Decisions

TATC File No. MO-006-37
MoT File No. O20081027-402-00011

TRANSPORTATION APPEAL TRIBUNAL OF CANADA

BETWEEN:

Florence M (The), Applicant

- and -

Minister of Transport, Respondent

LEGISLATION:


Review Determination
Barrie LePitre


Decision: December 31, 2009

Citation: Florence M (The) v. Canada (Minister of Transport), 2009 TATCE 34 (review)

Heard at Hamilton, Ontario, on September 16, 2009

Held: The penalty for the violation of section 187 of the Canada Shipping Act, 2001, by the vessel Florence M, on or about October 1, 2008, is reduced from $25 000 to $10 000. This amount is payable by McKeil Work Boats Limited, the authorized representative of the vessel.

The total amount of $10 000 is payable to the Receiver General for Canada and must be received by the Transportation Appeal Tribunal of Canada within thirty-five (35) days of service of this determination.

I. BACKGROUND

[1] The Notice of Violation which was the subject of the review hearing is dated December 9, 2008. It was issued to McKeil Marine Limited. In the portion of the Notice of Violation headed "Vessel Particulars", the name of the vessel is specified as the Florence M. In the portion of the Notice of Violation headed "Authorized Representative Particulars", the name of the authorized representative is specified as McKeil Marine Limited.

[2] The Notice of Violation then indicates that:

Pursuant to Section 229 of the Canada Shipping Act, 2001, the Minister of Transport has reasonable grounds to believe that you or the vessel have committed the violation(s) specified in schedule "A" to this Notice.

The Violation(s) specified in Schedule "A" has (have) been designated pursuant to the Administrative Monetary Penalty Regulations and the procedures in Section 228 to Section 243 of the Canada Shipping Act, 2001 respecting administrative penalties apply.

[3] In Schedule A to the Notice of Violation, the date, the details of the violation and the monetary penalty assessed are specified as follows:

On or about October 1, 2008, at Dawson Point on Wolfe Island, near Kingston in the province of Ontario, M.V. "Florence M." discharged a prescribed pollutant, thereby contravening section 187 of the Canada Shipping Act, 2001.

Monetary Penalty Assessed:  $25,000.00

[4] By letter of January 16, 2009, McKeil Marine Limited requested a review of the amount of the penalty by the Transportation Appeal of Canada ("Tribunal"). A review of the facts of the violation was not requested.

II. STATUTES, REGULATIONS AND POLICIES

[5] Section 2 of the Canada Shipping Act, 2001 ("Act") provides the following definitions:

"authorized representative" means, in respect of a Canadian vessel, the person referred to in subsection 14(1) and, in respect of a foreign vessel, the master.

"Canadian vessel" means a vessel registered or listed under Part 2 (Registration, Listing and Recording).

[6] Subsection 14(1), section 187, paragraph 191(1)(a) and subsections 191(2) and (4) of the Act provide as follows:

14.(1) Every Canadian vessel must have a person – the authorized representative – who is responsible under this Act for acting with respect to all matters relating to the vessel that are not otherwise assigned by this Act to any other person.

187. No person or vessel shall discharge a prescribed pollutant, except in accordance with the regulations made under this Part or a permit granted under Division 3 of Part 7 of the Canadian Environmental Protection Act, 1999.

191.(1) Every person who, or vessel that, contravenes any of the following commits an offence:

(a) section 187 (discharge of a pollutant);

. . .

191.(2) Every person or vessel that commits an offence under subsection (1) is liable on summary conviction to a fine of not more than $1,000,000 or to imprisonment for a term of not more than 18 months, or to both.

191.(4) In determining the punishment under subsection (2), the court may have regard to the following factors:

(a) the harm or risk of harm caused by the offence;

(b) an estimate of the total costs of clean-up, of harm caused, and of the best available mitigation measures;

(c) the remedial action taken, or proposed to be taken, by the offender to mitigate the harm;

(d) whether the discharge or anticipated discharge was reported in accordance with the regulations made under paragraph 190(1)(b);

(e) any economic benefits accruing to the offender that, but for the offence, the offender would not have received; and

(f) any evidence from which the court may reasonably conclude that the offender has a history of non-compliance with legislation designed to prevent or minimize pollution.

