Fasten Your Seatbelt

Major Ontario government regulatory changes are coming that will impact the hydrovac sector.
Fasten Your Seatbelt
Barry Wood

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The current Ontario provincial government has an “activist agenda,” according to provincial political media commentators. Whether one agrees with that or not, this year will feature the introduction of regulatory measures that will significantly impact hydroexcavation companies and their customers, both directly and indirectly. Regulations include:

  1. New Ministry of Transportation (MTO) rules on hydrovac licensing, driving qualifications, weight restrictions and overweight permits, grandfathering provisions for noncompliant hydrovacs, fuel taxes, Commercial Vehicle Operators Registration (CVOR) plus collateral cost impacts (e.g. road tolls).
  2. New Ministry of the Environment and Climate Change (MOECC) carbon tax regulations called “cap-and-trade” that will affect large and small businesses, including major impacts on utilities, particularly natural gas utilities.
  3. Future regulations expected from the MOECC on disposal of hydrovac slurries, emerging from policy guidelines and discussions on managing excess soils.

While some of the new 2017 MTO regulations are unique given Ontario’s historical treatment of hydrovacs, the 2017 greenhouse gas emission reduction regulations, as well as anticipated regulations affecting stewardship of hydrovac soil slurries, are in the vanguard of regulations that will likely be enacted across North America in the future. So for those operating in other parts of North America, take note.

MTO REGULATORY CHANGES AFFECTING HYDROVACS

MTO regulation developments affecting hydrovacs arise from historical treatment of hydrovacs as “road-building machines,” or RBMs, which developed as a class of equipment falling outside the definition of commercial vehicles and related regulations under the provincial Highway Traffic Act (HTA).

While RBMs were allowed to travel on Ontario roads and highways, they did not need to be licensed or plated, were allowed to use colored diesel with a lower fuel tax cost, did not require a driver’s license to operate and did not require annual safety inspections or operate under a CVOR. Still, RBMs developed both dimensionally and in load-carrying capacity in ways that exceeded the HTA rules.

The MTO has enacted regulations, effective July 1, that will require all hydrovacs to be treated as commercial vehicles. Hydrovacs will be licensed and plated, and will have to use clear diesel fuel — paying an additional $0.143 per liter fuel tax. Drivers will be required to have specific licenses and hydrovacs will be registered under the CVOR with driver and vehicle safety performance tracked.

Hydrovacs sold in Ontario after Jan. 1 will have to be compliant with HTA regulations regarding dimensions, axle weights and steering axle weight distribution. Current hydrovacs will be “grandfathered” regarding weights and dimensions, with weights limited to the gross vehicle weight design limit and axle weight design limits prescribed by the vehicle manufacturer. There will be one-time overweight permits required to be purchased that will record individual vehicle weight limits. The grandfathering period is for 15 years, from the model year, with a three-year grace period for older hydrovacs. Specifically, all hydrovacs older than 15 years must be HTA-compliant by 2020. On a practical level, this means that older hydrovacs will be off the road in 2020.

The Hydrovac Alliance of Ontario (HVAO), a voluntary group of hydrovac operators that banded together and represent a good portion of the industry in Ontario, has been fully supportive of regulatory change, promoting improved safety such as driver’s licenses, annual inspections, CVOR, as well as a reasonable grandfathering period for existing hydrovacs. The HVAO also accepted that reasonable licensing fees, fuel taxes and overweight permits would be a future cost of doing business.

The HVAO has not been pleased that the CVOR forced on the hydrovac sector is no different than that for long-haul commercial carriers. The CVOR credit system in Ontario is based on kilometers driven. Hydrovacs do not typically drive many kilometers each day to the job site, so only a few minor accidents or traffic violations will put an operator’s CVOR in jeopardy, threatening the survival of the business.

The grandfathering period will be onerous; well-looked-after hydrovacs can operate for 20 years or more. This is likely to be a particular challenge for smaller hydrovac companies and those starting out. The weight restrictions are challenging for some hydrovac designs. Load-carrying capacity will be significantly restricted in some cases.

The MTO regulations will dramatically change how the hydrovac sector operates in the future in Ontario. There will be new hydrovac designs and new ways for making an existing fleet of hydrovacs operate more effectively within the new regulations. There will need to be an emphasis on managing load weights and more frequent disposal/off-loading of debris. Costs to customers will invariably rise — hopefully not to a level where the use of hydrovacs is constricted.

CARBON TAX REGULATIONS

The provincial government agenda includes taking a strong stance on reducing greenhouse gas emissions through implementation of carbon taxes via a cap-and-trade framework.
The Globe and Mail newspaper describes the cap and trade system as, “… the centerpiece of the Wynne government’s Climate Change Action Plan, meant not only to meet tough targets for slashing greenhouse gas emissions but to spark a sweeping transition to a low-carbon society by changing the way Ontarians get around, heat their homes and run their businesses.”  

The newspaper goes on to note that, “The cap-and-trade system is getting high marks from environmental experts, who say it will achieve its central aim of driving down emissions. But critics caution that the plan contains financial pitfalls: A lack of checks means there could be few restrictions on how the government spends revenue raised from the system, while volatility in other carbon markets suggests the amount of revenue will fluctuate wildly. … Under cap-and-trade, the Ontario government will set a hard limit on emissions, which will steadily get lower every year. Companies will have to buy permits — called allocations — from the province for every ton of carbon they burn. The cap will mandate emissions cuts to 15 percent below 1990 levels by 2020, 37 percent below by 2030 and 80 percent by 2050.”

There is considerable lack of detail on how the cap-and-trade system will work for businesses. Increases in fuel costs through carbon taxes are very likely. Natural gas utilities have been identified as a primary focus area for cap-and-trade emission activity. The bottom line for businesses operating in Ontario: Expect higher operating costs and market changes.

MANAGING EXCESS SOILS

The Excess Soils Working Group has recently completed its task of advising the government on managing excess soils. It appears regulations will be developed to enforce compliance at the municipal level, rather than only guidelines.

While the primary focus has been on larger excess soil generation that occurs during building construction, the hydrovac sector is being looked at for development of regulations affecting daily disposal of hydrovac slurries. The regulations are likely to focus on the proper testing of materials before disposal and the suitable reuse of materials to avoid unnecessary disposal.

As one can discern from all these changes, the life of a hydrovac operator in Ontario is going to get increasingly complicated — and costly.

ABOUT THE AUTHOR

Barry Wood is the president and CEO of Ontario Excavac and also serves as chairman of the Hydrovac Alliance of Ontario. Email him at editor@digdifferent.com.
 



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