Regulatory Charge (Fee) Proposal for Vessel Remediation Fund

Transport Canada is proposing the creation of a regulatory charge to finance a proposed Vessel Remediation Fund that would support measures to address wrecked, abandoned or hazardous vessels. This document describes the context, policy rationale and analyses that informed the proposed charge.

Related acts and regulations: Wrecked, Abandoned or Hazardous Vessels Act; Canada Shipping Act, 2001

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Executive summary

Problem vessels (wrecked, abandoned or hazardous vessels) can:

  • damage the marine environment and ecosystem
  • endanger the public
  • interfere with commercial vessels and pleasure craft, and
  • negatively impact local economies

The Wrecked, Abandoned or Hazardous Vessels Act made it illegal to abandon vessels. This means that the Government can now hold vessel owners responsible when they abandon a vessel.

In 2016 the Government of Canada committed to creating an owner-financed fund to address problem vessels over the long term. This fund would help Transport Canada and the Canadian Coast Guard assess and deal with some high priority problem vessels, and expand options to help vessel owners manage their vessels responsibly.

This proposal would introduce a regulatory charge (fee) that vessel owners would pay when they register or license their vessel in Canada. This fee would be paid every five years. And would be collected at the same time, and in addition to, service fees for obtaining a pleasure craft licence (PCL) or vessel registration.

For pleasure craft, we propose to introduce a flat fee of $10.

For commercial and non-recreational vessels, fees would be based on a vessel’s size:

  • small vessels below 15 gross tonnage: $250 fee
  • group/fleet of small vessels (register to the same owner): $450 fee
  • vessels from 15 to 150 gross tonnage: $500 fee
  • vessels above 150 gross tonnage: $1000 fee

When setting the price for this proposed regulatory charge, we considered:

  • how much it costs Transport Canada and the Canadian Coast Guard to deal with problem vessels
  • how measures to prevent and address problem vessels benefit vessel owners
  • what other countries charge for similar services, and
  • the economic context of vessel owners in Canada

Many existing problem vessels found in Canadian waters do not have an owner that can be identified or located in order to hold them to account. The proposed approach will allow the Government to spread responsibility across all vessel owners and therefore transfer some of the costs of addressing problem vessels, which to date have been absorbed exclusively by taxpayers more broadly, to the group that stands to benefit most from waterways that are clean and free from hazards.

1.0 Purpose

Presented by Transport Canada (TC), with support from the Canadian Coast Guard (CCG) this proposal outlines the introduction of a regulatory charge (fee) to be paid by owners of vessels that are registered or licensed in Canada, and describes the context, policy rationale, costing and pricing analyses that have been considered in its development. The collected proceeds would be credited to a proposed Vessel Remediation Fund that would be used to prevent, assess and address problem vessels (wrecked, abandoned or hazardous vessels) in Canadian waters.

This fee proposal is being used as a tool for engagement with vessel owners, and Canadians more broadly, including coastal communities that are affected by problem vessels. Comments on the content of this document can be submitted through TC’s Let’s Talk Transportation website.

TC will consider all comments received on this proposal over a 90 day consultation period. This will help inform the development of future charging regulations, which will be pre-published in the Canada Gazette, Part I for further opportunity to review.

2.0 Context

As of May 2021, approximately 2,000 problem vessels in Canadian waters are identified in the National Inventory of Vessels of Concern, which is routinely updated. It is expected this number will increase as more of Canada’s vast coastlines are searched by communities and officials, and as awareness of the issue of abandoned and wrecked vessels grows. While problem vessels are found in every province and territory, the majority (60 percent) are located along the coast of British Columbia, and significant numbers are also found in Quebec, Newfoundland and Labrador, and Nova Scotia (see Annex A). Left unaddressed, problem vessels often present numerous risks to coastal and shoreline communities, which can be exacerbated in areas where large numbers of problem vessels are clustered in close proximity. The degree and extent of risks posed by problem vessels, and costs associated to address them, will only increase as these vessels continue to age, deteriorate, and lose their structural integrity.

Significant risks include:

  • Environmental: A number of problem vessels are located in ecologically and biologically significant areas across Canada. These vessels pose a threat to habitats and migration routes for vulnerable species and species at risk, as well as commercial species in the form of contamination of commercial and ceremonial fisheries and important spawning grounds, and/or the pollution or destruction of commercial aquaculture operations. Pollutants from problem vessels can also negatively impact recreational fisheries and other recreational activities (e.g., swimming, watersports). One of the most critical risks posed by problem vessels is linked to the contaminants a vessel may leach into the surrounding marine environment, including lead, polychlorinated biphenyls, zinc, mercury, plastics and copper. Limited studies suggest that these contaminants may bio-accumulate in surrounding soil, water and marine life, potentially impacting marine protected areas (e.g., salmon spawning grounds, seabird hatchery sites) and drinking water, and pose a risk to other nearby vessels through galvanic corrosion. Additionally, anti-fouling paints (i.e. specialized coating applied to the hull of a vessel to slow the growth and/or facilitate detachment of subaquatic organisms that attach to the hull) are made of a range of substances such as copper oxides, biocides, Teflon and silicone coatings, which may leach into the marine environment as a vessel deteriorates. Of note, fiberglass, which is a common construction material used for vessels, includes a range of hazardous materials including organic peroxides (i.e. hardeners), solvents (e.g., acetones), and paints. Fiberglass, particularly in salt water, will gradually deteriorate into micro particles, which can be harmful to marine organisms.
  • Economic: Economic damages caused by problem vessels are far-reaching. Problem vessels in small coastal communities, for example, can negatively impact fishing if they are located in harbours or near fishing sites. Furthermore, local communities have claimed that problem vessels are an impediment to the socio-economic well-being of their communities, as their presence may reduce property values and negatively impact the community’s tourism appeal and tax revenue. Moreover, across the country, problem vessels occupy space in harbours, essentially blocking use of that space for commercial gain. Problem vessels may also pose navigational obstructions that reduce the flow of goods and services through Canadian ports, impacting supply chains and passenger ferries. In addition, they can cause damage to coastal and navigational infrastructure (e.g., wharfs, docks, buoys, communications networks and underwater cables).
  • Public safety: Municipalities have expressed their concern for public safety in reference to problem vessels near parks, public beaches, recreational boating areas, etc. Problem vessels can pose a high risk to the public, including children and youth, who could access a vessel and be exposed to dangers (e.g., broken or jagged parts of the vessel, pollutants). Some problem vessels are also known to foster illegal or unsafe activities (e.g., drug manufacturing or use as a “party boat”). Problem vessels can also pose safety risks for recreational boaters, as they may present navigational hazards.

