ARCHIVED — Vol. 147, No. 7 — February 16, 2013

Regulations Amending the Canada Grain Regulations

Statutory authority

Canada Grain Act

Sponsoring agency

Canadian Grain Commission

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue: Most of the Canadian Grain Commission’s (CGC) user fees have not been updated since 1991 and no longer reflect the costs of delivering these services. As a result, the CGC has had to rely on ad hoc public funds in order to continue to provide mandated services and perform its regulatory functions.

Description: The proposed Regulations would establish new user fees which reflect the current role of the CGC. The CGC proposes to update existing fee amounts and provide for an annual adjustment of fees reflective of inflation. The proposed Regulations would also consolidate various existing user fees and establish a five-year fee schedule.

Cost-benefit statement: The net benefit in present value terms of the proposed Regulations is $162.14 million over 15 years, using 2013–14 price levels. The proposed Regulations also have the qualitative benefit of allowing the CGC to continue to provide services and fulfill its regulatory role. Without an increase in CGC user fees, grain quality and quantity assurance, grain research, producer protection and the CGC’s regulatory oversight role could be at risk.

“One-for-One” Rule andsmall business lens: The proposed Regulations would update fees for the CGC’s existing services and would not result in any additional compliance or administrative costs to small businesses. Related planned proposals to amend the Canada Grain Regulations (CGR) regarding mandatory CGC official inspection and weighing and complementary changes as well as producer payment protection will calculate administrative costs associated with the “One-for-One” Rule. However, overall costs for existing CGC services to small businesses would increase. These costs would be offset by the quantitative and qualitative benefits of the proposed Regulations, reducing costs to taxpayers and allowing the CGC to continue to provide services and fulfill its regulatory role. The proposed Regulations would consolidate the CGC’s fee schedule to make it more simple and easy to use.

Domestic and international coordination and cooperation: There is no expected conflict with international trade agreements or obligations.

Background

The CGC is the federal agency responsible for establishing and maintaining Canada’s grain quality standards. Its programs result in shipments of grain that consistently meet contract specifications for quality, safety and quantity. The CGC regulates the grain industry to protect producers’ rights and ensure the integrity of grain transactions.

Since its inception in 1912, the CGC has charged fees to recover at least a portion of the costs of providing services to the Canadian grain sector and regulating grain handling in Canada. However, most of the CGC’s user fees have not been updated since 1991. Since then, the cost of providing the organization’s services has continued to rise. This means that the revenues from user fees now cover approximately 50% of the cost of service provision whereas revenues were to represent approximately 90% of the costs of the services when fees were last updated in 1991. Canadian taxpayers have borne a larger share of the costs of providing these services, and the CGC faces ongoing challenges in securing enough funding to provide services and perform its regulatory functions.

In 2010–11, the CGC conducted extensive user fees consultations during which updates to user fees for services required by the Canada Grain Act (CGA) were proposed. One of the major themes of feedback the CGC received was that the CGA and the CGC’s services must be modernized before the user fees are updated. Based on this feedback, Parliament passed amendments to the CGA through the Jobs and Growth Act, 2012.

The changes to the CGA streamline the CGC’s operations by removing CGC services that are mandated by the CGA but do not need to be delivered solely by the CGC in today’s grain sector. Mandatory inward inspection and weighing services conducted by the CGC, along with their complementary requirements, will be eliminated, and the producer payment protection program will be modified to reduce costs for producers and grain handlers. This reduces the CGC’s costs and the overall fees that the CGC proposed in its 2010–11 consultations. For example, prior to the changes to the CGA, costs for the CGC’s services were forecast to be approximately $93 million. With the changes to the CGA, costs for CGC services would be reduced to about $60 million.

The proposed Regulations would predominately affect western Canadian producers as the majority of grain that falls under the CGC’s jurisdiction is grown by western Canadian producers. During the 2010–11 consultations, producers indicated that they would end up paying for any fee increases. They acknowledged that the CGC’s fees may need to be raised as it has been over 20 years since most fees have been updated. However, all producers (who provided feedback) have reacted negatively to the magnitude of proposed increases and the level of public funds allocated to the CGC.

Costs will be offset by the qualitative benefit of the proposed Regulations that the CGC will be able to continue providing grain quality and quantity assurance, grain research, and producer protection and fulfilling the organization’s regulatory oversight role. This is valuable to producers and grain industry stakeholders because the CGC ensures that Canada’s grain is safe, reliable and marketable. The CGC’s quality assurance program positions Canada with a sustainable competitive advantage in global grain markets. Without an increase in CGC user fees, these services and regulatory oversight functions could be at risk. For example, without funding for adequate resources there is a risk that Canadian grain may no longer be perceived as safe and reliable and could lose domestic and international markets, putting the multibillion dollar Canadian grain sector at risk.

The CGC’s producer protection program ensures Canadian grain producers are properly compensated for the quality and quantity of grain delivered and shipped. Without an increase in CGC user fees, there is also a risk that the CGC would no longer have the resources to ensure that producers are properly compensated for the quality and quantity of grain shipped and delivered.

The CGC conducted a 30-day consultation on its user fees again in November 2012 to reflect an updated cost structure resulting from the amendments to the CGA. For example, some fees such as for CGC-provided inward inspection and weighing would be eliminated altogether since these services will be eliminated when the changes to the CGA are brought into force. The fees for CGC licences would be reduced significantly from the amount that was proposed in 2010–11. User fees for outward inspection would increase because some of the CGC’s core activities such as grain quality functions, research and standard-setting remain essential to the CGC’s outward inspection operations.

