Canada Gazette, Part I, Volume 151, Number 51: Regulations Amending the Atlantic Pilotage Tariff Regulations, 1996
December 23, 2017
Statutory authority
Pilotage Act
Sponsoring agency
Atlantic Pilotage Authority
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
The Atlantic Pilotage Authority (the Authority) provides pilotage services in and around the Atlantic Provinces. Pilotage tariffs, set out in the Atlantic Pilotage Tariff Regulations, 1996 (the Regulations), have been established to (a) allow the Authority to operate on a self-sustaining financial basis in accordance with the Pilotage Act (the Act); and (b) allow each port to operate on a self-sustaining basis, in accordance with recommendations of the Canadian Transportation Agency (the CTA).
However, with the existing tariffs, the Authority has determined that 14 out of 17 ports would not continue to be financially self-sufficient in the coming years, and would not be able to provide the service levels required by industry without cross-subsidization. With respect to the surcharge that was introduced to address the deficit incurred in 2015 and 2016, the higher than anticipated revenues from short-term and temporary projects in 2017 make it possible to eliminate the surcharge ahead of schedule. Lastly, due to forecasts of larger vessels, and therefore greater revenues, for Canso, the previously approved tariff increase scheduled for 2018 in Canso can be reduced.
Background
The Authority is responsible for administering, in the interest of safety, an efficient pilotage service within the Canadian waters in and around the Atlantic Provinces. As required by the Act, the Authority prescribes tariffs of pilotage charges that are fair, reasonable and consistent with providing revenues sufficient to permit the Authority to operate on a self-sustaining financial basis. In practice, self-sufficiency requires that the Authority have the resources to provide a safe and effective pilotage service, even during periods of declining activity, while providing for capital replacement and servicing of longer-term debt.
In a decision published on November 9, 1995, the CTA reaffirmed its position that the Authority strive for district-by-district financial self-sufficiency, which means that increases in pilotage charges would reflect the differing revenue requirements of each district. The CTA's position is that district-by-district tariff proposals are more appropriate than proposals that incorporate across-the-board increases. This approach has the support of many in industry as ports within the Authority's district are in competition to attract business and should not be made to cross-subsidize other areas.
The Regulations were last updated in March 2017. Since that time, the Authority has been investing in its service with the addition of two additional pilot boats, expanded distribution of portable pilotage units, and increased pilot numbers in preparation for pending retirements. These investments are made with the agreement of the users that are to be impacted.
Objectives
The objective of the proposed amendments is to enable the Authority to meet its mandate to operate, in the interest of safety, an efficient pilotage service within the Atlantic region, while ensuring the financial self-sufficiency of individual ports and avoiding cross-subsidization.
Description
The proposed amendments would modify tariffs beginning in 2018, with some modifications entering into effect in 2019.
- Pilot boat charge for Pugwash and Charlottetown (effective on the day on which the proposed amendments are registered). The proposed amendments would introduce a charge to cover the actual cost of hiring a pilot boat in the compulsory ports of Pugwash and Charlottetown whenever a pilot boat is required to embark or disembark a pilot, or if a request for the service of a pilot boat is cancelled after the pilot has embarked.
- Winter pilot boat charge for Humber Arm (effective on the day on which the proposed amendments are registered). The proposed amendments would add a winter pilot boat charge in Humber Arm. This charge would recover the actual cost of using a pilot boat to embark or disembark a pilot, or the actual cost of hiring a pilot boat if the request for the service of a pilot boat is cancelled after the pilot has embarked, from mid-December to mid-April.
- Strait of Canso tariff adjustment (effective on the day on which the proposed amendments are registered). The proposed amendments would reduce the Canso tariff that comes into force on January 1, 2018, by 2%.
- Eliminate the 1.5% surcharge implemented on March 11, 2016, in 11 compulsory areas (effective July 1, 2018).
