Vol. 150, No. 21 — October 19, 2016

Registration

SOR/2016-256 September 30, 2016

CANADA GRAIN ACT

Regulations Amending the Canada Grain Regulations

P.C. 2016-839 September 30, 2016

The Canadian Grain Commission, pursuant to subsection 116(1) (see footnote a) of the Canada Grain Act (see footnote b), makes the annexed Regulations Amending the Canada Grain Regulations.

Winnipeg, May 30, 2016

Jim Smolik
Assistant Chief Commissioner

Murdoch MacKay
Commissioner

His Excellency the Governor General in Council, on the recommendation of the Minister of Agriculture and Agri-Food, pursuant to subsection 116(1) (see footnote c) of the Canada Grain Act (see footnote d), approves the making of the annexed Regulations Amending the Canada Grain Regulations by the Canadian Grain Commission.

Regulations Amending the Canada Grain Regulations

Amendments

1 Section 23 of the Canada Grain Regulations (see footnote 1) is replaced by the following:

23 No later than the 15th day of every month, each licensed grain dealer, primary elevator operator and process elevator operator shall submit to the Commission, on the appropriate form supplied by the Commission or in an electronic format acceptable to it, a report respecting the licensee’s outstanding obligations for the payment of money or the delivery of grain to holders of elevator receipts, grain receipts and cash purchase tickets and the security amount available to meet those obligations at the end of the preceding month.

2 (1) Paragraph 29.3(2)(a) of the Regulations is replaced by the following:

(2) Section 29.3 of the Regulations is amended by adding the following after subsection (2):

(3) If the penalty agreed on by the producer and the licensee is based on a daily amount, the penalty is payable for each day during the period beginning on the first day after the day on which the delivery period expires and ending on the day on which the total amount of grain specified in the contract is accepted and received by the licensee, or on another day otherwise agreed on by the producer and the licensee.

3 Form 14 of Schedule 4 to the Regulations is replaced by the Form 14 set out in the schedule to these Regulations.

Coming into Force

4 These Regulations come into force on the day on which they are registered.

SCHEDULE
(Section 3)

SCHEDULE 4
(Section 9, subsections 33(1) and 39(1), section 44, subsection 45(2), paragraph 57(a), section 58 and subsection 68(1))

FORM 14
(Subsection 68(1))

Application for Producer to Obtain Railway Cars

Section A - Producer Identification (please print) / Partie A - Identité du producteur (en lettres moulées)

Principal Producer / Producteur principal

Producer Identification Number

No d’identification du producteur

Name / Nom ________________________________________________________________________________________________

Address / Adresse ________________________________________________________________________________________________

                    

City / Ville _________________________________________________________

Province ________________________________________

Primary Delivery Point / Point de livraison primaire

Postal Code / Code postal __________________________________

Telephone / Téléphone _______________________________________

Fax / Télécopieur ______________________________________

Email / courriel _________________________________________________________

Secondary Producers / Producteurs secondaires

Name Nom

1

2

3

4
                                                                                 

Producer ID Number No d’identification du producteur

                                                                                

Section B - Application (please print) / Partie B - Demande (en lettre moulées)

Grain

Number of Cars Required Nombre de wagons demandés

  

Week Preferred for Shipment Choix de semaine d’expédition

  

Grade Estimate Grade estimatif

  

Protein Level Teneur de protéines

Placement of Car Emplacement des wagons

Shipping Point and Railway Point d’expédition et voie ferrée

Precise Siding and Placement on Siding Voie de service et endroit précis sur la voie

Destination of Shipment Destination de l’expédition

City Ville

Elevator Installation

Section C - Declaration / Partie C - Déclaration

I, the undersigned, do hereby solemnly declare that

  • (a) I am a producer as defined in the Canada Grain Act;
  • (b) all of the information contained in sections A and B of this application is true and correct;
  • (c) the grain can and will be loaded into the car(s) applied for within the limitations of my contract;
  • (d) if the siding named in section B is not a public siding, I have obtained the permission of the owner to use the siding;
  • (e) I am prepared to load either box cars or hopper cars;
  • (f) the car(s) will not be loaded through a licensed elevator;
  • (g) the car(s) will be loaded by the time the railway returns to pick it (them) up;
  • (h) I will complete and return a Canadian Grain Commission shipping report;
  • (i) the origin of the grain is ______________________________

