Canada Gazette, Part I, Volume 153, Number 50: Regulations Amending the Atlantic Pilotage Tariff Regulations, 1996

December 14, 2019

Statutory authority

Pilotage Act

Sponsoring agency

Atlantic Pilotage Authority

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: The Atlantic Pilotage Authority (the Authority) requires additional tariff revenue to meet rising expenses associated with the delivery of pilotage services.

Description: The proposed amendments to the Atlantic Pilotage Tariff Regulations, 1996 (the Regulations) would increase port-by-port tariffs for one-way trips, trips through, and moveages. The proposed amendments would also introduce a pilot boat charge in Restigouche, New Brunswick, while reducing the tariffs in this same port. Lastly, amendments are being proposed to indicate an increase in fuel consumption for the pilot boats in Halifax, Nova Scotia (N.S.) and Saint John, New Brunswick (N.B.). The fuel consumption amounts stated in the Regulations are used in calculating the pilot boat fuel charges.

Rationale: Given current and projected traffic volumes and vessel configurations, previously approved tariff rate increases for 11 ports in 2020 are expected to be too low. In addition, tariff adjustments are required to address the additional costs introduced by the coming into force of section 37.1 of the Pilotage Act (the Act).

Issues

Given current and projected traffic volumes and vessel configurations, previously approved tariff rate increases for 11 ports in 2020 are expected to be too low and in some cases, will not be considered fair and reasonable if adjustments are not made.

Background

The Authority is responsible for administering a safe and efficient pilotage service within the Canadian waters in and around the Atlantic Provinces. The Authority prescribes tariffs for pilotage services that are fair and reasonable and consistent with generating revenues sufficient to permit the Authority to operate on a self-sustaining financial basis. The Authority is responsible for 17 compulsory pilotage areas, and the tariff revisions contained herein are intended to maintain port-by-port self-sufficiency (i.e. no cross-subsidization) as per a 1995 decision by the Canadian Transportation Agency.

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 tariffs setting. 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.”

Objective

The objective of the proposed amendments is to enable the Authority to meet its mandate to operate a safe and efficient pilotage service within the Atlantic region, while achieving financial self-sufficiency of individual ports (i.e. avoiding cross-subsidization).

Description

The proposed changes are as follows:

Regulatory development

Consultation

Consultations in various forms took place with the affected parties throughout 2019. Formal consultation sessions were held in Halifax, N.S. (May 3 and August 13, 2019), Port Hawkesbury, N.S. (May 15 and August 14, 2019), Saint John, N.B. (May 9 and August 15, 2019), St. John’s, Newfoundland and Labrador (May 1 and August 19, 2019), and Corner Brook, Newfoundland and Labrador (August 20, 2019). Participation varied in each port depending upon the makeup of local industry, but generally included ship-owners and operators, agents, facility management, port authorities, and other stakeholders.

Separate consultation sessions were held in Montréal, Quebec, with the Shipping Federation of Canada, which represents foreign vessels and accounts for 77–79% of the Authority’s activity and revenue (May 22 and September 9, 2019).

In addition to these formal consultation sessions, the Authority engaged stakeholders through other formats, including written, in-person, and telephone communications with individuals and groups. To date, stakeholders have not voiced concerns with these proposed tariffs. However, it is worth noting that stakeholders have voiced concerns regarding tariff amendments proposed by the other pilotage authorities, specifically amendments designed to generate revenue to fulfill potential obligations under section 37.1 of the Pilotage Act.

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 proposed Regulations are likely to give rise to modern treaty obligations. This assessment examined the geographic scope and subject matter of the proposal in relation to modern treaties in effect and after examination, no implications or impacts on modern treaties are identified.

Instrument choice

The Authority considered a number of regulatory and non-regulatory options before proposing the present tariff amendment. Alternatives to tariff increases were presented, where applicable, and feedback from participants was encouraged. For various ports and districts, the alternative to increased tariff rates would be a reduction in pilot numbers or availability. Stakeholders have consistently indicated that their primary concerns are with service levels and have requested that the number of pilots be increased in some areas, and maintained in others, so that pilot availability is not compromised. The proposed amendments would address these concerns.

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 would generate additional annual revenues of $313,000 (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 would 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, 2018 price level / constant dollars)

Discount rate: 7%

Base Year 2020

2020

2021

Final Year 2029

Total (PV)

Average

Costs

Shipping industry

$313,000

$313,000

$313,000

$313,000

$2,198,381

$313,000

Net benefits

B. Qualitative impacts

Shipping industry

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

Atlantic Pilotage Authority

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

Canadians

Safe shipping in the Atlantic Pilotage Area. Sustainability of the Atlantic 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 Atlantic Pilotage Area.

