Decision No. 67-W-2021

July 7, 2021

APPLICATION by Orange Marine, pursuant to the Coasting Trade Act, SC 1992, c 31 (Act), for a licence.

Case number: 
21-03841

SUMMARY

[1] Under the Act, the Minister of Public Safety and Emergency Preparedness (Minister) issues 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 once 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] Orange Marine applied, through its Canadian representative, to the Minister for a licence to use the “RENE DESCARTES”, a cable-laying ship registered in France. Orange Marine intends to partner with IT International Telecom Inc. (IT Telecom), a Canadian company that will provide assistance with the proposed activity.

[3] Horizon Maritime Services Ltd. (Horizon Maritime) filed an objection to Orange Marine’s application and offered three Canadian-registered ships to perform the activity described in the application, in collaboration with ITB Subsea Ltd. (ITBS).

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

BACKGROUND

[5] On April 28, 2021, Orange Marine filed, through its Canadian representative, an application for temporary admission to the coasting trade of Canada for the “RENE DESCARTES”, a cable-laying ship registered in France. The activity is expected to start on July 6, 2021, and end on August 4, 2021.

[6] On April 29, 2021, Agency staff gave notice of the application to the Canadian marine industry.

[7] On May 11, 2021, Horizon Maritime filed an objection to the application and offered any one of its three Canadian-registered ships to perform the activity described in the application, namely the “HORIZON STAR”, “HORIZON ENABLER”, and “HORIZON ARCTIC” (collectively, the Horizon Ships), in collaboration with ITBS. On May 17, 2021, Orange Marine filed its answer to the objection. On May 20, 2021, Horizon Maritime filed its reply to Orange Marine’s answer, at which point, the pleadings for this application closed.

PROPOSED ACTIVITY

[8] The “RENE DESCARTES” would undertake the laying of two sets of fibre-optic telecommunication cables in the Alberni Inlet located in British Columbia as part of the Topaz submarine fibre-optic cable project linking Canada and Asia. The application indicates that the ship would arrive in Victoria, British Columbia, from Kita Kyushu, Japan, and then travel to Port Alberni, British Columbia, carrying 5,100 tons of fibre-optic cable, fibre-optic repeaters, a plough, and a remote operating vehicle (ROV).

[9] Orange Marine intends to use the “RENE DESCARTES” to perform the entire work related to the Topaz project, both within and outside Canadian waters. Only the portion within Canadian waters, which Orange Marine submits as being approximately 150 km in length, is the subject of this coasting trade licence application.

[10] Horizon Maritime opposes the proposed use of the “RENE DESCARTES”, and instead offers any one of its three Horizon Ships to perform the activity described in the application within Canadian waters, in collaboration with ITBS.

[11] Orange Marine submits in its application that it would collaborate with IT Telecom, which would use an IT Telecom ship to assist with the cable installation, including route clearance, pre-lay grapnel run, and post-lay inspection and burial, for the work located in Alberni Inlet. For the work covered by the scope of this application, which is the work to be performed in Canadian waters and proposed to be carried out using the “RENE DESCARTES”; however, Orange Marine states that it did not contact any Canadian ship operators, given the small cable-laying ship market, and also states that the available Canadian ships are widely known to industry.

[12] Orange Marine further submits that a suitable ship must be capable of laying cable with plough burial, operate a ROV for post-burial operations, and install branching units. Orange Marine states that the ship must also be capable of carrying 5,200 tons of cable for continuous laying from Canada to Japan, which it submits is a requirement of the Topaz project. Orange Marine states that the ability to carry 5,200 tons of cable is a characteristic that Canadian ships are not known to possess.

[13] Horizon Maritime objects to the proposed use of the “RENE DESCARTES”, instead offering any one of its three ships that it submits are suitable.

ISSUE

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

LEGISLATIVE CONTEXT

[15] The intent of the Act is to allow foreign ships to be used in Canadian waters when there is no suitable Canadian ship available for a proposed activity.

[16] The Agency must determine whether, on a balance of probabilities, there is a suitable Canadian ship available to perform the activity.

[17] In carrying out its responsibilities, the Agency relies upon the applicant to provide detailed information about all relevant facts and circumstances that are pertinent to a proposed activity and the foreign ship to be used.

[18] The Agency also relies upon Canadian operators to provide detailed information about the offered ships and how a Canadian ship that has been offered would be able to meet the requirements, as described by the applicant.

[19] The Agency’s process is set out in the Agency’s Guidelines Respecting Coasting Trade Licence Applications (Guidelines).

