Vol. 148, No. 12 — June 4, 2014

Registration

SOR/2014-115 May 16, 2014

PILOTAGE ACT

Regulations Amending the Pacific Pilotage Tariff Regulations

P.C. 2014-570 May 15, 2014

RESOLUTION

Whereas the Pacific 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 Pacific Pilotage Tariff Regulations, substantially in the annexed form, in the Canada Gazette, Part I, on January 25, 2014;

Therefore, the Pacific Pilotage Authority, pursuant to subsection 33(1) of the Pilotage Act (see footnote c), makes the annexed Regulations Amending the Pacific Pilotage Tariff Regulations.

Vancouver, April 1, 2014

KEVIN OBERMEYER
President and Chief Executive Officer
Pacific Pilotage Authority

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

REGULATIONS AMENDING THE PACIFIC PILOTAGE TARIFF REGULATIONS

AMENDMENTS

1. (1) The definition “hampered ship” in section 2 of the Pacific Pilotage Tariff Regulations (see footnote 1) is repealed.

(2) Section 2 of the Regulations is amended by adding the following in alphabetical order:

“restricted ship” means a ship that is unable to operate at full manœuvring revolutions per minute or a ship that, because of maintenance on its engines while it was in port, requires more than one hour to work up to full manœuvring revolutions per minute; (navire à capacité limitée)

2. (1) Paragraphs 6(2)(a) and (b) of the Regulations are replaced by the following:

(2) Paragraphs 6(2)(a) and (b) of the Regulations are replaced by the following:

(3) Paragraphs 6(2)(a) and (b) of the Regulations are replaced by the following:

(4) Subsection 6(3) of the Regulations is replaced by the following:

(3) Subject to subsection (4), for an assignment to a tethered tanker ship with a deadweight tonnage (summer) that exceeds 39 999 metric tons, in any waters, the pilotage charge payable is $5.9233 multiplied by the pilotage unit.

(5) Subsection 6(3) of the Regulations is replaced by the following:

(3) Subject to subsection (4), for an assignment to a tethered tanker ship with a deadweight tonnage (summer) that exceeds 39 999 metric tons, in any waters, the pilotage charge payable is $6.0714 multiplied by the pilotage unit.

(6) Subsection 6(3) of the Regulations is replaced by the following:

(3) Subject to subsection (4), for an assignment to a tethered tanker ship with a deadweight tonnage (summer) that exceeds 39 999 metric tons, in any waters, the pilotage charge payable is $6.2384 multiplied by the pilotage unit.

(7) Paragraphs 6(4)(a) and (b) of the Regulations are replaced by the following:

(8) Paragraphs 6(4)(a) and (b) of the Regulations are replaced by the following:

(9) Paragraphs 6(4)(a) and (b) of the Regulations are replaced by the following:

3. (1) Section 8 of the Regulations is replaced by the following:

8. Despite sections 6 and 7, the total charges payable under those sections in respect of a ship shall not be less than $917.79.

(2) Section 8 of the Regulations is replaced by the following:

8. Despite sections 6 and 7, the total charges payable under those sections in respect of a ship shall not be less than $940.73.

(3) Section 8 of the Regulations is replaced by the following:

8. Despite sections 6 and 7, the total charges payable under those sections in respect of a ship shall not be less than $966.60.

4. (1) Subsections 10(2) and (3) of the Regulations are replaced by the following:

(2) If a pilot embarks on or disembarks from a ship at Anacortes, Bellingham, Cherry Point or Ferndale, in the State of Washington, a charge of $1,771 per pilot is payable in addition to any other charges.

(3) If a pilot embarks on or disembarks from a ship at an out-of-Region location that is not listed in subsection (2), a charge of $2,361 per pilot is payable in addition to any other charges.

(2) Subsections 10(2) and (3) of the Regulations are replaced by the following:

(2) If a pilot embarks on or disembarks from a ship at Anacortes, Bellingham, Cherry Point or Ferndale, in the State of Washington, a charge of $1,815 per pilot is payable in addition to any other charges.