[7] Section 210 of the Act provides the applicable definition of "relevant provision":

"relevant provision" means a provision of this Act or the regulations that the Minister is responsible for administering . . .

[8] Subparagraph 229(1)(b)(i), section 232, subsection 238(2) and paragraph 244(h) of the Act provide as follows:

229.(1) If the Minister has reasonable grounds to believe that a person or vessel has committed a violation, the Minister may

. . .

(b) issue, and cause to be served on the person or vessel, a notice of violation that names the person or vessel, identifies the violation and sets out

(i) the penalty, fixed by or within the range fixed by the regulations made under this Part, for the violation that the person or vessel is liable to pay,

. . .

232.(1) A person or vessel served with a notice of violation under paragraph 229(1)(b) must

(a) pay the amount of the penalty; or

(b) within thirty days after being served or any further time that the Tribunal on application allows, file with the Tribunal a written request for a review of the facts of the violation or the amount of the penalty.

(2) If a review of the facts of the violation is not requested, the person or vessel is deemed to have committed the violation in respect of which the notice was served.

238.(2) A person or vessel is liable for a violation that is committed by an employee or agent of the person or vessel acting in the course of the employee's employment or within the scope of the agent's authority, whether or not the employee or agent who actually committed the violation is identified or proceeded against in accordance with this Act.

244. The Governor in Council may, on the recommendation of the Minister, make regulations for carrying out the purposes and provisions of this Part, including regulations

. . .

(h) designating violations that may be proceeded with by issuing notices of violation and fixing a penalty or a range of penalties in respect of each such violation, up to a maximum of $25,000 but in any event not greater than the maximum fine if the violation were proceeded with by way of summary conviction;

. . .

[9] Subsections 2(1), 2(2) and 3(4) of the Administrative Monetary Penalties Regulations, SOR/2008-97 ("AMPRs"), which are made under the Act, provide as follows:

2.(1) The contravention of a provision of the Act set out in column 1 of the schedule is designated as a violation that may be proceeded with in accordance with sections 229 to 242 of the Act and by the issuance of a notice of violation.

(2) The range of penalties set out in column 2 of the schedule is the range of penalties in respect of a violation set out in column 1.

3.(4) A document may be served on a vessel by

(a) delivering a copy of it personally to the master or any other person who is, or appears to be, in charge of the vessel;

(b) fixing a copy of it to a prominent part of the vessel;

(c) if the vessel's authorized representative is an individual, sending a copy of it by fax, registered mail or courier to the authorized representative; or

(d) if the vessel's authorized representative is a corporation,

(i) sending a copy of it by fax, registered mail or courier to the authorized representative's head office or place of business,

(ii) leaving a copy of it at the authorized representative's head office or place of business with an officer or other individual who appears to be in control of or to manage the head office or place of business or with the authorized representative's agent, or

(iii) sending a copy of it by electronic means, other than fax, to an individual referred to in subparagraph (ii).

[10] In item 69 of the Schedule to the AMPRs, section 187 of the Act is set out in column 1 and $1 250 to $25 000 is the range of penalties set out in column 2.

III. MOTION

[11] There was a motion by the Minister to substitute the name McKeil Work Boats Limited for the name McKeil Marine Limited, as the Applicant, on the basis that:

  • the Notice of Violation had been addressed to McKeil Marine as the authorized representative of the vessel;
  • subsequently, it was discovered that McKeil Work Boats Limited, a subsidiary of McKeil Marine, is actually the authorized representative of the vessel.

Captain Krick, the Applicant's representative, was in agreement with the motion.