[20] The Guidelines state that where an applicant has submitted evidence to challenge the suitability and/or availability of the offered ship, the evidentiary burden will shift to the offeror to produce evidence to counter or contradict the applicant’s evidence and to prove that it is more likely than not that the Canadian-registered ship is technically and/or commercially suitable and available to perform the activity described in the application.

PRELIMINARY MATTER

[21] On May 26, 2021, after the pleadings had closed, Orange Marine filed an unsolicited rebuttal to Horizon Maritime’s reply dated May 20, 2021. The unsolicited Orange Marine submission consists of an email from its Canadian contractor, IT Telecom.

[22] Horizon Maritime objects to this submission. Horizon Maritime submits that Orange Marine’s submission of May 26, 2021, was made outside of the pleadings’ regular and that it objects to the attempt of Orange Marine to submit additional and new materials after the fact and not in accordance with the Agency’s established timeline for pleadings in this matter.

[23] On June 18, 2021, Orange Marine submitted a second unsolicited submission. The submission consisted of a letter dated June 17, 2021, titled “Request for Support for Orange Marine to perform the TOPAZ subsea cable installation” from Google Canada.

[24] Horizon Maritime objects to the second submission for the same reasons as those set out above for Orange Marine’s first submission of May 26, 2021.

[25] Section 3.2 of the Guidelines establishes time limits for pleadings. Parties are expected to adhere to these time limits in the filing of their pleadings and are responsible for ensuring that all relevant information and documentation is filed within the prescribed time limits. This affords procedural fairness to both the applicant and offering party and allows the Agency to make its determination in a timely manner, as the filing of pleadings from the parties is not an open-ended process.

[26] Section 4.2 of the Guidelines provides that parties should refer to the Guidelines, including Appendix A, which contains supplemental provisions applying to all proceedings before the Agency related to coasting trade licence applications. Additionally, the Agency may vary any of the provisions of the Guidelines or grant other relief on any terms that it deems appropriate at any time during the proceedings. This includes, among other things, the acceptance of pleadings after the deadline to file such has passed. However, the Agency is not bound to accept any late submissions.

[27] The Agency finds that both submissions from Orange Marine do not contain any new information that was, or ought to have been, brought forward during the application and pleadings process. The Agency further finds that both submissions should have been properly filed within the time limits prescribed in section 3.2 of the Guidelines.

[28] In consideration of the foregoing, Orange Marine’s submissions of May 26, 2021, and June 18, 2021, will neither be placed on the record, nor be given any consideration in the determination of whether there is a suitable, available Canadian ship to perform the activity described in the application.

POSITIONS OF THE PARTIES

Availability

ORANGE MARINE

[29] Orange Marine does not explicitly contest the availability of any of the Horizon Ships, but implies the potential lack of availability, indicating that all of these ships are currently working abroad. Orange Marine submits that, at the time of Horizon Maritime’s objection, the “HORIZON STAR” is flagged in Barbados and working in the United Kingdom; the “HORIZON ENABLER” is flagged in Vanuatu and working in the Gulf of Mexico, and the “HORIZON ARCTIC” is flagged in Canada and working in the United Kingdom.

[30] Orange Marine does, however, specifically contest the availability of apparatus necessary for the Horizon Ships to perform the proposed activity. Specifically, in its response, Orange Marine states that power-feeding equipment (PFE) and a full universal jointing (UJ) spread are required, both of which are not readily available and require a six- to eight-month lead time for acquisition.

HORIZON MARITIME

[31] In its reply dated May 20, 2021, Horizon Maritime refutes Orange Marine’s implication that the Horizon Ships may be unavailable, whether due to the physical location of the ships and/or flag status at the time of Horizon Maritime’s objection, indicating that all of the Horizon Ships are available to perform the work in July 2021.

[32] With respect to the “HORIZON ARCTIC”, Horizon Maritime states that while the ship is in the United Kingdom, it is “free of forward charter commitments and available to mobilize to Canada immediately.”

[33] With respect to the “HORIZON ENABLER”, Horizon Maritime states that its Canadian registration has been temporarily suspended: the ship is temporarily bareboat chartered and registered in Vanuatu while working under charter in Mexican waters in the Gulf of Mexico. Horizon Maritime adds that the charter will be complete on May 21, 2021, after which time the ship is free to mobilize to Canada immediately thereafter.

[34] With respect to the “HORIZON STAR”, Horizon Maritime states that its Canadian registration has been temporarily suspended: the ship is temporarily bareboat chartered and registered in Barbados while working under charter in the United Kingdom’s waters. Horizon Maritime adds that the ship is scheduled to depart the United Kingdom to return to Canada within the week of May 20, 2021. Horizon Maritime adds that the reinstatement of Canadian flag following temporary suspension for a bareboat charter will take no more than five working days.

