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Decision No. 618-W-2005

REASONS FOR DECISION

IN THE MATTER OF the proposed tariff of pilotage charges published by the Laurentian Pilotage Authority and the notices of objection filed by the Canadian Shipowners Association, the Corporation des pilotes du Saint-Laurent Central Inc. and the Shipping Federation of Canada.

File No. W9250-3-9

INTRODUCTION

Under the Pilotage Act, R.S.C., 1985, c. P-14, the Laurentian Pilotage Authority (hereinafter the Authority) is responsible for providing pilotage services within Canadian waters in and around the province of Quebec, north of the northern entrance to St. Lambert Lock, except the waters of Chaleur Bay. Pilotage is compulsory from the St. Lambert Lock to Les Escoumins, including the Saguenay River, and pilotage is not compulsory east of Les Escoumins. The Authority has divided the compulsory waters into three pilotage districts for administrative purposes: District 1-1 for the Port of Montréal; District 1 from Montréal to Québec; and District 2 from Québec to Les Escoumins (including the Saguenay River).

Pursuant to subsection 34(1) of the Pilotage Act, the Authority published proposed amendments to the Laurentian Pilotage Tariff Regulations in the Canada Gazette Part I edition of March 5, 2005.

Under subsection 34(2) of the Pilotage Act, any interested person who has reason to believe that any charge in a proposed tariff of pilotage charges is prejudicial to the public interest may file an objection with the Canadian Transportation Agency (hereinafter the Agency).

In accordance with this provision, objections to the tariff proposal were filed on April 4, 2005 by the Canadian Shipowners Association, the Corporation des pilotes du Saint-Laurent Central Inc. and the Shipping Federation of Canada.

Subsection 34(4) of the Pilotage Act requires the Agency to make an investigation of the proposed charge. Section 35 of the Pilotage Act requires the Agency to make a recommendation to the Authority and the Authority is required to govern itself accordingly.

As part of its investigation, the Agency held a hearing in Montréal from September 27 to 28, 2005 after issuing procedural directions on July 27, 2005 outlining the procedures to be followed at the public hearing.

RECOMMENDATION

The Agency has given careful consideration to all of the evidence submitted by the parties.

The Agency concludes that the tariff proposal published by the Laurentian Pilotage Authority on March 5, 2005 is prejudicial to the public interest and should not be implemented.

Reasons for this Decision will follow.

REASONS FOR DECISION NO. 618-W-2005

IN THE MATTER OF the proposed tariff of pilotage charges published by the Laurentian Pilotage Authority on March 5, 2005 and the notices of objection filed by the Canadian Shipowners Association, the Corporation des pilotes du Saint-Laurent Central Inc. and The Shipping Federation of Canada.

File No. W9250-3-9

BACKGROUND

[1] Under the Pilotage Act, R.S.C., 1985, c. P-14, the Laurentian Pilotage Authority (hereinafter the Authority) is responsible for providing pilotage services within Canadian waters in and around the province of Quebec, north of the northern entrance to St. Lambert Lock, except the waters of Chaleur Bay. Pilotage is compulsory from the St. Lambert Lock to the eastern limit of the Port of Montréal (District 1-1); from Montréal to Québec (District 1); and from Québec to Les Escoumins, including the Saguenay River (District 2). Beyond Les Escoumins, pilotage is not compulsory and these waters are referred to as District 3.

[2] Pursuant to subsection 34(1) of the Pilotage Act, the Authority published a tariff proposal introducing increases to the pilotage charges as an amendment to the Laurentian Pilotage Tariff Regulations in the Canada Gazette Part I of March 5, 2005.

[3] The proposed tariff increases consist of a general 5 percent tariff increase in District 1 and a temporary surcharge of 4.9 percent on each pilotage charge in District 1 until the proceeds of this surcharge allows the Authority to reimburse the arrears owed to the Corporation des pilotes du Saint-Laurent Central Inc. (hereinafter CPSLC) which are estimated to be at $4,316,000.

[4] Under subsection 34(2) of the Pilotage Act, any interested person who has reason to believe that any charge in a proposed tariff of pilotage charges is prejudicial to the public interest may file an objection with the Canadian Transportation Agency (hereinafter the Agency).

[5] Objections to the tariff proposal were filed on April 4, 2005 by the Canadian Shipowners Association (hereinafter CSA), CPSLC and The Shipping Federation of Canada (hereinafter SFC).

[6] Subsection 34(4) of the Pilotage Act requires the Agency to conduct an investigation of the proposed tariff amendment. Section 35 of the Pilotage Act requires the Agency to make a recommendation to the Authority which is required to govern itself accordingly.

[7] Following receipt of the notices of objection, the Agency began an investigation in accordance with its mandate under the Pilotage Act.

[8] By Order No. 2005-W-221 dated April 20, 2005, the Agency directed the Authority to produce and file with the Agency, by May 4, 2005, information, particulars and documents relating to its operations and administration. The Authority was directed to provide a copy of the information, particulars and documents to the objectors upon request.

[9] On May 4, 2005, the Authority filed its response to Order No. 2005-W-221, and in accordance with the Canadian Transportation Agency General Rules, SOR/2005-35, it filed its answer to the objections. CSA, SFC and CPSLC filed replies to the Authority's answer on May 24, 2005.

[10] Following a review of the objections, the Agency concluded that it would hold an oral hearing as part of its investigation and parties were informed accordingly on May 20, 2005. Procedural directions were issued on July 28, 2005 and the oral hearing was held in Montréal, Quebec, on September 27 and 28, 2005.

ISSUE

[11] In accordance with subsection 34(2) of the Pilotage Act, the issue to be addressed is whether the proposed tariff of pilotage charges published by the Authority on March 5, 2005 is prejudicial to the public interest.

POSITIONS OF THE PARTIES

The Authority

[12] The Authority states that this tariff proposal is special in nature in the sense that it constitutes a means for the Authority to respond to a specific issue that it was faced with, following the determination by the Agency in December 2004 of the appropriate tariff for 2005. Consequently, the Authority is of the view that the matter at hand is limited to the proposed tariff increases, which are required as a result of the 8 percent retroactive increase of the fees that it must pay, effective July 1, 2002, to CPSLC pursuant to an adjudication award of the Federal Court on October 1, 2004.

[13] The Authority affirms that the Agency does not have to examine the justification of the tariff proposal, which is in response to an order that the Authority has no choice but to comply with, but that the Agency must focus on the means available to the Authority to comply. Therefore, it would be contrary to the Agency's mandate, pursuant to the Pilotage Act, that its decision prevent the Authority from complying with a court order. According to the Authority, the Agency must ensure that the Authority has the financial resources to fulfill its mandate through pilotage charges that correspond solely to the justifiable cost of services; the Agency should not exercise its authority without taking the context into account. Otherwise, the Authority would be unable to fulfill its mission, while remaining financially self-sufficient.

[14] The Authority states that although it strongly disagrees with the arbitration award, and as it was unsuccessful in contesting the award, it is binding and the Authority must comply with it. The financial impacts can be grouped under two categories: the additional ongoing 5 percent increase to the fees represents nearly $1,050,000 a year; and this increase has resulted in $4,000,000 in arrears (capital and interest).

[15] In its arguments, the Authority notes that it was the users, including SFC, that had asked for arbitration, as provided for in the Pilotage Act, as they wanted assurance of pilotage services, and that it is this arbitration award that is the basis for the current tariff proposal.

[16] With respect to the arrears, the Authority states that after considering several scenarios, it concluded that to reimburse them, it would be preferable to take out a loan, amortized over 36 months, from a financial institution, subject to government approval. Consequently, the Authority states that it has no choice but to proceed with two tariff increases: first, a 5 percent increase on all pilotage charges applicable in District 1; and second, a temporary 4.9 surcharge on these same charges until the full arrears are reimbursed. Without these increases, the Authority will not receive the authorizations necessary to borrow the required amounts.

[17] As to whether the Authority has sufficient funds, the Auditor General's special examination report revealed the precarious state of the Authority's finances. As tariffs are the Authority's only source of revenue, it must recover a sufficient amount from its users.

[18] According to the Authority, the sole issue to be addressed is whether the proposed tariff increases are fair and reasonable, and in the public interest. Even if CSA and SFC claim that there should be an equivalent increase in services, the Authority maintains that this tariff proposal is special in nature, that the Agency must consider the cost of maintaining services and that the issue of improving services is irrelevant.

[19] As for SFC's argument that the Authority could renegotiate the decision, the Authority notes that CSA and SFC are not contesting the fact that the Authority is required to comply with the arbitration award, but rather the pilotage charges that they must bear. They also question the validity of the legislative provisions that relate to the payment of fees of pilot corporations. The Authority claims that, like any private citizen, it must comply with Federal Court orders and reminds the parties that the 1998 amendments to the Pilotage Act, specifically at the request of shipowners, are the source of the current process that sets out the system of contract renewals, mandatory mediation and arbitration for the final offer selection process. This system, as described in the dissenting opinion to the Larouche report, has led to the pilot corporations outbidding each other for higher pilotage charges.

[20] The implementation of the proposed tariff increases in only one district, that is in District 1, aims to ensure greater equality among users, based on the user pay principle. The Authority believes that the tariff proposal is reasonable and necessary so that it can maintain effective and safe pilotage services, while ensuring its financial self-sufficiency.

[21] In response to CPSLC's argument that the Agency has jurisdiction over the validity of the tariff proposal, the Authority contends that the Agency has a mandate to investigate the appropriateness of the proposed increase, not its legality.