[12] At the review hearing, I noted that the Notice of Violation referred to the vessel as the entity against which the violation was alleged. (This appears in the Schedule to the Notice of Violation.) I also noted that, under the legislation, violation by a vessel and serving a vessel with a notice of violation are contemplated and one of the ways of serving the Notice of Violation on the vessel is to send the Notice of Violation to the authorized representative. With the agreement of the parties, it was determined that we would proceed on the basis that:

  • the Notice of Violation is in respect of a violation by the vessel;
  • an attempt was made to send the Notice of Violation to the authorized representative of the vessel;
  • we would treat the Notice of Violation as having been sent to McKeil Work Boats, which is the authorized representative of the vessel; and
  • McKeil Work Boats was before the Tribunal through the attendance of Captain Krick.

[13] Where an alleged violation is by a vessel, the Act and the AMPRs contain extensive provisions for proceedings against and by the vessel:

  • paragraph 229(1)(b) of the Act provides for issuing, and serving on the vessel, a notice of violation that names the vessel;
  • subsection 232(1) of the Act provides for the vessel to pay the amount of a penalty or to request a review of the facts of the violation or the amount of the penalty;
  • subsection 232.2(1) of the Act provides for an appeal, by the vessel, of a review determination;
  • subsection 3(4) of the AMPRs provides for the methods of service of a notice of violation on the vessel, including various methods where the authorized representative of the vessel is a corporation;
  • subsection 14(1) of the Act also provides that the authorized representative of a Canadian vessel is responsible, under the Act, for acting with respect to all matters relating to the vessel that are not otherwise assigned by the Act to any other person;

Matters that would fall within the scope of subsection 14(1) of the Act would include representing the vessel at tribunal hearings and actually paying a penalty imposed on the vessel.

[14] Accordingly, in this matter:

  • as the violation was by the vessel, the Applicant is the vessel Florence M and the style of cause is amended accordingly;
  • representation of the vessel at the review hearing was by the authorized representative of the vessel (McKeil Work Boats), through Captain Krick; and
  • payment of a penalty imposed on the vessel would be the responsibility of the authorized representative of the vessel (McKeil Work Boats).

IV. DOCUMENTARY EVIDENCE

A. Minister of Transport

[15] The Minister's representative submitted an incident report, dated November 2008, from the Department of Fisheries and Oceans, Canadian Coast Guard, Central and Arctic Region (Exhibit M-1).

[16] I will summarize the relevant information in the incident report as follows:

At 7:45 a.m. on October 1, 2008, the captain of the tug Florence M reported to Prescott Coast Guard radio an overflow of 600 − 700 litres (L) of diesel fuel into Lake Ontario, near Dawson Point (Dawsons Point in the report) at Wolfe Island. The captain also made corporate notification. He took action to stop the source of the spill and initiate some recovery of the fuel with limited on-board resources.

The Canadian Coast Guard (CCG) Environmental Response (ER) Duty Officer (DO) was notified of the report at 8:20 a.m. The ER DO immediately contacted the vessel for a situation update. The captain indicated that the overflow occurred during a transfer of fuel from the vessel's holding tank to its day tank. He asked when the CCG would be on scene to respond, as he had few resources immediately available and was having trouble contacting anyone in the corporate office. The captain was advised that it is the vessel's responsibility to respond and that he should consult his onboard plan and, if necessary, hire a contractor. The ER DO attempted to make contact with the McKeil Marine corporate office in Hamilton, Ontario, but calls were not answered or immediately returned. The ER DO assessed the situation and activated an operational response. A CCG cutter in Kingston was tasked to encircle the vessel with its onsite boom and the CCG ER personnel from Prescott followed shortly thereafter.

While en route to the scene of the incident, the CCG Senior Response Officer (SRO) received a telephone call from persons at McKeil Marine, seeking confirmation that the CCG was responding to the incident and that they did not require response by a contractor. The SRO indicated that the CCG would conduct a first response to initially assess and contain the situation, but that ultimate responsibility for the incident remained with the polluter. The SRO further indicated that the CCG would respond as necessary in the absence of any other response, but that McKeil Marine would be billed for the response and it would be more appropriate for persons at McKeil Marine to assume control of the response. They asked that the CCG provide an update of the situation once on scene.