2.1 Steps taken to date

In 2016, as part of the Oceans Protection Plan (OPP), the National Strategy to Address Canada’s Wrecked and Abandoned Vessels (the Strategy) was introduced with the objective of reducing the number of problem vessels that pose hazards in Canadian waters and supporting the preservation of marine ecosystems. This comprehensive Strategy consists of five key pillars focused on the prevention and remediation of problem vessels:

  1. Wrecked, Abandoned or Hazardous Vessels Act (WAHVA): The WAHVA, which came into force on July 30, 2019, establishes an owner-liability and polluter-pays regime and strengthens vessel owner responsibility regarding their vessels, particularly those that reach end of life. The act of vessel abandonment is now illegal; similarly, owners are no longer allowed to leave their dilapidated vessels stranded, grounded (including along the shore), anchored or moored in the same location without express consent of the owner of that location. Owners involved in an incident that results in a wreck are obliged to report, locate, mark and, if necessary, remediate any hazards including, if required, removing the wreck. The Government of Canada is now authorized under the Act to direct owners to take measures to address their problem vessel. Failure to comply with the Act can result in penalties. The WAHVA also provides discretionary powers to the Government to take direct action if an owner is unknown, unable or unwilling to address their vessel themselves (owners who refuse to take actions will be held accountable).
  2. National inventory and risk assessment methodology (RAM): The National Inventory of Vessels of Concern and RAM were created to help identify the scope and the scale of the issue of problem vessels nationally, and to rank and prioritize problem vessels across Canada to inform decisions with respect to remediation and monitoring plans.
  3. Enhanced vessel owner identification systems: Enforcement of the WAHVA relies on the ability to accurately identify vessel owners. The primary federal tools used to identify vessel ownership are the pleasure craft licence (PCL) and the vessel registration (primarily commercial) programs. Stakeholder engagement, including with regional law enforcement partners, as well as federal experiences both before and after the introduction of the WAVHA, have confirmed a number of data quality challenges with both programs. TC is working to close this gap through a number of enhancements to the PCL and vessel registration programs. Stakeholders and Indigenous partners were consulted on enhancements to the policy/regulatory design of the PCL program through a fee proposal posted to TC’s Let’s Talk Transportation website from November 2020 to January 2021. TC will also consult stakeholders on enhancements to the vessel registration program.
  4. Short-term funding programs: As part of the OPP, two interim programs — TC’s Abandoned Boats Program (ABP) ($6.85 million over a five-year period, including $5.6 million for assessment and removals, and $1.25 million for recycling research and education and outreach) and DFO’s Small Craft Harbours Abandoned and Wrecked Vessels Removal Program ($1.9 million over a five-year period) — were introduced to support local communities, organizations, marinas, and harbours to address targeted types of problem vessels (e.g., smaller vessels and those in specific locations) in the short term. Both of these programs are scheduled to end in March 2022.
  5. Long-term funding: There is a significant backlog of problem vessels captured in the National Inventory of Vessels of Concern (approximately 2,000 and growing), most of which were wrecked or abandoned before the WAHVA came into force and are now referred to as legacy vessels. In addition, TC and CCG expect that new cases of problem vessels will occur, specifically situations where owners cannot be identified or located, or where owners are unable or unwilling to take appropriate actions to remedy their problem vessels. Recognizing this, the Government committed to examine options to establish a long-term sustainable vessel remediation fund that would be financed by vessel owners themselves to address some legacy vessels as well as some new cases that arise.

3.0 Overview of the proposed Vessel Remediation Fund

The purpose of the proposed Vessel Remediation Fund is ultimately to help reduce, or prevent, risks related to problem vessels in Canada. It would do so by providing a long-term source of funds, financed by vessel owners themselves, to enable the Government of Canada to utilize more proactively the full suite of powers and authorities under the WAHVA.

This Fund would also take some of the pressure off of taxpayers, who up to this point, have been shouldering all the burden in assessing and addressing problem vessels posing any number of risks to local communities.

3.1 Use of the proposed Fund

The proposed Fund would serve two objectives, both of which align with the overarching policy intent of the WAHVA.

The primary objective of the Fund would be to assess and address (remediate) problem vessels located in Canadian waters in situations where the owner is unknown, known but cannot be located, or is unable or refuse to deal with the vessel themselves. Activities to assess and address problem vessels would be separated into two streams: one for commercial/non-recreational vessels and one for pleasure craft.

Owners of problem vessels who refuse to take actions themselves will be held accountable under the WAHVA, while the Fund could be used to mitigate the risks posed by the vessel.

Assessment activities involve confirming the degree of risk posed by a problem vessel, as well as determining which measures are needed (and at what cost) to mitigate these risks. It is a precursor to potential future action.

Activities to address a problem vessel involve measures that are authorized under the WAHVA, and include repairing, securing, moving or removing the vessel or its contents, or selling, dismantling, destroying or disposing of it. The vast majority of vessels reported in the National Inventory of Vessels of Concern have little to no value, and in most cases the only viable option is to remove and dispose of the vessel, recycling as much as possible.

Decisions to address vessels through the proposed Fund would be determined through risk-based prioritization (e.g., impact on the marine environment) as well as other considerations, such as public interest, location, departmental capacity, and economies of scale. Provinces and Territories, local and regional governments, and Indigenous communities would be engaged on a case-by-case or regional basis in helping to determine prioritization of initiatives under the Fund. However, the proposed Fund is not intended, nor designed, to remove every single problem vessel found. For instance, some problem vessels may not pose a high degree of risk, and therefore would not be a priority. In other cases, a vessel’s removal may cause greater damage to the environment than to leave it in place.

The secondary objective of the proposed Fund would be to support preventative measures that address factors that lead to vessel abandonment and encourage the responsible management of vessels at end-of-life. These measures would provide vessel owners with enhanced options for compliance with the WAHVA, effectively reducing incidences of future problem vessels. Preventative measure funding would help avoid environmental, economic and public safety risks from occurring in the first place. This funding would also help reduce the higher costs associated with activities to assess and address vessels that already pose risks.

Preventative measures could include:

  • promotion of public awareness of the responsibilities associated with vessel ownership;
  • research and development activities aimed at improving methods of recycling vessels and disposing of them in a manner that is environmentally responsible;
  • research and development activities aimed at improving vessel and wreck remediation techniques;
  • increasing capacity at the local level, including Indigenous communities, to perform vessel risk assessments and to recycle, dismantle, or otherwise dispose of vessels; and,
  • vessel turn-in activities by allowing for the voluntary surrender of an at-risk vessel by its owner to an organization or group that is set up to accept vessels for recycling and disposal.

The inclusion of preventative measures under the proposed Fund responds to preliminary feedback from stakeholders, particularly the pleasure craft community, who have emphasized the importance of such measures.

While activities to assess/address problem vessels would focus on vessels in Canadian waters, reflecting federal jurisdiction, the preventative measures would also help to reduce the number of vessels abandoned on land, which is more common in certain provincial jurisdictions, such as Ontario.

3.2 Sources of funds

Predicated on the polluter-pays principle, TC proposes that the Fund be primarily financed by vessel owners from a regulatory charge (fee) levied on owners when vessels are registered or licensed in Canada. Monies generated through enforcement actions taken under the WAHVA (e.g., fines, penalties or costs that are recovered from vessel owners) would also be credited to the Fund.

3.2.1 Regulatory charge (fee)

TC proposes that the Fund would be predominantly financed through a regulatory charge (fee) paid by all vessel owners that register or license their vessel in Canada with the exception of vessels owned by the federal or provincial/territorial governments that are used exclusively for non-commercial purposes (reflecting the exclusions for government vessels under the WAHVA). The regulatory charge would not be formally introduced until 2023 at the earliest, pending creation of enabling authorities.