[22] Furthermore, during the hearing, the Authority submitted a copy of a writ of seizure for two pilot boats and a legal mortgage notice which had been served on the Authority by CPSLC. According to the Authority, the seizure would have significant consequences and would cause delays for ships.

[23] The Authority states that it does not have any other financial means besides the proposed tariff increases to cover costs stemming from the arbitration award and that it feels that its tariff proposal is legally justified because it was accepted by higher courts. Furthermore, the Agency observed in its Decision No. 709-W-2004 dated December 29, 2004 that the 4 percent tariff increase stemmed from effective management and corresponded to the justifiable cost of services and did not jeopardize public interest. The Authority indicates that its financial situation has not changed significantly since December 29, 2004, the date of the above Decision.

[24] With respect to service improvements, the Authority notes that following collaboration between users and CPSLC, it was decided to make changes to night navigation in the pre-winter period (December 8 to 29, 2004) so as to stop giving priority to transiting ships, but to favour ships equipped with electronic navigational charts and two radars. These changes are in response, in part, to requests from users, who obtain better services as a result, without increased pilotage charges. The Authority states that if the changes to night navigation are to continue, it will become necessary to offset the delays resulting from increased traffic and the 50 percent drop in the number of pilots between December 24 to 29, as it is not acceptable to delay a large number of ships simply because there are not enough pilots.

[25] In conclusion, the Authority maintains that it is in the public interest that it be able to legally comply with the court order and requests that the Agency recommend, pursuant to section 33 of the Pilotage Act, the implementation of the tariff of pilotage charges published in the Canada Gazette of March 5, 2005.

CSA

[26] CSA states that the proposed tariff increases are not fair and reasonable, nor are they in the public interest, and they should not be implemented. CSA raises the following three grounds for its objection.

[27] First, CSA argues that the proposed tariff increases not only significantly exceed the Consumer Price Index (hereinafter the CPI), but they are not based on any increased value in services. CSA states that the final selection process, following unsuccessful contract negotiations, contemplated under the Pilotage Act does not take into account the public interest.

[28] CSA adds that every fee increase renders it more difficult for CSA members to compete with other modes of transportation. Consequently, CSA argues that the public interest requires that every tariff increase be scrutinized to determine if it is absolutely necessary and related to optimally efficient services.

[29] CSA states that at the hearing the Authority made no attempt to show that the increased charges are related to any increased value in the services provided to customers. CSA refers to Decision No. 709-W-2004 wherein the Agency determined that a pilotage authority ought not to be compensated for the costs of services that do not directly meet the needs of the users and that the requirement to be financially self-sufficient does not mean that users of pilotage services have to bear costs inconsistent with scrupulous and effective management by the pilotage authority. In this regard, CSA submits that the proposed tariff increases do not meet the needs of the users and that the Authority does not consider the arbitration award reasonable. CSA adds that this position was reinforced by the testimony of the Authority's witness in claiming that the tariff proposal did not stem from an improvement in level or quality of service. CSA also argues that there are no benefits to the users from the tariff proposal as the sole justification advanced by the Authority is to cover costs incurred as a result of the arbitration award.

[30] Secondly, CSA states that no tariff increase has ever been granted on a district basis and, in the past, tariff proposals resulting from contract negotiations have been spread across the Authority's customer base.

[31] Thirdly, CSA argues that the fact that the tariff proposal is necessary to cover all costs generated by the arbitration award which was sanctioned by the Federal Court raises the question of whether the Agency has jurisdiction. In CSA's opinion, the Agency cannot, as a matter of law, delegate its statutory mandate to any third party, be it the Authority, the pilot corporations, the arbitrator, or the courts. The Agency must ensure that the tariff amendments are fair and reasonable, and in the public interest. CSA argues that only the Agency has been given this responsibility under the Pilotage Act. In fact, CSA adds that this is so whether the negotiations between the Authority and the pilot corporations result in an agreement, or culminate in an arbitration award. Moreover, CSA asserts that the "automatic pass-through" of pilotage costs in District 1 would violate the principles of natural justice and equity as CSA was neither heard by the arbitrator nor the Federal Court.

[32] CSA explains that the deleterious impact on the public interest of collectively delegating to the Authority and the pilot corporations the authority to fix rates is illustrated by the fact that over the last few years the pilot corporations are effectively "outbidding" each other in the increases they negotiate with the Authority. Thus, large increases granted to one pilot corporation become the benchmark for the other pilot corporation. In other words, CSA maintains that pilot corporations are abusing their monopolistic powers, resulting in "spiralling" pilotage costs which, as now argued by the Authority and CPSLC, are outside the purview of the Agency's control as they claim that to disallow the proposed tariff would result in the Authority not being financially "self-sustaining".

[33] In CSA's view, where the contractual jurisdiction of an arbitrator comes directly in conflict with the statutory obligations of a regulatory authority, the decision of the arbitrator must be subject to the control of the regulatory body. In that respect, CSA argues that there is nothing in the Pilotage Act to suggest that the public interest does not apply when there is an arbitration award stemming from the final offer selection process.

[34] CSA asserts that the Agency must ensure that tariff charges are fair and reasonable, and in the public interest regardless of whether agreements between the pilotage authority and a pilot corporation result from negotiations or an arbitration award. An arbitrator cannot dictate terms to the Agency, and the Agency cannot delegate its statutory role to an arbitrator. CSA states that accepting the Authority's position that the Agency has no role to play when a tariff proposal results from an arbitration award would be tantamount to the Agency surrendering its regulatory role. In CSA's opinion, this would be an absurd result which was not the intent of Parliament. Therefore, argues CSA, the arbitration award should be suspended until such time as the Agency renders its decision on the tariff proposal.

CPSLC

[35] CPSLC raises two grounds in support of its objection. First, it argues that proposed increases target only one district and that the tariff proposal does not respect the requirements of a valid tariff amendment.

[36] CPSLC affirms that this is the first time that the Authority is attempting to impose increases for only one district. In CPSLC's view, in order for the proposed tariff to be valid, it must first be subject to a general tariff review to ensure that it reflects the actual situation of District 1 users.

[37] CPSLC contends that the proposed tariff is contrary to the spirit and letter of past Agency decisions that provide for legitimate cost recovery by encouraging competition and market forces. Tariff increases have always been applied to all districts, regardless of the fee increases to pilot corporations or to other contractual charges. Three tariff increases that impacted only District 2 users were applied without sectoral distinction and, since January 2002, District 1 users have borne global increases. In 2003, when the Corporation des pilotes du Bas Saint-Laurent (hereinafter CPBSL) obtained fee increases greater than those negotiated by the other pilot corporation, the Authority offset these increases by a proposal for a general increase in 2004. District 1 users therefore have always covered costs through the application of general tariff increases and it would be against the public interest to expose them to an exclusive increase as a result of an arbitration award.

[38] CPSLC affirms that a number of decisions made by the Authority over the years could explain its current financial situation: an additional fee increase for CPBSL; reduced recruitment of apprentice pilots; and the approval of increases exceeding the CPI for Districts 2 and 1-1. As a result, it would be unreasonable, unjustified and against the public interest to make only District 1 users bear the impact of a decision whose purpose is to re-establish the balance between fees paid to various corporations, considering that the fee increases granted to CPBSL were borne by all users.

[39] Furthermore, CPSLC contends that it is not in the public interest to increase tariffs for users on a district basis, when over 85 percent of ships that use a CPSLC pilot operate in District 2, and that the Authority's argument regarding fairness or justice for users of that District are, as a result, groundless.

[40] CPSLC notes that the contract negotiation process is imposed by the Pilotage Act, that the Authority has known about the result of the last negotiation process since March 2003 and that it has not seemed to have built up financial reserves since then. The current deficit cannot be attributed solely to the arbitration award; it results from the general management and other decisions made by the Authority since that date.

[41] It is CPSLC's view that reducing the Authority's general deficit through increases applied to only one of the three districts is unfair for users and is against the public interest because the requirement of financial self-sufficiency imposed on the Authority applies to all of its activities, not to each of its separate districts.

[42] As the second ground for its objection, CPSLC submits that the proposed tariff does not respect the legal requirements because it is too vague to be considered a valid tariff proposal because its application is based on an undetermined future date that does not take into account the possibility that the Authority's needs could change in the meantime.

[43] As for SFC's comments regarding the delays during the pre-winter period in 2004, CPSLC is outraged because it is of the view that users have greatly benefited from the winter navigation committee's work and resulting improvements.

[44] Finally, as for CSA's comments claiming that the Agency has some power to suspend the arbitration award, CPSLC contends that the arbitration award is final and binding. Consequently, it must be considered because it is one of the reasons for the Authority's financial situation.

SFC

[45] SFC states that the proposed tariff is not fair and reasonable and that it is prejudicial to the public interest. The tariff increases sought are not as a consequence of higher costs of providing efficient pilotage services. The increases are based on decisions that have no relevance under the Pilotage Act. The only basis for the tariff proposal is the recent arbitration award. This can only result in spiralling increases that have nothing to do with safe and efficient pilotage services.

[46] SFC asserts that the Authority has allowed itself to be locked into unreasonable contracts and the Authority proposes to assure financial self-sufficiency through whatever tariff increases are mathematically necessary. SFC argues that such tariff setting methodology cannot qualify as reasonable compensation for ensuring safe navigation, and does not reflect the justifiable costs of providing the service. SFC further asserts that the industry should not have to pay the costs of an authority that has been stripped of its powers and has left itself to be governed by service contracts. According to SFC, the Authority has left itself subservient to the service contracts, with its regulatory powers delegated to CPSLC.