[35] Horizon Maritime cites previous Agency jurisprudence in terms of offering a ship that is not currently Canadian-flagged but is expected to be by the time the proposed activity takes place. In particular, Horizon Maritime refers to Decision No. 72-W-2020, which states:

An offeror to a coasting trade application is not restricted to only offer a ship that is Canadian registered. It may offer a ship that will be Canadian registered by the time the activity is to take place. However, the Agency can only make a finding that there is a such a ship available if the evidence filed by the offeror clearly demonstrates that the ship offered will indeed be Canadian registered by the time the activity is to take place.

[36] In this respect, Horizon Maritime submits that in the case of the Horizon Ships, it is not a complete reflag from a foreign register but, rather, the reinstatement of Canadian-flagged status after a temporary bareboat charter out. Horizon Maritime re-emphasizes that the Horizon Ships’ Canadian-flagged status can be restored within five working days upon application for reinstatement and that Horizon Maritime commits to reinstating that status well before the July 2021 time period stated in the application.

Suitability

ORANGE MARITIME

[37] Orange Marine makes a number of arguments in support of its claim that the Horizon Ships are not suitable. The Agency has considered Orange Marine’s pleadings and categorized the suitability arguments, as follows.

Issue 1 – Conversion for cable-laying activity

[38] Orange Marine’s application states that a suitable ship must be capable of carrying 5,200 tons of cable for continuous laying from Canada to Japan, which it submits is a requirement of the Topaz project. Orange Marine submits that Canadian ships are not known to possess this capability.

[39] Orange Marine submits that the requirements for a telecom cable installation ship are very specific and that no multipurpose ship can be easily adapted to carry out telecom cable installation work.

[40] Specifically, in contrast with using a cable-laying ship, Orange Marine submits that if one were to accept that it is not a “big issue” to fit a multipurpose ship (i.e., the Horizon Ships) with a temporary cable tank, cable chute, and basic cable engine, “it is much more complex to have a slack management software installed, coupled with both the vessel’s DP [dynamic positioning] and the cable engine controller, tested and validated” on a multipurpose ship.

Issue 2 – Need for PFE

[41] Orange Marine submits that PFE is necessary, as the cable to be installed is an active system with repeaters and active branching heads. Orange Marine adds that PFE is very specific to the telecom cable industry and not available for hire and indicates that all cable ships have their own. Orange Marine further submits that as it is dealing with direct current tensions near 10,000 volts at one ampere or more, PFE equipment must be procured with a six- to eight-month lead time, be very carefully installed, tested, and certified before use.

Issue 3 – Plough systems

[42] Orange Marine submits that the cable must be buried by plough on the Canadian continental shelf. Orange Marine acknowledges that plough systems compatible with telecom cable installation can be found for hire. However, Orange Marine states that they are “complex systems involving the vehicle itself but also a towing winch able to safely withstand high tensions, an umbilical winch, a command and control van, and a careful integration on board the vessel to allow simultaneous cable laying operations.”

Issue 4 – UJ spread

[43] Orange Marine submits that in order to assemble and repair cables, the ship must also be equipped with a full UJ spread with qualified jointers able to carry out a joint during the installation if a repair is required without needing the mobilization of another ship. Orange Marine submits that a UJ spread includes complex and dedicated equipment (splicers, extruders, numeric X-rays, high-pressure presses, and toolkits, among others). Orange Marine further states that UJ spreads cannot be found for hire while indicating that all cable ships are already equipped with their own. Orange Marine submits that the procurement time for a UJ spread is six to eight months.

Issue 5 – Expertise

[44] Orange Marine also expresses concerns in respect to experience, indicating that the complex systems required of the task “are nothing if they are not operated by highly skilled and experienced dedicated engineers operating as a team with common practices and procedures to operate safely and efficiently.” Orange Marine adds that while some of those specialized engineers can be hired to complement an existing team, building a complete team from the ground up would represent a “very high operational risk.”

[45] According to Orange Marine, the only Canadian company capable of implementing a telecom cable installation of the magnitude set forth in the application is IT Telecom. Orange Marine states that it has in place a contract that shares the scope of work while preserving IT Telecom’s commercial interests as a Canadian company. Orange Marine submits that it does not believe that another company in Canada can provide it with a full cable-ship spread and a team of engineers to be mobilized on Horizon Maritime’s ships, particularly given that the installation must take place in July 2021.

