Vol. 151, No. 52 — December 30, 2017

Regulations Amending the Laurentian Pilotage Tariff Regulations

Statutory authority

Pilotage Act

Sponsoring agency

Laurentian Pilotage Authority

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: The Laurentian Pilotage Authority (the Authority) provides pilotage services in and around the Province of Quebec. As a result of rising costs since 2015 related to long-term pilotage contracts, collective agreements and general inflationary pressures, current pilotage tariffs will no longer be sufficient to cover the costs of providing its clients with efficient pilotage services.

Description: The proposed amendments to the Laurentian Pilotage Tariff Regulations would

  • increase pilotage charges by 2.50% effective April 1, 2018;
  • increase pilotage charges by an additional 2.25% effective January 1, 2019;
  • clarify the definition and application of the terms “movage,” “pilot boarding station,” and “composite unit” resulting in minor adjustments to the associated tariffs and geographical limits to harbours;
  • make changes for passenger ships making calls at Saguenay (Port-Alfred); and
  • make minor adjustments to ensure consistency between the pilotage tariffs and the fees paid to the Corporation des pilotes du Bas Saint-Laurent.

Cost-benefit statement: The proposed amendments would result in higher costs for the shipping industry amounting to $12.8 million over a 10-year period and a corresponding increase in revenue for the Authority. This transfer would enable the Authority to continue to establish, operate, maintain and manage an efficient, financially self-sufficient marine pilotage service for navigational safety. Moreover, based on consultations with stakeholders, the Authority does not anticipate that the proposed tariff rate increases would cause traffic to be diverted to other ports.

“One-for-one” Rule and small business lens: The “One-for-One” Rule and small business lens would not apply, as there would be no change in administrative costs incurred by business (e.g. record keeping or reporting), while fees for service fall outside the scope of the small business lens.

Domestic and international coordination and cooperation: No domestic or international coordination or cooperation is required to implement this tariff rate adjustment request.

Background

The 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 Saint-Lambert Lock, except the waters of Chaleur Bay, south of Cap-d’Espoir in latitude 48°25′08″ N and longitude 64°19′6″ W, in particular on the St. Lawrence and Saguenay rivers. Pursuant to subsection 33(3) of the Act, the Authority must set fair and reasonable tariff rates allowing it to operate on a self-sustaining financial basis.

Issues

The tariffs set out in the Regulations were last amended in 2015. Since then, long-term pilotage contracts, collective agreements and general inflationary pressures have resulted in increased costs for the Authority. Notwithstanding cost control efforts by the Authority, financial losses are anticipated in 2017 and thereafter, losses that would undermine the ability of the Authority to continue to deliver on its mandate and provide efficient pilotage services to its clients.

Objectives

The increase in tariff rates would allow the Authority to continue to operate on a self-sustaining financial basis by imposing fair and reasonable tariffs that would allow it to provide efficient pilotage services and ensure navigation safety.

Description

The proposed amendments seek to increase tariffs by 2.50% effective April 1, 2018, and an additional 2.25% effective January 1, 2019. The Authority also proposes to clarify the definition and application of the terms “movage,” “pilot boarding station,” and “composite unit” resulting in minor adjustments to the associated tariffs and the geographical limits to harbours. In addition, changes are being proposed for passenger ships making calls at Saguenay (Port-Alfred), as well as minor adjustments to ensure consistency between the pilotage tariffs and the fees paid to the Corporation des pilotes du Bas Saint-Laurent.

Regulatory and non-regulatory options considered

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

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

The status quo option was considered but rejected. Keeping pilotage tariff rates unchanged since January 1, 2015, 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 Pilotage Act.

Reduction of operating costs

The option of a further reduction in operating costs was also considered. 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 established 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 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 payment, it does not resolve the ongoing need to increase revenues in order to offset increased costs.