______________________________________________________

Applicant’s Signature / Date

Je soussigné déclare solennellement que :

  • a) je suis un producteur au sens de la Loi sur les grains du Canada;
  • b) tous les renseignements fournis dans les parties A et B de cette demande sont exacts et véridiques;
  • c) le grain peut être chargé et sera chargé dans le(s) wagon(s) qui a (ont) été demandé(s) dans le cadre de mon contrat;
  • d) dans le cas où la voie de service nommée à la partie B n’est pas une voie publique, j’ai obtenu la permission du propriétaire de m’en servir;
  • e) je suis prêt à charger le grain dans un wagon couvert ou un wagon-trémie;
  • f) le(s) wagon(s) ne sera (seront) pas chargé(s) par l’entremise d’une installation agréée;
  • g) le chargement du (des) wagon(s) sera terminé au moment où la compagnie de chemin de fer viendra reprendre le(s) wagon(s);
  • h) je remplirai et remettrai un rapport d’expédition de la Commission canadienne des grains;
  • i) l’origine du grain est ______________________________

________________________________________________________

Signature du demandeur / Date

Section D - Administrator and Consignee / Partie D - Administrateur et consignataire

_____________________________________________________

Name of Administrator / Nom de l’administrateur

______________________________________________________

Name of Consignee / Nom du consignataire

_____________________________________________________

Authorized Signature / Signature autorisée

______________________________________________________

Authorized Signature / Signature autorisée

The information in this document is required by the Canadian Grain Commission for the purpose of allocating railway cars to grain producers. Some information may be accessible or protected under the Access to Information Act. Information that could cause you or your organization harm if released is protected from disclosure under section 20 of the Access to Information Act.

Les renseignements demandés dans la présente formule visent à permettre à la Commission canadienne des grains d’affecter des wagons de chemin de fer aux producteurs de grain. Certains renseignements peuvent être accessibles ou protégés aux termes de la Loi sur l’accès à l’information. Les renseignements dont la divulgation pourrait porter préjudice à vous ou à votre organisme sont protégés aux termes de l’article 20 de la Loi sur l’accès à l’information.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

Producer cars — Application for Producer to Obtain Railway Cars Form

The Canadian Grain Commission (CGC) has modernized its Producer Car Allocation Program to ensure ongoing efficiency, timely service, and relevance in the changing grain transportation environment. As part of this process, automatic confirmation emails are now sent to a producer’s email address immediately after the CGC receives a new producer car order — a completed Application for Producer to Obtain Railway Cars form. Although the form has been updated in the electronic car ordering system, and the actual paper application form now includes a producer email address field, Form 14 of Schedule 4 (the Application for Producer to Obtain Railway Cars form) to the Canada Grain Regulations (CGR) does not reflect this change. For consistency, it is necessary to update Form 14 of Schedule 4 to include a producer email address field.

Penalty payment mechanism — Grain delivery contracts

Section 29 of the CGR requires that any contract between a producer and a grain company for the purchase of grain within a specified delivery period must include a provision stating that if a grain company does not accept a producer’s delivery within the delivery window negotiated in the contract, the grain company must pay the producer a penalty. The penalty is negotiable and must be agreed upon by the producer and the grain company in the contract and be based on either a daily amount or a lump sum. However, both grain companies and producers have expressed the wish to specify other penalty payment alternatives in their contracts (e.g. setting off against other commitments a producer may owe to a licensee during the crop year).

Licensing obligation and security reports — Monthly liability report

Licensed grain dealers, primary elevator operators, and process elevator operators must provide the CGC Licensing Unit with monthly reports of their liabilities to producers. Section 23 of the CGR requires that licensees supply this information for the previous month to the CGC, but does not state a specific date, which causes uncertainty for licensees. To address this issue, operationally the CGC has been requesting monthly liability reports from licensees on the 15th of the following month of the period being reported. For clarification, it is necessary to amend Section 23 to make it consistent with operational practice.

