Regulations Amending the Pacific Pilotage Tariff Regulations: SOR/2020-58

Canada Gazette, Part II, Volume 154, Number 8

Registration

SOR/2020-58 March 25, 2020

PILOTAGE ACT

P.C. 2020-164 March 24, 2020

RESOLUTION

Whereas the Pacific Pilotage Authority, pursuant to subsection 34(1) footnote a of the Pilotage Act 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 4, 2020;

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

Vancouver, February 19, 2020

Kevin Obermeyer
Chief Executive Officer
Pacific Pilotage Authority

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to subsection 33(1) of the Pilotage Actfootnote b, 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 The long title of the Pacific Pilotage Tariff Regulations footnote 1 is replaced by the following:

Pacific Pilotage Tariff Regulations

2 Section 1 of the Regulations and the heading before it are repealed.

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

(2) 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 $7.0176 multiplied by the pilotage unit.

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

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

(5) For an assignment that begins or ends on December 25, a charge of double the pilotage charge under subsections (1) to (4) is payable.

(6) A surcharge of $57 is payable on each pilotage charge payable under this section for the administration of the Pilotage Act.

4 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 $1,087.33.

5 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 $2,097.95 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 $2,797.63 per pilot is payable in addition to any other charges.

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 for the period that begins at the later of the time for which the pilot was ordered and the time the pilot reports and ends when the ship sails. No delay charge is payable if the delay period is less than 40 minutes.

7 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 $939.30 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 $1,878.59 is payable in addition to any other charges.

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

16 A charge of $1,765.60 is payable in addition to any other charges on each occasion that

9 Section 17 of the Regulations is replaced by the following:

17 On each occasion that a pilotage order is initiated for any place other than a pilot boarding station, a charge of $5,662.76 per pilot is payable in addition to any other charges.

10 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

4.6781

2

9.3563

3

4.6781

11 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

234.82

12 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

939.30

2

234.82

13 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

234.82

2

234.82

3

234.82

14 The portion of items 1 to 7 of Schedule 6 to the Regulations in column 2 is replaced by the following:

Item

Column 2

Transportation Charges ($)

1

179.98

2

173.24

3

1,785.21

4

564.71

5

564.71

6

179.98

7

5,643.64

15 The portion of items 1 to 8 of Schedule 7 to the Regulations in columns 2 and 3 is replaced by the following:

Item

Column 2

Charge ($)

Column 3

Pilot Boat Charge ($)

1

455.02

100

2

1,821.26

100

3

2,362.84

100

4

7,121.27

100

5

4,382.64

100

6

917.06

100

7

636.33

100

8

1,078.48

100

16 The portion of items 1 to 18 of Schedule 8 to the Regulations in column 5 is replaced by the following:

Item

Column 5

Pine Island Charge ($)

1

248

2

281

3

315

4

348

5

381

6

415

7

448

8

482

9

515

10

549

11

582

12

616

13

649

14

682

15

716

16

749

17

783

18

816

Coming into Force

17 (1) These Regulations, except subsection 3(4), come into force on April 1, 2020, but if they are registered after that day, they come into force on the day on which they are registered.

(2) Subsection 3(4) comes into force on August 21, 2020.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The current tariff rates imposed by the Authority are not sufficient to cover rising pilotage expenses. As well, current wording related to delay charges is not clear and could give rise to misinterpretation.

Background

The Authority is a financially autonomous Crown corporation, listed in Schedule III of the Financial Administration Act, whose role is to establish, operate, maintain and administer, in the interest of safety, an efficient and economical pilotage service within all coastal waters of the west coast of Canada, including the Fraser River.

Section 33 of the Pilotage Act (the Act) allows the Authority to make regulations prescribing tariffs that are fair and reasonable to permit the Authority to operate on a self-sustaining financial basis. The regulatory process ensures stakeholder consultation and transparency in tariff setting. Therefore, the process is initiated many months before tariffs can come into force.

The Authority has developed a sophisticated forecasting and modelling tool that is used by the Authority and its stakeholders to determine future tariffs, and allowing stakeholders to apply business scenarios to the Authority. This process is extensive and allows the Authority to work collaboratively with stakeholders to determine minimum tariff needs in order to continue to operate on a financially self-sufficient basis.

