Canada Gazette, Part I, Volume 157, Number 11: Regulations Amending the Canadian Aviation Security Regulations, 2012 (Air Cargo)

March 18, 2023

Statutory authority
Aeronautics Act

Sponsoring department
Department of Transport

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The air cargo industry remains vulnerable to extremist elements aspiring to commit acts of unlawful interference, including terrorist attacks. Information on inbound air cargo is not being consistently reviewed and assessed for security risks. To bolster the security of airports, aircraft and the travelling public, the Government of Canada must be empowered to identify high-risk cargo before it is loaded on Canada-bound aircraft. Amendments to the Canadian Aviation Security Regulations, 2012 (CASR 2012) would establish requirements for a Pre-load Air Cargo Targeting (PACT) program. Ensuring all air carriers transporting cargo to Canada submit pre-loading advance cargo information (PLACI) and comply with mitigation measures as directed by Transport Canada (TC), the PACT program would enhance the security of inbound air cargo and ensure that Canadian regulations remain aligned with those of key international trading partners.

Background

The Canadian air cargo industry transports over one billion tonnes of goods every year. According to Deloitte, the value of the Canadian air cargo industry is projected to reach $2.9 billion by 2025. Approximately half of all cargo that is transported by air travels on passenger flights.

Civil aviation remains a target of terrorist attacks, offering the kinds of high-profile targets that terrorists seek, such as airports, aircraft, and the travelling public. The vulnerability of air cargo in particular was highlighted by the events of October 29, 2010, when explosive devices were found in air cargo packages bound for the United States from Yemen. According to post-incident analysis, if the shipments had not been intercepted as a result of intelligence, one of the devices could have detonated in Canadian airspace while en route to Chicago. The incident led governments and industry stakeholders to take action. Around the world, countries began enhancing their domestic and outbound air cargo security regimes, while exploring ways of addressing air cargo threats from abroad.

Following the events of 2010, several countries proposed supplementing traditional screening with the analysis of advance cargo information, which enables early identification of high-risk cargo and the application of mitigation measures, as appropriate, before cargo can be transported on an inbound flight. Canada began implementing this approach with the launch of the PACT pilot project, a joint initiative between TC and the Canada Border Services Agency (CBSA), on October 1, 2012. Under the PACT pilot project, participating air carriers began submitting basic cargo information (e.g. shipper and consignee information and details about the commodities being shipped) to the Government of Canada for assessment before cargo was loaded on board the aircraft destined to Canada. Initial pilot project volunteers included several air carriers and two freight forwarders that could submit advance cargo information on behalf of air carriers. These participants represented 10 to 15% of the total volume of Canada-bound cargo. While originally conceived as an 18-month project, the pilot project was repeatedly extended as independent reviews found the PACT pilot project’s methodology an effective way to reduce aviation security risks, complementing other countries’ national level programs to address potential threats early in the supply chain.

In 2015, TC began working toward the implementation of a codified program, as the PACT pilot project continued to demonstrate its security value. At the same time, TC and the CBSA agreed to transition the management and operation of the pilot project to the sole responsibility of TC. Consequently, the CBSA’s involvement in the project was gradually reduced until 2018, when the CBSA completely ceased to be involved. Since its inception, the pilot project has risk assessed over 2.1 million shipments, leading to 850 requests for additional information and several requests for additional screening. By identifying high-risk shipments in advance, the PACT pilot project has added a layer of security to air cargo destined for Canada, reducing the risk that the Canadian public will suffer the consequences of a successful terrorist plot, including loss of life and economic damage.

Before implementing a mandatory program, TC had to figure out a way to scale up, as the processes used by TC for the pilot project were not designed to deal with large volumes of cargo data. Air carriers submitted cargo data via email and risk assessment was completed manually by a TC analyst. During the 2018–2019 fiscal year, TC completed a proof of concept, which demonstrated that a system based on automation and advanced analytics powered by artificial intelligence (AI) could understand advance cargo information and apply categorization and risk assessment rules to the data. Based on the proof of concept, the Department is building the information technology (IT) infrastructure for the proposed PACT program, replacing email submissions with automated submissions (“digital ingestion”), which are then processed through a risk-assessment algorithm.

As part of the 2021 Digitalization and Technology-Neutral Regulations Roadmap under the second round of the Treasury Board Secretariat’s (TBS) Regulatory Reviews, TC proposed to finalize the development of an IT system to risk assess incoming air cargo (Digitalization of the Pre-load Air Cargo Targeting program). TC also proposed to develop regulatory amendments to the CASR 2012 by 2023 to support the implementation of a codified PACT program.

Objective

The objective of the proposed amendments is to enhance the security of commercial aviation by ensuring information about air cargo destined for Canada is consistently submitted to the Government of Canada and assessed for security risks, so that mitigation measures can be applied where necessary before cargo is loaded on an aircraft bound for Canada.

The proposed amendments would also ensure that Canada’s air cargo security regime is aligned with those of its international partners.

