Vol. 141, No. 7 — February 17, 2007

Regulations Amending the Port Authorities Management Regulations

Statutory authority

Canada Marine Act

Sponsoring department

Department of Transport

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

These proposed amendments to the Port Authorities Management Regulations would add provisions setting out the "mechanics" for two or more Canada Port Authorities (CPAs) to amalgamate and continue as one integrated CPA.

Background

The 1998 Canada Marine Act (CMA) established the first single, comprehensive piece of legislation governing many aspects of Canada's marine industry and creating a national ports system made up of CPAs: 19 non-share capital corporations incorporated under the CMA that are of strategic significance to Canada's trade. Mandated to manage according to business principles, CPAs are governed by a management framework that provides a private sector management model with reasonable controls to protect federal Crown interests and minimize federal Crown liability. As such, CPAs may manage, but not own, federal real property and may act as federal Crown agents for certain port-related activities, excluding borrowing, for which they must employ market financing without federal government guarantee.

The management framework governing CPAs consists of the CMA, its regulations, including the Port Authorities Management Regulations, and the provisions set out in each CPA's letters patent of incorporation.

In 2003 the statutory review of the CMA's first five years of operation was tabled as a report in Parliament. The overall operation of the CMA was viewed as a success, and most stakeholders acknowledged that the Act had significantly contributed to improvements in the marine sector. However, the report suggested that changes were needed to achieve the goals of the CMA, particularly as they relate to promoting and safeguarding Canada's competitiveness and trade obligations. Several of the report's recommendations that dealt with CPAs were aimed at further improvements and modernization of the management framework governing CPAs and called for greater flexibility. Included was a recommendation to permit a merger (now referred to by the more precise term "amalgamation") of CPAs in a manner that included stakeholder consultations.

The purpose of these proposed amendments is to set out a generic high-level process for effecting an amalgamation of CPAs—essentially introducing another mechanism for their effective corporate management. Amalgamation provisions already exist for corporations governed by the Canada Business Corporations Act (CBCA). These proposed amendments adapt the CBCA amalgamation provisions to CPAs and their unique management framework. Two or more CPAs would amalgamate, in the sense of their combining and continuing as one integrated port authority. Continuity is a key principle of the amalgamation concept.

The content of the proposed amendments consists of the following:

(1) Requiring CPA amalgamation by way of certificates

The Governor in Council would be given the discretionary power to issue a certificate of intent to amalgamate that requires two or more specified port authorities to amalgamate and continue as one port authority. Subsequently, the Governor in Council would complete the process either by amalgamating these port authorities through the issuance of a certificate of amalgamation or by revoking the certificate of intent to amalgamate through the issuance of a certificate of revocation. Revocation would be considered where an assessment of the business case and other impacts does not support proceeding with an amalgamation.

The mandatory requirements pertaining to the certificate of intent to amalgamate include delivery of the certificate to the port authorities proposed for amalgamation by the Governor in Council and newspaper publication provisions that provide interested persons with a 30-day period within which to make written representations to the Minister of Transport. The intent of these provisions is to provide a minimum mandatory consultation component to an anticipated larger consultation strategy most likely developed collaboratively by the federal government and the port authorities being proposed for amalgamation and tailored to the users and stakeholders (including employees and labour representatives) potentially impacted by the proposed amalgamation. Obligations with respect to aboriginal consultations would also be considered. A certificate of amalgamation could not be issued before the minimum mandatory consultation period has transpired.

The mandatory requirements pertaining to a certificate of amalgamation include publication in the Canada Gazette of the certificate along with the letters patent of the amalgamated port authority, with the amalgamation taking effect on a day specified in the certificate.

The mandatory requirements pertaining to a certificate of revocation include delivery of the certificate to the port authorities that were specified in the certificate of intent to amalgamate and newspaper publication.

(2) Personal information

To assist in the assessment of any labour implications of a potential amalgamation, disclosure of personal information about employees would be permitted among the amalgamating CPAs.

(3) Continuity implications of the amalgamation

A series of provisions have been set out, the combined effect of which is to make express that the property, rights, interests and obligations of the amalgamating CPAs are continued in respect of the amalgamated CPA.

