Decision No. 503-W-1997

August 12, 1997

August 12, 1997

APPLICATION by EnerChem Transport Inc., pursuant to the Coasting Trade Act, S.C.,&nbsp1992, c.&nbsp31, for a licence to use the "SATURN", an American tanker, to transport approximately 42,000&nbspbarrels of heavy fuel oil for one voyage from Nanticoke, Ontario to Sarnia, Ontario and 42,000 barrels of heavy fuel oil for one voyage from Sarnia to Nanticoke, during the period commencing August&nbsp5, 1997 and ending August&nbsp12, 1997.

File No. W9125/E4/97-11

EnerChem Transport Inc. has applied to the Minister of National Revenue for a licence to operate the service set out in the title. The matter was referred to the Canadian Transportation Agency on July 30, 1997.

The Canadian Transportation Agency conducted a search of the relevant portion of the marine industry and an offer was received from McAsphalt Industries Limited (hereinafter McAsphalt Industries) for a tug, the "John Spence", and a barge, the "McAsphalt&nbsp401".

In commenting on the offer, the applicant stated that its client, Imperial Oil, refuses to use the proposed vessels. In a telephone conversation with a representative of Imperial Oil, the statement was made that, in Imperial Oil's opinion, the offer is not suitable because the tug/barge unit is not in compliance with certain provisions of the Canada Shipping Act.

The offeror replied that all safety requirements have been complied with, that it holds current certificates from both U.S. and Canadian Coast Guards, and that there are no oustanding deficiencies or any safety issues. The only contentious issue, as noted by the offeror, is that the barge is required to have an arrangement with a certified Response Organization. McAsphalt Industries stated that it attempted to renew its agreement with the Great Lakes Response Organization, but the organization refused to renew the contract. The offeror noted that the Great Lakes Response Organization is the only certified Response Organization in the area and that Esso is a major shareholder.

In a further communication by counsel for the offeror, the statement is made that the refusal of the Great Lakes Response Organization to conclude an arrangement with McAsphalt Industries is due to the fact that McAsphalt Industries refuses to pay bulk oil cargo fees which have not yet had Ministerial approval in accordance with the provisions of the Canada Shipping Act. Notice of proposed fees to be charged by the Great Lakes Response Organization were published in the Canada Gazette Part I on September 16, 1995 and were objected to by many Canadian vessel operators. The Minister appointed an inquiry panel which reported in August 1996 that the proposed fees were unfair and inequitable and since that time no fees have been approved. McAsphalt Industries maintains the view that a Response Organization cannot collect fees that have not been approved by the Minister and that the Response Organization cannot legally sanction Canadian operators for refusing to pay those fees.

The Agency has taken note of the dispute related to McAsphalt Industries' inability to conclude an arrangement with the Great Lakes Response Organization. The evidence before the Agency suggests that the Great Lakes Response Organization has refused to conclude an arrangement due to McAsphalt Industries' refusal to pay bulk oil cargo fees that have not yet received Ministerial approval. In any event, this issue is not relevant to Agency consideration of the suitability of the tug/barge unit to transport the heavy fuel oil between Sarnia and Nanticoke.

Thus, the Agency has determined pursuant to subsection 8(1) of the Coasting Trade Act that suitable Canadian vessels are available to provide the service or perform the activities described in the application.

This determination was provided orally on August&nbsp7, 1997 to the Minister of National Revenue for any necessary action as provided for in the Coasting Trade Act.

This Decision does not constitute an authority to commence operations in respect of the service for which application has been made.

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