- Port-by-port tariff increases for one-way trips, trips through, and moveages (effective January 1, 2019). The proposed amendments would increase all of the charges related to one-way trips, trips through, and moveages, with the effective tariff increases needed to maintain port-by-port self-sufficiency, as identified in Table 1.
| Port | Tariff Increase | Port | Tariff Increase |
|---|---|---|---|
| i. Pugwash, N.S. | 10.00% | viii. Holyrood, N.L. | 3.00% |
| ii. Bay of Exploits, N.L. | 7.00% | ix. Sydney, N.S. | 3.00% |
| iii. Stephenville, N.L. | 7.00% | x. Bras d'Or Lake, N.S. | 3.00% |
| iv. Humber Arm, N.L. | 5.00% | xi. Strait of Canso, N.S. | 2.50% |
| v. Confederation Bridge, P.E.I. | 5.00% | xii. Placentia Bay, N.L. | 2.50% |
| vi. Saint John, N.B. | 3.00% | xiii. Charlottetown, P.E.I. | 2.00% |
| vii. St. John's, N.L. | 3.00% | xiv. Halifax, N.S. | 1.50% |
“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 business.
Small business lens
The small business lens would not apply to the proposed amendments, given that annual nationwide cost impacts would be less than $1 million, and costs on small businesses would not be disproportionately high, as the vast majority of the Authority's users would not be classified as small businesses.
Consultation
Consultations in various forms took place with the affected parties throughout 2017. Formal consultation sessions were held in Halifax, N.S. (May 8 and August 16, 2017); Port Hawkesbury, N.S. (May 17 and August 17, 2017); Saint John, N.B. (April 11 and August 24, 2017); St. John's, N.L. (April 19 and August 22, 2017); and Placentia Bay, N.L. (April 19 and August 22, 2017). 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 with the Shipping Federation of Canada, which represents foreign vessels and accounts for 77%–79% of the Authority's activity and revenue, in Halifax, N.S. (June 16, 2017), and Montréal, Que. (August 28, 2017). 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.
Alternatives to tariff increases were presented, where applicable, and participation from the attendees was encouraged. For various ports and districts, the alternative to increased tariff rates would be a reduction in pilot strength. 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. Stakeholders have expressed their support for the proposed amendments.
Rationale
- Pilot boat charge for Pugwash and Charlottetown. The proposed pilot boat charges for Pugwash and Charlottetown are meant to make it more appealing for licensed pilots and pilot boat contractors to operate in these areas. Currently, pilots in these areas 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 these areas. The overall cost to industry from the introduction of a pilot boat charge is estimated to be $29,000 annually.
- Winter pilot boat charge for Humber Arm. Due to ice conditions in the port, assignments during the winter months require a more robust vessel to break the ice and transport the pilot. The contracted cost of this vessel has increased to a point where the current tariff is not sufficient. This tariff change will implement a winter pilot boat charge that will solve the issue the Authority has faced with increased costs during this season by recovering the actual cost of pilot boats used from December 15 to April 15 with a charge that is in addition to the tariff. The overall cost to industry from the introduction of the winter pilot boat charge is estimated to be $10,000 in 2018 and $96,000 in 2019 and thereafter.
- Strait of Canso tariff adjustment. Due to an increase in larger vessels calling in the Strait of Canso, the Authority will be reducing the tariffs in Canso by 2%, effective on the day on which these amendments are registered. The previously approved 5% increase for Canso coming into effect on January 1, 2018, will remain in place, until these proposed Regulations are registered and take effect. The additional revenues gained by the arrival of these larger vessels will provide sufficient revenues for Canso without the higher tariffs. This change will save users $36,000 in 2018.
- Eliminate the 1.5% surcharge that was started in March 2016. This surcharge was intended for a three-year period, expiring March 11, 2019, and was meant to recover the majority of losses incurred in 2014 and 2015. The Authority committed to industry that this surcharge would be reviewed annually to determine if it was still required. As the Authority is projecting its profit to be $1.4 million over target since the surcharge was implemented, the need for the surcharge no longer exists. The early removal of the surcharge will save users $260,000 over 2018 and 2019.