Issue

The CGC has not updated its user fees in over 20 years and the organization faces increasing costs for providing its services. Without an increase in CGC user fees, grain quality and quantity assurance, grain research, and producer protection and the CGC’s regulatory oversight role could be at risk. The CGC has been reliant on ad hoc public funds since 1999; thus ad hoc appropriation makes up part of the baseline scenario. In the absence of the regulatory proposal, the CGC would require increasing and ongoing ad hoc appropriation to sustain its operations.

The proposed Regulations would increase most CGC user fees for producers, grain companies and grain marketers. However, during consultations, grain companies indicated that they would pass the cost of the increased user fees onto grain producers. Therefore, it is expected that producers would ultimately pay for any fee increases as grain companies would pass their increased costs onto producers through lower grain prices or through higher elevator tariffs.

Objectives

This proposal will update and increase user fees to ensure the CGC can cover the costs of providing its services without the need for annual ad hoc public funds. The non-functioning cost recovery framework has placed increasing funding pressure on the CGC. To mitigate some of this pressure, the CGC has relied on ad hoc public funds, which now cover an increasing share of service delivery cost and which is not appropriate, given the direct benefits the grain sector derives from the CGC’s services.

The CGC determined the cost of delivering its services and licences, associated service standards and required revisions to existing fees. The Minister of Agriculture and Agri-Food is expected to table a user fees proposal in Parliament, called the CGC’s Proposal to Parliament for User Fees and Service Standards, as required under subsection 4(2) of the User Fees Act (UFA). Parliament will have 20 sitting days to make its recommendations with respect to the CGC’s proposal.

Specifically, the objectives of the Regulations are to

  • Create fair and consistent user fees and service standards that reflect the costs of providing the services and licences;
  • Make user fees–related consequential amendments to the CGR to align them with amendments to the CGA contained in the Jobs and Growth Act, 2012;
  • Construct a user fees cost recovery structure that eliminates the CGC’s dependence on annual ad hoc funding and provides a more stable funding environment for the CGC;
  • Ensure that the CGC can continue to meet its strategic outcome that Canada’s grain is safe, reliable, and marketable and that Canadian grain producers are protected; and
  • Develop a consolidated user fees schedule.

The CGC is proposing to update its user fees schedule in the CGR to meet these objectives to formalize the elements of the CGC’s user fees proposal. If extreme weather conditions, such as drought, affect grain volumes significantly in a given fiscal year, one-time ad hoc funding may be required. The CGC’s user fees proposal would result in increased costs for grain industry stakeholders (grain producers in particular) and decreased costs for taxpayers. Updated fees would allow the CGC to continue to fulfill its obligations under the CGA and provide the Canadian grain sector with the services it requires.

Description

The CGC’s user fees are listed in Schedule 1 of the CGR. The proposed Regulations increase user fees for outward inspection, reinspection, licensing, producer railway cars and grading of submitted samples to reflect the costs of providing the services.

The Government introduced amendments to the CGA through the Jobs and Growth Act, 2012, which received Royal Assent on December 14, 2012. When they come into force, the changes to the CGA will eliminate mandatory inward inspection and weighing services conducted by the CGC as well as elevator receipt registration and cancellation. As a consequence of these amendments to the CGA, the proposed Regulations eliminate user fees for inward official inspection, inward official weighing, registration and cancellation; replace the outward official weighing fee with a lower fee for monitoring of outward official weighing; and create a new fee for inward inspection and inward weighing authorizations.

The proposed Regulations would also consolidate the number of fees in the CGC’s fee schedule to simplify and make it easier to use due to its shorter length. Schedule 1 of the CGR currently has 52 fees and the proposed Regulations would reduce that number to 18. These 18 fees are categorized into 7 groups. The fee categories are

  • outward official inspection;
  • reinspection;
  • monitoring outward official weighing;
  • inspection and weighing authorization;
  • licensing;
  • producer railway cars; and
  • submitted samples.

The proposed Regulations would also provide for an automatic annual adjustment of all fees by 1.6% as presented in the CGC’s User Fees Proposal. The annual increase would sustain service standards for grain quality, quantity and safety assurance, producer protection and grain transaction integrity as costs continue to rise with inflation. The 1.6% annual adjustment of fees is based on estimated future capital and operating costs and increases to capital and operating costs experienced over the last 20 years.

All services and licences provided before the coming into force of these proposed Regulations would be governed by the existing fees regulations under which they were provided. These proposed Regulations would come into force on August 1, 2013, at the start of the 2013–14 crop year (see footnote c) and proposed updated fees would apply thereafter.

Regulatory and non-regulatory options considered

Two options were considered to address the CGC’s funding situation, i.e. status quo vs. updating user fees.

Updated user fees

With this option, it is proposed that the CGC update its user fees in the CGR to ensure that the organization has sufficient revenue to provide required services to the Canadian grain industry. As noted above, this option would also reduce the number of fees in the CGR from 52 to 18. This option is preferred over the other option because it results in the largest reduction of federal ad hoc appropriation and is in line with the federal government’s strategy to reduce costs. This option aligns CGC user fees with actual CGC costs resulting in stakeholders and taxpayers paying their appropriate share of CGC costs relative to the benefit they receive.

Status quo, retain current CGC fees

This option would have the CGC continue to rely on ad hoc federal appropriation to fund its services and activities. CGC user fees would not be adjusted in the CGR. This option was not selected because taxpayers would continue to pay a disproportionate share of the CGC’s costs relative to the benefits they receive. Under this option, the CGC’s ability to plan its operations would continue to be constrained by the uncertainty of its annual funding situation. There is also a risk that the CGC’s capital assets could become obsolete without increased investment. Under this option, the fees in the CGC’s fee schedule would no longer align with the services provided in the amended CGA.

