Decision No. 473-W-2006

August 31, 2006

August 31, 2006

APPLICATION by King Bros. Limited on behalf of Global Marine Systems Limited pursuant to the Coasting Trade Act, S.C., 1992, c. 31, for a licence to use the "WAVE VENTURE", a British cable ship, to repair and maintain the AmeriCan 1 submarine fibre optic cable system, on an as required basis, in the western Canadian waters of Juan de Fuca Strait, Haro Strait, Boundary Pass and the Strait of Georgia, during the period commencing on June 15, 2006 and ending on June 14, 2007.

File No. W9125/K12/06-1


APPLICATION

[1] King Bros. Limited, on behalf of Global Marine Systems Limited (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 May 24, 2006.

[2] On June 1, 2006, the Agency conducted a search of the relevant portion of the marine industry which has been notified. On June 6, 2006, 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 June 12, 2006, Agency staff was advised that the applicant had neither received a copy of the June 1 notice, nor the objection filed by ATL. On June 13, 2006, a copy of these documents was provided to the applicant. On June 14, 2006, the applicant filed comments and requested that the Agency accept the late filing. In its Decision No. LET-W-149-2006, the Agency accepted the submission and ATL was granted until June 16, 2006 to file a reply. ATL filed its reply on June 16, 2006.

PRELIMINARY MATTER

[4] On August 9, 2006, the applicant filed additional submissions for the Agency's consideration. The Agency notes that these submissions were filed after pleadings had closed respecting this matter. The Agency is of the opinion that the applicant's comments are not relevant and necessary to its consideration of this matter and, accordingly, does not accept these comments as they were filed after pleadings closed. The aforementioned comments have been returned to the applicant and do not form part of the record.

ISSUE

[5] The issue to be addressed is whether there are Canadian vessels that are suitable and available to provide the service or perform the activity described in the application.

LEGISLATIVE REFERENCE

[6] Under subsection 8(1) of the Coasting Trade Act, the Agency shall, in relation to an application for a licence, make the determinations referred to in paragraphs 4(1)(a) and (b) and 5(a) and (b) of the Act.

[7] Paragraph 4(1)(a) states:

4.(1) Subject to section 7, on application therefor by a person resident in Canada acting on behalf of a foreign ship, the Minister of Public Safety and Emergency Preparedness shall issue a licence in respect of the foreign ship, where the Minister is satisfied that

(a) the Agency has determined that no Canadian ship or non-duty paid ship is suitable and available to provide the service or perform the activity described in the application;

POSITIONS OF THE PARTIES

The applicant

[8] At the time of the application and in its comments on the offer, the applicant provided specifications and characteristics of the British cable vessel "WAVE VENTURE" for which Global Marine Systems Limited has contracted the services to provide specialized maintenance and repair services on an emergency basis to the AmeriCan 1 (Victoria-Vancouver-Seattle) submarine fibre optic cable system (hereinafter AmeriCan 1 system).

[9] The applicant states that because of the highly specialized nature of the requirements for these repairs and the related critical performance tolerances, an appropriate vessel was not available from Canadian sources. In reply to ATL, the applicant states that ATL's vessels are offshore support vessels that are not suitable as they are not specialized cable vessels or currently modified to the necessary specifications.

[10] With respect to the commercial suitability of ATL vessels, the applicant argues, among other things, that taking into account such items as ATL's retainer fee versus the applicant's annual standing charge as well as ATL's assumed basic cost of repair versus the applicant's repair charges, the use of ATL's vessels would be commercially unsuitable and economically unsustainable.

[11] Furthermore, the applicant claims that ATL has failed to offer details of a fully equipped cable vessel that is currently available to proceed and be underway to a cable repair within 24 hours of notification as per the service described in the application. The applicant submits that three vessels offered by ATL are offshore support vessels based on the east coast of Canada and are in no way available, equipped or ready to respond to an incident, within the pre-requisite 24-hour response time, on the west coast of Canada.

