recovery purposes requires that the “full cost” of delivering an activity be calculated. According to the Financial Administration Act and applicable TBS guidance, full cost is the allowable upper legal limit that can be recovered through cost-based fees. Full cost represents the departure point for determining pricing options. A full cost estimate comprises all relevant resource costs incurred to deliver an activity or provide a service, including direct and indirect costs, specifically:
- Employee salaries;
- Operating and maintenance;
- Amortization of capital assets;
- Program support;
- Internal services;
- Centrally managed costs, such as employee benefit plans; and
- Services provided by other departments, such as office accommodations.
To capture these elements and calculate full cost, TC applied a costing model that follows principles of activity-based costing to assign costs to all Marine Safety services and activities based on their use of resources.
The Marine Safety cost recovery costing model captures historical and existing Marine Safety costs. For the Marine Insurance Unit, these costs have been incurred to issue two types of certificates: the 1992 CLC certificate and Bunker certificates. Incremental salary costs were added to the historical cost estimate to reflect additional resources that will be required starting in the near future to handle issuance of Wreck Removal certificates pursuant to the Wrecked, Abandoned or Hazardous Vessels Act.
Based on the results of the Marine Insurance Unit cost analysis, the annual, ongoing estimated full cost of issuing marine insurance certificates is approximately $302,000. This figure was divided by the expected annual, ongoing number of certificates that will be issued once the Wreck Removal Convention is ratified – estimated to be 2,788 certificates per year – to arrive at a cost-per-unit of $109 per certificate.
7.0. Proposed New Fee
7.1. Applying the Analytical Lenses
The estimated full cost of assessing and issuing marine insurance certificates represents the maximum possible amount that TC can legally recover through fees. However, that is only the beginning of the analysis necessary to establish prices for this service.
In order to arrive at the proposed fee for marine insurance assessment and certification services, TC applied a series of analytical lenses to determine the proposed fee. The analytical lenses:
- Assessed the services provided by the Marine Insurance Unit to determine how much of the benefits derived from these services accrued to private companies or individuals, as opposed to the Canadian public generally;
- Examined comparable international jurisdictions to see what, if any, fees were charged for similar services by foreign authorities;
- Examined the economic context in which the Canadian marine industry operates to assess the impact rising fees would have on the industry; and
- Considered other factors that may impact members of the industry and therefore the ability of industry to bear fees.
By utilizing these lenses, TC has established a baseline of factual information that support an appropriate cost recovery rate for these services. The information considered as part of each lens, and the impact these lenses had on the proposed fee, are described in greater detail below.
7.1.1. Public-Private Benefit Assessment
Determining what proportion of a service constitutes public and private benefit is fundamental to initial decisions regarding which services should be subject to fees and what the cost recovery rate (the percentage of the costs paid by the user) should be for these services.
TC provides many services that offer neither purely public nor purely private benefits and must therefore consider this proportion when setting cost recovery rates. While services that convey purely public or private benefit have obvious cost recovery rates (0 percent and 100 percent, respectively), setting the cost recovery rate for a service that provides a mix of private and public benefits requires complex considerations.
A Public-Private Assessment (PPA) was conducted using the PPA tool developed by the Treasury Board Secretariat (TBS). The PPA tool estimates the degree to which a service provides a private benefit, if any, above and beyond benefits enjoyed by the general public. The PPA tool estimated that marine insurance services are essentially a private good. It calculated that 90 percent of the benefits from marine insurance services accrue to private companies or individuals, rather than to Canadians more broadly.
7.1.2. International Comparisons
For the purpose of comparability, we analyzed fees from three other countries whom are signatory to the Conventions: United Kingdom, Australia and New Zealand. We noted that these countries have adopted different approaches to cost recovery, related to marine insurance. Two out of the three jurisdictions reviewed have adopted a flat rate for such services.