At 9:45 a.m., the SRO received a telephone call from Eastern Canada Response Corporation (ECRC) indicating that ECRC had been retained by McKeil Marine to respond to the spill, that ECRC had a subcontractor in Kingston who would respond with a vessel, crew and boom, with an estimated time of arrival of one hour. ECRC would also send spill managers from Montréal, Quebec, with an estimated time of arrival of four hours. ECRC was advised that the CCG cutter had been tasked with deploying a boom and was already underway.

An ECRC barge arrived at the scene at about the same time as the CCG was completing the encircling of the Florence M with a boom. Some sheen was observed in the water adjacent to the Florence M and a thicker concentration of diesel, (one inch thick in certain areas), was found in a band from the shoreline to about ten feet offshore starting about one quarter of a mile west of the Florence M and continuing west about one half of a mile. The ECRC crew was advised that the product volume and condition was recoverable with sorbent material, but responded that they were a vessel booming crew only and had no training or equipment for other tasks. ECRC managers were expected on the scene at 4:00 p.m. and a shoreline cleanup crew around 6:00 p.m. The CCG personnel were tasked with bringing sorbent material to the scene. The ECRC crew deployed a boom to contain any product that might remobilize from the shoreline. The CCG and Environment Canada personnel deployed sorbent material along the shoreline. An ECRC manager arrived on the scene and advised that the ECRC would continue with shoreline cleanup and were expecting another crew that would assist very shortly. A Transport Canada inspector indicated that a revised estimate of the volume of the spill was 1 500 L. The CCG boom was redeployed to help contain any product that might remobilize from the shoreline to the west. The operations ended for the day when personnel attended a local meeting to explain the situation to local residents and answer any questions.

The second day (October 2, 2008), CCG personnel monitored the response by ECRC, which had additional resources on site to respond to the incident. The pace of shoreline cleanup was deemed to be slow and the CCG SRO recommended to McKeil Marine that the response should be progressing more quickly. This was agreed to and additional resources were ordered for the following day.

The third day (October 3, 2008), CCG ER personnel arrived to find a much improved shoreline condition. Most of the product had been removed and efforts were continuing to remove the last of the contaminated debris and sorbent. An additional ECRC shoreline crew was on scene. A final inspection, with all government agencies that were on site (CCG, Environment Canada, Ontario Ministry of Environment) as well McKeil Marine and ECRC, was conducted. The CCG recommended termination of shoreline response operations, having decided that the small amount of remaining sheen would be more effectively restored through natural recovery. The adjacent property owners were generally satisfied with the response.

The total cost of the CCG response was: $14 479.41.

[17] The parties agreed to the facts as set forth in the incident report, except that, during the Hearing, the volume of the spill was agreed to be around 1 720 L.

B. Applicant

[18] The Applicant's representative submitted a binder of materials that contains some opening pages followed by five tabbed items (Exhibit A-1).

  • Introductory pages − McKeil Marine's rationale for a review of the amount of the penalty.
  • Tab 1 − Letter to McKeil Marine and one of the attachments to that letter, being the above-described incident report.
  • Tab 2 − Three invoices billed to McKeil Marine in relation to the spill:

(i) the other attachment to the letter at Tab 1, being an invoice for the $14 479.41 costs of CCG services;

(ii) an invoice for the $40 850.34 costs of the ECRC services; and

(iii) an invoice for the $54 231.00 costs of Canadian Hydro services.

  • Tab 3 − Government of Canada list of "Prosecutions Completed Against Marine Polluters in the Atlantic Region Between January, 2000 and 2009" showing the prosecution date, the incident date, the ship name, the ship owner, the incident location, the type of offence, the amount of pollutant discharged and the penalty, but not showing either detailed facts or references to any case reports where such facts might be found.
  • Tab 4 − Work history of the person who was the second engineer of the Florence M at the time of the spill.
  • Tab 5 − Cover page of the Shipboard Oil Pollution Emergency Plan (SOPEP) for the Florence M.

[19] The parties agreed to admission of the facts in the items at Tabs 1, 2 and 4 and to admission of the fact of the existence of the SOPEP. The Minister's representative regarded the introductory pages of the binder of materials and the item at Tab 3 as being submissions.

V. ORAL EVIDENCE

A. Minister of Transport

[20] The Minister called no witnesses, relying on the incident report.

