Decision No. 717-W-2005

December 9, 2005

File No. W9125/C55/05-1

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APPLICATION

[1] The Canadian Salt Company Limited (hereinafter Canadian Salt) has applied to the Minister of National Revenue for the authority set out in the title. The matter was referred to the Canadian Transportation Agency (hereinafter the Agency) on October 14, 2005. Notice of the application was given on that same date, and on October 19, 2005, offers were filed by Canada Steamship Lines (hereinafter CSL), Transport Desgagnés Inc. (hereinafter Desgagnés), and Seaway Marine Transport (hereinafter SMT).

[2] On October 20, 2005, the Seafarer's International Union of Canada filed an intervention in this application, objecting to the issuance of temporary working permits for a foreign crew.

[3] In its letter of October 19, 2005, Desgagnés requested an extension of time to reply to the application. The Agency considered the matter and in its Decision No. LET-W-277-2005 dated October 21, 2005, the Agency refused to modify the normal process and advised Desgagnés that it had until October 25, 2005 to complete its offer.

[4] On October 25, 2005, Canadian Salt requested that the Agency allow it to reply to Desgagnés' letter of October 24, 2005, and in its Decision No. LET-W-282-2005 dated October 25, 2005, the Agency allowed Canadian Salt to do so.

[5] On November 2, 2005, the Agency determined that clarifications would be required with respect to certain points raised and in its Decision No. LET-W-285-2005 dated November 2, 2005, the Agency required Canadian Salt to provide additional information and to answer specific questions.

[6] In its letter dated November 2, 2005, Canadian Salt advised that the vessel that it originally proposed to use, the MANDARIN, was not available and informed that it would be replaced by a similar vessel, the PINTAIL. This letter was acknowledged on November 4, 2005.

[7] On November 7, 2005, Canadian Salt filed part of the information requested and asked that the Agency allow it more time to produce the remaining information.

[8] On November 9, 2005, CSL requested permission to reserve its final reply until the complete information is received from Canadian Salt. On that same date, Canadian Salt submitted information with a specific request that it either be kept entirely confidential without being subject to the Canadian Transportation Agency General Rules, SOR/2005-35 with respect to confidentiality, or that it be returned to Canadian Salt and not form part of the pleadings. In Decision No. LET-W-310-2005, the Agency informed the parties that Canadian Salt's submission of November 9, 2005 was returned. Therefore, the questions relating to the tonnage moved in the past and that is still to be moved for the 2005-2006 shipping season remain unanswered by Canadian Salt's own volition. CSL was given the opportunity to file its reply, and the pleadings were closed on November 24, 2005.

ISSUE

[9] Pursuant to the Coasting Trade Act, S.C., 1992, c. 31, the Agency must determine if there are Canadian vessels suitable and available to perform the activity proposed in the application.

POSITIONS OF THE PARTIES

Canadian Salt

[10] Canadian Salt produces deicing road salt, and its Magdalen Islands production is transported by vessel and delivered up the St. Lawrence River to stockpiles along the shore in Quebec and Ontario, notably in Québec and Montréal, Quebec, and in Johnstown and Toronto, Ontario. The great majority of deliveries have to be completed by the end of November or early December 2005.

[11] In its application, Canadian Salt claims it is missing Canadian tonnage for 3 to 4 cargoes totalling approximately 55,000 to 80,000 metric tonnes to be transported before December 15, 2005. It requires cargo vessels with certain characteristics like water tight hatches, having the capacity of transiting in the Seaway System, and with a maximum draught of 23 feet 8 inches.

[12] Further to the offers, Canadian Salt claims that it is facing an unforeseen situation that has to be addressed urgently and that cannot be dealt with in any other way without risking the ability to deliver deicing salt which is an absolute necessity for Canadian roads. Canadian Salt affirms that hurricanes forced it to close its Weeks Island salt mine facility, which resulted is its production being disrupted and significantly impacted its planning and flexibility to deliver. Also, its salt production in Objiway, Ontario was disrupted by labour and operational difficulties. Moreover, the needs are different from previous years, being lower in Quebec and the Maritimes, and higher in Ontario.

[13] Canadian Salt notes more specifically that CSL confirmed that it does not have the capacity during the October 25 to December 15, 2005 period; that Canadian Salt reached an agreement with Desgagnés but this does not provide all the capacity required during the specific period; and that SMT has no available capacity during the said period.

CSL

[14] CSL claims that it has a number of vessels that can service the trade from the Magdalen Islands. In late September, it was approached by Canadian Salt to supply vessel capacity of approximately 100,000 metric tonnes during the period October to December 2005. It offered capacity in December 2005 and January 2006, but Canadian Salt declined.

[15] CSL claims that Canadian Salt should have known that Canadian vessels are usually not available at the last minute during the period September to December, and that allowing a foreign vessel to provide the services would circumvent its services as capacity would have been available if Canadian Salt had committed itself in advance and at the appropriate time.

[16] In its letter dated November 23, 2005, CSL advised of a conversation with Canadian Salt wherein it was requested to supply a vessel as soon as possible for the Magdalen Islands; it offered a vessel for the end of December 2005, but the offer was refused.