Description

This regulatory proposal would transition the PACT pilot project into a mandatory program, requiring all air carriers transporting cargo on flights from outside Canada to an aerodrome in Canada to submit information to TC prior to the cargo being loaded. The program would not apply to mail, or a passenger’s checked or carry-on baggage.

The proposed amendments would not apply to flights departing from Canadian aerodromes (i.e. flights departing Canada or domestic flights within Canada).

Under the proposed amendments, air carriers would be required to submit, at any time prior to loading cargo onto the aircraft, eight pieces of information to TC for each shipment that will be transported on a flight destined for Canada, namely, the name and address of the original shipper, the consignee name and address, a description of each piece of cargo, total weight, piece count and the air waybill number. If there are any changes to the information, air carriers must provide updated information to TC as soon as feasible.

In addition to the eight pieces of cargo information, air carriers would be required to submit flight information to TC as soon as feasible following a flight’s departure and before its arrival in Canada.

Upon receipt of the cargo information, TC would complete an initial assessment. Air carriers would be prohibited from transporting cargo until receiving a message from TC confirming receipt of this information. Unless further action is required, confirmation of receipt should be sent within five minutes.

TC would use an algorithm to conduct a risk assessment of the cargo data, with the goal of identifying potential threats. Depending on the results of the risk assessment, an air carrier may be asked to provide additional information respecting the cargo, in order to assess security risk. Depending on the results of TC’s risk assessment, an air carrier may be asked to screen the cargo for threat items in accordance with a security measure made under the authority of the Aeronautics Act.

If, as a result of screening, the cargo is found to contain a threat item, the air carrier would be required to immediately establish control of the cargo and remove any threat to aviation security. Whether or not a threat item is found, air carriers would have to submit information regarding the screening to TC before the cargo is transported.

In a worst-case scenario, TC would issue a “Do Not Load” (DNL) notice in respect of the cargo. An air carrier must not transport cargo on a flight when a DNL has been issued.

If a threat is addressed and resolved, the cargo may be retendered for transportation. If a shipment were retendered for transportation, the eight pieces of cargo information would be reassessed by TC.

The proposed amendments would also require all air carriers that transport cargo to Canada to provide TC with the name and contact information of the principal point of contact for the purposes of the PACT program.

The proposed amendments would also designate violations of the PACT program requirements as enforceable via administrative monetary penalties (AMPs). For example, the proposed amendments would include AMPs of up to $25,000 for failure to screen the cargo when directed by TC, failure to establish control of the cargo and remove any threat to aviation security, if detected, and transporting cargo that must not be transported according to section 743 of the CASR 2012. In addition, AMPs of up to $10,000 could be issued for failing to provide cargo information, cargo information updates, requests for additional information, screening information, flight information or the name and contact information of a designated contact person.

Aside from PACT-related provisions, amendments have been proposed to Part 11 of the CASR 2012 for clarity. Specifically, the general application sections for cargo (668) and mail (720) would clarify that mail and cargo provisions in Part 11 apply only to flights that depart from Canada. The clarifications in Part 11 were necessary because, with the creation of PACT-related provisions, the CASR 2012 now contain provisions, in Part 12, that apply to flights departing from abroad. In substance, the approach to cargo and mail in Part 11 has not changed. Additional changes to Part 11 remove redundant language. The terms “all-cargo flights”, “all-cargo flight”, “passenger flights”, and “flight that is carrying passengers” have been removed from sections 668 and 669, as the term “flight” captures both flights with cargo only and flights with cargo and passengers. Finally, section 673, which states that cargo information must be complete and accurate, has been repealed, as it is implicit in the requirement to provide the information and therefore unnecessary.

Regulatory development

Consultation

The PACT pilot project was designed to seek continuous feedback and buy-in from affected stakeholders. Between fall 2012 and summer 2022, the PACT pilot project team carried out more than 50 consultative sessions and working group meetings. This included engagement through international working groups, such as the International Civil Aviation Organization (ICAO) Working Group on Air Cargo Security, the World Customs Organization (WCO) Technical Experts Group on Air Cargo Security and the WCO-ICAO Joint Working Group on Advance Cargo Information, whose Joint WCO-ICAO Guiding Principles for Pre-Loading Advance Cargo Information Canada helped to develop. Consultations included discussion on pilot project procedures, risk assessment methodology, mitigation processes and supporting technology.

Early discussions focused on specific pieces of information that would be mandatory and the timing of information submission. TC initially considered requiring three additional pieces of information, which would help reduce the number of follow-up requests that TC makes to air carriers for additional information. However, during consultation, concerns were raised that these pieces of information, in addition to the original eight, would render the eventual program unnecessarily burdensome relative to the added benefit, given the relative infrequency of requests for additional information. In response to stakeholder concerns, TC elected to move forward with the original eight pieces of information, as reflected in the proposed amendments.

Some stakeholders expressed concerns about prescribing specific time frames within which the cargo information would need to be reported to TC. While TC had initially proposed an amount of time prior to departure when cargo information would have to be submitted, such proposals were considered infeasible for air carriers with faster delivery services (e.g. express couriers, just-in-time delivery). As a result, the proposed PACT program includes only the stipulation that information be submitted prior to loading the cargo.