- Port-by-port tariff increases. In addition to ensuring the overall self-sustainability of the Authority as a whole, port-by-port tariff adjustments to basic, minimum and unit charges would ensure local self-sustainability, minimize cross-subsidization, and maintain the viability of pilotage services in individual ports.
Pugwash, N.S.: The Port of Pugwash has 80 to 100 assignments per year, and in 2016 generated revenues of $61,000. Recently, the pilots that cover the area and the pilot boat operator put in notices of retirement, and the Authority has had difficulty recruiting replacements for both due to the low level of activity and the relatively low tariff. The proposed amendments would implement two stages of tariff increases. In 2018, a pilot boat charge for the use of a pilot boat to embark or disembark a pilot for any pilotage service would be introduced (described above), and in 2019 the tariff would be increased by 10%. The proposed tariff increase would support the hiring of replacement pilots, and would result in costs to industry of $7,000 beginning in 2019 and a corresponding increase in Authority revenue.
Charlottetown, P.E.I.: The Port of Charlottetown has 250 assignments per year, and in 2016 generated revenues of $345,000. One of three pilots licensed for Prince Edward Island has retired, and the Authority has had difficulty recruiting a replacement. The proposed amendments would implement two stages of tariff increases. In 2018, a pilot boat charge for the use of a pilot boat to embark or disembark a pilot for any pilotage service would be introduced (described above), and in 2019 the tariff would be increased by 2%. The proposed tariff increase would support the hiring of a replacement pilot, and would result in costs to industry of $7,000 beginning in 2019 and a corresponding increase in Authority revenue.
Humber Arm, N.L.: Humber Arm has between 180 and 200 assignments per year, and generated $451,000 in revenues in 2016. The area has been affected by an increase in pilot boat costs as the regular vessel that served the port for many years had to be replaced with a newer vessel in 2016. For 2019, the tariff will be increased 5% in the area and would deliver a break-even result for the port by the end of 2019. This would result in costs to industry of $29,000 beginning in 2019 and a corresponding increase in Authority revenue.
Bay of Exploits, N.L.: Activity in the Bay of Exploits has fallen by over 33% since 2014. The area has 100 assignments per year, and in 2016 generated $286,000 in revenue. The proposed amendments would increase the tariff by 7% in 2019 and deliver a break-even result by the end of 2019. The port is expected to be in a position to achieve the long-term targeted return for the area in future years. This would result in costs to industry of $19,000 beginning in 2019 and a corresponding increase in Authority revenue.
Stephenville, N.L.: Stephenville has very little activity, but is a challenging port for ships calling there. The area has 10 to 20 assignments per year, and generated $18,000 in revenues in 2016. The Authority is increasing the tariff by 7% in 2019. This increase is expected to move the area close to a break-even result, and would result in costs to industry of $1,000 beginning in 2019 and a corresponding increase in Authority revenue.
Confederation Bridge, P.E.I.: Confederation Bridge is an area that is serviced by entrepreneurial pilots and a pilot boat operator. There are approximately 100 assignments annually in the area, and in 2016 generated $155,000 in revenue. Like Pugwash, a pilot that covers the area and the pilot boat operator put in notices of retirement. The Authority has had difficulty recruiting replacements for both due to the lower level of activity and the relatively low tariff. To help attract new service providers, the Authority is implementing a tariff increase of 5% in 2019. This area has a flat charge for pilot services when a pilot boat is not used, and a higher charge for the services of the pilot and pilot boat. This increase would result in costs to industry of $7,000 beginning in 2019 and a corresponding increase in Authority revenue.
