Vol. 148, No. 7 — March 26, 2014

Registration

SOR/2014-52 March 7, 2014

PILOTAGE ACT

Regulations Amending the Laurentian Pilotage Tariff Regulations

P.C. 2014-250 March 6, 2014

RESOLUTION

Whereas the Laurentian Pilotage Authority, pursuant to subsection 34(1) (see footnote a) of the Pilotage Act (see footnote b), published a copy of the proposed Regulations Amending the Laurentian Pilotage Tariff Regulations, substantially in the annexed form, in the Canada Gazette, Part I, on October 12, 2013;

Whereas a notice of objection was filed with the Canadian Transportation Agency on November 11, 2013 and with respect to that notice a settlement agreement between the parties was made on January 14, 2014;

Therefore, the Laurentian Pilotage Authority, pursuant to subsections 20(1) and  33(1) of the Pilotage Act (see footnote c), makes the annexed Regulations Amending the Laurentian Pilotage Tariff Regulations.

Montréal, January 23, 2014

FULVIO FRACASSI
Chief Executive Officer
Laurentian Pilotage Authority

His Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to subsections 20(1) and  33(1) of the Pilotage Act (see footnote d), approves the annexed Regulations Amending the Laurentian Pilotage Tariff Regulations, made by the Laurentian Pilotage Authority.

REGULATIONS AMENDING THE LAURENTIAN PILOTAGE TARIFF REGULATIONS

AMENDMENTS

1. (1) The definition “dead ship” in section 1 of the Laurentian Pilotage Tariff Regulations (see footnote 1) is repealed.

(2) The definitions “time factor” in section 1 of the Regulations is replaced by the following:

“time factor” means the result obtained by multiplying the draught of a ship by the number of hours, or parts of an hour, during which the ship is underway under the conduct of a pilot, but does not include any period during which charges are payable in accordance with item 6 or 9 of Schedule 2. (facteur temps)

2. (1) Section 7 of the Regulations is amended by adding the following after subsection (3):

(3.1) The Authority may require that information with respect to pilotage services rendered be delivered exclusively by an electronic method of collection and transmission without signature.

(2) The portion of subsection 7(4) of the Regulations before paragraph (a) is replaced by the following:

(4) If a discrepancy occurs between the information provided on the pilotage service form or transmitted electronically and the information contained in the following documents, the particulars of a ship are those contained, in order of priority, in

3. (1) Subsection 8(1) of the Regulations is amended by striking out “or” at the end of paragraph (e), by adding “or” at the end of paragraph (d) and by repealing paragraph (f).

(2) Subsection 8(2) of the Regulations is amended by striking out “or” at the end of paragraph (g), by adding “or” at the end of paragraph (f) and by repealing paragraph (h).

4. Section 9 of the Regulations is renumbered as subsection 9(1) and is amended by adding the following:

(2) When the pilot is detained for more than one hour, the fees set out in item 6 of Schedule 2 for each subsequent hour are reduced by half if the detention is caused by a berthing, an anchoring, ice conditions that force the ship to stop, weather conditions, a change in the expected time of arrival of the ship, delays associated with pilot boat services, a shortage of pilots, delays at dock or at anchor as a result of maritime traffic management by the competent authorities, or the grounding of the ship.

5. Schedule 2 to the Regulations is replaced by the Schedule 2 set out in Schedule 1 to these Regulations.

6. Schedule 2 to the Regulations is replaced by the Schedule 2 set out in Schedule 2 to these Regulations.

COMING INTO FORCE

7. (1) Subject to subsection (2), these Regulations come into force on the day on which they are registered.

(2) Section 6 of these Regulations comes into force on January 1, 2015.

SCHEDULE 1
(Section 5)

SCHEDULE 2
(Sections 1, 2 and 9)