For instance, the Australian Maritime Safety Authority offers services at a flat fee of $68 CAD for the issuance of a new certificate and $39 CAD for a renewal. In a similar manner, the United Kingdom’s Maritime and Coast Guard Agency charges a flat fee of $53 CAD for CLC certificates, Bunkers certificates, passenger liability certificates and Wreck Removal certificates. Annual renewals are set at the same rates. Alternatively, Maritime New Zealand charges an hourly rate of $216 CAD for the issuance of a certificate (see Appendix A).
For a complete listing of the current status of the relevant conventions and the member states, please see Appendix B.
Table 1 below summarizes the rates applied by other jurisdictions. It can be seen that Canada’s proposed fee of $98 falls within the spectrum of foreign country fees for the same service.
| Canada (proposed) | Australia | New Zealand | United Kingdom | |
|---|---|---|---|---|
| Service Standard (applies to both types of certificates regardless if it is an original or renewal) |
10 business days | 5 working days | 20 working days | 10 working days |
| Fee per Bunkers Certificate issued | New: $98 Renewal: $98 |
New: $68 [AUD$70] Annual Renewal: $39 [AUD$40] |
$216/hour [$235 NZD] |
New: $53 [£31] Renewal: $53 [£31] |
| Fee per CLC Certificate issued | New: $98 Renewal: $98 |
New: $68 [AUD$70] Annual Renewal: $39 [AUD$40] |
$216/hour [$235 NZD] |
New: $53 [£31] Renewal: $53 [£31] |
| Fee per Wreck Removal Certificate issued | New: $98 Renewal: $98 |
N/A | N/A | New: $53 [£31] Renewal: $53 [£31] |
| NSP* | ✓ | ✓ | ✓ | ✓ |
| Validity Period | 12 months | 12 months | 12 months | 12 months |
Note: All monetary figures have been converted to Canadian dollars for ease of comparison using the xe.com posted rate on 2018-12-19.
NSP* - Issues to vessels flagged in Non-State Parties
Note: It should be noted that the United States was not considered for this comparison as their insurance certificate regime is materially different than Canada’s and the international countries for comparison chosen, and thus would not offer an adequate comparison. It should also be noted that the United States is not a signatory to the 1992 CLC, the Bunkers Convention nor the Wreck Removal Convention.
7.1.3. Stakeholder Analysis
The economic context in which members of the Canadian marine industry operate is an extremely important analytical lens that needs to be applied before proposing revised fees. The goal of TC’s Fee Modernization initiative is to have those who benefit the most from services pay a greater share of the costs. This goal must be balanced with TC’s role as a regulator and economic enabler. The fee proposed herein was developed within the context of the relative economic health of the industry, and is designed to be congruent with the ability of industry members to pay fees.
The stakeholder demographic is expansive and disparate. Some stakeholders are private individuals, others are companies of varying sizes, and even states. The users of Marine Insurance Certification Services include owners and/or operators of tankers and other fairly large vessels. The Bunkers Convention applies to vessels over 1,000 gross tonnage (GT) and the 1992 CLC applies to tankers or barges carrying more than 2,000 tonnes of oil in bulk. Vessels of this size are typically owned by medium or large companies or by governments (e.g., ferries).
Only a few hundred Canadian-flagged vessels exceed these tonnage thresholds. The domestic marine shipping activity supported by these vessels is concentrated in four areas of the country: British Columbia, Great Lakes and St. Lawrence, Atlantic Canada, and Northern Canada.
Canadian shippers however rely predominantly on foreign registered fleets to carry goods to and from international destinations. In 2017, Canada’s commercial registered fleet (1,000 gross tonnage and over) had 189 vessels with a total of 2.3 million gross tonnesFootnote 1. In 2011, Canadian-flagged vessels carried only 0.1% of marine exports and imports. A few Canadian-based companies, such as Canadian Steamship Lines and Fednav Ltd., are active in Canada’s international trade using foreign-flagged vessels.
