Minister of Transport proposes new amendments to enhance transparency and accountability of Canadian ‎ports

On June 20, 2023, the Minister of Transport introduced proposed legislative amendments to the Canada Marine Act, S.C. 1998, c. 10 (“CMA”) aimed at enhancing transparency and accountability in the transportation system. The proposed Bill C-52, the Enhancing Transparency and Accountability in the Transportation System Act (“Bill C-52”) would amend the CMA and the Canada Transportation Act, and also enact the Air Transportation Accountability Act. Port terminals, freight shippers and other port users should take particular note of the amendments proposed in respect of the Canada Marine Act.

Canada currently has 17 port authorities established under the CMA which are federally incorporated, financially self-sufficient crown corporations. Generally speaking, the CMA tasks the port authorities with functioning as both the commercial operators of Canada’s ports and, at the same time, as a federal body tasked with (amongst other things) regulating the use of the property it manages and authorizing certain activities within the ports. In order to permit the port authorities to fulfill their federal purposes on a financially self-sufficient basis, the CMA permits the port authorities to set fees for the use of the port, port facilities and port services. In their role as commercial operators of Canada’s ports, the port authorities also enter into terminal leases at ports.

The proposed amendments to the CMA in Bill C-52 are three-fold: (1) the proposed amendments seek to enhance the transparency of the port authorities in the exercise of their fee setting powers under the CMA; (2) the proposed amendments expand the complaint process for port users to challenge a port fee with the Canadian Transportation Agency (the “Agency”), and (3) the proposed amendments provide for future regulations to be passed which would implement an alternative dispute resolution process for terminal leases at ports.

How does Bill C-52 propose to enhance transparency for port fees?

Currently, section 49(1) of the CMA empowers federal port authorities to fix fees for: (i) ships, vehicles, aircraft and persons coming into or using the port, (ii) goods loaded on ships, unloaded from ships or trans-shipped by water within the limits of the port or moved across the port, and (iii) any service provided by the port authority, or any right or privilege conferred by it, in respect of the port. The scope of this power is broad and constrained only by the requirement that the fees set by the port be at a level that permits the port to operate on a self-sustaining financial basis, be fair and reasonable (Section 49(3)), and not unjustly discriminate among users or classes of users of the port (Section 50(1))‎.

Bill C-52, if passed, would expand these mandatory criteria to include the following requirements:

• port fees must be fixed in accordance with an explicit methodology, including any conditions affecting the fees, which the port authority must establish and publish;
• the level of fees must not be fixed at levels that, based on reasonable and prudent projections, would generate revenues exceeding the authority’s existing and future financial requirements. Financial requirements are defined in Bill C-52 as including, amongst other things, operation and maintenance costs, including costs relating to the improvement and expansion of the port, debt servicing requirements, and capital costs; and
• the fees must be structured in a way that does not encourage a user to engage in practices that would diminish safety for the purpose of avoiding a fee.

In line with these expanded requirements, Bill C-52 also proposes that the port authorities be required to provide enhanced notice to port users of any new or revised fees that they intend to set. Most notably, the notice under Bill C-52 would need to include a description of the port authority’s fee proposal, the port authority’s reasons for fixing the fee, and the circumstances in which it would apply. As is the case under the current CMA provisions, affected port users may then make written representations to the port authority about the proposed fee.

What remedies will port users have in respect of fees set by a Canadian port authority?

Bill C-52 also seeks to expand the rights of port users to seek a remedy from the Agency where they have complaints about the level or application of port fees. Currently, the CMA only provides for a right of complaint to the Agency where there is alleged to be unjust discrimination in a fee fixed under section 49(1) of the CMA. Bill C-52 seeks to expand this complaint mechanism by:

• in the first instance, establishing a firm requirement that the port authority must publish a written decision with respect to the implementation of the fee, including reasons for that decision and a summary of any written representations that the port authority received in response to its proposal; and
• significantly expanding the potential grounds for a complaint to the Agency from only complaints about unjust discrimination, to also include complaints that the fee was not fixed in accordance with any of the other principles referred to in subsection 49(3). This would include, for example, that the fee is not fair and reasonable, that the fee exceeds the amount required for the port authority to be self-sustaining, and/or that the fees were not fixed in accordance with an explicit methodology.

Bill C-52 also strengthens the remedial powers of the Agency if it decides that a complaint about a port authority fee is well-founded. Under the current CMA, the Agency has only a limited ability to “report its findings to the port authority”, which is to then “govern itself accordingly”. Bill C-52 grants power to the Agency to order a port authority to cancel the fee, reinstate a previous version of the fee, issue refunds to users who paid a cancelled fee, reconsider the fee, or take any other measure the Agency considers appropriate in the circumstances. The proposed amendments also give the Agency the power to make rules for the recovery of fees arising from the hearing of the complaint.

Will the proposed amendments affect port terminal leases?

Finally, the proposed amendments in Bill C-52 would also give the Governor in Council regulation-making powers to implement an alternative dispute resolution process for terminal leases at ports. If passed, those regulations could address the following:

• the lease-related matters that may be subject to alternative dispute resolution;
• the users, or classes of users, who may have recourse to alternative dispute resolution;
• the procedures relating to alternative dispute resolution;
• the effect of alternative dispute resolution on the parties to a dispute and the remedies available to them; and
• the role of the Agency in the administration and oversight of alternative dispute resolution.

Transport Canada and the Minister of Transport have not yet specified what these regulations may look like, if passed. However, references to a possible role of the Agency in the administration and oversight of this alternative dispute resolution mechanism may suggest that it could possibly share attributes similar to other alternative dispute remedies which the Agency already oversees including, for example, Final Offer Arbitration and Level of Service arbitration under the Canada Transportation Act.

Our Canadian transportation team will be monitoring Bill C-52 as it reaches second and third readings before the legislature, and any further details that may be provided regarding these proposed amendments.