Got Coal? The Burning Problem with Canada’s Port Authorities

Canada’s major ports handle more than 300 million tonnes of cargo every year. They’re how we import products like cars and TVs and how we export commodities like grain and oil. Yet many of us have likely never thought of how the country’s 18 Canada Port Authorities (CPAs) are run — until now.

The way that decisions are made at Canada’s ports are coming under increasing scrutiny from environmentalists, who take issue with ports operating as both a promoter and regulator of trade.

The boards of directors of Canada’s port authorities determine what terminals receive approval for construction, and thus what types of commodities end up leaving the harbour.

Take Port Metro Vancouver (officially known as the Vancouver Fraser Port Authority), for example. It’s the largest port authority by tonnage in the country: in 2015 it facilitated the exchange of 138 million tonnes of cargo.

In September 2012, Fraser Surrey Docks — one of 28 marine terminals located at Port Metro Vancouver — announced plans to export eight million tonnes of thermal coal mined in Montana and Wyoming to Asian markets every year.

Paula Williams co-founded the advocacy group Communities and Coal in May 2013 in response to potential health effects and climate impacts stemming from such exports.

While Port Metro Vancouver’s CEO has readily admitted the port authority has never encountered such considerable opposition to a proposal before, the terminal’s proposal is still slated to go ahead (there are multiple lawsuits filed against it over alleged lack of consultation).

“At times, I’ve felt powerless, even though I remained hopeful,” Williams says. “You really start to see the machine that you’re up against.”

Port Users Nominate Board of Directors

That’s because seven of the 11 people who serve on the board of directors for Port Metro Vancouver are nominated by port users. In other words, the businesses that reap financial benefits from port-related transactions have a majority of the say in who gets recommended as a board member to the federal minister of transportation, who makes the final selection.

The other four spots are filled with selections by: 1) the 16 municipalities within Port Metro Vancouver’s jurisdiction; 2) the province of British Columbia; 3) the three prairie provinces; and 4) the federal transport minister (without recommendation from the port user group).

The selection process is spelled out by 1998’s Canada Marine Act, which established port authorities as federal not-for-profit corporations mandated with the three-pronged task of facilitating trade, consulting with communities and protecting the environment. Today, Canada Port Authorities serve as landlord, regulator and property developer.

Fox Watching the Hen House

Kathryn Harrison, a political science professor at the University of British Columbia, expresses concern over the board nomination process, as there’s no requirement for the ports to seek representation from First Nations, environmental or public health groups.

“The nomination process really exemplifies for me the degree to which this port authority has been envisioned as an agency that pursues the interests of industry,” she says. “It has a coordinating role, so you’ve got to have all the industries represented. But think about it: now you have a board primarily made up of those industries overseeing regulation of themselves.”

Peter Hall, director and professor of urban studies at Simon Fraser University and expert on port institutions, says that while ports can introduce widespread consultation, it makes little difference if they don’t have “the right people” at the final decision-making point.

That said, Hall states that he doesn’t believe a locally appointed board should decide on what a port trades, as that should remain the responsibility of provincial and federal governments. But who’s represented at the table has to change, he says, as does the mandate that “all cargo is by definition good.”

“There is this presumption the [Canadian Port Authority] in your city or region should say yes to everything because it’s presumed to be in the interests of Canada,” he says. “In that sense, it’s more difficult for local interests of any type to say ‘no, we’d rather not have that.’”

Hall adds the port industry is made up of a series of oligopolies and the current board composition is “not at all good” at dealing with tough environmental and social questions. Rejigging the composition to allow for more regional municipal representation would help.

“In the long run, we shouldn’t worry so much about these very big, financially successful port authorities just being able to get as much business as they can,” he says.

“We should be worrying about their long-term social and environmental commitments because there is capacity to do that. I don’t think we’re in any danger of destroying the golden goose. I think we’re actually much more in danger of a crisis of political legitimacy.”

Promoter or Regulator of Trade? Both.

Other port authorities have suffered from poor optics over the years: in 2011, the RCMP started investigations into an allegedly corrupt nomination process at Montreal’s port authority that involved the Prime Minister’s Office. Former Conservative cabinet minister Lisa Raitt came under fire in in 2009 for an expense scandal during her time as CEO of the Toronto Port Authority. Halifax’s port authority has faced criticism from a former port chairperson due to its loss of a major container customer. The list goes on.