Owners of tankers and large vessels, whether they are domestic or foreign registered companies, greatly benefit from Marine Insurance Certification Services as it enables them to call at Canadian ports and ports from countries that are signatory to the international marine conventions and access those markets. The 1992 CLC has 137 state parties representing 98% of the world’s tonnage and the Bunkers Convention has 91 state parties representing 93% of the world’s tonnage. Therefore, the number of foreign vessels seeking a Canadian certificate is limited to US-flagged vessels almost entirely.
Other users of Marine Insurance Certification Services includes ferry operators, which are often owned by governments. Ferries in Canada provide an important transportation link for coastal and island communities, as well as communities separated by river or lake crossings where crossing demands do not warrant building a bridge. Ferries also play a vital role in resupplying some communities across the country. The members of the Canadian Ferry Association, which includes all major ferry routes in Canada, carried more than 55 million passengers and more than 19 million vehicles in 2015Footnote 2.
Finally, the number of users of Marine Insurance Certification Services will eventually increase subsequent to the passage of Bill C-64, the Wrecked, Abandoned or Hazardous Vessels Act. Under this Act, owners of vessels of 300 gross tonnes and above will be required to maintain insurance or other financial security. There are 41 state parties to the Wreck Removal Convention representing 72% of the world’s tonnage, thus Canada may be issuing more certificates to ships registered in other states than primarily just the US. Approximately 2,030 vessels of this size including ferries, passenger ships, large workboats, barges and tugs have been estimated to qualify under this Act.
While other countries charge for these certificates, TC provides this service for free, including to ships flagged in the United States and other countries that are not signatory to the international marine conventions. Considering all of the above, establishing a $98 fee for this service will better align TC with the international jurisdictions’ prices and practices of charging the primary beneficiaries for this service.
7.1.4. Future Considerations
As noted previously, the HNS Convention certificates are not currently issued, but it is anticipated that these could come into force the year 2022 or 2023. As such, costs associated with issuance of these certificates, and the annual volume, are not currently included in the costing model. When these certificates begin to be issued, the resulting impact on TC’s resources and its costing approach may need to be revisited.
7.2. Proposed Insurance Assessment Service and Certification Fee
TC has considered the factors described above in order to establish a new fee for the insurance assessment and certification services leading to the issuance of the certificate. TC is proposing a fee that reflects the level of effort to provide the services as well as the benefits that accrue to the recipients, aiming to align more with the user-pay principle.
Therefore, TC proposes setting a certificate fee of $98. This figure represents 90 percent of the estimated full cost of $109. In the case of marine insurance services, this fee is also more consistent with the market value of the services of a subject-matter expert in this field (e.g. an insurance agent).
The proposed fee balances TC’s need for recovering its costs with consideration of the industry’s ability to bear a new fee. This new fee offers a balance between these interests without compromising the economic health of the Canadian marine industry.
8.0. Proposed Regulatory Amendments
TC is proposing regulatory amendments that will introduce one new fixed fee for the services provided in relation to the issuance of marine insurance certificates.
8.1. Proposed Amendments to the Marine Liability and Information Return Regulations (SOR/2016-307)
Fee Introduction
The new fixed fee for services related to the marine insurance assessment and certification services and issuance of the marine insurance certificates is proposed to be $98.
| Fee Item | Full Cost per Unit | Current Fee | Proposed Fee | |
|---|---|---|---|---|
| 1. | Provision of assessment and certification services related to the issuance of marine insurance certificates under regulations. [New Fee] | $109 | $N/A | $98 |
A new fixed fee of $98 will be added to the Marine Liability and Information Return Regulations (SOR/2016-307), which would allow TC to recover costs associated with undertaking marine insurance assessment and certification services. These services provide a direct benefit to the industry and are currently not subject to a fee.
9.0. Service Standards
Both the current and proposed service standard associated with the provision of marine insurance assessment and certification services, leading to the issuance of each marine insurance certificate are listed below:
| Current Service Standard | Revised Service Standard | |
|---|---|---|
| 1. | To issue the applicable certificate of insurance within 10 working days of receiving an application. | To issue the applicable certificate of insurance within 10 business days of receiving a full and complete application, including the relevant documentation support. |
TC has a service standard for this service in order to meet the requirements of the Service Fees Act.
