Vol. 145, No. 14 — July 6, 2011

Registration

SOR/2011-137 June 23, 2011

PILOTAGE ACT

ARCHIVED — Regulations Amending the Great Lakes Pilotage Tariff Regulations

P.C. 2011-739 June 23, 2011

RESOLUTION

Whereas the Great Lakes Pilotage Authority, pursuant to subsection 34(1) (see footnote a) of the Pilotage Act (see footnote b), published a copy of the proposed Regulations Amending the Great Lakes Pilotage Tariff Regulations, in the annexed form, in the Canada Gazette, Part I, on March 26, 2011;

Therefore, the Great Lakes Pilotage Authority, pursuant to subsection 33(1) of the Pilotage Act (see footnote c), hereby makes the annexed Regulations Amending the Great Lakes Pilotage Tariff Regulations.

Cornwall, May 11, 2011

ROBERT F. LEMIRE
Chief Executive Officer
Great Lakes Pilotage Authority

His Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to subsection 33(1) of the Pilotage Act (see footnote d), hereby approves the annexed Regulations Amending the Great Lakes Pilotage Tariff Regulations, made by the Great Lakes Pilotage Authority.

REGULATIONS AMENDING THE GREAT LAKES PILOTAGE TARIFF REGULATIONS

AMENDMENTS

1. (1) Subsection 3(1) of the Great Lakes Pilotage Tariff Regulations (see footnote 1) is amended by replacing “Schedule I”, “Schedule II” and “Schedule III” with “Schedule 1”, “Schedule 2” and “Schedule 3”, respectively.

(2) Items 5 to 7 of the table to subsection 3(2) of the Regulations are replaced by the following:

Item	Column 1 Location	Column 2 Pilotage Unit	Column 3 Weighting Factor
5.	Anywhere other than the Port of Churchill	More than 219	1.45
6.	The Port of Churchill	More than 219 but not more than 249	1.60
7.	The Port of Churchill	More than 249 but not more than 279	1.75

2. Section 4 of the Regulations is replaced by the following:

4. A surcharge of 12% is payable until December 31, 2011 on each pilotage charge payable under section 3 for a pilotage service provided in accordance with any of Schedules 1 to 3.

3. Schedules I to III to the Regulations are replaced by the Schedules 1 to 3 set out in the schedule to these Regulations.

COMING INTO FORCE

4. These Regulations come into force on the day on which they are registered.

SCHEDULE
(Section 3)

SCHEDULE 1
(Subparagraphs 3(1)(a)(i) and (ii) and (c)(i) and (ii) and section 4)

PILOTAGE CHARGES FOR AREAS OTHER THAN THE CORNWALL DISTRICT OR THE PORT OF CHURCHILL, MANITOBA

DESIGNATED WATERS AND CONTIGUOUS WATERS

1. (1) Subject to subsection (2), the basic charge for a passage, other than a movage, through International District No. 1 or any part of it, and its contiguous waters, is $17.14 for each kilometre ($28.52 for each statute mile), plus $380 for each lock transited.

(2) The minimum and maximum basic charges for a through trip through International District No. 1 and its contiguous waters are $833 and $3,657, respectively.

(3) The basic charge for a movage in International District No. 1 and its contiguous waters is $1,255.

(4) If a ship, during its passage through the Welland Canal, docks or undocks for any reason other than instructions given by The St. Lawrence Seaway Management Corporation, the basic charge is $50 for each kilometre ($82.86 for each statute mile), plus $309 for each lock transited, with a minimum charge of $1,031.

(5) The basic charge, other than that specified in subsection (4), for a pilotage service in International District No. 2 and its contiguous waters set out in column 1 of the following table is set out in column 2:

TABLE

Item	Column 1 Pilotage Service	Column 2 Basic Charge ($)
1.	Through the Welland Canal, if the pilot is changed at Lock 7,
	(a) for that portion of the passage between the northern limit of the Canal and Lock 7	1,900
	(b) for that portion of the passage between Lock 7 and the southern limit of the Canal	1,900
2.	Between Southeast Shoal and Toledo or any point on Lake Erie west of Southeast Shoal	2,032
3.	Between points on Lake Erie west of Southeast Shoal	1,199
4.	Between Southeast Shoal and the Port Huron Change Point or any point on the St. Clair River, if the pilot is not changed at the Detroit pilot boat	3,534
5.	Between Southeast Shoal and Detroit, Windsor or any point on the Detroit River	2,032
6.	Between Southeast Shoal and the Detroit pilot boat	1,471
7.	Between Toledo or any point on Lake Erie west of Southeast Shoal and the Port Huron Change Point, if the pilot is not changed at the Detroit pilot boat	4,096
8.	Between Toledo or any point on Lake Erie west of Southeast Shoal and Detroit, Windsor or any point on the Detroit River	2,638
9.	Between Toledo or any point on Lake Erie west of Southeast Shoal and the Detroit pilot boat	2,032
10.	Between Detroit, Windsor or any point on the Detroit River and any point on the Detroit River	1,199
11.	Between Detroit, Windsor or any point on the Detroit River and the Port Huron Change Point or any point on the St. Clair River	2,658
12.	Between the Detroit pilot boat and any point on the St. Clair River	2,658
13.	Between the Detroit pilot boat and the Port Huron Change Point	2,064
14.	Between points on the St. Clair River	1,199
15.	Between the Port Huron Change Point and any point on the St. Clair River	1,471

(6) The basic charge for a pilotage service in International District No. 3 and its contiguous waters set out in column 1 of the following table is set out in column 2:

TABLE

Item	Column 1 Pilotage Service	Column 2 Basic Charge ($)
1.	Trip, other than a movage, between the southern limit of the District and the northern limit of the District or the Algoma Steel Corporation Wharf at Sault Ste. Marie, Ontario	2,713
2.	Trip, other than a movage, between the southern limit of the District and Sault Ste. Marie, Michigan, or any point in Sault Ste. Marie, Ontario, other than the Algoma Steel Corporation Wharf at Sault Ste. Marie, Ontario	2,272
3.	Trip, other than a movage, between the northern limit of the District and Sault Ste. Marie, Ontario, including the Algoma Steel Corporation Wharf at Sault Ste. Marie, Ontario, or Sault Ste. Marie, Michigan	1,021
4.	Movage	1,021

UNDESIGNATED WATERS AND CONTIGUOUS WATERS

2. (1) Subject to subsections (2) and (3), the basic charge for a pilotage service set out in column 1 of the following table is set out in column 2:

TABLE

Item	Column 1 Pilotage Service	Column 2 Basic Charge ($)
1.	Being present on board, for a six-hour period or part of a six-hour period, in the undesignated waters and contiguous waters of
	(a) Lake Ontario	906
	(b) Lake Erie	782
	(c) Lake Huron, Lake Michigan or Lake Superior	546
2.	Docking or undocking each time in the undesignated waters and contiguous waters of
	(a) Lake Ontario	863
	(b) Lake Erie	602
	(c) Lake Huron, Lake Michigan or Lake Superior	522

(2) If a ship with a pilot on board makes a direct transit of the undesignated waters and contiguous waters of Lake Erie between Southeast Shoal and Port Colborne, the basic charges set out in subsection (1) are not chargeable unless

1. (a) the ship is required by law to have a pilot on board in those waters; or
   
2. (b) the pilot provides pilotage services in those waters at the request of the master of the ship.
   

(3) The basic charge for pilotage services consisting of a lockage and a movage between Buffalo and any point on the Niagara River below the Black Rock Lock is $1,537.

DETENTION

3. (1) Subject to subsections (2) and (3), if a pilot is detained for the convenience of a ship after the end of the pilot’s assignment or during an interruption of the passage of the ship through designated waters or contiguous waters, an additional basic charge of $73 is payable for each hour or part of an hour that the pilot is detained.

(2) The maximum basic charge payable under subsection (1) for any 24-hour period is $1,752.

(3) No basic charge for the detention of a pilot is payable under this section during an interruption of the passage of a ship

1. (a) that is caused by ice, weather or traffic, unless the interruption is during the period beginning on December 1 in a year and ending on April 8 in the next year; or
   
2. (b) that ends during a period in respect of which a basic charge is set out in item 1 of the table to subsection 2(1).
   

DELAYS

4. (1) Subject to subsection (2), if the departure or movage of a ship to which a pilot has been assigned is delayed for the convenience of the ship for more than one hour after the pilot reports for duty at the designated boarding point, a basic charge of $73 is payable for each hour or part of an hour of that delay, including the first hour.

(2) The maximum basic charge payable under subsection (1) for any 24-hour period is $1,752.