In 2019, following a review of the Act, amendments were tabled in Bill C-97 (Budget Implementation Act, 2019, No. 1) and received royal assent in June 2019. The coming into force of the amendments will occur over four orders in council, on dates set by the Governor in Council. In August 2019, the first of the amendments came into force, including section 37.1: “For the purpose of defraying the costs of the administration of this Act, including the development of regulations, and the enforcement of this Act, an Authority shall, on request, pay to the Minister an amount specified by the Minister in a time and manner specified by the Minister.”

The tariff amendments include provisions to address costs associated with the implementation of section 37.1 of the Act. On January 27, 2020, the Authority received a letter from the Minister of Transport, indicating the amount they will be required to pay Transport Canada in 2020–2021 for the costs of administering the Act. This amount was lower than previously anticipated and, as a result, the Authority has changed the coming-into-force date for the Pilotage Act administration charge to ensure that the tariffs remain fair and reasonable. In light of the process required to adjust tariff rates, it is necessary to implement the charge effective August 21, 2020, in order to have sufficient revenue to pay the costs by the first quarter of 2021, as anticipated.

Objective

The Authority’s three objectives are to

Description

The Authority is implementing the following changes, effective April 1, 2020:

The following change will come into effect on August 21, 2020:

Regulatory development

Consultation

The key stakeholders impacted by these amendments comprise four large organizations and represent multiple customers:

In 2019, the Authority undertook consultations with its stakeholders on August 12, and again on August 19, and emerged with a proposed tariff for fiscal year 2020, based on a collaborative effort through the Authority’s modelling tool, as well as estimates from Transport Canada regarding the costs anticipated under section 37.1 of the Act. Following these meetings, the Authority sent out summaries of the suggested outcomes asking for feedback from the industry associations once they had had a chance to discuss with their respective memberships. Feedback was received by all affected associations.

As required under subsection 34(1) of the Act, these amendments were published in the Canada Gazette, Part I, on January 4, 2020, followed by a 30-day comment period to provide interested persons with the opportunity to make comments or to file a notice of objection with the Canadian Transportation Agency (CTA). On January 24, 2020, as per subsection 34(2) of the Act, the Shipping Federation of Canada filed an objection to the Authority’s proposed tariff amendments; specifically, they objected to the Pilotage Act administration charge, believing it to be neither fair nor reasonable, as well as prejudicial to the public interest. On January 27, 2020, the Authority received a letter from the Minister of Transport indicating the amount they will have to pay, under section 37.1, for the 2020–2021 period. The amount is lower than previously anticipated. As a result, the Authority has chosen to delay the coming into force of the charge to August 21, 2020.

While the Authority acknowledges the concerns of the industry, section 37.1 of the Act obliges the Authority to pay charges to the Minister of Transport to defray the costs of administering the Act. In light of the time it takes to adjust tariff rates through the regulatory process, the Authority has no choice but to move forward with the $57 administration charge per assignment in order to secure the revenue necessary to be able to pay the charges by the first quarter of 2021, as anticipated. Therefore, the Authority maintains its position that the administration charge is necessary and that it needs to proceed with advancing these amendments for Governor in Council approval. Once the CTA will have made a recommendation to the Authority, the Authority will govern itself accordingly.

Modern treaty obligations and Indigenous engagement and consultation

In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, analysis was undertaken to determine whether the amendments were likely to give rise to modern treaty obligations. This assessment examined the geographic scope and subject matter of the amendments in relation to modern treaties in effect and, after examination, no implications or impacts on modern treaties were identified.

Instrument choice

The Authority considered a number of regulatory and non-regulatory options before proposing the present tariff amendments. A priority for the Authority is to remain financially self-sufficient through a combination of cost management and pilotage charges that are fair and reasonable. However, the Authority does not have a means of fixing pilotage charges through non-regulatory instruments, nor does it receive appropriations from Parliament that would allow it to cover its expenses. Therefore, the amendments to the Regulations were deemed to be the most appropriate instrument choice to recover the revenues necessary to deliver pilotage services on a financially self-sufficient basis.

