REGS Committee Meeting

THE STANDING JOINT COMMITTEE OF THE SENATE AND THE HOUSE OF COMMONS FOR THE SCRUTINY OF REGULATIONS

LE COMITÉ MIXTE PERMANENT D'EXAMEN DE LA RÉGLEMENTATION DU SÉNAT ET DE LA CHAMBRE DES COMMUNES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, April 29, 1999

• 0830

The Standing Joint Committee of the Senate and the House of Commons for the Scrutiny of Regulations met this day at 8:30 a.m. for the review of statutory instruments.

Mr. Gurmant Grewal (Joint Chairman) in the Chair.

The Joint Chairman (Mr. Gurmant Grewal (Surrey Central, Ref.)): Good morning. I call the meeting to order. Before we hear our witnesses, I have two brief announcements.

At the end of the meeting, we must discuss the possible trip by the committee to Australia. Our next meeting is on May 13.

ORDER AMENDING THE FEES PROPOSED BY WESTERN CANADA MARINE RESPONSE CORPORATION, GREAT LAKES RESPONSE CORPORATION OF CANADA, EASTERN CANADA RESPONSE CORPORATION LTD., ATLANTIC EMERGENCY RESPONSE TEAM (ALERT) INC., AND POINT TUPPER MARINE SERVICES LTD.

The Joint Chairman (Mr. Grewal): If members recall, at our last meeting on March 18 we wanted to hear from the officials of the Department of Fisheries and Oceans, and they are appearing before our committee today. We have Mr. Michel Leclerc, Acting Director of Legislation and Regulatory Affairs; Mr. Gerry Bartram, Senior Advisor on Environmental Response Policy; and Mr. Bruce Bergen, Senior Counsel to the department.

I will now ask Mr. Leclerc to make a presentation, and then we will have some time for questions and answers.

Mr. Michel Leclerc (Acting Director, Legislative and Regulatory Affairs, Department of Fisheries and Oceans): Although we are pleased to appear before this committee today, I regret our appearance was requested because committee members may believe that the Department of Fisheries and Oceans has been unwilling to answer certain questions asked by Mr. Bernier respecting fees paid to response organizations. Hopefully, today's meeting will dispel such impressions and provide committee members with useful information on the workings of the environmental response regime.

As you may be aware, Parliament created a new regime to provide protection to Canada's waters in 1993, after public opinion was galvanized by the Exxon Valdez oil spill in neighbouring Alaska and, in a separate incident, when quantities of oil fouled the B.C. coast.

This private sector regime is entirely financed and managed by the interests whose economic activities may pose a threat to the marine environment. Fees are set and collected under this regime by industry, not by government. We have provided Mr. Onu with a note for committee members that explains this regime, its importance and its origin.

I should now like to ask Dr. Bartram to point out very briefly the highlights of that note, and to provide you with context in assessing the issues before you.

Mr. Gerry Bartram (Senior Advisor, Environmental Response Policy, Department of Fisheries and Oceans): Does everyone have the note that we supplied yesterday?

The Joint Chairman (Mr. Grewal): Yes.

Mr. Bartram: This regime is unique, and is an early example of government/private sector partnering. I propose to give you a few highlights of that note to assist you, and provide you with some context as you examine the questions that are before you.

My first point, referring to the note, relates to the importance of the regime. As Mr. Leclerc said, the regime was put in place to provide protection against oil spills to Canadian waters for spills up to 10,000 tonnes, which is the level of preparedness recommended by David Brander-Smith at the beginning of this decade in a major panel investigation on tanker safety, following the catastrophic Exxon Valdez spill in Alaskan waters. Because of this regime, the private sector, i.e. what we in a policy sense call potential polluters, take on the responsibility of entirely funding and managing this level of preparedness in all regions of Canada. Not a penny of taxpayer money goes to fund that network of equipment depots, an investment of approximately $55 million, trained personnel, plans, contingency plans and continual exercising to ensure that, in the event of a spill of a magnitude that would be catastrophic, Canadian waters are protected. That is the importance of the regime.

The unusual nature of the regime is that it is a private sector based regime. Following the publication of David Brander-Smith's report, which recommended a major investment in oil spill preparedness in this country, the private sector said to the government of the day that they could provide this level of security; however, what they wanted to do was organize and manage it in their own way on a business basis. The government of the day put into effect legislation to permit such a partnering to take place, with the private sector funding and managing, and government providing technical oversight to ensure that the private sector did what it promised, that is, provide full protection for those waters to that level on an ongoing basis.

There is the fundamental role. In the event of a spill, Canadian Coast Guard ensures that the preparedness clicks in and that all necessary measures are taken to respond to the spill. Between spills — and we hope we will not have a spill of that magnitude — the private sector funds and manages the regime. It is important to note that it is the private sector that sets and collects the fees that are paid for this regime. Government does not collect these fees.

In setting up the regime, Parliament gave government levers to regulate on the technical side, but provided no regulatory powers to create financial regulations. That was part of the arrangement with the private sector, part of the understanding, that this was a self-managed regime within a context of minimal regulation.

