Decision No. 244-W-2006
April 26, 2006
APPLICATION by Borden Ladner Gervais LLP, on behalf of Global Marine Systems, pursuant to the Coasting Trade Act, S.C., 1992, c. 31, for a licence to use the "CABLE INNOVATOR", a British registered cable vessel, to repair and maintain the Hibernia Atlantic submarine fibre optic telecommunications cable, on an as required basis, during the period commencing on or about October 1, 2005 and ending on September 30, 2006.
File No. W9125/B19/05-3
APPLICATION
[1] Borden Ladner Gervais LLP, on behalf of Global Marine Systems (hereinafter the applicant) has applied to the Minister of National Revenue for a licence to operate the service set out in the title. The matter was referred to the Canadian Transportation Agency (hereinafter the Agency) on September 30, 2005.
[2] The Agency conducted a search of the relevant portion of the marine industry and on October 12, 2005, Atlantic Towing Limited (hereinafter ATL) filed an objection to the granting of the application, claiming that it has suitable and available Canadian flagged vessels that could perform the work proposed.
[3] On October 26, 2005, Agency staff became aware that the applicant had neither received a copy of the notice nor the objection filed by ATL. On October 31, 2005, the applicant filed comments and requested that the Agency accept the late filing. In its Decision No. LET-W-290-2005, the Agency accepted the submission and ATL was given until November 7, 2005 to reply, but it did not file a reply.
[4] In its Decision No. LET-W-25-2006, the Agency directed ATL to file its reply to the applicant's comments. ATL requested an extension until February 3, 2006 to reply, and in its Decision No. LET-W-31-2006, the Agency granted the request and the applicant was given until February 8, 2006 to file its last comments.
ISSUE
[5] The issue to be addressed is whether there are suitable Canadian vessels available to provide the proposed service or perform the activity described in the application.
POSITIONS OF THE PARTIES
The applicant
[6] At the time of the application, and in its comments on the offer, the applicant provided specifications and characteristics of the British cable vessel "CABLE INNOVATOR" for which Global Marine Systems Limited has contracted the services to provide specialized maintenance and repair services on an emergency basis to the Hibernia Atlantic submarine fibre optic telecommunications cable system. Three segments of this system are in Canadian territorial waters, approaching Halifax, Nova Scotia. The "CABLE INNOVATOR" is based in Hamilton, Bermuda, from where it provides, under an existing agreement through September 30, 2009, cable maintenance and repair services for fibre optic cable systems installed in Canadian, American, Caribbean and international waters.
[7] The applicant claims that in Decision No. 698-W-2003, the Agency determined, with respect to a similar application to use the "CS SOVEREIGN", that there was no suitable Canadian vessel available for the activity proposed in the application.
[8] The applicant also claims that it is imperative that the vessel be stationed at a specific harbour in Bermuda; that Hamilton, Bermuda is the permanent base of the "CABLE INNOVATOR"; and that the "ATLANTIC EAGLE" is not based in Bermuda, but in Canada, and that it would not be able to meet the mobilization response time to provide service anywhere on the route as it is not fully equipped and manned to meet the requirement to service anywhere, extending to the United States of America, Ireland and the United Kingdom.
[9] Accordingly, the applicant claims that it made its choice based on the benefit of using a cable vessel such as the "CABLE INNOVATOR" that is the most practical, sound and proven solution to the potential requirements. However, the applicant notes that there have been no repairs on the system in Canadian territorial waters since its installation in 2000/2001.
[10] In its final comments to ATL's reply, the applicant states that ATL has not provided the specifications of either the "ATLANTIC HAWK" or the "ATLANTIC EAGLE", or indicated how it proposes to perform the service, as defined by the Agency's Guidelines with respect to coasting trade applications. ATL has not provided pertinent information that supports either vessel's cable capability in relation to the application. More specifically, in response to ATL's statement that it owns and operates four Canadian built highly specialized vessels, the applicant maintains that these are high specification anchor handling and support vessels, not dedicated cable maintenance and installation vessels. Therefore, they would require a degree of mobilization prior to conducting cable repair operations and that is not possible on a 24 hour notice basis.
[11] The applicant stresses that the Hibernia cable system is a full 12,000 kilometre transatlantic cable and that only a small portion of it is within Canadian waters. It adds that the maintenance history of the system does not support providing a secondary maintenance solution for Canadian waters where a fault occurring is considered low and the "CABLE INNOVATOR" is a dedicated cable vessel committed to providing a 24/7 standby repair facility to Hibernia.
[12] With respect to ATL's statement that its vessels are situated in Canadian ports, and that they can be mobilized with the appropriate equipment, the applicant stresses that all Hibernia system spare equipment is not stored within Canada and that it does not contemplate doing so as the likelihood of a fault within the 12 mile Canadian territorial sea limit is rare and that with the system parts/equipment being calibrated on a regular basis, the duplication of this equipment is not commercially/financially acceptable for the low risk involved.
[13] Also, unless stern ramps for cable deployment are permanently installed on ATL's vessels, it is unlikely that it would be mobilized within 24 hours, and moreover, this is not comparable to a dedicated cable vessel specifically designed for launching modern cable fibre optic submarine telecommunications cables. The applicant claims that cable handling machinery with integrated onboard software would be required for cable lay planning and recovery and adds that it estimates that the mobilization of a submarine trenching ROV would require the installation of a launch and recovery system. It indicates that it estimates that this would take a minimum of five days, thereby not complying with the 24-hour call-out period required. Moreover, the applicant suggests that it is unlikely that the cable jointing equipment and the technical personnel would be available within 24 hours.