Background

Producer cars

The Canada Grain Act (CGA) requires that producer cars are available to farmers. Producer cars are used to ship grain directly to a particular destination and provide producers a delivery alternative to the licensed grain handling system. The CGC allocates producer cars that are for a confirmed sale in the order in which application orders are received, while working within certain parameters (train run service, access to loading sites, and car availability) and respecting the orderly movement of grain. In order to ensure ongoing efficiency, timely service, and relevance in the changing grain transportation environment, the CGC reviewed all of the processes of its Producer Car Allocation Program in fiscal year 2014–2015. As a result of this review, the CGC modernized its business and communication processes.

Penalty payment mechanism — Grain delivery contracts

Most grain delivery contracts are a commercial decision between a grain company and a producer, and specify a delivery time frame. In the past, consequences for contract non-compliance have been typically unbalanced in favor of grain companies. Effective August 1, 2014, section 29 of the CGR was amended in order to regulate penalty provisions in grain delivery contracts between producers and licensed grain companies. The precise nature of the penalty provision to be included in contracts is not completely defined in regulation and each grain company can have a unique strategy regarding how to implement this requirement. Although section 29 accomplishes the regulatory objective, it does not clearly allow for a penalty that could be structured and paid using a mechanism as agreed to by the contracting parties, other than a set daily amount or single lump sum.

Licensing obligation and security reports — Monthly liability report

Licensed grain dealers, primary elevator operators, and process elevator operators must provide monthly liability reports to the CGC Licensing Unit as part of CGC licensing and reporting obligations. A monthly liability report identifies a licensee’s outstanding payments and other obligations for grain to producers as of the last day of each month. As required by the CGA, the CGC uses this information to establish the amount of security that each licensee must provide for the purpose of covering potential liabilities to producers in the event of a company default. Operationally, the CGC currently requests that licensees submit this report by the 15th of the following month of the period being reported.

Objectives

The three objectives of this proposal are as follows:

Description

This proposal

“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.

Small business lens

The small business lens does not apply to this proposal, as there are no costs on small business.

Consultation

Stakeholders were consulted on the modernized producer car application process, including the addition of a mandatory producer email address, in July 2015. The CGC hosted both an in-person meeting and a webinar on July 17, 2015, to discuss the updated producer car program business practices with affected stakeholders. Follow-up information packages were sent to all producer car administrators and producer car loading facilities. In addition, on request, the Commission held face-to-face meetings with producer organizations, producer car loading facilities, grain marketers, and a short-line railway group. Stakeholders were supportive of the change as it facilitates modernized producer car ordering procedures.

Stakeholders have not been formally consulted on the amendment to penalty payment mechanisms in grain delivery contracts in section 29. However, given that both grain companies and producers have enquired about the ability to use alternative penalty payment mechanisms in their contracts, during the past year, CGC Commissioners have provided information at various producer group annual general meetings and farm shows in order to clarify how the penalty payment clause can be applied. Commissioners have also had numerous informal discussions with stakeholders about their understanding of penalty payment mechanisms.

Licensees have not been consulted on the amendment to section 23 regarding the addition of a specific date by which they must submit their monthly liability reports to the CGC Licensing Unit. Licensees should be supportive of this amendment as it simply formalizes current reporting procedures. Once these amendments come into force, licensees will be reminded of this requirement.

Rationale

The addition of a mandatory producer email field on Form 14 of Schedule 4 (the Application for Producer to Obtain Railway Cars form) presents no risk or cost to stakeholders. This amendment is necessary to reflect the modernized operating practices of the CGC’s Producer Car Allocation Program.

The amendment to section 29 will address the question raised by both grain companies and producers about their ability to specify other alternatives in delivery contracts to deal with the way in which the penalty amount may be paid (other than as a daily amount of lump sum). The amendment presents no risk or cost to stakeholders and will facilitate practical grain delivery contract penalty arrangements.

Amending section 23 will provide regulatory certainty for licensees and will not negatively impact their operations. In practice, the CGC Licensing Unit already requires that licensees submit their monthly liability reports by the 15th of the following month of the period being reported. This amendment presents no costs to licensees.

Implementation, enforcement and service standards

These regulatory amendments will come into force on the day on which they are registered.

Contact

Melanie Gustafson
Policy Analyst
Canadian Grain Commission
303 Main Street
Winnipeg, Manitoba
R3C 3G8
Telephone: 204-292-5721
Email: melanie.gustafson@grainscanada.gc.ca