Decision No. 381-W-2016

December 22, 2016
APPLICATION by IT International Telecom Canada Inc. (IT), pursuant to the Coasting Trade Act, S.C., 1992, c. 31, for a licence.
Case number: 
16-05718

APPLICATION

[1] On November 9, 2016, a fishing ship damaged several fibres from Société TELUS Communications’ Sunoque II cable system in the area between Pointe-à-Santerre, Quebec, Canada and Forestville, Quebec, Canada. The Sunoque II is a submarine fibre optic cable system comprised of two segments linking the northern shore to the southern shore of the St. Lawrence River, Quebec.

[2] On November 23, 2016, IT became aware of the requirement to undertake the submarine cable repair and burial, which is the activity that is the subject of the application.

[3] On December 2, 2016, IT filed, through its Canadian representative, a fast track application for temporary admission to the coasting trade of Canada for the “IT INTREPID”, a cable ship registered in Barbados. The activity is expected to take approximately three to four full days to complete within the time frame of December 15, 2016 to January 14, 2017.

[4] Currently, TELUS is using a redundant link to serve the area. IT states that any other break in this cable would deprive an entire region, as well as several hospitals and emergency services, of its wired, mobile and 911 telecommunication services. As a result, IT maintains that it is essential that the repair work be done by the IT INTREPID as quickly as possible to ensure continued service to this area, and before ice forms on the water.

NOTICE AND OFFER

[5] On December 2, 2016, Canadian Transportation Agency (Agency) staff gave notice of the application to the Canadian marine industry. The notice sets out the time periods allowed for the filing of an offer, an answer and a reply.

[6] On December 6, 2016, DOF Subsea Canada (DOF) submitted an objection to the application, and offered a Canadian-registered multipurpose vessel to perform the activity. On December 7, 2016, IT filed its answer to the offer. On December 9, 2016, DOF filed its reply.

CONCLUSION

[7] The Agency determines, pursuant to subsection 8(1) of the Coasting Trade Act, that there is a suitable Canadian ship available to perform the activities described in the application.

PRELIMINARY MATTER

DOF’s December 9, 2016 submission

[8] DOF filed its reply with the Agency on December 9, 2016, after the closure of pleadings on December 8, 2016. In doing so, DOF provided a reason.

[9] While the reply was filed after the closing of pleadings, the Agency has considered DOF’s reason along with the fact that DOF’s submission provides relevant information. The Agency further considers DOF’s submission necessary to complete the file and to allow the Agency to render its decision in this matter.

[10] As such, the Agency accepts DOF’s reply, allowing it to form part of the public record and to be considered by the Agency in making its determination.

ISSUE

[11] Are there suitable Canadian ships available to perform the activity described in the application?

LEGISLATIVE CONTEXT

[12] The intent of the Coasting Trade Act is to allow foreign ships to be used in Canadian waters when there is no suitable Canadian ship available for a proposed activity. The Agency must determine whether, on a balance of probabilities, there is a suitable Canadian ship available to perform the activity.

[13] In carrying out its responsibilities, the Agency relies upon an applicant to provide detailed information about all relevant facts and circumstances that are pertinent to a proposed activity and to the foreign ship to be used. The Agency also relies upon Canadian operators to provide detailed information about the offered ship and how a Canadian ship that has been offered would be able to meet the requirements, as described by an applicant. The Agency’s process is set out in the Agency’s 2015 Guidelines Respecting Coasting Trade Licence Applications (Guidelines).

[14] 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/or available to perform the activity described in the application. Should the offeror fail to provide sufficient evidence to support its position that it is more likely than not that the offered ship is suitable and available to perform the proposed work, the Agency will determine that there is no suitable Canadian ship available to perform the activity.

POSITIONS OF THE PARTIES

Suitability

[15] In response to the staff’s notice of the application, DOF filed an offer for the “SKANDI CHIEFTAIN”, a Canadian-flagged, Canadian-crewed, full duty paid vessel operating in Atlantic Canada. DOF states that the SKANDI CHIEFTAIN is available and fully capable of carrying out the scope of work described in the application. DOF proposes that DOF would supply the vessel for this work, while IT would execute the repair.

[16] DOF asserts that, with its local and global experience in product recovery and installation as well as its compliance with the minimum vessel capabilities outlined by IT in its application, it is technically capable of performing the repair work.