(3) If a pilot embarks on or disembarks from a ship at an out-of-Region location that is not listed in subsection (2), a charge of $2,420 per pilot is payable in addition to any other charges.

(3) Subsections 10(2) and (3) of the Regulations are replaced by the following:

(2) If a pilot embarks on or disembarks from a ship at Anacortes, Bellingham, Cherry Point or Ferndale, in the State of Washington, a charge of $1,865 per pilot is payable in addition to any other charges.

(3) If a pilot embarks on or disembarks from a ship at an out-of-Region location that is not listed in subsection (2), a charge of $2,487 per pilot is payable in addition to any other charges.

5. Section 13.2 of the Regulations is replaced by the following:

13.2 (1) On each occasion that a pilot boat is used to embark or disembark a pilot at a location set out in Schedule 8, the charge set out in the corresponding column for that location is payable. Subject to subsection (2), the reference price that is to be used to establish the price range set out in column 1 is the daily average wholesale (rack) price per litre for diesel in Vancouver, British Columbia, for the 20th day of the preceding month, as posted on the following Department of Natural Resources (Natural Resources Canada) website: http://www2.nrcan.gc.ca/eneene/sources/pripri/wholesale _bycity_e.cfm?PriceYear=2001&ProductID=13&LocationID=2.

(2) If a daily average wholesale (rack) price per litre for diesel in Vancouver, British Columbia, is not posted on the website for the 20th day of the preceding month, the reference price that is to be used is the daily average (rack) price per litre for diesel in Vancouver, British Columbia, for the last day before the 20th day of the preceding month that is posted on that website.

6. Section 14 of the Regulations is replaced by the following:

14. If a pilot reports to a ship for an assignment and, for reasons unrelated to any act or omission of the owner, master or agent of the ship, does not commence the assignment at the time for which the pilot was ordered, a charge of double the time charge set out in item 1, column 2, of Schedule 3 is payable for each hour or part of an hour during the period that begins 40 minutes after the time for which the pilot was ordered and ends when the ship sails.

7. (1) Section 15 of the Regulations is replaced by the following:

15. (1) On each occasion that a pilotage order is initiated during the period that begins at 06:00 and ends at 17:59 with less than 10 hours’ notice for local assignments and less than 12 hours’ notice for all other assignments, a charge of $792.80 is payable in addition to any other charges.

(2) On each occasion that a pilotage order is initiated during the period that begins at 18:00 and ends at 05:59 with less than 10 hours’ notice for local assignments and less than 12 hours’ notice for all other assignments, a charge of $1,585.60 is payable in addition to any other charges.

(2) Section 15 of the Regulations is replaced by the following:

15. (1) On each occasion that a pilotage order is initiated during the period that begins at 06:00 and ends at 17:59 with less than 10 hours’ notice for local assignments and less than 12 hours’ notice for all other assignments, a charge of $812.64 is payable in addition to any other charges.

(2) On each occasion that a pilotage order is initiated during the period that begins at 18:00 and ends at 05:59 with less than 10 hours’ notice for local assignments and less than 12 hours’ notice for all other assignments, a charge of $1,625.28 is payable in addition to any other charges.

(3) Section 15 of the Regulations is replaced by the following:

15. (1) On each occasion that a pilotage order is initiated during the period that begins at 06:00 and ends at 17:59 with less than 10 hours’ notice for local assignments and less than 12 hours’ notice for all other assignments, a charge of $835.00 is payable in addition to any other charges.

(2) On each occasion that a pilotage order is initiated during the period that begins at 18:00 and ends at 05:59 with less than 10 hours’ notice for local assignments and less than 12 hours’ notice for all other assignments, a charge of $1,670.00 is payable in addition to any other charges.

