OFFER LETTER
Ottawa, 31 March 2021
SOPF File: 120-880-C1
CCG File:
BY EMAIL
Manager, Response Services and Planning
Canadian Coast Guard
200 Kent Street (Stn 5N167)
Ottawa, Ontario K1A 0E6
RE: M/V Aura Lee – Cowichan Bay, BC
Incident Date: 2018-12-13
SUMMARY AND OFFER
This offer letter responds to a submission from the Canadian Coast Guard (the “CCG”) received on December 8, 2020. The submission concerned an ex-fishing vessel 35’ in length and 11’ at the beam, and known as the M/V Aura Lee (the “Vessel”).
The Vessel was moored in Cowichan Bay, British Columbia on 13 December 2018. The Vessel began to sink, and may have dragged another Vessel down with it (the “Incident”)
The CCG responded to the reports of the sinking, with the Ganges Lifeboat station first attending the scene on 13 December 2018. CCG ER was subsequently mobilized and took charge of the incident.
The submission from the CCG presents $42,176.45 in costs and expenses arising from the incident. The principal expense relates to raising the Vessel, which sunk in deep water.
The submission has been reviewed and a determination with respect to its claims has been made. This letter advances an offer of compensation to the CCG pursuant to sections 105 and 106 of the Marine Liability Act (the “MLA”). Also provided in this letter are a description of the CCG’s submission and an explanation of the findings.
The claim is allowed. The amount of $33,908.13 (the “Offer”), plus statutory interest to be calculated at the time the Offer is paid and in accordance with s. 116 of the MLA, is offered with respect to this claim.
The reasons for the Offer are set forth below.
***
THE SUBMISSION RECEIVED
The submission includes a narrative that describes events relating to the Incident. It also includes a summary of the costs and expenses that the CCG claims and corroborating documents. To the extent that the narrative and documents are relevant to determinations, they are reviewed below.
The narrative and supporting documents
The CCG was advised of a sinking 35’ vessel (the Aura Lee) at 09:55 on 13 December 2018. They were further advised it was attached to a 16’ speedboat, which was also sinking.
No information is available as to what caused both Vessels to sink. It is presumed that the Aura Lee began to sink because it had become structurally unsound, allowing an ingress of water. Then, the Aura Lee dragged the speedboat down with it.
The CCG reports that they contacted the owner of the Aura Lee as part of the response. The owner could not advise as to how much fuel was aboard the Aura Lee. He apparently provided a response plan to the CCG. The CCG deemed the proposal inadequate.
The narrative does not indicate what steps were taken by the Lifeboat Station crew before they were left on the scene, but no claim is made for their efforts so no determinations are required.
CCG Environmental Response (“ER”) began their response the same day the Incident was reported. The Personnel & Equipment Daily Log for that date notes that there was a visible sheen on the surface of the water and that sorbent materials were deployed.
A CCG ER crew of three attended the scene on 14 December 2018. They travelled from Victoria Base by land vehicle to the Institute of Ocean Sciences in Sidney. From there, they used a response craft to deploy to Cowichan Bay. The CCG indicates they used CGE705 “because of its close proximity to the incident”.
According to the narrative, the ER crew arrived at the scene. The Aura Lee remained sunken and a sheen remained on the water. The crew replaced the sorbent boom.
Several salvage companies were contacted about raising the Aura Lee. Only one company was available, Cold Water Divers Inc. However, due to the weather forecast, salvage efforts could not commence for several days.
On 17 December 2018, 4 CCG ER crew attended from Victoria (via Sidney to travel by boat). By the time the CCG crew arrived, the Aura Lee was partially refloated. The CCG crew assisted the effort by providing generators, pumps, vessel support, sorbents, containment boom positioning and containment boom removal.
After the Vessel was successfully lifted, dewatering efforts had to be maintained continuously. Water quickly entered the Vessel through a number of large holes in its hull. While those efforts continued, the Vessel was maneuvered to a nearby boat ramp to be removed from the water. The narrative indicates CCG personnel could not determine how much fuel was onboard the Vessel.
During the salvage effort, the 16’ speedboat could not be located. The Aura Lee had sunk in approximately 80’ of water, and the bottom of the bay in the area was littered with debris. The CCG decided that any release of oil form the speedboat must be minimal, given that it had only an outboard engine, and so the search was ended.