Issue 6 – Timing

[46] Orange Marine states that it trusts the high quality of the Horizon Ships and Horizon Maritime’s services, but submits that assembling a new cable ship and operating it at the safety and quality standard expected by the purchasers of the system is a challenge that cannot be met in the time given by the project.

Issue 7 – Cost

[47] Orange Marine submits that while multipurpose ships are sometimes converted into cable ships, it is a “very long, complex, costly, and mostly definitive operation,” and it is economically not viable for “such a small work as the few days required” for the installation of the TOPAZ cable into the Canadian waters. Orange Marine states that there is an “unrealistic cost (budgetary and environmental) of such mobilization for only 150 km of cable installation.”

HORIZON MARITIME
Issue 1 – Conversion for cable-laying activity

[48] Horizon Maritime refutes Orange Marine’s claim that “no multipurpose vessel can be easily adapted to carry out telecom cable installation work.” Horizon Maritime states that multipurpose ships can and are frequently converted for use for cable laying. Horizon Maritime states that, in Decision No. 27-W-2021, the Agency concluded that the “HORIZON STAR” and “HORIZON ARCTIC” are indeed capable of conversion for cable‑laying activities and that the Agency noted that “the need to modify a ship, by way of adding or removing equipment and reconfiguring deck layouts, does not preclude it from ultimately being technically or operationally suitable for an activity.”

[49] Horizon Maritime submits that it can secure the required cable-laying kit necessary to perform the work from ITBS, which Horizon Maritime characterizes as being reputable and the only full-time Canadian cable-laying company on the west coast of Canada. Horizon Maritime states that ITBS has experience, has been offering subsea cable services since 1965 and has installed over 420 systems on the west coast. Horizon Maritime also states that ITBS has full equipment and cable expertise in-house and that its submarine cable crew has successfully completed over 40 submarine cable projects within the last 12 years. Horizon Maritime states that ITBS has confirmed that it has available in British Columbia all of the cable-laying equipment necessary to be installed on the Horizon Ships to enable them to perform the proposed activity.

[50] With respect to Orange Marine’s stated need for a cable tank, cable chute and cable engine as necessary equipment for completing the work described in the application, Horizon Maritime submits that it has installed all of this equipment on its ships in the past and adds that ITBS has confirmed the availability of such equipment.

[51] With respect to Orange Marine’s stated need for slack management software, Horizon Maritime disagrees not only with Orange Marine’s claim that it is a complex matter to install a slack management software on the Horizon Ships, but also whether this is even a valid requirement at all. Horizon Maritime submits that Orange Marine did not list slack management software among the minimum requirements for the ship in its application. Horizon Maritime adds that Orange Marine stated, in its application, that in order to carry out its duty, the ship “must be equipped at least with the following equipment” and then set out nine minimum requirements—slack management software not being one of them. To that end, Horizon Maritime rejects this software as being one of Orange Marine’s minimum requirements for the work, but nonetheless submits that it meets this criteria. In that regard, Horizon Maritime submits that it confirmed that Kongsberg Dynamic Positioning Auto Track software is installed on the Horizon Ships and that it has used this system on all of its previous cable work. Horizon Maritime adds that the Horizon Ships have more than sufficient power to maintain position while laying cable, whereas older ships such as the 2002-built “RENE DESCARTES” often require assistance from tugs to maintain position while laying cable. Horizon Maritime also disagrees with Orange Marine’s characterization of the installation of slack management software as being complex in general. Horizon Maritime adds that Orange Marine did not provide specifics about why such software could not be successfully integrated into the Horizon Ships, nor the time that such installation should take.

[52] Horizon Maritime did not provide information in rebuttal to Orange Marine’s submission that no Canadian ships are known to be capable of carrying 5,200 tons of cable for continuous laying from Canada to Japan.

Issue 2 – Need for PFE

[53] Horizon Maritime submits that PFE is not among Orange Marine’s own minimum requirements as stated in the application, and, consequently, it rejects the lack of PFE as a valid objection to the suitability of the Horizon Ships. Horizon Maritime further submits that PFE is not specifically required for the Horizon Ships to perform the work described in the application. Horizon Maritime assumes that Orange Marine would use PFE on the “RENE DESCARTES” to monitor the cable during the laying activity. In that respect, Horizon Maritime submits that, in conjunction with ITBS’ technology and expertise, it is able to provide a similar and suitable outcome by monitoring the cable either from shore or from the Horizon Ships using an optical time domain reflectometer (OTDR) technology.