Benefits and costs

The CGC conducted a cost-benefit analysis in accordance with the Treasury Board Secretariat’s Canadian Cost-Benefit Analysis Guide: Regulatory Proposals and found that the total quantifiable benefits of the proposed Regulations, over the period 2013–14 and 2027–28, would be about $450.03 million (in present value terms). The qualitative benefits of the proposal would allow the CGC to continue to provide services to producers, grain companies and Canadians, and consolidate its fee schedule. For the same 15-year time frame, the total quantifiable costs of the proposed Regulations and accompanying sustainable funding model are expected to amount to $287.89 million. The resulting net benefit in present value terms is $162.14 million. The standard discount factor of 1/(1+0.08)t was used for the analysis.

To put the benefits and costs into perspective, according to Statistics Canada, Canada exported approximately $13.75 billion in grain during 2011. Without an increase in CGC user fees, grain quality and quantity assurance, grain research, and producer protection and the CGC’s regulatory oversight role could be at risk. These programs result in shipments of grain that consistently meet contract specifications for quality, safety and quantity. The CGC’s regulatory oversight role protects producers’ rights and ensures the integrity of grain transactions.

The proposed Regulations eliminate user fees for inward inspection, inward weighing, outward weighing, registration and cancellation as a consequence of the amendments to the CGA. The estimated present value of these benefits is $155.13 million over the next 15 years.

The proposed Regulations create fees for monitoring of outward weighing and authorizing service provider applications as a consequence of the amendments to the CGA. The proposed Regulations also increase fees for outward inspection, reinspection, licensing, producer railway cars and grading of submitted samples. The estimated present value of these costs is $287.89 million over the next 15 years.

The proposed fee changes would increase most CGC user fees for producers, grain companies and grain marketers. However, it is assumed that producers would ultimately pay for any fee increases as grain companies would pass their increased costs onto producers through lower grain prices or through higher elevator tariffs. An elevator tariff is a deduction an elevator operator may charge a producer for providing a service such as elevation, cleaning, storage, and drying. Therefore, producers would ultimately end up paying for $287.89 million in net costs for the updated fees, over the 2013–14 to 2027–28 period. As a result, it is estimated that the net cost to producers for CGC services would be approximately $1.82/tonne or 2% of the total cost of moving wheat from a mid-prairie point to export. The proposed Regulations would predominantly affect western Canadian producers as the majority of grain that falls under the CGC’s jurisdiction is grown by western Canadian producers. The impact of the proposed user fees changes on consumers is negligible.

The proposed sustainable funding model would also eliminate the CGC’s need for federal ad hoc appropriation by 2014–15, funds which ranged from $14.75 million to $36.90 million per year over the 1999–2000 to 2010–11 fiscal years. The estimated present value of this benefit is $294.90 million over the next 15 years.

Cost-benefit statement

Base
Year 2013/14

Final
Year 2027/28

Total Present Value

Average Annual

A. Quantified impacts (in dollars)

Benefits (millions of dollars)

Benefits to producers and grain companies

Elimination of CGC inward inspection fee

Producers and grain companies

2.79

1.08

37.69

2.51

Elimination of CGC inward weighing fee

Producers and grain companies

1.00

0.42

13.43

0.90

Elimination of CGC outward weighing fee

Producers and grain companies

5.01

2.09

67.59

4.51

Elimination of registration fees

Producers and grain companies

1.21

0.51

16.39

1.09

Elimination of cancellation fees

Producers and grain companies

1.48

0.62

20.03

1.34

Benefits to taxpayers and consumers

Amount saved as a result of the proposed sustainable funding model and Regulations (elimination of ad hoc appropriation)

Canadian taxpayers

16.96

11.48

294.90

19.66

Total benefits (millions of dollars)

28.45

16.20

450.03

30.00

Costs (millions of dollars)

Costs to producers and grain companies

Proposed increase in outward inspection fees

Producers and grain companies

17.29

10.39

229.17

15.28

Proposed increase in reinspection fees

Producers and grain companies

0.60

0.34

8.05

0.54

Proposed new fee for monitoring of outward weighing

Producers and grain companies

2.43

1.46

32.16

2.14

Proposed new fee for authorized service provider application
(see footnote 2)

Producers and grain companies

0.00

0.00

0.00

0.00

Proposed increase in licensing fees

Producers and grain companies

0.99

0.50

13.18

0.88

Proposed increase in producer railway car fees

Producers and grain companies

0.05

0.02

0.72

0.05

Proposed increase in submitted sample fees

Producers and grain companies

0.34

0.14

4.61

0.31

Costs to taxpayers and consumers

Increase in public benefit appropriation

Canadian taxpayers

0.00

0.00

0.00

0.00

Total costs (millions of dollars)

21.70

12.85

287.89

19.19

 

Net present value (millions of dollars)

   

162.14

 

B. Quantified impacts (in non dollars)

Positive impacts

The proposed Regulations consolidate the number of fees in the CGC’s fee schedule to improve efficiency and reduce administrative burden by simplifying the fee schedule and making it easier to use. The CGC currently has 52 fees in the CGR and is proposing to consolidate the number of fees to 18.