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 (2018 to 2027). According to the analysis, the increase in the rates for pilotage services would generate additional revenues of $1.83 million (in constant 2018 dollars) over the next 10 years and a total equivalent cost for the industry. This calculation is based on the assumption of a 3.7% increase in traffic in 2018 and a 2.52% increase in traffic in 2019 in the navigable waters within the Authority’s jurisdiction. 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, ensuring safety in the navigable waters within the Authority’s jurisdiction.

An increase in pilotage tariff rates would lead to higher operating costs for the shipping industry. However, since it is spread over two years, the new tariff rates would mean greater stability and predictability for clients, making it easier for them to include the increase in their cost structures. Therefore, it will have no significant effect on the competitiveness of the shipping industry, on vessel traffic or on vessel destinations.

Cost-benefit statement
 

Base Year 2018

2019

2020

Final Year 2027

Total (PV)

Annualized Average

A. Quantified impacts (in Canadian dollars, 2018 price level / constant dollars)

Benefits

Laurentian Pilotage Authority

1,611,178

1,861,069

1,861,069

1,861,069

12,837,827

1,827,818

Costs

Shipping industry

(1,611,178)

(1,861,069)

(1,861,069)

(1,861,069)

(12,837,827)

(1,827,818)

Net benefits

 

B. Qualitative impacts

Shipping industry

Efficient and timely pilotage services in navigable waters within the Authority’s jurisdiction.

Laurentian Pilotage Authority

The Authority’s financial self-sufficiency and activities are maintained.

Canadians

Safe shipping in the Laurentian Pilotage Area. Sustainability of the Laurentian Pilotage Authority would 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.

“One-for-One” Rule

The “One-for-One” Rule would not apply to the proposed amendments, as there is no change in administrative costs incurred by businesses.

Small business lens

The small business lens would not apply because fees for service fall outside the scope of the small business lens.

Consultation

Consultations were conducted in the spring and summer of 2017 with associations representing clients, i.e. the Shipping Federation of Canada, Chamber of Marine Commerce, and St. Lawrence Shipoperators. The Authority held various meetings to explain the proposed increases and its medium-term financial needs. Recognizing that they benefitted from the rate freeze that was in place from 2016 to 2017, the clients have stated that they are satisfied with the rationale for the proposed 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. 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/or 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 proposed tariff rate increases are expected to provide the Authority with adequate revenue to meet its objectives of maintaining self-sustainability, establishing a financial reserve, and continuing to provide safe and efficient pilotage services.

Implementation, enforcement and service standards

Section 45 of the Pilotage 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 Pilotage 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.

Performance measurement and evaluation

The Authority’s financial self-sufficiency is a key performance indicator related to this regulatory change, and it applies especially to senior management. This indicator is one of the performance objectives and is closely monitored during the year and more formally assessed at the end of the fiscal year.

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

PROPOSED REGULATORY TEXT

Notice is given, pursuant to subsection 34(1) (see footnote a) of the Pilotage Act (see footnote b), that the Laurentian Pilotage Authority, pursuant to subsection 33(1) of that Act, proposes to make the annexed Regulations Amending the Laurentian Pilotage Tariff Regulations.

Interested persons who have reason to believe that any charge in the proposed Regulations is prejudicial to the public interest, including the public interest that is consistent with the national transportation policy set out in section 5 (see footnote c) of the Canada Transportation Act (see footnote d), may file a notice of objection setting out the grounds for the objection with the Canadian Transportation Agency within 30 days after the date of publication of this notice. The notice of objection must cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to the Canadian Transportation Agency, Ottawa, Ontario K1A 0N9. The notice of objection must also be filed with the Minister of Transport and the Laurentian Pilotage Authority in accordance with subsection 34(3) (see footnote e) of the Pilotage Act (see footnote f).

Montréal, December 15, 2017

Fulvio Fracassi
Chief Executive Officer Laurentian Pilotage Authority

Regulations Amending the Laurentian Pilotage Tariff Regulations

Amendments

1 (1) The definition unit in section 1 of the Laurentian Pilotage Tariff Regulations (see footnote 1) is repealed.