Small business lens

The small business lens does not apply, as there are no associated impacts on small businesses. The annual cost impact is expected to be well under $1 million.

One-for-one rule

The One-for-one rule does not apply to these proposed amendments, as there is no change in administrative costs to or burden on business.

Regulatory cooperation and alignment

The regulatory proposal has no impact on regulatory cooperation and alignment initiatives.

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 this proposal.

Rationale

  1. Reductions to tariff in Restigouche, N.B., in 2020
    • With the additional pilot boat charge (described in item 2 below), the basic charge and minimum charge in the area will be lowered to offset much of this new charge.
  2. Pilot boat charge for Restigouche, N.B.
    • This proposed charge is meant to make it more appealing for licensed pilots and pilot boat contractors to operate in these areas, as this charge would cover the cost of hiring a pilot boat and operator in the compulsory port of Restigouche. It also makes the tariff calculation consistent with those of other smaller ports that use entrepreneurial pilots. Currently, entrepreneurial pilots in this area have been absorbing the cost of hiring a pilot boat and operator. Moving forward, however, this practice is not considered sustainable when trying to attract new pilots to operate in this area.
  3. Increases in budgeted fuel consumption in two ports in 2020
    • In Halifax, N.S., the budgeted fuel consumption was based on pilot boats that are no longer servicing the port on a regular basis. These vessels were replaced by two jet boats that use more fuel per assignment. The budgeted fuel consumption is used in a formula captured in the Authority’s tariff regulations to calculate the fuel charge for a port. Based on recent consumption, the budgeted fuel consumption will be increased by 10 L per assignment.
    • In Saint John, N.B., the budgeted fuel consumption was based on an allocation of pilot boats that is no longer applicable, as a second newer vessel was deployed to the area. The budgeted fuel consumption is used in a formula captured in the Authority’s tariff regulations to calculate the fuel charge for a port. Based on recent consumption, the budgeted fuel consumption will be increased by 10 L per assignment.
  4. Change the description for In-Transit Charges to mirror the language that describes Overcarriage Charges
    • In the winter, especially, it is becoming more common for pilots to have to join vessels in their previous port of call in order to be on board when the vessel reaches the pilotage area. Currently, there is no charge recovery for the time it takes for the pilot to travel to these areas to meet the vessels. This is unlike the overcarriage language where there is cost recovery for the entire time a pilot is required to travel outside of their pilotage area. Therefore, the Authority is proposing that the description of In-Transit Charges be changed to include the travel time it takes a pilot to meet the vessel outside the pilotage area and the travel time on the vessel until their services are needed for the arrival at the compulsory port. This change would not increase revenues significantly but will be beneficial to attracting new pilots to operate in ports serviced by entrepreneurial pilots.
  5. Tariff increases in two ports, effective the date of registration
    • Strait of Canso: The Authority is proposing a tariff that would increase pilotage revenue in the port by 3% in 2020 due to inflationary pressures.
    • Miramichi, N.B.: The Authority has had difficulty recruiting entrepreneurial pilots to the area due to the lower level of activity and the relatively low tariff. To help attract and retain service providers, the Authority is implementing an inflationary tariff increase of 2% in 2020.
  6. Tariff increases in nine ports, effective April 1, 2020
    • As a result of new costs associated with the administration of the Pilotage Act, the Authority is proposing an additional 1% tariff increase in 2020 for the following ports: Placentia Bay, N.L.; Sydney, N.S.; Humber Arm, N.L.; Saint John, N.B.; Bay of Exploits, N.L.; St. John’s, N.L.; Halifax, N.S.: Holyrood, N.L.; and Stephenville, N.L. This increase is being proposed in order to cover the anticipated costs to administer the Pilotage Act.

The proposed tariff amendments include provisions to address anticipated costs associated with the implementation of section 37.1 of the Act. The Authority has received an estimate of the amounts anticipated to be charged under this provision for 2020. However, the timing and manner of the payment have not been finalized. Furthermore, it remains to be determined if the payment will be requested as scheduled. In light of the process required to adjust tariff rates, it is necessary to implement the surcharge by April 1, 2020, based on current estimates, in order to have sufficient revenue to pay the costs within the first quarter of 2021, as anticipated.

Implementation, compliance and enforcement, and service standards

Compliance and enforcement

The 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 regulations is guilty of an offence, and liable on summary conviction to a fine not exceeding $5,000. This proposal is expected to produce no change to these compliance and enforcement mechanisms.

Performance measurement and evaluation

The Authority’s financial self-sufficiency is a key performance indicator related to this regulatory change.

