Regulations Amending the Laurentian Pilotage Tariff Regulations: SOR/2020-85

Canada Gazette, Part II, Volume 154, Number 9

Registration

SOR/2020-85 April 9, 2020

PILOTAGE ACT

P.C. 2020-242 April 8, 2020

RESOLUTION

Whereas the Laurentian Pilotage Authority, pursuant to subsection 34(1) footnote a of the Pilotage Act footnote b, published a copy of section 1 of the proposed Regulations Amending the Laurentian Pilotage Tariff Regulations, in the annexed form, in the Canada Gazette, Part I, on December 21, 2019;

And whereas the Laurentian Pilotage Authority, pursuant to subsection 34(1)footnote a of that Act, published a copy of sections 2 and 3 and the schedule to the proposed Regulations Amending the Laurentian Pilotage Tariff Regulations, substantially in the annexed form, in the Canada Gazette, Part I, on February 22, 2020;

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

Montréal, February 25, 2020

Fulvio Fracassi

Chief Executive Officer
Laurentian 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 Laurentian Pilotage Tariff Regulations, made by the Laurentian Pilotage Authority.

Regulations Amending the Laurentian Pilotage Tariff Regulations

Amendments

1 The Laurentian Pilotage Tariff Regulations footnote 1 are amended by adding the following after section 2:

2.1 A charge of $39.64 is payable for each pilot assignment for the administration of the Pilotage Act.

2 Section 5 of the Regulations is replaced by the following:

5 (1) A pilotage charge of $261.73 is payable if a pilot is required to embark on or disembark from a ship at a place other than a pilot boarding station but within the compulsory pilotage area.

(2) If a pilot is required to embark on or disembark from a ship outside the compulsory pilotage area, travel and other expenses reasonably incurred by the pilot are payable as a pilotage charge.

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

Coming into Force

4 (1) These Regulations, except section 1, 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) Section 1 of the Regulations comes into force on July 6, 2020.

SCHEDULE

(Section 3)

SCHEDULE 2

(Section 1, subsections 2(1) and (2) and section 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

N/A

46.80

23.03

N/A

2,394.65

N/A

2

N/A

28.20

16.24

N/A

1,885.91

N/A

2

Movage

1

538.70

17.75

N/A

N/A

2,394.65

N/A

1-1

495.69

16.32

N/A

N/A

2,203.48

N/A

2

513.05

16.89

N/A

N/A

2,280.62

N/A

3

Anchorage during a trip or a movage

1

416.56

4.48

N/A

N/A

N/A

N/A

1-1

383.29

4.13

N/A

N/A

N/A

N/A

2

396.73

4.28

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

318.84

3.29

N/A

N/A

N/A

619.92

2

303.64

3.13

N/A

N/A

N/A

590.41

5

A docking or undocking performed at the request of a master, owner or agent of a ship, by a pilot designated by the Corporation .

1

513.05

11.60

N/A

N/A

1,885.91

N/A

2

513.05

11.60

N/A

N/A

1,885.91

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, 124.26 for the second half-hour and 248.52 for each subsequent hour

N/A

N/A

1-1

N/A

N/A

N/A

0.00 for the first half-hour, 114.33 for the second half-hour and 228.66 for each subsequent hour

N/A

N/A

2

N/A

N/A

N/A

0.00 for the first half-hour, 118.32 for the second half-hour and 236.64 for each subsequent hour

N/A

N/A

7

Compass adjustment by pilot

1

538.70

17.75

N/A

N/A

N/A

N/A

1-1

495.69

16.32

N/A

N/A

N/A

N/A

2

513.05

16.89

N/A

N/A

N/A

N/A

8

Cancellation of a request for pilotage services if the pilot reports for pilotage duty

1

668.30

N/A

N/A

0.00 for the first hour, 248.52 for the second hour and 124.26 for each subsequent hour table a1 note 1

N/A

N/A

1-1

614.95

N/A

N/A

0.00 for the first hour, 228.66 for the second hour and 114.33 for each subsequent hour table a1 note 1

N/A

N/A

2

636.46

N/A

N/A

0.00 for the first hour, 236.64 for the second hour and 118.32 for each subsequent hour table a1 note 1