[47] Although improvements in the quality of service have been promised for a number of years, SFC notes that since late December 2004, 40 ships have been delayed due to the unavailability of pilots despite the service contract which states that CPSLC will provide all pilots for safe, efficient and quality pilotage services, at all times in District 1, and that the Authority and CPSLC will take steps to remedy problematic situations. SFC is of the view that the lack of service demonstrates the inability of the Authority to provide an efficient service, and that there has been no improvement in service in District 1 to justify a 9.9 percent increase.

[48] To that effect, SFC supports the statement made by the Agency in Decision No. 709-W-2004 that the requirement for an authority to be self-sufficient does not mean that the users have to bear costs that are inconsistent with a scrupulous and effective management by an authority, and the test criteria developed by the Agency in that decision should apply.

[49] The arbitration award is subject to the Authority's ability to pay and the arbitrator acknowledged the risk involved for the Authority being able to implement tariff increases; however, SFC is of the view that the arbitrator wrongly concluded that the Authority had the capacity to pay for the award. Therefore, SFC asserts that the Authority and CPSLC will have to renegotiate as arbitration does not bind third parties.

[50] SFC argues that the matter of the arbitration award is a matter of private interest as it serves to benefit uniquely CPSLC, and that there are no efficiency improvements, no added services, no added safety, no economies and no benefit to any party other than CPSLC.

[51] At the hearing, SFC reiterated that the Agency must, in the present case as well as in any other case where a tariff increase is examined, ensure that the proposed tariff is consistent with the public interest criteria established by its own precedents. Therefore, it must consider the level of service, the efficiency of service, and the reasonableness of the requirement that the Authority achieve financial self-sufficiency.

[52] SFC disputes the Authority's statement that this is a special case where the process of allowing increases through arbitrated settlements guarantees the public interest, and that as a consequence, the Agency must accept the proposed tariff. SFC does not agree that as the tariff proposal is the result of a legislative process, it is thus justified. It asserts that, when an objection is filed, the Agency is not bound by any arbitration award, and that any tariff proposal must be scrutinized by the Agency on the issue of the public interest.

[53] SFC maintains that the Agency must fully exercise its jurisdiction, and that relevant jurisprudence has repeatedly stated that the awards delivered in relation to a pilotage authority/pilot corporation relationship do not impact the pilotage authority/users relationship which is governed by a different statutory and regulatory framework. To that effect, the Agency is not bound by the outcome of a final offer selected by an arbitrator, but the relevant framework for its analysis is the Pilotage Act, and the public interest criteria.

[54] As for the Authority's argument that it is the users, including SFC, that had asked for the final offer selection process, the SFC witness agreed that there had been the expectation with the final offer selection process in the Pilotage Act that there would no longer be any threat of interruptions in service when service contracts came up for renewal. SFC acknowledged that there could be cost increases associated with the final offer selection process but that such increases were expected to be similar to changes in the CPI.

[55] In its closing arguments, SFC drew attention to comments made in the Auditor General's report of July 2005 on the Authority that there are management issues that have not been resolved. Of note to SFC was that no steps had been taken by the Authority to put in place a system to assess the quality of service provided by pilots as directed by the Minister of Transport in 1999. In addition, SFC noted that the Auditor General's Report stated that there were no indicators of pilotage service delays or customer satisfaction in the Authority's annual report even though such recommendations had been made in a previous Auditor General Special Examination Report. This, in the SFC's opinion, was evidence of management problems leading to inefficiencies in service.

[56] SFC concludes that the tariff proposal should not be implemented as it is neither fair nor reasonable and is prejudicial to the public interest.

THE ANALYSIS

The Agency's mandate

[57] In its Decision No. 709-W-2004 of December 29, 2004, the Agency devoted several paragraphs to the scope of its mandate in terms of the specific legislative framework of the Pilotage Act. The Agency considers that it is appropriate to refer back to these paragraphs, in light of the arguments that the different counsel have presented regarding the scope of the Agency's authority in this matter.

Legislative framework

-- The pilotage authorities

[58] To understand the importance of the scope of the Agency's mandate in any pilotage investigation, it must be remembered that there is a monopoly in pilotage services in Canada. The Agency reminded the parties of this situation in its Decision No. 709-W-2004 by explaining that when the Pilotage Act came into force in 1971, four pilotage authorities were created, each with the exclusive right to administer pilotage services in a specific geographic region of Canada. Pursuant to section 18 of the Pilotage Act, the objects of an Authority are to establish, operate, maintain and administer in the interests of safety an efficient pilotage service. Therefore, once created a pilotage authority is solely responsible for administering pilotage services in the region under its jurisdiction, resulting in the monopolistic situation.

[59] To administer pilotage services, a pilotage authority has the power to make regulations to fix pilotage charges. However, the Pilotage Act imposes certain obligations in this regard. Subsection 33(3) of the Pilotage Act provides that the tariffs of pilotage charges prescribed by an Authority shall be fixed at a level that permits the Authority to operate on a self-sustaining financial basis and shall be fair and reasonable. These obligations are the responsibility of a pilotage authority. Although the pilotage authority can fix tariffs of pilotage charges at a level that permits the Authority to operate on a self-sustaining financial basis, it cannot fix tariffs that are unreasonable. In other words, the Authority's financial self-sufficiency must go hand in hand with the reasonableness of its tariffs.

-- The pilots

[60] To fulfill its duties, a pilotage authority must retain the services of pilots who were able to choose to become employees of the authority or to form a corporation when the Pilotage Act was first introduced in 1971. Pilots, whether they are part of a corporation or not, must provide safe pilotage services at all times. Pilots have the exclusive right to provide pilotage services in a specific region and the pilotage authority cannot deal with any other pilot groups in that region. In other words, in this situation as well, a pilot corporation has a monopoly.

[61] The relationships between pilot corporations and pilotage authorities are governed by contracts. Sections 15 and 15.1 to 15.3 of the Pilotage Act set out the contract renewal process between a pilotage authority and a pilot corporation. These sections also provide for the intervention of a mediator or an arbitrator in the event of disagreement. If the mediation process does not lead to an agreement, the arbitrator, through a final offer selection, will impose a contractual framework on the parties that will govern their professional relationship.

-- The users

[62] The users, the primary beneficiaries of pilotage services, pay the pilotage charges fixed by the pilotage authority. Pilotage charges are fixed pursuant to contracts negotiated-or imposed following arbitration- between the pilotage authority and pilot corporations regarding fees that a pilotage authority agrees to pay to pilot corporations and salaries paid to its own pilots, pursuant to collective agreements.

[63] However, users are entitled to file objections to a proposed tariff of pilotage charges that a pilotage authority wants to impose. Users can oppose by asserting that the proposed tariff is prejudicial to the public interest, that is the public interest in the usual sense and as defined in the national transportation policy set out in section 5 of the Canada Transportation Act, S.C., 1996, c. 10 (hereinafter the CTA). In determining whether a proposed tariff is prejudicial to the public interest, a balance must be struck between the rights and obligations of all parties concerned. Public interest within the meaning of the CTA also promotes a balance between a transportation system that is safe and secure, while ensuring free competition among the various players.

[64] Therefore, the Agency must take into account the rights, duties and obligations of all parties in its investigation pursuant to subsection 34(4) of the Pilotage Act. As for the issue of the Agency's mandate, the counsel for the different parties all presented arguments pertaining to the scope of the Agency's mandate in this case. These arguments will be reviewed briefly below, within their contextual background.

Parties' arguments on the scope of the Agency's mandate

-- Origin of the application for the proposed tariff increases

[65] In 1999, the Authority and CPSLC signed a pilotage service contract, which provided for annual fee increases of 3 percent. The contract included a clause that allowed CPSLC to withdraw from the contract regarding the fee increase negotiated with the Authority for the last year of the contract. In other words, this clause allowed CPSLC to reopen the contract with regard to the pilot fees to be paid for the last year of the contract and to renegotiate them. CPSLC did reopen the contract. The parties were unable to reach an agreement on the fee increase to be paid out to CPSLC so they submitted their dispute to arbitration.

[66] On March 12, 2003, the arbitrator fixed an 8 percent fee increase to be paid out to CPSLC for the last year of the contract. This was 5 percent higher than the 3 percent increase that the Authority had set out in its budget. The Authority unsuccessfully contested this arbitration award before the Master of the Federal Court. It also attempted, unsuccessfully, to contest the validity of that decision. All procedures to quash the arbitration award, which the Authority deemed unreasonable, were exhausted on October 1, 2004. The arbitration award has been binding since that date. As a result of the award, the Authority considered it necessary to publish regulations to increase pilotage charges. However, the Authority has restricted the increase to District 1.

-- The Authority

[67] The Authority indicated to the Agency that the exceptional nature of the tariff proposal, which stems exclusively from an arbitration award, requires that the Agency adopt a different approach from the one it has used in the past, specifically the last request for a tariff increase that gave rise to Decision No. 709-W-2004.

[68] Although the Authority states that it strongly disagrees with the arbitration award, it recognizes that it must comply with the arbitration award, as all of its attempts to contest the validity have failed. In the Authority's opinion, the Agency should assume that a service contract imposed through arbitration is reasonable. In other words, in order to attempt to reconcile the dual responsibilities that the Pilotage Act imposes on the arbitrator and the Agency, the Authority believes that the Agency must assume that the conditions established through arbitration are reasonable.

[69] That being said, the Authority acknowledges that given its precarious financial situation, it does not have sufficient funds to pay its debt to CPSLC. As tariffs are the Authority's only source of revenue, it considers that it is fair and reasonable to limit the application of the revised tariffs on an user pay basis to District 1.