Key dates in establishing the regime — at point number 3 in our note — are familiar to you. From 1989 to 1991, the catastrophic spills that prompted a public outcry for environmental protection, and the determination by government to massive upgrades in Canada's preparedness; 1991 to 1993, industry providing and consulting extensively to provide its network; 1993 to 1995, legislation in place, regulations created, and these response organizations, which are the tools industry uses to provide protection, set up.

Then, in 1995, regulations were proclaimed and certification takes place at the fees proposed. That is the subject of this meeting.

Point five, the current fee process, I need not dwell on that process as that will be the subject of our discussion here. It is safe to say that government oversight is limited to the opportunity for clients paying fees into the regime to object, and due diligence follows an objection.

In the opinion of DFO, we believe that in scrutinizing the objections that followed the first round of fee proposals, and in guiding and advising the minister on a fee decision in the spring of 1998, we followed the letter and the spirit of the act.

I shall now turn to the current fee process. The response organizations are required to propose fees every three years. Therefore, they have proposed fees a second time as of the fall of this year.

We have performed our due diligence and advised the minister on those fees, and we are poised now with an order for the minister to approve or amend four of the five RO fees. We have held back on that out of respect for this committee, given the questions that you are asking. We simply note that, and advise the committee that we have that second order ready.

Finally, I wish to bring to your attention, as part of the reform of the Canada Shipping Act, that we are clarifying the fee process and introducing the power for government to make financial regulations for the response organizations in future. Clearly, given our learning experience in the past three years, that is now necessary.

A discussion paper was published as of December. For interested members of the committee, I have a copy of that paper with me. A report, which we are required to make every two years to Parliament, was tabled this fall on the operation of the regime.

Thank you for this opportunity to appear before you.

Mr. Leclerc: In closing, I should like to make two points with respect to questions that have been posed by counsel to this committee. First, with respect to the publication of the established fees, DFO takes the view that the process followed by the department, while different from the one advocated by Mr. Bernier, conformed to the Canada Shipping Act and provided the public with the necessary notice on the fees that response organizations were permitted to charge. Thus, the effect was the same as the slightly different process proposed by Mr. Bernier and, we would submit, produced results intended by the act.

Mr. Lee: On a point of order. Mr. Chairman, Mr. Leclerc is doing his best here to provide some preliminary answers to questions that he is anticipating will arise. However, he is characterizing some suggestions that have been forwarded to the department in the past as being Mr. Bernier's view. I did not want the record to go on any further without noting that there is no view of Mr. Bernier in this regard. There is only the view of the committee, and the requirements of the statute.

No one is personalizing the statutory requirements here. There may be a difference of views between the committee and the department, but it is unfair for Mr. Leclerc to place our counsel on the front lines here. The witness has misunderstood what is happening.

I would ask Mr. Leclerc to please consider replacing the words Mr. Bernier with the committee. That would assist the record.

Mr. Leclerc: Mr. Chairman, I apologize to the committee members if that was the impression that was created. I was referring to comments received from counsel to the committee. I understand that those comments represent the views of this committee. Thank you for pointing that out to us.

I only have one other point to make. In our view, the order signed by the minister is not retroactive.

That concludes our presentation. We are available to answer committee members' questions.

Mr. Lee: Mr. Chairman, I apologize to Mr. Leclerc for pre-empting him so close to the end of his remarks.

In any event, I congratulate the department for doing a great job in inventing and putting together the response organization mechanisms. I believe it is working, that it is good for the taxpayer, and it looks like it is good for the environment.

That having been said, that is a macro approach. This committee does not always look at the macro situation. We are required by mandate to look at the micro aspects, some might suggest in a microscopic way. Yet, we are required to ensure that there is legal compliance.

I have itemized four separate things that I should like to go into. First, you have been asked to assure us that there is a record of establishment of fees by the ROs. What constitutes that record? We have not had a reply as to what constitutes the record of establishment of a fee by an RO.

Second, it is our understanding that there was no final list of fees ever published by the department. It is our view that there must be a final publication of those new proposed fees by an initial RO before those fees are valid in law.

Third, as I read the statute, I do not see any authority for retroactive charging of fees in an initial RO scenario.

Fourth, while not in compliance with the provision of the act that requires the minister to appoint a person as an investigator, the minister has appointed three persons as investigators in relation to scrutinizing the first set of proposed fees.

I shall start with the first item. We had asked you to advise us about the record of establishment of fees by the RO. Are you able to tell us whether or not you have asked for or identified what record of establishment exists in the ROs?

Mr. Leclerc: To answer that question, it is important to point out the process that we went through. When the minister signed his order, the response organizations were advised soon thereafter that a fee level had been approved. They advised us verbally that they would establish fees in accordance with the minister's order.

Although the order was not required to be published, given that the department was already publishing the order with the fees, and that the response organizations had informed us that they would be establishing fees in accordance with that order, and given that the sequence contemplated in the Canada Shipping Act was respected, it was our view that by publishing the order and fees, we were publishing a copy of the list of the fees as required by the CSA.