9.1. Effective Date of Proposed Service Standard
The proposed service standard would come into effect at the same time as the revised Marine Liability and Information Return Regulations (SOR/2016-307) come into force, upon Governor in Council approval of the proposed regulatory amendments.
9.2. Remission Policy
The Service Fees Act (SFA) requires government departments to remit a portion of a fee when the department determines that a service standard associated with a fee has not been met. Guidance concerning the SFA from the Treasury Board of Canada Secretariat (TBS) further requires departments to develop and publish a Remission Policy outlining the circumstances under which fees will be remitted. TC’s Remission Policy is currently under development and will be in place prior to the introduction of fees for Marine Insurance certification services. Remissions will take place in accordance with TC’s Remission Policy and the TBS Directive on Charging and Special Financial Authorities.
10.0. Implementation
10.1. Transitional Provisions
For simplicity, marine insurance assessment services that have begun for applications received, prior to the coming into force date of the proposed amendments to the Marine Liability and Information Return Regulations will not be charged. However, any new and/or renewal applications received after the coming into force date will be subjected to the full fee amount.
10.2. Other Implementation Considerations
TC will develop guidance and explanatory materials to ensure that the new fee is applied consistently across Canada, and to ensure that stakeholders can clearly understand how and when the fees will be applied and what their responsibilities and liabilities will be under the revised Marine Liability and Information Return Regulations. These materials will be developed based in part on feedback received from stakeholders in response to this Fee Modernization Proposal as well as throughout the regulatory process necessary to amend the Marine Liability and Information Return Regulations. These materials will be ready before the new fee comes into force.
In accordance with the Service Fees Act, the proposed fee will be indexed annually, based on the applicable Consumer Price Index published by Statistics Canada. The inflation-adjusted fee levels and the date they will come into effect will be published in TC’s Fees Report and will be made available on the TC website annually.
11.0. Stakeholder Consultations
TC has engaged with the marine industry to seek feedback concerning cost recovery. Engagement with industry members took place to make stakeholders aware that TC was in the process of developing this Fee Modernization Proposal. A presentation to raise awareness was made to industry members at the regional and national plenary sessions of the Canadian Marine Advisory Council (CMAC) meetings held between December 2017 and May 2018. This presentation outlined the broad goals and timeframes associated with this initiative, and time was allotted following the presentation for stakeholders to ask questions.
Further engagement specific to the marine insurance services and the introduction of a fixed fee of $98 for the provision of marine insurance assessment and certification services took place in November 2018. TC solicited feedback on the proposed fee design and amount.
A complete fee design and pricing presentation was made at the November 2018 CMAC. Stakeholders were given an overview of the costing and fee design methodology, policy lenses to establish the pricing and the SFA requirements. No questions or issues were raised, and the presentation concluded with an invitation to provide feedback upon the fee proposal being published.
Appendix A: International Benchmarking
Australia
The Australian Maritime Safety Authority charges an initial fee of $68 CAD to process an application for a certificate of insurance – 1992 CLC (oil tankers) and the Bunkers Convention. Australia also charges an annual renewal fee of $39 CAD. These fees have been in place for at least 5 years, having been unchanged since at least 2013.
Australia employs a service standard of 5 working days for both certificates. This standard is applied to both initial applications and renewals. Australia also offer an emergency service that will issue a certificate the same day. Australia accepts electronic blue cards and issue certificates to non-state parties.
New Zealand
New Zealand is the only country considered that charges an hourly fee for the issuance of certificates. Maritime New Zealand charges $216 CAD per hour of work to issue a certificate. This is the hourly rate for both Bunker certificates and CLC certificates. These fees have been in place for at least 5 years, having been unchanged since at least 2013.
New Zealand has a service standard of 20 working days for CLC and Bunker certificates. This standard is applied to both initial applications and renewals.