[17] In terms of the minimum equipment capabilities that IT requires for the vessel to undertake the submarine cable repair and burial, DOF states that the SKANDI CHIEFTAIN has a large, covered deck that is easily converted to an environmentally controlled area. Additionally, its vessel has sufficient space to store the recovered fibre cable, as well as the 1.5 km of double armored cable being loaded onboard the IT INTREPID in Halifax, the discarded cable section and much more if required. DOF states that the SKANDI CHIEFTAIN has the same Dynamic Positioning class as the IT INTREPID and an AHC Winch/A-Frame configuration that is capable of recovering the cut fibre cable and transferring it to an environmentally controlled area for repair operations.

[18] DOF adds that once the repair has been performed, the vessel can deploy to the seabed in a controlled manner, with constant observation by way of the Remotely Operated Vehicle (ROV).

[19] In its answer, IT asserts that in another recent application involving the IT INTREPID, its coasting trade application was successfully granted because of the vessel’s unique capabilities. Maintaining that the speciality still prevails today, IT submits that the operations required to successfully and safely conduct the work in question cannot be executed with a vessel of lesser capabilities than the IT INTREPID, such as the one proposed by DOF.

[20] IT notes that it has no record of DOF ever completing a repair or the installation of a submarine telecommunications cable with the SKANDI CHIEFTAIN or any other vessel.

[21] IT contends that there is only one cable ship in the vicinity that can complete the activity and do it safely. Emphasizing that safety is its priority, IT argues that the SKANDI CHIEFTAIN does not provide sufficient open deck space to safely complete the repair. IT explains that cable engines are risky to operate as there is a requirement for a machine to recover and deploy cable [while] still being able to remove and insert cable into the machine. On a cable ship, the equipment is segregated to operators only and is completely safe. IT adds that portable engines, as suggested by DOF, are placed on the open deck where access is available to anyone. The only protection against this is to have a large open deck where the operators are in control of personnel around the working engines. Should there be a problem, there is an escape route. DOF is proposing that the cable engines be crammed together in a confined space with little room to safely operate during the work.

[22] Further, IT states that the SKANDI CHIEFTAIN’s equipment is not conducive to recovery and deployment of submarine fiber optic cables as they require a minimum bending radius of 1.5 meters for storage and 2 meters under tension. Below that radius, the cable could be compromised and may not function properly.

[23] IT’s answer also puts forth what IT calls a “few additional aspects of the work to be performed by a dedicated cable ship”. These aspects are as follows:

  • Cable repair/installation vessel capable of conducting repairs and installation to 8,000-meter water depths;
  • Telecommunications cable testing equipment capable of powering and testing cables and cable systems using up to 12,000 VDC. State of the art power feed equipment calibrated to the ITU Standard. All cables are terminated in ITU approved cable termination cubicles;
  • Cable specific jointing techniques (Universal joint and Universal Quick Joint Technology). See the link: http://ujconsortium.com/ ;
  • Post-repair ROV burial up to a 2,500-meter water depth;
  • ROV manipulators capable of cutting cables in situ;
  • ROV manipulators capable of gripping cable ends for quick retrieval to the vessel and limiting wastage at the site; and,
  • Bow working repair capability with 2 x 40T cable drum engines designed for simultaneous payout and pickup clear of any propeller activity.

[24] IT lists the health, safety, and environment standards that the IT INTREPID must meet, along with its certification to specific standards. It adds that its cable equipment must always perform at a high level when dealing with submarine cables operating at up to 12,000 volts DC and up to a 6,000-meter water depth, and that a dedicated cable vessel’s equipment is all indoors so as to maximize the safety factor, including having its crew work in an enclosed environment during the winter season when decks are slippery and there are rolling seas.

[25] IT asserts that the net needs to be recovered as the IT INTREPID is required to perform post repair burial operations using the specialized 200 horsepower burial ROV on board the ship. IT adds that the cable burial ROV on board the IT INTREPID is specifically designed to bury submarine cables up to 1.5 meters under the bottom after installation or repairs. IT contends that DOF’s ROV has no such capability. As well, IT maintains that the client also requires the recovery of the damaged cable section.

[26] In its reply, DOF agrees that while it has not completed a repair or the installation of telecommunications cables, it has a track record of installing similar products that contain fibre optics. DOF states that it is not objecting to IT providing the dedicated equipment and personnel to do the repair. However, its ship can provide the platform for this repair, similarly to IT working, in the past, with other Canadian ship operators to execute cable activities, using ships of similar size and capabilities. DOF presents photos showing what it states is IT equipment installed on ships very similar to the SKANDI CHIEFTAIN.