Saint John, N.B.: The port of Saint John is considered one of four major ports for the Authority. The area has between 1 600 and 1 800 pilotage assignments annually, and generated $4,100,000 in revenue in 2016. The Authority has deployed two newer vessels in the port, each five years of age. The Authority is also preparing for pilot retirements by continuing to add to the pilot strength. The proposed tariff increase would support the costs associated with the newer pilot boats and the additional pilots added, and would represent a cost to industry of $143,000 beginning in 2019 and a corresponding increase in Authority revenue.
Bras d'Or, N.S.: The port in the Cape Breton district with the least activity is Bras d'Or. The activity in the port has declined as the primary business in this area is the shipment of gypsum from Little Narrows, which ceased operations in 2016. The remaining activity in the area centres around occasional small cruise ships or private yachts. There are now fewer than 10 assignments annually, and revenues generated in the area in 2016 were $11,000. The Authority is proposing a 3% increase for the area in 2019, or a $300 cost to industry. This increase is expected to leave the area in a loss position, but there is minimal activity.
Strait of Canso, N.S.: The Strait of Canso is another one of the Authority's major areas and has annual activity of 650 to 750 assignments. In 2016, the port generated $2,400,000 in revenue for the Authority. The Authority has had significant volatility in the area as most of the activity is based on commodity prices. Very weak activity in 2016 has been followed by strong traffic levels in 2017 with the return of coal transshipment operations. The costs in the area are mostly fixed as the pilot boats have to be robust to make the long transit in the strait, and any decline in pilot strength will create service issues for the district. To maintain an acceptable return for the port, the Authority is increasing the tariff charge by 2.5% in 2019. This increase would result in costs to industry of $47,000 beginning in 2019 and a corresponding increase in Authority revenue.
Sydney, N.S.: For Sydney, the area has had between 314 and 370 annual assignments, with the fluctuation due primarily to cruise traffic. In 2016, the port generated $1,000,000 in revenues for the Authority. Like other ports on the east coast, Sydney has had a large increase in cruise activity in 2017 with the expectation of it continuing. Two identical Breau boats have been deployed to the area to provide better service, redundancy, and reliability. Having multiple vessels in the area is costlier to operate. The Authority is proposing a tariff that would increase pilotage revenue in the port by 3% in 2019. This increase is required as the costs allocated to the area have increased. This increase would result in costs to industry of $39,000 beginning in 2019 and a corresponding increase in Authority revenue.
St. John's, N.L.: Activity in the port has been between 550 and 600 assignments per year, and generated revenues of $1,300,000 in 2016. The traffic levels have large fluctuations as traffic may spike for short periods and then subside. Business can come to the port on short-term contracts, while regular callers tend to apply for pilotage certificates. The Authority has to be able to provide service during these peak periods while minimizing financial losses during the down periods. The Authority is proposing a tariff that would increase pilotage revenue in the port by 3% in 2019. This increase would result in costs to industry of $37,000 beginning in 2019 and a corresponding increase in Authority revenue.
Holyrood, N.S.: The port in the Eastern Newfoundland and Labrador district with the least activity is Holyrood. In recent years, the activity in the port has ranged from a high of 39 assignments to a low of 23 assignments, and generated $99,000 in revenue in 2016. The port has the same tariff rates as St. John's as they closely share the same resources. Like St. John's, the Authority is proposing a tariff that would increase pilotage revenue in the port by 3% in 2019. The increase is required as the trainee pilots move up in class and operating costs increase. This increase would result in costs to industry of $3,000 beginning in 2019 and a corresponding increase in Authority revenue.
Placentia Bay, N.L.: Activity in this major port is between 900 and 1 100 assignments, and generated $6,540,000 in revenues in 2016. The Authority has invested significantly in pilot boats for the area and carries debt for their acquisition. The Authority was asked to address service concerns by the users and has responded by increasing pilot numbers in the district. These tariff increases are required as the trainee pilots move up in class and operating costs increase. The Authority is also planning for capital asset replacement in the area and must accumulate funds for this purpose. The Authority is proposing a tariff that would increase pilotage revenue in the port by 2.5% in 2019. This increase would result in costs to industry of $145,000 beginning in 2019 and a corresponding increase in Authority revenue.