PILOTAGE CHARGES

Item	Column 1 Pilotage Service	Column 2 District	Column 3 Basic Charge ($)	Column 4 Charge per Unit ($)	Column 5 Charge per Time Factor ($)	Column 6 Charge per Hour or Part of an Hour ($)	Column 7 Minimum Charge ($)	Column 8 Maximum Charge ($)
1.	Trip	1 2	N/A N/A	42.92 25.86	21.12 14.89	N/A N/A	2,196.12 1,729.55	N/A N/A
2.	Movage	1 1-1 2	494.04 454.60 470.51	16.27 14.97 15.49	N/A N/A N/A	N/A N/A N/A	2,196.12 2,020.78 2,091.54	N/A N/A N/A
3.	Anchorage during a trip or a movage	1 1-1 2	382.02 351.51 363.83	4.11 3.78 3.93	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A
4.	Docking of a ship at a wharf or pier at the end of a trip	1 2	292.40 278.47	3.02 2.87	N/A N/A	N/A N/A	N/A N/A	568.52 541.45
5.	Request by a master, owner or agent of a ship for a pilot designated by the Corporation to perform a docking or undocking	1 2	470.51 470.51	10.64 10.64	N/A N/A	N/A N/A	1,729.55 1,729.55	N/A N/A
6.	Detention of a pilot at a pilot boarding station or on board ship	1	N/A	N/A	N/A	0.00 for the first half-hour, 113.96 for the first hour, including the first half-hour, and 227.92 for each subsequent hour	N/A	N/A
		1-1	N/A	N/A	N/A	0.00 for the first half-hour, 104.85 for the first hour, including the first half-hour, and 209.70 for each subsequent hour	N/A	N/A
		2	N/A	N/A	N/A	0.00 for the first half-hour, 108.51 for the first hour, including the first half-hour, and 217.02 for each subsequent hour	N/A	N/A
7.	Compass adjustment by pilot	1 1-1 2	494.04 454.60 470.51	16.27 14.97 15.49	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A
8.	Cancellation of a request for pilotage services if the pilot reports for pilotage duty	1	612.89	N/A	N/A	0.00 for the first hour, 227.91 for the second hour, including the first hour, and 113.96 for each subsequent hour (see note1)	N/A	N/A
		1-1	563.96	N/A	N/A	0.00 for the first hour, 209.69 for the second hour, including the first hour, and 104.85 for each subsequent hour (see note1)	N/A	N/A
		2	583.70	N/A	N/A	0.00 for the first hour, 217.01 for the second hour, including the first hour, and 108.51 for each subsequent hour (see note1)	N/A	N/A
9.	Carrying a pilot on a ship beyond the district for which the pilot is licensed	1 1-1 2	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	113.96 104.85 108.51	N/A N/A N/A	N/A N/A N/A
10.	Except in the case of a pilot having to be relieved after an accident, a master, owner or agent of a ship, after filing a notice as required by section 8 or 9 of the Laurentian Pilotage Authority Regulations, making a request that the movage or departure occur at a time before that set out in the notice	1 1-1 2	2,550.23 2,346.63 2,428.79	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A
(Note for table 1) The number of chargeable hours of service is calculated from the later of the time for which the pilotage services are requested and the time the pilot reports for pilotage duty until the time of cancellation.

SCHEDULE 2
(Section 6)

SCHEDULE 2
(Sections 1, 2 and 9)

PILOTAGE CHARGES

Item	Column 1 Pilotage Service	Column 2 District	Column 3 Basic Charge ($)	Column 4 Charge per Unit ($)	Column 5 Charge per Time Factor ($)	Column 6 Charge per Hour or Part of an Hour ($)	Column 7 Minimum Charge ($)	Column 8 Maximum Charge ($)
1.	Trip	1 2	N/A N/A	43.78 26.38	21.54 15.19	N/A N/A	2,240.04 1,764.14	N/A N/A
2.	Movage	1 1-1 2	503.92 463.69 479.92	16.60 15.27 15.80	N/A N/A N/A	N/A N/A N/A	2,240.04 2,061.20 2,133.37	N/A N/A N/A
3.	Anchorage during a trip or a movage	1 1-1 2	389.66 358.54 371.11	4.19 3.86 4.01	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A
4.	Docking of a ship at a wharf or pier at the end of a trip	1 2	298.25 284.04	3.08 2.93	N/A N/A	N/A N/A	N/A N/A	579.89 552.28
5.	Request by a master, owner or agent of a ship for a pilot designated by the Corporation to perform a docking or undocking	1 2	479.92 479.92	10.85 10.85	N/A N/A	N/A N/A	1,764.14 1,764.14	N/A N/A
6.	Detention of a pilot at a pilot boarding station or on board ship	1	N/A	N/A	N/A	0.00 for the first half-hour, 116.24 for the first hour, including the first half-hour, and 232.48 for each subsequent hour	N/A	N/A
		1-1	N/A	N/A	N/A	0.00 for the first half-hour, 106.95 for the first hour, including the first half-hour, and 213.90 for each subsequent hour	N/A	N/A
		2	N/A	N/A	N/A	0.00 for the first half-hour, 110.68 for the first hour, including the first half-hour, and 221.36 for each subsequent hour	N/A	N/A
7.	Compass adjustment by pilot	1 1-1 2	503.92 463.69 479.92	16.60 15.27 15.80	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A
8.	Cancellation of a request for pilotage services if the pilot reports for pilotage duty	1	625.15	N/A	N/A	0.00 for the first hour, 232.47 for the second hour, including the first hour, and 116.24 for each subsequent hour (see note2)	N/A	N/A
		1-1	575.24	N/A	N/A	0.00 for the first hour, 213.88 for the second hour, including the first hour, and 106.94 for each subsequent hour (see note2)	N/A	N/A
		2	595.37	N/A	N/A	0.00 for the first hour, 221.35 for the second hour, including the first hour, and 110.68 for each subsequent hour (see note2)	N/A	N/A
9.	Carrying a pilot on a ship beyond the district for which the pilot is licensed	1 1-1 2	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	116.24 106.95 110.68	N/A N/A N/A	N/A N/A N/A
10.	Except in the case of a pilot having to be relieved after an accident, a master, owner or agent of a ship, after filing a notice as required by section 8 or 9 of the Laurentian Pilotage Authority Regulations, making a request that the movage or departure occur at a time before that set out in the notice	1 1-1 2	2,601.23 2,393.56 2,477.37	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A
(Note for table 2) The number of chargeable hours of service is calculated from the later of the time for which the pilotage services are requested and the time the pilot reports for pilotage duty until the time of cancellation.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Background