8. (1) Section 16 of the Regulations and the heading before it are replaced by the following:

RESTRICTED SHIP CHARGES

16. A charge of $1,490.29 is payable in addition to any other charges on each occasion that

(2) The portion of section 16 of the Regulations before paragraph (a) is replaced by the following:

16. A charge of $1,527.55 is payable in addition to any other charges on each occasion that

(3) The portion of section 16 of the Regulations before paragraph (a) is replaced by the following:

16. A charge of $1,569.56 payable in addition to any other charges on each occasion that

9. (1) The portion of items 1 to 3 of Schedule 2 to the Regulations in column 3 is replaced by the following:

Item Column 3

Amount ($)
1. 3.9487
2. 7.8974
3. 3.9487

(2) The portion of items 1 to 3 of Schedule 2 to the Regulations in column 3 is replaced by the following:

Item Column 3

Amount ($)
1. 4.0474
2. 8.0948
3. 4.0474

(3) The portion of items 1 to 3 of Schedule 2 to the Regulations in column 3 is replaced by the following:

Item Column 3

Amount ($)
1. 4.1587
2. 8.3174
3. 4.1587

10. (1) The portion of item 1 of Schedule 3 to the Regulations in column 2 is replaced by the following:

Item Column 2

Time Charge ($)
1. 198.20

(2) The portion of item 1 of Schedule 3 to the Regulations in column 2 is replaced by the following:

Item Column 2

Time Charge ($)
1. 203.16

(3) The portion of item 1 of Schedule 3 to the Regulations in column 2 is replaced by the following:

Item Column 2

Time Charge ($)
1. 208.75

11. (1) The portion of items 1 and 2 of Schedule 4 to the Regulations in column 2 is replaced by the following:

Item Column 2

Cancellation Charge ($)
1. 792.80
2. 198.20

(2) The portion of items 1 and 2 of Schedule 4 to the Regulations in column 2 is replaced by the following:

Item Column 2

Cancellation Charge ($)
1. 812.64
2. 203.16

(3) The portion of items 1 and 2 of Schedule 4 to the Regulations in column 2 is replaced by the following:

Item Column 2

Cancellation Charge ($)
1. 835.00
2. 208.75

12. (1) The portion of items 1 to 3 of Schedule 5 to the Regulations in column 2 is replaced by the following:

Item Column 2

Charge ($) (per hour or part of an hour)
1. 198.20
2 198.20
3. 198.20

(2) The portion of items 1 to 3 of Schedule 5 to the Regulations in column 2 is replaced by the following:

Item Column 2

Charge ($) (per hour or part of an hour)
1. 203.16
2. 203.16
3. 203.16

(3) The portion of items 1 to 3 of Schedule 5 to the Regulations in column 2 is replaced by the following:

Item Column 2

Charge ($) (per hour or part of an hour)
1. 208.75
2. 208.75
3. 208.75

13. Schedule 7 to the Regulations is replaced by the Schedule 7 set out in the schedule to these Regulations.

14. (1) The portion of items 1 and 2 of Schedule 7 to the Regulations in column 2 is replaced by the following:

Item Column 2

Charge ($)
1. 378
2. 1,512

(2) The portion of items 1 and 2 of Schedule 7 to the Regulations in column 2 is replaced by the following:

Item Column 2

Charge ($)
1. 389
2. 1,557

15. (1) The portion of items 4 to 8 of Schedule 7 to the Regulations in column 2 is replaced by the following:

Item Column 2

Charge ($)
4. 5,911
5. 3,892
6. 761
7. 528
8. 895

(2) The portion of items 4 to 8 of Schedule 7 to the Regulations in column 2 is replaced by the following:

Item Column 2

Charge ($)
4. 6,088
5. 4,009
6. 784
7. 544
8. 922

COMING INTO FORCE

16. (1) Subject to subsections (2) and (3), these Regulations come into force on the day on which they are registered.

(2) Subsections 2(2), (5) and (8), 3(2), 4(2), 7(2), 8(2), 9(2), 10(2), 11(2), 12(2), 14(1) and 15(1) come into force on January 1, 2015.