Stakeholders also raised concerns that risk assessments were being delayed because they were conducted one at a time by TC officials. In response, TC began working toward the automation of the assessment process. Based on feedback from air carriers, and to reduce the burden to affected stakeholders, TC is transitioning the means of submitting cargo information from an email, which stakeholders have to compose specifically for PACT, to a portal that accepts standard industry data and messaging formats. Already, some air carriers are submitting cargo information through the portal, which will be upgraded in advance of the coming-into-force date of the proposed amendments.

On May 18, 2022, TC hosted an additional consultation on the proposed amendments, which included representatives of air carriers, freight forwarders and a data aggregator representing more than 200 supply chain entities. Stakeholders asked many questions pertaining to the scope of the proposed program and operational scenarios. No objections were raised regarding any of the proposed PACT program elements. A copy of the presentation was posted immediately after on TC’s primary information repository for stakeholders, the Secure Supply Chain Information Management System (SSCIMS).

Throughout consultations, TC has heard no concerns from affected stakeholders regarding their ability to comply with the proposed amendments. Affected stakeholders have not indicated that they would need any lead time to configure their systems in advance of the implementation of the PACT program. TC has repeatedly indicated that it will work to ensure all air carriers are onboarded in advance of the coming into force of the proposed amendments.

Modern treaty obligations and Indigenous engagement and consultation

In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, analysis was undertaken to determine whether this regulatory proposal is likely to give rise to modern treaty obligations. The assessment examined the geographical scope and subject matter of the regulatory proposal in relation to modern treaties in effect and no implications or impacts on modern treaties were identified.

Instrument choice

While the likelihood of a terrorist attack involving air cargo destined for Canada remains low, the potential economic, political and human consequences of such an attack could be catastrophic. For this reason, TC launched the PACT pilot project in 2012. The objective was to test the feasibility of identifying and applying risk mitigation measures to high-risk cargo before it could be transported to Canada. The pilot project was intended to form the basis of a mandatory program that would further enhance the security of air cargo destined for Canada.

Given the success of the pilot project, TC has been building the procedural and technical foundation for a mandatory PACT program. The publication of regulations would constitute the final step in making that program a reality, providing TC with the legal authority to compel all air carriers to provide air cargo information and comply with instructions to implement mitigation measures. In the absence of regulations, TC would not receive advance cargo information from all air carriers, meaning that security vulnerabilities in the air cargo sector would remain unaddressed. In addition, without a PACT program established in regulations, Canada would fall out of alignment with its main trading partners in its approach to air cargo security, which could damage Canada’s international reputation. Already, the Department of Homeland Security in the United States has codified its Air Cargo Advance Screening (ACAS) program under Title 19 of the Code of Federal Regulations.

No non-regulatory options were considered.

Regulatory analysis

Benefits and costs

As a result of the proposed amendments, both the Government and industry would be expected to assume costs. The benefits of the proposed amendments would be the added layer of security to the air transportation sector, by ensuring that air cargo has been risk assessed prior to entering Canadian airspace. These impacts are described in further detail in the following text.

Analytical framework

The costs and benefits for the proposed amendments have been assessed in accordance with the TBS Policy on Cost-Benefit Analysis by comparing the baseline scenario against the regulatory scenario. These impacts are analyzed over a 10-year analytical time frame, beginning in the anticipated year of final publication in the Canada Gazette, Part II (2024) and ending in 2033. Values provided throughout the “Benefits and costs” section, unless otherwise noted, are in 2021 dollars and expressed in present value using a 2024 base year and a 7% discount rate.

Baseline and regulatory scenarios

The baseline scenario represents what is projected to occur throughout the analytical time frame without the proposed amendments. In this scenario, it is anticipated that the current PACT pilot project would cease to continue if TC does not formalize it through regulations. Without these regulatory amendments, air carriers have indicated that they would not continue their participation.

The regulatory scenario represents the scenario in which the proposed amendments are made and affected stakeholders must comply with. For the purpose of the cost-benefit analysis, the primary aspect of this scenario is that all air carriers transporting cargo into Canada would be required to submit the necessary information to TC prior to loading. This would apply to any Canadian or foreign air carriers transporting cargo into Canada. For the Government, full-time employees would be required to fulfill the administration and analysis functions. In addition, administration and maintenance of the IT system would occur in the regulatory scenario.

In order to implement the proposed amendments, TC would need to put in place an upgraded IT system prior to the final publication of the proposed amendments in the Canada Gazette, Part II. These resources and their associated costs would be incurred prior to the start of the analytical time frame and, therefore, for the purpose of this analysis, the costs associated with the IT system are considered sunk. This is described in more detail in the “Government costs” section below.

