Canada's Pollution Fines Deter Shipping Growth

Shipping firms risk million-dollar fines in countries such as Canada because equipment to clean bilge water of oil before it is pumped out into the ocean may meet regulations but often doesn't work, the president of a global shipping company with major operations in Vancouver warns. Robert Ho, president of Hong Kong-based Fairmont Shipping, said he has seen cases where a ship's bilge-water management system is poorly laid out, leaving the oily-water separator incapable of working properly and the crew vulnerable to stiff penalties. Mr. Ho delivered the warning in a speech earlier this month in Cyprus to an audience representing about 40 per cent of the world's commercial shipping fleet.

Canada recently amended its pollution laws to crack down on oil spills from ships. Canada's new law is called the Migratory Birds Convention Act, which sets minimum fines of $100,000 and raised the maximum fine to $1 million in cases where ships spill oil and crews are found at fault. Mr. Ho said that the new regulations have already caused several Vancouver-based shipping companies to put expansion plans on hold and consider moving some ships back to Asia because of the risks their crews assume in operating in Canadian waters.

Mr. Ho was among shipping executives that initially led the charge to oppose the Canadian legislation, alleging that it did not discriminate between accidental and deliberate spills, and puts ship crews in a "reverse onus" situation of having to prove their innocence in spill cases, rather than being presumed innocent until authorities prove their guilt in court. Fairmont, he said, learned that separators are vulnerable to failure when one of its ships, in 2003, was prosecuted and fined $450,000 by the U.S. Environmental Protection Agency for dumping oily water. A statement from the EPA said the U.S. Coast Guard found that the ship's engineering personnel were bypassing the ship's oil pollution-control system, and dumping oil at sea. He added that the prosecution prompted Fairmont to undertake a two-year program of inspecting the oily-water separators on 35 vessels. In some cases, Ho said, the devices worked, but in others they did not and had to be repaired.