Canada Gazette, Part I, Volume 151, Number 50: Regulations Amending the Canada Grain Regulations
December 16, 2017
Statutory authority
Canada Grain Act
Sponsoring agency
Canadian Grain Commission
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
Canadian Grain Commission (CGC) fees are fixed in Schedule 1, Fees of the Commission, in the Canada Grain Regulations (CGR) until March 31, 2018, the end of fiscal 2017–2018. No fees are set out in Schedule 1 for fiscal 2018–2019 or beyond. The CGR need to be amended by April 1, 2018, in order to set fees for future fiscal years and keep Schedule 1 current.
Background
The CGC is structured as a revolving fund, receiving the majority of its funding from charging fees for its services. As part of the 2013 comprehensive fee setting process, the CGC committed to review its fees on a five-year cycle to ensure that fees remained aligned with the costs of service provision. The CGC also indicated that it would address issues outside the five-year fee review cycle as warranted.
Fee levels
Official inspection grain volumes from licensed terminal elevators are the basis upon which the CGC establishes its fees. The existing fees for CGC services and licences were established in 2013 and based on a $60 million budget and an annual average official inspection and weighing volume of 23.3 million metric tonnes (MMT). Although CGC operating costs have remained relatively stable since 2013, the CGC provided official services on higher than expected grain volumes, which resulted in a revenue surplus. This was not the intention when the fees were established; fees were fixed with the objective of matching revenue with the cost of providing the service or licence with the best available information at the time.
The CGC has updated its model for forecasting the volume of grain that it expects to officially inspect and weigh upon discharge from terminal elevators and is projecting a level of approximately 34.4 MMT annually. The updated model uses time-series analysis that includes official inspection and weighing grain volumes for the 1983–2016 year period; captures non-obvious trends, seasonality and cycles in the data; and provides a more objective means of characterizing observed fluctuations. The updated model is similar to the forecasting model used by the Federal Grain Inspection Service, the CGC's counterpart in the United States.
Based on the updated model, to control the accumulation of additional surplus in its revolving fund and better align fees with the costs of service provision, CGC fees for official inspection and weighing services were reduced as of August 1, 2017, eight months earlier than the end of the current fee cycle (March 31, 2018).
Fees for specific services
Provision of samples and documentation issued
Fees for the “provision of samples” and “documentation issued” services were removed from Schedule 1 on August 1, 1995. Rationale cited was that these fees were non-mandatory and that removing them from the CGR would allow the CGC to negotiate these services more freely. Over the past 20 years, the CGC has continued to provide these services and charge fees fixed by contract. However, these services now have significant usage and generate substantial revenue. The 1995 rationale is no longer viable.
Inspection of submitted samples
There are currently three separate fees in Schedule 1 for the inspection of submitted samples: “inspection of submitted sample — unofficial sample,” “inspection of submitted sample — Certified Container Sampling Program,” and “inspection of submitted sample — Accredited Container Sampler Program.” Separate fees were established strictly for tracking purposes and the fee amount for all three services is the same. The CGC no longer requires separate fees for tracking purposes.
Supplementary fees for official inspection
There are currently three separate fees in Schedule 1 for cancellation of overtime (by users of the service) related to CGC provision of official inspection services outside of regular location hours: “time and one-half overtime — cancellation,” “double-time overtime — cancellation,” and “standby.” Separate fees are no longer required.
Objectives
The objectives of this proposal are to
- ensure that the CGC can continue to perform its mandated activities and contribute to its strategic outcome — “Canada's grain is safe, reliable, marketable and Canadian grain producers are protected”;
- set fair and consistent fees that reflect the costs associated with providing CGC services and licences; and
- update the fees of the Commission set out in Schedule 1 of the CGR to keep them current by establishing fees that come into effect on April 1, 2018.
Description
The proposed regulatory amendments to Schedule 1 would
- decrease the fees for reinspection of grain, third-party authorization to provide inspection or weighing services, supplementary fees for official inspection, full-term licences, and inspection of submitted samples;
- set the fee levels for official inspection and weighing services the same as the fees that came into effect on August 1, 2017, for these same services via a separate regulatory package;
- adjust the fee for producer railway car applications only for inflation;
- adjust the fee for short-term licences only for inflation;
- replace the three separate fees for “inspection of submitted sample — unofficial sample,” “inspection of submitted sample — Certified Container Sampling Program,” and “inspection of submitted sample — Accredited Container Sampler Program” with a single fee “inspection of submitted sample”;
- replace the two fees for cancellation of overtime related to provision of official inspection services outside of regular location hours (“time and one-half overtime — cancellation” and “double-time overtime — cancellation”) with one fee “non-scheduled service reservation — cancellation”;
- eliminate the “standby” fee;
- establish fees for sampling services and documentation services in Schedule 1 of the CGR; and
- establish that annually, on April 1, all fees are adjusted in accordance with the annual adjustment factor provided for in the Service Fees Act.
