Government responds to the recommendations of the Domestic Fuel Oil Spill Prevention Committee

Government responds to the recommendations of the
Domestic Fuel Oil Spill Prevention Committee

Environment Minister Ralph Wiseman and Government Services and Lands Minister Walter Noel today announced government�s response to the Domestic Fuel Oil Spill Prevention Committee report. Comprised of representatives of the fuel service, environmental and insurance industries, as well as consumers and government officials, the committee was formed in March 2001 to advise government on how to address the immediate problems related to domestic fuel oil spills and to suggest mechanisms to minimize contamination from domestic fuel tanks.

The Domestic Fuel Oil Spill Prevention Committee presented its report to government in September 2001. It outlined eight recommendations to reduce and prevent the occurrence of fuel oil spills. The committee indicated the primary recommendation involved regulations. Government endorsed this recommendation and will introduce regulations governing the manufacture, installation, and operation of fuel systems less than 2,500 litres in size. The regulations will come into effect April 1, 2002 and property owners will have five years to ensure their existing systems are in compliance. Newfoundland and Labrador is only the second province in Canada to introduce regulations governing domestic fuel tanks. Prince Edward Island introduced similar legislation in June 2001.

"Domestic oil spills affect not only the environment, but property owners, insurance companies, and government often face high financial costs to clean up spills. These new regulations will help to prevent and reduce the occurrence of oil spills to the benefit of both stakeholders and the environment," said Minister Wiseman.

Minister Wiseman explained that the new regulations are essentially those suggested by the committee. "In preparing its final report, the committee prepared draft regulations for government�s consideration, and I am pleased to say that the new regulations differ only in three areas from those proposed by the committee," he said. "First, the committee suggested a January 1, 2002 effective date which had to be changed. Second, we felt the proposed two year phase-in period should be five years and, finally, systems must be approved by licenced inspectors as opposed to installers."

The ministers also announced that a financial assistance program, similar to that recommended by the committee, will be implemented on April 1, 2002. This program will be available to low income households which must upgrade or replace a fuel system not in compliance with the new regulations. Households with an annual family net income of less than $21,744 will be eligible for up to $300 towards the cost of replacing an existing system. The program will be administered by the Department of Finance. In addition, the fuel oil companies offer customers various payment plans when purchasing new systems.

The committee also recommended implementing a public education campaign, reviewing the procedures for responding to reports of oil spills and the current cleanup criteria for oil spills, and that enforcement of the regulations rest with the fuel service and insurance industries. These recommendations were endorsed by government. The recommendations for tax incentives and a levy on fuel oil for the establishment of an emergency response fund were not accepted by government.

"The Domestic Fuel Oil Spill Prevention Committee was able to produce a consensus report on a difficult and challenging topic which demonstrates that government, industry, and consumers can work together to address issues," said Minister Wiseman. "Our response to the committee�s report and recommendations achieves a balance for property owners, the fuel service and insurance industries, government and our environment."

Minister Noel said: "On behalf of government, I want to thank the members of the committee for their time, talent and energy. They have accomplished a great deal. The committee certainly has met all the expectations I had when, in March 2001, I called together consumers, representatives of the fuel service, environmental and insurance industries, and government officials to deal with serious financial and environmental concerns brought to light by a harsh winter and a dramatic increase in fuel oil spills. Many Newfoundlanders and Labradorians will be protected against financial ruin because of the work that this committee has done. Equally important is the major contribution the committee has made to safeguarding our environment. This is indeed a major step forward."

In Newfoundland and Labrador, approximately 66,000 households use fuel oil as their main source of heat. During the 2000-2001 heating season, there were approximately 600 residential oil spills reported which was twice the number from previous years. For the period January 1 to May 10, 2001, it was estimated that insurance companies processed 340 claims associated with domestic oil spills with costs totalling approximately $9 million. In 2000, there were 220 claims, while from 1996-1999 the claim total was 610.

Media contact:
Diane Keough, Environment, (709) 729-2575.
Rick Callahan, Government Services and Lands, (709) 729-4860.