N/A

N/A

9

Carrying a pilot on a ship beyond the district for which the pilot is licensed

1

N/A

N/A

N/A

124.26

N/A

N/A

1-1

N/A

N/A

N/A

114.33

N/A

N/A

2

N/A

N/A

N/A

118.32

N/A

N/A

10

Except in the case of a pilot having to be relieved after an accident, a movage or departure that occurs, at the request of a master, owner or agent of a ship, before that set out in the notice required by section 8 or 9 of the Laurentian Pilotage Authority Regulations

1

2,780.78

N/A

N/A

N/A

N/A

N/A

1-1

2,558.77

N/A

N/A

N/A

N/A

N/A

2

2,648.36

N/A

N/A

N/A

N/A

N/A

Table a1 note(s)

Table a1 note 1

The number of chargeable hours of service is calculated from the later of the time when the pilotage services are requested and the time the pilot reports for pilotage duty until the time of cancellation.

Return to table a1 note 1 referrer

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, and so it is necessary to increase tariffs to ensure that the Authority can remain financially self-sufficient.

Background

The Authority is a Crown corporation listed in Part I of Schedule III to the Financial Administration Act. It was established in February 1972, pursuant to the Pilotage Act (the Act). The Authority’s mandate is to establish, operate, maintain, and administer, in the interest of safety, an efficient pilotage service within the Canadian waters in and around the Province of Quebec.

Section 33 of 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, and therefore the process is initiated many months before tariffs can come into force.

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.”

Following the prepublication period that began on December 21, 2019, and as a result of further discussions with the Shipping Federation of Canada, the Authority decided to adjust its proposed tariff increases for 2020, from what was originally published. As per subsection 34(1) of the Act, this adjustment was published in the Canada Gazette, Part I, on February 22, 2020, for 30 days.

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 July 6, 2020, in order to ensure that the tariffs remain fair and reasonable.

Objective

The increase in tariff rates will allow the Authority to continue to provide efficient marine pilotage services and ensure navigation safety on a self-sustaining financial basis, as required under the Act.

Description

The amendments will

Regulatory development

Consultation

Consultations took place in the spring and summer of 2019 with associations representing clients, i.e. the Shipping Federation of Canada, the Chamber of Marine Commerce and the St. Lawrence Shipoperators. The Authority held various meetings to explain the proposed increases and its medium-term financial needs. Recognizing that they benefited from the rate freeze that was in place in 2016 and 2017, and the modest increases of 2018 and 2019, the clients stated that they were satisfied with the rationale for the proposed amendments.

As required under subsection 34(1) of the Act, these amendments were published in the Canada Gazette, Part I, on December 21, 2019. During the prepublication period, the Shipping Federation of Canada voiced concerns to the Authority regarding the 2.7% tariff increase as well as the new Pilotage Act administration charge. No other comments were received regarding the proposed tariff increase. As a result of the discussions that followed, the Authority and the Shipping Federation of Canada agreed to a revised tariff increase, but did not reach an agreement on the Pilotage Act administration charge.

Instead of the originally published 2.7% increase, the Authority would propose a 2% increase and the Shipping Federation of Canada would not file an objection to this tariff proposal with the Canadian Transportation Agency (CTA). In accordance with subsection 34(1) of the Act, the revised tariff must be published for 30 days before it can come into force. Therefore, the 2% increase was published in the Canada Gazette, Part I, on February 22, 2020, for 30 days.

With respect to the Pilotage Act administration charge, on January 17, 2020, as per subsection 34(2) of the Act, the Shipping Federation of Canada filed an objection, believing it to be neither fair nor reasonable, as well as prejudicial to the public interest.

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 $39.64 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 Pilotage Act administration charge is necessary and will 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, an analysis was undertaken to determine whether the amendments are 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 has chosen to propose tariff increases through regulatory changes because this was deemed the fairest and most reasonable option to provide the revenues necessary to address the increasing costs. Outlined below are the various options that the Authority considered and rejected.

Regulatory options

Increasing pilotage tariff rates by a higher rate than the current proposal rates would result in non-competitive pilotage tariff rates and a risk that traffic might divert to other ports in Canada and the United States. Lower pilotage tariff rate increases would compromise the Authority’s ability to be financially self-sufficient.

Status quo

Keeping pilotage tariff rates unchanged since January 1, 2019, would result in the financial situation of the Authority deteriorating because of continually increasing costs, and would compromise its financial self-sufficiency obligation under the Act.