A regulatory charge is used to offset a portion of the costs associated with a regulatory scheme (in this case, the WAHVA). A regulatory charge is paid by those who both cause the need for the scheme and who will benefit from the action taken under it. This approach is aligned with the polluter-pays principle insofar as vessel owners can be reasonably expected to collectively contribute to ensuring that Canadian waters are free of hazards that are attributable to their activities. In addition, as the primary users of the waterways where problem vessels are located, the benefits of addressing these problem vessels accrue particularly to vessel owners (outlined in 5.1 Public-private benefit). This approach would allow the Government of Canada to spread responsibility across the community of vessel owners and would help to alleviate pressure on taxpayers, the vast majority of whom are not vessel owners and who should not always be asked to pay to address problem vessels. At present, vessel owners do not pay a regulatory charge for the purpose of addressing problem vessels.

This proposal calls for the regulatory charge to be collected at the same time, and in addition to, service fees for select PCL and vessel registration transactions (outlined in 6.0 Proposed regulatory charge). In considering a delivery mechanism for the regulatory charge, TC and CCG examined a variety of options. Connecting the collection of the regulatory charge with the collection of vessel registration and PCL service fees was deemed the most broad in terms of scope of coverage and the most predictable, as nearly every vessel operating in Canada that could present any hazard or risk of significance, should it be wrecked or abandoned, would be captured under the registration or licensing regulatory requirements (as established through the Canada Shipping Act, 2001 (CSA 2001)). Thus the proposed approach would maximize both equity and resources available to address problem vessels posing risks. This approach would also streamline the payment process for vessel owners and is consistent with the approach adopted in some other jurisdictions, which collect a charge at the time of purchasing a vessel or, as is the case for the State of Washington, at the time of registration (outlined in 5.5 International comparison).

With respect to foreign-flagged vessels, they would not be subject to the proposed regulatory charge; however, if these vessels commit an offence under the WAHVA, any fines or penalties collected could be credited to the Fund (as described in 3.2.2 Enforcement Actions). In addition, risks posed by these vessels are partly mitigated by the WAHVA, which brought the Nairobi International Convention on the Removal of Wrecks, 2007 (Nairobi Convention) into Canadian law. Under the Nairobi Convention, a vessel owner is liable for the costs to address their hazardous wreck (regardless of vessel size). Moreover, owners of vessels that are 300 gross tonnage and above operating in Canadian waters (about 98 percent of foreign-flagged vessels) are now required to maintain insurance or other security to cover the potential costs related to the removal of wrecks and provide claimants the right to recover their losses through direct action against the vessel insurer.

While insurance will help cover the costs of addressing a vessel if it becomes a problem in the future, the regulatory charge would help fund measures to address problem vessels that predate the insurance requirement (i.e. legacy problem vessels) as well as vessels to which the requirement does not apply (i.e. vessels under 300 gross tonnage).

Monies from the regulatory charge could also be used to fund urgent action on a problem vessel while recovery of costs is sought from the owner or insurer. In cases where the proposed Fund is used to take action on a problem vessel, TC and CCG will still attempt (with discretion) to recover costs from the vessel owner as liability and responsibility remain with the vessel owner. Costs recovered from vessels owners would be returned to the Fund (as described in 3.2.2 Fines, penalties and other proceeds).

3.2.2 Fines, penalties and other proceeds under the WAHVA

As additional sources of funding for the proposed Vessel Remediation Fund, the Government is considering that amounts collected from fines and penalties under the WAHVA, debts due to Her Majesty under the WAHVA, and proceeds from the disposition of vessels under the WAHVA could also be credited to the Fund. Non-compliance with the WAHVA can result in administrative monetary penalties and fines. Moreover, the WAHVA provides that all costs that are incurred by the Government of Canada when taking actions on a problem vessel are recoverable from the owner of the vessel.

However, given the WAHVA only came into force in July 2019, the amount of monies that could be collected from fines, penalties and other costs recovered under the Act is difficult to anticipate and is not expected to be significant. TC and CCG adhere to a graduated response approach when enforcing the WAHVA (consistent with its enforcement policy across all federal marine legislation). This means owners found to be in violation of the Act will usually be given opportunities to remedy the situation, without TC/CCG proceeding with formal enforcement action. Experience in the U.S. indicates that less than one percent of costs associated with addressing problem vessels is ever recovered through fines and penalties. If redirected fines, penalties and collected costs under the WAHVA were to be the only source of financing for the Fund (i.e. no regulatory charge), the cost to administer the Fund would be disproportionate relative to the small stream of funding available.

4.0 Cost analysis

Developing a regulatory charge requires the calculation of the cost of the activities under the regulatory scheme (in this case, the WAHVA), which imposes an upper legal limit on the amount the Government can collect through the regulatory charge. As the proposed Vessel Remediation Fund is only intended to finance activities under the WAHVA related to preventing, assessing and addressing problem vessels (see 3.1 Use of the proposed Fund), the cost analysis focuses specifically on the costs of these activities.

With respect to the cost of assessment and remediation activities under the Fund, TC and CCG have calculated that it would cost about $351 million to assess and address the entirety of the approximately 2,000 vessels in the National Inventory of Vessels of Concern (about $320 million for commercial/non-recreational vessels and $31 million for pleasure craft) (see Annex A for additional costing information). These estimates are expected to grow as more problem vessels are discovered (although the growth rate should decline over time as a result of the WAHVA).

This cost excludes the estimated cost to assess and address a small subset of exceptionally complex and costly commercial problem vessels (outliers) that could easily exceed several million dollars. Those problem vessels would not fall within the scope of the Fund. Addressing these types of vessels via the proposed owner-financed Fund would require calibration of an exceptionally high regulatory charge that would create undue burden on the collective community of vessel owners, while the benefits or remediating outliers accrue significantly to the broader public (as noted in 5.1 Public-private benefit).

The cost to assess and address a problem vessel is affected by a number of variables, including a vessel’s size, construction material, condition, and materials on board. Location of the vessel also has significant bearing on overall costs. Since only preliminary data is available for the vessels in the National Inventory of Vessels of Concern, some assumptions are required. For example, when no remediation cost estimate exists for a vessel, the average cost to remediate similar vessels was applied. Based on data for over 1,200 vessels for which estimated and actual assessment/remediation costs are available, TC and CCG have calculated that the average assessment and remediation cost for vessels within the scope of the Fund is $321,000 for a commercial/non-recreational vessel and $31,000 for a pleasure craft. Considerable differences between commercial/non-recreational vessels and pleasure craft account for the significant variation in cost, and by extension, the proposed regulatory charge.

With respect to commercial/non-recreational vessels, their larger size tends to make them costlier to remediate given that the risks and costs associated with a problem vessel increases with vessel size. Larger problem vessels tend to require more specialized equipment/expertise due to their complexity and contain more pollutants, which can be found all over a vessel, including in difficult-to-access locations such as tanks, piping systems, manifolds, boilers, and engines. While the characteristics of commercial/non-recreational vessels vary considerably in the National Inventory, they are on average significantly larger than pleasure craft (22 metres in length compared to 8 metres). Commercial/non-recreational vessels in the National Inventory range from small workboats, fishing vessels and barges (many around 10 metres) up to large cargo vessels that exceed 200 metres. The most expensive remediation projects to date have involved commercial vessels, such as the Kathryn Spirit, which was abandoned near Beauharnois, Quebec, and cost approximately $25 million to remove in 2018.

On the other hand, pleasure craft, are smaller, less complex, and less likely to contain significant amounts of hazardous materials. In addition, there is less variation among pleasure craft, most of which are under 10 metres (the largest pleasure craft in the National Inventory measures about 30 metres). Consequently, pleasure craft tend to be less expensive to address than commercial/non-recreational vessels.