Halifax, N.S.: This major port has had an increase in container vessels and cruise traffic in recent years. Assignments in the area have been between 2 600 and 2 800 annually, and generated $6,100,000 in revenue in 2016. The Authority has added two additional pilot boats to its company-wide fleet in 2017, with these latest acquisitions stationed in Halifax. These vessels are six to seven years old and will be able to service the port for years to come. The Authority has invested significantly in these newer vessels and carries debt for their acquisition. The Authority is also adding pilots to the port in anticipation of planned retirements. Due to the increase in costs associated with the change in pilot boats and additional pilot strength, the Authority is proposing a 1.5% increase in 2019. This increase would result in costs to industry of $100,000 beginning in 2019 and a corresponding increase in Authority revenue.
Implementation, enforcement and service standards
The Act provides an enforcement mechanism for the 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. The Act stipulates that every 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.
Contact
Captain Sean Griffiths
Chief Executive Officer
Atlantic Pilotage Authority
TD Tower, Suite 1801
1791 Barrington Street
Halifax, Nova Scotia
B3J 3K9
Telephone: 902-426-2550
Fax: 902-426-4004
PROPOSED REGULATORY TEXT
Notice is given, pursuant to subsection 34(1) (see footnote a) of the Pilotage Act (see 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 (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 Atlantic Pilotage Authority in accordance with subsection 34(3) (see footnote e) of the Pilotage Act (see footnote f).
Halifax, December 6, 2017
Captain Sean Griffiths
Chief Executive Officer, Atlantic Pilotage Authority
Regulations Amending the Atlantic Pilotage Tariff Regulations, 1996
Amendments
1 Section 14 of the Atlantic Pilotage Tariff Regulations, 1996 (see footnote 1) is amended by adding the following after subsection (4):
(5) Despite subsections (1) and (3), in the following compulsory pilotage areas, the charge for the use of a pilot boat to embark or disembark a pilot for pilotage service is the actual cost of hiring the pilot boat:
- (a) Pugwash, Nova Scotia, at any time during the year;
- (b) Charlottetown, Prince Edward Island, at any time during the year; and
- (c) Humber Arm, Newfoundland and Labrador, during the period beginning on December 15 in one year and ending on April 15 in the next year.
(6) Despite subsection (2), in the following compulsory pilotage areas, the charge for the use of a pilot boat if a request for the service of a pilot boat is cancelled after the pilot has embarked on the pilot boat is the actual cost of hiring the pilot boat:
- (a) Pugwash, Nova Scotia, at any time during the year;
- (b) Charlottetown, Prince Edward Island, at any time during the year; and
- (c) Humber Arm, Newfoundland and Labrador, during the period beginning on December 15 in one year and ending on April 15 in the next year.