C. Qualitative impacts

With the proposed Regulations, as part of the sustainable funding model, the CGC would have adequate funding that would allow the CGC to maintain its regulatory oversight role and continue to provide services such as grain quality and quantity assurance, grain research, and producer protection.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business. Related planned proposals to amend the CGR regarding mandatory CGC official inspection and weighing and complementary changes as well as producer payment protection will calculate administrative costs associated with the “One-for-One” Rule. The proposed Regulations would consolidate the number of fees in the CGC’s fee schedule to simplify the fee schedule and make it easier to use. The CGC is proposing to consolidate fees where it was determined that the costs of providing a particular service were the same as another of a similar nature. The CGC currently has 52 fees in the CGR. The CGC is proposing to consolidate the number of fees in the CGR to 18. For example, the CGC currently has separate fees for each class of elevator licence. The CGC is proposing to combine these fees under one fee code since the costs of providing these services are the same.

Small business lens

The proposed Regulations would not result in any additional compliance or administrative costs (such as reporting, training, purchasing new equipment, completing new forms, retaining data) to small businesses or any other stakeholder since the proposed Regulations simply update the user fees for the CGC’s existing services and align the CGC’s fee schedule with the amendments to the CGA. CGC services are not being changed as a result of the proposed Regulations. However, as shown in the cost-benefit statement above, costs to producers and grain companies for the existing services of inward and outward inspection and weighing and licensing, as well as producer railway cars and submitted samples would increase by $287.89 million over the 2013–14 to 2027–28 period. It is expected that the increase in costs for existing services will be passed on to producers.

Consultation

In 2010–11, the CGC conducted extensive user fees consultations in several phases. First, in November 2010, a producer poll was conducted, followed by the release of the CGC’s User Fees: Consultation Document in December 2010. In January 2011, the CGC held information sessions for interested stakeholders and in March 2011 released the Individual Fees Consultation (Pre-proposal Notification). Based on the feedback received during these phases, Parliament passed amendments to the CGA through the Jobs and Growth Act, 2012. The CGC started a 30-day consultation on its user fees again in November 2012 to reflect an updated cost structure resulting from the amendments to the CGA. The following section provides results from the 2010–11 and 2012 consultations.

2012 user fees consultation and pre-proposal notification

On November 1, 2012, the CGC released the User Fees Consultation and Pre-proposal Notification document, which outlined proposed individual fees, service standards and performance measures. Stakeholders had until November 30, 2012, to provide written submissions regarding the document.

This document was emailed directly to industry and producer stakeholders, including all CGC licensees, producer organizations, industry organizations and relevant government organizations. At the same time, the CGC sent a news release to its media contacts. The CGC posted the document on its external Web site and arranged for it to be posted on Service Canada’s Consulting with Canadians’ Web site.

Eighteen formal written submissions as well as one submission by telephone were received from external stakeholders. This section highlights the most common of the comments received as a result of the consultation:

  • The CGC should be allocated funding in excess of the $5.45 million it presently receives to fully reflect the public benefit activities it undertakes on behalf of all Canadians.
  • Public benefit appropriation should increase annually with inflation; otherwise, producers would be paying an increasing share of costs.
  • Amendments to the CGA that were included in the Jobs and Growth Act, 2012 are a good first step to modernizing the CGC; however, further amendments to the CGA are required.
  • The magnitude of the proposed increases to user fees is significant and too high.
  • The CGC and its services must be as efficient as possible.
  • Fee increases should be phased in over time as opposed to a large increase on August 1, 2013.
  • The CGC provides valuable services and functions to producers, industry and Canadians.
  • Producers will ultimately pay for any CGC fee increases (through higher tariffs, a lower basis or lower grain prices), even if the grain companies initially pay user fees.
  • CGC fees need to be in line with those in the United States, Australia, other grain producing countries and the private industry; otherwise, Canadian producers will be at a competitive disadvantage.
  • Fees may need to be raised for services that are for the private benefit as it has been over 20 years since they were last increased. As noted above, however, most commenters were opposed to the magnitude of the proposed fee increases.
  • The CGC may not have authority to fully recover the costs of mandatory services.
  • There is a conflict of interest when a regulatory body is seeking cost recovery because it has the incentive to generate revenue instead of creating the appropriate regulatory environment.
  • Outward inspection should be optional.
  • The CGC’s governance structure requires updating.
  • Further information is required about the proposed insurance-based security program. However, some of these stakeholders provided conditional support of the insurance-based security program if it is more cost-efficient and provides effective coverage to producers.
  • The CGC should play an increasing role to help maintain a transparent, well-functioning sector by collecting and making available additional data and information related to the grain sector.
  • A training program for industry grain inspectors should be created.
  • The use of CGC services may become less attractive and decline as a result of user fee increases.
Producer survey

As part of the consultations on the CGC’s proposed user fees, Ipsos Reid, on behalf of the CGC, conducted a telephone poll in 2010 with over 500 grain producers across Canada to partially fulfill the consultation requirement of the UFA. Results from the poll provided information on the perceptions and impressions of Canadian grain producers regarding the CGC, satisfaction levels with CGC services and support for cost recovery and user fees adjustments. Respondents were not informed that their answers would be included as part of the CGC’s user fees consultation results as the poll covered a wide range of topics.

In order to ensure appropriate geographic representation within each major grain-growing province, Ipsos Reid established sampling quotas for each census division that were proportionate to the 2006 Census of Agriculture conducted by Statistics Canada. As well, Ipsos Reid weighted the final study data to reflect the actual distribution of producers in each province proportionate to Statistics Canada’s 2006 Census of Agriculture.

