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1989 Report of the Auditor General of Canada

Main Points

22.1 Ship Safety. The Coast Guard has allocated the majority of the resources given to the Ship Safety Branch to three areas: performance of mandatory inspections of necessary safety features, development of regulations, and examination of mariners. In these areas its activities appear to be well organized and are carried out by qualified and dedicated inspectors. However, the Coast Guard has not set out specific objectives for its ship safety activities; nor has it done an analysis to identify the areas of greatest relative risk to mariners and to the public interest. The Coast Guard does few random inspections to detect and prevent unsafe operating practices on fishing vessels, unsafe transportation of dangerous goods, or the use of unqualified seamen for critical tasks (paragraphs 22.19 to 22.38).

22.2 Marine Emergencies. At present the Coast Guard has not developed the capability to deal with spills or accidents involving hazardous materials other than petroleum products. The Coast Guard has installed oil pollution containment equipment at various sites throughout the country. Contingency plans are in place for dealing with major oil spills. The Coast Guard has gained some experience in cleaning up various oil spills, but it has not acquired the resources for field responses to major oil spills or spills of hazardous materials other than petroleum products. In responding to a major incident of oil pollution from a ship, the Coast Guard would rely on a joint response network which it has formed. However, the full capability of this network to contain, control and clean up a major oil spill has not been put to the test (22.52 to 22.55).

Introduction

22.3 The regulatory activities of the Canadian Coast Guard touch the lives of millions of Canadians: when they board a passenger ferry, visit a beach, or make their living in the commercial fishing or shipping industry. Thus, when ferry passengers travel to Prince Edward Island, Newfoundland or Vancouver Island, their safe passage depends, in part, on the Coast Guard's inspections of ships for structural safety, and emergency, fire fighting and navigational equipment.

22.4 The recent spill from the Exxon Valdez on the Alaskan coast has highlighted the risk of the marine environment being fouled by oil. The Coast Guard has the responsibility to contribute to preventing marine emergencies in Canadian waters by monitoring shipments of petroleum products and other dangerous goods.

22.5 This chapter looks at how the Coast Guard plans and operates to meet these challenges.

22.6 The mission of the Coast Guard's Marine Regulatory Program, according to Part III of the Department of Transport's Estimates, has three elements: (1) to develop, promulgate and implement marine regulations and standards to contribute to marine safety and environmental protection; (2) to mitigate the effects of ship-source pollution; and (3) to ensure the provision of workplace safety in the marine industry.

22.7 The program is delivered by two branches of the Coast Guard -- the Ship Safety Branch and the Emergencies Branch, hereafter referred to as Marine Emergencies.

Ship Safety

Background

22.9 The Branch's legal mandate is based on the Canada Shipping Act and other Acts, and on a number of international conventions. Other Acts include the Arctic Waters Pollution Prevention Act, the Safe Container Convention Act and the Transportation of Dangerous Goods Act. The Branch is also responsible for developing and enforcing safety and pollution prevention regulations issued pursuant to those Acts.

22.10 The Canada Shipping Act lays out an inspection and certification regime to ensure that Canadian registered ships contain necessary safety features. The Canada Shipping Act and related regulations cover periodic inspections of a ship and its safety features such as life-saving, fire extinguishing and navigational equipment. These can be referred to as mandatory inspections and, with certain defined exceptions, are applied only to Canadian registered ships -- both new and older ships. Other regulations cover operating practices, such as navigation by qualified personnel, safe handling of equipment on board, use of current charts, etc. The Coast Guard relies to a great extent on the owners and crews of ships to voluntarily follow these regulations.

22.11 In carrying out the mission of the regulatory program, the Ship Safety Branch has established as its primary objectives the development and promulgation of regulations and the conduct of mandatory inspections to promote ship safety. These inspections are carried out by qualified Marine Surveyors who rely on moral suasion and the maintenance of good working relationships with the shipping industry to achieve compliance with the provisions of the Canada Shipping Act dealing with structural safety. The ultimate enforcement sanction is the power of the Steamship Inspector to deny the issuance of an inspection certificate to a non-complying vessel. Daily ship operating costs, in the tens of thousands of dollars, are a powerful inducement for a ship owner to comply with regulatory requirements.