[70] With respect to the public interest, the Authority states that due to the exceptional nature of the proposed tariff increases, the service improvement criterion is not relevant. The issue at hand is the maintenance of service. To maintain the service, the Authority must be in a position to comply with the order of the Federal Court sanctioning the arbitration award. This obligation is in the public interest.

-- The objectors: CSA and SFC

[71] In CSA's view, in order to counter the monopoly created by the Pilotage Act, the legislator established the Agency as an independent monopoly-monitoring regulator of pilotage authorities. When the legislator established the investigation and submission of evidence process, following the submission of an objection up and until the holding of a hearing, it did not intend to preclude the Agency from exercising its mandate under the pretext that the issue would be settled by an arbitrator. It would be ridiculous that the legislator would have conferred the Agency with a mandate that would become irrelevant as soon as an arbitrator rendered a decision regarding an issue that could result in a tariff increase.

[72] The objectors believe that it is the Agency's responsibility to determine the appropriateness of the tariff increases for the sake of the public interest. The Agency cannot renounce its mandate, which it would in fact be doing if it were to approve the tariff increases under the pretext that they stem from an arbitration award. The objectors affirm that the Agency cannot be at the mercy of an adjudicator or pilot corporations when it comes time to decide whether a tariff increase is in the public interest and whether it is fair and reasonable. If the Agency blindly endorsed the arbitration award, which does not consider whether the tariff increase is fair or reasonable or whether it is in the public interest, it would be renouncing its mandate as the Agency would find itself accepting a decision that clearly does not take into account the public interest. As a result, in accordance with the principle of legislative coherence, a pragmatic and functional interpretation of the Pilotage Act must be adopted, which complies with the intent of the legislators to grant the Agency exclusive authority to decide whether the pilotage tariffs are fair and reasonable and in the public interest. In this regard, CSA refers to Bell Canada v. Canada (CRTC), [1989] 1 R.C.S. 1722.

[73] In light of the foregoing, CSA contends that the arbitration award would be effectively suspended, and that it could not be binding until such time as the Agency renders a decision regarding the proposed tariff amendments. CSA bases this position on British Columbia Telephone Co. v. Shaw Cable Systems (B.C.), [1995] 2 R.C.S. 739.

-- CPSLC

[74] In CPSLC's opinion, as the arbitration award is final and binding, it must be applied and the Agency is bound by it. The effects of the arbitration award on third parties would not be relevant because the matter at hand is a contractual issue that is not under the purview of the Agency's responsibilities. CPSLC's objection is limited to the way in which CSA is applying the proposed tariff increases to one district only, that is District 1, and the validity of the tariff proposal.

The distinction between the Agency's mandate and the arbitrator's mandate

[75] It is important to clearly distinguish between the arbitrator's mandate and that of the Agency in this case.

[76] The Agency does not intend to interfere in the matter before the arbitrator. The Agency has already clearly indicated this to the parties in its procedural directions and also provided a reminder to the parties at the start of the hearing in Montréal. This is not its role, although counsel for the objectors contended that the Agency, in reviewing the Authority's tariff proposal, was in a way hearing an appeal of the arbitrator's decision. This is not the case. However, this does not in any way mean that the Agency does not have jurisdiction to review a tariff proposal stemming from an arbitrator's decision to impose contractual terms and conditions to govern the Authority's relations with any of the pilots corporations.

[77] The Agency's mandate and that of the arbitrator are very different, as emphasized by the Agency in its Decision No. 709-W-2004 of December 29, 2004. As indicated by the Agency in paragraph 53 of its Decision:

[53] It is with this double monopoly in mind that the Agency must exercise its mandate. However, it is appropriate to provide a brief summary of the objectors' argument that Agency decisions and the criteria set by the Agency in the review of the statutory duties of a pilotage authority should take precedence over arbitration decisions. It is important not to confuse the two roles. The job of an arbitrator is to establish the contractual relationship between the pilotage authority and the pilots' corporation in the event that the parties cannot agree on the labour relations that should govern their relationship. The Agency's mandate is quite different. The Agency intervenes when an authority's proposal to change its pilotage tariff raises objections. The Agency does not deny that the tariff change may flow from the consequences of the final offer selected by the arbitrator, but its role is to examine the proposed change in the light of the public interest criterion while also taking into account the obligations of pilotage authorities under the Pilotage Act. The Agency's mandate, therefore, is quite different from that of an arbitrator and, in a sense, it is more extensive.

[78] The Agency's mandate goes beyond that of the arbitrator in the sense that the arbitrator does not have to be concerned with the legislative framework of the Pilotage Act. The Pilotage Act does not impose any specific obligations on the arbitrator, except those set out in subsection 15.2(2) of the Act related to deciding which of the two final offers will be selected. The issue of whether the decision that the arbitrator is planning to render is in the public interest within the meaning of subsection 34(2) of the Pilotage Act is not under the arbitrator's responsibility. If the arbitrator interfered in this regard, the Agency would have even more reason to intervene as an expert tribunal responsible for the implementation of the transportation policy within the meaning of section 5 of the CTA. However, it is precisely this issue that is at the heart of the Agency's mandate when an objection to a tariff increase is filed.

[79] It would be absurd if the legislator required at the same time objectors to show that the tariff increase is prejudicial to the public interest and if it precluded the Agency from having to review the validity of these allegations under the pretext that the proposed tariff increase stems from an arbitration award. As the legislator intended that the investigation of objections to a tariff increase be based on the concept of public interest, specifically the concept of public interest that is in line with the definition of the national transportation policy set out in section 5 of the CTA, it is completely logical that the legislator conferred the mandate of assessing the relevance of that definition on the tribunal that specializes in the application of this policy, namely the Agency. The Agency's decision in this regard is at the heart of its mandate.

[80] Furthermore, it is reasonable that the legislator, in choosing to establish a monopoly in pilotage services in Canada, also wanted to confer on an expert tribunal a monitoring and regulating role that specifically takes into account the users' interests that are completely ignored in contractual negotiations or in the selection of the final offer, even though they are the main contributors.

[81] As for CSA's argument that the arbitration award would be suspended until such time as the Agency renders a decision regarding the objections to the tariff increases in order to give a voice to the objectors, who pay for the services, the Agency finds that nothing in the Pilotage Act justifies the broad interpretation advocated by the CSA.

[82] According to the same principle of rationality and legislative coherence advocated by CSA, if the legislator had wanted to make application of the arbitration award contingent on a previous recommendation by the Agency, it would not have imposed the obligation on the pilotage authority to reimburse the charges that it had already prescribed to users, as set out in subsection 35(4) of the Pilotage Act. The mechanics are the following. Pursuant to subsection 34(1) of the Pilotage Act, a pilotage authority shall publish in the Canada Gazette a copy of each tariff of pilotage charges that it proposes to prescribe, and no tariff shall come into force before the expiration of thirty days after that publication. Although any interested party can object to the pilotage authority's proposed charge, nothing prevents the authority from requiring the payment of charges while awaiting the Agency's decision regarding the objection and recommendation. No provisions set out that the proposed pilotage charge is suspended as soon as an objection is filed. However, subsection 35(4) provides that if the Agency, following the completion of its investigation, recommends a charge that is lower than that prescribed by the Authority, the Authority shall reimburse any person who has paid the prescribed charge the difference between that charge and the recommended charge. Furthermore, based on the principle of interpretation that the legislator do not speak unnecessarily, if the legislator had intended that a proposed pilotage charge could not come into force and would be suspended upon the filing of a notice of objection, it would have said so. The legislative provisions do not implicitly infer such consequences.

[83] That being said, the mandate of the arbitrator and that of the Agency are very different. In each case, the nature of the issue and the parties concerned are not the same. The arbitrator's mandate is carried out in the contractual context between the Authority and the pilot corporations; that of the Agency is carried out in the tariff context between the Authority and the users. The Agency therefore recognizes that the application of the Pilotage Act can lead to results that, while not contradictory, are very different due to these fundamental differences. This was the choice of the legislator and that choice is unavoidable in a monopolistic context, but it rests nonetheless with the legislator and the Agency has no choice but to apply it.

[84] The Agency therefore intends to fully exercise its mandate and examine the issue of whether the tariff increases proposed by the Authority are in the public interest, specifically in accordance with the concept of public interest that is in line with that of the national transportation policy, as set out in section 5 of the CTA. The fact that the tariff increases stem from an arbitration award does not change this mandate and certainly does not preclude the Agency from its obligation to exercise it.

The Agency's mandate and the public interest

[85] It is the public interest, including the public interest that is consistent with the national transportation policy set out in the CTA, that the Agency will consider when analyzing this tariff proposal.

[86] If there is a concept that is difficult to grasp, it is certainly that of public interest. It can easily be said that public interest generally covers all interests, no matter how conflicting they may be, of all parties concerned in a matter. However, public interest also covers the interest of those who are not directly concerned by the matter, but who must bear some of the consequences, sometimes beneficial and sometimes detrimental. In other words, beyond the immediate interests of those involved in the matter, there is the interest of third parties - or the common interest, which in the past would have been called public good - that should be kept in mind. The difficulty in assessing public interest is in the weight that should be given to these different interests, which can vary from one situation to another and from one time period to another, based on the dominant values of the time. For each party, some of these interests are paramount, others are less so. Identifying what is a key interest for a party likely means that what another party identifies as its own key interest will be dismissed. This is the unique challenge of the exercise that is imposed by the examination of public interest. This is the mandate of the Agency.