Summary of costs and expenses
The claim submitted by the CCG includes the following summary of expenses incurred in responding to the Incident:
Figure 1 - Screen capture of CCG Cost Summary
The submission also included a summary of contractor expenses, as follows:
Figure 2 – Screen Capture of Contract Expense Summary prepared by the CCG
***
DETERMINATIONS AND FINDINGS
The CCG submission presents potentially eligible claims under section 103 of the MLA
The Incident resulted in damage suffered, or the threat of damage, within the territorial seas or internal waters of Canada, as well as in costs and expenses to carry out measures to avoid or minimize further damage. As a result, claims arising from the Incident are potentially eligible for compensation.
The CCG is an eligible claimant for the purposes of section 103 of the MLA. The submission arrived prior to the limitation periods set out under subsection 103(2).
The claimed costs and expenses arise from what appear to be reasonable measures taken to “prevent, repair, remedy or minimize” oil pollution damage from a ship, as contemplated under Part 6, Division 2 of the MLA, and are therefore potentially eligible for compensation.
Accordingly, the submission presents claims that are potentially eligible for compensation under s. 103 of the MLA.
The facts presented by the CCG are generally accepted
The CCG included with the submission a narrative which sets out the facts of the Incident in some detail. This description of the material events is accepted as generally accurate, except as is noted below.
The decision to deconstruct the Vessel
After the Vessel was removed from the Water, a marine surveyor was retained to inspect it. According to the narrative, the purpose of the survey was as follows:
Figure 3 - Excerpt from narrative
The narrative further indicates, with respect to the decision to deconstruct the Vessel:
Figure 4 - Excerpt from narrative
The marine survey report included in the submission does not include a finding that the Vessel constituted a threat of oil pollution after it had been removed from the water. It includes only a finding that it posed a general pollution threat, a notation concerning the Vessel’s fuel tanks and the statement that the machinery space bilge is lightly fouled with oil and fuel.
Notwithstanding that the survey report does not include the conclusions as asserted in the narrative, it is concluded, given the Vessel’s hull type (wooden planks), the use to which it was put (a former troller/gillnet fisher converted to other purposes), its age (built circa 1960) and the photographs included with the submission that the machinery bilge space of the Vessel was likely saturated with oil.
In the result, it is accepted that the Vessel itself posed a risk of oil pollution and some deconstruction measures would be appropriate.
***
CLAIM AND OFFER DETAILS
The CCG submission breaks down the claim for costs and expenses into several categories. This section of the offer letter reviews each of those categories in detail and provides reasons as to why portions of the claim have been allowed or disallowed.
According to s. 51, 71, and 77 of the MLA, both the measures taken to respond to an oil pollution incident and the resulting costs must be reasonable in order to trigger eligibility for compensation. In each portion of the CCG claim below, it will be discussed whether that has been established.
Schedule 2 – Contract Services Claim: $29, 522.79
The contract services portion of the claim included two invoices from Cold Water Divers: one for $12,214.13 for raising the Vessel, and one for $13,299.76 for deconstruction of the Vessel.
With respect to raising the Vessel, the amounts claimed for raising a semi-submerged vessel with the dimensions of the Vessel, using 4 divers, lift bags, slings and compressors, is reasonable. The invoice for $12,214.13 is accepted in its entirety.
The invoice for deconstructing the vessel ($13,299.76) has been accepted as a measure taken with respect to oil pollution for the reasons noted above. The invoice itself shows a portion of this expense was to deal with hazardous material – but not oil. The hazardous material identified is asbestos lagging. Dealing with asbestos aboard a vessel is not inherently something that is compensable under the Marine Liability Act. However, the portion of the expense attributed to this cost is moderate ($6,000). Moreover, the Administrator accepts that it is probable that if asbestos was found aboard the Vessel, then part of that asbestos was likely found in and around the Vessel’s machinery spaces. Those machinery spaces are also where the Administrator has accepted that oil saturation likely occurred. In the result, the Administrator accepts that some measures to deal with asbestos would have been necessary to deal with the oil pollution threat posed by the Vessel, and believes that the overall cost of dealing with the asbestos is reasonable such that an arbitrary measure to parse that expense and reduce compensation awarded is not appropriate. This expense is allowed in its entirety.
The marine surveyor submitted an invoice to the CCG in the amount of $1,745.10. The evidence does not establish that the marine survey was secured primarily for the purposes of establishing the presence of oil pollution. The report itself was corroborative, rather than determinative, of the need for deconstruction, and the observations made by the surveyor attributed to oil pollution can and should have been made by the CCG personnel who attended at the scene. This expense is disallowed.