CANCELLATIONS

5. (1) If a request for pilotage services is cancelled after the pilot reports for duty at the designated boarding point, a basic charge of $1,515 is payable.

(2) Subject to subsection (3), if a request for pilotage services is cancelled more than one hour after the pilot reports for duty at the designated boarding point, in addition to the basic charge set out in subsection (1), a basic charge of $73 is payable for each hour or part of an hour, including the first hour, between the time that the pilot reports for duty and the time of cancellation.

(3) The maximum basic charge payable under subsection (2) for any 24-hour period is $1,752.

(4) If a request for pilotage services is cancelled after a pilot has left the pilot’s work station for the designated boarding point, there must be, in addition to any other basic charge set out in this section, a charge in an amount equal to reasonable travel and other expenses incurred by the pilot in travelling from the work station to that boarding point and back to the work station.

ASSIGNMENT OF MORE THAN ONE PILOT

6. If more than one pilot is assigned to a ship, the basic charges set out in this Schedule must be multiplied by the number of pilots assigned.

SLOW-MOVING SHIPS

7. (1) If a ship exchanges pilots in accordance with subsection 8.1(1) of the Great Lakes Pilotage Regulations, the basic charges set out in this Schedule must be multiplied in accordance with section 6.

(2) If a ship that is required to exchange pilots under subsection 8.1(1) of the Great Lakes Pilotage Regulations does not do so because no licensed pilot is available for an exchange, the basic charges set out in this Schedule must be doubled.

(3) Subsections (1) and (2) do not apply in respect of a ship that is required to exchange pilots under subsection 8.1(1) of the Great Lakes Pilotage Regulations because the ship was slowed down by ice, weather or traffic.

OVERCARRIAGE

8. (1) If a pilot is unable to board a ship at the normal boarding point and must, in order to board it, travel beyond the area for which the pilot’s services are requested, a basic charge of $436 is payable for each 24-hour period or part of a 24-hour period during which the pilot is away from the normal boarding point.

(2) If a pilot is carried on a ship beyond the area for which the pilot’s services are requested, a basic charge of $436 is payable for each 24-hour period or part of a 24-hour period before the pilot’s return to the place where the pilot normally would have disembarked.

(3) In addition to the basic charges set out in subsections (1) and (2), there must be a charge in an amount equal to reasonable travel and other expenses incurred by a pilot that are directly associated with the requirement to travel to or from a place other than the pilot’s normal boarding or disembarking place.

SCHEDULE 2
(Subparagraphs 3(1)(b)(i) and (ii) and section 4)

PILOTAGE CHARGES FOR THE CORNWALL DISTRICT

GENERAL

1. The basic charge for a pilotage service set out in column 1 of the following table is set out in column 2 but is subject to the minimum basic charge set out in column 3, if applicable:

TABLE

Item	Column 1 Pilotage Service	Column 2 Basic Charge ($)	Column 3 Minimum Basic Charge ($)
1.	Trip between the eastern limit of the Cornwall District and Cornwall or the pilot boarding station near Saint-Régis, Quebec	4,047	N/A
2.	Trip other than a trip referred to in item 1	18.58 for each kilometre (30.92 for each statute mile), plus 516 for each lock transited	1,041
3.	Docking or undocking for the purpose of loading or unloading cargo, stores or bunker fuel or of effecting repairs	725	N/A
4.	Movage	1,558	N/A

DETENTION

2. (1) Subject to subsections (2) and (3), if a pilot is detained for the convenience of a ship after the end of the pilot’s assignment or during an interruption of the passage of the ship through the Cornwall District, an additional basic charge of $136 is payable for each hour or part of an hour that the pilot is detained.

(2) The maximum basic charge payable under subsection (1) for any 24-hour period is $3,264.

(3) No basic charge for detention of a pilot is payable under this section during an interruption of the passage of a ship that is caused by ice, weather or traffic, unless the interruption is during the period beginning on December 1 in a year and ending on April 8 in the next year.

DELAYS

3. (1) Subject to subsection (2), if the departure or movage of a ship to which a pilot has been assigned is delayed for the convenience of the ship for more than one hour after the pilot reports for duty at the designated boarding point, a basic charge of $136 is payable for each hour or part of an hour of that delay, including the first hour.

(2) The maximum basic charge payable under subsection (1) for any 24-hour period is $3,264.