These average assessment and remediation costs also reflect the fact that removal and disposal costs are considerably higher for a wrecked, abandoned or dilapidated vessel, especially in cases where a vessel is partially submerged or has no means of propulsion, compared to one that has not yet become a problem. Costs to address a problem vessel can include (among others) environmental and technical assessments, salvage contracting and support activities for the vessel’s removal, transportation of equipment to the vessel site, preparation of the vessel, and removal and disposal of the vessel and associated waste.

Costs to address problem vessels also increase the longer a vessel has been wrecked, left abandoned, and/or left in poor condition, especially in cases where contaminants are present or the vessel is unsecured. In the case of vessels in the National Inventory, many have been wrecked or abandoned for several years. As a result, the likelihood that these vessels have sunk or have lost their structural integrity is greater, making removal efforts more complex and costly. In many cases, specialized equipment and skilled tradespeople are required, which necessitates additional training and equipment for salvagers leading to higher labour costs and potential increases in the time required to complete the operation. In addition, these vessels are more likely to leak, which must be contained as part of the remediation effort, thereby further increasing the cost. In cases where contaminants are present, costs for handling, processing, treating and/or disposing of the waste can be considerable.

With respect to preventative activities under the proposed Fund, TC anticipates to allocate up to $750,000 per year for this purpose. However, flexibility may be required to allocate some of these monies towards addressing the backlog of existing high-priority problem pleasure craft, particularly in the early years of the Fund. This estimate is based on past demand for existing short-term funding initiatives that support education and awareness and research and development related to problem vessels, as well as anticipated demand for new vessel turn-in activities.

Costing of activities to prevent, assess and address problem vessels within the scope of the Fund, as well as monitoring of the inflows and outflows of the Fund, will be done on an ongoing basis to ensure that monies generated for the Fund do not exceed the cost of activities financed under the Fund.

5.0 Pricing analysis

In addition to determining the upper cost limit of activities that could be financed through the Fund, TC conducted the following analysis to determine the proposed regulatory charge:

  1. Public-private benefit assessment: TC considered the level of benefit that accrues to vessel owners (who would pay the regulatory charge) compared to the Canadian public more broadly.
  2. Stakeholder impact considerations: TC examined the context in which Canadian vessel owners (both commercial/non-recreational and pleasure craft) operate and the existing fees they already pay, as well as their ability to pay the charge and benefit from activities financed by the charge, and lastly, the ability of other stakeholders/Indigenous partners to benefit from the activities financed by the charge.
  3. Number of commercial/non-recreational vessels and pleasure craft: Building on the stakeholder impact considerations, TC examined the ability to generate resources from both commercial/non-recreational vessel and pleasure craft owners and the impact on activities to reduce the risks posed by problem vessels.
  4. Variation in regulatory pricing: TC examined the variation in risk posed by different types/sizes of vessels, and associated costs to the Government should they become wrecked or abandoned.
  5. International comparisons: TC examined how much other countries charge vessel owners, if anything, for activities to prevent, assess and address problem vessels.

5.1 Public-private benefit

Activities to prevent, assess and address problem vessels provide both private benefits to vessel owners (who would pay the regulatory charge) as well as benefits to the broader public, consistent with most activities with a positive environmental impact. TC conducted a public-private benefit assessment for the regulatory charge using the Government of Canada’s Public-Private Benefit Assessment Tool, which was developed by the Treasury Board Secretariat. This tool is used to estimate the extent to which activities supported by the regulatory charge benefit Canadians beyond those paying the charge. In particular, the tool considers the range of safety, security, environmental and economic benefits from the activities and the extent to which these benefits are limited to those paying the charge.

Based on this tool, TC estimates that approximately 60 percent of the benefits from activities to prevent, assess and address problem vessels would accrue to the group that pays the charge (i.e. vessel owners). As the primary users of the water for recreation, transportation/navigation, fishing, and commercial activities, among others, a majority of the direct benefits would primarily flow to vessel owners. Examples of the direct benefits to vessel owners/operators include:

  • Cleaner/safer waters for recreational boating and associated activities, including water sports and sport fishing.
  • Reduction of navigational hazards for vessel operations (including hazards that may pose safety hazards or impede commercial/economic activity).
  • Reduced risk of contamination of aquaculture, commercial fishing sites, etc.
  • Reduced risk of galvanic corrosion of vessels caused by contaminants from nearby abandoned vessels.
  • Increased awareness and availability of responsible (and more affordable) vessel disposal options.

The remaining 40 percent of benefits would accrue to the broader public and may include:

  • Improved public health through cleaner drinking water.
  • Cleaner waters for recreational activities (e.g., swimming).
  • Reduced public safety risks associated with wrecked or abandoned vessels being accessible to the public (e.g., near beaches or parks).
  • Reduced harmful environmental impacts, including on marine protected areas.
  • Enhanced tourism opportunities due to cleaner shorelines, harbours, etc.
  • New business opportunities for industries involved in vessel assessment, remediation, recycling, etc.
  • Reduced risk of damage to coastal and navigational infrastructure posed by problem vessels.
  • More revenue opportunities for ports/harbours/marinas by removing abandoned vessels that are occupying space that would otherwise be allocated to paying clients.
  • Removal of eyesores (contributing to greater public enjoyment of coastal/shoreline areas and improved property values).

In general, public benefit is derived from stopping, or undoing, the harm that has been caused to the public as a result of irresponsible vessel management. Similarly, vessel remediation activities help restore ports/harbours/marinas to their former state, before they were impacted by problem vessels. To date, segments of the Canadian public and economy have essentially been penalized by the presence of problem vessels at no fault of their own and the activities funded through the regulatory charge would help to provide some redress.

Public benefit is particularly evident in cases of exceptionally complex and costly commercial vessels, the costs of which can easily exceed several million dollars. As these vessels are generally large and contain high levels of contaminants, they may pose significant risks to the Canadian public more broadly. Accordingly, these vessels have been excluded from the costing for the proposed owner-financed Fund identified above (see 4.0 Cost analysis). A similar approach has been adopted by other jurisdictions, such as the State of Washington, which has imposed fees on all vessel owners to fund measures to address problem vessels, but generally addresses larger vessels through taxpayer-funded general spending.

5.2 Impact considerations

In developing this proposal, TC took into consideration the diverse range of stakeholders and Indigenous partners, and the context in which they operate, including their unique circumstances and differing abilities to absorb new costs. The following sections provide an overview of currently licensed and registered vessels, as well as key stakeholder groups and Indigenous partners.

5.2.1 Overview of licensed and registered vessels

Vessels in Canada are engaged in a wide range of activities and are spread across the country. By far, pleasure craft account for the greatest share of vessels in Canada. There are about 2.7 million licensed or registered pleasure craft compared to about 37,000 registered commercial/non-recreational vessels, of which about 2,100 are owned by the federal government and 1,200 by provincial/territorial governments. Among commercial/non-recreational vessels, fishing vessels make up the greatest share (about 47%). In terms of regional distribution, almost half (45%) of pleasure craft are located in Ontario while commercial/non-recreational vessels are concentrated on the east and west coasts. The following tables break down vessels by type and region.