Some of the highlights of the responses from the producer survey with respect to cost recovery and user fees are as follows:

  • 76% of producers agree with the idea of grain companies paying higher fees for CGC sampling, inspection and weighing services.
  • 78% of respondents would support increases in CGC fees if they were in line with those charged by other comparable regulatory bodies in the United States and Australia.
  • 78% of respondents are aware that increased fees to grain companies will likely translate into higher user fees for producers.
  • When asked to choose between fee increases to maintain service levels, a reduction in services rather than an increase in fees, or a measured increase in fees phased in over time, 46% of producers surveyed opt for a phased-in approach.
  • When they considered costs for the grain quality assurance system on a per-bushel basis,
  • 62% of respondents say the cost seems reasonable;
  • 32% of respondents consider costs to be high, giving scores of somewhat high, high and extremely high;
  • 4% of respondents consider costs to be somewhat low, low or extremely low; and
  • 2% of respondents did not know.

The final report and detailed findings of the 2010 Canadian Grain Commission Producers Satisfaction Survey are available on Library and Archives Canada’s Web site.

The 2010–11 consultation documents and sessions

The User Fees: Consultation Document regarding the CGC’s approach to changing its user fees was released on December 14, 2010. Stakeholders had until January 31, 2011, to provide written submissions regarding the document. The CGC held consultation sessions in Montréal, Guelph, Winnipeg, Regina, Saskatoon, Edmonton and Calgary in January 2011.

On March 1, 2011, the CGC released the Individual Fees Consultation Document (Pre-proposal Notification), which outlined proposed individual fees, service standards and performance measures. Stakeholders had until March 31, 2011, to provide written submissions regarding the document. Both consultation documents were based on 100% cost recovery for the amount the CGC expects to spend in a normal year of providing service, where the CGC inspects and weighs 50.6 million tonnes of grain.

A total of 76 people from 49 different organizations participated or observed during the cross-country consultation sessions. The CGC received many comments and questions from engaged stakeholders at the consultation sessions. Forty-eight formal written submissions were received from external stakeholders in total from both phases (28 in Phase 1, and 20 in Phase 2). This section highlights the most common comments and questions received through both phases:

  • The CGA and the CGC’s services need to be modernized before the CGC increases any of its user fees.
  • Some of the CGC’s services and activities provide a public benefit. Therefore, some of the costs of these services should be funded by federal appropriation.
  • It is very important that the CGC and its services be efficient.
  • Fee increases should be phased in over time as opposed to a one-time large increase.
  • CGC inward inspection and weighing should be optional.
  • The CGC grading structure should be reviewed.
  • The licensing and security program should be retained and/or improved.
  • Funding for research should be maintained or increased.
  • The CGC’s governance structure should be reviewed.
  • The CGC provides valuable services to producers and industry.
  • For those CGC services that are mandatory, it is important that there be alternative service providers to deliver them.
  • The CGC’s fees may need to be raised for services that are for the private benefit as it has been over 20 years since they were last increased.
  • The magnitude of the potential increases to user fees is worrisome to producers and the grain industry in general.
  • Producers will ultimately pay for any fee increases to CGC services (through higher tariffs, which result in lower grain prices), even if the grain companies initially pay user fees.
  • CGC fees need to be in line with those in the United States, Australia, grain producing countries in the European Union and private industry.
  • Funding associated with the CGC’s quality assurance system is non-trade distorting, and therefore, may be considered as a green-box subsidy under World Trade Organization rules.
  • The CGC’s proposed service standards and performance measures are not competitive with private industry.
  • The CGC’s services contribute to Canada’s brand reputation for producing high-quality food.
  • Feedback from the producer poll and the first round of the consultations should have been incorporated into consultations on individual fees.
  • Does the CGC have the authority to fully recover the costs of mandatory services?
  • The CGC should conduct a full cost-benefit analysis for fee increases.
  • An independent review of the CGC and the CGA should be conducted.
  • There is a conflict of interest when a regulatory body is seeking 100% cost recovery on mandatory services because it has the incentive to generate revenue instead of creating the appropriate regulatory environment.

The results from the consultations were taken into consideration in the preparation of this regulatory proposal and shared with the Minister of Agriculture and Agri-Food. The results will also be shared with parliamentarians as part of the CGC’s Proposal to Parliament for User Fees and Service Standards.

Parliamentary tabling of user fees proposal

As required under subsection 4(2) of the UFA, the Minister of Agriculture and Agri-Food will table in Parliament the CGC’s Proposal to Parliament for User Fees and Service Standards. Parliament will have 20 sitting days to make its recommendations with respect to the proposal.

Rationale

The CGC has not updated most of its user fees in over 20 years, while the costs to provide its services and licences continue to rise. This results in taxpayers having to pay for an increasing share of these costs relative to the public benefit they receive from CGC activities.

The proposed Regulations would result in increased costs for grain sector stakeholders and decreased costs for taxpayers. As a result, the proposed Regulations would help to ensure that those stakeholders who benefit from CGC services and activities pay for their appropriate share of CGC costs relative to the benefit they receive. During the CGC’s user fees consultations, most stakeholders acknowledged that raising the CGC’s fees would be reasonable since they have not increased in over 20 years, but did not agree with the magnitude of increases or the limited amount of appropriation allocated to the CGC.

The total quantifiable benefits of the proposed Regulations are expected to exceed the total quantifiable costs. The proposed Regulations would also consolidate the number of fees in the CGC’s fee schedule to simplify the fee schedule and make it easier to use.