(3) Subsections 2(3), (6) and (9), 3(3), 4(3), 7(3), 8(3), 9(3), 10(3), 11(3), 12(3), 14(2) and 15(2) come into force on January 1, 2016.

SCHEDULE
(Section 13)

SCHEDULE 7
(Section 12)

PILOT BOAT AND HELICOPTER CHARGES

Item Column 1

Location		 Column 2

Charge ($)
1. Brotchie Ledge 368
2. Sand Heads 1,472
3. Triple Islands 2,020
4. Cape Beale 5,753
5. Pine Island 3,788
6. The entrance to Nanaimo Harbour 741
7. Prince Rupert Anchorages 8 and 9 514
8. Prince Rupert Anchorages 10 to 31 871

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: Due to increased costs in 2014, 2015 and 2016 resulting from long-term contracts, collective agreements and general inflationary pressures, the Pacific Pilotage Authority (the Authority) needs to amend the Pacific Pilotage Tariff Regulations (the Regulations) to ensure the revenue it receives from pilotage tariffs is sufficient to cover the costs of providing pilotage services to its clients.

Description: The following are amendments to the Regulations:

  • Increase by 2.25% the general tariff for pilotage units and hours on the date of registration; by 2.5% on January 1, 2015; and by 2.75% on January 1, 2016;
  • Increase by 2.5% the general tariff for pilot boat and helicopter charges on the date of registration; by 2.75% on January 1, 2015; and by 3.0% on January 1, 2016;
  • Change the fuel adjustment date to the 20th of the preceding month;
  • Modify the wording of delay charge in section 14 to account for current practice;
  • Replace the definition of “hampered ship” with a definition of “restricted ship” and replace section 16 in order to account for current practice; and
  • Modify Schedule 7 to include Prince Rupert Anchorages 8, 9 and 10 to 31.

Cost-benefit statement: The cost-benefit analysis shows that the net present value of the cost to the shipping industry would be $26.8 million over 10 years. This is equivalent to the net present value of the revenue that the Authority would receive.

The main benefit of the amendments is that the Authority will be enabled to continue to provide sustainable service to port users as a result of the increased revenues these fees will bring. Without the fee increases, the Authority would begin to operate in deficit and would therefore need to reduce service levels. These services are beneficial in that they provide stakeholders with a safe, efficient and timely pilotage service that ensures protection of the public and its health, and addresses environmental and social concerns while taking into account weather conditions, currents, traffic conditions, protection of recreational boating and fishing, and tourism interests. As it is assumed that the tariff increases will not cause traffic to divert to other ports, the value of pilotage services is worth, at a minimum, the increased rates.

“One-for-One” Rule and small business lens: The “One-for-One” Rule does not apply to this amendment, as there is no change in administrative costs to business. The small business lens does not apply to this proposal.

Domestic and international coordination and cooperation: These amendments are not inconsistent, nor do they interfere with the actions planned by other government departments/agencies or another level of government.

Background

The Authority is responsible for maintaining and administering, in the interest of safety, an efficient pilotage service within all Canadian waters in and around the province of British Columbia. This area covers all waters between Washington State in the south to Alaska in the north, including Vancouver Island and the Fraser River.

Issues

Due to increased costs in 2014, 2015 and 2016 resulting from long-term contracts, collective agreements and general inflationary pressures, the Authority is seeking to match anticipated cost pressures, thus preventing bank borrowing to fund these costs, which would result in interest charges.

Objectives

The objective of the amendments to the Regulations is to allow the Authority, a Crown corporation listed in Schedule III to the Financial Administration Act, to operate on a self-sustaining financial basis as required by section 33 of the Pilotage Act (the Act). The amendments are intended to ensure the Authority maintains a positive cash flow for the years 2014, 2015 and 2016. The amendments will allow the Authority to cover the costs of its pilotage services to clients while continuing to provide safe and efficient pilotage services in accordance with the Pilotage Act.