[87] In this regard, Macaulay and Sprague in their book Practice and Procedure Before Administrative Tribunals, Thomson & Carswell, 2004, p. 8-4, state as follows:

One might interpret the public interest as the best possible accommodation of conflicting specific interests. Not all sectional interests may be represented at a Board hearing but nonetheless the [Ontario Energy] Board must have regard for them. The Board follows a multi-stage process in resolving value conflicts of particular interests in arriving at its decision in the overall public interest. In considering whether the public interest would be served by a specific proposal, the Board must also consider whether any public disservice to the public interest would be done in the event that the proposal was not approved.

Clearly, there are no firm criteria for determining the public interest which will hold good in every situation. Like "just and reasonable" and "public convenience and necessity", the criteria of public interest in any given situation are understood rather than defined and it may well not serve any purpose to attempt to define these terms too precisely. Rather, it must be left to those who have to arrive at a conclusion to strike the balance of "puts and takes", pluses and minuses, that at the particular point in time are considered appropriate.

[88] In a 1985 Ontario Energy Board decision [EBRLG 28, in the matter of a Reference respecting Unicorp Canada Corporation/Union Enterprises Ltd., August 2, 1985, paragraph 566], Macaulay, the Chair, noted:

The public interest is dynamic, varying from one situation to another, if only because the values ascribed to the conflicting interests alter. It follows that the criteria by which the public interest is served may also change according to the circumstances.

[89] Similarly, the public interest that the Agency must assess in this case must be based on the national transportation policy set out in section 5 of the CTA. This policy itself identifies the conflicting interests that the Agency must bear in mind when the time comes to weigh the evidence submitted by each party as justification to prioritize its interests rather than those of its opponent.

[90] What are the interests that the national policy identifies and which would be appropriate to apply to this case? The Agency finds that what follows and what is reflected by the policy, as it is set out in section 5 of the CTA, is applicable in this case.

[91] The general objective pursued is the following:

... a safe, economic, efficient and adequate network of viable and effective transportation services ...

[92] Paragraph (a) provides that:

the national transportation system shall meet the highest practicable safety standards.

[93] Paragraph (b) provides that:

competition and market forces shall be, whenever possible, the prime agents in providing viable and effective transportation services.

[94] Paragraph (c) provides that:

economic regulation of carriers and modes of transportation shall occur only in respect of those services and regions where regulation is necessary to serve the transportation needs of shippers and travellers and that such regulation shall not unfairly limit the ability of any carrier or mode of transportation to compete freely with any other carrier or mode of transportation.

[95] Paragraph (f) provides that:

each carrier or mode of transportation, as far as is practicable, shall receive fair and reasonable compensation for the resources, facilities and services that it is required to provide as an imposed public duty.

[96] And, finally, paragraph (g) provides that:

each carrier or mode of transportation, as far as is practicable, shall carry traffic to or from any point in Canada under fares, rates and conditions that do not constitute

[...]

(iii) an undue obstacle to the interchange of commodities between points in Canada, or

(iv) an unreasonable discouragement to the development of primary or secondary industries, to export trade in or from any region of Canada or to the movement of commodities through Canadian ports.

[97] The Agency intends to apply these objectives of the national transportation policy, as it has in its past decisions by taking into account the general purpose of the Pilotage Act. In its Decision No. 709-W-2004 dated December 29, 2004, the Agency reaffirmed the principles that it had established in its Decision No. 94-W-2001 dated March 23, 2001 regarding the obligations of a pilotage authority to ensure that its operations are self-sustaining, while ensuring that the pilotage charges that it establishes are reasonable and fair, pursuant to the national transportation policy. The Agency refers to these principles that should guide its analysis. In paragraphs 55 to 62 of its Decision No. 709-W-2004 of December 29, 2004, the Agency indicated as follows:

[55] Section 33 provides that the tariffs of pilotage charges prescribed by an authority must be fixed at a level that permits the authority to operate on a self-sustaining financial basis and that they must be fair and reasonable. In Agency Decision No. 94-W-2001 of March 23, 2001, the Agency made a number of policy statements that take into account the pilotage authority's obligation to assure that the authority can operate on a self-sustaining financial basis and that the tariffs are fair and reasonable. These statements are as follows:

1. A pilotage authority has an imposed public duty to ensure the safety of navigation in Canadian waters under its jurisdiction.

2. A pilotage authority is entitled to receive reasonable compensation for fulfilling the imposed duty of ensuring the safety of navigation.

3. A pilotage authority has a responsibility to organize and provide services in an efficient manner.

4. A pilotage authority has a requirement to be financially self-sufficient and cannot rely upon government appropriations to achieve this.

5. A pilotage authority has the right to establish user charges at a level that enables it to meet the requirement of being financially self-sufficient.

6. User charges set by a pilotage authority are to be fair and reasonable, reflecting only the justifiable costs of providing the service.

[56] Under subsection 34(2) of the Pilotage Act, any interested person who has reason to believe that any charge in a proposed tariff of pilotage charges is prejudicial to the public interest may file a notice of objection. The Agency makes an investigation and makes a recommendation to the Authority, which must govern itself accordingly. The public interest mentioned in subsection 34(2) of the Pilotage Act includes the public interest referred to in section 5 of the CTA. Section 5 of the CTA is a policy statement that provides a framework for the decisions that the Agency makes in the performance of its mandate. The framework in question in Decision No. 645-W-2002, reproduced above, is not only consistent with the Pilotage Act but also with the national transportation policy set out in section 5 of the CTA. The analysis made in Decision No. 645-W-2002, reproduced below, applies in its entirety to the present decision.

[57] The first point relates to the imposed public duty of a pilotage authority to ensure the safety of navigation in Canadian waters under its jurisdiction. This duty originates in section 18 of the Pilotage Act, which provides that the objects of an Authority are to establish, operate, maintain and administer an efficient pilotage service in the interests of safety. This duty is also confirmed in the national transportation policy. Thus, the introductory provision of section 5 and paragraph 5(a) of the CTA recognize the importance of establishing a safe transportation system that meets the highest practicable safety standards.

[58] The second point relates to the compensation to which a pilotage authority is entitled. There is no doubt that a pilotage authority is entitled to receive reasonable compensation for fulfilling the imposed duty of ensuring the safety of navigation. Paragraph (f) of the national transportation policy recognizes this fact. Paragraph (f) nevertheless makes clear that the fairness and reasonableness of this compensation is a function of the resources, facilities and services that the carrier is required to provide as an imposed public duty. A pilotage authority will therefore not be compensated for all of the costs incurred; rather, it will be compensated only for fair and reasonable costs. Further, the compensation to which a pilotage authority is entitled depends on the services that it is required to provide as an imposed public duty. In other words, a pilotage authority could not be compensated for the costs of services that do not directly meet the needs of the public, namely the users.

[59] The issue of compensation is closely linked to the efficiency of the service, which is the third point of the framework of rights and duties of a pilotage authority. Section 18 of the Pilotage Act provides that the pilotage service established by a pilotage authority is to be efficient. This is made clear by the introductory paragraph of the national transportation policy, which recognizes the importance of establishing a viable and effective transportation network, and in paragraph (b), which recognizes competition and market forces as prime agents in providing viable and effective transportation services. The effectiveness of a pilotage authority can therefore not be determined without regard to the needs of the users that it claims to serve.

[60] The fourth and fifth points of the framework relate to the requirement for a pilotage authority to be financially self-sufficient and the recognized corollary right to establish user charges that enable it to meet that requirement. Moreover, subsection 33(3) of the Pilotage Act requires that the charges be fixed at a level that permits the authority to operate on a self-sustaining financial basis, and that they be fair and reasonable. The requirement to be financially self-sufficient is also reinforced by section 36.01 of the Pilotage Act, which provides that no payment may be made to an authority under an appropriation by Parliament to enable the authority to discharge an obligation or liability. Section 36, however, provides for the borrowing of money by an authority for the purpose of defraying its expenses.

[61] The Agency is of the opinion that the tariff of pilotage charges must permit a pilotage authority to generate sufficient revenues to cover the inherent expenses of the service provided to the users. The requirement to be financially self-sufficient, however, does not mean that users of a pilotage service have to bear costs inconsistent with scrupulous and effective management by an authority. Accordingly, a tariff of pilotage charges that permits an authority to cover the reasonable inherent expenses related to providing an efficient pilotage service will meet the requirement to be financially self-sufficient, as provided for in subsection 33(3) of the Pilotage Act, even if the revenues generated by the tariff are insufficient to cover the authority's anticipated expenses not due to effective management. The Agency is of the opinion that an authority's imposed requirement to be financially self-sufficient is therefore closely linked to its duty of efficiency.

[62] The sixth point of the framework further specifies that user charges must not only be fair and equitable, they must also reflect only the justifiable cost of providing the service. Regarding the fairness and equity of the pilotage charges that may be imposed by a pilotage authority, the Agency refers the parties to what it said on the subject in its Decision No. 94-W-2001. The Agency noted among other things that, in order for pilotage charges to be fair and reasonable, they had to result from an economic and efficient service. The Agency specified that the costs that could legitimately be recovered from users had also to be shown to be based on an economic and efficient service (see in this regard Decision No. 669-W-1995 of the National Transportation Agency). In this respect, the Agency considers that the costs must favour competition and market forces within the meaning of the introductory paragraph of the national transportation policy and its paragraphs (c) and (g).

[98] It is therefore based on these principles that the Agency is planning to examine the Authority's tariff proposal, as well as the evidence that each party submitted to the Agency at the public hearing and in the documents they filed in support of their claims.

[99] The Agency will now review the Authority's financial situation.

Overview of the Authority's financial and operational results

[100] As part of the assessment of the Authority's tariff proposal, the Agency examined the Authority's operational and financial results for the 2003 to 2006 period. A summary of the financial results is presented in the following table.