The final contractor expense is one from Don’s Boat Transport, in the amount of $2,263.80. Although the distance the Vessel had to be moved is relatively short, the amount of the invoice is considered to be competitive and reasonable in the circumstances. The amount of this invoice is accepted in its entirety.
The contract services portion of this claim is allowed in the amount of $27,777.69.
| Item |
Contractor |
Service Provided |
Cost |
Recommendation |
| Cold Water Divers |
Raising the Aura-Lee and towing the vessel to shore |
$12,214.13 |
$12,214.13 |
|
| Cold Water Divers |
Deconstruction and Disposal of the Aura-Lee |
$13,299.76 |
$13,299.76 |
|
| Building Sea Marine |
Marine Survey of the Aura-Lee |
$1,745.10 |
0 |
|
| Dons Boat Transport |
Transport wreck from ramp at Cowichan Bay to Deconstruction site |
$2,263.80 |
$2,263.80 |
|
|
|
Total |
|
$29,522.79 |
$27,777.69 |
Figure 5 - Summary of Contractor expenses claimed and allowed
Schedule 4 – Salaries: Full Time Personnel Claim: $2, 406.97
The CCG claims for 53.5 hours of salary time for four CCG personnel, distributed over three days (13, 14 and 17 December 2018). The submission is supported by timesheets. The work on 14 and 17 December 2018 is accepted in its entirety.
The 4 hours claimed for 13 December 2018 requires some comment. The four hours claimed on 13 December 2018 is for the CCG ER duty officer to receive a report about the Incident, and deploy the Ganges Lifeboat Station to respond to the incident. It is considered that 4 hours is excessive for the work done by the CCG ER duty officer that day. It would be appropriate to write down the CCG claim by three hours. However, it is also noted that no claim was made by the CCG for the work done by the Ganges Lifeboat crew who were dispatched to the scene and who carried out useful work with respect to preventing oil pollution (including deploying absorbent materials). It is concluded that the work done by the Ganges Lifeboat Crew on 13 December 2018 would have been well in excess of the four hours claimed by the CCG that day. In result, while the Administrator does not accept that the timesheets submitted with the claim support the claim for CCG salaries on 13 December 2018, it is nevertheless determined that the claim should be allowed as the hours and value of the work done by the CCG that day likely exceed the four hours claimed.
The salaries portion of this claim is allowed in the amount of $2,406.97.
Schedule 5 – Overtime: Full Time Personnel Claim: $562.35
The overtime portion of the claim is for work done by all four CCG ER personnel who were involved in the response on 17 December 2018. The claim is for 2.5 hours of overtime (at 1.5 rate) for each response officer. The work done on that day, in the water support to Cold Water Divers carrying out the salvage effort, is considered a measure reasonably taken with respect to oil pollution. The hours claimed are supported by Personnel & Equipment Daily Log sheets and Extra Duty Pay forms, and are considered reasonable overall.
The overtime portion of this claim is allowed in the amount of $562.35.
Schedule 11 – Pollution Counter Measures Claim: $9457.11
The submission includes a chart summarizing the pollution counter-measures claimed. Two items of interest are circled in red:
Figure 6 - Chart of counter-measure equipment expenses claimed from the submission, with annotations in red
The appropriateness of the use of a 24-inch containment boom and sorbent materials in response to an Incident involving oil pollution is evident, This claim is accepted without deduction.
The need for 2 generators and 3 pumps provided by the CCG has not been establish on the evidence. The Vessel was a 42-foot boat. Cold Water Divers had been retained to carry out the salvage operation, and they had 4 pumps on site (two 2-inch and two 3-inch) for that purpose. It is accepted as reasonable that the CCG would have one pump and generator available as a contingency; the rest of this portion of the claim is not accepted. On the same point, the charge-out rate for a 2” electrical pump ($166.67) as proposed by the CCG is not accepted. The submission does detail what electrical pump was in use. The CCG manual includes different types, with substantially different replacement costs, which have the same charge-out rate:
Figure 7 – Excerpt of page 7 of the CCG charge-out manual, with annotations in red
As well, the costing of the charge-out rates is not established. Given the needs, a 2-inch dispersant pump would have sufficed. That pump has a charge-out rate of $15.37. That amount is allowed, for one pump.
A similar issue arises with respect to the use of the CGE 705. The CCG proposes a charge-out rate of $4,209.50 per day for that craft. That is based on the valuation the CCG attributes to PRV III class vessels built by Robert Allen Ltd., which have a replacement cost of $757,710.79. Arriving at the rate proposed by the CCG for the PRV III class of vessels given their age and base cost is not problematic, and in any event the CGE 705 is not one of those vessels and does not have the capabilities of that vessel. The PRV II rate of $1,194.23 per day is considered a more appropriate match to the CGE 705, and that rate is applied instead.