Desgagnés

[17] Desgagnés submits that its fleet includes vessels that are perfectly suited and that Canadian Salt has been using them for many years, which leaves no doubt as to their suitability. Desgagnés submits that it has been able to identify some of its vessels that are available and that it has contacted its clients to change schedules in order to be able to respond adequately to the application.

[18] Desgagnés also submits that Canadian Salt has not demonstrated the need to fast track the application. It has been in operation for many years, its production rate has been constant and there hasn't been much variation in the demand for salt. Further, there is no indication that this situation is fortuitous or a case of force majeure.

[19] On October 24, 2005, Desgagnés clarified its offer, stating that to its knowledge nothing over which Canadian Salt had no control, i.e., with respect to production, could have required it to change its shipping schedule in a manner that it should require the use of a foreign vessel when the Canadian fleet has always been in a position to meet its requirements.

[20] Three vessels belonging to Desgagnés are identified in an agreement with Canadian Salt with which Desgagnés has maintained contractual relations since the early 1980s. Consequently, the AMÉLIA DESGAGNÉS, MATHILDA DESGAGNÉS and MÉLISSA DESGAGNÉS are suitable. With respect to availability, Desgagnés affirms that to this day it has always been able to meet Canadian Salt's demands.

[21] In its reply dated November 7, 2005, Desgagnés reiterates that the three above-mentioned vessels are suitable for the transportation of salt, that the MATHILDA DESGAGNÉS and MÉLISSA DESGAGNÉS are still available, and that it is waiting for a confirmation from Canadian Salt as to their use.

SMT

[22] SMT expresses concerns with the potential adverse impact on its contracted and proposed activities. The addition of a foreign vessel during the fall period may compromise any of the five remaining cargoes planned for the ALGOPORT and/or this may cause delay to the ALGOPORT at the loading point.

[23] SMT confirms the availability of the ALGOPORT and the SAULNIÈRE to provide additional service for Canadian Salt in January 2006, consecutive to the 18 voyage program already contracted for. SMT claims that it is not unreasonable to expect service in January from the Magdalen Islands as, over the past five years, it has consistently loaded salt in January, and as late as January 31 in 2005, and February 13 in 2004.

[24] SMT is concerned that the use of a foreign vessel will adversely impact the planned programs by reducing the amount of salt available to move during the late season. SMT asserts that the tonnage proposed to be moved under the current coasting trade application will displace tonnage that was planned to be carried by the ALGOPORT and the SAULNIÈRE during January 2006.

[25] SMT notes that earlier this year, it did not move the planned cargoes; that it could have moved additional cargoes upon reasonable notice; and that it reserves the right to oppose any coasting trade licence application unless every effort has been made to utilize all available capacity throughout the navigation season.

ANALYSIS AND FINDINGS

[26] In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings.

[27] The issue to be addressed is whether there are suitable Canadian vessels available for the activity proposed in the application. The Agency must take into consideration legislation that is in place to protect the interests of Canadian vessel operators who have invested in vessels that comply with specific safety requirements and who must employ a Canadian crew.

[28] The onus rests with the applicant to demonstrate that the Canadian vessels offered are not suitable or not available to meet its needs. In this case, the suitability of the Canadian vessels is not contested. The issue is limited to their availability to carry the tonnage required for Canadian Salt to meet its obligations to provide deicing salt for Canadian roads.

[29] To justify its application, Canadian Salt claimed an increased demand in Ontario, requiring delivery before December 15, 2005. In its comments, Canadian Salt stated that the additional demand in Ontario amounts to 60,000 metric tonnes. The Agency asked Canadian Salt specific questions and requested information that would substantiate the identified need. In reply, the marketing requirement chart provided shows only a slight increase of 7 metric tonnes from 2004 to 2005, for Johnstown and Toronto, Ontario.

[30] The Agency notes that the evidence is unchallenged on the ability of Canadian vessel operators to meet Canadian Salt's transportation requirements. This is not only confirmed by statements filed by Canadian operators, but also by Canadian Salt's admission that it has never previously filed an application for a foreign vessel to carry salt.

[31] Canadian Salt stated that for this year, it is unlikely that its berth facilities will be accessible from late December 2005 through late January 2006. Canadian Salt neither specified why, nor did it provide evidence in support of this statement. To the contrary, loading dates provided to the Agency by SMT for the past five years indicate that this 2005-2006 shipping season will, as the other shipping seasons, extend throughout December 2005 and January 2006.

[32] As stated above, the burden of proof lies with the applicant. Canadian Salt must therefore substantiate its need and prove that the vessel capacity offered by Canadian vessel operators, that have previously always met its transportation needs, is insufficient.

[33] In this case, the Agency finds that Canadian Salt has not met that burden. The information provided does not substantiate the requirement for additional foreign vessel capacity to meet the shipping requirements from the Magdalen Islands to ports along the St. Lawrence River, including Québec, Montréal, Johnstown and Toronto.

CONCLUSION

[34] In light of the foregoing, the Agency has determined, pursuant to section 8 of the Coasting Trade Act, that there are suitable Canadian vessels available to carry out the activity proposed in the application.

[35] 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
• Mary-Jane Bennett