Affected industry stakeholders

All air carriers transporting cargo into Canadian airspace would be required to abide by the proposed amendments and would need to provide the requested data to TC prior to the cargo being loaded on the aircraft. Based on historical data, there have been air carriers transporting cargo into Canada since 2010, of which approximately 24 air carriers are based in Canada and the remaining 116 are foreign air carriers. While it is anticipated that foreign air carriers would incur costs, for the purposes of the cost-benefit analysis, they do not have standing within Canada and, therefore, the costs to such air carriers are not counted in the analysis. The air carriers are made up of scheduled passenger service providers, cargo-only service providers, as well as charter service providers. Historically, approximately half of all cargo that has been transported by air travelled on passenger flights.

It is not anticipated that there would be any impact on competitiveness for any affected air carriers, as the minor cost impacts incurred would be relative to the air operator’s quantity of cargo transported. Further, all air carriers offering cargo transportation would be impacted so no imbalance would be created and the costs would not be significant enough to push consumers to other forms of cargo transportation.

Freight forwarders or other third-party service providers could also be impacted by these proposed amendments on occasion, as they would be permitted to submit cargo information on behalf of air carriers.

Costs

The total incremental costs associated with these proposed amendments are estimated to be $6.3 million, with $4.2 million that would be carried by TC, and the remaining $2.1 million carried by air carriers. The costs are outlined in more detail below.

Government costs

Labour costs

Within the analytical time frame, the Government would carry ongoing incremental costs associated with the administration of the PACT program and analysis of the data received. In total, the proposed amendments would result in estimated present value labour costs of $3.49 million over the 10-year period of analysis.

While there is currently a team working on the PACT program within TC, the proposed amendments would require continued funding for these full-time employees (FTEs) throughout the analytical time frame. Four of the employees (those under the Programme Administration [PM] group classification) would be responsible for the analysis of the associated data received, including the live targeting function. While TC would be receiving a higher volume of data in comparison to the pilot project, it is anticipated that these four employees would be able to continue fulfilling these duties due to the introduction of the upgraded IT system and the increase in automation as part of the data screening process. When the data is transmitted to TC, these employees would be reviewing the output to determine if any cargo needs to be flagged for additional information or re-screening. There would be an employee (EC-05) required in the first two years of the analytical time frame to provide public outreach, manage the administration of the data program, and provide any additional support where required. The numbers of FTEs and their respective classification by year are provided in the following table.

Table 1: Number of full-time employees and their job classification by year
Job classification 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
PM-04 3 3 3 3 3 3 3 3 3 3
PM-05 1 1 1 1 1 1 1 1 1 1
EC-05 1 1 0 0 0 0 0 0 0 0

The compensation by job classification is provided in the following table.

Table 2: Compensation by job classification
Job classification Annual salary table a2 note a Salary and overhead (30%)
PM-04 $79,006 $102,708
PM-05 $94,368 $122,679
EC-05 $101,999 $132,599
Table a2 note(s)
Table a2 note a

Highest current step used, adjusted to 2021 dollars.

Return to table a2 note a referrer

IT setup and maintenance

The Government would also incur estimated costs of $2.52 million prior to the final publication of the proposed amendments in the Canada Gazette, Part II, associated with the setup of the necessary data infrastructure. These are capital costs to develop the system and accompanying technology that would enhance the ability of TC to identify risks. Given that they occur prior to the analytical time frame, these costs are considered sunk and are not included in the analysis.

It is anticipated that, throughout the analytical time frame, TC would also carry ongoing costs to do with maintenance of the IT system as well as cloud services. While there remains some uncertainty about the cloud capacity and maintenance required, it is estimated based on internal current spending and potential growth that these incremental costs would be roughly $100,000 on average per year. Therefore, over the analytical time frame, the total cost to TC associated with maintenance of the IT systems and cloud services would be $0.75 million.

Other Government costs

Minimal incremental enforcement costs are anticipated as a result of the proposed amendments as the implementation would provide valuable real-time data to TC about potential non-compliance. This efficient gathering of information would allow existing security resources, including the renewed FTEs described above, to review and enforce the proposed amendments. There would be some incremental costs to deliver training to these existing security resources on the new AMPs; however, these are expected to be minimal and were not monetized.

TC would also assume some costs associated with the publication of additional resources and stakeholder outreach; however, these activities would be taking place prior to the final publication of the proposed amendments in the Canada Gazette, Part II, and, therefore, their costs are excluded from the analysis.

Industry costs

As all the air carriers impacted by the proposed amendments are already collecting and storing the data being requested, the incremental costs for the Canadian-based air carriers would be associated with setting up the process with which to share this data and the effort associated with responding to requests for additional information or re-screening. The total cost to the industry is expected to be $2.11 million over the analytical time frame.

Initial setup

The web-based system was designed in a flexible fashion to use the data in the form it is already in and does not require a specific paid software. Given this system, the setup for air carriers would only require initial time spent, as described in the following paragraph. No system-related expenditures would be required.