The Laurentian Pilotage Authority, a Crown corporation listed in Part I of Schedule III to the Financial Administration Act, was established in February 1972 pursuant to the Pilotage Act (the Act). Its mission is to operate, maintain and manage, in the interest of navigational safety, an efficient marine pilotage service within all Canadian waters in and around the Province of Quebec, north of the northern entrance to St. Lambert Lock, except the waters of Chaleur Bay, south of Cap d’Espoir in latitude 48 degrees 25 minutes 8 seconds N., longitude 64 degrees 19 minutes 6 seconds W., in particular on the St. Lawrence and Saguenay rivers. Pursuant to subsection 33(3) of the Act, the Authority must fix fair and reasonable tariffs to allow it to operate on a self-sustaining financial basis.

Issues

Because of increased costs in 2014 and 2015 due to long-term pilotage contracts, collective agreements and general inflationary pressures, the Authority needs to amend the Laurentian Pilotage Tariff Regulations to ensure that its revenues from pilotage charges cover the costs it incurs to provide pilotage services to its clients. The new charges should allow the Authority to cover its increased costs without having to make bank loans, which would entail additional costs for interest. After a few years during which the Authority has taken on significant capital expenditures, the tariff increases will put its finances on a healthy and stable footing in 2014 and 2015, even though its net income will drop markedly as a result of increased financial contributions towards pilots’ portable pilotage units and greater depreciation costs arising from capital expenditures at Les Escoumins station.

Objectives

The purpose of the tariff increase is to keep the Authority on a self-sustaining financial base with fair and reasonable tariffs that can support efficient pilotage services and ensure safe navigation. Non-financial amendments to the Regulations are also being made to deal with the introduction of electronic pilot service forms.

Description

The tariff increase applies to all the charges in the table in Schedule 2 of the Tariff Regulations. The increase is 2.00% in 2014 and 2.00% in 2015 (the increase in 2013 was 2.35%). Spreading the increase over two years will give users greater stability and predictability and facilitate recovery of the increase from their clients.

The Authority is also suggesting that the hourly rate be doubled (from an estimated maximum of about $116 to about $232 an hour in 2014) when a pilot is detained at a boarding station or on board a ship for more than one hour. Exceptions would be allowed for situations where the delay is not due to the client, so as to minimize the financial impact.

Finally, further amendments to the Regulations are made to eliminate certain charges or change other provisions that have no financial consequences for users, such as the provisions on pilot service forms, in anticipation of the imminent introduction of electronic forms. These forms will be created electronically (and not printed out) and will be sent electronically to the Authority’s billing service, thus eliminating any manual work.

Regulatory and non-regulatory options considered

The Authority considered a number of regulatory and non-regulatory options before making the present regulatory amendment.

Regulatory options

Increasing pilotage charges by more than the amount being made would have resulted in non-competitive charges and there would be a risk that traffic might be diverted to other ports in Canada and the United States. Smaller increases than those made would have resulted in compromising the Authority’s financial self-sustainability.

Status quo

The status quo option was considered but rejected. Keeping pilotage charges unchanged over the two-year period that started on March 7, 2014, would result in the financial situation of the Authority deteriorating due to continually increasing costs and would prevent it from fulfilling its obligation under the Pilotage Act to be financially self-sustaining.

