Decision No. 12-W-2021

[1] Under the Act, the Minister of Public Safety and Emergency Preparedness (Minister) may issue a coasting trade licence authorizing a foreign ship or a non-duty paid ship to conduct a commercial activity in Canadian waters for a maximum period of 12 months if the Canadian Transportation Agency (Agency) has determined that there is no suitable Canadian ship or non-duty paid ship available to perform the activity described in the application.

[2] Minerva applied for licences in two applications to use the “KASSOS” and the “KEFALONIA”, two oil tankers registered in Liberia, to load, discharge and deliver bunker fuels to ships in Prince Rupert and Vancouver, British Columbia. The proposed activity would commence on February 1, 2021, and end on January 31, 2022.

[3] North Arm Transportation Ltd. (North Arm), Algoma Tankers Limited (Algoma), Canship Ugland Ltd. (Canship) and Wolverine Terminals ULC (Wolverine), (collectively, the respondents), each filed an objection to the applications. North Arm offered the following Canadian-registered ships: the “NORTH ARM PIONEER” and the “NORTH ARM GENESIS” and Algoma and Canship offered, respectively, the following Canadian-registered ships: the “ALGOMA DARTMOUTH” and the “CL AQUARIUS” to perform the activity described in the applications. Wolverine did not offer a ship.

[4] After considering the pleadings, the Agency determines, pursuant to subsection 8(1) of the Act, that there is a suitable Canadian-registered ship available to perform the activity described in the applications.

BACKGROUND

[5] On December 17, 2020, Minerva filed, through its Canadian representative, two applications for temporary admission to the coasting trade of Canada to use the “KASSOS” and the “KEFALONIA”, to load, discharge and deliver bunker fuels to ships in Prince Rupert and Vancouver. The activity has a starting date of February 1, 2021, and an ending date of January 31, 2022.

[6] On December 21, 2020, Agency staff gave notice of both applications to the Canadian marine industry.

[7] On December 23, 2020, North Arm, Algoma, Canship and Wolverine each filed an objection to the applications.

[8] On December 29, 2020, Minerva filed its replies to the four objections.

[9] On December 30, 2020, North Arm and Algoma each filed their final response. On the same day, Canship requested an extension to file its final response to Minerva, which the Agency granted on December 30, 2020.

[10] On December 31, 2020, Canship filed its final response, which closed the pleadings.

ISSUE

[11] Is there a suitable Canadian ship available to perform the activity described in the application?

JOINING OF APPLICATIONS

[12] The Agency has considered the submissions of the parties in both applications filed for the “KASSOS” and the “KEFALONIA”. As the issues are operationally similar, the Agency determines that the cases should be joined. Consequently, one decision is issued with respect to the two applications.

LEGISLATIVE CONTEXT

[13] When an application is made for a coasting trade licence to authorize a foreign ship or a non-duty paid ship to conduct a commercial activity within Canadian waters, the Agency is responsible under the Act for determining whether there is a suitable Canadian ship available to provide the service or perform the activity described in the application. The Act recognizes the interests of Canadian ship operators by permitting foreign ships to be used in Canadian waters only when no suitable Canadian ship or non-duty paid ship is available to provide the service or perform the proposed activity.

[14] The Agency must determine whether, on a balance of probabilities, there is a suitable Canadian ship available to perform the activity. The Agency’s process is set out in the Canadian Transportation Agency Guidelines Respecting Coasting Trade Licence Applications (Guidelines).

POSITIONS OF THE PARTIES

Minerva

[15] Minerva states that it requires the use of two oil tankers to load, discharge and deliver bunker fuels to ships in Prince Rupert and Vancouver.

[16] Minerva contends that, historically, there has not been any reliable source of bunker fuels and related services at the Port of Prince Rupert. It adds that Prince Rupert is one of the largest ports in North America without bunkering services available and that it has been working with the port authorities to bring a high-quality local bunkering operation that supports the port’s long-term growth plans. Minerva states that it continues to work closely with the representatives of the Prince Rupert Port Authority and Transport Canada Marine Safety to this end.

[17] Minerva argues that its applications follow due process, as set by the Agency and its Guidelines. It specifies that the proposed bunkering ships will be subject to Transport Canada Marine Safety’s inspection prior to any final coasting trade licence issuance.

[18] Minerva indicates that the number of trips will be up to two trips per ship per month. The total volume of cargo to be moved is up to 6,600 cubic metre (m³) per ship, per voyage, per destination. Specifically, regarding the type of ship required, size, capability and any other specifications, Minerva states that the ships:

• must have a minimum capacity of 6,000 metric tonne per oil tanker;
• must be self-propelled;
• must have individual screw-type cargo pump with a maximum pumping rate of 750 m³/hour;
• must be capable of handling high-viscosity products up to 700 centistoke at 50°C; and
• must be capable of segregating and delivering multiple grades of cargo with each load.

North Arm

[19] North Arm states that it already provides marine fuel services to British Columbia’s coast with the “NORTH ARM PIONEER” and the “NORTH ARM GENESIS”, two double-hulled tanker barges fitted to load, carry and discharge a full range of marine fuel products.

[20] North Arm specifies that Minerva stated that un-propelled barges with tugs are not feasible in Prince Rupert for bunkering due to prevailing weather conditions and lack of staging areas while awaiting deliveries. North Arm takes issue with this assertion, stating that it is in discussion with the Prince Rupert Port Authority and at no time did it say that the use of North Arm’s barges to deliver fuel in the port was not feasible due to weather conditions and lack of staging areas.