Commercial/non-recreational vesselsFootnote 1

Type of vessel

Number of vessels

Percent of total

<15 gross tonnage

15gt – 150 gross tonnage

>150 gross tonnage

Total

Air cushion vehicle

20

0

0

20

<1%

Amphibious

8

0

0

8

<1%

Auxiliary

95

0

0

95

<1%

Barge

217

874

1,293

2,384

6%

Cargo

30

59

93

182

<1%

Ferry

11

53

115

179

<1%

Fishing

13,356

3,824

138

17,318

47%

Floating structure

12

38

1

51

<1%

Offshore construction vessel

0

0

2

2

<1%

OtherFootnote 2

9,462

0

0

9,462

25%

Passenger

4,180

465

152

4,797

13%

Sailing

6

11

0

17

<1%

Tanker

0

3

34

37

<1%

Tug

1,353

328

167

1,848

5%

Workboat (e.g., research, enforcement, first responders)

253

314

146

713

2%

Total

29,003

5,969

2,141

37,113

100%

Region of vesselFootnote 3

Number of vessels

Percent of total

<15 gross tonnage

15gt – 150 gross tonnage

>150 gross tonnage

Total

Atlantic

10,809

2,991

336

14,136

38%

Quebec

4,105

898

210

5,213

14%

Ontario

3,803

640

335

4,778

13%

Prairie and Northern

1,995

12

10

2,017

5%

Pacific

8,291

1,428

1,250

10,969

30%

Total

29,003

5,969

2,141

37,113

100%

Pleasure CraftFootnote 4

Region of vessel

Number of vessels

Percent of total

Licensed

Registered

Total

Atlantic

182,268

1,253

183,521

7%

Quebec

468,345

5,866

474,211

17%

Ontario

1,230,641

5,213

1,235,854

45%

Prairie and Northern

454,664

60

454,724

17%

Pacific

365,412

5,998

371,410

14%

Total

2,701,330

18,390

2,719,720

100%

5.2.2 Stakeholder groups and Indigenous partners

TC considered the potential impacts of the proposed charge on stakeholder groups and Indigenous partners, including:

  • Large vessel owners/operators (e.g., fishing companies; shipping companies; passenger vessel companies; ferry operators; and companies providing other commercial marine services such as dredging, tug and barge, and offshore support)
  • Small vessel owners/operators (e.g., fishing companies, tourism companies, small ferry owners and water taxi companies)
  • Owners of pleasure craft
  • Governments
  • Coastal and shoreline communities
  • Marinas, harbours and ports
  • Companies involved in the assessment and remediation/disposal of vessels

The table in Annex B provides an overview of these main stakeholder groups and Indigenous partners, and the key considerations that TC took into account in developing this proposal. This includes recognition that commercial vessels owners are already charged numerous fees by the Government of Canada on a wide range of services, including vessel registrations, vessel and marine cargo inspections, certificate issuance (e.g., insurance), fishing vessel licences, marine navigation services, icebreaking, and dredging, among others. Moreover, TC is considering new and updated service fees for vessel registration, including changing requirements for large vessel registrations. Consultations on changes to the vessel registration may occur separately. TC also recognizes that other federal initiatives (e.g., speed restrictions to protect whales, fishing restrictions, border closures due to the pandemic) have financial impacts on commercial vessel owners/operators. TC further understands that the cumulative impact of the proposed charge and other federal initiatives could pose cost burdens to stakeholders, and that each vessel owner will be affected differently depending on their unique circumstances. In particular, TC understands that the proposed charges could have financial impacts to owners of small commercial vessels such as fishing vessels, small ferries, workboats and tourist vessels. TC therefore proposes that vessels registered in a group or fleet would benefit from a discount on the proposed regulatory charge. This would align with existing group and fleet discounts for vessel registration services. More information is provided in section 6.2.

In addition, the COVID-19 pandemic has impacted many facets of the Canadian economy, including the marine sector. The marine sector, particularly marine transportation, is strongly tied to the global economy and trade volumes. Marine transportation also relies on household spending and tourism, including the transportation of cruise passengers, so disruptions resulting from the pandemic, including lockdowns and reduced manufacturing capacity, has negatively impacted some marine transportation and marine-related industries. Water transportation, in particular, was disproportionately impacted by the pandemic from an employment perspective.Footnote 5 Recognizing this, TC is proposing that the regulatory charge comes into force no earlier than 2023, which would allow time for the economic circumstances of impacted vessel owners to improve before the charge would apply.

With respect to pleasure craft, a studyFootnote 6 commissioned by TC found that pleasure craft owners are generally willing to pay up to $5 annually toward addressing problem vessels, as this cost is considered to be minimal, if not negligible, relative to the actual cost of purchasing, maintaining and operating a vessel. The study also found that such a cost would have no discernable impact on industries related to recreational boating.

5.3 Number of commercial/non-recreational vessels and pleasure craft

While TC proposes that commercial/non-recreational vessel owners would pay a higher regulatory charge than pleasure craft owners, reflecting the higher risks and costs associated with commercial/non-recreational vessels, the amount of monies that can be generated from this sector are constrained due to Canada’s relatively small commercial/non-recreational fleet (roughly 37,000, including about 2,100 federal government vessels). In comparison, over 2.7 million pleasure craft are registered or licensed in Canada, with opportunity to generate significantly more monies spread over a larger base. In addition, the recreational boating sector has grown during the COVID-19 pandemic. Between March and December 2020, TC recorded over 137,000 PCL transactions, a 20 percent increase compared to the same period in 2019. Predicting the longevity of this trend is difficult; however, it has resulted in significantly more pleasure craft on the water over the past year.

5.4 Variation in regulatory pricing

As noted in section 4.0 Cost analysis, the risks and costs associated with a wrecked or abandoned vessel increase with vessel size. For this reason, a lower charge level is proposed for pleasure craft (which tend to be smaller, less complex, and less likely to contain significant amounts of hazardous materials) than for commercial/non-recreational vessels. While TC proposes that the regulatory charge level reflects the increased risks/costs associated with increases in vessel size, an overly complicated regulatory charge structure would create more complexity for vessel owners and result in higher administration costs. As noted previously, pleasure craft have minimal variation in size while commercial/non-recreational vessels tend to vary more dramatically in both size and complexity. As a result, TC proposes that pleasure craft owners pay a single flat rate charge while commercial/non-recreational vessel owners pay a charge that increases with vessel size, based on three size categories that already exist for vessel inspections.

5.5 International comparison

TC conducted an international comparison to inform the proposed regulatory charge. Comparing fees/charges to prevent, assess and address problem vessels among foreign jurisdictions is a difficult task, as numerous countries and U.S. states have different mechanisms to generate monies for these activities.

Many coastal U.S. states collect monies from vessel owners to help fund the removal of abandoned vessels. In general, the fees/charges are embedded within broader fees (e.g., the fees to register a vessel). In some cases, U.S. states fund activities to address abandoned vessels by reallocating a portion of revenue from taxes on vessel sales.

Washington (U.S.)

In the State of Washington, pleasure craft owners pay a flat rate of US$3 annually while all commercial vessel owners pay US$1 per foot of vessel length annually to support measures that address problem vessels (this translates to about C$250 every five years for a vessel of 15 gross tonnage and C$500 every five years for a vessel of 150 gross tonnage). The monies collected by the State of Washington are deposited into the Derelict Vessel Removal Account, which funds activities to address problem vessels and supports other secondary activities including a vessel turn in program. The general approach in the State of Washington (i.e., an owner-financed fund for addressing problem vessels) has been identified as a best practice by Canadian stakeholders and has served as a model for similar measures in other U.S. states.

Rhode Island (U.S.)