22.12 An historical perspective is critical to understanding the Branch's current objectives. A hundred years ago the use of substandard ships in the transportation of timber cargoes and passengers led to numerous accidents and loss of life. The Canada Shipping Act concentrated on safeguarding the ship, the crew and passengers. Protecting the marine environment was given less priority. Since then there have been many changes in both the Canadian economy and the shipping industry--shipping has grown dramatically, "flags of convenience" have become widespread, supertankers are commonplace, and the extensive use of containers is the norm.

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22.13 As the maritime environment changes, so do the risks to the public. In our opinion, the Coast Guard now must employ new analytical tools to identify emerging risks to the marine environment; inspection practices that may have been appropriate yesterday may no longer suffice. It must re-evaluate its role and its allocation of scarce resources among its branches which manage various activities such as ship safety, aids to navigation and icebreaking. The challenge for the Coast Guard is to respond to the changing circumstances.

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Audit Scope

22.15 As illustrated in Exhibit 22.1, "Ship Safety: Protecting the Public Interest", our scope included the data base, the processes for assessment and analysis of risk, and the risk management plans used by the Coast Guard to establish priorities and allocate its resources.

(Exhibit not available)

22.16 We looked at systems and activities to promote safety in commercial fishing vessels, foreign vessels, passenger ferries and in the marine transportation of dangerous goods.

22.17 Our audit did not look at the regulation of offshore oil rigs, or examine enforcement of occupational safety.

Observations and Recommendations

22.19 Risk assessment not carried out. The Coast Guard states that almost all regulatory initiatives of the Ship Safety Branch stem from implementation of international convention standards, or from recommendations arising from inquiries into shipping casualties. However, the Coast Guard's Ship Safety Branch has not carried out a formal, comprehensive analysis to determine the best way of promoting safety in marine transportation in the Canadian context. It does not have reliable performance indicators that show what safety results have been achieved and accordingly does not have the information to know whether its current approach will lead to the best results. We recommended in 1983 that the Department develop analytical procedures for monitoring the level of safety in all major areas of risk. The Coast Guard reported that phase one of a risk assessment framework has been conducted. However, our recommendation has not yet been implemented.

22.20 Though a comprehensive assessment had not been done, we found that a risk analysis existed for at least one specific area -- commercial fishing vessels -- that had identified deficiencies and made recommendations for change. In other key areas, such as the operation of foreign vessels and ferries, we found no detailed risk analysis and no regional risk management plans. We noted that the Coast Guard was allocating its resources among the Ship Safety Branch and other programs, such as the aids to navigation program, without the benefit of such a comprehensive risk analysis. We then looked at the allocation of resources within the Ship Safety Branch.

22.21 According to the Coast Guard's records, mandatory inspections, primarily of the machinery, safety equipment and structural safety of a ship, use most of its existing resources -- in some regions, up to 90 percent. This leaves few resources in the Ship Safety Branch for discretionary inspections of safe operating practices. There is no national plan, nor are there national goals, for most types of discretionary inspection.

22.22 Yet there are risks which are not being addressed by mandatory inspections. Our review of the Coast Guard's activities relating to commercial fishing vessels, foreign vessels and passenger ferries identified some of these risks for which the Coast Guard had not prepared regional risk management plans or allocated resources.

22.23 Few inspections of commercial fishing vessels. All of Canada's approximately 41,000 commercial fishing vessels are subject to various safety regulations, depending on their size and operating environment. Only about 4,000 of these fishing vessels are large enough (over 15 gross tons or 24.4 meters in length) to be subject to the requirement for regular safety inspection. Vessels between 15 tons and 150 tons are inspected every four years (about 3,600 vessels), while those over 150 tons are inspected annually (about 400 vessels), as required by the Canada Shipping Act.

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22.24 The Coast Guard has stated that improving the safety of commercial fishing vessels is a current priority. In 1987 it conducted a fishing vessel study which reported that from 1982 to 1986, 824 fishing vessels were reported lost, about 90 percent of them smaller than 60 gross tons. One hundred and forty lives were lost over the same period. Of these, 60 percent were on vessels smaller than 15 gross tons -- not covered by the requirement for regular safety inspection. The study also noted that the Ship Safety Branch does relatively little in the fishing fleet to enforce existing regulations. Regulations are enforced only incidentally to a regular inspection or following a reported accident. The majority of fishing vessel accidents are caused by unsafe operating practices. At the time of our audit the Coast Guard had not developed regional action plans to detect and prevent such practices.