Regulatory analysis

Benefits and costs

Cost-benefit statement
A. Quantified impacts (in Canadian dollars, 2019 price level / constant dollars)

Discount rate: 7%

Base Year 2020

2021

2022

Final Year 2029

Total (PV)

Average

Costs

Shipping industry

$2,506,272

$3,091,841

$3,127,575

$3,346,612

$22,318,511

$3,215,197

Net benefits

—

—
B. Qualitative impacts

Increase in the pilot boat charge

Improved reliability: The new vessel will reduce the likelihood of launch delays due to equipment issues.

The discount rate used is 7% and the time period used is 10 years.

As can be seen below, the Authority has broken out the effects of each of the cost changes so that the magnitude of each can be seen.

Detailed breakdown of the adjustments

Year

Total Revenue Base ($)

Effect of
Tariff ($)

Pilotage Act Administration Charge ($)

Launch (Pilot Boat) ($)

Fuel
Decrease ($)

Effect of all Adjustments ($)

2020

98,730,804

1,864,305

441,222

363,385

(162,640)

2,506,272

2021

98,515,444

2,141,083

750,016

363,382

(162,640)

3,091,841

2022

98,493,680

2,145,525

781,308

363,382

(162,640)

3,127,575

2023

109,815,674

2,393,868

718,544

396,840

(162,640)

3,346,612

2024

109,810,226

2,393,868

718,544

396,840

(162,640)

3,346,612

2025

109,807,505

2,393,868

718,544

396,840

(162,640)

3,346,612

2026

109,806,145

2,393,868

718,544

396,840

(162,640)

3,346,612

2027

109,805,465

2,393,868

718,544

396,840

(162,640)

3,346,612

2028

109,805,125

2,393,868

718,544

396,840

(162,640)

3,346,612

2029

109,804,955

2,393,868

718,544

396,840

(162,640)

3,346,612

The data source used for the purposes of calculating the effects of this set of amendments is the Authority’s forecasting tool. The Authority’s tool allows the user to see the impacts of each change to the Authority’s revenues, expenses and cash flows (looking forward 15 years) from changes to assumptions. Assumptions that can be manipulated include the following:

A cost-benefit analysis is done in real time with stakeholders, using the Authority’s model, in order to work out what tariff changes are acceptable by keeping cash within reasonable limits (maintaining the self-sufficiency mandate).

Small business lens

The small business lens does not apply, as there are no associated impacts on small businesses. The majority of commercial vessels are owned by large companies ($100 million plus). Smaller pleasure vessels are generally owned by high–net-worth individuals and typically apply for a waiver from compulsory pilotage, which would exempt them from pilotage charges.

One-for-one rule

These amendments seeks to increase tariffs and adjust charges for pilotage services. All administrative systems are already in place to execute these changes; thus, no incremental administrative burden would be borne on industry, and the one-for-one rule would not apply.

Regulatory cooperation and alignment

The amendments are not part of a formal regulatory cooperation initiative.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified for these amendments. The amendments put forward tariffs that are considered to be fair and reasonable for the purpose of delivering safe and efficient pilotage services.

Rationale

The amendments to the Regulations will ensure the Authority is able to remain financially self-sufficient. The Authority estimates that the charge of $57 will allow it to recuperate enough revenue to cover the charges anticipated in accordance with section 37.1 of the Act, and expected to be paid to the Minister of Transport by the first quarter of 2021.

Implementation and compliance and enforcement

Implementation

The amended tariffs will be published in the Pacific Pilotage Tariff Regulations, and on the Authority’s website. Also, the amended tariffs will come into force on April 1, 2020, with the exception of the Pilotage Act administration charge, which will come into force on August 21, 2020.

Compliance and enforcement

The Pilotage Act provides an enforcement mechanism for all regulations made by pilotage authorities. Pilotage authorities can inform a customs officer at any port in Canada to withhold clearance from any ship for which pilotage charges are outstanding and unpaid. Any person who fails to comply with the Act or the Regulations is guilty of an offence, and liable on summary conviction to a fine not exceeding $5,000. These amendments are not expected to produce any changes to these compliance and enforcement mechanisms.

Contact

Stefan Woloszyn
Chief Financial Officer
Pacific Pilotage Authority
1000–1130 West Pender Street
Vancouver, British Columbia
V6E 4A4
Telephone: 604‑666‑6988
Fax: 604‑666‑1647
Email: swoloszyn@ppa.gc.ca
Website: www.ppa.gc.ca