The setup costs are assumed to occur around the time of final publication of the proposed amendments in the Canada Gazette, Part II. Before the amendments come into force, a meeting between representatives from TC and both an air manager and a senior IT employee from the air operator would take place to establish the process required to transmit data to TC, and the steps that would have to be undertaken by the air operator to set up the web-based system. It is estimated that this meeting would be 30 minutes in duration. Four hours would then be required for an IT employee to develop a way to transmit the in-scope data to the PACT program. When this process has been followed in the past, there has been a varying level of additional back and forth following this four-hour setup, ranging from less than one hour to six hours over the following days. Given this varying level of engagement, and to ensure that the costs are not underestimated, the analysis assumes 10 total hours of IT employee time. With estimated hourly wages, including 25% overhead of $68.76 for the air manager, $66.34 for the senior IT employee, and $53.94 for the IT employee, it is estimated that this time would result in costs of $607 for each air operator. It is assumed that the air carriers that are currently compliant under the pilot project would not incur initial setup costs as they would already have their systems setup for automatic transmission. There are 10 Canadian air carriers that are not part of the pilot project and that TC projects to transport cargo into Canada during the analytical time frame. The total estimated setup costs to air carriers would therefore be $6,070. Considering the setup outlined would result in the automatic transmission of data from the air carriers to TC, the proposed amendments are not expected to result in ongoing transmission costs to the air carriers.

Requests for information or screening

Air carriers would also assume costs associated with responding to TC’s requests for information (RFIs) and/or requests for screening (RFSs). While the air carriers currently taking part in the pilot project already complete these requests, because the baseline scenario would mean the dissolution of the pilot project, incremental costs are included for those air carriers. Over 10 years of historical data, Canadian-based air carriers have transported an annual average of 123.4 million cargo shipments into Canada.footnote 1 As no consistent trend was observed in the volume of cargo being transported, an average was used when forecasting future volumes. The historical rates of RFIs are roughly 1 in every 2 500 shipments, and roughly 1 in every 427 000 shipments results in an RFS from TC. Should these rates remain consistent into the analytical time frame with the upgraded IT system in place, it is projected that TC would submit roughly 49 000 RFIs and 289 RFSs to Canadian-based air carriers on average per year. Depending on the complexity of the request, the industry effort to respond would commonly range between 3 and 15 minutes, and likely be fulfilled by an airport security manager or air cargo specialist employed by the air operator. For the purpose of the analysis, average fulfillment times of 6.5 minutes for RFIs and 10 minutes for RFSs are used. These times were estimated in consultation with TC subject matter experts. Further, the estimated hourly wage of the fulfilling employee is $51.83. There could also be times when a Canadian or foreign third party that is using the cargo transportation services of an impacted air operator, such as a freight forwarder, would be contacted to provide further information upon receipt of an RFI and/or RFS; however, based on TC subject matter expertise, these indirect impacts are expected to be minimal. It should also be noted that no incremental training costs are anticipated for the air carriers’ security employees who are already familiar with these processes as other jurisdictions (the United States, the European Union, etc.) have implemented similar requirements in recent years. Therefore, the total cost associated with requests for information or screening is estimated to be $2.11 million over the 10-year period of analysis.

Should TC use the data to identify a risk and issue a DNL notice for the identified piece of cargo, it would need to be set aside and not loaded onto the aircraft. This would result in impacts to the air carrier as well as the cargo shippers and/or receivers. However, historical data shows TC has never issued a DNL notice upon receiving cargo information from air carriers. Therefore, while a DNL notice would result in incremental costs, the number of future DNL notices and their associated costs cannot reasonably be forecasted.

Benefits

The proposed amendments would add another valuable layer of security to the air transportation sector, ensuring that all air cargo has been risk-assessed prior to entering Canadian airspace, in comparison to the baseline scenario, absent the proposed amendments, where cargo would not be assessed by Canadian authorities until it lands on Canadian soil.

There exists a baseline level of security risk to the air transportation sector, absent the proposed amendments, with the detonation of explosive devices hidden inside cargo shipments representing the most catastrophic of potential incidents. To provide context, an example of these types of incidents is Pan Am Flight 103 from London to New York in 1988, on which a bomb hidden inside a cassette player, located in the cargo area of the aircraft, detonated. This resulted in a total of 270 fatalities. If an incident of similar magnitude were to occur in the Canadian context, when considering the value of statistical life, it could represent monetized human consequences totalling $2.23 billion.footnote 2 In addition to the societal cost of the human lives lost, such an incident and those like it can carry significant costs related to non-fatal injuries, search and rescue services, other emergency services, property damage, disruption of air traffic, accident investigations, the long-term pain and suffering of family and friends of the victims, and damage to the reputation of the air operator.

By introducing these requirements, TC would be able to screen all cargo on incoming aircraft earlier in the transportation process, allowing for the removal of any potentially high-risk shipments before the aircraft takes off. This added layer of security would help to reduce that baseline level of security risk and, in turn, decrease the likelihood that a catastrophic event, such as the one described above, could occur in the future.

As there is a lack of historical incidents, the baseline risk level cannot be quantified and projected over the analytical time frame. Further, the potential effectiveness of the proposed amendments in incrementally reducing that risk is also uncertain. These data would be required to perform the calculations required to report concrete monetized expected benefits. These data would also be needed to perform a breakeven analysis that examines the level of risk reduction required for the proposed amendments to have benefits that are equal to or greater than the costs.