The State of Rhode Island incorporates a derelict and abandoned vessel and obstruction removal fee into their vessel registration fee. The state assesses the fee biennially along with the assessment of vessel registration fees. The monies collected from the derelict and abandoned vessel and obstruction removal fee are deposited into the Derelict and Abandoned and Obstruction Removal Account. Fee rates are administered on all motorized vessels based on the length of the vessel in increments of 5ft with an exception of the first and last fee categories, which are 1-20ft and 51ft+ respectively. The fee levels begin at US$2 for vessels 1-20ft in length, which is followed by US$6 for vessels 21-25ft and increases by US$2 every 5ft increment with the 51ft+ category being the final category and costing US$20.

Oregon (U.S.)

In the State of Oregon, the Marine Board establishes and maintains the Abandoned and Derelict Vessel Removal Fund. The fund is financed through fees that are collected biennially from titling and registration fees. Registration fees are administered on a per foot basis, with a base fee of US$5 plus US$5.95 per foot, or portion thereof, for all sailboats 12ft in length or more and for all motorboats.

Florida (U.S.)

The State of Florida deposits a designated amount of the annual vessel registration fee into the Marine Resources Conservation Trust Fund to finance derelict vessel removal grants. The fee allocations, which are set based on vessel class, are as follows:

  1. Class A-2: US$0.25 for each 12-month period registered.
  2. Class 1: US$2.06 for each 12-month period registered.
  3. Class 2: US$9.26 for each 12-month period registered.
  4. Class 3: US$16.45 for each 12-month period registered.
  5. Class 4: US$20.06 for each 12-month period registered.
  6. Class 5: US$25.46 for each 12-month period registered.

France

In France, activities to address problem vessels are funded through the Extended Producer Responsibility (EPR) system for recreational boats, which includes a Recreational Boat Deconstruction Program. Two percent of the yearly registration fee and sailing fee (Droit de francisation et de navigation), which is paid by the vessel owner, is allocated to the program. This fee is calculated based on the following criteria:

  • Administrative power of the vessel's engine(s) (horsepower (hp)), which varies between C$21 (14€) for a vessel with 6 to 8hp and C$94 (64€) for a vessel with more than 6hp; and;
  • Length of the hull of the vessel, which varies between C$114 (77€) for a vessel of 7-8 meters and C$1310 (886€) for a vessel of more than 15 meters.

Australia

In Australia, some states apply additional charges on mooring fees to compensate for damages caused by abandoned vessels and debris. Additional sources of monies to address problem vessels may come from collected fines and penalties or via taxpayer-funded general spending.

6.0 Proposed regulatory charge (fee)

Based on the analyses described above related to costs and pricing, sections 6.1 and 6.2 identify the proposed regulatory charge levels for both commercial/non-recreational vessels and pleasure craft.

6.1 Proposed pleasure craft charge (fee)

Based on the analyses described in 4.0 Cost analysis and 5.0 Pricing analysis above, TC proposes that pleasure craft owners pay a flat and fixed fee of $10 to be paid generally every five years, regardless of whether they are licensed or registered, which would generally be used as follows:

  • $7 to assess and/or address problem pleasure craft
  • $1 for preventative measures (e.g., public awareness of vessel owner responsibilities, research and development aimed at improving vessel recycling, increasing capacity at the local level, and vessel turn-in activities), which would primarily benefit pleasure craft owners
  • $2 to assess and/or address commercial vessels (i.e. supplemental support – see 6.1.1 below)

This fee would be paid when:

  • licensing or registering a pleasure craft for the first time
  • renewing a pleasure craft licence or registration certificate (every five years)
  • transferring a pleasure craft licence or certificate of registry (by the new owner)

No fee would be applied to a replacement licence or certificate of registry (due to loss or accident) or to any other PCL or Vessel Registry service.

The fee would be fixed and payable upfront at the same time (and in addition to) service fees for the aforementioned PCL and Vessel Registry services. In the case of licensed pleasure craft, this would be in addition to a proposed new PCL service fee of $15 for processing an application to obtain, renew (every five years), or transfer a PCL. The cumulative cost of the proposed regulatory charge and PCL service fee would be $25 every five years (or $5 annually).

As the proposed charge for pleasure craft would be considered low materiality under the Low-materiality Fees Regulations (Section 2.1(a)), it would not be subject to annual adjustment (e.g., Consumer Price Index indexation).

6.1.1 Supplemental support to address commercial vessels

TC proposes that up to 20 percent of each regulatory charge (fee) collected from pleasure craft owners (i.e., $2) be allocated to help cover some of the costs of addressing commercial vessels and vessels that cannot be identified as either a commercial vessel or pleasure craft (either due to lack of identification or its state of deterioration). This is based on the key consideration that benefits accrue to pleasure craft owners from the remediation of commercial vessels.

Pleasure craft owners stand to benefit directly from remediation of commercial vessels, which pose environmental and safety issues in the waters that pleasure craft owners also use. Commercial problem vessels typically present hazards to navigation and anchoring, and they have contaminants on-board that can, or do, result in pollution of the waters that pleasure craft owners use for sport fishing or other recreational activities.

In addition, as described under 5.4 (Number of Commercial/Non-Recreational Vessels and Pleasure Craft), the opportunity to collect monies from commercial/non-recreational vessel owners is limited, given the number of registered commercial/non-recreational vessels compared to the overall costs associated with wrecked and abandoned commercial vessels. Generating enough funds to enable the Government to address the backlog of commercial problem vessels would require a regulatory charge of tens of thousands of dollars, which would be unfair to current vessel owners and would be inconsistent with other jurisdictions. Allocating a portion of monies collected from the pleasure craft regulatory charge to address commercial vessels would allow further reduction of risks related to commercial problem vessels.

Finally, the amount of each individual pleasure craft fee that would be used for cross-subsidization ($2 paid every five years) is expected to have a negligible effect on pleasure craft owners, as the overall fee level remains well below the $5 annual amount pleasure craft owners previously indicated they were willing to pay toward addressing problem vessels (see 5.2.2 Stakeholder groups and Indigenous partners). This modest amount could enable the assessment and remediation of an additional 31 commercial vessels over a 10-year period. In the absence of cross-subsidization, TC and CCG would remediate fewer commercial vessels annually, leading to increased risks and costs over the longer term, including for pleasure craft owners.

6.2 Proposed commercial/non-recreational vessel charge (fee)

Based on the analyses described in 4.0 Cost analysis and 5.0 Pricing analysis above, TC proposes that the fee for commercial/non-recreational vessels be divided into four tiers as follows:

  • small vessels below 15 gross tonnage: $250 fee
  • a group or fleetFootnote 7 of small vessels (registered to the same owner): $450 fee
  • vessels from 15 to 150 gross tonnage: $500 fee
  • vessels above 150 gross tonnage: $1,000 fee

The charge would be used specifically to assess and/or address problem commercial vessels.

TC proposes a simple four-tier charge structure, rather than a charge per metre (e.g., the State of Washington approach), as this streamlines administration of the charge and provides more certainty to vessel owners regarding the charge levels. The proposed fees roughly correlate to the charge levels in the State of Washington for vessels of a similar size.

The fee would be paid when:

  • registering a vessel and issuing a certificate of registry for the first time
  • renewing a certificate of registry (every five years)Footnote 8
  • issuing a certificate of registry for a re-registered vessel (i.e. a vessel that was previously registered, but is no longer active)
  • transferring a certificate of registry (by the new owner)

No fee would be applied to a replacement certificate of registry (due to loss or accident) or to any other Vessel Registry service.