Mr. Lee: Perhaps you missed my specific focus. Several ROs have embarked on procedures whereby they establish fees. If I am paying the fee, I may wish to ask the RO: Would you please show me the document under which you have established the fees? We have asked you for a copy of such a document. Is there one in existence? From your answer, you are indicating to me that there is not.

Mr. Leclerc: I think by my answer I am telling you that we do not have it in our possession. I am also telling you that the specific instrument that the members may be looking for is not the instrument that most people would expect.

I think it is important. I would ask my colleagues to step in to assist me, because there is a point to be made about the nature of the arrangements that the ROs enter into with their clients.

Mr. Lee: I understand that a consultation process went on here. I understand that every RO knew what the score was on April 2 or April 3, 1998, when the minister gave his order that authorized the fees. I am not saying anyone was blind-sided here. However, if I were paying a fee, I would like to see the document whereby the fee was established, because the statute requires the RO to establish the fee.

There may not be such a document. At best, it is sloppy bookkeeping or sloppy management, but let us move on from that.

If there is no such document — and I suggest there should be — then perhaps we ought to be asking an RO.

The Joint Chairman (Mr. Grewal): Mr. Leclerc, if I understand correctly, there is no document to establish the fees to be charged?

Mr. Leclerc: We do not have the document in our possession.

The Joint Chairman (Mr. Grewal): Was any document ever prepared?

Mr. Leclerc: I imagine there was.

The Joint Chairman (Mr. Grewal): Would you send us a copy of that document?

Mr. Bruce Bergen (Senior Counsel, Legislative Services Branch, Department of Fisheries and Oceans): In April of 1998, the department, in making the minister's order and in dealing with the response organizations when they were establishing fees, was cognizant of the fact that the statute does not provide for any particular instrument that the ROs must use to establish their fees. In hindsight, the department perhaps should have asked for a document of that nature, but the department did not do so at that time.

We have received letters from each of the response organizations, indicating that they did establish their fees in April of 1998, following the notice they received indicating that the minister had approved the fees. We do have that document.

As Mr. Lee pointed out, the fees were incorporated within the arrangements or the contracts between the response organizations and their clients. We took the view that this could take a form to be determined by the ROs and their clients. That might have been quite informal, but it was not something into which the department felt it could inquire. In hindsight, perhaps it would have been better to make inquiries.

Mr. Lee: We will now have to make those inquiries. It is as simple as the ROs getting together for a meeting, which they have done from time to time, and deciding as a body to establish the fees. If they have not done that yet, there is a certain weakness there.

I realize that we are talking about a small club of operators. There are not thousands of individuals and corporations involved. Rather, we are talking about a group of people in the transportation business and in the shipping business.

Mr. Bergen: It is important to note that the fees were approved by the minister to be established by each and every response organization. In essence, the establishment of the fees by the response organizations is something that the response organizations do themselves with their clients, and within their corporate structure. The department does not know whether they would pass a corporate resolution, or simply send a letter to their customers or clients saying, These are the fees approved by the minister, and, accordingly, we are establishing the fees in that manner.

Mr. Lee: We cannot accept that an RO can do this on the back of an envelope in a phone booth, or in the front of a pickup truck one evening, because someone said, You better make a list of fees. That is not the way we allow the public to be charged fees. That is my first point.

The Joint Chairman (Mr. Grewal): I understand that, but I heard words to the effect that there may be a document or there might be a document. We need more information on the question of whether the document is there. If so, we would like that document sent to this committee.

Mr. Lee: My second point is that as we see the record here, no final list of fees was ever published by the minister in the Canada Gazette, as required. That, we believe, is a statutory requirement. Can you confirm that the minister has never published a final set of fees, as approved by the minister?

Mr. Leclerc: Could you repeat the question, please?

Mr. Lee: The law requires that the minister publish the list of fees that he or she has approved in the process. I understand that no final list of fees, as approved by the minister, was ever published?

Mr. Leclerc: I think the requirement is for the minister to publish fees established by the ROs under the Canada Shipping Act.

Mr. Bartram: The answer to the question is yes. A final list of fees was published on April 18 because that was the list that the minister published in publishing his order.

Mr. Lee: I will ask counsel to assist me in this.

The Joint Chairman (Mr. Grewal): There is a misunderstanding on this point.

Mr. François-R. Bernier (General Counsel to the Committee): The statute requires that ROs propose fees. Those fees are reviewed by the minister, and he gives his approval to the proposed fees. Essentially, he is approving a draft. The order approving the draft was published. It is not required to be published under the act. ROs must establish the fees, and then the minister is under a legal duty to cause the fees so established to be published. That is the publication that never took place.

Mr. Lee: Mr. Chairman, that is the question I have asked. I understand that no publication of the proposed final fees was ever made. The witnesses have said the final list of fees was published. If that is the case, would the witnesses please provide us with the particulars of the publication of that list of fees?