[21] North Arm submits that the Port Information Guide from the Prince Rupert Port Authority addresses the weather conditions for bunkering and states that the restrictions apply to all ships, not just barges, and, consequently, the restrictions affect all bunkering operations equally, whether by self-propelled tanker or un-propelled tanker barge.

[22] North Arm adds that, to its knowledge, there are no domestic ships that have the need for the quantity of fuel mentioned in the applications. Moreover, it has never had an issue in supplying domestic ships with the quantity of fuel required. It further states that its offered tanker barges are fully approved by Transport Canada to load, carry and deliver marine fuel in British Columbia. North Arm points out that it has an annual delivery of 25 million litres of fuels of all types.

Algoma

[23] Algoma states that its offered ship, the “ALGOMA DARTMOUTH”, regularly performs bunkering operations and that the transport of the monthly required product could easily be made by this ship over the course of a year.

[24] Algoma contends that Minerva’s assertion that Algoma’s offered oil tanker cannot perform the required work is incorrect. Algoma explains that the ships proposed in the applications are larger than its offered ship but that the respective load and discharge times between its offered ship and Minerva’s proposed ships are comparable.

[25] In Algoma’s opinion, Minerva’s proposed ships are limited in their discharge capability by the smaller size of their ballast pumps.

[26] Algoma indicates that with a total ballast of 2,900 m³ and a load rate of 400 m³/hour, it would take Minerva’s proposed ships 7.25 hours to get all the ballast onboard. Algoma’s ships, by comparison, would take roughly 7 hours at 600 m³/hour to discharge 4,300 m³.

Canship

[27] Canship indicates that the “CL AQUARIUS” is currently in Vancouver and laid up as a result of the ongoing pandemic. Its oil tanker has been utilized for bunkering in Vancouver since 2018.

[28] Canship argues that it is unclear why Minerva would highlight a maximum pumping rate as opposed to a minimum as pumping rates are controllable. In addition, Canship indicates that the maximum pumping rate would not be a determining factor in the efficiency of the bunkering operation as it is largely dependent on the receiving ship.

[29] Furthermore, Canship offers an oil tanker that can carry up to 3,500 deadweight tonnage with a cargo pump with a maximum of 600 m³/hour pumping rate. Canship adds that its oil tanker is capable of handling high-viscosity products up to a maximum of 85°C.

Wolverine

[30] Wolverine states that the ships in the applications have not yet been approved under the strict regulatory regime established by Transport Canada. Wolverine adds that the applications are not for a temporary activity and says that Minerva is looking to establish a more permanent marine fuel service. Wolverine, even though it is not offering a ship, strongly objects to both applications.

ANALYSIS AND FINDINGS

Availability

[31] Minerva made no submissions in relation to the availability of the Canadian ships offered. Therefore, the Agency concludes that the availability of the Canadian ships for the required period is not contested by Minerva and, consequently, is not an issue.

Suitability

[32] The Agency assesses the suitability of a Canadian-registered ship in relation to the technical and operational requirements of the activity and whether the Canadian-registered ship is capable of performing the activity.

[33] The Agency weighs the submissions made and the evidence filed by the parties to assess whether an applicant has met its burden of proof to demonstrate that a suitable Canadian ship is not available to perform the activity. The Agency makes its determination on a balance of probabilities assessment of the merits of the evidence submitted, meaning that an applicant must prove that its position is more likely than not.

[34] While there is an onus on an applicant to provide sufficient details for owners and operators of Canadian-registered ships to assess and respond to an application, there is equally an onus on a respondent in its answer to an application to provide detailed information about the offered ship and how it would meet the requirements and perform the activity described in the application.

[35] Where an applicant, bearing the burden of proof, provides sufficient evidence to make its argument persuasive, the evidentiary burden will shift to the respondent offering its Canadian-registered ship. In this case, the Agency is of the opinion that Minerva has not provided sufficient evidence to support its position that the offered ships are not suitable, and, consequently, the evidentiary burden did not shift to the respondents to justify their positions with supporting evidence.

[36] The Agency notes that the ultimate onus is on an applicant to demonstrate that the offered ships are not technically suitable and to provide evidence in support of its statements to the contrary. In this case, Minerva failed to provide sufficient information in this regard in its general blanket replies to the respondents’ answers.

[37] Furthermore, the Agency considers that the respondents provided sufficient information indicating that their offered ships could provide the desired services to meet the bunkering fuel demand on the Canadian west coast. The Agency also considers that Minerva has not filed concrete evidence to meet its burden regarding restrictions of bunker fuel operations at the Port of Prince Rupert while the respondents did provide credible information that disputes these claims.

[38] In addition, it is the responsibility of an applicant to do its due diligence and contact the Canadian operators to discuss the suitability of their Canadian ships. In this case, Minerva did not provide evidence demonstrating that it made any attempts to contact the respondents, which has been highlighted as a serious gap by some of the respondents.

[39] In light of the above, the Agency finds that Minerva has not established that the offered ships are not suitable to perform the activity described in the applications.

CONCLUSION

[40] For the above reasons, the Agency, pursuant to subsection 8(1) of the Act, finds that there is a suitable Canadian ship available to perform the activity described in the applications.

[41] The Agency will provide this Decision to the Minister of Public Safety and Emergency Preparedness.