In cases where vessels qualify for the group/fleet discount for services under the Vessel Registry, the fee ($450) would only be paid once for the group/fleet.

Consistent with exclusions under the WAHVA, the regulatory charge would not be collected on transactions involving a vessel that is owned by the federal government or a provincial/territorial government if the vessel is used exclusively for non-commercial governmental purposes. As such vessels are excluded from the applicability of the WAHVA, the Fund would not be used to take action on these vessels if they become a problem.

The regulatory charge would be fixed and payable upfront at the same time (and in addition to) service fees for the aforementioned Vessel Registry services.

Vessels that are used for both recreational and commercial/non-recreational purposes are required to be registered. Therefore, owners of these vessels would pay the commercial/non-recreational regulatory charge (fee).

As the commercial charge would not be considered low materiality under the Low-materiality Fees Regulations, it would be subject to annual adjustment. Accordingly, it would be adjusted every year on April 1, based on the Consumer Price Index published by Statistics Canada, in accordance with Section 17(1) of the Service Fees Act. This approach would be consistent with what TC is proposing as part of a separate Vessel Registry Fee Proposal.

6.3 Scale of activities enabled by proposed charge (fee)

The scale of activities enabled by the charge would be modest in the early years of the proposed Fund. However, estimates suggest that the regulatory charge could generate up to $9.4 million annually ten years after coming into force. This would include up to $6.8 million from pleasure craft owners (including $1.4 million to address commercial vessels) and up to $2.6 million from commercial vessel/non-recreational owners. Over a ten-year period, TC estimates that these monies could address up to 1,143 pleasure craft and up to 114 commercial vessels. Although the number of pleasure craft that could be addressed over a ten-year period exceeds the number of pleasure craft currently in the National Inventory (see Annex A), the inventory will continue to grow as additional legacy pleasure craft vessels are reported and validated.

While more money would be generated from pleasure craft owners overall, commercial/non-recreational vessel owners would be asked to pay between 25 to 100 times more than pleasure craft owners (depending on vessel size). For comparison, the average remediation cost for a commercial vessel in the National Inventory is approximately 10 times that of a pleasure craft.

6.4 Service standards

As the proposed regulatory charge falls under definition 2(1)(e) of fee in the Service Fees Act, requirements pertaining to performance standards (including remissions) do not apply.

7.0 Engagement and implementation

Creation of an owner-financed vessel remediation fund is a multi-year undertaking as part of the National Strategy to Address Canada’s Wrecked and Abandoned Vessels. Since early 2017, TC, with the support of CCG, has led cross country stakeholder engagement sessions on the implementation of the National Strategy. During this time, stakeholders weighed-in on the possibility of an additional charge that would be used to address problem vessels in Canadian waters. Several one-off information sessions with stakeholders on the National Strategy have also occurred—particularly with communities affected by problem vessels—as well as consultation sessions with the recreational boating community through venues such as the Canadian Marine Advisory Council (CMAC). Consultations sought to better understand views of stakeholders on the introduction of a long-term owner-financed fund. Stakeholders supported the ‘polluter-pay’ based approach in regards to establishing an owner-financed long-term vessel remediation fund, on the premise that taxpayers should not always be on the hook for addressing problem vessels when owners cannot be located or identified, so long as charge remains reasonable and aligned with costs.

Following consultation on this proposal, TC will consider feedback and will publish a “What We Heard” report, which will summarize the feedback received during the consultation period and outline next steps. TC intends to align, as best as possible, the introduction of regulatory charges with new PCL service fees, as well as with any amended vessel registration service fees.

TC and CCG would report on the Fund’s expenditures and results to the Public Accounts of Canada. Expenditures and results would also be included in respective public Departmental Results Reports. To provide transparency and accountability to both commercial/non-recreational vessel and pleasure craft owners, monies collected from both groups would be accounted for, tracked and reported separately. Potenial monies collected through the regulatory charge would be reported as required by the Service Fees Act, through the public annual TC departmental fees report.

Annex A: Breakdown of national inventory by vessel location, type and cost

Vessel numbers, costs and categorization in the chart below are estimates as of May 2021. As vessels in the National Inventory of Vessels of Concern continue to be investigated and validated, numbers, costs and categorization may change as these details are confirmed. In cases where vessel categorization remains uncertain, the vessels have been categorized based on indicators such as size or material composition (e.g., smaller fibreglass vessels have been categorized as pleasure craft whereas larger vessels have been categorized as commercial/non-recreational). Outliers are excluded.

 

Number of Vessels

Cost to Address Problem Vessels

Province

Total

Pleasure Craft

Commercial/
Non-Recreational

Total

Pleasure Craft

Commercial/
Non-Recreational

AB

1

1

-

$32,000

$32,000

-

BC

1,191

778

413

$121,975,000

$25,336,000

$96,639,000

MB

1

-

1

$826,000

-

$826,000

NB

88

19

69

$13,547,000

$362,000

$13,185,000

NL

206

38

168

$48,393,000

$935,000

$47,458,000

NS

120

35

85

$23,772,000

$1,604,000

$22,168,000

NT

3

-

3

$1,466,000

-

$1,466,000

NU

-

-

-

-

-

-

ON

99

35

64

$41,006,000

$1,124,000

$39,882,000

PE

5

1

4

$642,000

$32,000

$610,000

QC

235

62

173

$99,588,000

$1,963,000

$97,625,000

SK

-

-

-

-

-

-

YT

-

-

-

-

-

-

Total

1,949

969

980

$351,247,000

$31,388,000

$319,859,000

Annex B: Stakeholder/Indigenous partner impact considerations

The following table provides an overview of the main stakeholder groups/Indigenous partners, and the key considerations that TC took into account in developing the proposed regulatory charge (fee):

Stakeholder group and Indigenous partners

Overview of stakeholder groups and Indigenous partners

Considerations

Companies/organizations that own/operate medium or large vessels

Examples:

  • Fishing companies
  • Shipping companies
  • Passenger vessel companies
  • Ferry operators
  • Companies providing other commercial marine services, such as dredging, tug and barge, and offshore support
  • Commercial vessels are used to perform activities such as fishing; transporting cargo, commodities, equipment, and passengers; and tourism.
  • The fisheries industry is important for local, provincial and territorial economies, and the communities that rely on it.
  • Canadian registered vessels carry about 98% of domestic marine tonnage (primarily bulk cargo).
  • Ferries provide an important transportation link for coastal and island communities, as well as for those separated by river or lake crossings, and play a vital role in resupplying some communities across the country.
  • As part of this proposal, companies/organizations that own/operate medium or large vessels would pay a new regulatory charge, which would be $500 or $1,000, depending on the size of the vessel, when they register, or renew the registration of, their vessel (every five years).
  • TC is also considering new and updated service fees for vessel registration. Consultations on proposed changes will occur separately.
  • Vessel owners/operators in the marine shipping industry, primarily large international companies headquartered outside of Canada, also pay fees to TC for marine cargo inspections and marine insurance certificates.
  • TC is mindful that medium or large vessel owners/operators may pay fees to other federal departments (e.g., fees for fishing licences and navigation, ice-breaking and dredging services). TC also recognizes that other federal initiatives (e.g., speed restrictions to protect whales, fishing restrictions, border closures due to the pandemic) have financial impacts on vessel owners. As well, TC is aware that vessel owners face charges from Crown corporations and shared governance organizations (e.g., pilotage and port fees). The 2019-20 Departmental Fees Reports for TC and Fisheries and Oceans Canada indicate that vessel owners paid over $90 million in fees to the two departments during the fiscal year.
  • In addition, the largest vessels (>300 gross tonnage, of which there are about 1,600 registered in Canada) are now required to maintain insurance or other security to cover the potential costs related to the removal of wrecks, which creates an additional operating cost for these vessels.
  • Owners/operators of medium or large vessel would benefit from the activities financed through the regulatory charge as they would address problem vessels that may pose navigational hazards or risks to aquaculture and commercial fishing sites, among other hazards.
  • Monies from the Fund would assist in the removal of problem vessels currently occupying harbour and port space across Canada.