While UBC’s Harrison agrees there’s an urgent need to reform the nomination process for the board of governors — which would require an Act of Parliament to amend the Canada Marine Act and the issuing of new letters patent to Canadian Port Authorities — she says port authorities also suffer from mixed mandates, in which they serve as both a promoter and regulator of trade. The goal of regulating business, she says, can come into conflict with the port’s reliance on income from projects to fund its operations.

Such a narrow focus on economic benefit, without fully considering environmental and social impacts, also concerns Andrew Gage, staff lawyer at West Coast Environmental Law.

“If you view coal as a normal and legal commodity, then you can’t understand how someone would limit its export,” he says via e-mail. “If you view coal as a product that, due to its central role in fossil fuel pollution and climate change, plays a crucial role in killing people and destroying property, then your answer may be different.”

Bill C-43 Allowed Ports to Destroy Documents

Those tensions were exacerbated in 2014 with Bill C-43, the 475-page budget implementation omnibus bill that, among many other things, authorized the sale of federal land to port authorities. Such lands, now leasable to private industry, are no longer covered by the Canadian Environmental Assessment Act and Species at Risk Act. In the same section of the bill, port authorities were empowered to establish rules that would allow them to physically destroy documents.

Such an amendment carries extra weight given that the year prior, the Vancouver-based organization Voters Taking Action on Climate Change uncovered documents via an Access to Information request that showed an uncomfortably close relationship between Port Metro Vancouver and National Public Relations, the firm that also represents the Coal Alliance (which Fraser Surrey Docks is a member of).

Throw in the fact Port Metro Vancouver has been facing serious problems with organized crime — a Vancouver Sun investigation published in May 2015 revealed that over two dozen longshoremen are affiliated with the Hells Angels and associates — and Harrison suggests a serious overhaul is needed.

“If there are concerns being raised about organized crime operating in ports as a way to smuggle drugs, that’s not the time to be passing legislation authorizing the destruction of documents and reducing transparency,” she says.

Lobbying Activity Flies Under the Radar

Topping it all off is that employees of Canada Port Authorities aren’t subject to the federal Lobbying Act, which means the public can’t find out which individuals or businesses are meeting with Port Metro Vancouver board directors. While Harrison doesn’t perceive any nefarious intent behind the omission, it’s yet another sign for her that the governance model hasn’t kept up with the changing times and expectations of transparency.

In 2010, the federal commissioner of lobbying issued an advisory opinion confirming that communication between shared governance organizations — a category that port authorities belong to — and “federal public office holders concerning its mandate, operation, funding and other related matters is not a registrable activity.”

Robyn Crisanti, director of public affairs at Port Metro Vancouver, notes the port authority has met with a number of federal ministers since the beginning of the year and there’s a lot of interest in the port’s activities.

“We’re very aware of what our marching orders are and we follow them,” she says.

Grappling With the Long-Term Questions

One of the key tasks of the Canada Port Authorities, Crisanti says, is to do long-term planning: “It’s this thing of looking quite far into the future and trying to assess where Canada’s going to go in terms of trade and trade deals and things of that nature.”

For projects such as the G3 Terminal Vancouver — which if approved will annually transport eight million tonnes of grain — this can be a fairly straightforward task. While the economics may vary, there’s no doubt the world will require grain for the foreseeable future.

But it’s a different story when it comes to exports like coal and petroleum products. Canada has signed international agreements, notably the G7 commitment to phase out all fossil fuels by 2100 and the Paris Agreement to limit global warming to two degrees Celsius, both of which could seriously impact future investments in terminals that export energy products.

According to Gage of West Coast Environmental Law, Port Metro Vancouver “can consider whether fossil fuel specific infrastructure being built on port lands may become ‘stranded assets’ as the world moves away from a fossil fuel economy, as well as any potential liabilities that may be associated with fossil fuel infrastructure.”

This is where it all circles back to the board nomination process and underlying mandate.

Williams of Communities and Coal suggests that it’s currently not beneficial for the port authority to reject a project such as the Fraser Surrey Docks expansion given its modus operandi to facilitate trade, especially given that a majority of governors are commissioned under the “user pay-user say” principle.

However, Williams suggests the experience that Port Metro Vancouver went through with the controversial Fraser Surrey Docks proposal was a good learning opportunity, something Crisanti confirms (the Canada Port Authorities hired external consultants to review the permitting process and launched a new process last July). But there’s much more to be done, Williams says.

“If any change is going to come about, it’s got to be federally mandated,” she concludes. “It has to come from above.”