[14] With respect to ATL's past experience with cable repair and maintenance, the applicant points out that there is no evidence of the type of contract and of the services provided while it has 150 years of experience in cable operations. Therefore, it claims that in addition to the unsuitability of ATL's vessels for rapid 24-hour deployment, there is no commercial case for utilizing these vessels for the service of cables within Canadian territorial waters where the likelihood of a fault is minimal.
[15] Therefore, the applicant believes that the Canadian vessel offered is not suitable for the activity described in the application, and neither is it available to conduct that activity in the time frame prescribed in the application.
ATL
[16] ATL claims that it has a vast experience in fibre optic cable maintenance and repairs; that in the past five years, several of its vessels have been engaged in such work; and that in the summer and fall of 2004, it completed fibre optic cable repairs off the east coast of Canada and of the United States of America. ATL offers to use the "ATLANTIC KINGFISHER", the "ATLANTIC HAWK", and the "ATLANTIC EAGLE". ATL refers to Decision No. 184-W-2001, in which the Agency ruled that there were suitable Canadian vessels available for the same cables and scope of work under a cable maintenance repair contract. At that time, ATL had offered the "ATLANTIC EAGLE".
[17] ATL submits that it is an Atlantic based and operated company that operates Canadian built highly specialized vessels and is in the final stage of design for the construction of more Canadian vessels, all of which are capable of fulfilling the requirements of cable maintenance and repair services. ATL asserts that its capability to build these Canadian vessels is dependent on its ability to ensure work that it claims is rightfully entitled to Canadian vessels.
[18] ATL also submits that it has reviewed Hibernia Atlantic's technical requirements and that they are within the spectrum of tasks completed by its Canadian built and owned vessels in the past. Consequently, it rejects the applicant's assertions that its vessels do not meet the requirements. More specifically, its vessels are situated in Canadian ports and are designed so mobilizing can be achieved with the appropriate cable handling equipment stored at secure Canadian depots. Its vessels utilized self contained high specification stern ramps for cable deployment in the past; they are designed to operate in extremely harsh weather conditions and provide a powerful, very reliable and stable work platform and their complete navigational suite mirrors that being used by the "CABLE INNOVATOR". The vessels are also equipped for rapid installation and deployment of submersibles and remotely operated vehicles and their fully integrated communications system is compliant with International Marine Organization standards, and its officers are fully trained and certified.
[19] ATL also claims that it has completed a one-year contract with a cable company using the "ATLANTIC HAWK", fulfilling a similar role of cable repair and surveys and that, based on the above information, it requests that the application for the "CABLE INNOVATOR" be rejected and the opportunity left open for Canadian vessels to compete for this business.
[20] ATL strenuously objects to the application to grant a licence to a foreign vessel to engage in coasting trade activities in Canadian waters.
ANALYSIS AND FINDINGS
[21] At the outset, the activity has to be defined. The applicant claimed that the activity is the repair and maintenance, on an as required basis, of the integrity of the Hibernia Atlantic submarine fibre optic telecommunications cable system. However, the majority of the cable system lies outside of Canada's territorial waters and in the past, there has been no repair and maintenance required in Canadian waters.
[22] The application of the Coasting Trade Act is limited to coasting trade activities, as defined in section 2 of the Coasting Trade Act. In this case, coasting trade is limited to commercial marine activities in Canadian waters that are defined as internal waters and the territorial sea of Canada, in accordance with the Territorial Sea and Fishing Zones Act. Therefore, coasting trade activities would be limited to maintenance and repair operations within the 12-mile limit of the Canadian territorial sea.
[23] The Agency notes that there is no work to be performed at the present time that would constitute a coasting trade activity. The applicant has been awarded a four-year contract to repair and maintain the Hibernia Atlantic submarine fibre optic telecommunications cable system.
[24] In the past, the same type of contract was awarded and the coasting trade application filed in December 2000 was also opposed by ATL. One other operator also offered the use of a Canadian vessel and the Agency determined, in Decision No. 184-W-2001, that there were suitable Canadian vessels available for the activity proposed in the application.
[25] The applicant pointed out that the Agency made another determination in Decision No. 698-W-2003 where there was no objection from Canadian vessel operators to the use of the "CS SOVEREIGN". In that instance, as no Canadian vessels were offered, there was no need for the Agency to assess the availability and suitability of Canadian vessels.
[26] However, in the present application, a Canadian vessel operator raised an objection and offered three of its vessels for work in Canadian waters. With respect to coasting trade activities, the Agency must consider the intent of the Coasting Trade Act to protect the interests of Canadian vessel operators who made investments in order to have vessels that comply with more stringent Canadian regulations.
[27] The Agency is of the opinion that, although the Canadian vessels offered differ in size and equipment from the foreign vessel, they have been used for fibre optic cable maintenance and repair activities in the past and that specialized equipment can be added.
[28] With respect to the vessel's location and other contingencies, the Agency is of the opinion that this is related to operations outside of the Canadian territorial sea. While the Agency recognizes the importance of timely repairs, should the need arise, it must examine whether there is a suitable Canadian vessel available for a coasting trade activity, and as there is no actual need identified, nothing supports the applicant's specific requirements. Therefore, the Agency is of the opinion that the Canadian vessels are available and suitable to carry out the proposed activities in Canadian waters.
CONCLUSION
[29] In light of the foregoing, the Agency has determined pursuant to subsection 8(1) of the Coasting Trade Act that there are suitable Canadian vessels available to provide the service or perform the coasting trade activities described in the application.
[30] This determination will be provided to the Minister of National Revenue for any necessary action as provided for in the Coasting Trade Act.
Members
- Guy Delisle
- Gilles Dufault
- Beaton Tulk
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