Issue 3 – Plough systems

[54] Horizon Maritime submits that it meets this requirement, indicating that it owns a 1,600‑horsepower Leviathan multipurpose trencher/plough, which is currently installed on the “HORIZON ENABLER”, and adds that it can be easily transferred to any of the other Horizon Ships. Horizon Maritime further states that ITBS has reviewed its technical specifications and confirmed that the trencher is suitable to bury the cable. On that basis, Horizon Maritime submits that the Horizon Ships meet this requirement.

Issue 4 – UJ spread

[55] Horizon Maritime submits that a full UJ spread, which is used to connect cables, is not necessary to perform the work described in the application. Referencing Orange Marine’s response, wherein Orange Marine stated that, in order to assemble and repair cables, the ship must be equipped with a full UJ spread, Horizon Maritime states that Orange Marine did not explain why such equipment is strictly necessary to perform that portion of the cable-laying work that is taking place in Canadian waters.

[56] Regarding the merits of using a full UJ spread, Horizon Maritime submits that the proposed activity in Canadian waters requires laying the branching cables from shore to the offshore branching unit. Horizon Maritime states that Orange Marine can perform the connection between the branching unit and the offshore segment in offshore waters using the “RENE DESCARTES”. Specifically, the Horizon Ships, which would perform the work within Canadian waters, would work in conjunction with the “RENE DESCARTES”, which would perform the work in non-Canadian waters. Horizon Maritime submits that the Horizon Ships, in conjunction with ITBS’ equipment and expertise, are “more than suitable” to facilitate this operation, by either laying the cable’s end in a very accurate position at the seaward boundary of the Canadian territorial sea, where Orange Marine can recover and connect the cable to the branching cable using the “RENE DESCARTES”, or by passing the branching cable off to the “RENE DESCARTES” at the surface. Horizon Maritime submits that, in both scenarios, Orange Marine can use the “RENE DESCARTES” to join the offshore and branching cables to Orange Marine’s satisfaction, if required. 

[57] In terms of experience in this regard, Horizon Maritime submits that it has mobilized UJ spreads, which consist of dedicated joining/splice containers, on both the “HORIZON STAR” and “HORIZON ENABLER" in the past for cable repairs in Atlantic Canada and Greenland. Horizon Maritime adds that specific cable-joining kits are typically supplied by the cable manufacturer. Horizon further states that according to ITBS, it would be a rare occurrence for damage to happen at this point, but that equipment can be mobilized onboard in a timely manner to meet the project needs.

Issue 5 – Expertise

[58] Horizon Maritime rejects Orange Marine’s position that expertise in cable laying is a valid concern within the realm of the Act and adds that it is the suitability of the Horizon Ships that is the relevant concern, as opposed to Horizon Maritime’s experience. Horizon Maritime cites Decision No. 27-W-2021, which stated that “[i]n Decision No. 381‑W-2016, the Agency noted that a lack of previous experience with a particular activity cannot be interpreted as a ship being unsuitable for the required activity” and that “[t]he issue at hand is the suitability of the ship, not whether the ship has engaged in the activity before.” Horizon Maritime does, however, counter Orange Marine’s concerns regarding expertise by pointing out that it would be using equipment and skilled personnel from ITBS, which Horizon Maritime submits has substantial expertise in these activities. Horizon Maritime further submits that “[n]o time is required to assemble this expertise, since ITBS has such expertise in house and available” to Horizon Maritime. On that basis, Horizon Maritime submits that it meets this criteria.

Issue 6 – Timing

[59] Horizon Maritime disagrees with Orange Marine’s suggestion that converting a multipurpose ship with the requisite equipment would be a long process and counters it by stating that mobilizing and installing the requisite equipment takes between three and seven days. Horizon Maritime indicates that the Horizon Ships are currently or will be returned to Canadian-flag by the period set out in Orange Marine’s application. Horizon Maritime submits that the Horizon Ships are either already scheduled or are available to return to Canada during the week of May 20, 2021, and are all able to be on location for the time required.

Issue 7 – Cost

[60] Horizon Maritime did not rebut Orange Marine’s submission of what Orange Marine characterizes as an “unrealistic cost (budgetary and environmental) of such mobilization for only 150 km of cable installation” in terms of using the Horizon Ships. However, the Agency notes that no substantive arguments were made by Orange Marine in respect to the cost of using a Canadian ship rendering the proposed activity to be economically unfeasible.

ANALYSIS AND FINDINGS

[61] The Agency notes that the onus is on the applicant to complete the coasting trade application to provide information in sufficient detail to permit the Canadian industry to assess and respond to the application. This is in keeping with the intent of the Act, which recognizes the interests of Canadian ship operators by permitting foreign ships to temporarily engage in coasting trade activities in Canadian waters, only if no suitable Canadian ship or non-duty paid ship is available to perform the activity.