Mr. Leclerc: We agree with the committee that there is a three-point process here. First, the minister approves a fee level; then the fees are established by the ROs, after which the minister causes a copy of those fees to be published in the Canada Gazette. There is a chronological order in which those events take place.

The minister signed his order on April 2, 1998. The department then advised the response organizations that the minister had approved a fee level. They informed us that they would establish fees in accordance with that order. Hence, when we published the order with the fees, we were actually publishing the fees as established by the response organizations. In our view, the requirements of the Canada Shipping Act have been satisfied.

We agree that there is no statutory requirement in the Canada Shipping Act to publish the minister's order. We published it for the sake of transparency. We published it to make known to the public the minister's order and the fees that would be charged by response organizations, which is the primary purpose of publishing the fees. That is our understanding.

Mr. Lee: We do not have any problem with the department publishing the minister's order. We have never objected to that. We simply want to see that the department has published the final list of fees as required by the statute. In our view, that list has not been published, and that is our problem. We do not have a problem with the minister publishing his order. He can publish his daily agenda in the Canada Gazette if he wants, but we insist on compliance with the statute.

Mr. Wappel: It is obvious, colleagues, that the department believes it has complied with the act. We do not think so, but that is their view.

To begin, who is Sharon Ashley?

Mr. Leclerc: Sharon Ashley was the former director of legislative and regulatory affairs at the Department of Fisheries and Oceans.

Mr. Wappel: Where is she now?

Mr. Leclerc: She is currently acting director general at Aboriginal Affairs.

Mr. Wappel: She had some difficulty responding to our letters in a timely fashion. I note that in September of 1998, when you wrote, Mr. Leclerc, you were acting director. Are you still acting director?

Mr. Leclerc: Yes.

Mr. Wappel: We then followed up with a letter of September 28 to Ms Ashley, because your letter made no mention of the fact that Ms Ashley had gone, and that you were replacing her. I guess we are supposed to assume that when we see A/Director under your name. Is that right?

Mr. Leclerc: That is right.

Mr. Wappel: It might have been courteous to notify our counsel that Ms Ashley had gone and that you were replacing her.

In any event, we wrote to you on September 28 and had to follow up with you, since we received no answer, on January 28. Why is that? Did you not get the letter?

Mr. Leclerc: Part of the reason for the slowness in responding is the complexity of the issues that were being raised.

Mr. Wappel: Let us look at the complexity, if that is your excuse. Let us look at section 660.4(2) of the act. Step one is to propose some fees. That is not particularly complex, is it? You propose some fees.

Mr. Bergen: A response organization that is applying for a certificate of designation shall propose fees.

Mr. Wappel: Under step two, the minister causes a copy of that list of proposed fees to be published. That is not complicated, is it?

Mr. Bergen: That was done in 1995.

Mr. Wappel: It is not complicated, intellectually, to publish a list of proposed fees, is it?

Mr. Bergen: No.

Mr. Wappel: The next step is that if people have any objections, they file them. Is that right?

Mr. Bergen: That is correct. In fact, in 1995, I believe a total of 31 objections were received. A few of them were later withdrawn.

Mr. Wappel: Subsection (5) reads:

Where a notice of objection is filed, the Minister shall appoint a person to investigate whether the charging of the proposed fee would be fair and equitable. Is that complicated?

Mr. Bartram: There is one nuance. If you read the clause to the end, you will find that shall becomes may.

Mr. Wappel: Yes. That is brilliant drafting, but that is fine. Is there any dispute that a person is singular?

Mr. Bartram: I do not dispute that.

Mr. Bergen: No. Certainly it says a person.

Mr. Wappel: What legal authority, then, did the minister have to appoint three people to investigate the proposed fees?

Mr. Bergen: I think that, although the statute clearly says a person, at times it is open to interpret a statute as the singular meaning the plural, or the plural meaning the singular.

Mr. Wappel: What authority is there for that? Is that in the Interpretation Act?

Mr. Bergen: It is in the Interpretation Act.

Mr. Wappel: What section?

Mr. Bergen: I do not have the section before me.

Mr. Leclerc: It is in the Interpretation act, but the fact that a panel of three members was appointed does not mean that all of them had the powers of commissioners under the Inquiries Act. In fact, it is our understanding that Dr. Gold had the power of commissioner and that the other two panel members were there to assist him in his duties.

Mr. Wappel: Was that made clear?

Mr. Bartram: None of us were there at the time, but I looked at the correspondence and, frankly, it was not made clear.

Mr. Wappel: Although it is pretty simple.

Mr. Bartram: Dr. Gold was appointed as the chairperson and the other two were appointed as members.

Mr. Bergen: That was because of their specific expertise, I believe.

Mr. Wappel: If the department is seriously maintaining that the word person in this act can mean persons, I should like you to forward to this committee your legal authority for that proposition. Otherwise, I should like you to accept that a person is a person, singular. We need not dwell on that any more today, but I would ask you to provide us with your legal authority for maintaining that, in this statute, when it clearly says a person in subsections (5) and (6), that can legally be read as persons.