Description

The Authority is increasing its general tariff by 2.25% on the date of registration; by 2.5% on January 1, 2015; and by 2.75% on January 1, 2016, for the following pilotage charges:

These increases will fund expense increases that are currently committed to under labour and service agreements for the years 2014, 2015 and 2016. These agreements cover contract pilots and employee pilots.

The Authority is increasing its general tariff by 2.5% on the date of registration; by 2.75% on January 1, 2015; and by 3.0% on January 1, 2016, for the following pilotage charges:

These increases will match the labour cost increases negotiated for 2014, 2015 and 2016 that cover pilot launch, dispatch and billing staff employees.

The Authority is making four minor housekeeping amendments to the Regulations

Regulatory and non-regulatory options considered

The retention of the existing tariff rates was considered as a possible option. However, the Authority rejected the status quo since the increase of tariff rates is necessary to reflect the actual costs for the various pilotage services provided to the industry. These amendments will ensure that the Authority maintains its financial self-sufficiency.

Further reductions in operating costs are not deemed to be an alternative since such reductions could reduce the quality of services provided. Approximately 78% of the Authority’s annual revenues are used to pay for pilot contracts, travel and dispatching expenses. Pilot boat operations, including employee salaries, repairs, fuel and contractor costs, represent 12%. The remaining margin covers pilot training and administrative overhead expenses. The Authority has maintained its administrative expenses at the lowest possible level, in the range of 8% of annual revenues.

Benefits and costs

  Base Year: 2014 2015 2016 Final Year: 2023 Total (PV) Annualized Average
  A. Quantified impacts (in Can$, 2013 price level / constant dollars)
Benefits By stakeholder 987,000 2,811,000 4,495,000 4,495,000 26,821,624 3,818,796
Costs By stakeholder (987,000) (2,811,000) (4,495,000) (4,495,000) (26,821,624) (3,818,796)
Net benefits   - -
  B. Quantified impacts in non-$ (e.g. from a risk assessment)
Positive impacts By stakeholder - - - - - -
Negative impacts By stakeholder - - - - - -
  C. Qualitative impacts
  Short list of qualitative impacts (positive and negative) by stakeholder
  Shipping industry — Efficient and timely pilotage services in navigable waters within the jurisdiction of the Pacific Pilotage Authority.
  Pacific Pilotage Authority — Sustainability of the Pacific Pilotage Authority.
  Canadians — Safe shipping on the west coast of Canada. Sustainability of the Authority will avoid layoffs and the associated consequences for unemployment.
  Canadian importers and exporters — There is potential for the shipping industry to pass on the cost of the increased tariff to importers and exporters in the Pacific pilotage area. However, the increased costs represent an insignificant part of the industry’s total costs and the pass-through cost would be negligible.

The Authority benefited from sustained traffic levels in 2011 and 2012 mainly due to continuing Asian demand for commodities. The 2013 traffic is forecast to be close to the previous year’s traffic levels and will result in a small deficit for the year of 2013. This has allowed the Authority to delay implementation of a 2014 tariff adjustment to the date of registration. This offers three months of cost relief to customers, as the adjustment would only be in effect for nine months of the year. Additionally, the Authority is adjusting its tariff for 2014, 2015 and 2016 by rates that are substantially lower than the cost pressures of a 4% contract increase for its entrepreneur pilots, which was negotiated with the assistance of an arbitrator.

The cost assumptions shown in the table below are based on the Authority’s corporate plan traffic level projections for the years 2014, 2015 and 2016.