[12] The applicant stresses that the 24-hour response time requirement is a critical component of the activity. The applicant states that it is imperative that the vessel be stationed at one of the harbors on the route, to provide a 24-hour response time to anywhere on the route. The applicant adds that Victoria, British Columbia is defined as the base port as it provides the essential immediate access required to maintain and repair the AmeriCan 1 system.

[13] Therefore, the applicant believes that the Canadian vessels offered are not available and are not suitable for the activity described in the application.

ATL

[14] ATL states that it has vast experience in fibre optic cable maintenance and repairs. ATL submits that over the past five years, several of its vessels have been actively engaged in this work. Most recently, it completed fibre optic cable repairs during the summer and autumn of 2004 off the east coast of Canada and the eastern seaboard of the United States. ATL offers to use the "ATLANTIC KINGFISHER", the "ATLANTIC HAWK" and the "ATLANTIC EAGLE" to perform the activity described in the application.

[15] ATL submits that its vessels are capable of fulfilling the requirements for maintenance and repair of the AmeriCan 1 submarine fibre optic cable system. ATL mentions that it has reviewed the applicant's technical requirements and maintains that this is within the realm of tasks completed by its vessels.

[16] According to ATL, it has successfully mobilized and utilized fully self-contained, high specification stern ramps for cable deployment, on its vessels during other cable repair work in the past. ATL adds that its vessels are equipped for rapid installation and deployment of remote operated vehicles (ROV) and have used ROVs in cable repairs on several vessels.

[17] ATL advises that its vessels are situated in Canadian ports and mobilization can be achieved easily within these ports with appropriate equipment stored at secure Canadian depots, not an uncommon practice for companies completing cable repairs in Canadian waters. Otherwise, ATL submits that its vessels can be retained in the port of choice of the vessel charter, even on the west coast of Canada.

[18] ATL requests that the Agency reject this coasting trade application and that the opportunity be left open for Canadian vessels to compete for this business.

ANALYSIS AND FINDINGS

[19] The Agency's mandate is to determine whether or not there are suitable and available Canadian vessels to perform the activity described in the application.

[20] The Agency acknowledges that this application is for an "emergency" repair and maintenance program on an as required basis for the AmeriCan 1 system on the west coast of Canada. The Agency also recognizes that the 24-hour response time requirement specified in the application is a critical component of the activity to be performed.

[21] The Agency notes that the three vessels proposed by ATL as being available on the west coast of Canada are permanently based on the east coast of Canada. In this regard, ATL asserted that its "vessel can be retained in port of choice of the Vessel Charter, even on the West Coast of Canada". The Agency finds this statement to be unsubstantiated, theoretical and hypothetical.

[22] In fact, the record demonstrates that ATL's vessels are not currently chartered on the west coast of Canada. Information filed by the applicant on June 13, 2006, which was not contested by ATL, also demonstrates that the costs that would be associated with the mobilization and demobilization of ATL's vessels to the west coast of Canada, as well as the amount of time that would be required by ATL to complete such mobilization and demobilization would be considerable.

[23] In light of the foregoing, and upon careful consideration of all the facts and circumstances of this case, the Agency finds that ATL's vessels are not actually available to provide the service on the west coast of Canada as per the service described in the application.

[24] The Agency notes that many comments have been raised over the technical and commercial suitability of the Canadian vessels, but given that the Agency has found that no Canadian vessels are available to provide the service described in the application, it is not necessary to address the suitability issues raised in the pleadings.

DETERMINATION

[25] In light of the foregoing, the Agency has determined pursuant to subsection 8(1) of the Coasting Trade Act that there are no suitable Canadian ships available to provide the service or perform the activities described in the application.

[26] This determination will be provided to the Minister of National Revenue for any necessary action as provided for in the Coasting Trade Act.

Members

  • Gilles Dufault
  • Guy Delisle
  • Beaton Tulk

Members

  • Guy Delisle
  • Gilles Dufault
  • Beaton Tulk
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