The pollution counter-measures portion of this claim is allowed in the amount of $2,933.88.
| Item |
Rate |
Date |
Amount |
| CGE 705 |
$1,194.23 per day |
Dec 14th and Dec 17th |
$2,388.46 |
| 1 Generator (2000 watt) |
$8.05 per day |
Dec 17th |
$8.05 |
| 1 Electric Pump (2-inch) |
$15.37 per day |
Dec 17th |
$15.37 |
| 150-feet of 24-inch containment boom |
$0.67 per foot per day |
Dec 14th to 17th |
$402.00 |
| I bundle sorbent boom |
$75.00 |
Replacement cost |
$75.00 |
| 1 bundle sorbent pads |
$45.00 |
Replacement cost |
$45.00 |
| Total |
|
|
$2,933.88 |
Figure 8 - Summary of pollution counter-measures equipment claims allowed
Schedule 12 – Vehicles Claim: $165.26
The vehicles claim is supported by Daily Trip Reports rather than Vehicle Logs, which are more typically used. Gas receipts were not provided, but a rate of $0.22/km is claimed and accepted. The total distance travelled is 137 km, which roughly matches what would be expected. The daily rate of $67.56 for a vehicle is accepted.
The vehicle portion of this claim is allowed in the amount of $165.26.
Schedule 13 - Administration Claim: $61.98
The CCG submission advances a claim for administration costs at a rate of 3.09%, applied against claimed salaries, less the 20% markup associated with the costs of the employee benefits plan.
The 3.09% rate is generally accepted as reasonable. This portion of the claim is accepted as is.
The administration portion of the submission is allowed in the amount of $61.98
***
OFFER SUMMARY AND CLOSING
The following table summarizes the claimed and allowed expenses with respect to the CCG claim regarding the Vessel:
| Schedule |
Cost claimed |
Recommendation |
| 1 – Materials & Supplies |
nil |
nil |
| 2 – Contract Services |
$29,522.79 |
$27,777.69 |
| 3 - Travel |
nil |
nil |
| 4 - Salaries - CFT personnel |
$2,406.97 |
$2,406.97 |
| 5 - Overtime - CFT personnel |
$562.35 |
$562.35 |
| 6 - Other allowances |
nil |
nil |
| 7 – Salaries Casual Personnel |
nil |
nil |
| 8 – Ships Costs (excluding fuel & overtime) |
nil |
nil |
| 9 – Ships propulsion fuel |
nil |
nil |
| 10 – Aircraft |
nil |
nil |
| 11 - Pollution counter-measures equipment (PCME) |
$9,457.11 |
$2,933.88 |
| 12 - Vehicles |
$165.26 |
$165.26 |
| 13 - Administration |
$61.98 |
$61.98 |
| Total Claim |
$42,176.45 |
$33,908.13 |
Table 1 - Summary of claims made and allowed
Costs and expenses in the amount of $33,908.13 are accepted and will be paid together with statutory interest calculated at the date of payment if the Offer is accepted.
***
In considering this Offer, please observe the following options and time limits that arise from section 106 of the MLA.
You have 60 days upon receipt of this Offer to notify the undersigned whether you accept it. You may tender your acceptance by any means of communication by 16:30 Eastern Time on the final day allowed. If you accept this Offer, payment will be directed to you without delay.
Alternatively, you have 60 days upon receipt of this Offer to appeal its adequacy to the Federal Court. If you wish to appeal the adequacy of the Offer, pursuant to Rules 335(c), 337, and 338 of the Federal Courts Rules, SOR/98-106 you may do so by filing a Notice of Appeal on Form 337. You must serve it upon the Administrator, who shall be the named Respondent. Pursuant to Rules 317 and 350 of the Federal Courts Rules, you may request a copy of the Certified Tribunal Record.
The MLA provides that if no notification is received by the end of the 60-day period, you will be deemed to have refused the Offer. No further offer will issue.
Finally, where a claimant accepts an offer of compensation from the Fund, the Fund becomes subrogated to the claimant’s rights with respect to the subject matter of the claim. The claimant must thereafter cease any effort to recover for its claim, and further it must cooperate with the Fund in its subrogation efforts.
Yours sincerely,
Mark A.M. Gauthier, B.A., LL.B
Deputy Administrator, Ship-source Oil Pollution Fund