Federal Government Enacts Wave of New Shipping Industry AMPs and Increased Fines


Federal Government Enacts Wave of New Shipping Industry AMPs and Increased Fines

New federal legislation may result in Transport Canada increasing its use of Administrative Monetary Penalties (AMP) as a means of enforcement. AMPs have commonly been used across numerous industries to respond to various regulatory offences. They are often seen as an effective enforcement tool as they are typically more administratively expedient than criminal sanctions. Recent trends suggest that AMPs are now being used in respect of a broader range of regulatory offences than ever before, and the shipping industry is no exception.

The recently enacted Administrative Monetary Penalties (Canada Marine Act) Regulations introduces new AMPs for violating various provisions of the Canada Marine Act, Port Authorities Operations Regulations, Public Port and Public Port Facilities Regulations, Seaway Property Regulations, and the Natural and Man-made Harbour Navigation and Use Regulations. These penalties range up to $5,000 for individuals, and $25,000 for corporations or ships. Violations include failing to maintain direct communication with the harbour master, blocking or interfering with an enforcement officer, jeopardizing the safety or health of persons in a port, and adversely affecting soil, air or water quality.

In addition to becoming more common, the maximum fines for certain AMPs are also significantly increasing. In 2018, the Canada Shipping Act (CSA) was amended to increase the maximum amount of an AMP for certain violations from $25,000 to $250,000. The recently proposed Regulations Amending the Administrative Monetary Penalties and Notices (CSA 2001) Regulations (CSAR) would make corresponding amendments to adjust penalty ranges for prescribed sections of the CSA up to the revised maximum of $250,000 per violation.

If the CSAR are brought into force, they will also increase maximum penalties for prescribed provisions under the Ballast Water Control and Management Regulations, Environmental Response Regulations, Load Line Regulations, Special-purpose Vessels Regulations, Vessel Safety Certificates Regulations, and the Vessel Registration and Tonnage Regulations, and would designate certain provisions of the Arctic Shipping Safety and Pollution Prevention Regulations and Vessel Fire Safety Regulations as violations. Several of these violations will also be subject to daily penalties for as long as the violator remains non-compliant.

An AMP can have serious consequences for a recipient, regardless of the quantum of the fine sought. Corporate offenders can face reputational risks associated with the publication of AMP recipients on a federal registry. A history of non-compliance is also considered an aggravating factor and can be taken into consideration in the assessment of future penalties. For these reasons, recipients should carefully consider the legal risks and future consequences of failing to contest an AMP where there may be a legal basis to do so. Contesting can often be challenging, as these violations are typically prosecuted as strict liability offences, so available defences are decidedly limited despite maximum penalties of up to $250,000.

While AMPs are intended to motivate compliance rather than being solely punitive in nature, stakeholders are concerned that AMPs will replace the graduated enforcement approach that Transport Canada had been using, resulting in more fines, fewer warnings and/or notices, and greater regulatory uncertainty overall. It remains to be seen if these concerns will be borne out by future enforcement trends.