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Feds introduce new measures to address abandoned vessels...by Catherine A. Hofmann, Bernard LLP, Vancouver

By BCShippingNews 16 February 2018
Catherine A. Hofmann, Bernard LLP, Vancouver
Under this program, the feds will provide financial assistance to support eligible recipients in the assessment and permanent removal and disposal of abandoned and wrecked small boats from Canadian waterways.

On October 30, 2017, Transportation Minister Marc Garneau tabled Bill C-64, an act respecting wrecks, abandoned, dilapidated or hazardous vessels and salvage operations, marking the one year anniversary of Canada’s $1.5 billion Ocean Protection Plan. The legislation forms part of a larger strategy of reforms and policies aimed at protecting Canada’s coasts and waterways from the ongoing threat these potentially hazardous vessels pose.

The first of those policies was introduced last spring, when Transport Canada launched the Abandoned Boats Program (ABP). The ABP will provide up to $5.6 million over the next five years towards the removal and disposal of hazardous small boats. While the ABP has a component dedicated to public education and research on vessel recycling, it is the assessment and removal arm of the policy which is of the greatest interest. Under this program, the feds will provide financial assistance to support eligible recipients in the assessment and permanent removal and disposal of abandoned and wrecked small boats from Canadian waterways.

Eligible recipients include the provinces, territories, municipal and local governments, indigenous groups, private ports and marinas (excluding federally owned small craft harbours), Canadian Port Authorities and both for-profit and not-for-profit organizations. Transport Canada is presently accepting applications for assessment and removals to be completed for 2018-19 funding with the deadline for all such applications being March 15, 2018. Under the program, all projects must be completed by March 31, 2022. It is also worth noting that the ABP is based on the premise of reimbursement of eligible expenses, and does not involve advanced payment of any kind. It is therefore imperative that grant applicants demonstrate that they have sufficient funding available to conduct a boat assessment as well as the proposed removal and disposal of the abandoned or wrecked vessel.

To be eligible for a grant to conduct a boat removal assessment, applicants must first establish that the vessel is either abandoned or wrecked. For these purposes, abandonment means that the owner of the vessel is either: (i) unknown, and the location and condition of the vessel indicate that it has been intentionally abandoned; or (ii) known, and has intentionally abandoned the vessel. A wrecked vessel is a boat that is sunken, stranded, beached, partially submerged or dismantled. Whether or not a vessel in fact meets the definition of abandoned or wrecked will be determined by the Navigation Protection Program (NPP) which administers the Navigation and Protection Act (Canada) and in order to be eligible for funds under the ABP, applicants must first get authorization from the NPP to take possession of it. Lastly, it should be noted that boats involved in legal disputes of any kind are not available for funding.

If the ABP (and its companion the Small Craft Harbours Abandoned and Wrecked Vessels Removal Program which was established in September 2017) are aimed at the removal of existing hazardous vessels, Bill C-64 is directed at prohibiting and preventing future vessel abandonment. The proposed legislation also attempts to impose liability for clean-up costs directly upon irresponsible owners and gives governmental authorities’ greater power to undertake hazard assessments of vessels, as well as to impose stronger compliance and enforcement measures.

The new Wrecked, Abandoned or Hazardous Vessels Act (the Act) has broad application and, subject to some limited exceptions, encompasses both Canadian and foreign-owned, licensed or registered vessels. Part 1 of the Act, among other things, implements the Nairobi International Convention on the Removal of Wrecks, 2007. The Convention was adopted at an International Maritime Organization Diplomatic Conference in 2007 and has, as its purpose, the establishment of a set of uniform rules for the prompt and effective removal of shipwrecks from the exclusive economic zone of a member state and from international waters. The Convention was entered into force on April 14, 2015, and since then it has been ratified by over 31 member states, including Denmark, France and the United Kingdom.

Under Part 1 of the Act, and subject to any limit set out in the Marine Liability Act (Canada) and certain limited exceptions, the liability of an owner of a vessel includes the costs and expenses incurred by any person in Canada (including the Minister of Fisheries and Oceans) in determining whether a wreck poses a hazard and any loss or damage caused by any measures taken in respect of such vessel. Moreover, for vessels greater than 300 gross tons, and unregistered vessels being towed, the Act requires owners to maintain wreck removal insurance or other financial security for any liability arising under the Act and the Convention.