22.25 Foreign vessels not inspected consistently. Up to 80 percent of Canada's offshore trade is carried on by vessels operating under foreign flags. There are at least 12,000 visits by foreign vessels annually at Canadian ports. Except for those carrying grain, timber and ore concentrates, foreign ships are for the most part exempt from the mandatory inspection provisions of the Canada Shipping Act. However, they are required to carry current internationally recognized safety certificates and must declare any safety deficiencies upon entering Canadian waters. Until recently, the Coast Guard rarely ensured that foreign vessels complied with international marine safety standards. But many industrialized nations, including Canada, have recognized the need to verify compliance with these regulations by their use of random safety inspections. In 1987 Canada joined the major European maritime countries in accepting an international agreement, the European Port State Control Agreement, to eventually inspect at least 25 percent of foreign vessels visiting their ports.

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22.26 In 1983, we recommended that the Department of Transport review the extent to which foreign vessels comply with Canadian regulations and take action, if necessary, to increase it. Our current examination focussed on the progress made since our last audit and on the present practices for inspection of foreign ships entering Canadian waters. We found that, except for foreign oil tankers, none of the Coast Guard's regional offices had goals for the ate of inspection of foreign vessels. At the time of our audit few foreign ships -- about 7-8 percent -- were being inspected, often after the vessel had steamed extensively in Canadian waters or unloaded its cargo. The inspection rate depended on available human resources rather than on an analysis of risk.

22.27 A high proportion of the inspections that were performed identified serious safety problems -- some serious enough to detain the vessel. For example, in 1988 a foreign ship inspected and detained in Vancouver was found to have lifeboats unfit for use. Duct tape and paint had been used to cover up serious holes and corrosion of the lifeboat shell. In another case, in Halifax, cracks were found in the hull of a vessel and the lifeboats had serious defects.

22.28 We noted that a foreign vessel carrying dangerous goods could enter Canadian waters in the Maritimes, not call at any Canadian port, and proceed all the way through the St. Lawrence Seaway into the Great Lakes with little chance of being subjected to an inspection to ensure that it met international ship safety requirements. The Coast Guard does not have an overall plan for meeting the goal of the European Port State Control Agreement to inspect 25 percent of foreign vessels.

22.29 Safety of passenger ferry operations not emphasized. Canada is a heavy user of ferries. Annually there are in excess of 20 million passengers on Canadian ferries. Ferries operating in Canadian waters vary in size from small cable ferries to large ocean-going ships on both the east and west coasts.

22.30 Although there have been no major ferry accidents in Canada in recent years, there have been serious incidents in other parts of the world. Recent accidents involving ferries, for instance the sinking of the "Herald of Free Enterprise" in Europe, were caused by unsafe operating practices rather than by unsafe ships.

22.31 We looked at the activities of the Branch in inspecting the ferries operated by the British Columbia Ferry Corporation and by Marine Atlantic. British Columbia Ferry Corporation operated 38 ferries in 1987, carrying more than 18 million passengers and 6.5 million vehicles. Marine Atlantic carried almost 2.5 million passengers and more than 800,000 vehicles in 1987.

22.32 We noted that the Coast Guard had not done an overall risk assessment for passenger ferries, such as would identify key risk areas -- structure, operating practices and the transportation of dangerous goods, for example. An appropriate assessment would also set out the Coast Guard's objectives, jurisdiction and safety priorities. We were informed that the Coast Guard was not aware of the extent of provincial activities or private initiatives in this area.

22.33 For the two ferry operations examined, the Branch had concentrated its activities on the development of extensive regulations and on pre-arranged annual inspections of structural safety, equipment, lifeboats, etc. The Branch had also attended an annual fire drill on every ferry to ensure that the operators were familiar with necessary procedures. However, the Branch had no formal program of inspecting operating practices. For example, there were almost no random checks of loading and off-loading practices, few checks to ensure that the ferries were under the control of qualified people and few checks to ensure that safety equipment was functional at all times.