CANCELLATIONS

4. (1) If a request for pilotage services is cancelled after the pilot reports for duty at the designated boarding point, a basic charge of $1,543 is payable.

(2) Subject to subsection (3), if a request for pilotage services is cancelled more than one hour after the pilot reports for duty at the designated boarding point, in addition to the basic charge set out in subsection (1), a basic charge of $136 is payable for each hour or part of an hour, including the first hour, between the time that the pilot reports for duty and the time of the cancellation.

(3) The maximum basic charge payable under subsection (2) for any 24-hour period is $3,264.

(4) If a request for pilotage services is cancelled after a pilot has left the pilot’s work station for the designated boarding point, there must be, in addition to any other basic charge set out in this section, a charge in an amount equal to reasonable travel and other expenses incurred by the pilot in travelling from the work station to that boarding point and back to the work station.

ASSIGNMENT OF MORE THAN ONE PILOT

5. If more than one pilot is assigned to a ship, the basic charges set out in this Schedule must be multiplied by the number of pilots assigned.

SCHEDULE 3
(Paragraph 3(1)(b.1) and section 4)

PILOTAGE CHARGES FOR THE PORT OF CHURCHILL, MANITOBA

1. The basic charge for a pilotage service that is provided during the period beginning on July 20 in a year and ending on October 31 in the same year and that is set out in column 1 of the following table, is set out in column 2:

TABLE

Item	Column 1 Pilotage Service	Column 2 Basic Charge ($)
1.	Entering or exiting the port	1,477
2.	Movage	1,032
3.	Embarking or disembarking a pilot at a pilot boarding station if a boat is used	The amount charged to hire the boat

2. The basic charges for any service provided in a year during the period preceding July 20 or following October 31 are the following:

1. (a) the salary and benefits of the pilot, as contracted, beginning on the date of the pilot’s departure from the pilot’s home base and ending on the date of the pilot’s return to that home base;
   
2. (b) the travel expenses of the pilot, starting from and ending at the pilot’s home base, including transportation, meals and lodging;
   
3. (c) the cost of the pilot’s use of a pilot boat, helicopter or other means of transportation; and
   
4. (d) a surcharge of 15% on the total of the amounts referred to in paragraphs (a) to (c), to cover administrative and assignment costs.
   

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue

The Great Lakes Pilotage Authority (the Authority) is responsible for administering, in the interests of safety, an efficient pilotage service within Canadian waters in the province of Quebec, south of the northern entrance of Saint-Lambert Lock and in and around the provinces of Ontario and Manitoba. The Pilotage Act requires that the Authority set tariffs at a level that permits it to operate on a self-sustaining financial basis. In addition, the Office of the Auditor General, in its Special Examination Report of April 2008, directed the Authority to take appropriate measures to become financially self-sufficient and to eliminate its accumulated deficit within the next four years.

During the latter months of 2008 and early 2009, there was a significant decline in shipping traffic levels due to the worldwide economic recession. In those years, the Authority’s traffic decreased by 42%. The 2009 traffic was the lowest traffic in the Authority’s history. As the North American economy recovered, the traffic trend was reversed in 2010 as traffic increased by 36% from 2009 and the forecasted traffic for 2011 is expected to be the same as 2010 or even better. The increase in traffic in 2010 and other factors contributed in generating increased revenues for the Authority from the collection of pilotage charges. This has resulted in the Authority having an operating surplus of over $2.0 million in 2010, thus reducing its accumulated deficit to $3.5 million at December 31, 2010. The Authority is planning on eliminating its accumulated deficit in the next four years.

Contributing factors for the Authority having a financial surplus in 2010 include

• an increase in pilotage assignments of 36% from 2009;
• a 15% temporary tariff surcharge on all pilotage charges during the period from August 17, 2009, to December 31, 2010;
• steps taken in 2009 to reduce operating costs by reducing the number of pilots through early retirement, deferring staff and management professional development courses and reducing travel and maintenance costs;
• tariff increases implemented in November 2010; and
• the introduction of Classes 5 and 6 for larger ships in November 2010.

The Authority has taken many steps since 2008 to control costs and increase revenues. However, costs will increase in 2011 due to labour agreements previously negotiated with clerical and pilot employees, and a further tariff amendment is necessary to help ensure that the Authority operates on a self-sustaining financial basis and reduces its accumulated deficit.