United Kingdom
United Kingdom’s Maritime and Coast Guard Agency charges a flat fee of $53 CAD for CLC certificates, Bunkers certificates, passenger liability certificates and Wreck Removal certificates. Annual renewals are set at the same rates. The Agency also charges $51 CAD for a courier service should the applicant require it.
The Agency’s service standard is 10 working days. It also offers an emergency service that will issue a certificate the same day. The Agency also accepts electronic blue cards and issues certificates to non-state parties.
United States
It should be noted that the United States was not considered for this comparison as their insurance certificate regime is materially different than Canada’s and the international countries for comparison chosen, and thus would not offer an adequate comparison. It should also be noted that the United States is not a signatory to the 1992 CLC, the Bunkers Convention or the Wreck Removal Convention.
Appendix B: Status of Conventions – Ratification by Member States (status as of October 18, 2018)
Please see the following list for the status of countries (i.e. party member states) and their respective statuses for the relevant Convention directly related to this proposal.
Those conventions are as follows:
- International Convention on Civil Liability for Oil Pollution Damage, 1992
- International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001
- Nairobi International Convention on the Removal of Wrecks, 2007
- Hazardous and Noxious Substances (HNS) Convention, 2010
| Country / Conventions | CLC Protocol 92 HNS PROT 2010 | HNS PROT 2010 | BUNKERS CONVENTION 01 | NAIROBI WRC 2007 |
|---|---|---|---|---|
| Afghanistan | ||||
| Albania | x | x | x | |
| Algeria | x | |||
| Andorra | ||||
| Angola | x | |||
| Antigua & Barbuda | x | x | x | |
| Argentina | x | |||
| Armenia | ||||
| Australia | x | x | ||
| Austria | x | |||
| Azerbaijan | x | x | ||
| Bahamas | x | x | x | |
| Bahrain | x | x | ||
| Bangladesh | ||||
| Barbados | x | x | ||
| Belarus | ||||
| Belgium | x | x | x | |
| Belize | x | x | x | |
| Benin | x | |||
| Bhutan | ||||
| Bolivia (Plurinational State of) | ||||
| Bosnia & Herzegovina | ||||
| Botswana | ||||
| Brazil | ||||
| Brunei Darussalam | x | |||
| Bulgaria | x | x | x | |
| Burkina Faso | ||||
| Burundi | ||||
| Cambodia | x | |||
| Cameroon | x | |||
| Canada | x | x | x | |
| Cabo Verde | x | |||
| Central African Republic | ||||
| Chad | ||||
| Chile | x | |||
| China | x | x | x | |
| Colombia | x | |||
| Comoros | x | x | x | |
| Congo | x | x | x | |
| Cook Islands | x | x | x | |
| Costa Rica | ||||
| Cote d'Ivoire | x | x | ||
| Croatia | x | x | x | |
| Cuba | ||||
| Cyprus | x | x | x | |
| Czechia | x | |||
| Dem. People's Rep. Korea | x | x | ||
| Dem. Rep. of the Congo | ||||
| Denmark | x | x | x | x |
| Djibouti | x | x | ||
| Dominica | x | |||
| Dominican Republic | x | |||
| Ecuador | x | |||
| Egypt | x | x | ||
| El Salvador | x | |||
| Equatorial Guinea | ||||
| Eritrea | ||||
| Estonia | x | x | ||
| Eswatini (former Swaziland) | ||||
| Ethiopia | x | |||
| Fiji | x | x | ||
| Finland | x | x | x | |
| France | x | x | x | |
| Gabon | x | |||