Companies/organizations that own/operate small vessels

Examples:

  • Fishing companies
  • Tourism companies (whale watching, sport fishing, outfitters, diving, outdoor camps, river rafting, sailing)
  • Small ferry owners, water taxi companies
  • Universities and colleges
  • As noted above, fishing and marine transportation are important industries in Canada’s economy and communities.
  • Some vessels are used seasonally (e.g., whale watching tour boats) whereas others are used all year (e.g., ferries, water taxis).
  • A small number of vessels are also owned by universities and colleges to support research.
  • Small vessels (<15 gross tonnage) make up the vast majority (about 78%) of commercial/non-recreational vessels in Canada.
  • As part of this proposal, companies/organizations that own/operate small vessels would pay a new regulatory charge of $250, when they register, or renew the registration of, their vessel (every five years).
  • TC is also considering new and updated service fees for vessel registration. Consultations on proposed changes will occur separately.
  • Owners of multiple small vessels would benefit from the group and fleet discount fee ($450).
  • TC recognizes that small fishing vessel owners also pay fees for fishing licences to Fisheries and Oceans Canada.
  • Like owners/operators of large or medium vessels, small vessel owners/operators would benefit from the regulatory charge as they would be used to address problem vessels posing a range of safety and economic risks.

Owners of pleasure craft

  • There are about 2.7 million licensed or registered pleasure craft in Canada. The industries surrounding recreational boating contribute about $5 billion per year to Canada’s GDP.
  • As part of this proposal, pleasure craft owners would pay a new regulatory charge of $10 when they license/register or renew the licence/registration of their pleasure craft (every five years).
  • Coinciding with this proposal (under a separate fee proposal as part of TC’s fee modernization initiative), pleasure craft owners would see a new $15 service fee for licensing their pleasure craft.
  • TC is also considering new and updated service fees for pleasure craft that are registered.Footnote 9 Consultations on proposed changed will occur separately.
  • In addition to licensing or registration fees, owners and operators of pleasure craft pay third-party service providers (not TC) approximately $50 to $70 (depending on the rate charged by the provider) to take a boating safety course to get their lifetime-valid pleasure craft operator card.
  • A study commissioned by TC (Malatest, Establishing Owner-Financed Cleanup Funds, 2019) found that pleasure craft owners are generally willing to pay up to $5 annually toward addressing problem vessels, as this charge is considered to be minimal, if not negligible, relative to the actual cost of purchasing, maintaining and operating a vessel. The study also found that such a charge would have no discernable impact on industries related to recreational boating.
  • Pleasure craft owners also stand to benefit from activities financed by the regulatory charge, as it would be used to ensure cleaner waters for recreational boating and associated activities (e.g., water sports, swimming, sport fishing) and reduce navigational/safety hazards.

Indigenous peoples of Canada

  • Indigenous people and communities use vessels for a wide range of activities, such as recreation, commercial fishing, search and rescue operations and Often vessels are also used to exercise Constitutionally-protected rights such as fishing, harvesting, and cultural practices.
  • Indigenous peoples and communities may be owners/operators of commercial/non-recreational vessels or pleasure craft, and thus would be subject to the same elements of the proposal noted above for these stakeholder groups.
  • TC recognizes that Indigenous owners/operators may also pay other marine-related fees to the Government of Canada (same as other owners/operators of commercial/non-recreational vessels and pleasure craft).
  • Ceremonial boats and other watercraft that are not required to be licensed would not be subject to the proposed regulatory charge.
  • Indigenous communities may also stand to benefit from the regulatory charge as it could be used, in part, to increase the capacity of Indigenous communities to perform vessel risk assessments and to address problem vessels.

Governments

  • Governments own a significant number of registered vessels, used for a range of activities, such as law enforcement, search and rescue, and research.
  • Approximately 2,100 vessels are registered to the federal government and 1,200 are registered to provincial/territorial governments (the vast majority—about 87%—are below 15 gross tonnage).
  • As part of this proposal, the federal government and provincial/territorial governments that register their vessels used exclusively for non-commercial governmental purposes would be excluded from paying the new regulatory charge. This reflects exclusions under the WAHVA in respect of non-commercial vessels owned or operated by federal or provincial governments.
  • Governments would be expected to address/responsibly dispose of their own vessels at end of life.
  • As with other vessel owners/operators, governments would benefit from activities funded by the charge, as the charge would be used to address vessels posing a number of environmental, economic and safety risks, including risks to navigation of government vessels and government-owned infrastructure.

Coastal and shoreline communities

  • Wrecked, abandoned or hazardous vessels affect communities across Canada.
  • Over half (roughly 60%) of known problem vessels are located on the west coast—approximately 20% are located on the east coast and about 10% are located in Quebec.
  • As part of this proposal, vessel owners would pay a new regulatory charge that would be used to address problem vessels located in coastal and shoreline communities across Canada.
  • Left unaddressed, these problem vessels often present environmental, economic, public health and safety and/or socio-economic threats to these communities.
  • As problem vessels are an eye-sore, they may have a negative impact on tourism revenues or property values.
  • By providing funding to remove these vessels, this proposal could contribute to greater public enjoyment of coastal/shoreline areas, improve public health through cleaner drinking water, and reduce public safety risks associated with problem vessels being accessible to the public (e.g., near beaches or parks).

Marinas, harbours and ports

  • Canada has over 900 marinas, 550 port facilities and 1,000 harbours.
  • Ports, in particular, play an important economic role, supporting over 200,000 jobs and with more than $50 billion in economic activity annually in Canada.
  • As part of this proposal, vessel owners would pay a new regulatory charge that would be used to address problem vessels located in Canadian marinas, harbours and ports.
  • Across the country, problem vessels occupy space in these facilities resulting in forgone revenue and impacting supply chains and passenger ferries.
  • By providing funding to remove these vessels, this proposal could contribute to improved financial gain/economic performance.

Companies involved in the assessment and remediation/disposal of vessels

  • A variety of activities are required to address problem vessels, including assessment, monitoring, remediation, dismantlement, and disposal, among others.
  • These activities implicate a number of industries that have a significant presence in many coastal and shoreline communities.
  • As part of this proposal, vessel owners would pay a regulatory charge that would be used to prevent, assess and address problem vessels.
  • Monies collected through the proposed charge would flow to companies involved in ship breaking, marine salvage and waste management (including recycling), among others, leading to economic growth in these industries and the communities in which they are located.
  • Indigenous companies could continue playing an important role in addressing problem vessels and the monies collected through the charge would continue to support Indigenous companies in undertaking assessment and remediation activities on problem vessels.