Reduction of operating costs

The option of reducing operating costs was also considered. While cost control is an ongoing management priority, creating cost reduction scenarios equivalent to the tariff increase would have been very difficult because 80% of the Authority’s costs are fixed by way of long-term contracts negotiated with pilot corporations. The Authority has already taken steps to reduce other costs (for example by reducing the crew size on its pilot boats) and no further reduction is possible without compromising pilotage services.

Sale of assets

The option of selling some of the Authority’s assets was considered. The bulk of the Authority’s assets consists of pilot boats located at its Les Escoumins station. These boats are essential to pilotage services as they are used to transport pilots from shore to ship and they cannot be sold without affecting the Authority’s ability to provide efficient pilotage services. Furthermore, while the sale of assets might bring in a one-time sum of money, it does not deal with the ongoing need to increase revenues to offset increased costs.

Benefits and costs

A cost-benefit analysis was conducted to determine the impact of the tariff increase. It covers a 10-year period starting in the first year of the increase, i.e. 2014 to 2023. According to the analysis, the increase for pilotage services will generate additional net revenues of $1.5 million per year on average (in constant 2013 dollars) over the next 10 years and a total present value of $15 million using a discount rate of 7%. This is based on the assumption of a 0.5% increase in traffic in 2014 and a 0.8% increase in 2015 in the navigable waters under the jurisdiction of the Laurentian Pilotage Authority.

The increase in pilotage charges will ensure the financial self-sustainability of the Laurentian Pilotage Authority as well as the uninterrupted provision of efficient and timely pilotage services, ensuring safety in the navigable waters within the jurisdiction of the Authority.

The increase will mean higher operating costs for the shipping industry, equal to the Authority’s increased revenue of $1.5 million per year (in constant 2013 dollars). This is quite a small amount when compared to all of the industry’s operating costs.

The estimated overall benefits and costs along with possible qualitative impacts of the increase are summarized in the cost-benefit statement below.

Cost-benefit statement

		Base Year: 2013	2014	2015	Final Year: 2023	Total (Present Value):	Annualized Average
A. Quantified impacts (in Canadian dollars, 2013 price level/constant dollars)
Benefits	Laurentian Pilotage Authority	1,895,417	1,771,418	1,893,617	1,102,102	14,972,386	1,497,239
Costs	Shipping industry	(1,895,417)	(1,771,418)	(1,893,617)	(1,102,102)	(14,972,386)	(1,497,239)
Net benefits						—	—
B. Qualitative impacts
Shipping industry		Efficient and timely pilotage services in navigable waters within the jurisdiction of the Laurentian Pilotage Authority.
Laurentian Pilotage Authority		Sustainability of the Pilotage Authority.
Canadians		Safe shipping in the Laurentian pilotage area. Sustainability of the Pilotage Authority will avoid layoffs and the associated consequences for unemployment.
Canadian importers and exporters		Potential for the shipping industry to pass on the cost of the increased tariff to importers and exporters in the Laurentian pilotage area. However, the increased charges represent an insignificant part of the industry’s total costs and the pass-on cost would be negligible.

Laurentian Pilotage Authority and suppliers

The net present value of the benefit for the Laurentian Pilotage Authority and its suppliers is estimated at $15 million over 10 years. This will ensure the fulfillment of the Authority’s mandate, which is to establish, operate, maintain and manage, in the interest of navigation safety, an efficient pilotage service in Canadian waters within the area served by the Authority, and maintain pilotage charges at a fair and reasonable level that reflects the Authority’s need to generate revenue which is sufficient to permit the Authority to operate on a self-sustaining basis. The increase will also allow the Authority to absorb future cost increases from its suppliers.

Shipping industry

A cost increase in present value of $15 million would be imposed on the shipping industry. There is a potential for the industry to pass on this cost to importers and exporters.

While any increase in the cost of services may have a certain impact, the increase is negligible compared to the total cost of operating a ship. It will thus have no significant effect on the competitiveness of the shipping industry, on vessel traffic or on vessel destinations. The increase will make it possible to maintain efficient and timely pilotage services that ensure safety. The quality of service will remain a priority.

The Authority believes that the charges are fair and reasonable. The increases will keep the Authority on a self-sustaining footing and, more particularly, they will deal with inflationary pressures.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this amendment, as there is no change in administrative costs to businesses.