Reduction of operating costs

While cost control is a constant management priority, developing cost reduction scenarios equal to the tariff rate increase would be very difficult, given that 80% of the Authority’s costs are fixed by way of long-term contracts negotiated with pilot corporations.

The Authority has already taken measures to control its variable costs as much as possible when negotiating new contracts or by controlling costs within its recurring expenses. No further significant reduction is possible without compromising pilotage services.

Sale of assets

The bulk of the Authority’s assets consist 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 payment, it does not resolve the ongoing need to increase revenues in order to offset increased costs.

Regulatory analysis

Benefits and costs

A cost-benefit analysis was conducted to determine the impact of the tariff rate increase. It covers a 10-year period starting in the first year of the increase (2020 to 2029). According to the analysis, the increase in the rates for pilotage services will generate additional revenues of $2.26 million (in constant 2020 dollars) over the next 10 years and a total equivalent cost for the industry. Traffic volumes have steadily increased over the past few years. Although continued growth is expected, the Authority estimates that traffic in the next year will not see a significant increase. As a result, this calculation is based on the assumption of no significant increase in traffic. Higher pilotage tariff rates would ensure the financial self-sustainability of the Authority, as well as the uninterrupted provision of efficient and timely pilotage services.

An increase in pilotage tariff rates will lead to higher operating costs for the shipping industry. It will have no significant effect on the competitiveness of the shipping industry, on vessel traffic or on vessel destinations.

Cost-benefit statement

A. Quantified impacts (in Canadian dollars, 2019 price levels / constant dollars)

Discount rate: 7%

Base Year
2019

2020

2021

Final Year
2029

Total (Present Value)

Average

Costs

Shipping industry

0

1,866,956

2,259,901

2,312,454

15,844,757

2,255,937

Net benefits

  

—

—
B. Qualitative impacts

Shipping industry

Safe, efficient and timely pilotage services in navigable waters within the Authority’s jurisdiction.

Laurentian Pilotage Authority

The Authority’s financial self-sufficiency, activities are maintained as well as sustainability of assets.

Canadians

Safe shipping in the Laurentian pilotage area. Sustainability of the Laurentian Pilotage Authority will prevent layoffs and the associated consequences of unemployment.

Canadian importers and exporters

Potential for the shipping industry to pass on the cost of the increased tariff rate to importers and exporters in the Laurentian pilotage area.

Small business lens

The majority of the Authority’s clientele (i.e. foreign shippers) are not small businesses. The small business lens does not apply, as there are no associated impacts on small businesses.

One-for-one rule

The one-for-one rule would not apply to these amendments, as there is no change in administrative costs imposed on businesses.

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.

Rationale

The Authority anticipates that the costs of providing efficient pilotage services to its clients will continue to increase in the coming years, largely because of contracts already in place with pilot corporations and to ensure the sustainability of its infrastructures without compromising the protection it has given itself against financial risks. The Authority must also negotiate new collective agreements with the Public Service Alliance of Canada and the Canadian Merchant Service Guild. These negotiations will have an impact on the Authority’s expenses in 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 its ability to provide safe and efficient pilotage services. An increase in pilotage tariff rates is necessary to ensure that the Authority’s revenues offset its rising costs.

The tariff amendments also include a provision to address costs associated with the implementation of section 37.1 of the Act. The Authority estimates that the Pilotage Act administration charge of $39.64, to be collected starting July 6, 2020, will allow it to recuperate enough revenue to cover the charges 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 Laurentian Pilotage Tariff Regulations, and on the Authority’s website. Also, the amended tariffs will come into force on the date on which they are registered, with the exception of the Pilotage Act administration charge, which will come into force on July 6, 2020.

Compliance and enforcement

Section 45 of the Act provides for a mechanism for the enforcement of the Regulations. The Authority may notify a customs officer in a Canadian port not to grant clearance to a ship when its pilotage charges are outstanding and unpaid. Section 48 of the Act stipulates that every person who fails to comply with 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
999 De Maisonneuve Boulevard West, Suite 1410
Montréal, Quebec
H3A 3L4
Telephone: 514‑283‑6320, extension 204
Fax: 514‑496‑2409
Email: fulvio.fracassi@apl.gc.ca