Bill C-48
A Tanker Ban That is Not a Tanker Ban
June 4, 2019 (updated June 25, 2019)
Bill C-48 is titled “An Act respecting the regulation of vessels that transport crude oil or persistent oil to or from ports or marine installations located along British Columbia’s north coast”.
As can be seen from the title, this bill does not seek to ban tanker traffic. It merely seeks to prevent the transportation of oil products from the north coast of British Columbia. If this bill was to be passed in it is original form, it would be entirely permissible to have tankers deliver or transport liquefied natural gas or coal from British Columbia’s north coast.
The definition section of the bill, defines the banned products as:
- “Crude oil” means any liquid hydrocarbon mixture that occurs naturally in the earth”
- “Persistent oil” means 14 oils listed in the schedule to the bill, and includes bitumen and synthetic crude oils
Bill C-48 does not ban the transportation of, for example, LNG, gasoline, jet fuel or propane. Tankers are defined as vessels transporting more than 12,500 metric tons.
It is difficult not to see this bill as a frontal attack on the Canadian oil industry, and specifically the Alberta oil industry. This legislation was introduced following the federal government’s cancellation of the Northern Gateway pipeline project.
Critics of this bill point to the federal government’s laudable environmental goals but question why the federal government shows no concern for the transporting LNG, gasoline or jet fuel through an environmentally sensitive area.
There appears to be hope for oil producers thanks to the Canadian Senate, as will be discussed below.
History
It is important to note that Bill C-48 is the codification of a 1972 federal government policy decision, under the Pierre Trudeau government, to impose a moratorium on the transportation of crude oil through sensitive waters in Northern British Columbia. Additionally, in 1988, a voluntary agreement was reached between the Canadian Coast Guard, the US Coast Guard and the American Institute of Merchant Shipping to ban tanker traffic from the area north of Vancouver to the Alaska border. Note that no American coasts were impacted by this agreement.
A map of the exclusion areas has been produced by the library of Parliament as follows:
Note the location of Kitimat, British Columbia which would have been the terminus of the Northern Gateway pipeline. Vessels transporting oil would have to navigate the Hectate Strait and the Queen Charlotte Sound which are both considered to be environmentally sensitive areas.
The current federal Liberal government campaigned in the 2015 election on the promise to impose a “tanker moratorium” along the northern British Columbia coast. The bill seeks this ban from the northern tip of Vancouver Island to the Alaska border.
If C-48 was to pass in its original form, it would represent the only tanker ban in existence on any coastline in the world.
Improvements in the Transportation of Oil
The initial moratorium passed in 1972 was based on data of environmental concerns that was available at that time. In hindsight, the evidence was questionable, at best.
Safety and transportation standards have improved expeditiously since the 1970s.
In 2017, the Fraser Institute published an in-depth study on oil tankers, accidents and spills using international data. The study can be seen here:
The conclusion of this study is that even as the amount of oil transported increased since 1970, the volume and frequency of spills has declined substantially. There has not been a significant spill in Canadian waters in more than twenty years. The Fraser Institute study quotes a federal government analysis on marine oil spill preparedness which estimates that a major spill of 10,000 tonnes was “exceedingly rare” and likely to occur only once every 242 years. A spill of 100 to 1,000 tonnes is expected to occur once every 69.2 years.
In other words, transportation of oil by vessel is substantially more safe than it was in 1972.
Parliament has reviewed the safety of transportation of oil and noted the same trend. Following the Canadian Senate’s review of this bill, Independent Senator Paula Simons wrote that after months of testimony on Bill C-48, she could not see any scientific evidence or legal logic to support the tanker ban contained in the bill.
Legislative Status
In order to be made into a statute, a bill is introduced in the House of Commons, where it receives a first and second reading, subject to debate. The bill is then studied by a committee who report back to the House and then the bill receives a third reading. After the bill is passed through the third reading, it is sent to the Senate which proceeds through the same process. After the bill is passed through the third reading of the Senate, it is sent to the House to approve any amendments suggested by the Senate. The bill then receives Royal Assent. If the Senate did not propose amendments, the bill goes directly to Royal Assent. If the House of Commons makes further amendments, the bill is sent back to the Senate to start the process again.
At the present time, the Liberal Party of Canada has a majority in both the House of Commons and Senate. The point to note is that the Liberal Party of Canada has a so-called double majority which normally would allow them to enact whatever legislation they deem fit.
Senate Hearings
The House of Commons passed Bill C-48 through all three readings and sent the bill to the Senate. The Senate passed the bill through the first two readings and proceeded to the committee stage. The Senate Standing Committee on Transportation and Communications held months of hearings, including in coastal British Columbia and Alberta.