22.34 An example of a potentially hazardous situation is the illegal transportation of dangerous goods on passenger ferries. Ferry operators rely on declarations by transporters that dangerous goods are not among those being shipped on passenger ferries. The Ship Safety Branch does not have a program to monitor or inspect such shipments.

22.35 For the most part the Coast Guard relies on others to ensure that safe operating practices are followed. We noted that it had done only limited verification to find out whether this reliance was justified.

22.36 The Coast Guard does not have national or regional risk management plans. Such plans would identify the skills, materials, and other resources required to meet its priorities and would include a multi-year schedule showing time frames and areas covered. It would also highlight any risks not provided for in the action plan. The plan would indicate areas where the Coast Guard relied on others to ensure, for example, the safety of passenger ferries in Canada. The Coast Guard would then be in a position to determine the impact of its activities on such areas as ferry passenger safety, and to identify gaps in its coverage.

22.37 Overall, we concluded that the Coast Guard had not developed analytical procedures for assessing risks related to the safety of ships and had not prepared risk management plans. It allocates its resources based on historical patterns for mandatory inspections rather than on an analysis of current needs.

22.38 The Coast Guard should assess current risks to the safety of ships and prepare national and regional risk management plans that allocate resources relative to risk.

Departmental response: The Department accepts the recommendation and will continue with ongoing efforts which will contribute to the assignment of resources based on risk management plans.

Human factors are the leading cause of accidents in small fishing vessels and will be dealt with by improved safety education, certification for masters of smaller vessels and passive protective features in the vessels. Additionally, enforcement will increase and random inspection of vessels under 15 tons will be carried out.

The Department is now inspecting over 7 percent of all foreign ships and intends to meet the goal of 25 percent in 1990. Adherence to the European Port State Control Agreement, compulsory reporting through the Vessel Traffic Management system and the conduct of port warden surveys will provide a practical level of foreign ship control.

Safe operation of ferries is an international concern and the Department and Canadian Industry have recently contributed to new international guidelines.

Marine Emergencies

Background

22.40 Dangerous goods include explosives, compressed gases, flammable liquids or solids, poisonous substances, radioactive materials, and corrosives. Quantities of dangerous goods shipped through Canadian waters increase from year to year. There has been a growing public awareness and concern about the likelihood of accidents, potential damage from hazardous substances and the limitations of clean-up efforts. Exhibit 22.2, Transport of Hazardous Materials in Canadian Waters, illustrates estimated annual shipments by region. The source of these data, a recent study undertaken by the Coast Guard, also estimated that 40 percent of these reported shipments were oil based products and 60 percent were other types of hazardous materials.

(Exhibit not available)

22.41 Many regulations and Acts of Parliament exist to control the handling and shipment of dangerous goods. Domestic shipment of dangerous goods is regulated by the Transportation of Dangerous Goods Act, which seeks voluntary compliance on the part of shippers of dangerous goods. The transportation of dangerous goods involves various modes of transportation and is subject to federal and provincial jurisdictions. The Coast Guard states that, for the most part, Canada's regulations conform to international standards and regulations for transporting dangerous goods to or from other countries. Although legislation does not require that the safe packaging, labelling and transportation of all dangerous goods be verified through inspections, the Coast Guard has the authority to do so at its discretion.

22.42 The essence of a good prevention and response capability is extensive front-end analysis, identifying the risks and the knowledge, co-ordination, skills, materials and equipment that would be needed to respond. This analysis should form the basis of proper response plans which clearly set out the roles, responsibilities and jurisdictions of all parties as well as the procedures to be followed in the event of a marine emergency.

Audit Scope

(Exhibit not available)

Observations and Recommendations

22.45 Prevention procedures incomplete. Given current limitations of the technology for containment and clean-up, prevention of pollution is of paramount importance. This can be achieved through education, and by ensuring that petroleum and chemical products including dangerous goods are packed (in the case of packaged goods), handled, stored and transported safely. The Coast Guard has issued a large number of regulations to this effect but, except for the inspection of tankers, there is very limited enforcement activity to ensure compliance with the regulations. As in other situations, the Coast Guard relies on voluntary compliance with regulations but has done limited verification to demonstrate that this reliance is justified.