Alternatives

The proposed amendments to the Port Authorities Management Regulations are necessary for providing the mechanics that would facilitate the amalgamation of CPAs. There is no alternative to regulatory action to achieve this goal.

Benefits and costs

New and emerging trends in the economics of marine transportation have generated exploration of corporate management opportunities that could make CPAs more modern, efficient, competitive and able to respond more quickly to emerging global opportunities and growing business volumes (e.g. with the Asia-Pacific region). An integrated port authority created by way of amalgamation may be a possibility for selected CPAs in regional proximity for addressing competitive forces in a manner that maximizes business opportunities. Potential benefits include (1) better overall port and land-use planning; (2) rationalized and maximized port development opportunities; (3) more strategic financial planning; and (4) unified branding and marketing abroad.

One of the critical elements in pursuing any CPA amalgamation would be a careful consideration of the potential benefits and concerns so as to develop a business case. The specifics of each business case would differ based on the particular CPAs being considered for amalgamation and would include environmental and other considerations. Similarly, any proposed amalgamation would include an assessment of the implications to various stakeholders and seek to identify, mitigate and/or address potential issues.

Strategic environmental assessment

A preliminary scan of the proposed regulatory amendments has been done in accordance with the criteria of Transport Canada's Strategic Environmental Assessment Policy Statement — March 2001 with the conclusion being that there are no significant environmental effects associated with these amendments and that a detailed analysis is not necessary.

Consultation

The issue of permitting CPAs to merge (now referred to by the more precise term "amalgamate") was considered during the statutory review of the CMA's first five years of operation. A guidance document was made available for distribution to interested parties and included a summary on port amalgamation. An extensive list of marine transportation stakeholders were sent correspondence soliciting their participation in the review. A series of public consultations were then held across Canada that generated over 140 written submissions and 75 presentations from individuals, industry groups, labour organizations, transport companies, other levels of government and other federal departments and agencies. The vast majority of stakeholders supported permitting CPAs to amalgamate and included the Association of Canadian Port Authorities, shippers (e.g. Canadian Shipowners Association, Montship Inc., Oceanex Inc., Rigel Shipping Canada Inc. and Western Canadian Shippers' Coalition), industry associations (e.g. Canadian Fertilizer Institute, Council of Forest Industries, Forest Products Association of Canada and the Council of Marine Carriers) and some provincial and municipal bodies (e.g. Government of Newfoundland and Labrador, Business Council of British Columbia, City of Richmond, British Columbia, and Village of Belcarra, British Columbia).

In general, stakeholders were receptive to CPAs being permitted to amalgamate with concerns, if any, directed not so much at the concept of amalgamation but at the potential implications (e.g. to users and terminal operators) of an amalgamation of specific CPAs, especially in terms of possible elimination of competitive choices. As noted previously, a consultation strategy would be a critical component in the application of these regulations to a specific proposal to amalgamate.

Compliance and enforcement

These proposed amendments do not require any new mechanisms pertaining to compliance and enforcement. The amalgamated CPA would be subject to the existing extensive reporting and rigorous accountability requirements under the CMA and its regulations, as well as the detailed provisions set out in the letters patent of the amalgamated port authority that would be issued by the Minister of Transport. Certain articles of the letters patent would require the approval of the President of the Treasury Board and the Minister of Finance, and the approval of the Governor in Council.

Contact

For general inquiries, please contact Kimberly Ellard, Senior Policy Advisor, Seaway and Domestic Shipping Policy, ACFS, Transport Canada, Marine Policy, Place de Ville, Tower C, 25th Floor, Ottawa, Ontario K1A 0N5, 613-998-0704 (telephone), 613-990-1198 (fax), ellardk@tc.gc.ca (email).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to paragraph 27(1)(a) of the Canada Marine Act (see footnote a), proposes to make the annexed Regulations Amending the Port Authorities Management Regulations.

Interested persons may make written representations to the Minister of Transport, Infrastructure and Communities concerning the proposed Regulations within 30 days after the date of publication of this notice. All representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Marc Fortin, Director, Seaway and Domestic Shipping Policy, Transport Canada, Place de Ville, Tower C, 25th Floor, 330 Sparks Street, Ottawa, Ontario K1A 0N5 (tel.: 613-998-1843; fax: 613-998-1845; e-mail: fortinm@tc.gc.ca).