[62] Specifically, in accordance with paragraph 25 of the Guidelines, an applicant is required to clearly state all the relevant facts and circumstances and the grounds for its application, including a comprehensive justification as to why a foreign ship must be imported to perform the proposed activity.

[63] While the offering party has the responsibility to establish that its ships are suitable and available to perform the activity, the ultimate burden of proof rests, on a balance of probabilities, with the applicant to demonstrate that the offered ships are not suitable and available.

[64] However, once an applicant has provided sufficient evidence to make its arguments persuasive, an evidentiary burden will shift to the offeror. This obligates the offeror to respond by adducing evidence to support its allegations.

[65] With respect to the terms “available” and “suitable,” the Act does not define these terms. The Agency thus uses its discretion in making its determinations based on the merits of each application, particularly as there are no unique criteria or standards to determine whether a Canadian-registered ship is suitable.

[66] Should the applicant fail to provide sufficient evidence to support its position that it is more likely than not that the offered ship is not available and/or suitable (technically and/or commercially) to perform the proposed work, the application will be denied by the Agency.

Availability

[67] Orange Marine’s concerns are that the Horizon Ships are currently not Canadian flagged, and would not be relocated to the area where the proposed activity would be performed in time for July 2021. Horizon Maritime has provided a substantive rebuttal to this concern, indicating that the Horizon Ships could have their Canadian flag reinstated in a matter of days and that their current work abroad would have concluded by July 2021.

FINDING – AVAILABILITY

[68] In considering the pleadings, the Agency finds that Horizon Maritime has sufficiently addressed any concerns regarding the availability of the Horizon Ships and has therefore met its evidentiary burden in that respect.

Suitability

[69] According to the Agency’s Guidelines, the Act does not state that an offered Canadian‑registered ship must be “identical” to the foreign ship proposed in an application. Furthermore, the suitability of the Canadian-registered ship is not assessed in relation to the technical specifications of the foreign ship. Rather, the Agency assesses the suitability of the 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. The suitability factors to be assessed may include:

  • commercial and economic suitability – the commercial (e.g., financial) and economic implications of using the foreign ship versus the offered Canadian‑registered ship; and
  • technical and operational suitability – technical characteristics of the ship and equipment required to operationally perform the proposed marine service or activity.

[70] Both of these suitability factors have been raised by the applicant.

COMMERCIAL AND ECONOMIC SUITABILITY

[71] With respect to commercial and economic suitability, the Agency recognizes, as a general principle consistent with the overall intent of the Act, that the operation of Canadian‑registered and -crewed ships implies costs and operating conditions that are not applicable to, and are usually higher than for, foreign ships. Therefore, allegations or evidence from the applicant that go solely to the higher cost of operating a Canadian ship are generally insufficient to establish that an offered Canadian-registered ship is not commercially and/or economically suitable.

[72] Where commercial and/or economic suitability has been raised by an applicant, then it must produce evidence that clearly demonstrates:

  • the necessity of using the foreign ship for the commercial viability of the proposed activity; and
  • that the higher costs of using an offered Canadian ship for the activity would render the activity commercially/economically unviable.

[73] If the applicant produces this evidence, the offeror must then challenge the applicant’s position by, for example, producing counter-evidence in its reply to demonstrate that the use of a Canadian-registered ship would not render the proposed activity commercially and/or economically unviable.

[74] In this respect, Orange Marine submits that it faces an “unrealistic cost (budgetary and environmental) of such mobilization for only 150 km of cable installation.” Orange Marine did not, however, make any supporting submissions in this respect, such as a cost comparison between using the Horizon Ships versus the “RENE DESCARTES”, nor any other evidence to demonstrate that the higher costs of using an offered Canadian ship for the activity would render the activity commercially or economically unviable, despite having the opportunity to do so in its application and its response to the objection.

[75] Horizon Maritime did not rebut Orange Marine’s arguments related to cost in its reply submission.

[76] The Agency recognizes that there may be additional costs resulting from the use of a second ship to perform the work in Canadian waters by using one of the Horizon Ships when the “RENE DESCARTES” would already be performing the work outside of Canadian waters.

[77] However, the onus is on Orange Marine to demonstrate that this cost is unreasonable and would render the proposed activity using one of the Horizon Ships to be economically unfeasible. In that respect, Orange Marine failed to make any submissions, aside from a general statement about an “unrealistic cost.” As Orange Marine did not adduce any evidence in this respect, there was nothing substantive for Horizon Maritime to rebut. The Agency therefore finds that the evidentiary burden, which ultimately rests with Orange Marine, was not met in terms of Orange Marine demonstrating the cost to be unreasonable or uneconomic.