B. Applicant

[21] The Applicant called no witnesses, relying on the portions of the binder of materials admitted as facts.

VI. ARGUMENTS

A. Minister of Transport

[22] The Minister submits that the incident was a misadventure. He acknowledges that McKeil Marine had done its best as to what was required by legislation with regard to clean‑up and that, because a SOPEP is only required for vessels that engage in international voyages and not for vessels that engage in domestic voyages, it had gone beyond what was required by legislation with regard to having such a plan on a vessel.

[23] However, the Minister submits that, in provincial courts, fines for oil spills had been increasing as a matter of general deterrence to the public or to the industry. The Minister refers to fines imposed for spills of various amounts in the Atlantic Region: $50 000 for a spill of 10 000 L; $80 000 for a spill of 22 L; $45 000 for a spill of 5.5 L; and $70 000 for a spill that was under 6 000 L.

[24] The Minister submits that, with regard to the incident at hand, had the spill of some 1 700 L been prosecuted in provincial court, it would have justified a fine of $40 000 to $60 000, even taking into account mitigating factors.

[25] The Minister submits that the expense, time and effort that is involved for the parties to go to provincial court justified issuing a notice of violation for the maximum amount of penalty, being $25 000, to make it easier on all parties. He also submits that this is a test case on pollution.

[26] The Minister submits that the second engineer lost track of the fact that he was doing a transfer of fuel, and it overflowed into the river.

[27] The Minister also submits that the employer is vicariously responsible for the acts of the employee acting within the course of the employee's employment, and he refers to subsection 238(2) of the Act in that regard.

B. Applicant

[28] The Applicant's representative indicates that he does not dispute the Minister's statements. He agrees that this is a test case for administrative monetary penalties.

[29] The Applicant's representative submits that there is a wide range of fines in the cases provided in the list of "Prosecutions Completed Against Marine Polluters in the Atlantic Region Between January 2000 and 2009" (Tab 3). The question arises as to what mitigating factors were involved. He acknowledges that proceeding by way of provincial court would have been costly, and submits that proceeding by way of administrative monetary penalty is the most appropriate way to deal with this matter.

[30] With regard to the cases (Tab 3) for which the penalties exceed $25 000, he submits that: in one case, while the amount of pollutant was minimal, it was offshore and would not have involved the company doing or paying anything regarding clean-up; in a second case, the amount of pollutant was small (5.5 L), but the polluter did not report it, justifying a penalty that is higher; and in a third case, the amount of pollution (slightly under 6 000 L) was considerably higher than in this matter.

[31] The Applicant's representative submits that two of the cases (Tab 3), both with penalties of $15 000, are more comparable to this matter than are offshore cases where the vessel does not do a clean‑up and the owner does not pay for one. No rationale for the penalty was presented in the Notice of Violation. It is a matter of opinion as to what would have happened had this matter gone to court.

[32] Referring to section 191 of the Act, the Applicant's representative submits that there were mitigating circumstances, as described in the introduction of the binder of materials. He submits that the incident was reported in accordance with legislation; McKeil Marine spent $109 000 to clean up the spill, it was cleaned up within two days to the satisfaction of the local residents and there was no lasting effect on the environment. He submits that the company had a SOPEP in place so that if an event did happen, they were prepared to clean it up. He submits that no economic benefit accrued to the company from the spill.

[33] The Applicant's representative submits that, if a company did not do everything that it could, then the fine should be larger, but if actions happened beyond the control of the company and its management, then that is the biggest mitigating circumstance.

[34] Referring to the work history (Tab 4), the Applicant's representative submits that the vessel's second engineer, who was in charge of the operation that resulted in the spill, was an experienced person. He acknowledges that the company is vicariously responsible for its employees. However, it is the nature of ship-board operations that the error of an employee on a vessel may not come to the attention of the head office of the company until later, and the company had done all that it could do. He submits that the company relies on the experience of its crews and makes sure they understand the job that they are to do.

[35] The Applicant's representative submits that the penalty should be closer to $10 000.