Given the data scarcity issues, and the large variability and uncertainty around the likelihood and the potential consequences of an avoided incident in the future, the benefits associated with these proposed amendments have mostly been described qualitatively. The proposed amendments nonetheless represent a meaningful step to making the air sector more secure. Given the potentially very high costs that would be avoided by preventing a single incident, TC believes that the benefits of the proposed amendments would outweigh the costs.

Cost-benefit statement
Table 3: Monetized costs
Impacted stakeholder Description of costs 2024 2026 2033 Total
(present value)		 Annualized value
Government Administration and analysis $563,401 $376,279 $234,327 $3,494,098 $497,481
Government IT maintenance $100,000 $87,344 $54,393 $751,523 $107,000
Government Total government costs $663,401 $463,623 $288,721 $4,245,622 $604,481
Industry Initial setup $6,070 0 0 $6,070 $864
Industry Requests for information and/or screening $279,683 $244,286 $152,129 $2,101,884 $299,261
Industry Total industry costs $285,753 $244,286 $152,129 $2,107,954 $300,125
All stakeholders Total costs $949,154 $707,909 $440,850 $6,353,576 $904,606

Qualitative benefits

Qualitative costs

Small business lens

Analysis under the small business lens concluded that the proposed amendments would impact small businesses. Of the Canadian air carriers that would be expected to carry costs associated with the proposed amendments, five are likely considered small businesses under the lens. These five air carriers would only account for 0.002% of the cargo expected to be impacted; the other air carriers are considered medium or large businesses, accounting for the remaining 99.998%. The total estimated costs to small businesses over the 10-year period of analysis would be $3,079,footnote 3 which translates to $615 per small business.

No flexible options were explored for small businesses, as the proposed amendments concern the security of aircraft and air carriers considered would be considered just as vulnerable as larger businesses. Further, since the costs that would be carried by businesses are predominantly tied to the magnitude of cargo they transport, the impacts would be roughly relative to their revenues.

One-for-one rule

The one-for-one rule does not apply, as there would be no incremental change in the administrative burden on business and no regulatory titles would be repealed or introduced.

The information provided to TC by stakeholders is not used for compliance and enforcement, but rather to assess risks and take appropriate actions directly supporting the safety and security of Canadians. Therefore, these activities do not meet the definition of administrative burden as defined in the Red Tape Reduction Act.

Regulatory cooperation and alignment

The regulatory proposal is not related to a work plan or commitment under a formal regulatory cooperation forum. However, in developing the proposed amendments, Canada has been working alongside partner countries, including the United States, the United Kingdom (UK) and the European Union (EU), to harmonize its PLACI initiative. The United States’ ACAS program came into force in 2018; the UK’s Predict pilot project is targeting implementation in 2023; and the EU’s Import Control System 2 is being implemented in three releases between 2021 and 2023.

TC helped to establish the Joint WCO-ICAO Guiding Principles for PLACI under the auspices of the ICAO and WCO Joint Working Group on Advance Cargo Information, comprising international organizations, like-minded nations and industry partners. These principles are reflected in the proposed PACT program and have influenced the development of PLACI regimes in other countries. Canada has already begun to seek opportunities to coordinate PLACI assessments with its international partners. Under Agile Nations, Canada will begin a joint targeting pilot project in 2022–2023 with the UK, which will determine how the two countries could share risk assessments of cargo transiting between them to eliminate redundant mitigation measures.

TC does not see any major gaps in alignment with any of Canada’s key trading partners. Canada is aligned with its partners on the eight pieces of cargo information, the departure information, and the approach to mitigation (requests for screening, requests for information, DNL notices). Canada is also aligned with its partners on the requirement for air carriers to receive a message confirming receipt of the cargo information.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, and the TC Policy Statement on Strategic Environmental Assessment (2013), the strategic environmental assessment (SEA) process was followed for this regulatory proposal and a Sustainable Transportation Assessment was completed. No important environmental effects are anticipated as a result of this proposal. The assessment took into account potential effects to the environmental goals and targets of the Federal Sustainable Development Strategy (FSDS).

Gender-based analysis plus

The proposed amendments are not expected to have different impacts on the basis of identity factors such as gender, race, ethnicity, religion, age, and ability status. The air cargo data captured as part of the proposed PACT program does not record gender or other intersectional identity data. The goal of this regulatory proposal is to ensure that air cargo data is reported by all air carriers transporting cargo on flights to Canada irrespective of place of origin. All Canadians are expected to benefit from enhanced security in the aviation transportation system and the supply chain.

Implementation, compliance and enforcement, and service standards

Implementation

The proposed amendments would come into force upon their final publication in the Canada Gazette, Part II. Stakeholders, particularly air carriers, are already familiar with PLACI programs and with existing data reporting requirements under the PACT pilot project. The most recent consultation with industry stakeholders proposed a coming into force on publication, and no comments were received indicating that complying at that point would be unfeasible or that further lead time would be required. Air carriers are familiar with the process of being onboarded leading up to the coming-into-force date of regulations, as was the case with the outbound Air Cargo Security (ACS) program.

