EXTRA Vol. 141, No. 1

Canada Gazette

Part II

OTTAWA, THURSDAY, AUGUST 2, 2007

Registration
SOR/2007-171 July 31, 2007

CANADA MARINE ACT

Regulations Amending the Port Authorities Operations Regulations

P.C. 2007-1143 July 31, 2007

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, Infrastructure and Communities, pursuant to subsection 62(1) (see footnote a) of the Canada Marine Act (see footnote b), hereby makes the annexed Regulations Amending the Port Authorities Operations Regulations.

REGULATIONS AMENDING THE PORT AUTHORITIES OPERATIONS REGULATIONS

AMENDMENT

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:

(a) that the holder shall comply with and ensure compliance with

(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

(3) Paragraph (2)(b) does not apply in respect of an owner-operator of a tractor who is transporting containers referred to in that paragraph to or from a place outside the Lower Mainland of British Columbia.

(4) The Minister shall, within two years after the coming into force of this subsection, conduct a review of the operation of paragraph (2)(b) and, taking into consideration the results of that review, decide whether to modify that paragraph.

COMING INTO FORCE

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

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

The Regulations Amending the Port Authorities Operations Regulations are made pursuant to subsection 62(1) of the Canada Marine Act (CMA). The amending regulations 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 were 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 license, and the holder of that license is in compliance with a minimum set of conditions.

The minimum conditions currently required to be specified in the licence and with which the license 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 or 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 amending regulations 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 such that, 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 at least equivalent to a rate of remuneration contained in any existing collective agreement made publicly available on the Internet site of the Vancouver Port Authority that applies to owner-operator truckers engaged in the movement of containers at the ports. As a result of representations received during the prepublication period, the Regulations have been amended to further specify that the rate of remuneration paid to the owner-operator cannot be less than the rate of remuneration set out in the Memorandum of Agreement (MOA) between trucking companies and the Vancouver Container Truckers Association, dated July 29, 2005. This is discussed further below under "Consultation". Should an applicable law in respect of rates of remuneration for owner-operator truckers be enacted, that law would prevail.

The amended regulations are 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 Regulations as amended will contribute towards long-term stability in container trucking operations in the Lower Mainland of British Columbia.

The MOA was recommended for a two year duration by a mediator in July 2005 as a result of discussions between two separate groups: trucking companies or brokers and independent owner-operator truckers. These discussions were commenced in response to a disruption of container trucking operations at ports in the Lower Mainland of British Columbia. On August 4, 2005, the Government of Canada issued an Order in Council, under section 47 of the Canada Transportation Act, requiring the Port Authorities to adopt the MOA as a condition of licence for accessing the ports. Similar Orders in Council were subsequently issued and, upon expiry of the last Order in Council on April 20, 2006, the Port Authorities determined that access to the ports would continue to be conditional on adherence to the MOA by prospective licensees. 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 amended regulations seek to maintain the stability for rates of remuneration established under the MOA and, to the greatest extent possible, reflect rates of remuneration that have been negotiated by industry and are binding under collective agreements. The Regulations ensure that rates of remuneration that have been negotiated and agreed to on behalf of those owner-operator truckers that are subject to a collective agreement are also comparably applied to owner-operator truckers that are not subject to a collective agreement. The amended regulations allow for a range of rates of remuneration to be paid to owner-operators on the basis of collective agreements, and allow for fluidity of rates of remuneration due to the amendment or renegotiation of collective agreements.

However, for greater certainty that undercutting of rates and other compensation do not recur upon expiry of the MOA, the amended regulations require that the rate of remuneration paid to an owner-operator cannot be less than the applicable rate of remuneration set out in the MOA.

Alternatives

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. As full ratification did not occur, a further Order in Council (P.C. 2005-1365) was issued in August 2005 to require the Port Authorities to adopt the MOA as a condition of license to access the ports.

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, ninety-day measure, issued on the basis that 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 as a result of 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.

As mentioned earlier, the amended regulations will require that rates of remuneration for independent owner-operators who are not subject to collective agreements be at least equivalent to those established in collective agreements binding other owner-operators, but no lower than the rates of remuneration set out in the MOA.

Benefits and costs

Failure to implement the amending Regulations would likely 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 the amended regulations could significantly mitigate the risks of port disruption and the risk of damage to Canadian trade and competitiveness.

The amended regulations are 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. Therefore, the amended regulations should have limited impacts on the 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 amended regulations are 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 amendments to subsection 31.1(2), 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. The Province of British Columbia has agreed to develop, implement and manage an ongoing dispute resolution mechanism for alleged contraventions of rates paid to independent owner-operators. The Province of British Columbia will assume the costs associated with this dispute resolution mechanism.

Consultation

The proposed Regulations were pre-published in the Canada Gazette, Part I, on June 19, 2007, followed by a 30-day prepublication period. During this period, Transport Canada received nine representations with respect to the Regulatory proposal. Submissions were received from the following stakeholders: labour associations, trucking companies and associations, another level of government, a port authority, and importers and exporters. In general, those opposed to the regulatory proposal were of divergent views: either the federal regulatory proposal intervened too extensively in the marketplace or, conversely, did not provide adequate protection of compensation levels and enforcement for independent owner-operators.

