Canada Gazette

The Regulations Amending the Port Authorities Operations Regulations (the "Regulatory Proposal") are proposed pursuant to subsection 62(1) of the Canada Marine Act. The Regulatory Proposal would replace subsection 31.1(2) of the Port Authorities Operations Regulations (the "Regulations") pertaining to the Vancouver Port Authority and Fraser River Port Authority (the "Port Authorities"), which came into effect on November 9, 2006, and was published in the Canada Gazette, Part II, on November 29, 2006.

The enactment of section 31.1 of the Regulations placed a legal obligation on the Port Authorities to prohibit access to their respective ports to a truck or other road transportation equipment for the delivery, pick-up or movement of containers into, within or out of the port, unless the Port Authority has issued a written authorization to allow access in the form of a licence, and the holder of that licence is in compliance with a minimum set of conditions.

The minimum conditions currently required to be specified in the licence and with which the licence holder must comply and ensure compliance with are in respect of

— any appointment or reservation system to be established or adopted by the Port Authority for the port;

— the requirements of the Port Authority respecting the identification of trucks and other road transportation equipment and the tracking, monitoring, location and movement of these trucks and other road transportation equipment into, within and out of the port; and

— any applicable law in respect of rates of remuneration that the owner-operator of a tractor covered by an authorization is to receive for the delivery, pick-up or movement of containers into, within or out of the port.

The Regulatory Proposal would modify the condition of licence pertaining to the rate of remuneration for the delivery, pick-up or movement of containers into, within or out of the port for owner-operator truckers. Thus, in the absence of any applicable law in respect of rates of remuneration, or in the absence of a collective agreement that is applicable to the owner-operator, as a condition of licence to access the port, the owner-operator is to receive a rate of remuneration consistent with a rate of remuneration contained in any existing collective agreement that applies to owner-operator truckers engaged in the movement of containers at the ports. Should an applicable law in respect of rates of remuneration for owner-operator truckers be enacted, that law would prevail.

The proposed amendment is necessary to ensure the maintenance of order and safety in the ports; the unimpeded flow of national trade; and the reliability of port operations consistent with Asia-Pacific Gateway and Corridor Initiative objectives. It is intended that the Regulatory Proposal will contribute towards long-term stability in container trucking operations in the Lower Mainland of British Columbia following the expiry of a Memorandum of Agreement (the "MOA") on August 2, 2007.

The MOA was negotiated in July 2005, for a two-year period, by a mediator on behalf of two separate groups, trucking companies or brokers and independent owner-operator truckers, in response to a disruption of container trucking operations at ports in the Lower Mainland of British Columbia. The MOA largely stabilized the rates of remuneration for owner-operator truckers for the duration of its effective term.

Several industry stakeholders have expressed significant concern that, in the absence of applicable legislation, there is a high risk that rates of remuneration could decline upon the expiry of the MOA for those owner-operators not subject to collective bargaining. Such a decline in rates could lead to the same conditions that prevailed during the disruption of 2005 and, in turn, could impact on the national transportation system in its entirety.

The Regulatory Proposal does not regulate, impede or interfere in the marketplace governing the local container trucking industry in the Lower Mainland of British Columbia, nor does it set, or require the Port Authorities to set, rates of remuneration. Rather, it seeks to maintain the stability established under the MOA. It also ensures that rates of remuneration that have been negotiated and agreed to, on behalf of those owner-operator truckers that are subject to collective bargaining, are also comparably applied to owner-operator truckers that are not subject to collective bargaining.

There is no alternative to regulatory action to achieve the desired objective. It has been suggested by some groups and individuals that the Government of Canada could extend or replace the MOA at the expiry of its term on August 2, 2007. In order to facilitate the ratification of the MOA in 2005, the Government of Canada issued an Order in Council (P.C. 2005-1356) under section 47 of the Canada Transportation Act, which, among other things, suspended certain provisions of the Competition Act. The Government of Canada subsequently passed additional Orders in Council (P.C. 2005-1365, P.C. 2005-1892 and P.C. 2006-3). Although each was a temporary, 90-day measure, they were required to stabilize the national transportation system because an extraordinary disruption to the national transportation system was either occurring or imminent, that failure to act would be contrary to the interests of users and operators of the national transportation system, and there was no other Act of Parliament that could be used to remedy the situation. In order to support the making of a further Order in Council based on such a determination, an extraordinary disruption of the national transportation system would need to be imminent or occurring. This alone could cause important damage to the reputation of Canada as a reliable gateway and could result in costs to users. However, it is uncertain whether any of the tests set out in the Canada Transportation Act could be met, due to a number of actions that have been taken to stabilize the situation since 2005. Moreover, there is no means of assuring that the issuance of an additional Order in Council would result in the negotiation of a new or extended MOA. Regulating at this time is a preventive measure to ensure the stability of the ports operating in the British Columbia Lower Mainland.

Failure to implement the Regulatory Proposal could lead to a disruption of container trucking activities at the Port Authorities, which in turn could negatively impact the national transportation system and Canadian international competitiveness, in particular in respect of Canada-Asia trade prospects and relationships.

Canada's West Coast ports currently handle approximately 8% of the total West Coast (Canada and the United States) container trade and close to 70% of Canada's imports from the Asia-Pacific region. The British Columbia Ports Strategy, released by the Province of British Columbia in 2005, sets a target for Canada's West Coast ports to handle 15% of the total West Coast container trade by 2020. The Province has designated significant funding for projects designed to accommodate this growth in both overall traffic and Canadian port market share of Asian trade. The Government of Canada has likewise recognized that international trading patterns are shifting and, increasingly, substantial volumes of Canada's trade will be tied to Asian economies. Recognizing the importance of remaining competitive and the national benefits to pursuing trade with Asian economies, the Government of Canada has announced $1 billion in funding towards projects in support of the Asia-Pacific Gateway and Corridor Initiative.