Persons making representations should identify any of those representations the disclosure of which should be refused under the Access to Information Act, in particular under sections 19 and 20 of that Act, and should indicate the reasons why and the period during which the representations should not be disclosed. They should also identify any representations for which there is consent to disclosure for the purposes of that Act.

Ottawa, February 8, 2007

MARY O'NEILL
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE PORT AUTHORITIES MANAGEMENT REGULATIONS

AMENDMENT

1. The Port Authorities Management Regulations (see footnote 1) are amended by adding the following after section 59:

PART 5.1

AMALGAMATION

59.1 (1) The Governor in Council may, by issuing a certificate of intent to amalgamate, require two or more port authorities to amalgamate and continue as one port authority in accordance with the certificate and may, at any time after the period set out in subsection (2), amalgamate the port authorities by issuing a certificate of amalgamation.

(2) A notice of the certificate of intent to amalgamate shall be published in at least one major newspaper that is published or distributed in the municipalities where the ports managed by a port authority specified in the certificate are situated. The notice shall state that interested persons may, in accordance with the notice, make written representations to the Minister within 30 days after the day on which the notice is published.

59.2 A port authority specified in a certificate of intent to amalgamate may, for the purposes of the amalgamation, disclose personal information about its employees to any other port authority specified in the certificate.

59.3 (1) The Governor in Council may revoke a certificate of intent to amalgamate by issuing a certificate of revocation of intent to amalgamate at any time before the certificate of amalgamation is issued.

(2) A notice of the certificate of revocation of intent to amalgamate shall be published in at least one major newspaper that is published or distributed in the municipalities where the ports managed by a port authority specified in the certificate of intent to amalgamate are situated. If possible, the notice shall be published in the same newspapers as the notice of the certificate of intent to amalgamate.

(3) The revocation takes effect on the date set out in the certificate of revocation of intent to amalgamate.

59.4 A certificate of intent to amalgamate and, if applicable, a certificate of revocation of intent to amalgamate shall be sent to each port authority specified in the certificate.

59.5 A certificate of amalgamation shall specify the day on which the amalgamation takes effect and contain the letters patent of the amalgamated port authority, which include the information set out in subsection 8(2) of the Act.

59.6 A certificate of amalgamation shall be published in the Canada Gazette.

59.7 On the day on which an amalgamation takes effect

(a) every director of an amalgamating port authority who remains in office continues as a director of the amalgamated port authority for the balance of their term or until they cease to hold office in accordance with subsection 19(1) of the Act;

(b) the navigable waters within the jurisdiction of each amalgamating port authority continue to be within the jurisdiction of the amalgamated port authority;

(c) the property, rights and interests of each amalgamating port authority continue to be the property, rights and interests of the amalgamated port authority;

(d) the management of any federal real property or federal immovable that the Minister has given to an amalgamating port authority under subsection 44(2) of the Act continues to be given to the amalgamated port authority;

(e) the real property or immovables occupied by each amalgamating port authority continue to be occupied by the amalgamated port authority;

(f) the amalgamated port authority continues to be liable for the obligations of each amalgamating port authority;

(g) an existing cause of action, claim or liability to prosecution is unaffected;

(h) a civil, criminal or administrative action or proceeding pending by or against an amalgamating port authority may be continued to be prosecuted by or against the amalgamated port authority;

(i) a conviction against, or ruling, order or judgment in favour of or against, an amalgamating port authority may be enforced by or against the amalgamated port authority;

(j) every fee fixed by an amalgamating port authority continues in force until the expiry date specified in the provision that fixes the fee or until the amalgamated port authority repeals that provision or replaces the fee; and

(k) the letters patent contained in the certificate of amalgamation are the letters patent of the amalgamated port authority.

59.8 An amalgamation does not constitute a disposition of the property, rights and interests of an amalgamating port authority to the amalgamated port authority.

COMING INTO FORCE

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

[7-1-o]

Footnote a

S.C. 1998, c. 10

Footnote 1

SOR/99-101

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