| Fee Name | Description of Service | Unit (per) | Fee (see note *) |
|---|---|---|---|
| Official inspection | |||
| 1. Official inspection — ships (payable by the elevator operator) | Official inspection of grain or screenings discharged to ships and issuance of certificate | Tonne | $1.35 |
| 2. Official inspection — railway cars, trucks, containers (payable by the elevator operator) | Official inspection of grain or screenings discharged to railway cars, trucks or containers, and issuance of certificate | Inspection | $121.12 |
| Reinspection | |||
| 3. Reinspection of grain (payable by the person requesting the inspection) | Reinspection by the Chief Grain Inspector for Canada or authorized inspector in respect of (a) an inspection of grain upon receipt; or (b) an inspection of a submitted sample | Reinspection | $68.68 |
| Official weighing | |||
| 4. Official weighing — ships (payable by the elevator operator) | Monitoring of official weighing of grain or screenings discharged to ships and issuance of certificate | Tonne | $0.07 |
| 5. Official weighing — railway cars, trucks, containers (payable by the elevator operator) | Monitoring of official weighing of grain or screenings discharged to railway cars, trucks or containers, and issuance of certificate | Railway car or truck or container | $6.67 |
| Authorized service provider — inspection or weighing | |||
| 6. Third-party authorization (payable by the applicant) | Processing of an application for authorization of a third party to provide inspection or weighing of grain upon receipt into a terminal elevator | Application | $137.35 |
| Supplementary fees for official inspection | |||
| 7. Travel and accommodation for official inspection services outside regular location (payable by the elevator operator) | Canadian Grain Commission staff are available to conduct official inspection in a location where on-site inspection is not available | Actual | 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. Non-scheduled service reservation — cancellation (payable by the elevator operator) | Where Canadian Grain Commission staff are reserved for official inspection outside of regularly scheduled location hours, the fee will be charged when service is cancelled | Employee reporting | $239.06 |
| Licensing | |||
| 9. 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 | $275.68 |
| 10. Short-term licence (payable by the licensee) | Issuance of licence (all classes) for one month or partial month | Licence | $381.64 |
| Producer railway cars | |||
| 11. Producer railway car application (payable by the producer) | Processing of a complete application for a producer railway car | Railway car | $29.00 |
| Inspection of submitted samples | |||
| 12. Inspection of submitted sample (payable by the person submitting the sample) | Inspection of sample of grain or screenings and issuance of certificate | Sample | $45.78 |
| Sampling services | |||
| 13. Official sample (payable by the person making the request) | At the time of official inspection, obtaining and supplying a portion of the representative grain sample, and identifying the portion with a Canadian Grain Commission seal | Sample | $68.68 |
| Documentation | |||
| 14. Documentation issued (payable by the person making the request) | Provision of the following types of supplemental documentation:
|
Document | $71.77 |
- Note *
Adjusted annually on April 1 in accordance with the Service Fees Act.
“One-for-One” Rule
The proposed regulatory amendments would reduce the number of fees in Schedule 1 to the CGR from 18 to 14 and improve ease of use. For example, the CGC previously had three separate fees for inspection of submitted samples. These fees would be combined under one fee code since the costs of providing these services are equivalent.
The proposed regulatory amendments would also consolidate two of the fees for cancellation of overtime related to provision of official inspection services outside of regular location hours into one fee. The “standby” fee related to cancellation of overtime would be eliminated. This would reduce the administrative burden of tracking and billing for overtime costs for business and government.
Small business lens
The small business lens does not apply to this proposal, as there are no costs on small business.
Consultation
The CGC has conducted extensive fee consultations. The CGC completed a 60-day stakeholder consultation on its full suite of fees on May 1, 2017, which followed the guidelines of the User Fees Act and other government requirements. Bilateral information sessions were also held between the CGC and stakeholders upon request. In addition, a client satisfaction survey was conducted during February and March 2017. The key audiences for the survey were Canadian grain producers and industry representatives.
The following section provides results from the 2017 consultations.