| Gambia | ||||
| Georgia | x | x | ||
| Germany | x | x | x | |
| Ghana | x | |||
| Greece | x | x | ||
| Grenada | x | x | ||
| Guatemala | x | |||
| Guinea | x | |||
| Guinea-Bissau | ||||
| Guyana | ||||
| Haiti | ||||
| Holy See | ||||
| Honduras | ||||
| Hungary | x | x | ||
| Iceland | x | |||
| India | x | x | ||
| Indonesia | x | x | ||
| Iran (Islamic Republic of) | x | x | x | |
| Iraq | ||||
| Ireland | x | x | ||
| Israel | x | |||
| Italy | x | x | ||
| Jamaica | x | x | ||
| Japan | x | |||
| Jordan | x | x | x | |
| Kazakhstan | ||||
| Kenya | x | x | x | |
| Kiribati | x | x | ||
| Kuwait | x | |||
| Kyrgyzstan | ||||
| Lao People's Dem. Rep. | ||||
| Latvia | x | x | ||
| Lebanon | x | x | ||
| Lesotho | ||||
| Liberia | x | x | x | |
| Libya | ||||
| Liechtenstein | ||||
| Lithuania | x | x | ||
| Luxembourg | x | x | ||
| Madagascar | x | x | ||
| Malawi | ||||
| Malaysia | x | x | x | |
| Maldives | x | |||
| Mali | ||||
| Malta | x | x | x | |
| Marshall Islands | x | x | x | |
| Mauritania | x | |||
| Mauritius | x | x | ||
| Mexico | x | |||
| Micronesia (Fed. States of) | ||||
| Monaco | x | |||
| Mongolia | x | x | ||
| Montenegro | x | x | ||
| Morocco | x | x | x | |
| Mozambique | x | |||
| Myanmar | x | x | ||
| Namibia | x | |||
| Nauru | ||||
| Nepal | ||||
| Netherlands | x | x | x | |
| New Zealand | x | x | ||
| Nicaragua | x | x | ||
| Niger | ||||
| Nigeria | x | x | x | |
| Niue | x | x | x | |
| Norway | x | x | x | |
| Oman | x | |||
| Pakistan | x | |||
| Palau | x | x | x | |
| Panama | x | x | x | |
| Papua New Guinea | x | |||
| Paraguay | ||||
| Peru | x | |||
| Philippines | x | |||
| Poland | x | x | ||
| Portugal | x | x | x | |
| Qatar | x | |||
| Republic of Korea | x | x | ||
| Republic of Moldova | x | |||
| Romania | x | x | x | |
| Russian Federation | x | x | ||
| Rwanda | ||||
| Saint Kitts and Nevis | x | x | x | |
| Saint Lucia | x | x | ||
| St. Vincent & Grenadines | x | x | ||
| Samoa | x | x | ||
| San Marino | ||||
| Sao Tome & Principe | ||||
| Saudi Arabia | x | |||
| Senegal | x | |||
| Serbia | x | x | ||
| Seychelles | x | |||
| Sierra Leone | x | x | ||
| Singapore | x | x | x | |
| Slovakia | x | x | ||
| Slovenia | x | x | ||
| Solomon Islands | x | |||
| Somalia | ||||
| South Africa | x | x | ||
| South Sudan | ||||
| Spain | x | x | ||
| Sri Lanka | x | |||
| Sudan | ||||
| Suriname | ||||
| Sweden | x | x | x | |
| Switzerland | x | x | x | |
| Syrian Arab Republic | x | x | ||
| Tajikistan | ||||
| Thailand | x | |||
| The former Yugoslav Republic of Macedonia | ||||
| Timor-Leste | ||||
| Togo | x | x | ||
| Tonga | x | x | x | |
| Trinidad & Tobago | x | |||
| Tunisia | x | x | ||
| Turkey | x | x | x | |
| Turkmenistan | x | |||
| Tuvalu | x | x | x | |
| Uganda | ||||
| Ukraine | x | |||
| United Arab Emirates | x | |||
| United Kingdom | x | x | x | |
| United Rep. of Tanzania | x | |||
| United States | ||||
| Uruguay | x | |||
| Uzbekistan | ||||
| Vanuatu | x | x | ||
| Venezuela | x | |||
| Viet Nam | x | x | ||
| Yemen | x | |||
| Zambia | ||||
| Zimbabwe | ||||
| Associate Members | ||||
| Hong Kong, China | x | x | ||
| Macao, China | x | x | ||
| Faroe Islands | x | |||