VII. LEGISLATION AND POLICY ANALYSIS

[36] The Applicant did not request a review of the facts of the violation. Pursuant to subsection 232(2) of the Act, if a review of the facts of the violation is not requested, the vessel is deemed to have committed the violation in respect of which the Notice of Violation was served. As a result, the issue of whether the vessel is liable for a violation committed by a member of the crew of the vessel, having regard to subsection 238(2) of the Act, is not an issue before the Tribunal in this matter.

[37] The Applicant has requested that the factors in subsection 191(4) of the Act be considered in reviewing the amount of the penalty. Subsection 191(4) sets out a number of factors to which a court may have regard in determining the punishment under subsection 191(2) of the Act. Under subsection 191(2), a vessel that commits an offence under section 187 of the Act is liable on summary conviction to a fine of not more than $1 000 000. Where a notice of violation is issued pursuant to subsection 229(1) of the Act, the penalty is to be fixed by the regulations or within the range fixed by the regulations made under part 11 of the Act. Pursuant to paragraph 244(h) of the Act (which is in Part 11), the range of penalties that has been set out in item 69 of the Schedule to the AMPRs, for a violation regarding section 187, is $1 250 to $25 000. While the penalty regime in the AMPRs does not expressly incorporate the factors set out in subsection 191(4), those sorts of factors can be helpful in analysing the appropriateness of a penalty for a violation regarding section 187. Having regard to the sorts of factors set out in subsection 191(4):

  • the incident was reported by the violator;
  • the spill of a significant amount of pollutant (1 720 L) resulted in some short-term harm to the water and nearby shoreline;
  • there were substantial clean-up costs, but McKeil Marine has paid them;
  • the remedial action taken by the violator to mitigate the harm was initially somewhat slow and under-resourced;
  • the violator received no economic benefit from the violation; and
  • there was no evidence of a history of non-compliance by the violator.

[38] With regard to a review of penalty, my authority is provided under subsection 232.1(4) of the Act, which reads as follows:

232.1(4) The member may confirm the Minister's decision or, subject to any regulations made under paragraph 244(h), substitute his or her own determination.

[39] As noted in paragraph [37] above, it is pursuant to paragraph 244(h) of the Act that the range of penalties for a violation regarding section 187 of the Act has been set out in the AMPRs as $1 250 to $25 000. The Regulatory Impact Analysis Statement ("RIAS") that accompanied the AMPRs, but does not form part of them, provides some insight as to the rationale for the penalty regime under the AMPRs. In that regard, the $1 250 to $25 000 range of penalties, set out in the AMPRs in respect of a violation regarding section 187 of the Act, signals that such a violation is regarded as one of high gravity. The RIAS also gives some indication that penalty amounts which are higher for corporations than for individuals provide an appropriate deterrent effect; a penalty of $6 000 was envisaged for a first high-gravity violation by a corporation and a penalty of $12 000 was envisaged for a second high-gravity violation by a corporation.

[40] Taking into account the sorts of factors set out in subsection 191(4) of the Act and the penalty regime under the AMPRs, I am not satisfied that, in the circumstances of this case, a penalty of $6 000 (the penalty contemplated under the RIAS for a first high-gravity violation by a corporation) is appropriate, particularly given the significant amount of pollutant discharged and the short-term harm caused by it, as well as the initially slow and under-resourced remedial action by the polluter. Nor am I satisfied that a penalty of $25 000 (the maximum penalty allowed under the AMPRs) or $12 000 (the penalty contemplated under the RIAS for a second high-gravity violation by a corporation) is appropriate, given the reporting of the spill, the lack of long-term harm, the payment of clean-up costs, the absence of economic benefit and no history of non-compliance. I am satisfied that a mid-range penalty of $10 000 is appropriate.

VIII. DETERMINATION

[41] I determine that the penalty for the violation of section 187 of the Canada Shipping Act, 2001, by the vessel Florence M, on or about October 1, 2008, is reduced from $25 000 to $10 000. This amount is payable by McKeil Work Boats Limited, the authorized representative of the vessel.

December 18, 2009

Barrie LePitre

Member