Mr. Bergen: I think we should look into this issue a little further and reply to the committee about the events of 1995, which none of us were there to witness. Dr. Bartram has made an important point about that panel of three persons.

Mr. Wappel: Thank you. We will wait for your answer.

Subsection (7) says that the person who holds an investigation shall send a report.

Subsection (8) says that the minister may, by order, approve or amend a proposed fee. In this case, he presumably amended it. It says that the response organization shall establish its fee accordingly.

Mr. Leclerc's letter of March 2 to this committee says that the designated response organizations established their fees on these specified dates. How did they establish their fees?

Mr. Leclerc: We did not ask them which instrument they used to establish their fees. It is our understanding that, as the body responsible for establishing their fees, the instrument is up to them.

Mr. Wappel: Is it the position of the department that it has no obligation whatsoever to determine that the fees were legally established?

Mr. Leclerc: We considered the verbal notification that the fees were being established in accordance with the minister's order as adequate proof that those fees had been established in accordance with the order.

Mr. Wappel: Do you think that is prudent?

Mr. Leclerc: There is another point to be made about this: The minister's approved fee levels were published in the Gazette on April 18.

Mr. Wappel: We will get to that. Do you think it is prudent to rely on the oral assurances of ROs that they have established their fees?

Mr. Leclerc: Given the nature of the system, it is always better to have an instrument in place, but the information from the response organizations that they had established fees in accordance with the minister's order was satisfactory under the circumstances.

Mr. Bartram: First, I would say yes, because it is a market-based system and the ROs had no choice but to establish the fees as approved by the minister.

Second, the minister, in publishing the final list of established fees on April 18, made it clear to the whole fee-paying world that only those fees could be charged.

Third, they are charged in private sector contracts between parties. The minister has no ability under the act to examine the terms and conditions of those contracts. They are private contracts between parties.

Fourth, given the public nature of the established fees, through publication in the Canada Gazette, should an RO be so foolhardy as to attempt to charge its clients a fee other than that approved by the minister, the client can cite the published order, can make a complaint to the minister, and can refuse to pay the fee. It is as simple as that. It is a private sector system.

Mr. Bergen: I would add this to Dr. Bartram's comment: Because those fees are incorporated into the contractual arrangements between the response organizations and their clients, and because it would be clear — especially following publication on April 18 — to the clients that the ROs could only establish their fees if they were approved by the minister, one remedy the client would have would be a remedy in contract. In other words, the client could sue on the contract.

Mr. Wappel: The second part of subsection (8) states that the minister shall cause a copy of the fee to be published in the Canada Gazette. We understand your position is that by publishing his entire order, subsumed in which is his approval of the fee, and your position that the ROs could do nothing but accept that fee, you have complied with the spirit, and I believe you said the letter, of the act. It is my view that that may be true as far as spirit goes, perhaps, but as far as letter goes, that was not the case. However, that is neither here nor there.

According to your notes, the proposed fees were established by the ROs on April 2 and 3, 1998. The fee order — and let us take your generous interpretation of the act — was published April 18, 1998. How can these organizations charge these fees from 1995?

Mr. Bergen: In 1995, when the response organizations applied for certificates of designation and were designated as response organizations and began to enter into arrangements with their clients, those contractual arrangements would have had to make some provision for the payment or service that the response organization provides, which is a service of oil spill preparedness. When the contracts were entered into, although the Department of Fisheries and Oceans does not have any statutory authority to seek copies of the contracts, or to mandate the way in which the issue of payment for services is addressed in those contracts, it would have been open to the response organizations and their clients to include a provision in each and every contract that would address the issue of fees.

Conceivably, a contract could provide that fees would be paid at the level proposed by the response organizations until such time as a fee is approved by the minister. Accordingly, the response organizations are able to establish their fees in accordance with subsection (8) of this section.

Mr. Wappel: Is there anything in the section that we have been discussing, or anything in the entire act, that supports your view? Is there anything that gives the organizations authority to charge the fees? Suppose from 1995 to 1998 they charged fees higher than the minister established. Could they do that?

Mr. Bergen: Conceivably, they could do that.

Mr. Wappel: They could have charged no fees?

Mr. Bergen: The act is silent on the form of the arrangements and contract between the response organizations and their clients, as well as the manner in which the response organizations and their clients could address this issue of fees. The example you have cited is quite possible.

By the same token, it is possible that the response organizations and their clients could have agreed that no fee would be paid from the time that a contract was first entered into until such time as the minister approved the fee, the RO established the fee, and then for the period of time prior to that day, that fee could have been paid by the clients. Beyond this issue we are discussing about the minister approving fees, there is no statutory authority for the department to delve into the issue of the contracts between the response organizations and their clients. I think that really hearkens back to the point made by Dr. Bartram that this is a private sector based regime. It was clear that the private sector did not want that sort of interference in their contracts or arrangements.

Mr. Wappel: What about subsection (11)?

Mr. Bergen: Do you have a specific question?