Specifically, some stakeholders opposed to the regulatory proposal commented that, in proceeding with the amending regulations, the Government of Canada is rewarding those that have engaged in illegal behaviour, setting a detrimental precedent, contravening the Canada Transportation Act, the Charter of Rights and Freedoms and the Canada Labour Code, and is perpetuating uncompetitive shipping rates. Transport Canada responds to these comments as follows:

• The amended regulations are intended to provide continued stability in container trucking operations at Lower Mainland ports and not to reward those who have engaged in illegal behaviour. An assessment of the legal conduct of individuals associated with the 2005 trucking disruption is the responsibility of appropriate law enforcement agencies.
• The precedent set with respect to the amended regulations is limited to the conditions necessary to access the Ports of Vancouver and Fraser River. The amended regulations represent a specific action by the Government of Canada in response to a unique set of circumstances and do not represent an overarching policy.
• The Government of Canada in general, and Transport Canada specifically, have followed a course of deregulation of the transportation sector over several decades. Transport Canada continues to advance policies and programs that support a market-based transportation framework. However, there are clear instances where a market failure may occur, whether at a broad level or within a certain segment of the transportation sector. In such instances, either to correct a market or to mitigate a disruption of the national transportation system and economy, governments may be required to intervene.
• Transport Canada is satisfied that the amending Regulations fall within the scope of federal constitutional jurisdiction and are not in contravention of the Canada Transportation Act, the Charter of Rights and Freedoms and the Canada Labour Code.
• The amended regulations require that independent owner-operators be compensated at rates of remuneration that are at least equivalent to those contained in collective agreements, and no less than the rates set out in the MOA. Such rates for container trucking have been in effect for two years and have not been demonstrated to have caused a decline in container volumes handled at Lower Mainland ports. Loss of traffic due to further trucking disruptions could be far more detrimental to sustaining the long-term volumes of containers handled at these ports.

Other stakeholders opposed to the regulatory proposal counter that the proposal would not prevent an erosion of compensation to independent owner-operators, does not specify how enforcement would occur, does not address residual issues associated with the MOA and does not regulate employee drivers. Transport Canada responds to these comments as follows:

• Transport Canada acknowledges that the regulatory proposal refers to "a collective agreement", without specifying a base rate. A number of representations received by Transport Canada provide examples of how undercutting of rates could occur without appropriate safeguards. As a result, Transport Canada has addressed the need to specify base rates of remuneration in the amended regulations. The base rates of remuneration are those set out in the MOA.
• The Province of British Columbia has agreed to develop, implement and manage an ongoing dispute resolution mechanism for alleged contraventions of rates of remuneration paid to independent owner-operators.
• A number of issues have been identified under the MOA for which there has yet to be a binding resolution. Issues associated with enforcement of rates of remuneration will be managed under the dispute resolution mechanism established by the Province of British Columbia. Rates of remuneration are intended to encompass all compensation entitled to an owner-operator either under a collective agreement or, alternatively, set out in the MOA. Issues that cannot be addressed under the dispute resolution mechanism would require an alternative venue as agreed upon by all industry stakeholders.
• The MOA did not address the issue of compensation paid to employee drivers. The intention of the amended regulations is to provide appropriate protections to those independent owner-operators that have been subject to the MOA since 2005. Structural issues that extend beyond the scope of collective agreements or the MOA would need to be resolved by all industry stakeholders.

Although representations regarding the regulatory proposal were mixed, there was clear acknowledgement by all stakeholders for the need to preserve reliability and stability in port trucking operations and therefore an understanding of why the Government of Canada has put forward the regulatory proposal. All stakeholders stated support for a review of this measure to account for its effectiveness and to evaluate the overall state of the industry.

As a result of representations received by Transport Canada, the following changes have been made to the proposed Regulations published in the Canada Gazette, Part I, on June 19, 2006:

• In the absence of a collective agreement to which they are subject or an applicable law, an owner-operator is to be paid a rate of remuneration that is at least equivalent to a rate set out in any collective agreement. This may include collective agreements as amended from time to time or renegotiated.
• Notwithstanding the above, an owner-operator cannot be paid a rate of remuneration that is less than the applicable rate set out in the MOA.
• Rates of remuneration contained in collective agreements are to be posted on the Internet site of the Vancouver Port Authority. As the amended regulations are directed to the Port Authorities, a determination of how the regulatory requirements will be incorporated operationally within the licensing system falls within the responsibility of the Port Authorities.
• Owner-operator truckers that are engaged in long-haul trucking between the port and outside the British Columbia Lower Mainland are specifically excluded from the amended Regulations.
• A review of subsection 31.1(2) of the Regulations is to be conducted within two years of the coming into force of the amending regulations.

Compliance and enforcement

Section 127 of the Canada Marine Act 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.

Contact

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

Footnote a

S.C. 2001, c. 4, s. 143

Footnote b

S.C. 1998, c. 10

Footnote 1

SOR/2000-55

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