2 Section 28 of the Regulations is repealed.
| Item | Column 2 Minimum |
Column 3 Unit Charge |
Column 4 Basic Charge ($) |
|---|---|---|---|
| 11 | 1,709.00 | 4.60 | 1,247.00 |
| Item | Column 2 Minimum Charge ($) |
Column 3 Unit Charge |
Column 4 Basic Charge ($) |
|---|---|---|---|
| 3 | 2,493.00 | 12.79 | 1,215.00 |
| 4 | 2,296.00 | 7.27 | 740.00 |
| 5 | 2,520.00 | 10.77 | 1,260.00 |
| 6 | 3,369.00 | 5.94 | 2,542.00 |
| 7 | 2,296.00 | 7.27 | 740.00 |
| 8 | 2,282.00 | 11.71 | 1,112.00 |
| 9 | 2,473.00 | 7.19 | 1,205.00 |
| 10 | 2,999.00 | 13.24 | 2,137.00 |
| 11 | 1,752.00 | 4.72 | 1,278.00 |
| 12 | 1,624.00 | 2.85 | 731.00 |
| 13 | n/a | 5.69 | 482.00 |
| 14 | n/a | 3.56 | 362.00 |
| Item | Column 4 Unit Charge |
Column 5 Basic Charge ($) |
|---|---|---|
| 1 | 10.95 | 1,761.00 |
| Item | Column 3 Flat Charge, Pilot Boat Used ($) |
|---|---|
| 2 | 1,985.00 |
| Item | Column 3 Flat Charge, Pilot Boat Used ($) |
|---|---|
| 2 | 2,035.00 |
| Item | Column 2 Flat Charge, No Pilot Boat Used ($) |
Column 3 Flat Charge, Pilot Boat Used ($) |
|---|---|---|
| 3 | 735.00 | 1,575.00 |
| Item | Column 3 Minimum Charge ($) |
Column 4 Unit Charge, |
Column 5 Basic Charge, |
Column 6 Unit Charge, |
Column 7 Basic Charge, |
|---|---|---|---|---|---|
| 3 | 2,244.00 | 10.23 | 975.00 | 11.51 | 1,096.00 |
| 4 | 2,066.00 | 5.81 | 592.00 | 6.55 | 666.00 |
| 5 | 2,268.00 | 8.62 | 1,007.00 | 9.70 | 1,134.00 |
| Item | Column 3 Minimum Charge ($) |
Column 4 Unit Charge, |
Column 5 Basic Charge, No Pilot Boat Used ($) |
|---|---|---|---|
| 6 (a) | 1,684.00 | 2.97 | 1,271.00 |
| Item | Column 3 Minimum Charge ($) |
Column 4 Unit Charge, |
Column 5 Basic Charge, |
Column 6 Unit Charge, |
Column 7 Basic Charge, |
|---|---|---|---|---|---|
| 6 (b) | 3,032.00 | 4.75 | 2,034.00 | 5.34 | 2,288.00 |
| Item | Column 3 Minimum Charge ($) |
Column 4 Unit Charge, |
Column 5 Basic Charge, |
Column 6 Unit Charge, Pilot Boat Used ($/pilotage unit) |
Column 7 Basic Charge, |
|---|---|---|---|---|---|
| 7 | 2,066.00 | 5.81 | 592.00 | 6.55 | 666.00 |
| 8 | 2,054.00 | 9.37 | 889.00 | 10.55 | 1,000.00 |
| 9 | 2,225.00 | 5.73 | 964.00 | 6.46 | 1,086.00 |
| 10 | 2,699.00 | 10.62 | 1,710.00 | 11.96 | 1,924.00 |
| 11 | 1,576.00 | 3.78 | 1,023.00 | 4.24 | 1,151.00 |
| 12 | 1,462.00 | 2.28 | 585.00 | 2.57 | 658.00 |
| Item | Column 3 Minimum Charge ($) |
Column 4 Unit Charge, |
Column 5 Basic Charge, |
Column 6 Unit Charge, |
Column 7 Basic Charge, |
|---|---|---|---|---|---|
| 11 | 1,538.00 | 3.69 | 998.00 | 4.14 | 1,123.00 |
| Item | Column 2 Flat Charge ($) |
|---|---|
| 13 | 519.00 |
| 14 | 392.00 |
| Item | Column 3 Minimum Charge ($) |
Column 4 Unit Charge |
Column 5 Basic Charge ($) |
|---|---|---|---|
| 1 | 1,774.00 | 4.60 | 993.00 |
| 2 | 1,595.00 | 4.16 | 894.00 |
| 3 | 1,595.00 | 3.68 | 794.00 |
| Item | Column 2 Flat Charge ($) |
|---|---|
| 4 | 1,337.00 |
Coming into Force
15 (1) Subject to subsections (2) and (3), these Regulations come into force on the day on which they are registered.
(2) Section 2 comes into force on July 1, 2018.
(3) Sections 4 and 5, subsection 6(2), sections 7 to 10 and sections 12 to 14 come into force on January 1, 2019.
[51-1-o]