Mr. Wappel: It states that after the minister has approved a new fee or an amended fee, that fee shall be applicable. From when is that fee applicable? It is not from the date the contracting parties decide it shall be applicable but, rather, from the date of publication in the Canada Gazette of the proposal for it. Does that not indicate that the statute decides when the fee becomes applicable and not the contracting parties?

Mr. Bergen: This is a difficult issue.

Mr. Wappel: It seems pretty clear to me.

Mr. Bergen: Subsection (11) refers to a new fee or an amended fee. It is not clear in our view that the new fees or amended fees refer to the first fees that are proposed by a response organization at the time that they apply for certificate of designation as required in subsection (2).

At that time, the response organization files a list of the fees that it proposes to charge. The process that you have set out in subsections (3) through (8) applies.

Interestingly enough, subsection (9) requires that where a response organization proposes to charge a new fee or proposes to amend a fee — which are the terms used in subsection (11) — the provisions of the publication through approval by the minister process apply with such modifications as the circumstances require to the proposed new or amended fee.

One can take two views here. I think that a proposed few is a new fee, and, accordingly, that the retroactivity provision applies. However, on a very strict construction of the statute, I think there are those who would say that that is not what Parliament intended.

The other view is that the proposed fee is a unique fee because it appears but once, that is, when the response organizations apply for a certificate of designation. Accordingly, if the retroactivity provision does not apply to a proposed fee, what is the solution?

Mr. Wappel: I assume the solution would be to recognize the problem and amend the statute, rather than try to work around it as if the problem did not exist.

Mr. Bartram: You will be happy to know that, in fact, we are amending the statute to simplify all this and to make it right.

Mr. Bergen: In the end, based on advice from those of us in the Department of Justice, the Department of Fisheries and Oceans concluded that the one thing that is different about a proposed fee as opposed to a new fee or an amended fee is that the fee proposed by the response organization at the time it applies for a certificate of designation, after which it is able to contract with its clients, is a fee that both parties are aware has been proposed. They are aware that that proposed fee may in fact be amended or approved at a different level by the minister pursuant to subsection (8). Accordingly, those parties may contract to deal with that eventuality, recognizing that, possibly, subsection (11) does not apply to that proposed fee.

I agree with you, Mr. Wappel, that it is not so clear. We in the department had to debate this quite a bit. We decided that the actions we took were, perhaps, the better course of action. As Dr. Bartram said, a reform process is, indeed, under way.

Mr. Bartram: That touches on the policy question, too, which deals with the intention of the act. That is one of the things that we were confronted with in trying to interpret this process and this statute intelligently, given the situation that we are faced with here.

Here the act clearly intends a private sector regime that provides a high level of preparedness and is financed through fees paid by potential polluters. It also clearly intends that the response organizations be in place, and somehow financed. They are financed through fees. The minister's order makes no reference to retroactivity, and is therefore not retroactive as an order, but the arrangements that the ROs have with their clients are between parties, and fees may be paid as part of those arrangements, or fees may be adjusted as part of those arrangements. It is not part of the minister's due diligence, nor does he have the power to look at those arrangements.

Mr. Bernier: I would like to direct members' attention to the excerpt of the statute attached and to the definition of response organization in section 654, which refers to any person or body in Canada in respect of which a certificate of designation is issued by the Commissioner, that is the Commissioner of the Canadian Coast Guard, pursuant to subsection 660.4(1). If we go to subsection 660.4(1), it tells us that the minister may, in respect of an area, issue a certificate of designation.

Clearly, we have a problem here. The statute, on the one hand, tells us that the Commissioner of the Canadian Coast Guard is responsible for the issuing of certificates, and on the other hand, another provision in the act tells us that it is the minister. Is the department aware of this problem? What is the view that has been formed by the department in terms of the possible legal consequences on the validity of the designations that have been effected in these five cases?

Mr. Bergen: Yes, I think the department is aware of the difference between the definition of response organization and the provision of subsection 660.4(1). That is something that will be fixed during the statutory reform process. The point to be made is that the response organizations were, in fact, designated by the commissioner. We would take the view that the commissioner is indeed the minister's delegate, and that the actions of the minister in subsection 660.4(1) may be taken by the commissioner as well. In fact, in this regime where there is a fair degree of administration of the statute involved, these actions are indeed largely taken by the commissioner or by his officials acting on his behalf, and, accordingly on behalf of the Minister of Fisheries and Oceans.

Mr. Bernier: Mr. Bergen just referred to the fact of the statute involving a fair amount of administration. That is after we have just heard how this was a purely private arrangement between people, and that the department has nothing to do with it. Suddenly we find the department quite involved.

Mr. Bergen: I was referring to activities such as publishing fees in the Canada Gazette and that sort of thing. In subsection (3) we see that the minister shall cause a copy of the list of fees to be published. That is obviously not something that the minister would personally do.

Mr. Bernier: The comment was made earlier that the letter and spirit of the law had been followed in the establishment of the fee process, on the proposed fees, the original fees. It took the minister nearly three years to approve fees from the time those fees were published. Is that the spirit and letter of the law? Is that type of delay what Parliament intended in the establishment of fees?