(2) The definitions breadth, depth, draught, length, movage and pilot boarding station in section 1 of the Regulations are replaced by the following:

(3) Section 1 of the Regulations is amended by adding the following in alphabetical order:

composite unit means a ship consisting of a tug rigidly connected to the stern of a barge. (unité composite)

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

(1.1) The units of a ship is the number obtained by multiplying the tariff length of the ship by its breadth and depth, dividing by 850 and rounding to the second decimal place.

3 Section 4 of the Regulations is replaced by the following:

4 (1) If a single tug is used, other than during a movage, to tow or push one or more uncrewed ships, pilotage charges are payable and are determined

(2) If more than one tug is used, other than during a movage, to tow or push one or more uncrewed ships, pilotage charges are payable and are determined

(3) If one or more tugs are used, during a movage, to tow or push a ship, pilotage charges are payable and are determined on the basis of their units.

4.1 The units of a composite unit are determined

4 (1) Paragraph 8(1)(b) of the English version of the Regulations is replaced by the following:

(2) Subsection 8(1) of the Regulations is amended by striking out “or” at the end of paragraph (d), by adding “or” at end of paragraph (e) and by adding the following after paragraph (e):

(3) Paragraph 8(2)(d) of the English version of the Regulations is replaced by the following:

(4) Subsection 8(2) of the Regulations is amended by striking out “or” at the end of paragraph (f), by adding “or” at end of paragraph (g) and by adding the following after paragraph (g):

5 (1) Paragraphs 1(b) and (e) of Schedule 1 to the Regulations are repealed.

(2) Paragraph (c) of the French version of Schedule 1 to the Regulations is replaced by the following:

c) Contrecœur

Les eaux situées entre les coordonnées suivantes : 45°49′36″ de latitude N. et 73°17′16″ de longitude O.; 45°49′48″ de latitude N. et 73°17′34″ de longitude O.; 45°50′30″ de latitude N. et 73°16′45″ de longitude O.; 45°50′18″ de latitude N. et 73°16′27″ de longitude O.;

(3) Section 1 of Schedule 1 to the Regulations is amended by adding the following after paragraph (i):

(i.1) Saguenay (Chicoutimi and Grande-Anse)

All waters located westerly of a line bearing 011° (true) and running across the Saguenay River at latitude 48°22′59″ N, longitude 70°45′00″ W;

(i.2) Saguenay (La Baie, Quai Lepage and Port-Alfred)

All waters located westerly of a line bearing 315° (true) and running across the Saguenay River at latitude 48°20′58″ N, longitude 70°42′06″ W;

(4) Section 1 Schedule 1 to the Regulations is amended by adding the following after paragraph (j):

(j.1) Tadoussac

All waters located northerly of a line bearing 090° (true) and running across Tadoussac Bay at latitude 48°08′08″ N, longitude 69°42′59″ W;

6 (1) Schedule 2 to the Regulations is replaced by the Schedule 2 set out in Schedule 1 to these Regulations.

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

Coming into Force

7 (1) These Regulations, other than subsection 6(2), come into force on April 1, 2018, but if they are registered after that day, they come into force on the day on which they are registered.

(2) Subsection 6(2) comes into force on January 1, 2019.

SCHEDULE 1

(Subsection 5(1))

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

44.87

22.08

N/A

2,296.04

N/A

2

N/A

27.04

15.57

N/A

1,808.24

N/A

2

Movage

1

516.52

17.02

N/A

N/A

2,296.04

N/A

1-1

475.28

15.65

N/A

N/A

2,112.73

N/A

2

491.92

16.20

N/A

N/A

2,186.70

N/A

3

Anchorage during a trip or a movage

1

399.40

4.29

N/A

N/A

N/A

N/A

1-1

367.50

3.96

N/A

N/A

N/A

N/A

2

380.39

4.11

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

305.71

3.16

N/A

N/A

N/A

594.39

2

291.14

3.00

N/A

N/A

N/A

566.09

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

491.92

11.12

N/A

N/A

1,808,24

N/A

 