Contact

Captain Sean Griffiths
Chief Executive Officer
Atlantic Pilotage Authority
1791 Barrington Street, Suite 1801, TD Tower
Halifax, Nova Scotia
B3J 3K9
Telephone: 902‑426‑2550
Fax: 902‑426‑4004

PROPOSED REGULATORY TEXT

Notice is given, pursuant to subsection 34(1) footnote a of the Pilotage Act footnote b, that the Atlantic Pilotage Authority, pursuant to subsection 33(1) of that Act, proposes to make the annexed Regulations Amending the Atlantic Pilotage Tariff Regulations, 1996.

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 footnote c of the Canada Transportation Act 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 Atlantic Pilotage Authority in accordance with subsection 34(3) footnote e of the Pilotage Act footnote b.

Halifax, November 21, 2019

Captain Sean Griffiths
Chief Executive Officer
Atlantic Pilotage Authority

Regulations Amending the Atlantic Pilotage Tariff Regulations, 1996

Amendments

1 (1) Subsection 14(5) of the Atlantic Pilotage Tariff Regulations, 1996 footnote 1 is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):

(2) Subsection 14(6) of the Regulations is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):

2 The portion of subsection 23(1) of the Regulations before paragraph (a) is replaced by the following:

23 (1) When a pilot is transported to an area other than the one for which pilotage service is requested, a charge is payable as follows for the period commencing when the pilot begins to travel to the area for which pilotage service is requested and ending when the pilot begins to perform pilotage duties:

3 The portion of item 1 of Schedule 2 to the Regulations in columns 2 to 4 is replaced by the following:

Item

Column 2


Minimum Charge ($)

Column 3

Unit Charge
($/pilotage unit)

Column 4

Basic
Charge ($)

1

1,836.00

6.18

554.00

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

Item

Column 2

Minimum Charge ($)

2

2,000.00

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

Item

Column 4

Basic Charge ($)

2

1,000.00

5 The portion of items 3 to 9 of Schedule 2 to the Regulations in columns 2 to 4 is replaced by the following:

Item

Column 2


Minimum
Charge ($)

Column 3


Unit Charge
($/pilotage unit)

Column 4


Basic
Charge ($)

3

2,594.00

13.30

1,264.00

4

2,377.00

7.52

767.00

5

2,622.00

11.20

1,311.00

6

3,298.00

5.81

2,488.00

7

2,377.00

7.52

767.00

8

2,305.00

11.83

1,123.00

9

2,560.00

7.44

1,247.00

6 The portion of item 11 of Schedule 2 to the Regulations in columns 2 to 4 is replaced by the following:

Item

Column 2


Minimum
Charge ($)

Column 3


Unit Charge
($/pilotage unit)

Column 4


Basic
Charge ($)

11

1,760.00

4.74

1,284.00

7 (1) The portion of item 12 of Schedule 2 to the Regulations in columns 2 to 4 is replaced by the following:

Item

Column 2


Minimum
Charge ($)

Column 3


Unit Charge
($/pilotage unit)

Column 4



Basic Charge ($)

12

1,682.00

2.95

756.00

(2) The portion of item 12 of Schedule 2 to the Regulations in column 6 is replaced by the following:

Item

Column 6

Budgeted Fuel Consumption (litres)

12

140

8 The portion of item 1 of Schedule 3 to the Regulations in columns 4 and 5 is replaced by the following:

Item

Column 4

Unit Charge
($/pilotage unit)

Column 5


Basic Charge ($)

1

6.18

554.00

9 The portion of item 2 of Schedule 3 to the Regulations in column 5 is replaced by the following:

Item

Column 5

Basic Charge ($)

2

1,000.00

10 The portion of items 3 to 9 of Schedule 3 to the Regulations in columns 4 and 5 is replaced by the following:

Item

Column 4

Unit Charge
($/pilotage unit)

Column 5


Basic Charge ($)

3

13.30

1,264.00

4

7.52

767.00

5

11.20

1,311.00

6

5.81

2,488.00

7

7.52

767.00

8

11.83

1,123.00

9

7.44

1,247.00

11 The portion of item 11 of Schedule 3 to the Regulations in column 3 is replaced by the following:

Item

Column 3

Flat Charge, Pilot Boat Used ($)

11

2,041.00

12 (1) The portion of item 12 of Schedule 3 to the Regulations in columns 4 and 5 is replaced by the following:

Item

Column 4

Unit Charge
($/pilotage unit)

Column 5


Basic Charge ($)

12

2.95

756.00

(2) The portion of item 12 of Schedule 3 to the Regulations in column 6 is replaced by the following:

Item

Column 6

Budgeted Fuel Consumption (litres)

12

140

13 The portion of item 1 of Schedule 4 to the Regulations in column 2 is replaced by the following:

Item

Column 2

Flat Charge ($)

1

610.00

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

Item

Column 3

Minimum Charge ($)

2

1,800.00

(2) The portion of item 2 of Schedule 4 to the Regulations in column 5 is replaced by the following:

Item

Column 5

Basic Charge, No Pilot Boat Used ($)

2

800.00

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

Item

Column 7

Basic Charge, Pilot Boat Used ($)

2

900.00

15 The portion of items 3 to 5 of Schedule 4 to the Regulations in columns 3 to 7 is replaced by the following:

Item

Column 3



Minimum Charge ($)

Column 4

Unit Charge,
No Pilot Boat
Used ($/pilotage unit)

Column 5



Basic Charge, No Pilot Boat Used ($)

Column 6

Unit Charge, Pilot
Boat
Used ($/pilotage unit)

Column 7



Basic Charge, Pilot Boat Used ($)

3

2,334.00

10.65

1,014.00

11.98

1,140.00

4

2,139.00

6.02

613.00

6.78

690.00

5

2,359.00

8.97

1,047.00

10.09

1,180.00

16 (1) The portion of paragraph 6(a) of Schedule 4 to the Regulations in columns 3 to 5 is replaced by the following:

Item

Column 3


Minimum Charge ($)

Column 4

Unit Charge, No Pilot Boat Used
($/pilotage unit)

Column 5


Basic Charge, No Pilot Boat Used ($)

6(a)

1,648.00

2.91

1,244.00

(2) The portion of paragraph 6(b) of Schedule 4 to the Regulations in columns 3 to 7 is replaced by the following:

Item

Column 3



Minimum Charge ($)

Column 4

Unit Charge,
No Pilot Boat
Used ($/pilotage unit)

Column 5



Basic Charge, No Pilot Boat Used ($)

Column 6

Unit Charge, Pilot
Boat
Used ($/pilotage unit)

Column 7



Basic Charge, Pilot Boat Used ($)

6(b)

2,967.00

4.65

1,991.00

5.22

2,239.00

17 The portion of items 7 to 9 of Schedule 4 to the Regulations in columns 3 to 7 is replaced by the following:

Item

Column 3



Minimum Charge ($)

Column 4

Unit Charge,
No Pilot Boat
Used ($/pilotage unit)

Column 5



Basic Charge, No Pilot Boat Used ($)

Column 6



Unit Charge, Pilot Boat Used ($/pilotage unit)

Column 7



Basic Charge, Pilot Boat Used ($)

7

2,139.00

6.02

613.00

6.78

690.00

8

2,075.00

9.46

898.00

10.66

1,010.00

9

2,304.00

5.93

998.00

6.69

1,124.00

18 The portion of item 11 of Schedule 4 to the Regulations in columns 3 to 7 is replaced by the following:

Item

Column 3



Minimum Charge ($)

Column 4

Unit Charge,
No Pilot Boat
Used ($/pilotage unit)

Column 5



Basic Charge, No Pilot Boat Used ($)

Column 6



Unit Charge, Pilot Boat Used ($/pilotage unit)

Column 7



Basic Charge, Pilot Boat Used ($)

11

1,584.00

3.80

1,028.00

4.26

1,157.00

19 (1) The portion of item 12 of Schedule 4 to the Regulations in columns 3 to 7 is replaced by the following:

Item

Column 3



Minimum Charge ($)

Column 4

Unit Charge,
No Pilot Boat
Used ($/pilotage unit)

Column 5



Basic Charge, No Pilot Boat Used ($)

Column 6



Unit Charge, Pilot Boat Used ($/pilotage unit)

Column 7



Basic Charge, Pilot Boat Used ($)

12

1,514.00

2.36

605.00

2.66

681.00

(2) The portion of item 12 of Schedule 4 to the Regulations in column 9 is replaced by the following:

Item

Column 9

Budgeted Fuel Consumption (litres)

12

140

20 The portion of items 1 and 2 of Schedule 5 to the Regulations in column 7 is replaced by the following:

Item

Column 7

Budgeted Fuel Consumption (litres)

1

110

2

110

21 The portion of items 1 to 3 of Schedule 5 to the Regulations in columns 3 to 5 is replaced by the following:

Item

Column 3


Minimum Charge ($)

Column 4

Unit Charge
($/pilotage unit)

Column 5


Basic Charge ($)

1

1,836.00

4.77

1,028.00

2

1,651.00

4.30

925.00

3

1,651.00

3.81

822.00

22 (1) The portion of item 4 of Schedule 5 of the Regulations in column 2 is replaced by the following:

Item

Column 2

Flat Charge ($)

4

1,384.00

(2) The portion of item 4 of Schedule 5 to the Regulations in column 7 is replaced by the following:

Item

Column 7

Budgeted Fuel Consumption (litres)

4

110

Coming into Force

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

(2) Section 5, subsection 7(1), section 10, subsection 12(1), sections 15 to 17, subsection 19(1), section 21 and subsection 22(1) come into force on April 1, 2020.