Numerous Canadian trade missions to China and other Asian countries have reported that Asian shippers value reliability and labour stability when planning vessel routings and gateway preference. Canadian officials have been reminded by Asian shippers of the damage caused to the reputation of British Columbia Lower Mainland ports as a result of the 2005 trucking disruption, which lasted four weeks and cost the Canadian economy approximately $120 million. Clearly, a disruption similar to that of 2005 would further damage the reputation of Canadian West Coast ports, cost the Canadian economy millions of dollars, set back federal and provincial promotional efforts designed to increase private investment and utilization of the Asia-Pacific Gateway and possibly decrease the relevance of infrastructure funding already dedicated by the federal and provincial governments and the private sector (anticipated total investment of $5.8 billion).

Conversely, the benefits of implementing the Regulatory Proposal could significantly mitigate the risks of port disruption and the risk of damage to Canadian trade and competitiveness.

The Regulatory Proposal is not expected to result in substantially higher costs to the container trucking industry in the Lower Mainland of British Columbia. Since August 2005, trucking companies have paid rates for the services of owner-operators consistent with the rates established in the MOA (for independent owner-operators) or established by collective bargaining (for dependent owner-operators). The rates contained in the MOA and in collective agreements are within a comparable range.

The labour costs associated with the adoption of the MOA and the institution of collective bargaining have been absorbed in the overall costs of logistics movements, generally paid for by the shipper. Since 2005, the marketplace has demonstrated that any additional costs in support of operational stability are sustainable. The Regulatory Proposal should have limited impacts on the competitiveness or market access of existing or prospective container trucking companies.

In conjunction with the other minimum conditions of licence, notably the requirements to comply with extended gate hours and a centralized reservation system, a stable remuneration regime would be expected to result in increased productivity in local container trucking operations, thereby increasing the number of daily trips, increasing the efficiency and capacity of terminals, and reducing local congestion and bottlenecks.

The Regulatory Proposal would be expected to present minor costs to the Government of Canada. The Port Authorities would be responsible for some administrative, monitoring and overhead costs associated with the Regulatory Proposal, although these would not be expected to be greater than the costs presently expended by the Port Authorities to administer and monitor the current licensing system and existing minimum conditions.

Preliminary consultations have been conducted with the Vancouver Port Authority and the Province of British Columbia in respect of the Regulatory Proposal.

Comments from owner-operator truck drivers, brokers and trucking firms, Canada Port Authorities, unions, industry associations, municipalities in the Lower Mainland of British Columbia and other affected third parties are expected following pre-publication.

In addition, the Province of British Columbia established the Lower Mainland Container Logistics Stakeholders Forum in April 2006 as a venue for deliberating and achieving consensus among industry participants involved in the container-trucking sector. It is possible that this venue could also be utilized as a consultative body with respect to the Regulatory Proposal.

Section 127 of the Canada Marine Act (CMA) provides that a person who contravenes a provision of the Act, other than section 107, or the regulations for which no penalty is otherwise provided under the CMA or under regulations made under paragraph 27(1)(a) is guilty of an offence and liable to a fine of not more than $5,000 in the case of an individual and of not more than $50,000 in the case of a corporation.

Neil Weatherdon
Marine Policy, ACF
Transport Canada
Place de Ville, Tower C, 25th Floor
Ottawa, Ontario
K1A 0N5
Email: weathen@tc.gc.ca

Notice is hereby given that the Governor in Council, pursuant to subsection 62(1) (see footnote a) of the Canada Marine Act (see footnote b), proposes to make the annexed Regulations Amending the Port Authorities Operations Regulations.

Interested persons may make representations to the Minister of Transport, Infrastructure and Communities with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations shall be in writing and cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Neil Weatherdon, Policy Advisor, Ports Policy, Department of Transport, Place de Ville, Tower C, 330 Sparks Street, Ottawa, Ontario K1A 0N5 (tel.: 613-998-0693; fax: 613-998-1845; e-mail: weathen@tc.gc.ca).

1. Subsection 31.1(2) of the Port Authorities Operations Regulations (see footnote 1) is replaced by the following:

(2) The written authorization referred to in subsection (1) shall specify the following minimum conditions:

(i) any appointment or reservation system established or adopted by the port authority for the port, and

(ii) the requirements established by the port authority respecting the identification of trucks and other road transportation equipment and the tracking, monitoring, location and movement of trucks and other road transportation equipment into, within or out of the port; and

(b) that the holder shall ensure the remuneration — for the delivery, pick-up or movement of containers into, within or out of the port — of an owner-operator of a tractor covered by the authorization is in accordance with

(i) the applicable rate of remuneration set out in a collective agreement that is binding on the owner-operator,

(ii) in the absence of a collective agreement referred to in subparagraph (i), any applicable law in respect of rates of remuneration, or

(iii) in the absence of a collective agreement referred to in subparagraph (i) and a law referred to in subparagraph (ii), a rate of remuneration that is equivalent to the applicable rate set out in a collective agreement that is binding on any other owner-operator of a tractor and that is posted on the Internet site of the British Columbia Labour Relations Board.

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

EXTRA Vol. 141, No. 1

Regulations Amending the Port Authorities Operations Regulations