At the conclusion of the committee’s hearings, the committee debated several amendments to the bill, none of which were passed. Some of the proposed amendments included carving out areas from the ban (including the lands of certain indigenous peoples who oppose the bill) and making the tanker ban conditional on the Trans Mountain pipeline expansion being completed. No proposed amendment could garner enough support from the committee members to be approved. Much of the opposition to amendments came from Conservative Senators who insisted that no amendment was acceptable and that the entire bill must be scrapped.
The committee then voted on the un-amended version of Bill C-48. The vote was tied 6-6 which meant that the bill failed to advance. Reports that the committee rejected the bill were not legally correct, but the committee’s report is that the bill should not advance any further.
An interesting note of this committee vote is that independent Alberta Senator Paula Simons voted last at committee (by virtue of the committee voting alphabetically) and voted to reject the bill. Senator Simons was previously an Edmonton journalist appointed last fall by the Prime Minister and ultimately cast the vote to kill the bill at this stage. Her vote seemed to surprise both sides of the debate, and she has indicated, including in an op-ed in Macleans, that she voted in the best interests of her province, as she feels that she is constitutionally bound to do. She said that she listened to all of the months of testimony and found no basis to approve an un-amended version of the bill, She herself proposed many amendments which were rejected that she felt would have improved the bill. As a result of her having a last name that starts with the letter “S” and thus being the last vote, she has received a torrent of online abuse from environmentalists who are in favour of Bill C-48 as written.
What Now?
The full Senate will have to vote on whether to accept or reject the committee’s report. If the full Senate accepts this report, the bill is considered rejected and will not become law. However, the Senate is not expected to accept the committee report, given the Liberal party majority in the Senate.
Senator Paul Harder, who is the Liberal government’s representative in the Senate, has expressed disappointment in the committee vote, but has noted that the entire Senate has not had an opportunity to vote on the bill. That seems to be language indicating that the committee report will be rejected.
Senator Harder has indicated a hope that Senators will make “reasonable” amendments to the bill at third reading in the Senate. If that occurred, the amended bill would be returned for consideration to the House of Commons.
Of note, there is less than 4 weeks left of sitting in the Senate before the summer break and 3 weeks in the House of Commons. Given that there is a federal election scheduled for the fall of 2019, it is unlikely that either house will hold fall sittings prior to that election. As such, if the Senate is unable to pass an un-amended Bill C-48 prior the summer recess, it is highly unlikely that the bill will be passed into law before the federal election. If the Liberal party is returned to a majority government, this process will continue, and if the Conservatives are elected, this bill would be dead. There are, of course, a multitude of possibilities if any party forms a minority government.
Ironically, Senator Simons has indicated her belief that Bill C-48 was a trade-off for getting the Trans Mountain pipeline built. If the Liberal party is not re-elected, Trans Mountain may be built and the tanker ban may not be passed into law.
An Independent Senate
There is a fascinating footnote to this debate.
For those that follow Parliament’s passage of laws, this has been an interesting few weeks, given the Senate’s proceedings relating to both Bill C-69 and Bill C-48.
Both Prime Minister Stephen Harper and Prime Minister Justin Trudeau have advocated Senate reform, albeit in different ways.
Prime Minister Trudeau has sought to make the Senate more independent. One of the by-products of an independent Senate has been the recent deliberations of Bill C-48. A proposed tanker ban was unquestionably a signature promise of the Liberal Platform in the 2015 federal election, and it has been arguably shot down by an independent Senator appointed by the Prime Minister himself. She understands her responsibility to act in the best interests of her province according to the Constitution, and she also felt that C-48 lacked scientific or legal justification. Senator Simons is also not hamstrung by politics and elections in what has been a very emotional debate. She is free, as she has indicated, to focus on science and logic.
If the Senate continues to move towards being an independent non-political body, as intended by the framers of the Constitution Act (formerly the British North America Act), it will have to be mindful of the “Salisbury Convention” which is applicable to the UK House of Lords and dictates that the Lords will not reject any legislation contained in a government’s election platform. Under that convention, if it was applicable to the Canadian Senate, there would be no basis to reject Bill C-48, although reasoned amendments would be permitted.
Thankfully for oil producers, the Canadian Senate is in a state of flux.
UPDATE - JUNE 25, 2019
Bill C-48 was passed through third reading in the Senate with only one minor amendment. This was essentially considered a "friendly amendment" and did not require the approval of the full House of Commons. This minor amendment was approved by cabinet and on June 20, 2019, Bill C-48 was finally and fully approved by the Senate in a close 49-46 vote. It now awaits Royal Proclamation at which time it will be law.
Byron W. Nelson is the managing partner of Inns Law and practises in commercial litigation and energy law.
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