Incremental impact on annual gross revenues by date

  2014 2015 2016 Total Increase in Revenue 2014–2016
April to December (Including 2014 increase) (Including 2014 and 2015 increases)  
Pilotage assignments 2.25% $888,000 2.5% $2,530,000 2.75% $4,047,000 $7,465,000
Time charges for bridge watches and minimum charges 2.25% Included above 2.5% Included above 2.75% Included above  
Cancellation charges, out-of-region charges, delay charges, short order charges, restricted ship and remote port charges to ensure financial self-sufficiency in each individual area 2.25% Included above 2.5% Included above 2.75% Included above  
Pilot launch operating charges 2.5% $99,000 2.75% $281,000 3.0% $448,000 $828,000
Total impact on annual gross revenues in the year noted $987,000 $2,811,000 $4,495,000 $8,293,000
Average cost increase per trip based on 2014 corporate plan traffic budget $107 $229 $366 $702
Total trips per annum 12 280 12 280 12 280  

The Authority is forecasting an increase in revenues for 2014, 2015 and 2016 of $987,000, $2,811,000 and $4,495,000, respectively. The total cost to industry of the revenue increases will be $8,293,000 over three years.

On an average invoice total of $5,367 per vessel, the 2014 increases will add $107 per trip from the date of registration until December 31, 2014, an average of $229 per trip for 2015 and an average of $366 per trip for 2016.

“One-for-One” Rule

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

Small business lens

The small business lens does not apply to this amendment.

Consultation

The Authority has committed to regular consultation with the Chamber of Shipping (CS) and the Shipping Federation of Canada (the Federation), which represent the shipping community on the West Coast of British Columbia, along with other shipping community members, including the North West and Canada Cruise Association, agents, terminal operators and shipowners. This consultation covers all aspects of the Authority’s operations, including financial, operational and regulatory matters.

The Authority consulted the CS on these tariff increases on June 12, July 16 and August 13, 2013. The Federation was consulted via email on June 12, 2013, and in person on August 19, 2013.

The Authority published the proposed amendments to the Pacific Pilotage Tariff Regulations in the Canada Gazette, Part I, on January 25, 2014, 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 February 24, 2014, the Federation filed a notice of objection with the CTA. The Federation objected to the following charges arising from the prepublished Regulations:

The CTA proposed mediation between the Federation and the Authority to settle this issue. The mediation exercise enabled the parties to come to an agreement that is reflected in the regulatory amendments that have been made. More specifically, the definition of “hampered ship” has been replaced by “restricted ship” and means a ship that is unable to operate at full manœuvring revolutions per minute (RPM) or a ship that requires more than one hour to work up to full manœuvring RPM because of maintenance on its engines while in port. The term “hampered ship” has negative connotations for a vessel under charter. It could be deemed to be off hire if it is considered hampered, which is the primary reason why both parties agreed to the changes. Consequently, a housekeeping change was made to replace the title “Hampered Ship Charges” with “Restricted Ship Charges.” Finally, “delay charges” will be applied 40 minutes after the time for which the pilot was ordered instead of 30 minutes. On March 26, 2014, the Federation withdrew their notice of objection.

Rationale

The Authority is forecasting increased costs for the coming years mainly due to a long-term service agreement with contract pilots and collective agreements covering employee pilots and launch and office employees. The benefit of these long-term contracts is the stability and certainty provided to industry.

The status quo, a further reduction in operating costs and the selling of assets are not feasible options, as they would result in reduced service levels to industry. Additionally, they would compromise the Authority’s financial self-sufficiency and its ability to provide safe and efficient pilotage services.

These increases over the next three years will be used to fund expense increases that are currently committed to under labour and service agreements for the years 2014, 2015 and 2016.

Implementation, enforcement and service standards

Section 45 of the Act provides an enforcement mechanism for the Pacific Pilotage Tariff Regulations in that a pilotage authority can inform a customs officer at any port in Canada to withhold clearance from any ship for which pilotage charges are outstanding and unpaid. Section 48 of the Act stipulates that any person who fails to comply with Part I of the Act (other than section 15.3) and some of its regulations is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000. These existing mechanisms are expected to be sufficient for the implementation and enforcement of the amendments.

Contact

Kevin Obermeyer
President and Chief Executive Officer
Pacific Pilotage Authority
1130 West Pender Street, Suite 1000
Vancouver, British Columbia
V6E 4A4
Telephone: 604-666-6771
Fax: 604-666-1647
Email: oberkev@ppa.gc.ca