Fee consultation
On March 1, 2017, the CGC released its User Fees Consultation and Pre-proposal Notification document, which outlined proposed fees, service standards and performance measures. The document proposed fee reductions on most CGC fees as of April 1, 2018, based on a thorough review of existing fees and cost structures, past revenues generated by services, the relatively stable costs of providing those services, and the updated grain volume forecasting model.
The consultation document was emailed directly to industry and producer stakeholders, including all CGC licensees, producer organizations, industry associations and relevant government organizations. At the same time, a news release was issued. The consultation document was posted on the CGC website, and a link to it was posted on Service Canada's Consulting with Canadians website.
The consultation document was accessed over 1 200 times during the consultation period. A total of 92 formal written submissions were received from a combination of individual producers, producer organizations, CGC licensees and industry associations. The most common stakeholder comments received are as follows:
- All agreed with the proposal to reduce fees, although some stakeholders suggested lowering fees even further to reduce the existing revolving fund surplus and return money to producers and the grain sector.
- All were supportive of the new grain volume forecasting methodology. A number of stakeholders recommended that grain volume projections be reviewed on an annual basis. Other stakeholders voiced support for the five-year fee review cycle in tandem with annual reviews of grain volume projections.
- The majority supported replacing the existing fixed-fee structure in Schedule 1 with a formula-based fee structure. Stakeholders said that this regulatory change would help streamline future fee adjustments. Many stakeholders also said that fee formulas and their associated variables and input values must be published and transparent.
- Most agreed with the CGC's guiding principles for fee setting. However, they said that operating costs should be recovered equitably for all CGC services in both western and eastern Canada.
- The majority said that a portion of CGC services and activities provide a public benefit to all Canadians. Most stakeholders said that the CGC should be allocated substantially more than $5.37 million in appropriation for providing these types of services.
- Many noted that fees are proposed to increase annually with inflation while there is no commitment to increase public benefit appropriation by the same amount. They recommended that public benefit appropriation should also increase annually by inflation.
- Many said that CGC fees need to be in line with those in the United States, Australia, other grain-exporting countries and the private industry; otherwise, Canadian producers will be at a competitive disadvantage. Several stakeholders also noted the discrepancy between the CGC's appropriation amounts and those of its counterparts in other grain-exporting countries.
- Many said that the CGC provides valuable services and functions to producers, the grain industry and Canadians. Many also voiced support for the CGC's service standard commitments.
- It was suggested that regulatory bodies that are funded through cost recovery are in a conflict of interest. The argument was made that there is a greater incentive for generating revenue than for creating the appropriate regulatory environment and offering appropriate services.
- Some recommended that the Canada Grain Act and the CGC's role and all of its services should be reviewed and modernized.
Client satisfaction survey
As part of the CGC's fee consultation process, Ipsos, on behalf of the CGC, conducted a qualitative survey of grain industry representatives and a quantitative survey of western Canadian grain producers.
The qualitative survey consisted of self-directed interviews through a workbook format, followed up with conversations and in-depth interviews. Participants included company executives, elevator operators, quality assurance managers, key contacts in industry associations, and other industry representatives. The quantitative survey consisted of telephone interviews with Canadian grain producers in Manitoba, Saskatchewan, Alberta, and the Peace River Region of British Columbia.
Survey results provided information on the perceptions and impressions of Canadian grain producers and grain industry representatives regarding CGC services, satisfaction levels with CGC services, and opinions on fee adjustments. Highlights of survey responses are as follows:
- Most industry participants and 94% of producers agreed with reducing CGC fees. However, some participants worried that lowering fees could result in a reduced quality of service delivery.
- Industry participants indicated that the CGC's cost recovery model increases burden on the industry due to low government appropriation levels. Some were concerned that CGC services are not competitive with the private industry and would benefit from a review.
The final report and detailed findings of the CGC's 2017 Client Satisfaction Survey are available at the Library and Archives Canada website. (see footnote 1)
Rationale
Schedule 1 — Fees of the Commission
Schedule 1 of the CGR expires March 31, 2018. As no fees are set for fiscal 2018–2019 or beyond, the proposal to amend Schedule 1 with fees effective April 1, 2018, would keep the schedule current.
As part of its stakeholder consultation, the CGC proposed to replace the current fixed-fee structure with a formula-based fee structure set out in Schedule 1 to help streamline the process for adjusting future fees. When this structure was proposed, the CGC would still have been required to follow the requirements of the User Fees Act to increase fees but not the regulatory process to update the CGR. As a result, a formula-based fee structure would have allowed for fee adjustments on a timelier basis if CGC operating costs became unaligned with grain export volumes.