In order to be compliant with the amendments as soon as they come into force, air carriers would have to spend a few hours syncing up their code to that of TC to enable the continuous flow of cargo data. Minimal operational changes would be required to respond to PACT instructions, including a request for screening and a DNL notice, as air carriers already have procedures in place to screen and respond to threat items.

Ahead of the coming into force of the proposed amendments, TC would publish additional resources and conduct outreach activities with stakeholders. These would include the following:

The PACT program would be supported by several complementary and overlapping IT systems, designed to enable program continuity in the event of one or multiple outages. Alerts for system errors and outages would be constantly monitored and addressed as they emerge. In the event of a portal outage, air carriers would be notified and able to submit cargo information via email. If necessary, TC officials would be prepared to risk assess cargo using Microsoft Excel, focusing on data emanating from high-risk regions.

Access to the data would require a TC device and login credentials, with access determined by one’s role and group, which would be monitored to maintain security. Three local copies and three regional copies would be made to ensure information in the system is backed up. The PACT program would follow strict Government of Canada procedures and guidelines related to digital policy. The PACT program would control, manage, and monitor data access while ensuring the confidentiality and availability of the information where needed.

Records of information submitted under PACT would be retained for no more than an 18-month period, unless a risk mitigation action results in the positive identification of a threat item within the cargo shipment. In that instance, the record and information would be stored and retained in accordance with departmental policies and regulations regarding protected and classified materials. With regard to the air carriers, the proposed amendments do not introduce any new retention period requirements.

The IT system would make use of advanced analytics, powered by AI, in order to conduct an initial risk assessment of the cargo information. If the system detects something of concern, a TC official would receive notification of the issue. The TC official would then decide whether it is appropriate to issue a request for additional information, request for screening or, in a worst-case scenario, a DNL notice. All such decisions would be taken by a human operator. Given the use of AI, TC would adhere to the requirements of the Directive on Automated Decision-Making, which aims to ensure automated decisions made by federal government departments comply with procedural fairness and due process requirements. Further to the Directive, TC has completed one of two Algorithmic Impact Assessments, with the second to be completed prior to the deployment of the PACT IT system.

Though the CBSA uses many of the same data elements as part of its eManifest program, this information is not required to be submitted prior to the cargo being loaded. For this reason, TC is unable to use CBSA data for the purpose of the PACT program.

Compliance and enforcement

TC’s goal is to create a fair and equitable compliance and enforcement environment that allows the regulated community to take corrective actions. The enforcement of the regulatory amendments would be achieved through the compliance and enforcement regime set out in the Aeronautics Act and the Canada Transportation Act, including the addition of corresponding designated provisions in Schedule 4 to the CASR 2012 in order to have the authority to issue AMPs.

TC would generally consider imposing an AMP only after employing other compliance tools intended to promote voluntary compliance (e.g. verbal counselling, warning letter). Where compliance is not achieved on a voluntary basis, or where there are serious or repeated violations, however, it may be appropriate to impose an AMP. The amount of the AMP is determined using several factors, such as whether the violation was carried out by an individual or a corporation, the seriousness of the violation, and the circumstances of the violation.

Failure to screen the cargo when directed by TC, failure to establish control of the cargo and remove any threat to aviation security if detected, and transporting cargo that must not be transported according to the CASR 2012 are provisions punishable by an AMP of up to $25,000. Failure to provide advance cargo information, advance cargo information updates, additional information following requests, screening information, flight information, or the name and contact information of a designated contact person are provisions punishable by an AMP of up to $10,000. Repeated offences or significant non-compliance may lead to the prosecution of the air carrier or the suspension or revocation of an air carrier’s Canadian aviation document, which would restrict their ability to operate flights in Canadian airspace.

Service standards

The proposed PACT program has aligned itself with the service standards set out in the internationally accepted Joint WCO-ICAO Guiding Principles for PLACI. Based on the results from the PACT pilot project, approximately 99% of cargo shipments are assessed as low risk, for which a confirmation of receipt would be generated by the system within approximately five minutes. For shipments that require further scrutiny, a request for additional information or a request for screening would be sent by TC. Requests for additional information are sent as soon as possible to allow the air carrier to respond as early as feasible before loading.

Service standards related to the timing of requests for additional information and requests for screening will be set in relation to the systems’ development and communicated to industry through guidance material posted on SSCIMS in advance of the coming into force of the proposed amendments.

Stakeholders who have questions or concerns related to a decision to request additional information, to request a screening, or to issue a DNL notice are encouraged to communicate those questions or concerns to the TC official who issued the request or notice.

Contact

Mario Boily
Executive Director
Program Development
Aviation Security
Transport Canada
112 Kent Street, Place de Ville, Tower B, 20th Floor
Ottawa, Ontario
K1A 0W8
Telephone: 613‑990‑5631
Fax: 613‑949‑8503
Email: mario.boily@tc.gc.ca (or aircargosecurity-suretedufretaerien.tc@tc.gc.ca)

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council proposes to make the annexed Regulations Amending the Canadian Aviation Security Regulations, 2012 (Air Cargo) under section 4.71footnote a and paragraphs 7.6(1)(a)footnote b and (b)footnote c of the Aeronautics Act footnote d.