Mr. John Drover (Co-Chair)
Director, Policy and Planning
Department of Environment

Mr. H. Sheridan Yetman
Vice-President & General Manager
Harvey�s Oil Limited

Mr. Carl Paddock
Atlantic Plumbing and Heating

Mr. Darrell H. Swain
Co-ordinator (Safety)
Johnson Incorporated

Mr. David Anthony
Insurance Corporation of Newfoundland Limited

Mr. Steve Elliott
Department of Environment

Bill Melendy
ADI- Nolan Davis
Environmental Consultant

Consumer Representatives:

Mr. Bruce Tricco

Ms. Katherine Flight

Mr. Cyril Simms (Co-Chair)
Environmental-Health Officer
Department of Government Services and Lands

Mr. Bill Oakley
Service Manager
North Atlantic Refining

Mr. Ron McCarthy
Branch Manager
Kerr Controls Limited

Mr. Kevin J. Sheppard
District Sales Manager
The Co-operators

Mr. John Dutton
Department of Environment

Mr. Don Boland
Eastern Sheet Metal Works Limited

FACT SHEET

Government�s Response to Recommendations of the
Domestic Fuel Oil Spill Prevention Committee

Recommendation: Government introduce regulations governing the manufacture, installation, and operation of residential fuel systems.

Government�s Response: Regulations will come into effect April 1, 2002, with a five year phase-in period for consumers.

Recommendation: That the responsibility for inspection and enforcement rest initially with industry (insurance, fuel suppliers, installers, etc.) and that government�s role be primarily one of registrar and for legal action on extreme cases.

Government�s Response: Government accepts this recommendation. The fuel supply and insurance industries will be responsible for inspection and enforcement. If a domestic fuel supply system does not meet the new regulations, the fuel company will not deliver oil and the insurance industry will not offer coverage. Government will maintain a register of all fuel systems. If necessary, government will also be responsible for legal action.

Recommendation: That government, in cooperation with industry, implement a public awareness campaign prior to the next heating season to provide consumers information with respect to options, responsibilities, and precautionary measures.

Government�s Response: The Department of Government Services and Lands will continue to distribute brochures on fuel system maintenance as well as provide information on the Web site. In addition, the fuel service and insurance industries will provide customers with information.

Recommendation: That government review its procedures with respect to responding to spill reports, specifically with respect to keeping those who have reported spills informed of what actions are being taken.

Government�s Response: The Department of Government Services and Lands reviewed their operational protocols for responding to reported oil spills and determined that the current protocol is satisfactory.

Recommendation: That government provide tax incentives to consumers for expenditures related to the upgrading or replacement of systems which do not meet acceptable standards.

Government�s Response: Under the current federal/provincial agreements with respect to the Harmonized Sales Tax (HST), government has limited ability to exempt such expenditures. However, government is implementing a financial assistance program for low income households.

Recommendation: That government consider providing grants to consumers for the upgrading of existing systems that do not meet the standards reflected in the proposed regulations.

Government�s Response: A financial assistance program for low income households will be implemented on April 1, 2002. The program will be administered by the Department of Finance. Households with an annual family net income less than $21,744 will be eligible for up to $300 towards the cost of upgrading a fuel system to meet the new regulations.

Recommendation: That government consider the implementation of a levy on the sale of fuel oil and that such revenues be deposited in an industry/government administered fund for use in spill remediation in cases where no fault or negligence can be assigned or proven.

Government�s Response: Implementing a levy on fuel oil would place an additional financial burden on consumers and, as such, government does not agree with this recommendation.

Recommendation: That, given the considerable cost associated with cleanup, the Department of Environment should review its current cleanup criteria to conform the validity of such requirements.

Government�s Response: The Department of Environment completed a review of the current cleanup criteria for oil spills. The department endorses national cleanup criteria developed by the Canadian Council of Ministers of the Environment, standards which have been well researched and are based on good science. The department will not alter the cleanup criteria at this time.