[27] DOF also responds to each of the additional aspects of the work to be performed. It states that the following aspects are irrelevant: the references to the 8,000‑meter and the 2,500‑meter water depths, as the activity is in a water depth of only 167 metres; as well as the testing of 12,000 VDC, as the repair is for a fibre optic telecommunications cable. However, in response to the post-repair ROV burial, DOF’s ROV system is rated to 3,000 meters and can be equipped with cable burial equipment that is readily available and fairly quick to install. Its ROV system is also equipped with two state of the art manipulators as well as 38 mm and 72 mm cable cutters that can easily and quickly cut this particular cable and larger cables. The same ROV system on board the SKANDI CHEIFTAIN can handle the cable and move it as necessary with these manipulators, which are standards for most ROV systems used worldwide. DOF also states that it keeps spar manipulators in the event that they are needed.

[28] For the cable specific jointing techniques, DOF states that it does not dispute IT’s capabilities to conduct the repair and test, rather it questions the use of a foreign flag vessel.

[29] In addressing the bow repair capability, DOF states that, while useful, it is not a requirement for this type of repair. DOF provided photos that it states were provided by IT, showing that both ends of the cable can be recovered and redeployed over the stern of another ship similar to the SKANDI CHIEFTAIN. DOF indicates that the photo provided indicates that cable repair and installation can be conducted from ships similar to the SKANDI CHIEFTAIN. DOF notes that the vessel in the photo is 80 meters long and 18 meters wide while the SKANDI CHIEFTAIN is 74.3 meters long and 16.4 meters wide. DOF concludes that it is expected that the equipment for this shallow water repair would be much less than seen in the photo.

[30] Addressing safety, DOF states that IT has extensively used ships of equivalent or lesser capabilities to the SKANDI CHIEFTAIN in the past to conduct cable installations and/or repairs. DOF ascertains that safety is also its top priority, and it will ensure that safety is not compromised. DOF states that the SKANDI CHIEFTAIN meets all Transport Canada and international requirements for a safe operation. It also states that cable repairs using a mobile spread would still be done inside a container or other environmentally controlled dry area. Additionally, DOF is of the view that the geographic area for this repair is not likely to present any issue with regard to rolling seas and/or wet, icy, slippery decks.

[31] With respect to clearing the bottom of the ocean of debris and retrieving the damaged cable section, DOF maintains that the SKANDI CHIEFTAIN’s 10 MT A-Frame and active heave compensated winch system is suited to subsea recovery operations. DOF indicates that it has just recently completed a project requiring a great deal of debris to be recovered from the seafloor in excess of 200-meter water depths utilizing its subsea work basket. It remains of the view that the fishing net, cable remnants, and other debris recovery is well within the capacities of its equipment and experience.

Availability

[32] IT maintains that the work to be performed came about as a fishing ship hooked its net in a telecommunications cable. The fibre optic submarine cable connecting the southern and northern shores of the St. Lawrence River, between Pointe-a-Santerre and Forestville, has been damaged. Any other break in this cable would deprive an entire region, as well as several of its hospitals and emergency services, of its wired, mobile and 911 telecommunication services. It is therefore essential that the repair work be done by the IT INTREPID as quickly as possible to ensure continued service to this area, and before ice forms on the water.

[33] DOF submits that the SKANDI CHIEFTAIN is ready to mobilize immediately for this work.

[34] The Agency notes that the applicant did not argue that the offered Canadian ship was not available for the dates of the proposed activity.

ANALYSIS AND FINDINGS

[35] With respect to the burden of proof, the Agency has been consistent in its opinion that while the offering party has the responsibility to establish, in response to allegations to the contrary made by the applicant, 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.

Suitability

[36] The Agency has considered IT’s statements that, in another recent application involving the IT INTREPID, IT’s coasting trade application was successfully granted because of IT INTREPID’s unique capabilities; and that the speciality still prevails today and the operations required to successfully and safely conduct the work in question cannot be executed with the ship that is proposed by DOF.

[37] The Agency clarifies that the issuance of previous determinations involving the IT INTREPID did not require an Agency assessment of whether there was a suitable Canadian ship available to perform the activity given that the Agency did not receive any offers of Canadian ships.

[38] In cases where the coasting trade application is uncontested, the Agency issues a determination that there is no suitable Canadian ship available that is not based on the capabilities of the foreign ship proposed for temporary importation, but rather, on the absence of an offer from a Canadian ship.