Mr. Bergen: I do not believe that anyone intended that there would be that sort of delay between the initial publication of the fees by the response organizations and their eventual approval by the minister, or between establishment by the response organizations and publication. I think that those who were involved in the drafting of the statute, those in industry who were involved in the development of this regime, did not foresee that that sort of delay would indeed take place.

The experience was simply that there were unanswered questions that had to be dealt with, and the appointment of the panel or of the investigator, and that appointment took a fair bit of time. The report of the panel took a fair bit of time in developing. There were a number of objections to examine. Following the receipt of the report of the panel, the Department of Fisheries and Oceans felt that, in order for the minister to make an informed decision about the approval or amendment of the fees, additional work was required. I believe the whole process simply took a lot longer than anyone ever intended it would. I do not think there was any attempt by the department to circumvent the intention of Parliament. It was just that the process took a lot longer than they thought it would.

Mr. Bartram: Mr. Chairman, I can supplement that answer, if you wish.

The Joint Chairman (Mr. Grewal): Very briefly. We will be ending this meeting at 9:45.

Mr. Bartram: As brief as I can, I would note that the department made every effort to conform to the process laid out in the act, appointed an investigator and informed that panel. The investigator, approximately a year after the fees were first proposed, delivered his report. That report, however, was a very difficult one for the minister to implement. The minister asked for advice on fair and equitable fees. The investigation panel produced a report that said that the whole regime should be changed but did not give the minister the data needed to approve or amend fees as he was required to do under the act. Therefore, the minister continued to do further financial due diligence in an effort to set fees. That was the reason for the delay.

Mr. Bernier: I should like to turn to Mr. Leclerc's statement that the impression — and that was his word — might have been created that the department was not replying to the committee. If members will look at my letter of April 23, 1998, which is appended in Appendix B, that letter is numbered. There is on the first page point number 1. That deals with the failure of the minister to publish. If you turn to page 2, the fourth full paragraph is numbered 2. That paragraph begins a discussion of the issue of the retroactive application of the fees by response organizations.

I then obtained a reply on September 14, 1998, from Mr. Leclerc. That reply deals exclusively with point number 1, the issue of publication. I wrote back some 14 days later and pointed out that his letter completely ignored the issue of the date of coming into force of fees established pursuant to the relevant provision of the act, an issue that was dealt with in point 2 of my letter. I then go on to discuss some of the reply that had been given on the issue of publication.

Mr. Leclerc replied on February 8, 1999, again exclusively discussing the issue of publication, and not addressing point 2 of my original letter, although I had clearly pointed out that that point had not been addressed.

That prompted me to write back on February 12, as follows:

As was clearly indicated in my subsequent letter of September 28, 1998, your reply to my letter of April 23rd did not address the second issue laid out in that letter. I now have your letter of February 8, 1999 in which you further discuss the matter of publication but fail, once again, to deal with the issue of the coming into force of these orders. As my request for a reply on this issue was both clear and explicit, I can only conclude that you are deliberately refusing to provide an answer. On March 2, Mr. Leclerc sent a letter in which he stated that the response organizations are those corporations that made these orders on this and that date, namely, April 3 and April 2 for one of them. That does not deal with the issue of the retroactive application by those response organizations of those orders, which was the issue raised in my second point. On March 18, I then conveyed the committee's invitation to appear.

Can the witnesses understand why the committee might have gained the impression that a reply was not being given? Would that not be more than an impression but a fact? To this day, we still do not have a reply from the department on that issue. I should like to suggest that it is more than merely an impression here. It is a fact. Will the committee be given a reply on that issue, Yes or No?

Mr. Leclerc: We will be providing a reply to you shortly after this meeting. I apologize to the committee for the delays in responding to you. The issue is a complex one. As Mr. Bergen pointed out, we had some work to do in examining the full impact of the issues. It was a difficult question to answer for us and we wanted to ensure that the committee was properly informed, and that we provided a response that did not prejudice the governance framework for this important regime.

If committee members feel in any way that disrespect by the department was a motivating factor in these delays, I want to dispel that notion right away. We take this committee's work and its comments very seriously. Sometimes it takes a bit longer to provide an adequate response. That is my answer to your question.

The Joint Chairman (Mr. Grewal): How long will it take before you might send us that information?

Mr. Leclerc: I will endeavour to do so within the next week.

Mr. DeVillers: On that point, Mr. Leclerc, you indicate that it was not out of disrespect for the committee. In a case like that, would it not be simpler to communicate to the committee the difficulties you are having in providing the response rather than totally ignoring it, which leaves the committee with only that impression?

Mr. Leclerc: You are right. Perhaps that should have been made clear. In the case of the change of directors in our units that Mr. Wappel has noticed, I did not formally notify the committee of the change in leadership in our group because, as acting director, I have been writing to the committee on a number of other files and it was my impression that committee members would take note of the fact that a change of leadership had occurred.