However, on June 22, 2017, the User Fees Act was repealed and replaced by the Service Fees Act. Under the Service Fees Act there is no longer any requirement to consult and report to Parliament on fee changes if fees are fixed by regulation; only the requirements of the regulatory process are applicable. Under the Service Fees Act, if the CGC implements a formula-based structure for its fees, neither of the regulatory process and the legislated fee consultation process would apply to future amendment of CGC fees.
Given the change in legislation, the CGC is no longer pursuing the proposal to move to a formula-based fee structure in Schedule 1. Retaining a fixed-fee structure is the simplest, most efficient and justifiable approach. Proposed fee amounts would be the same whether formulas are established or fees are fixed in the CGR and would not impact producers or the grain industry.
The Service Fees Act establishes an annual adjustment that, when it comes into effect, will apply to fees fixed in regulations. As the User Fees Act did not prescribe for automatic adjustment, the fees on which the CGC consulted included a 1.5% annual adjustment based on historical and estimated future CGC capital and operating costs. Adjusting fees annually on April 1 using the adjustment factor established in the Service Fees Act (Consumer Price Index) instead of the previously consulted on 1.5% would be consistent with other Government fees. Although the consumer price index varies from year to year, the average is within acceptable limits. The annual increase would sustain service standards for grain quality, quantity and safety assurance, producer protection and grain transaction integrity.
Fee levels
The proposal to maintain fee levels for official inspection and weighing services at the same level as those that came into effect August 1, 2017, and to reduce almost all other CGC fees would result in fees that better reflect the operational costs of providing services and licences, and control the accumulation of surplus in the CGC's revolving fund. The proposed fee amendments account for the increase in grain volumes requiring CGC services going forward.
Overall, based on the updated grain volume forecasting model, it is expected that the proposed fee amendments would ensure a viable funding platform for the CGC to continue its operations into the future. Based on actual usage data for all services in question and 2016–2017 dollar values, the net result of all proposed fee amendments is expected to reduce costs to stakeholders by approximately $404,468 annually.
Fees for specific services
Provision of samples and documentation issued
The proposal to re-establish fees for “provision of samples” and “documentation issued” services in Schedule 1 would recognize that these fees should be prescribed, improve regulatory application consistency and transparency, and ensure accountability for the associated revenues. These services have significant usage and generate substantial revenue: in fiscal 2016–2017 approximately 8 290 samples were provided and the “documentation issued” service generated approximately $1.3 million in revenue.
Inspection of submitted samples
The proposal to consolidate the three existing fees for inspection of submitted samples into one fee, “inspection of submitted samples,” would consolidate Schedule 1 and simplify its use. Historically, separate fees were established strictly for tracking purposes but had the same fee level. Current usage of the “inspection of submitted sample — Certified Container Sampling Program” and “inspection of submitted sample — Accredited Container Sampler Program” services is minimal or zero and separate fees are no longer required for tracking purposes.
Supplementary fees for official inspection
The proposal to combine the two fees for “time and one-half overtime — cancellation” and “double-time overtime — cancellation” related to CGC provision of official inspection services outside of regular location hours into one fee would consolidate Schedule 1 and simplify its use. Over the past three years there has been an upward trend in usage of “double-time overtime” versus “time and one-half overtime.” The new simple fee “non-scheduled service reservation — cancellation” would prorate the two existing fees using a 25/75 split to align it with the historical trend analysis of service usage.
The existing “standby” fee is no longer required. As of August 1, 2017, overtime is recovered as part of the CGC's official inspection fees. Since “standby” is another type of overtime, this service is now recovered through official inspection fees.
Implementation, enforcement and service standards
Implementation
These regulatory amendments are proposed to come into force on April 1, 2018.
As part of implementation, a communication strategy would involve notification to stakeholders regarding fee amendments and updates to the CGC website prior to the Regulations coming into force. Also, to be as transparent as possible with stakeholders, the CGC would publish the corresponding fee formulas and associated variables and inputs used to calculate the Schedule 1 fees on its website.
CGC information technology and financial systems would be updated to support the regulatory proposal.
Schedule 1 fees would be reviewed if services change or if, for example, actual CGC operating costs became considerably unaligned with grain export volumes.
Enforcement
Where a fee is not paid by the person obliged to do so (as stipulated in the Regulations) then that fee payable would be a debt owing to the Crown, which would be collected as per standard practice.