22.46 The Coast Guard states that the Ship Safety Branch places a high priority on the inspection of foreign tankers on their first visit to Canada each year. We noted that the Coast Guard has few other clearly articulated plans that determine the resources required for various discretionary ship safety activities in this area. Other inspection activity is limited to mandatory requirements.

22.47 In the Maritimes Region, the Ship Safety Branch reports that it inspects approximately 2 percent of the containers used in the transportation of dangerous goods. The Region monitors the movement of dangerous goods in its area and uses the information to determine which containers to inspect. The Region was not aware of any random inspections carried out on regular ferry runs to detect unlawful transportation of dangerous goods.

22.48 Although the Western Region each year does approximately 100 inspections of shipments of dangerous goods, it has no procedure for selecting a certain proportion of such shipments for random inspection, and it does no random inspection of ferries in the Region.

22.49 In the Laurentian and Central Regions, the Branch reports it does virtually no inspection of dangerous goods shipments other than those on tankers.

22.50 We concluded that the senior management of the Coast Guard does not have reasonable assurance that its prevention activities are succeeding or that the risks to marine environment are being minimized.

22.51 The Coast Guard should clearly set out its objectives, roles and plans for preventing marine pollution and should allocate its resources accordingly.

22.52 Gaps in containment, control and clean-up capability. The Coast Guard has stored oil pollution response equipment at 51 locations throughout the country, much of which is mobile and can be readily transported to the site of an oil spill. Contingency plans are in place for dealing with major oil spills and, in the case of waters contiguous to the United States, joint contingency plans exist. The Coast Guard states that these plans are regularly exercised to ensure that key personnel are effectively trained and that the necessary equipment and communications are readily available at the scene. The Coast Guard has gained some experience in containing and cleaning up oil spills. There is a network of agencies that provide mutual support and share facilities, which could be activated in the event of a major incident of oil pollution from a ship. However, neither the individual capabilities of participants in this network to field a response team, nor the full capability of the network, have been put to the test by a major oil spill.

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22.53 In 1988 the Coast Guard carried out a preliminary risk assessment, which analyzed major categories of hazardous chemical shipments and identified technical requirements for responding. However, it has not articulated its objectives for clean-up and containment nor defined the areas of its jurisdiction.

22.54 At present, the Coast Guard has not developed the capability to deal with spills or accidents involving hazardous materials other than petroleum products, and there is no reasonable assurance that it would succeed in doing so, for the following reasons:

• There are dangerous products such as toxic chemicals which may dissolve if spilled in water. We were informed by the Coast Guard that there is little, if anything, that could be done to clean these up with existing technology.
• Current procedures and criteria for calling upon outside resources to deal with these spills are not clearly set out in the Coast Guard's contingency plans.
• Backup capabilities of other government departments and resources of commercial contractors are not clearly identified or described. For example, contingency plans contain lists of contractors, but their capabilities are not clearly articulated.
• The Coast Guard states it is not within its mandate to pre-inspect the capabilities of other organizations in the cooperative network. Consequently, contractors and other organizations have not been evaluated or inspected to establish the range of their backup capabilities to deal with dangerous materials spilled into a marine environment.
• Few of the mutual assistance arrangements and joint-response plans address hazardous materials other than oil products.
• The Coast Guard does not have a data base on the capability of shippers to deal with spills of hazardous materials.

Departmental response: The Department agrees with the recommendations in paragraphs 22.51 and 22.55 and will assess how to best increase inspections under the International Maritime Dangerous Goods Code, noting that shipping is only one link in a multi-modal transportation chain, and that implementation is rendered difficult by a wide variety of packaging, labelling and containment systems. A very sophisticated inter-agency and international effort is required to protect against dangerous commodities from the point of origin to the point of final disposal.

On a global basis, there is at present no available technology that can fully mitigate the adverse effects of oil spills, particularly in the open ocean environment. A state-of-the-art readiness continues, however, to be actively pursued by the Department. Currently, the most effective defense against oil spills and the more complex spills of hazardous materials is to prevent their occurrence, by ensuring that ships carrying these substances are designed, manned and equipped and operated in accordance with accepted standards. These objectives are being addressed through the Department's work in support of the International Maritime Organization, as most vessels operating in Canadian waters are of foreign flag.