8 MARINE TRANSPORTATION

MAJOR EVENTS IN 2006

LEGISLATIVE AND REGULATORY CHANGES AND INITIATIVES

CANADA SHIPPING ACT AND REGULATORY REFORM UNDER THE CANADA SHIPPING ACT, 2001

The Canada Shipping Act, 2001 (CSA 2001) received Royal Assent on November 1, 2001. However, until the regulations required in support of the new Act are in place, the existing Canada Shipping Act and its related regulations will remain in full force and effect.

There are two phases to the implementation of the new regulations. In Phase 1, which is expected to be completed in 2007, more than 50 existing regulations are being reformed and streamlined into an estimated 22 regulations. At that time, the CSA 2001 will come into force. In Phase 2, the remaining regulations will be modernized so they are consistent with the requirements of the new Act.

The CSA is the main legislation overseeing personal safety and environmental protection in Canada’s marine sector. It applies to Canadian vessels operating anywhere and to foreign vessels operating in Canadian waters. This includes legislative and regulatory responsibilities relating to pleasure craft safety, marine navigation services, pollution prevention and response, and navigable waters, which were transferred from Fisheries and Oceans Canada to Transport Canada in 2003.

Transport Canada conducted extensive public consultations on the Phase 1 regulations at the spring and fall regional and national meetings of the Canadian Marine Advisory Council (CMAC). In addition, several individual projects conducted outreach sessions with stakeholders at strategic locations across Canada. Most Phase 1 projects are now being finalized for approval and publication in Parts I and II of the Canada Gazette.

Some of the regulations to come out of Phase 1 of the CSA 2001 Regulatory Reform Project include Administrative Monetary Penalties Regulations; Ballast Water Control and Management Regulations; Cargo, Fumigation and Tackle Regulations; Collision Regulations; Competency of Operators of Pleasure Craft Regulations; Environmental Response Regulations; Fire Safety Regulations; Fishing Vessel Safety Regulations; Heritage Wreck Regulations; Load Line Regulations; Marine Personnel Regulations; Regulations for the Prevention of Pollution from Ships and for Dangerous Chemicals; Safety Management Regulations; Ships Registry and Licensing Fees Tariff; Small Vessel Regulations; Vessel Certificates Regulations; Vessel Clearance Regulations; Vessel Detention Orders Review Regulations; Vessel Operation Restriction Regulations; and Vessel Registration and Tonnage Regulations. For more information on the CSA 2001 Regulatory Reform Project, visit www.tc.gc.ca/marinesafety/menu.htm.

MARINE ATLANTIC REVITALIZATION STRATEGY

Based on extensive consultations, the concerns of users, and close cooperation with Marine Atlantic Inc., the federal government developed a long-term strategy to revitalize the ferry services provided by this Crown corporation. The strategy was announced in January 2007 and its first phase includes additional funding of $54 million per year for the next five years; predictable tariff increases on constitutional services to be adjusted to the Consumer Price Index; implementation of a fuel surcharge as per standard industry practices; and a mandate given to the corporation’s new Board of Directors to develop and implement a five-year plan to improve service efficiencies, contain operating costs and save on fuel expenses. The Board has also been asked to continue advancing the fleet renewal plan that was submitted to the Government in 2006. More particularly, cost–benefit analyses and feasibility studies are required within the next two years to determine the specific requirements for the new ships and for ship refits. This information on the extent of the capital project is necessary for the Government to implement the second phase of the revitalization strategy aimed at renewing and upgrading Marine Atlantic’s fleet. This active approach strikes a balance between the Canadian taxpayers’ contribution to the service, the stakeholders’ share of the cost of the service and the Crown corporation’s effort to contain operational expenses while delivering an efficient service.

Short- And Long-Term Strategies for the Saint John – Digby Ferry Service

Bay Ferries has been operating the Saint John – Digby ferry service since 1997, when it was commercialized through a competitive tendering process. Bay Ferries has experienced significant challenges during the past few years, including large increases in fuel and insurance costs, and a significant decline in American visits to the Atlantic Region. Due to the financial operating losses on the Saint John – Digby ferry service, Bay Ferries announced in June 2006 that it would cease operating this specific route as of November 1, 2006. Recognizing the importance of this route to the regional economy, the federal government worked with its provincial counterparts to find a viable solution. Following an impact study, the federal government, the Province of New Brunswick and the Province of Nova Scotia announced in October 2006 that they would provide Bay Ferries with short-term financial assistance up to January 31, 2009. During this interim period, the federal government will work with stakeholders to identify a viable long-term strategy in line with the National Marine Policy and economic development imperatives.

NATIONAL MARINE AND INDUSTRIAL COUNCIL

The National Marine and Industrial Council (NMIC) was established in 2004 at the request of marine stakeholders. The objective of the Council is to provide a forum for the discussion of marine policy issues between marine industry executives and deputy ministers of federal departments that play a role in marine transportation. The Council also strives to raise the profile of Canada’s marine transportation sector as an economic generator.

The NMIC includes senior representatives from cargo shippers, domestic and international shipowners, port operators and marine service providers from across the country, as well as from Transport Canada, Industry Canada, Fisheries and Oceans Canada, Foreign Affairs and International Trade Canada, and Environment Canada.

The Council meets twice a year, and inter-sessional activities are carried out by working groups with the support of the Council Secretariat, which is housed at Transport Canada. Key subjects of discussion include competitiveness, security, innovation and infrastructure.

SHORTSEA SHIPPING FOR INCREASING INTERMODALITY

In April 2006, Transport Canada, in collaboration with the U.S. Department of Transportation Maritime Administration and the Secretariat of Communications and Transport of Mexico, hosted the North American Marine Conference in Vancouver. The conference was the result of collaboration between the three nations following the signing of a Memorandum of Cooperation on Shortsea Shipping in 2003. The conference also contributed to fulfilling commitments under the Security and Prosperity Partnership, a trilateral action plan designed to increase the security, prosperity and quality of life in North America.

The conference promoted the shortsea shipping concept and facilitated discussion of the contribution of the marine mode within an integrated North American transportation system. Transportation officials from Canada, the United States and Mexico signed a declaration to demonstrate each government’s commitment to continue trilateral cooperation and develop insights into the challenges associated with shortsea shipping. The declaration provides a general framework for developing a tripartite North American shortsea shipping steering committee with the objective of establishing an active relationship between the participants in order to share experience and professional knowledge.

Transport Canada continued in 2006 to pursue several studies and initiatives to understand and assess the opportunities, challenges, policy considerations and overall state of shortsea shipping in Canada, whether on the west or east coast, the St. Lawrence, the Great Lakes or in the Arctic. And, since 2004, Transport Canada has continued to be an active member of the Quebec Shortsea Shipping Roundtable. This roundtable works to create a clearinghouse for information and expertise, communicate information to stakeholders, and promote and support shortsea shipping projects.

CANADA MARINE ACT

Efforts were undertaken to amend the Canada Marine Act (CMA) in 2005. The proposed amendments followed the tabling of a June 2003 report pertaining to the first five years of operation of the Act. In 2006, Transport Canada, in consultation with financial experts, considered a number of key issues in order to further refine legislative amendments to the CMA in combination with enhanced policy initiatives focussed on increasing financial flexibilities for Canada Port Authorities. These consultations will be completed in early 2007 and will be used as key inputs to future CMA amendments and government activities in 2007/08.

Major Events in 2006

Infrastructure

Marine Politage

Industry Structure

Passenger Transportation

Freight Transportation