Part 2 of the Act prohibits an owner of a dilapidated vessel to leave it stranded, grounded, anchored or moored in the same location for a period of 60 consecutive days, except where such owner has obtained express consent (from a person with the authority to give such consent) to leave the vessel in that condition throughout that period. For these purposes, a dilapidated vessel means any vessel, greater than 5.5 metres in length, which is significantly degraded or dismantled or incapable of being used for safe navigation. Part 2 also prohibits:

the abandonment of a vessel by an owner (except for the purposes of averting danger to human life);

an owner from letting a vessel become a “wreck” by reason of failing to maintain it; and

any person in charge of a vessel to knowingly cause it to sink, partially sink or to be stranded or grounded (except for the purposes of averting danger to human life).

Depending on where the offending vessel is located, either the Minister of Transportation or the Minister of Fisheries and Oceans may direct the authorized representative or owner of the vessel to repair, secure, move, dismantle, sell, destroy or otherwise dispose of it or its contents. Should the owner or authorized representative not be known or located, the respective Minister may take such measures as he or she may consider necessary to deal with the vessel. Prior to taking such action, however, 30 days must have elapsed from the date on which notice of his or her intention to dispose of the vessel was given to the public and any known interested parties, including any known holder of a mortgage or maritime lien.

What is perhaps the most surprising aspect of Bill C-64 are the proposed fines and penalties which may be imposed upon owners of abandoned vessels and wrecks. In some cases, offenders may, upon conviction, be liable for up to three years’ imprisonment and fines up to $1 million. In addition, owners may be liable to the Crown for the costs and expenses incurred by the relevant Minister arising from the measures taken in respect of the vessel or wreck, including any monitoring of the vessel. The owner may also be liable to any other person, in respect of such measures that they were directed to take by the minister or in respect of any loss or damage caused by those measures, or caused by the use of property in the vicinity of such vessel or wreck. Finally, the Act allows the Minister of Transport to suspend, cancel or refuse to issue or renew any documents including a certificate, licence or permit if the applicant or holder of the document has contravened a direction given under the Act or has not paid or reimbursed the government for a fine or penalty imposed on them.

There is no question that some of the maximum penalties are high and are clearly intended to promote compliance with the Act and to curb irresponsible vessel ownership. Consequently, and given the breadth and severity of these measures, identifying who the precise owner of the vessel or wreck is will be of particular importance. For the purposes of Part 2 of the Act, an “owner” means a registered owner, the holder of a pleasure craft licence or a person who has, either by law or contract, the rights of an owner of the vessel in respect of its possession and use. This is a very expansive definition and potentially puts multiple “owners” at risk to the extent that the legal and beneficial ownership or the legal and operational control of the vessel do not reside with the same person (intentionally or otherwise).

This increased potential for liability becomes an even greater concern to the extent that Transport Canada has, in the past few years, reduced some of the formalities of registration and to the extent that the Act relies upon the pleasure craft licensing system as a means of determining ownership, a purpose for which it was never intended. Since vessel registration and now pleasure craft licensing may give rise to substantial liability, it is imperative that the process by which one obtains or relinquishes registered or “licensed” ownership should become more stringent. Although the federal government has promised to work with the provinces and territories to improve the registration and licensing system, whether the increased resources required to effect changes in administration and enforcement will be available is yet to be seen. As a result and in view of the increased exposure to potential liability, extreme caution should be taken by existing and prospective owners to ensure that all steps and documents regarding the transfer of legal and/or beneficial ownership and use of a vessel are completed in each case.

While the need for some form of legislation to address the issue of abandoned vessels across Canada is clear, who will ultimately bear the cost of removing these vessels is less obvious. The Transport Minister has suggested that the bill will “reduce the financial burden on taxpayers, who have, in the past, borne many of the costs to remove and dispose of problem vessels.” However, no fines or penalties will be imposed on the owner of a boat that has already been abandoned. To this end, the government hopes to establish an inventory of existing derelicts with the goal to remove them all. Presumably the funds needed to create such an inventory will form part of the Ocean Protection Plan budget. Finally, although it is hoped that the severity of the enforcement provisions of the Act will reduce the number of abandoned vessels in the future, and thereby moderate the taxpayer burden, there is concern that the government will in fact be able to both collect and enforce the fines over the long run as it is seldom the financially secure who abandon a dilapidated vessel.

Catherine Hofmann is a lawyer with the maritime law firm Bernard LLP and can be reached at hofmann@bernardllp.ca.