Interested persons may make representations concerning the proposed Regulations within 75 days after the date of publication of this notice. They are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website but if they use email, mail or any other means, the representations should cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Mario Boily, Executive Director, Program Development, Aviation Security, Department of Transport, Place de Ville, Tower B, 112 Kent Street, 20th Floor, Ottawa, Ontario K1A 0W8 (tel.: 613‑990‑5631; email: mario.boily@tc.gc.ca).

Ottawa, March 9, 2023

Wendy Nixon
Assistant Clerk of the Privy Council

Regulations Amending the Canadian Aviation Security Regulations, 2012 (Air Cargo)

Amendments

1 Paragraphs 2(k) and (l) of the Canadian Aviation Security Regulations, 2012 footnote 4 are replaced by the following:

2 The headings “Air Cargo and Mail” and “Overview” before section 668 and sections 668 to 669 of the Regulations are replaced by the following:

Cargo and Mail — Flights from Canada

DIVISION 1

Cargo

Application

Application

668 (1) Section 669 applies to air carriers who transport cargo on a flight departing from an aerodrome located in Canada.

(2) Sections 670 to 686 apply to the following members of the air cargo security program who screen cargo or store, tender or transport secure cargo:

Transporting and Tendering

Requirement to screen cargo

669 (1) Cargo that is to be transported by an air carrier on a flight must be screened by the air carrier for threat items in accordance with a security measure unless the cargo was tendered to the air carrier for transportation by air as secure cargo.

Prohibition

(2) An air carrier must not transport cargo on a flight if the cargo contains a threat item.

3 Section 673 of the Regulations is repealed.

4 Section 720 of the Regulations and the reference “[721 to 738 reserved]” after section 720 are replaced by the following:

Requirement to screen mail

720 (1) Mail that is to be transported by an air carrier on a flight departing from an aerodrome located in Canada must be screened by the air carrier for threat items in accordance with a security measure.

Prohibition

(2) An air carrier must not transport mail on a flight departing from an aerodrome located in Canada if the mail contains a threat item.

[721 to 739 reserved]

5 Part 12 of the Regulations is replaced by the following:

PART 12

Cargo — Flights from Outside Canada

Application

740 This Part applies to air carriers who transport cargo on a flight departing from a place outside Canada to an aerodrome located in Canada. This Part does not apply in respect of diplomatic or consular bags.

Cargo information

741 (1) An air carrier must provide to the Minister, before cargo is loaded on board the aircraft, the following information:

Change in cargo information

(2) If there are any changes to the information, the air carrier must, as soon as feasible, provide the updated information to the Minister.

Additional information

(3) The air carrier must provide to the Minister, on request, any additional information respecting the cargo so that the aviation security risk may be assessed.

Cargo screening request

742 (1) At the request of the Minister, an air carrier must screen the cargo for threat items in accordance with a security measure.

Threat item

(2) If the cargo contains a threat item, the air carrier must immediately establish control of the cargo and must remove any threat to aviation security.

Screening information

(3) After any screening carried out under subsection (1), the air carrier must provide the Minister with the following information before the flight’s departure from the last point of departure:

Prohibition

743 An air carrier must not transport cargo on a flight unless

Information to Minister

744 An air carrier must provide the following information to the Minister as soon as feasible after a flight’s departure from the last point of departure and before its arrival in Canada:

Contact person

745 An air carrier must provide to the Minister the name and contact information of the person who is the principal contact between the air carrier and the Minister. The air carrier must ensure that the person is available at all times.

[746 to 764 reserved]

6 The heading “PART 11 — AIR CARGO” in Schedule 4 to the Regulations is replaced by the following:

Column 1

Designated Provision

Column 2

Maximum Amount Payable ($)

Individual

Column 3

Maximum Amount Payable ($)

Corporation
PART 11 — CARGO AND MAIL — FLIGHTS FROM CANADA
Subsection 669(1)   25,000
Subsection 669(2)   25,000

7 The reference “Section 673” in column 1 of Schedule 4 to the Regulations and the corresponding amounts in columns 2 and 3 are repealed.

8 Schedule 4 to the Regulations is amended by adding the following after the reference “Section 686”:

Column 1

Designated Provision

Column 2

Maximum Amount Payable ($)

Individual

Column 3

Maximum Amount Payable ($)

Corporation
Subsection 720(1)   25,000
Subsection 720(2)   25,000
PART 12 — CARGO — FLIGHTS FROM OUTSIDE CANADA
Subsection 741(1)   10,000
Subsection 741(2)   10,000
Subsection 741(3)   10,000
Subsection 742(1)   25,000
Subsection 742(2)   25,000
Subsection 742(3)   10,000
Section 743   25,000
Section 744   10,000
Section 745   10,000

Coming into Force

9 These Regulations come into force on the day on which they are published in the Canada Gazette, Part II.

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