Objectives

The objective of the amendments to the Great Lakes Pilotage Tariff Regulations (the Regulations) is to allow the Authority to operate on a self-sustaining financial basis. The amendments are intended to help ensure that the Authority realizes for 2011, an operating surplus and positive cash-flow that will fully cover the costs of pilotage services to its clients and provide sufficient funding to reduce its accumulated deficit of $3.5 million while continuing to provide a safe and efficient pilotage service in accordance with the Pilotage Act.

Description

The amendments to the Regulations include

— a 3% general tariff increase in all of the Authority pilotage districts;

— a 3% decrease in the temporary tariff surcharge from 15% in 2010 to 12% in 2011;

— a change to the table immediately following subsection 3(2) of the Regulations to repeal Classes 5 and 6 categories for larger ships for the Great Lakes region as introduced in the 2010 tariff initiative; and

— minor editorial improvements and corrections.

Regulatory and non-regulatory options considered

The retention of the existing tariff rates was considered as a possible option. The Authority, however, rejected this status quo position since it has an accumulated deficit of $3.5 million at the end of 2010 and must take measures to ensure its financial self-sufficiency and reduce its accumulated deficit. The increase of tariff rates is necessary to reflect the actual costs for the various pilotage services provided to the industry. Also, in accordance with the Special Examination Report of April 2008, the Authority is required to be financially self-sufficient and eliminate its deficit within four years.

A second option is to have further reductions in operating costs. However, this option is not deemed to be an alternative since it could reduce the quality of service provided. Approximately 85% of the Authority’s annual revenues are used to pay for pilot salaries, benefits, travel, pilot boat and other operational related expenses. The remaining margin covers administrative overhead expenses. The Authority has maintained its administrative expenses at the lowest possible level, in the range of 7% of annual revenues.

The third and recommended option considered is to adjust revenues by implementing an overall tariff increase, a decrease in the temporary tariff surcharge and the repeal of Classes 5 and 6 introduced in 2010. These amendments will help enable the Authority to provide a safe and efficient pilotage service in accordance with the Pilotage Act, operate on a self-sustaining financial basis and reduce its current accumulated deficit.

Benefits and costs

During the development of these regulatory amendments, a CBA was conducted on behalf of the Authority addressing the three major amendments. The CBA indicates that the net present benefit to the Authority and the marine transportation industry is over $12.5 million over a 10-year period.

It is estimated that the cost to the marine transportation industry would increase by a present value of $2.7 million over 10 years, representing additional fees for pilotage services. However, since this amendment will allow the Authority to maintain service levels rather than reducing pilot numbers in the short term, the shipping industry will experience a benefit in the form of reduced wait times for pilotage services. This benefit has been estimated at a present value of $15.3 million over 10 years, more than outweighing the cost of increased tariffs.

In addition, it is anticipated that this tariff amendment will provide the Authority with a positive cash flow of approximately $13,000 in 2011.

The revenue generated from the amendments will be beneficial in that it will enhance the Authority’s ability to operate on a self-sustaining financial basis that is both fair and reasonable, while reducing its accumulated deficit in accordance with the Special Examination Report of April 2008. These amendments will also be beneficial in that the Authority could continue to provide a safe and efficient pilotage service in accordance with the requirements of the Pilotage Act.

For an average-sized ship transiting the Seaway between Montreal and Thunder Bay, the pilotage charge in 2010 was $43,500 for a one-way trip. For a round trip, these charges are doubled. These amendments will result in the pilotage charge in 2011 to be the same as for 2010. In future years, this tariff amount will decrease as the temporary surcharge currently in effect expires on December 31, 2011.

There are presently fewer than 20 companies operating foreign-flag ships within the Great Lakes that must employ Authority pilots. For a foreign-flag ship transiting these waters, its pilotage costs represent approximately 3.5% of its total operating costs. With the adjustment in pilotage costs attributed to these three amendments, it is estimated that its total pilotage costs will remain at approximately 3.5% of the ship’s total operating costs.

In certain districts within the Authority’s jurisdiction, pilotage is shared equally between Canadian and U.S. pilots on a rotational basis. The Authority and its U.S. counterpart regularly exchange information concerning pilotage rates. In 2011, the U.S. pilotage authority intends to increase its tariff rates by an overall 3.5% and when this occurs, the U.S. rates would be the same as those in Canada, based on parity of the dollar. When the three amendments come into effect, however, the Authority’s rates will be temporarily higher than the U.S. rates. Although this will provide the U.S. pilotage authority with a temporary financial competitive advantage, the impact on international competitiveness is negated by operational principles since pilotage services are shared equally between both countries on a rotational basis.