Small business lens

The small business lens does not apply because the tariff increase entails no costs (or only minimal costs) for small business. The pilotage revenues generated by the Authority are proportional to ship size.

Consultation

Consultations were held with affected parties between May and July 2013. Those consulted include the Shipping Federation of Canada (the Federation), the Canadian Shipowners Association and the St. Lawrence Shipoperators. These organizations account for most of the Authority’s clients. The consultations took the form of meetings, as well as correspondence and discussions by telephone and in person. A number of analyses related to the tariff increase were presented, and participants were asked to express their views, which resulted in a number of changes. The most important change was the removal of a special tariff to fund the purchase of portable units and electronic charts used by pilots in carrying out their duties.

Most of those consulted agreed that the increases are fair and reasonable. The Shipping Federation of Canada expressed concerns about the growth of certain expenses and about the amount of the increase in view of the current low level of inflation. However, right from the start of consultations, the Federation stated that only an increase greater than the Consumer Price Index (CPI) would be open to challenge. The 2% increases in 2014 and 2015 reflect the forecast increase in the CPI in Quebec during those years, according to the Royal Bank of Canada (March 2013), the National Bank of Canada (Financial Markets — winter 2013) and the Quebec department of finance (Finances et Économie Québec — “Le point sur la situation économique et financière du Québec” — spring 2013). The CPI projection is based in part on the method of calculation used by the Authority in its own service contracts with the pilot corporations, which include a component that adjusts according to variations in the CPI.

The Authority published the proposed amendments to the Laurentian Pilotage Tariff Regulations in the Canada Gazette, Part I, on October 12, 2013, followed by a 30-day comment period. As stated in subsection 34(2) of the Pilotage Act, any interested person who has reason to believe that any charge in a proposed tariff of pilotage charges is prejudicial to the public interest may file an objection with the Canadian Transportation Agency (CTA) within 30 days after publication in the Canada Gazette.

On November 11, 2013, the Federation filed a three-point notice of objection with the CTA. First, the Federation objected to the proposed new definition of the word “movage,” which changed the rules on warping. The Federation pointed out that the change would require a similar amendment to the Laurentian Pilotage Authority Regulations. Second, the Federation objected to the requested increase in pilotage fees when a pilot is detained on board a vessel for more than one hour. The Federation found this neither reasonable nor in the public interest. Third, the Federation made this same objection in general terms to the 2% increase in 2014 and 2015.

The Federation and the Authority agreed to have their dispute mediated by a representative of the CTA.

The mediation exercise enabled the parties to come to an agreement that is reflected in the regulatory amendments that have been made. Thus the new definition of “movage” has been withdrawn, and the planned fee increase after one hour will apply only to delays at dock or at anchor as a result of marine traffic management by competent authorities. The general 2% increases in 2014 and 2015 are maintained.

Rationale

The Authority forecasts that the costs of providing an efficient pilotage service to its users will continue to increase in the coming years, largely due to contracts already in place with pilot corporations. The Authority must also negotiate new collective agreements with the Public Service Alliance of Canada and the Canadian Merchant Service Guild (at Les Escoumins). These negotiations will have an impact on the Authority’s expenses over the coming years.

As noted above, the status quo, a further reduction in operating costs, and the selling of assets are not feasible options because they would all result in compromising the Authority’s financial self-sustainability and/or its ability to provide safe and efficient pilotage services. An increase in pilotage charges is necessary to ensure that the Authority’s revenues offset its rising costs. The 2% increase in each of the next two years is predicted to provide the Authority with adequate revenue to meet the objectives of maintaining self-sustainability, establishing a financial reserve, and continuing to deliver safe and efficient pilotage services.

Implementation, enforcement and service standards

Section 45 of the Pilotage Act contains a mechanism for the enforcement of the Regulations. The Authority may notify a customs officer on duty in a Canadian port not to grant clearance to a ship when its pilotage charges are outstanding and unpaid. Section 48 of the Pilotage Act provides that anyone who contravenes the Act or its regulations is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000.

Contact

Fulvio Fracassi
Chief Executive Officer
Laurentian Pilotage Authority
555 René-Lévesque Boulevard West, Suite 1501
Montréal, Quebec
H2Z 1B1
Telephone: 514-283-6320, extension 204
Fax: 514-496-2409
Email: fulvio.fracassi@apl.gc.ca

• Footnote a
  S.C. 1998, c. 10, s. 150
• Footnote b
  R.S., c. P-14
• Footnote c
  R.S., c. P-14
• Footnote d
  R.S., c. P-14
• Footnote 1
  SOR/2001-84