Without an increase in CGC user fees, grain quality and quantity assurance, grain research and producer protection and the CGC’s regulatory oversight role could be at risk. Updated fees would allow the CGC to continue to fulfill its obligations under the CGA and provide the Canadian grain sector with the services it requires.

Implementation, enforcement and service standards

Implementation

These Regulations and updated fees are proposed to come into force on August 1, 2013, at the start of the crop year.

As part of the implementation of the proposed Regulations, a communication strategy would involve notices to stakeholders regarding updated fees and an updated Web site prior to the Regulations coming into force.

The CGC’s information technology and financial systems would be updated to support the regulatory proposal.

Enforcement

If a user or licensee fails to pay a fee, then that fee payable would be a debt owing to the Crown which would be collected as per standard practice.

Service standards

With respect to service standards, the CGC has consulted stakeholders, as required by the UFA. For each fee, the CGC has identified a service standard that reflects the level of service that can be expected. Service standards would no longer be the expected level of service, but would become a service commitment with recourse for underperformance, as per the UFA.

Fee No.

Fee name

Service standard

Outward inspection

1

Outward official inspection — Ships

  • When grain being loaded is other than grade ordered, the Canadian Grain Commission will inform the elevator staff by form IW-7.
  • Applicable documents for final outward inspection will be issued within two business days after all of the following has been met:
  • (a) completion of loading;

  • (b) receipt of final documentation request from the shipper/exporter; and

  • (c) completion of all required analytical testing results.
  • Grades are accurate (based on the official sample).

2

Outward official inspection — Railway cars, trucks or containers

  • When grain being loaded is other than grade ordered, the CGC will inform the elevator staff by form IW-7.
  • Applicable documents for final outward inspection will be issued within two business days after all of the following has been met:
  • (a) completion of loading;

  • (b) receipt of final documentation request from the shipper/exporter; and

  • (c) completion of all required analytical testing results.
  • Grades are accurate (based on the official sample).

Reinspection

3

Reinspection of grain

  • Reinspection by the Chief Grain Inspector for Canada will be complete and results will be available within ten business days of the reinspection request.

Monitoring outward weighing

4

Monitoring of official outward weighing — Ships

  • Applicable documents for final outward weighing will be issued within two business days after all of the following has been met:
  • (a) completion of loading;

  • (b) reporting of weights and documentation to the CGC;

  • (c) receipt of final documentation request from the shipper/exporter; and

  • (d) completion of all required analytical testing results.

5

Monitoring of official outward weighing — Railway cars, trucks or containers

  • Applicable documents for final outward weighing will be issued within two business days after all of the following has been met:
  • (a) completion of loading;

  • (b) reporting of weights and documentation to the CGC;

  • (c) receipt of final documentation request from the shipper/exporter; and

  • (d) completion of all required analytical testing results.

Inspection and weighing authorization

6

Authorized service provider application

  • A decision will be made with respect to the authorization of a service provider within ten business days of receiving a complete application form.
  • The applicant will be notified within one business day of authorization being given.
  • The Canadian Grain Commission’s Web site is updated within three business days of the effective date of the change on the status of an authorized service provider.

Supplementary fees for official inspection

7

Travel and accommodation (outward)

  • Refer to the applicable service standards for outward inspection.

8

Time and one-half overtime (outward)

  • Refer to the applicable service standards for outward inspection.

9

Double time overtime (outward)

  • Refer to the applicable service standards for outward inspection.

10

Time and one-half overtime — cancellation (outward)

  • Refer to the applicable service standards for outward inspection.

11

Double time overtime — Cancellation (outward)

  • Refer to the applicable service standards for outward inspection.

12

Standby (outward)

  • Refer to the applicable service standards for outward inspection.

Licensing

13

Full-term licence

  • Licensees will be sent licence renewal packages three months prior to the annual licence renewal date.
  • After the renewal deadline and prior to the renewal date, a decision will be made with respect to the issuance of a licence.
  • The licensee will be notified within one business day of the licence being issued.
  • The licence will be mailed to the licensee within five business days from the effective date of the licence.
  • The Canadian Grain Commission’s Web site will be updated within three business days of the effective date of a change in the status of a licensee.
  • Licensee inquiries will receive a response within one business day.
  • Publication of grain elevator, grain handling and elevator tariff reports.

14

Short-term licence

  • Licensees will be sent a short-term licence notification within five business days from the effective day of the licence.
  • After the renewal deadline and prior to the renewal date, a decision will be made with respect to the issuance of a licence.
  • The licensee will be notified within one business day of the licence being issued.
  • The licence will be mailed to the licensee within five business days from the effective date of the licence.
  • The Canadian Grain Commission’s Web site will be updated within three business days of the effective date of a change in the status of a licensee.
  • Licensee inquiries will receive a response within one business day.

Producer railway cars

15

Producer railway car application

  • Written acknowledgement of the receipt and processing of a complete producer railway car application will be mailed by the end of the next business day.

Grading of submitted samples

16

Grading of submitted sample — Unofficial sample

  • An I-126 submitted sample certificate will be issued within five business days of receiving the sample and completion of all required analytical testing results, subject to operational commitment.
  • Grades are accurate (based on the submitted sample).

17

Grading of submitted sample — Certified Container Sampling Program

  • An I-125 submitted sample certificate will be issued within five business days of receiving the sample and completion of all required analytical testing results, subject to operational commitment.
  • Grades are accurate (based on the submitted sample).

18

Grading of submitted sample — Accredited Container Sampling Program

  • An I&W 3 official inspection certificate will be issued within five business days of receiving the sample and completion of all required analytical testing results, subject to operational commitment.
  • Grades are accurate (based on the official sample).

