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					                                     Appendix D

Harbours (Amendment) Bill 2008: Regulatory Impact Analysis

Introduction
The primary purpose of this analysis is to assess the likely effects of the draft
Harbours (Amendment) Bill 2008. In addition, the analysis offers an evaluation of the
various options considered by the Department of Transport concerning the
implementation of the Ports Policy Statement, published in January 2005. Given the
contents of the draft Bill and the fact that it derives largely from the Policy Statement,
it is considered that the level of detail afforded by a “Screening” Regulatory Impact
Analysis (R.I.A.) is more appropriate than that associated with a full in this matter.

(A) Description of policy context, objectives and options
(i) The Policy context
Summary background information in relation to the development of Irish ports is
attached at Annex 1.

The importance of Irish ports
Ireland, as an island, is dependent on sea-borne trade and the economic significance
and importance of our ports to the prosperity of the country is self-evident. Given our
small open economy, Ireland’s international competitiveness is central to overall
economic performance.

Our ports are vital gateways for commercial freight and sea passengers. This is
highlighted by the fact that nine of the 10 commercial State port companies are
located in areas identified as gateways in the National Spatial Strategy.

The core objective of the Department’s Strategy Statement in relation to ports for the
period 2005–2007, consistent with the Programme for Government, is "to provide a
framework for the provision of port infrastructure and services which are efficient,
effective and adequate for the needs of our trading economy.”

High Level Review of the State Commercial Ports
In May 2003, the High Level Review of the State Commercial Ports operating under
the Harbours Acts 1996 to 2000 was published. This was the first review undertaken
since enactment of the Harbours Act 1996. This legislation removed Ireland’s key
ports from direct Departmental control and gave them the commercial freedom to
operate as modern customer oriented service industries. The remit of the review was
to critically examine the current model for the governance of the State commercial
ports.

On foot of publication of the review, a comprehensive consultation process was
initiated which involved interested parties making both written and oral submissions
in relation to future ports policy. The responses received fed into and informed the
content and recommendations of the Government’s policy statement on ports (see
below). Since the launch of the policy statement in January 2005, the Department’s
strategy has been geared towards implementing the actions outlined therein.


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Ports Policy Statement
In January 2005, when responsibility for ports policy lay with the Department of
Communications, Marine and Natural Resources, the Marine Minister launched the
Ports Policy Statement. It aims to better equip the port sector and its stakeholders to
meet national and regional capacity and service needs through:

      Clearer and more focussed commercial mandates for the ports and their
       Boards.
      Enhancing Board performance through reform of the structure of port Boards.
      Encouragement of private sector investment and involvement.
      Sanction for the use of non-core assets to fund new port development but not
       to mask inefficiencies.
      Encouragement of healthy competitive conditions within and between ports.
      Encouragement of mergers where a business case exists.

(ii) Statement of objectives
A number of the proposals put forward in the Ports Policy Statement (as outlined
above and in the Memorandum for the Government) require legislative change.
Accordingly, the Bill contains important provisions concerning both the
implementation of certain aspects of the policy statement, which can be described as
an immediate objective of the Bill, and other issues. In particular, the opportunity is
being taken to further underpin and enhance the commercial freedom conferred on the
State port companies under the Harbours Act 1996 to reflect the changing
environment in which they operate. The Bill also addresses certain anomalies in
respect of that Act, which have come to light since its enactment. It is also considered
appropriate, based primarily on the experience of the port companies, to make certain
minor amendments to the Act to enhance the framework under which such companies
operate.

The provisions of the Bill are considered necessary in light of a period of considerable
change, which Irish ports have undergone over the past decade. The Bill will help to
ensure that they are equipped to grow as an integral part of our economic prosperity in
the future. In particular, it is considered critical that commercial ports are provided
with the capacity to provide cost effective and efficient services to meet the needs of
their customers, the State and the national economy. These high level targets may be
described as the ultimate objectives of the Bill.

Furthermore, the Ports Policy Statement makes the following points in respect of the
harbour authorities operating under the Harbours Act 1946:

      The continued operation of many of the regional harbours under the outdated
       provisions of the Harbours Act 1946 is unsustainable on the grounds of good
       governance.
      The Minister reiterates the view that most of these harbours would best
       achieve their potential through their transfer to local control in cases where
       there is little or no commercial traffic.
      In harbours where significant commercial traffic exists, consideration will be
       given to bringing them under the control of a port company.


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The provisions of the Bill in respect of harbour authorities give effect to the above
matters.

(iii) Identification of options/choices
 The following options were considered, summarised below:

(a) Do Nothing: In light of the above, this option was not considered viable, as to take
no action would mean in the first instance a failure to implement stated Government
policy as set out in the Ports Policy Statement. To do nothing would furthermore
potentially have a negative impact on the attainment of the ultimate objectives of the
Bill, as set out in the policy statement and outlined above.