Laurentian Pilotage Authority - Revenues and Expenses ($000)
Year	2003	2004	2005*	2006*
Revenues
District 1-1 District 1 District 2 Pilot Boats - Contractors Pilot Boats - Escoumins Other	1,288 23,518 17,325 2,993 2,172 557	1,384 25,553 18,722 3,235 2,408 108	1,518 26,642 19,421 3,114 2,465 35	1,583 29,765 19,837 3,207 2,346 36
Total revenues	47,853	51,390	53,195	56,774
Expenses
District 1-1 District 1 District 2 Pilot Boats - Contractors Pilot Boats - Escoumins	1,288 21,102 16,046 2,852 1,890	1,266 26,404 17,589 3,131 2,219	1,429 25,030 18,319 2,971 2,220	1,453 25,823 18,910 3,060 2,102
Subtotal - Expenses	43,178	50,609	49,969	51,348
Profit (Loss)	4,675	781	3,226	5,426
Administration and dispatching expenses	4,104	4,168	3,951	4,100
Total expenses	47,282	54,777	53,920	55,448
Net Profit (Loss)	571	(3,387)	(725)	1,326
Assignments
District 1-1 District 1 District 2 Total	1,206 11,784 6,609 19,599	1,277 12,113 7,049 20,439	1,333 12,031 6,949 20,313	1,343 12,149 6,858 20,350
* Projections. The projections for 2005 include the proposed tariff increases of 5 percent and 4.9 percent for District 1 coming into effect on October 1, 2005. The projections for 2006 include the planned tariff increase of 3.5 percent effective January 1, 2006. These projections were revised by the Authority as described in the text of this section.

[101] The Authority shows a loss on operations of $3,387,000 in 2004 which is attributable to the monies owing to CPSLC following the sanctioning the arbitration award by the Federal Court on October 1, 2004. Thereafter, the Authority states that it decided to record all of the monies payable to CPSLC from July 1, 2002 until the end of December 2004 as an expense in 2004. In addition to this, the Authority had to pay CPSLC a total of $1,101,000 in productivity payments in 2004. As a result, the payments to CPSLC increased from $21,102,000 in 2003 to $ 26,404,000 in 2004. The Authority notes that the inability to collect the docking fee at the St. Lambert lock represents a cost of about $300,000 per year since payments must be made to CPSLC for the docking of vessels at the lock.

[102] The Authority implemented a 4 percent tariff increase on January 1, 2005 which was approved by the Agency in Decision No. 709-W-2004 of December 29, 2004. The current investigation results from the additional 5 percent increase and 4.9 surcharge in District 1, related to the arbitration award. These increases were implemented on July 1, 2005, the effective date of the tariff following its publication in the Canada Gazette, Part II on June 15, 2005.

[103] At the hearing, the Authority provided an update of its financial projections. The Authority stated that for 2005, it now expects to incur a loss of $1,371,000 instead of the $725,000 originally projected. As well, the Authority expects the productivity payments in 2005 to be close to $1,800,000 instead of $873,000 as there has been an increase in traffic which results in greater productivity payments to CPSLC. The Authority has reduced its projected profit for 2006 to $965,000 from the previous projection of $1,326,000 while adding an additional 1 percent to the planned tariff increase of 3.5 percent for that year. Productivity payments in 2006 are expected to increase as well to $1,500,000 instead of $861,000. The revised financial results are related to the increased traffic which means that in District 1 the Authority must pay more to CPSLC than it receives from users for every assignment over the average workload of 120 assignments per pilot. As such, the Authority finds itself in a position of incurring greater losses as traffic increases.

[104] At the hearing, the Authority also referred to a recent arbitration ruling rendered in August 2005 which awarded the District 2 pilot corporation fees for a vessel that had operated through District 2 over the 1987 to 2002 period which should have been subject to compulsory pilotage. The award could result in additional payments of about $ 1,900,000 to the District 2 pilot corporation. These potential payments have not been included in any of the forecasts for 2005 or 2006.

[105] The potential cost of this recent arbitration ruling, together with a potential increase of one million dollars in productivity payments to District 1 pilots and the Authority's current deficit of $6,931,000, could increase the Authority's accumulated deficit to about $10,000,000.

Pilot boat operations

[106] The Authority contracts for pilot boat services at four locations and owns and operates its own pilot boats at Les Escoumins. The pilot boat operations are independent from other operations as pilot boat charges to users are set independently from the general tariff increases that the Authority publishes in the Canada Gazette. The user fees for the use of contracted pilot boats are equal to the tariffs that these contractors charge and the Authority collects payments from the users and remits the money to the contractors. The user fee at Les Escoumins is set at a level to cover the cost of the boats, the crew, and the repayment of loans incurred to construct pilot boats.

[107] The Authority operates three pilot boats at Les Escoumins, the A. MARTIN, the CÔTE NORD and the CHARLEVOIX. The Authority has an outstanding bank loan on the CHARLEVOIX which matures in 2008.

[108] On September 21, 2005, the Authority was served with a Notice of Distraint by the Federal Court on behalf of CPSLC for the seizure and sale of the CHARLEVOIX and A. MARTIN pilot boats. These boats were subject to sale in early November 2005 to offset a claim of $3,164,452 which CPSLC states it is owed stemming from the arbitration award. It was also served with a Notice of Mortgage Security for its properties at Les Escoumins and Trois-Rivières.

Administrative expenses

[109] As part of the information requested by the Agency, the Authority provided a summary of its actual administrative expenses for 2003 and 2004 along with projections of these costs for 2005 and 2006. These costs are summarized in the following table.

[110] The administrative costs shown above include the costs for headquarters staff and dispatchers.

[111] In commenting on the year to year changes in the various cost categories, the Authority noted that the increase in transportation costs in 2004 was related to the consolidation of the dispatching centres in Montréal. In 2004, the Authority replaced its computerized billing and payment system and therefore the old system was fully depreciated that year which gave rise to the increased depreciation costs. The increased financing costs projected for 2005 and 2006 relate to the anticipated cost of borrowing to pay the arrears owing to CPSLC stemming from the arbitration award.

[112] At the hearing, the Authority stated that its new five year agreements with the headquarters employees, the dispatching staff and the crews operating the pilot boats at Les Escoumins will result in salary increases of 2.45 percent per year.

Pilot costs

[113] Excluding the costs of pilot boats, payments to pilots represent approximately 90 percent of the Authority's expenses. Pilots in District 1-1 are covered by a collective agreement while pilots in Districts 1 and 2 are members of pilot corporations which provide services in accordance with service contracts.

[114] The District 1-1 collective agreement covers the January 1, 2005 to December 31, 2009 period with salary increases of 2.5 percent in each of the first three years followed by a 2.75 percent increase in 2008 and a 3 percent increase in 2009.

[115] The District 1 service contract covers the July 1, 2003 to June 30, 2006 period and resulted from a final offer selection process. The fee increase is 2.5 percent in the first year and equals the change in the CPI in the province of Quebec for the last two years. The productivity clause remains in the contract.

[116] The District 2 service contract covers the January 1, 2004 to December 31, 2006 period and is the result of a negotiated settlement. The fee increase is 2.5 percent in the first year and is linked to the change in the CPI in the province of Quebec in the second and third years.

Pilot Strength

[117] The Authority provided information on pilot strength and workload in each district as part of its response to the Agency request for information. A summary is presented below.

Laurentian Pilotage Authority - Pilot Strength and Workload
	2003	2004	2005*	2006*
District 1-1
Active Pilots Assignments Workload**	9 1,206 134	9 1,277 142	8 1,333 167	6.8 1,343 199
District 1
Active Pilots Assignments Workload	94.3 11,784 125	90.5 12,113 134	91.5 12,031 131	92.8 12,149 131
District 2
Active Pilots Assignments Workload	70.8 6,609 93	68.6 7,049 103	65 6,949 107	64.5 6,858 106
* Projections. ** Workload is assignments divided by the number of active pilots.

[118] With respect to District 1-1, the Authority noted that the workload standard is 200 assignments per pilot per year and that this level will be achieved in 2006 following the expected retirement of two pilots.

[119] The Authority stated that for District 1, it plans to hire 10 apprentice pilots in that District in 2005 and 8 more in 2006 so that the average workload will be reduced to 120 assignments per pilot by 2008. In commenting further on pilot strength in District 1, the Authority stated that over the 1997 to 2003 period, 42 pilots retired while 29 apprentice pilots were hired. As such, the Authority noted that it faced a deficit of 13 pilots or 14 percent of active pilot strength in the District. The Authority noted that traffic had not declined by an equivalent amount in the District which resulted in the average workload of 120 assignments per pilot being exceeded.

[120] While the number of assignments in District 1 has fluctuated over the 1997 to 2003 period, the volume handled in 2003 is almost identical to the number of assignments handled in 1997. The fact that the number of pilots was reduced between 1997 and 2003 while the number of assignments remained the same produced a workload in 2003 that exceeded 120 assignments per pilot.

[121] The level of pilot strength in District 1 remains a concern for the Authority and users due to the continued application of the productivity clause where a premium has to be paid to CPSLC when the average workload exceeds 120 assignments per pilot per year. As can be seen from the information shown above, the average workload in District 1 remains well above 120 assignments per pilot and the Authority faces significant productivity payments to CPSLC. The planned recruitment of additional apprentice pilots in District 1 in 2005 and 2006 is expected to alleviate this situation.

[122] With respect to District 2, the Authority noted that a total of 18 pilots retired between 1997 and 2003 while 11 apprentices were hired. During that period, traffic declined by 14 percent from 7,686 assignments in 1997 to 6,609 assignments in 2003. The Authority plans to hire 8 apprentices in District 2 in 2005 and an additional 6 apprentices in 2006 so as to maintain the average workload in District 2 between 95 and 100 assignments per pilot per year.