TECHNICAL AND OPERATIONAL SUITABILITY

[78] Orange Marine has raised a number of technical and operational suitability arguments, both in its application and in its response, which were rebutted by Horizon Maritime in its reply.

Issue 1 – Conversion for cable-laying activity

[79] Orange Marine characterizes the conversion and outfitting of a multipurpose ship into a cable-laying ship as being not easy to adapt to telecom cable installation work and that converting multipurpose ships is a “very long, complex and costly and mostly definitive” operation. Orange Marine points out that beyond the need for a temporary cable tank, cable chute, and basic cable engine, the installation of slack management software and related testing and validation would be complex. Horizon Maritime disagrees with the characterization that the conversion of a multipurpose ship is a lengthy process, indicating that multipurpose ships can and have been converted in the past. Horizon Maritime also references previous Agency jurisprudence stating that the modification of a ship does not preclude it from being technically or operationally suitable.

[80] Horizon Maritime will rely on a third-party supplier, ITBS, to provide the equipment necessary to convert the Horizon Ships to be able to perform cable-laying activities, and Horizon Maritime states that ITBS can do so within three to seven days. Given that the proposed activity would occur in July 2021, this timeframe should not unreasonably delay the project. While Horizon Maritime objects to the requirement of slack management software being introduced after the filing of the application and rejects Orange Marine’s characterization of the installation of slack management software as being complex, it confirms that its ships are outfitted with Kongsberg Dynamic Positioning Auto Track software, which has been used for previous cable work.

[81] The Agency has consistently held that a Canadian offered ship does not need to be identical to the proposed ship and that the requirement is only that the offered ship can perform the work. Orange Marine has not established that any one particular slack management software system can only be used for this operation, nor that the installation of such software on the Horizon Ships is infeasible. Rather, Orange Marine’s application only specifies the requirement for a computer system and software with the capability of accepting and storing multi-parameter data, including navigation data, for real-time display. Horizon Maritime has submitted that its ships have successfully performed cable‑laying activities and that ITBS, which it would partner with, has experience in cable laying going back to 1965. ITBS’ experience and success in performing cable-laying activities, combined with the fact that the Horizon Ships are outfitted with dynamic positioning software, are indicative of the capability of the Horizon Ships’ ability to provide the requisite navigation capabilities necessary to carry out the work.

[82] The issue of whether the Horizon Ships are capable of carrying 5,200 tons of cable for continuous laying from Canada to Japan was not addressed by Horizon Maritime, nor was the requirement of such capability rebutted. However, it is important to note that if this were a key issue, Orange Marine, for its part, did not make pleadings in this respect when it had the opportunity to do so in its response to Horizon Maritime’s objection.

[83] In consideration of the foregoing, the Agency finds that the Horizon Ships can be outfitted for cable laying. The Agency also finds that Orange Marine has not met its evidentiary burden of demonstrating that the Horizon Ships could not perform the work.

Issue 2 – Need for PFE

[84] Orange Marine submits that the requisite PFE is not readily available, stating that it is not available for hire and that such equipment requires a six- to eight-month lead time for procurement. Horizon Maritime refutes the requirement for PFE, stating that it was not a listed requirement in Orange Marine’s application. Horizon Maritime states that it can achieve a similar and suitable outcome by way of monitoring the cable from the shore or using OTDR technology from the Horizon Ships.

[85] The Agency’s Guidelines state that an applicant must include, among other things, specifications that are required for the proposed activity. Orange Marine’s application does not provide any particular specifications expected for PFE, nor for the requirement to have PFE at all, both points raised by Horizon Maritime. Horizon Maritime, for its part, acknowledges that while it does not have PFE, it is able to perform the requisite function with its equipment.

[86] As the requirement under the Act is to be able to perform the work, rather than to have an identical ship, the Agency finds that Orange Marine has not met its evidentiary burden to establish the specific need for PFE, as opposed to the use of other suitable equipment, to achieve the same outcome.

Issue 3 – Plough systems

[87] Orange Marine submits that the cable needs to be buried by plough and acknowledges that such ploughs are readily available for hire. It also raises issues regarding the complexity of the system. Horizon Maritime confirms the availability of such a system, and that ITBS has reviewed the technical specifications of its system and has confirmed its suitability for the operation.