2

491.92

11.12

N/A

N/A

1,808,24

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, 119.15 for the second half-hour and 238.29 for each subsequent hour

N/A

N/A

1-1

N/A

N/A

N/A

0.00 for the first half-hour, 109.62 for the second half-hour and 219.25 for each subsequent hour

N/A

N/A

2

N/A

N/A

N/A

0.00 for the first half-hour, 113.45 for the second half-hour and 226.89 for each subsequent hour

N/A

N/A

7

Compass adjustment by pilot

1

516.52

17.02

N/A

N/A

N/A

N/A

1-1

475.28

15.65

N/A

N/A

N/A

N/A

2

491.92

16.20

N/A

N/A

N/A

N/A

8

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

1

640.78

N/A

N/A

0.00 for the first hour, 238.29 for the second hour and 119.15 for each subsequent hour (see note 1)

N/A

N/A

   

1-1

589.62

N/A

N/A

0.00 for the first hour, 219.25 for the second hour and 109.62 for each subsequent hour (see note 2)

N/A

N/A

   

2

610.25

N/A

N/A

0.00 for the first hour, 226.89 for the second hour and 113.45 for each subsequent hour (see note 3)

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

119.15

N/A

N/A

1-1

N/A

N/A

N/A

109.62

N/A

N/A

2

N/A

N/A

N/A

113.45

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

2,666.26

N/A

N/A

N/A

N/A

N/A

1-1

2,453.40

N/A

N/A

N/A

N/A

N/A

2

2,539.30

N/A

N/A

N/A

N/A

N/A

SCHEDULE 2

(Subsection 5(2))

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

45.88

22.58

N/A

2,347.70

N/A

2

N/A

27.65

15.92

N/A

1,848.93

N/A

2

Movage

1

528.14

17.40

N/A

N/A

2,347.70

N/A

1-1

485.97

16.00

N/A

N/A

2,160.27

N/A

2

502.99

16.56

N/A

N/A

2,235.90

N/A

3

Anchorage during a trip or a movage

1

408.39

4.39

N/A

N/A

N/A

N/A

1-1

375.77

4.05

N/A

N/A

N/A

N/A

2

388.95

4.20

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

312.59

3.23

N/A

N/A

N/A

607.76

2

297.69

3.07

N/A

N/A

N/A

578.83

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

502.99

11.37

N/A

N/A

1,848,93

N/A

 

2

502.99

11.37

N/A

N/A

1,848,93

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, 121.83 for the second half-hour and 243.65 for each subsequent hour

N/A

N/A

1-1

N/A

N/A

N/A

0.00 for the first half-hour, 112.09 for the second half-hour and 224.18 for each subsequent hour

N/A

N/A

2

N/A

N/A

N/A

0.00 for the first half-hour, 116.00 for the second half-hour and 232.00 for each subsequent hour

N/A

N/A

7

Compass adjustment by pilot

1

528.14

17.40

N/A

N/A

N/A

N/A

1-1

485.97

16.00

N/A

N/A

N/A

N/A

2

502.99

16.56

N/A

N/A

N/A

N/A

8

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

1

655.20

N/A

N/A

0.00 for the first hour, 243.65 for the second hour and 121.83 for each subsequent hour (see note 1)

N/A

N/A

1-1

602.89

N/A

N/A

0.00 for the first hour, 224.18 for the second hour and 112.09 for each subsequent hour (see note 2)

N/A

N/A

2

623.98

N/A

N/A

0.00 for the first hour, 232.00 for the second hour and 116.00 for each subsequent hour (see note 3)

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

121.83

N/A

N/A

1-1

N/A

N/A

N/A

112.09

N/A

N/A

2

N/A

N/A

N/A

116.00

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

2,726.25

N/A

N/A

N/A

N/A

N/A

1-1

2,508.60

N/A

N/A

N/A

N/A

N/A

2

2,596.43

N/A

N/A

N/A

N/A

N/A

[52-1-o]