[123] It is therefore in light of the principles described above, and the financial situation and operational conditions of the Authority that the Agency will review this tariff proposal to determine if it is prejudicial to the public interest within the above described meaning.

Requirement to remain financially self-sufficient and act in the public interest

[124] In light of the framework described above, it is appropriate to examine the Authority's requirement to remain financially self-sufficient and its requirement to fix tariffs that enable it to meet the first requirement.

[125] It is clear that the Authority is in a precarious financial situation, as acknowledged by the Authority itself during the hearing. The Authority testified that the arbitration award could not be considered the main reason for its precarious finances. The Agency also recognized this fact on many occasions in its past decisions over the last few years.

[126] The Office of the Auditor General's Special Examination Report submitted to the Authority on July 20, 2005 indicates that the Authority's deficit totalled $6,931,000 as of the end of the 2004 fiscal year, of which $3.4 million was for 2004 alone. In the Report, the Auditor General expressed concerns regarding the Authority's future capacity for self-sufficiency. Furthermore, the Auditor General added that the dispute settlement mechanisms could be a constraint for the Authority, which must deal with two different, independent processes, as described in the section on the Agency's mandate.

[127] The Authority emphasized that it did not have any leeway to deal with all of these financial requirements. It stated at the hearing that during some weeks in the summer, the Authority had to scrape the bottom of the barrel to pay its financial commitments.

[128] The Authority believes however that the proposed tariff increases will help it stop the financial drain resulting from the arbitration award because the Authority has been accumulating debts with CPSLC since that time.

[129] The Agency, in carrying out its mandate as set out above, and recognizing the Authority's requirements to remain financially self-sufficient and to fix tariffs that are fair and reasonable pursuant to the Pilotage Act, is of the opinion however that the Authority's precarious financial situation does not result solely from the arbitration award, although the award certainly did not improve it. Other factors, some of which were mentioned by the Agency in previous decisions, are seriously affecting the Authority's financial health, to the point where the Agency finds that it is compromised, and more so in light of the increases sought by the Authority in this application.

-- The tariff increases

[130] The Authority claims that its tariff proposal is fair and reasonable because it is imposed pursuant to the legislation and because it permits the Authority to ensure its financial self-sufficiency. However, it seems strange and even contradictory that, on one hand, the Authority acknowledged in its response to the notices of objections that an 8 percent increase of the fees paid to CPSLC would not be acceptable or even reasonable, but, on the other hand, argues before the Agency that its tariff proposal, which is necessary to cover the costs associated with that increase, is fair and reasonable.

[131] First, as indicated by SFC and CSA, this tariff proposal and the 4 percent increase granted by the Agency for 2005 represent a cumulative 13.9 percent increase over a period of a few months. Had the docking charge at the Saint-Lambert lock not been refused, the Authority would have imposed a 14.5 percent increase on pilotage service users.

[132] At the hearing, CSA demonstrated that since 1995, the Authority's pilotage charges have increased by 60.05 percent, compared to 21.7 percent for the CPI for the same period. The Authority said that these increases were due to a change in the government's philosophy. Since 1995, the Authority can no longer receive parliamentary appropriation to cover its operational losses. The Authority therefore has had to borrow funds to cover its losses arising from this change of philosophy and to publish tariffs that could help it reimburse these loans.

[133] However, the Authority stated that since 2000, when the loans were fully reimbursed, the tariff increases have been fairly similar to the CPI increases. The Authority estimates that, since 2000, tariffs have increased by 20.75 percent, whereas the CPI has increased by 14 percent.

[134] A review of the evidence demonstrates that the Authority's successive tariff increases are higher than the CPI increases.

[135] Furthermore, at the hearing, the Authority also indicated that its accumulated deficit could potentially increase by an additional $3 million, which includes: $1 million related to the productivity clause, in response to a significant increase in marine traffic in District 1; and, close to $2 million related to the recent arbitration award in the case of the vessel CTMA VOYAGEUR in District 2.

[136] It is clear that the Agency's approval of the tariff proposal would not end the Authority's very real ongoing difficulties.

-- Spiralling costs

[137] The Authority, SFC and CSA acknowledged that the establishment of pilotage service fees is leading to what all parties described as a spiral. This spiralling effect enables pilot corporations to profit from their monopolistic situation so that the latest fee increases obtained by a pilot corporation serve as a basis for a future increase for another corporation, under the pretext of establishing equality among the pilot corporations. It would certainly be useful to explain the phenomenon and to do so a little history must be provided.

[138] The Authority testified that during the 1997-1999 service contract renewal negotiations with CPBSL, the key issue was the pilots' workload. CPBSL felt that its pilots' workload was greater than that of the CPSLC pilots and, therefore, asked to be compensated accordingly. A task force was established to assess the workload of District 1 and 2 pilots. The task force submitted the Larouche report, which recommended, among other things, an increase in fees for CPBSL pilots and a decrease in their workload in order to establish a degree of equity between the two pilot corporations.

[139] The Authority testified that it disagreed with the Larouche report's findings and maintained that they could lead to spiralling increases for the other pilot corporation. Pilots are constantly trying, through different means, to establish equality among themselves. Further to the Larouche report, the Authority recognized that this spiral effect was on the horizon.

[140] However, the Authority indicated that it was successful in disputing some of the report findings during the 2000-2003 service contract negotiations. The Authority indicated that it had granted CPBSL fee increases totalling 14.12 percent for the 2000-2003 period which, according to the Authority, would help establish a degree of equality between the fees of District 1 and 2 pilots.

[141] In the 1999-2003 service contract signed between the Authority and CPSLC, a clause stipulated that either one of the parties could reject the fee increase for the last year of the contract. CPSLC exercised this right and, without attempting to conduct further negotiations, the parties submitted the matter to arbitration. The arbitrator fixed the CPSLC pilot fee increase at 8 percent for the last year of the contract based on the notion of equality between the two pilot corporations.

[142] In the Authority's view, the arbitration award creates an imbalance of 4.94 percent in favour of the CPSLC pilots. Users expressed their concern regarding the future impact of this imbalance. They fear that the CPBSL will use this imbalance as a reason to obtain an equivalent fee increase, which would lead to a new tariff increase.

[143] The Agency cannot predict the future, but it is clear that the current situation allows for this spiral effect and results in the Authority fixing pilotage tariffs based on the fees that it must pay to pilot corporations, without concerning itself with the quality and efficiency of the services to users.

-- Productivity clause

[144] The Authority provided information on the productivity payments made to CPSLC each year since the productivity clause was introduced in the service contract. A summary of the payments is presented in the following table.

[145] The forecasts regarding the productivity clause total $1,800,000 for 2005 and $1,500,000 for 2006.

[146] When questioned by the Authority about the productivity payments, CPSLC responded that the productivity clause was a negotiated provision in the service contract to compensate the pilots for performing assignments above the average workload of 120 assignments per pilot in District 1. Further, CPSLC stated that the productivity payment clause was a choice made during negotiations as a method to compensate pilots for extra or call-back assignments. In CPSLC's view, the productivity payments are equivalent to payment for overtime.

[147] The Authority expressed the opinion that as the pilots chose to be part of an independent corporation which is paid per task performed, there should be no basis for the extra payments. Doing so would be equivalent to treating the pilots as employees of the Authority.

[148] The Agency has commented on the productivity clause in previous decisions and the Agency once again maintains that the clause is of no benefit to users as there is no added or improved service for the added payment. The Agency notes that the Authority has attempted in negotiations and before an arbitrator to have the productivity clause removed from the service contract but has not been successful in doing so. The productivity clause remains a burden for users and the Authority.

[149] It is clear that such a contractual clause has significant financial consequences for the Authority and, ultimately, for users. It should be also be noted that another factor that is closely related to productivity is that of the pilot strength, which also has consequences for the Authority's service and financial situation. The Agency observes, however, that the Authority has hired apprentice pilots. However, these pilots will not be certified for a number of years and, in the meantime, the Authority has no choice but to comply with this onerous clause in the service contract with CPSLC.

[150] In light of these observations, the Agency does not accept the Authority's argument that the implementation of the tariff proposal will help to stop the Authority's financial drain. The evidence shows that this tariff proposal will not enable the Authority to be financially self-sufficient. Any financial self-sufficiency that the approval of this tariff proposal could help create would be very short-lived and would not eliminate the financial drain referred to by the Authority. Based on the evidence, the Agency is of the opinion that the Authority will have no choice but to implement other increases in the very near future if it wishes to maintain a certain degree of financial self-sufficiency and meet its financial requirements.

[151] Should the Agency, as suggested by the Authority, recommend that the tariff proposal be implemented to enable the Authority to fulfill its requirement to be financially self-sufficient, notwithstanding its other requirements? Should all other considerations take a backseat if the refusal to implement a tariff proposal plunges a pilotage authority into a serious deficit situation? Is a tariff proposal deemed fair and reasonable if it enables an authority to avoid this black hole? The Agency does not agree with this. The Agency is of the opinion that it would be disregarding its mandate if it did not continue its analysis by applying the above framework and if it did not review the quality and the efficiency of pilotage services.

The requirement to provide efficient service and the public interest

[152] One of the objectives set out in the framework described above is that for a compensation to be fair and reasonable, it must be based on the public's needs, with an emphasis on the users, and that such compensation is closely related to the service's efficiency.