Treatment of risk and uncertainty

The conclusions of the CBA are subject to cautious interpretation, as reasonable assumptions had to be made in order to depict the Authority’s financial future over the next 10 years. The analysis makes the assumption that the yearly number of assignments undertaken by the Authority is to grow according to the forecasted growth rates for the 2011–14 period (3.5%) and to remain constant after 2014. Further, an assumption was made that the Authority will be able to manage its accumulated deficit in the same fashion it was able to manage it over the last five years. Accordingly, the interest rates used in order to assess avoided interest charges are based on an average of the 2006–10 rates observable.

Aggregated costs and benefits, as well as a list of potential qualitative impacts for these amendments can be found in the following cost-benefit statement.

Costs, benefits and distribution		2011	2012	2020	Total (present value)	Annual average
A. QUANTIFIED IMPACTS IN 2009 $
Benefit — Increased revenue for GLPA	Great Lakes Pilotage Authority	13,000	—	—	12,000	2,000
Benefit — Fewer pilotage-related delays for shippers	Maritime transport industry	—	806,000	7,227,000	15,288,000	2,278,000
Costs — Increased tariffs paid by shippers	Maritime transport industry	(13,000)	(478,000)	(437,000)	(2,739,000)	(408,000)
Net benefits					12,561,000
B. QUANTIFIED IMPACTS IN NON-$ — RISK ASSESSMENT, e.g. mortality, morbidity
Positive impacts	N/A
Negative impacts	N/A
C. QUALITATIVE IMPACTS
Canadian population — Safe, efficient and timely pilotage services in districts operated by GLPA in the future.
Canadian importers and exporters — Since the elasticity of the demand curve for maritime transportation is likely to be low according to the existing literature, there is a possibility that the incremental costs borne by the shipping industry may be passed on to Canadian importers in the case of incoming cargo. Additionally, Canadian exporters may face marginally-decreased demand for their goods due to the possible increase of transportation costs, in the case of outgoing cargo.

The full CBA is available at www.glpa-apgl.com/reports_e.asp.

Rationale

In addressing its current accumulated deficit, the Authority evaluated the impact of a tariff increase, the continuance of the temporary tariff surcharge and the marine industry’s objection to the introduction in 2010 of Classes 5 and 6 for larger ships. This had to be done in a way that will enable the Authority to provide a safe and efficient pilotage service in accordance with the Pilotage Act, operate on a self-sustaining financial basis and reduce its current accumulated deficit. In order to perform this evaluation, the following facts or occurrences were reviewed:

• during the latter months of 2008 and early 2009, there was a significant decline in shipping traffic levels due to the worldwide economic recession. In those years, the Authority’s traffic decreased by 42%. The 2009 traffic was the lowest traffic in the Authority’s history;
• due to the unprecedented traffic decrease and facing a major financial loss for the operating year 2009, the Authority decided in June 2009 to cut operating costs by reducing pilot numbers and operational and administrative costs, adjusting the temporary tariff surcharge and requesting approval from the Minister of Finance for an increased line of credit in order to finance its operations;
• the Authority’s operating loss for 2009 was $1,865,000; and
• the Authority’s accumulated deficit at December 31, 2009 was $5,500,000.

2010 tariff initiative:

• a 1.5% overall tariff increase except within the Port of Churchill and the Lake Ontario District;
• a 15% tariff increase for the Lake Ontario District;
• a 30% tariff increase for the Port of Churchill;
• the introduction of two additional classes of ships, Classes 5 and 6;
• the Authority had forecasted traffic increase of 5% for 2010 and an operating surplus of $47,000;
• the Authority published its 2010 tariff proposal in the Canada Gazette, Part I, on May 1, 2010, followed by a 30-day comment period;
• in late May 2010, the Shipping Federation of Canada (the Federation), representing 85% of the Authority’s customers, filed an objection to the Canadian Transportation Agency (the Agency);
• during the period of June to November 2010, the Agency conducted investigation and in early November rendered its decision to hold a public hearing to be held in late January 2011 with a final decision expected to be issued in April 2011. During this period, the Authority could not publish its 2011 tariff proposal causing its forecast for 2011 revenues to decrease by 15% as the temporary tariff surcharge of 15% introduced in 2009 was set to expire on December 31, 2010;
• by November 2010, the Authority was experiencing a major increase in shipping traffic for the year. Traffic had increased by 33% from 2009. The Authority had forecasted a traffic increase of 5% in the 2010–14 Corporate Plan and a small surplus of $47,000. The revised forecast prepared in November 2010 based on the increased traffic would result in an anticipated operating surplus of $1,400,000 for the year;
• in late November, the Authority’s management and the Federation reached an agreement that permitted the Federation to withdraw its objection and the Authority to keep all revenues collected in 2010 as a result from the 2010 tariff initiative. The agreement also included the Federation’s support for the Authority’s 2011 tariff amendment;
• the Authority’s actual traffic in 2010 increased by 36% from 2009. This resulted in an operating surplus for the year of over $2.0 million and a reduction of its accumulated deficit to $3.5 million;
• the Authority’s forecast traffic for 2011 is the same as 2010 or even better. This will result in a forecasted operating surplus of $1.0 million and a further reduction of its accumulated deficit to $2.5 million.

Considering the figures presented in the CBA, it is apparent the benefits to the Authority and the marine industry are positive. These amendments will ensure that its ships will continue to receive a safe, efficient and timely pilotage service that will protect the public, environmental and social concerns, both now and in future years.

With respect to international cooperation and coordination, it should be noted that the Authority regularly exchanges information concerning pilotage rates and other matters with its U.S. pilotage counterpart since pilotage is shared on an equal basis in certain districts within the Authority’s jurisdiction.

The tariff amendment is consistent with the directive from the Treasury Board and the Auditor General as contained in its Special Examination Report of April 2008. This requires the Authority to take appropriate measures to become financially self-sufficient and eliminate its deficit within the next four years.

Strategic environmental analysis

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals of 1999 and the Transport Canada Policy Statement on Strategic Environmental Assessment, a strategic environmental assessment of these amendments was conducted in the form of a preliminary scan. The strategic environmental assessment concluded that the amendments are not likely to have important environmental effects.

Consultation

The Authority’s major stakeholder is the Shipping Federation of Canada (the Federation), which represents the owners/ operators of foreign-flag ships that operate within the Great Lakes system and are required to utilize the services of Authority pilots while transiting these waters. These foreign-flag ships represent 85% of the Authority’s business and the remaining 15% pertains to the Canadian domestic fleet represented by the Canadian Shipowners’ Association (the Association). The Association represents approximately 70 Canadian-flag ships and most of these ships do not utilize the services of Authority pilots. Approximately 10 ships within the domestic fleet, however, are Canadian tankers that employ the services of a pilot when transiting certain districts within the Authority’s jurisdiction or when the ship/cargo charterers require the ship to utilize the services of a pilot.

The Authority met with representatives from the Federation on November 22, 2010 and February 10, 2011, with the Association on January 7, 2011, and with the various port authorities and key stakeholders on January 20, 2011, to discuss current and future traffic levels within the Great Lakes and to present its current financial position. The Authority indicated that during 2008 and 2009, traffic levels have been seriously affected, decreasing by 42% over the two-year period, due to the worldwide economic recession. However, the Authority saw traffic increase by 36% in 2010 due to the economic recovery in North America. The Authority generated an operating surplus of $2.0 million for 2010 and has reduced its accumulated surplus to $3.5 million at December 31, 2010.

These amendments were pre-published in the CanadaGazette, Part I, on March 26, 2011, to provide interested persons with the opportunity to make comments or to file a notice of objection with the Canadian Transportation Agency (CTA) as allowed by subsection 34(2) of the Pilotage Act. No comments were received and no notices of objection were filed.

Implementation, enforcement and service standards

Section 45 of the Act provides an enforcement mechanism for these 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. Section 48 of 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. These existing mechanisms are expected to be sufficient for the implementation and enforcement of the amendments.

Contact

Mr. R. F. Lemire
Chief Executive Officer
Great Lakes Pilotage Authority
P.O. Box 95
Cornwall, Ontario
K6H 5R9
Telephone: 613-933-2991
Fax: 613-932-3793

Footnote a
S.C. 1998, c. 10, s. 150

Footnote b
R.S., c. P-14

Footnote c
R.S., c. P-14

Footnote d
L.R., ch. P-14

Footnote 1
SOR/84-253; SOR/96-409