[39] However, as DOF has offered a Canadian-registered ship for the activity proposed in IT’s application, the Agency must make a determination as to whether, on a balance of probabilities, this Canadian ship is suitable and available to perform the proposed activity.

[40] The Agency notes that, as part of its offer, DOF indicates that the SKANDI CHEIFTAIN is technically capable of performing the repair work, and is equipped with the essential equipment to complete the activities. DOF advances that it could supply the SKANDI CHIEFTAIN for the work, while IT executes the repair.

[41] IT objects, in part, to DOF’s claim that the SKANDI CHIEFTAIN can suitably and safely conduct the work, because DOF has not completed a repair or the installation of a submarine telecommunications cable with the SKANDI CHIEFTAIN or any other ship. While DOF’s offer includes having IT execute the repair, IT has failed to address this. The Agency finds that the fact that the SKANDI CHIEFTAIN has not had previous experience with this particular work cannot be interpreted as a ship being unsuitable for the required work.

[42] The Agency has also considered IT’s objection to use the SKANDI CHIEFTAIN, in part, on the basis that there is not sufficient open deck space to safely complete the repair, and because the equipment on board the vessel is not conducive to recovery and deployment of submarine fibre optic cables. The Agency notes that IT maintains that its cable ship is the only one in the vicinity that can complete the activity and do it safely.

[43] The Agency further notes that in IT’s answer, IT addresses a “few additional aspects of the work to be performed by a dedicated cable ship”. In its reply, DOF addresses each of the additional aspects, concluding that its ship can meet the requirements.

[44] The Agency’s mandate under the Coasting Trade Act is not to determine whether the Canadian‑registered SKANDI CHIEFTAIN and its equipment are identical to IT’s foreign‑registered IT INTREPID. Rather, the Agency must determine whether the Canadian‑registered ship is suitable to perform the cable repair and burial activity described in the application, including through the acquisition of additional equipment, where deemed necessary, to perform such an activity.

[45] In particular, the Agency notes that many of the additional factors included by IT in its answer are unrelated to the activity and instead are, more likely, a technical specification related to the IT INTREPID. IT mixes these factors with others requirements that are appropriately related to the activity. As DOF mentioned, the references to water depth are irrelevant to the activity as the damaged cable resides in 167-meter water depth. The Agency emphasizes that the onus is on the applicant to clearly put forward the relevant facts and circumstances pertaining to its application and any other specifications that are required for the proposed activity.

[46] In terms of the safety requirements, the Agency notes that the SKANDI CHIEFTAIN is required to operate safely in all operations with which it is involved. This ship, along with others, must meet Transport Canada’s and international safety requirements. As per section 106 of the Canada Shipping Act, 2001, the authorized representative of a Canadian ship shall ensure that the vessel and its machinery and equipment meet the requirements of the Safety Management Regulations, as well as develop procedures for the safe operation of the vessel and for dealing with emergencies; and ensure that the crew and passengers receive safety training.

[47] In addition to the above obligations under the Canada Shipping Act, 2001, there is a requirement for compliance with the Safety Management Regulations by having a Safety Management System (SMS) according to the International Safety Management Code. The SMS provides a formalized method for systematically integrating safety and risk management into the daily operations of a transportation company, thereby providing, as one objective, for safe practices in vessel operation and a safe working environment.

[48] The Agency finds that no evidence was submitted to demonstrate that the operator does not comply with applicable Canadian laws and regulations.

[49] The Agency further considers that with respect to the equipment and personnel, DOF proposes that IT can employ these on its ship. The Agency notes that Canadian ships are crewed according to Canadian requirements and regulations. The Agency also notes that IT did not contradict that its equipment and personnel could not be used for such operations and, as a result, the Agency is of the opinion that the SKANDI CHIEFTAIN can be outfitted with the equipment and personnel at any time.

[50] In light of the foregoing, the Agency finds that DOF has met its evidentiary burden to counter IT’s arguments. Therefore, the Agency finds that IT has not met its burden of proof to show that the offered ship is not technically suitable.

Availability

[51] As IT does not contest the availability of the ship to perform the activity, the Agency finds that the ship offered by DOF is available to perform the activity.

DETERMINATION

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

[53] The Agency is providing this determination to the Minister of Public Safety and Emergency Preparedness.

[54] This Decision takes effect on December 21, 2016, the date on which it was communicated verbally to IT and DOF.

Member(s)

P. Paul Fitzgerald
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