[153] Therefore, in order for pilotage charges to be fair and reasonable, they must correspond to the cost of delivering service. This requirement refers implicitly to competition and market forces. Paragraphs 5(b), (c) and (f) of the national transportation policy recognize these aspects. Paragraph (f) provides that each carrier shall receive fair and reasonable compensation based on the resources, facilities and services that it is required to provide to the public. Paragraph (b) recognizes that competition and market forces shall be the prime agents in providing viable and effective transportation services. Paragraph (c) recognizes that economic regulation of carriers shall not unfairly limit the ability of any carrier to compete freely with any other carrier. Therefore, a review of the public interest with regard to the Authority's requirement to provide efficient pilotage services should be undertaken.

[154] In the current circumstances, the Authority is requesting two tariff increases which by its own admission are unrelated to any improvements in the quality or efficiency of services. This was firstly stated by the Authority in its response to questions posed by SFC. In its letter dated August 1, 2005, the Authority stated, inter alia,

Concerning your third question, you will certainly remember that the tariff to which you objected is not aimed at improving the services, ...

[155] This position was affirmed at the hearing during the testimony of a witness for the Authority, that the proposed tariff increases had nothing to do with improvements in the quality of services or the efficiency of services.

[156] If it were sufficient to argue that a tariff increase is required to respond to an exceptional situation in order to have the Agency disregard its mandate, the Agency's role would become unnecessary. Whether the tariff increase stems from a specific situation, an arbitration award, the application of a contractual clause or an increase in pilotage services in general, it still remains that the increase represents a fee for a service. It must therefore be determined whether this cost corresponds to efficient, quality service. In this regard, the evidence shows that the pilotage services are lacking in more than one area in District 1, notably with respect to delays and winter navigation.

-- The delays

[157] In its written submission, SFC argued that the proposed tariff increases were not the result of higher costs of providing efficient pilotage services but only to recover the costs of an arbitration award. SFC further argued that delays to shipping reflected a lack of service which demonstrated that the Authority is unable to provide efficient pilotage service. SFC also elaborated on these points at the hearing by arguing that the arbitration award was totally disconnected from any assessment of pilotage service levels, the satisfaction of users' needs or the efficiency of pilotage services. SFC observed at the hearing that service improvements have been continually promised but have not been delivered. SFC argued that the Authority has not been able to bridge the gap between users' needs and the services actually delivered.

[158] As part of its response to SFC's questions, the Authority provided information on the number of vessel delays for each of the years 2001, 2002, 2003 and 2004. These data show that there has been an ever increasing number of vessel delays - from 8 in 2001 to 266 in 2004. One of the major reasons for delays was a shortage of pilots. CPSLC argued that the lack of recruitment of a sufficient number of apprentices, coupled with the 7 year period to achieve Class A status as a pilot, together with unexpected traffic growth in 2004 and peaks in traffic resulted in some vessel delays. CPSLC noted that many pilots volunteered throughout the year to take on extra assignments when off duty or on leave so this contributed to reducing the number of vessel delays.

[159] At the hearing, SFC stated that delays are costly for its members. For ships operating in a scheduled liner service, costs for each delay vary from $10,000 to $100,000, and costs are approximately $50,000 per delay for ships operating in the non-scheduled dry bulk business. SFC indicated that ship delay is not a concern in District 2 nor in the compulsory pilotage areas of the east coast and the Great Lakes Pilotage Authorities. SFC expressed the view that it is only concerned with delays in District 1 of the Laurentian Pilotage Authority.

-- Winter navigation

[160] One of the other significant causes of vessel delays was winter navigation restrictions, particularly night time restrictions. In 2004, in accordance with a letter of understanding between the Authority and CPSLC, a winter night navigation committee was formed with a view to modify the night navigation restrictions during the pre-winter period (from roughly December 8 until the closure of the Seaway) so that more ships would be allowed to make trips outside of daylight hours. Based on the recommendations of the Committee, so-called conforming ships, those equipped with electronic charts and a second radar, were allowed to proceed rather than having to anchor overnight. During the pre-winter season of December 2004, 55 ships benefited from the changes allowed for night navigation.

[161] While SFC acknowledged that the modifications to the winter navigation rules were beneficial, there was little benefit for foreign ships as for the most part they did not meet the criteria to be conforming ships. SFC noted the cost of equipment, infrequent calls to Canada and the equipment required not being an international requirement were reasons why foreign ships did not invest in meeting the conforming criteria. CPSLC argued that the cost of equipping ships was less than the cost of delays so it would make sense for the ships to conform to take advantage of changes in the winter navigation rules. In considering the vessel delays and the changes to the night navigation rules, the Agency observes that even if foreign vessels had the required equipment to be considered conforming ships, there may not have been many more vessels that could have taken advantage of night navigation due to a lack of available pilots. Having more ships meeting the criteria for a conforming ship would not change the number of pilots available and vessels delays may still have ensued.

[162] SFC also noted that changes in winter navigation rules had been tried previously in 1999-2000 when a Service Plus initiative had been put in place. SFC noted that the Authority had considered the trial a success and that the winter navigation rules were no longer appropriate. The Service Plus Committee was however disbanded in February 2000 and no further changes in the winter navigation rules were introduced until December 2004. SFC noted that while the changes to the winter navigation rules are expected to continue in 2005, there is as yet no written agreement on this between the Authority and CPSLC. SFC also expressed the view that the foreign vessel operators are still awaiting improvements that will benefit them and not mainly the Canadian vessel operators.

[163] In response to SFC's arguments, CPSLC noted that the changes to the winter navigation rules were made with the consent of users as users are present on the Committee. Regarding service delays, CPSLC expressed the opinion that the current situation is the result of past decisions taken to reduce the number of pilots in years when traffic was declining and to reduce the number of apprentices hired in recent years. In this regard, the Agency is of the opinion that even if more pilots had been hired in recent years, these pilots would not be Class A pilots until after seven years of training and, therefore, they would not have been added to the Class A pilot strength in District 1 in 2004 or 2005.

[164] Based on the foregoing, the Agency is of the opinion that the considerable increase in the number of vessel delays over the 2001 to 2004 period in District 1 raises questions as to the effectiveness and efficiency of service in District 1 and the ability of the Authority to provide an efficient pilotage service. There is no guarantee that the changes to the Authority's Board of Directors will result in improved services to users or that there will be a reduction in or a reversal of the number of vessel delays experienced by users. Furthermore, there is no evidence that CPSLC will take any concrete measures to increase the availability of pilots. The CPSLC witness spoke of initiatives to persuade pilots to refrain from taking leave during the pre-winter season and to restrict their rest period to 10 hours following night time assignments. These persuasive measures depend on the voluntary co-operation of all of CPSLC's pilots and do not guarantee any service improvements or a higher number of available pilots.

Findings of the review of evidence with regard to the public interest

[165] The Agency recognizes that without the proposed tariff increases, the Authority cannot meet its requirement to be financially self-sufficient. However, the Agency recognizes that even if it were to approve the increases, the Authority's financial self-sufficiency would be risky and temporary. Approving the proposed increases for this reason only would amount to disregarding the review of pilotage services and their effectiveness. However, the Agency, as part of its mandate, must ensure the quality and effectiveness of pilotage services in the public interest.

[166] In light of the foregoing and the Agency's obligation in exercising its mandate to weigh the different interests at play, pursuant to the national transportation policy, the Agency is of the opinion that the pilotage charges that the Authority has been imposing since July 1, 2005 and which are the subject of this investigation are against the public interest in that they are not fair or reasonable with regard to the quality of services that the Authority is required to provide. The evidence shows that these services have not improved; in fact they have deteriorated. The Agency has repeated many times that for pilotage charges to be considered fair and reasonable, they must go hand in hand with economic and effective service. The only costs that the Authority can legitimately charge users are those that ensure economic and effective service.

[167] The evidence reveals that the monopolistic structure of pilotage services promotes a spiralling cost effect that allows a pilot corporation to justify tariff increases based on those obtained by the other pilot corporation; that delays and backups can have serious consequences for users; that although efforts have been made to encourage pre-winter navigation, it remains problematic; that the productivity clause results in considerable costs for the Authority. Users are paying the price and the Agency notes that little effort is being made to actually provide users with service that meets the efficiency-related needs, which the marine transportation market has the right to expect in an economy based on the globalization of trade and competition.

[168] It is therefore evident from this review that it is simply not sufficient for the Authority to invoke financial difficulties to obtain the Agency's approval for a proposed tariff increase. The Agency's mandate is much broader, as evidenced by the Pilotage Act, and as described by the Agency herein. Pursuant to the Pilotage Act, the Agency must take into consideration the concept of public interest, specifically the concept of public interest within the meaning of the national transportation policy set out in the CTA. In doing so in this case, the Agency, based on the evidence on file, does not conclude that the proposed tariff increases are in the public interest. The proposed increases do no reflect the operation of economic and effective services. The Agency finds that they are prejudicial to the public interest and, accordingly, will not approve them.

[169] The Authority and CPSLC should work together in fulfilling their respective mandate of providing a service that will be in the interest of an effective marine transportation network, which can only promote the greater interests of all direct and indirect users of this service, and thus the general public.

OTHER ISSUES

[170] In light of the foregoing, the Agency has determined that it is not necessary to address the issues of cross-subsidization nor the validity of the Authority's proposed tariff.

RECOMMENDATION

[171] The Agency concludes that the tariff proposal published by the Laurentian Pilotage Authority on March 5, 2005 is prejudicial to the public interest and should not be implemented.

[172] This Decision takes effect as of October 14, 2005, the date on which Decision No. 618-W-2005 containing the recommendation of the Agency issued.

Members

• Gilles Dufault
• Mary-Jane Bennett
• Guy Delisle