[88] While making general statements regarding the complexity of plough systems and the need for a towing winch, umbilical winch, and a command and control van, Orange Marine has not submitted any information in the pleadings to indicate that the provision of such equipment by another party would be infeasible or unsuitable, indicating the wide availability of such systems. The Agency therefore finds that Orange Marine has not met its evidentiary burden of demonstrating that the Horizon Ships would be unsuitable in this regard.

Issue 4 – UJ Spread

[89] Orange Marine states that a UJ spread is a requirement and that such equipment is not readily available for hire, taking six to eight months to procure. Horizon Maritime, for its part, rejects the necessity for such equipment for the proposed activity and submits that Orange Marine did not substantiate the need for such equipment. Horizon Maritime also submits that in conjunction with ITBS’ equipment and expertise, its Horizon Ships can perform the task and states that similar operations have been conducted with its ships in Atlantic Canada and Greenland.

[90] The Agency has consistently held that an offered ship need not be identical to the proposed foreign ship, provided that it can perform the task at hand. Orange Marine’s application makes no mention of the requirement for a UJ spread, let alone substantiate the need for one. While not ignoring the desirability nor the necessity of the functionality a UJ spread could provide, Horizon Maritime has nonetheless presented evidence to demonstrate that a similar outcome can and has been achieved in other projects using Horizon Maritime’s and ITBS’ equipment. Accordingly, the Agency finds that Orange Marine has not met its evidentiary burden in demonstrating the necessity of a UJ spread.

Issue 5 – Expertise

[91] Orange Marine emphasizes the need for experience and the challenge of building a team from the ground up, as it implies would be the case by using a ship other than the “RENE DESCARTES” and the “very high operational risk” that it would carry. Horizon Maritime refutes this claim as being a relevant concern, citing previous Agency jurisprudence in Decision No. 381-W-2016 referred to in Decision No. 27-W-2021, which stated that “[t]he issue at hand is the suitability of the ship, not whether the ship has engaged in the activity before.” In respect to the issue of expertise, Horizon Maritime also submits that ITBS would be providing equipment and skilled personnel.

[92] Cable-laying operations that rely on equipment and expertise provided by a third party are not uncommon, and notably, Orange Marine itself proposes to do so with IT Telecom. While claiming that IT Telecom is the only Canadian company capable of implementing a telecom cable installation of the magnitude set forth in the application, Orange Marine has not provided any information to substantiate this claim, nor to justify the preclusion of the use of any other contractor.

[93] The Agency, in Decision No. 27-W-2021, reiterated that the question is the suitability of the offered ship, and not experience performing the activity at issue. Accordingly, the Agency finds that Orange Marine has not met its evidentiary burden in this respect.

Issue 6 – Timing

[94] Orange Marine submits that the assembly of a new cable ship, such that it can be operated at the safety and quality standards expected, cannot be met in time, a claim disputed by Horizon Maritime. Horizon Maritime, for its part, submits that the mobilization and installation of the requisite equipment would take three to seven days, and that the Horizon Ships themselves could be returned to Canada during the week of May 20, 2021, to be on location for the requested timeframe. Horizon Maritime has also countered Orange Marine’s concerns regarding the reflagging of the Horizon Ships back to Canadian status by stating that it could be done within five working days upon application.

[95] Orange Marine has not provided any concrete evidence to substantiate or contradict Horizon Maritime’s submissions regarding timing and whether the Horizon Ships would be onsite and ready to carry out the work in time for July 2021.

[96] The Agency, therefore, finds that Orange Marine has not met its evidentiary burden in this respect.

FINDING – SUITABILITY

[97] The Agency’s mandate under the Act is not to determine whether the Canadian-registered Horizon Ships and their equipment are identical to the foreign-registered ship, the “RENE DESCARTES”. Rather, the Agency must determine whether the Canadian‑registered ships are available and suitable to perform the activity described in the application, including through the acquisition of additional equipment, where deemed necessary, to perform such an activity.

[98] On the issue of commercial and economic suitability, the Agency finds that Orange Marine has not satisfactorily demonstrated the necessity of using the “RENE DESCARTES” for the commercial viability of the proposed activity, nor that the higher costs of using the Horizon Ships would render the activity commercially or economically unviable.

[99] On the issue of technical and operational suitability, the Agency finds that Orange Marine has not met its evidentiary burden to demonstrate that the offered Horizon Ships could not perform the work.

DETERMINATION

[100] In light of the foregoing, the Agency determines, pursuant to subsection 8(1) of the Act, that there is a suitable Canadian ship available to perform the activity described in the application.

[101] The Agency is providing this Determination to the Minister.

Member(s)

J. Mark MacKeigan
Toby Lennox
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