(b) Primary legislation: As the port companies were established and operate under the
Harbours Act 1996, a number of the proposals put forward in the Ports Policy
Statement impacting on such companies require legislative change (as stated above),
primarily by means of amendment to that Act. Accordingly, it is considered that
primary legislation is the only viable option available in this context.

In addition, the Department is of the view that new harbours legislation is also the
only possible means of giving effect to the other matters that the Bill seeks to address
(as outlined above).

(B) Identification of costs, benefits and other impacts of each option, which is
           being considered

Do Nothing, for the reasons outlined above, is not considered a viable option.

Costs associated with the option of primary legislation
It is considered that the option of primary legislation may have some of the following
associated costs:

      In respect of harbour authorities, one-off costs may arise as a result of the
       potential application of the pilotage provisions of the 1996 Act to them e.g.
       information costs (such as identifying and understanding the new requirements
       in this regard). On-going costs may also arise in this context e.g. staff
       costs/time, enforcement, increased administration etc.

      Information costs may also be borne by port companies in familiarising
       themselves with the amending legislation and any requirements arising
       therefrom; limited impacts on staff costs/time and administration may also
       occur in this regard.

      One-off and on-going costs similar to those outlined above may occur arising
       from the transfer of (i) a harbour authority to port company control (ii) the
       Minister’s functions regarding the compulsory acquisition of land by port
       companies to An Bord Pleanála.




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      Minor on-going enforcement costs may arise in respect of a person conferred
       by order under section 79 with the function of organising and ensuring the
       provision of pilotage services (Part D below refers).

      The cost of a bond to a pilot to attain limitation of liability is to increase from
       €127 to €2,500 to reflect the modern circumstances in which pilots operate.

      The Bill should not give rise to any direct costs to the Exchequer.

The Department is of the view that, in the context of the general thrust of the Bill and
the benefits it is intended to bring, the above costs are relatively minor in nature and,
therefore, does not propose to quantify or monetise same.

Benefits of the primary legislation option
It is considered that the following matters addressed by the Bill will facilitate the
commercial ports in meeting the anticipated capacity requirement to 2014 and beyond
and in so doing grow as an integral part of our economic prosperity in the future:

      Enhancement of port company board structure;

      Port company investment in outside existing harbour limits and outside the
       State;

      Requirement on port companies to abide by relevant Government guidelines in
       the disposal of property should encourage consistency and best practice in that
       regard.

As a general point, the Minister is of the view that the Bill will enhance the efficiency
and effectiveness of services provided by port companies to their customers and other
stakeholders, with a concomitant positive impact on industry costs.

Furthermore, it is considered that the enactment of the Bill may result in some or all
of the following significant benefits for the harbour authorities operating under the
Harbours Act 1946:

      Further facilitate their transfer to local authority ownership;
    In harbours where significant commercial traffic exists, consideration will be
       given to bringing them under the control of a port company. The Minister
       envisages that such a move would help to ensure that a harbour authority in
       this position has access to the best regional port management expertise,
       marketing skills and strategic development planning. The Bill specifically
       enables the transfer of Bantry Bay Harbour Commissioners to the Port of Cork
       Company and Tralee & Fenit Harbour Commissioners to Shannon Foynes Port
       Company as, in practice, these are the only relevant harbours in this regard.

      The provision of a legislative basis in relation to pilotage services should also
       result in an improvement of general safety in the harbour area;




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       Provision to facilitate the intended transfer of Arklow Harbour Commissioners
        to local authority control.

It is also envisaged that the Bill may have the following minor benefits:

       Reduction in port company staff costs/time and administration arising from (i)
        a decrease in the number of board members to be serviced and (ii) the
        introduction of an “averaging” system regarding the election of employee
        directors;

       Amendment to section 79 to ensure the application of the entire 1996 Act
        (instead of merely the pilotage provisions of same as currently drafted), as
        appropriate, to an order under that section to confer on a specified person the
        function of organising and ensuring the provision of pilotage services in the
        pilotage district to which the order relates;

       The removal of functions of harbour authorities insofar as they relate to
        harbour works orders clarifies and rationalises the appropriate statutory
        procedures in that regard;

       The application of certain provisions of the 1996 Act to the imposition of
        pilotage charges should ensure consistency and equity in this regard;

       The transfer to An Bord Pleanála (ABP) of the Minister’s functions in relation
        to the compulsory acquisition of land by port companies operating under the
        1996 Act should ensure (a) that an application by a port company in this
        regard is considered by the most appropriate statutory body and (b)
        consistency and best practice given the recent transfer of similar powers to
        ABP in respect of such acquisition of land by the Dublin Airport Authority.