A business day is the standard hours of work, Monday to Friday, as stipulated in collective agreements and does not include designated holidays.

Performance measurement and evaluation

The CGC has developed a Performance Measurement and Evaluation Plan (PMEP), describing the commitments to planning, monitoring, evaluating, and reporting on results of the proposed Regulations and overall cost recovery initiative. Specifically, the PMEP is based on a logic model that illustrates the flow from resources and activities to expected results, as well as indicators measuring changes in outputs and impacts of the proposed Regulations.

The logic model

The activities identified in the logic model are developing and implementing updated fees, consulting with stakeholders, and monitoring. Through the activities, the products and services (outputs) resulting from the proposed Regulations would be produced and delivered to the affected stakeholders, both industry and Canadians. The outputs are a user fees structure that accurately reflects CGC operating costs to provide private benefit services; an annual appropriation structure that accurately reflects CGC operating costs of providing public benefit services; user fees that accurately reflect the approved user fees schedule; and a user fees schedule that contains fewer fees and greater clarity than the baseline.

The short-term outcomes focus on the objectives of the proposed cost recovery regulatory amendments. The short-term outcomes contribute to the achievement of the overall program outcomes identified in the intermediate and long-term outcomes as well as the CGC’s strategic outcome.

The intermediate and long-term outcomes focus on medium- and long-term objectives of the proposed cost recovery regulatory amendments. They also contribute to the achievement of the overall program outcomes as well as the CGC’s strategic outcome that Canada’s grain is safe, reliable and marketable and Canadian grain producers are protected.

Indicators used to measure performance

The proposed indicators used to measure performance are derived from the logic model and are in support of the CGC’s Program Alignment Architecture.

Reporting on performance

The service standards are published in the CGC’s User Fees Proposal and the CGC would continue to report on performance against standards annually as part of the Departmental Performance Report.

The CGC would also review the fees and cost of services every five years and may propose new or amended fees to reflect the results of these reviews. The CGC may address issues outside of the review cycle as warranted. For example, if the CGA were significantly revised, a review may be necessary to address the situation.

Evaluation of proposed regulatory activities

In fiscal year 2011–12, the CGC established a Program Evaluation function under the direction of the Chief Audit Executive, in accordance with the provisions for small departments and agencies contained in the Treasury Board Policy on Evaluations.

Cost recovery through user fees is a horizontal initiative that impacts all of the CGC’s services and activities. It is anticipated that it would take from five to seven years for the full impact of the Regulations to be realized. Therefore, an appropriate time to conduct an evaluation of the effectiveness of the Regulations is 2020.

To conduct the evaluation, the CGC would use various sources of data including financial reports and analyses, strategic and operating plans and results, producer and industry surveys, interviews or correspondence, employee feedback and other studies or analyses as necessary.

To obtain a copy of the PMEP, please make a request to the contact below.

Contact

Eve Froehlich
Policy Analyst
Corporate Services
Canadian Grain Commission
600–303 Main Street
Winnipeg, Manitoba
R3C 3G8
Telephone: 204-983-6394
Fax: 204-983-4654
Email: eve.froehlich@grainscanada.gc.ca

PROPOSED REGULATORY TEXT

Notice is given that the Canadian Grain Commission, pursuant to subsection 116(1) (see footnote a) of the Canada Grain Act (see footnote b), proposes, with the approval of the Governor in Council, to make the annexed Regulations Amending the Canada Grain Regulations.

Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part Ⅰ, and the date of publication of this notice, and be addressed to Eve Froehlich, Canadian Grain Commission, 600–303 Main Street, Winnipeg, Manitoba R3C 3G8.

Ottawa, February 7, 2013

JURICA ČAPKUN
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE CANADA GRAIN REGULATIONS

AMENDMENT

1. Schedule 1 to the Canada Grain Regulations (see footnote 1) is replaced by the Schedule 1 set out in the schedule to these Regulations.

COMING INTO FORCE

2. These Regulations come into force on August 1, 2013.

SCHEDULE
(Section 1)

SCHEDULE 1
(Section 2 and subsection 21(3))
FEES OF THE COMMISSION

Item

Column 1

Fee Name

Column 2

Description of Service

Column 3

Unit (per)

Outward Official Inspection

1.

Outward official inspection — ships (payable by the elevator operator)

Official inspection of grain or screenings discharged to ships, and issuance of certificate

Tonne

2.

Outward official inspection — railway cars, trucks or containers (payable by the elevator operator)

Official inspection of grain or screenings discharged to railway cars, trucks or containers, and issuance of certificate

Inspection

Reinspection

3.

Reinspection of grain (payable by the person requesting the reinspection)

Reinspection by the chief grain inspector for Canada or other authorized inspector in respect of

  • (a) an inward inspection of grain; or

  • (b) an inspection of a submitted sample

Reinspection

Outward Official Weighing

4.

Outward official weighing — ships (payable by the elevator operator)

Monitoring of official weighing of grain, grain products or screenings discharged to ships, and issuance of certificate

Tonne

5.

Outward official weighing — railway cars, trucks or containers (payable by the elevator operator)

Monitoring of official weighing of grain, grain products or screenings discharged to railway cars, trucks or containers, and issuance of certificate

Railway car, truck or container

Third-Party Authorization — Inward Inspection or Weighing

6.

Third-party authorization application (payable by the applicant)

Processing of application for third-party authorization to provide inward inspection services or inward weighing services

Application

Supplementary Fees for Outward Official Inspection

7.