After a few months of correspondence, I realized that letters were continuing to be addressed to Ms Ashley, the former director. At that point, I then wrote a letter to the committee advising them that I had been appointing acting director.

Mr. DeVillers: When there are difficult questions, it would simply be a matter of communicating that you are working on it. I am sure the committee would understand. When there is just a wall of silence, it becomes difficult.

Mr. Leclerc: We apologize for that. We will endeavour in the future to keep you better apprised of what work we are doing on particular files.

Mr. Wappel: That was the exact point I wanted to make.

Mr. Bernier: I have one additional point, Mr. Chairman. The witnesses agree that all those response organizations are corporate bodies. Is that correct?

Mr. Bergen: Yes.

Mr. Bernier: As corporate bodies, they function by way of resolution. Is that correct?

Mr. Bartram: Not necessarily.

Mr. Bernier: I would think that legally — and perhaps Mr. Bergen wants to answer this — when a corporate body talks, it talks by way of resolution. It has a board of directors.

Mr. Bergen: Yes; I am sure the response organizations must adhere to the legislation regarding the manner in which they function, but I am not so clear on that. In fact, I do not think I can offer a view as to whether an action such as the establishment of response organization fees would require a resolution.

Mr. Bernier: We have a statute that provides that a corporation may establish and prescribe fees. I put it to you that the way for that corporation to exercise that power is by way of a resolution, and that is what I would expect to find.

In my letter of March 18, I asked for a copy of the resolutions adopted by each organization. Will the department undertake to ask about that? Apparently it has not bothered itself with that issue up to now. It has assumed compliance with the statute, which is very wonderful. Will it now bother itself to contact the response organizations and ask them whether they even established fees following the approval of the draft by the minister?

Mr. Bergen: Indeed, Mr. Bernier, we have done that. We have received confirmation by letter from each and every one of the response organizations that they did establish their fees immediately following the approval of those fees by the minister, when they were notified.

Mr. Bernier: They can send you a copy of the relevant resolution, then?

Mr. Bergen: They did not indicate in those letters that they had passed corporate resolutions.

Mr. Bernier: Will you ask them for a corporate resolution?

Mr. Bergen: We can do that.

Mr. Bernier: You indicated that the Point Tupper Marine Services established its fees, according to the letter from Mr. Leclerc of March 2, on April 2, 1998. According to an earlier letter from Mr. Leclerc dated September 18, the approval order of the minister was only communicated to each response organization on April 3. How could Point Tupper establish fees the day before the minister's approval order was even communicated to it?

Mr. Bartram: The text of the letter from Point Tupper Marine Services said that they had established their fees effective April 2. It may have been a miscommunication.

Mr. Bernier: There is a date of coming into force — at least with regard to Point Tupper.

Mr. Bartram: To return to your previous question, I cannot assure the committee that we can supply it with corporate resolutions from each of the ROs. Some ROs have corporate resolutions, but I am not sure that all do. I do not think we have the ability to ask them that.

Mr. Wappel: You do not think you have the ability? Of course you can ask.

Mr. Bartram: We can ask, but we do not have the power to demand.

Mr. Lee: We do.

Mr. Bernier: One additional point must be made, and I am making this observation to members of the committee: If the department had complied — that is, the minister had complied with his legal duty to publish the fees established by response organizations — as he is directed to do by statute — none of these questions would be necessary. The department would not have to assume, or presume, conformity between the fees and the minister's approval order. It could verify that compliance because the final fees would be published. We would not have to ask for copies of the resolutions and dates of coming into force, or proof of the official existence of the response organization fees because they would have been published as required by the act of Parliament.

It was observed earlier that Mr. Bernier had suggested a different process in terms of publication. I found that objectionable as well because the process that I am suggesting — that is, according to you — is the process ordered by Parliament. It is as simple as that. It is not my view but Parliament's view of the process that is to be followed.

Mr. Lee: I understand from your remarks today that the department is considering proposing legislative amendments to these sections. It would be useful for us to get a sense of just what is being amended. I should like you to ask the minister to allow the department to indicate to our committee the proposed legislative amendments that are in mind. That should be done as quickly as the department can move to the amendments. I think the process might be helpful.

Mr. Leclerc: We can certainly try to do that. I must remind you that the amendments to the Canada Shipping Act are co-sponsored by two ministers, namely, the Minister of Transport and Minister of Fisheries and Oceans. In order to do that, we must have the agreement of two ministers.

Mr. Lee: Let me put it simply: If you cannot do that for us, please let our committee know through correspondence to our clerk or counsel. If that is the case, then the committee will write to both ministers. If you cannot organize that, for whatever reason, please let us know. We will do what we think is best.

The Joint Chairman (Mr. Grewal): Before we continue out meeting in camera, I should like to thank the witnesses for coming here this morning. The committee is looking forward to receiving the letter that you promised to send within a week, as well as the copies of the documents that we need, in particular the established fee and some of the other documents which contain information that it was made clear in the discussions that we need.

We will continue in camera at this point in time.

The committee continued in camera.