Other Impacts

National Competitiveness
The Minister is confident that that the provisions of the Bill will, when enacted, have
a positive impact on Ireland’s national competitiveness.

The Ports Policy Statement makes clear that the Department intends to maintain
competition as a foremost policy driver and capacity provision clearly will have
significant implications in this regard. In particular, the Department will seek to
ensure that sufficient high quality capacity is provided at ports to allow for vibrant
competitive conditions.

It is intended that certain provisions of the Bill will facilitate ports to further adapt to
the modern commercial environment in which they are required to operate and so
enhance their ability to provide cost effective and efficient services to meet the needs
of customers and the wider national economy, thereby underpinning and enhancing
national competitiveness.




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The Minister considers that the provisions relating to port company investment in
infrastructure may result in increased levels of employment at the ports, in addition to
facilitating general economic growth and national competitiveness.

It is also considered that these provisions may facilitate the provision of adequate and
efficient capacity into the future, thereby making a positive contribution to local,
regional and national economies and employment levels.

Socially excluded and vulnerable groups
In respect of rural communities, the Bill facilitates the transfer/disposal of certain
regional harbours in order to best achieve their potential. The Minister considers that
such a development could result in direct and indirect economic and non-economic
benefits for rural communities in their hinterlands e.g. increased traffic, enhanced
amenity value etc.

Furthermore, the Minister is required, as a matter of policy, to take full account of the
Government’s policy on gender balance on the boards of State bodies in relation to
the State commercial ports when making appointments to same.

Environmental Impacts
As stated above, it is envisaged that certain provisions of the Bill may facilitate future
port infrastructure developments. Such developments will be required to comply with
all relevant environmental legislation, including, as appropriate, an Environmental
Impact Assessment, requiring consultation with interested parties and key
stakeholders prior to completion.

Significant Policy change in an economic market/Impact on consumers and
competition
It is not envisaged that the provisions of the Bill will give rise to any significant
policy change(s) in any relevant economic market.

In line with the relevant objectives of the Ports Policy Statement, it is intended that
certain provisions of the Bill will facilitate our commercial ports in meeting the
anticipated capacity requirement to 2014 and beyond and in so doing grow as an
integral part of our economic prosperity in the future. In addition, the Minister is of
the view that the Bill will, when enacted, underpin and enhance the commercial
freedom conferred on the State port companies under the Harbours Act 1996 to reflect
the changing environment in which they operate e.g. reforming the Board structure.

Furthermore, the Minister is confident that the Bill will, when enacted, have a positive
impact on competition and consumers. Studies have concluded that competition exists
both within and between Irish ports. The Ports Policy Statement outlines that the
Minister will continue to monitor the health of competitive conditions and will seek to
ensure that capacity constraints do not lead to dominant or monopolistic conditions.

Accordingly, it is envisaged that key provisions of the Bill will facilitate the delivery
of efficient and competitive port infrastructure to support our open economy, with
consequent benefits for consumers, including lower prices and enhanced service
provision and delivery.



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The rights of citizens
It is not considered that the Bill gives rise to any issues in this regard.

Compliance burden
As outlined above, certain minor compliance costs may arise in respect of harbour
authorities and port companies in terms of adapting to the requirements of the new
legislation.

(C) Consultation
As stated previously, on foot of publication of the High Level Review in 2003, a
comprehensive consultation process was initiated which involved interested parties
and key stakeholders making both written and oral submissions in relation to future
ports policy. The responses received fed into and informed the content and
recommendations of the Port Policy Statement.

The table below sets out a list of those who responded under the consultation process
on the final report of the High Level Review of the State Commercial Ports.


Company or Agency
Galway Harbour Company
Irish Continental Group
Stena Line
Competition Authority
Irish Business and Employers
Confederation
New Ross Port Company
Coiste Tacaiochta Chalafort Ros a’Mhil
Port of Cork Company
Dun Laoghaire-Rathdown County
Council
Dun Laoghaire Harbour Company
Dublin Port Company
Drogheda Port Company
Irish Ports Association
DKM Economic Consultants
Irish Institute of Master Mariners

In addition, and as an important part of the preparation of the Ports Policy Statement
following the publication of the High Level Review, the Department held meetings
with the following parties:


DKM Economic Consultants
Norfolk Line
IBEC
Competition Authority
IMDO
Irish Continental Group


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Stena Line
Irish Exporters Association

It should be noted that observations from relevant Government Departments were also
sought and considered prior to the publication of the policy statement.

As can be seen from the above, a wide consultation occurred at this time, consistent
with the Minister’s view that, in general, the more comments received, the more buy-
in there is likely to be from those affected by regulation and the lower the likelihood
of unforeseen impacts of regulatory proposals.

All submissions received careful consideration by the Department and it is considered
that this consultation process provided many valuable insights and perspectives into
the needs of the sector and the operation of the State port companies.