Travel and accommodation (payable by the elevator operator)

Travel and accommodation to conduct an outward official inspection in a location where on-site Commission inspection is not available

Trip

8.

Time and one-half overtime (payable by the elevator operator)

Overtime incurred to conduct an outward official inspection

Hour/employee

9.

Double time overtime (payable by the elevator operator)

Overtime incurred to conduct an outward official inspection

Hour/employee

10.

Time and one-half overtime — cancellation (payable by the elevator operator)

Late cancellation of overtime to conduct an outward official inspection

Employee reporting

11.

Double time overtime — cancellation (payable by the elevator operator)

Late cancellation of overtime to conduct an outward official inspection

Employee reporting

12.

Standby (payable by the elevator operator)

Employee on standby to conduct an outward official inspection during off-duty hours

Hour/employee

Licensing

13.

Full-term licence (payable by the licensee)

Issuance of licence (all classes) for a one-year term or, if the licence is issued following the expiry of one or more short-term licences, for a term that consists of the remainder of the year that began on the issuance of the first short-term licence

Licence/month or partial month

14.

Short-term licence (payable by the licensee)

Issuance of licence (all classes) for one month or partial month

Licence

Producer Railway Cars

15.

Producer railway car application (payable by the producer)

Processing of application for producer railway car

Railway car applied for

Inspection of Submitted Samples

16.

Inspection of submitted sample — unofficial sample (payable by the person submitting the sample)

Inspection of unofficial sample of grain or screenings, and issuance of certificate

Sample

17.

Inspection of submitted sample — Certified Container Sampling Program (payable by the person submitting the sample)

Inspection of sample of grain or screenings taken by a company certified under the Commission’s Certified Container Sampling Program, and issuance of certificate

Sample

18.

Inspection of submitted sample — Accredited Container Sampler Program (payable by the person submitting the sample)

Inspection of sample of grain or screenings taken by a third party accredited under the Commission’s Accredited Container Sampler Program, and issuance of certificate

Sample

 

Item

Column 4

Fee by Fiscal Year

2013-14

2014-15

2015-16

2016-17

2017-18

Outward Official Inspection

1.

$1.60

$1.63

$1.65

$1.68

$1.70

2.

$143.99

$146.29

$148.63

$151.01

$153.43

Reinspection

3.

$70.48

$71.61

$72.76

$73.92

$75.11

Outward Official Weighing

4.

$0.15

$0.16

$0.16

$0.16

$0.16

5.

$13.87

$14.09

$14.31

$14.54

$14.78

Third-Party Authorization — Inward Inspection or Weighing

6.

$140.97

$143.22

$145.52

$147.84

$150.21

Supplementary Fees for Outward Official Inspection

7.

Cost calculated in accordance with the rate set out in the Travel Directive of the National Joint Council of the Public Service or, if no rate is set, actual cost

Cost calculated in accordance with the rate set out in the Travel Directive of the National Joint Council of the Public Service or, if no rate is set, actual cost

Cost calculated in accordance with the rate set out in the Travel Directive of the National Joint Council of the Public Service or, if no rate is set, actual cost

Cost calculated in accordance with the rate set out in the Travel Directive of the National Joint Council of the Public Service or, if no rate is set, actual cost

Cost calculated in accordance with the rate set out in the Travel Directive of the National Joint Council of the Public Service or, if no rate is set, actual cost

8.

$64.50

$65.53

$66.58

$67.65

$68.73

9.

$86.00

$87.38

$88.77

$90.19

$91.64

10.

$193.50

$196.60

$199.74

$202.94

$206.18

11.

$258.00

$262.13

$266.32

$270.58

$274.91

12.

$43.00

$43.69

$44.39

$45.10

$45.82

Licensing

13.

$276.00

$280.00

$285.00

$289.00

$294.00

14.

$353.00

$358.00

$364.00

$370.00

$376.00

Producer Railway Cars

15.

$26.50

$27.00

$27.50

$28.00

$28.50

Inspection of Submitted Samples

16.

$46.99

$47.74

$48.51

$49.28

$50.07

17.

$46.99

$47.74

$48.51

$49.28

$50.07

18.

$46.99

$47.74

$48.51

$49.28

$50.07

NOTES:

Fees for items 2 and 5

1. If more than one certificate is required for a railway car, truck or container, separate inspection and weighing fees will be applied for each certificate issued.

Fees for items 8 to 12

2. Type of overtime (time and one-half or double time) and the commencement of overtime and standby are determined in accordance with the collective agreement that is applicable to inspectors (Primary Products Inspection classification, Technical Services Group). The agreement may be found on the Treasury Board of Canada Secretariat’s website.

Fees for items 10 and 11

3. A fee is not payable for cancellation of overtime if notice of cancellation is received by the Commission no later than 2 p.m. on the day on which the inspection is to be conducted or, if the inspection is to be conducted on a Saturday or a holiday, no later than 2 p.m. on the day — other than a Saturday or holiday — before that day.

4. Fees are exclusive of the goods and services tax.

5. All fees are calculated to the nearest cent. Overtime hours are calculated in 15-minute increments.

[7-1-o]

  • Footnote a
    S.C. 2001, c. 4, s. 89
  • Footnote b
    R.S., c. G-10
  • Footnote c
    C.R.C., c. 889; SOR/2000-213
  • Footnote 1
    The crop year in western Canada is from August 1 to July 31 the following year.
  • Footnote 2
    The processing of the authorized service provider application is expected to cost less than $10,000 per year; therefore, it does not register as a cost to the second decimal place.