It might be noted that all of the above comments are available on the Department’s
website, www.transport.gov.ie.

In addition, the Department has received submissions from the following parties to
date on foot of the publication of the Ports Policy Statement, which have been
considered in the context of on-going policy analysis:

      Irish Ports Association
      Dublin Port Company
      Irish Business and Employers Confederation
      Irish Exporters Association
      Port of Rosslare Working Group.

The Department also liaised closely with the Irish Ports Association in the course of
drafting the General Scheme of the Bill.

As a general point regarding consultation with interested parties, Part (E) below also
refers.

(D) Enforcement
The Minister considers that, broadly speaking, the provisions of the Bill do not give
rise to significant enforcement issues per se, as they do not relate specifically to any
offence created under existing harbours legislation. There are, however, two minor
exceptions to this in the Bill:

      The application of pilotage provisions of the Harbours Act 1996 to harbour
       authorities established and operating under the Harbours Act 1946 includes
       certain provisions in respect of which offences created under section 6 of the
       1996 Act apply. It is intended that summary proceedings arising in this regard
       may be brought and prosecuted by the relevant harbour authority, in a manner
       similar to that provided for under section 6(5)(a) of the 1996 Act in respect of
       port companies.

      Amendment of section 79, under which the Minister may, by order, confer on
       a specified person the function of organising and ensuring the provision of


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       pilotage services, so that this person has the legal power to prosecute in
       respect of a breach of any pilotage bye-law. (As matters stand, only the
       provisions of Part IV of the Harbours Act 1996 (i.e. those dealing exclusively
       with pilotage) apply to such an order. However, the power to prosecute is
       provided for in section 6 of the Act, which is in Part I, and so cannot currently
       be applied in relation to an order made under section 79).

It is not envisaged that these provisions will give rise to any significant enforcement
issues in terms of costs, resources, accountability of enforcer etc. (the section dealing
with costs of the Bill above also refers).

Furthermore, the Bill also obliges port companies to have regard to any relevant
Government policy or guidelines in relation to the disposal, in addition to the
acquisition, of land.

The Minister would also point out that the State port companies and harbour
authorities (the parties principally affected by the provisions of the Bill) are, as
creatures of statute, obliged to comply with the relevant pieces of any and all
legislation under which they operate, including the Harbour Acts which enunciate
general duties and objects of same. It is considered that such an approach maximises
the potential for the key regulatory principles of accountability and consistency to be
met by port companies and harbour authorities in the execution of their statutory
functions and responsibilities.

(E) Review
The Minister proposes to review, in consultation with key stakeholders including
State port companies and harbour authorities, the impact(s) of the Bill on an ongoing
basis post enactment.

As a general point, where major changes of policy and/or strategy are considered, the
Department will continue to ensure that these are designed and progressed, on the
basis of consultation with all relevant parties. It is open to any party to submit to the
Minister and Department reasoned proposals for change at any time.




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                                                                                 Annex 1



                              Development of Irish Ports

The vast majority of the State’s seaport capacity is located within the jurisdiction of
the ten State owned port companies established under the Harbours Act 1996.
Rosslare Europort operates outside the Act and is owned by Iarnród Éireann.
Greenore Port is a 50/50 joint venture between Dublin Port Company and a private
sector company.

Prior to the corporatisation of the key commercial ports in 1997, 24 commercial ports
and harbours operated as harbour authorities under the Harbours Act, 1946 and were
essentially run as public utilities. To a certain extent, the sector was characterised by
local monopolies, an essentially non-commercial mindset, and dock labour
inefficiencies were prevalent. The sector experienced low growth, lack of
competitiveness and suffered market penetration by Northern Ireland ports. The
Harbours Act 1946 was anachronistic and inappropriate to the commercial entities
into which the ports had evolved.

Recognising that the ports were constrained in their ability to respond commercially
under existing structures, the Harbours Act 1996 facilitated the establishment of
commercial State port companies. The new structure allowed ports the freedom they
required to act commercially and to provide cost effective and efficient services to
meet the needs of their customers, the State and the national economy. Since
corporatisation, there has been significant progress in the sector in that ports are more
competitive, there has been major organisational and cultural change, better
management and significant rationalisation of port operations.

Today, there are 10 ports established under the Act, as listed below:

      Port of Cork Company

      Drogheda Port Company

      Dublin Port Company

      Dundalk Port Company

      Dun Laoghaire Harbour Company

      Galway Harbour Company

      New Ross Port Company

      Shannon Foynes Port Company

      Port of Waterford Company


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      Wicklow Port Company

There are also a number of harbour authorities operating under the Harbours Act
1946. These latter harbours range from those with some commercial traffic to those
that have experienced gradual decline in terms of commercial and seaborne trade and
now exist only to service the local economies that depend on them for seafishing and
marine leisure.




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