Service standards
The CGC consulted with stakeholders and established service standards for each fee that reflect the level of service that can be expected. The service standards are commitments with recourse for underperformance, as per the Service Fees Act.
| Fee name | Service standard |
|---|---|
| Official inspection — ships |
|
| Official inspection — railway cars, trucks, containers |
|
| Reinspection of grain | Reinspection by the Chief Grain Inspector for Canada is complete and results available within 10 business days of the reinspection request. |
| Official weighing — ships | One original Certificate Final is issued to the client within two business days of
|
| Official weighing — railway cars, trucks, containers | One original certificate is issued to the client within two business days of
|
| Third-party authorization |
|
| Travel and accommodation for official inspection services outside regular location | Employees are available to conduct official inspection in a location where on-site inspection is not available. |
| Non-scheduled service reservation — cancellation | Employees are reserved for inspection outside of regular location hours. |
| Full-term licence |
|
| Short-term licence | The licensee is sent their licence(s) on or before the licence effective date. |
| Producer railway car application | Acknowledgement of the receipt and processing of a complete producer car application is sent by the end of the next business day. |
| Inspection of submitted sample |
|
| Official sample |
|
| Documentation issued | Applicable documents are issued to the client within two business days after
|
Contact
Melanie Gustafson
Policy Economist
Canadian Grain Commission
303 Main Street
Winnipeg, Manitoba
R3C 3G8
Telephone: 204-292-5721
Email: melanie.gustafson@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 concerning 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 Melanie Gustafson, Policy Analyst, Corporate Affairs, Canadian Grain Commission, 303 Main St., Winnipeg, Manitoba R3C 3G8 (tel.: 204-292-5721; fax: 1-866-317-5721; email: melanie.gustafson@grainscanada.gc.ca).
Ottawa, December 7, 2017
Jurica Čapkun
Assistant Clerk of the Privy Council
Regulations Amending the Canada Grain Regulations
Amendments
1 The Canada Grain Regulations (see footnote 3) are amended by adding the following after section 2:
2.1 On April 1, 2019 and every subsequent year on April 1, all fees set out in Schedule 1 will be adjusted in accordance with sections 16 to 18 of the Service Fees Act. All adjusted fees are calculated to the nearest cent.
2 Schedule 1 to the Regulations is replaced by the Schedule 1 set out in the schedule to these Regulations.
Coming into Force
3 These Regulations come into force on April 1, 2018, but if they are registered after that day, they come into force on the day on which they are registered.
SCHEDULE
(Section 2)
SCHEDULE 1
(Sections 2 and 2.1 and subsection 21(3))
| Item | Column 1 Fee Name |
Column 2 Description of Service |
Column 3 Unit (per) |
Column 4 Fee |
|---|---|---|---|---|
| Official Inspection | ||||
| 1 | Official inspection – ships (payable by the elevator operator) |
Official inspection of grain or screenings discharged to ships and issuance of certificate | Tonne | $1.35 |
| 2 | Official inspection – railway cars, trucks, containers (payable by the elevator operator) | Official inspection of grain or screenings discharged to railway cars, trucks or containers, and issuance of certificate | Inspection | $121.12 |
| Reinspection | ||||
| 3 | Reinspection of grain (payable by the person requesting inspection) | Reinspection by the Chief Grain Inspector for Canada or authorized inspector in respect of
|
Reinspection | $68.68 |
| Official Weighing | ||||
| 4 | Official weighing – ships (payable by the elevator operator) |
Monitoring of official weighing of grain or screenings discharged to ships and issuance of certificate | Tonne | $0.07 |
| 5 | Official weighing – railway cars, trucks, containers (payable by the elevator operator) | Monitoring of official weighing of grain or screenings discharged to railway cars, trucks or containers, and issuance of certificate | Railway car, truck or container |
$6.67 |
| Authorized Service Provider – Inspection or Weighing | ||||
| 6 | Third-party authorization (payable by the applicant) |
Processing of an application for authorization of a third party to provide inspection or weighing of grain upon receipt into a terminal elevator | Application | $137.35 |
| Supplementary Fees for Official Inspection | ||||
| 7 | Travel and accommodation for official inspection services outside regular location (payable by the elevator operator) | Canadian Grain Commission staff are available to conduct official inspection in a location where on-site inspection is not available | Actual | 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 | Non-scheduled service reservation – cancellation (payable by the elevator operator) | If Canadian Grain Commission staff are reserved for official inspection outside of regularly scheduled location hours, the fee will be charged when service is cancelled | Employee reporting |
$239.06 |
| Licensing | ||||
| 9 | Full-term licence (payable by the licencee) | 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 | $275.68 |
| 10 | Short-term licence (payable by the licensee) | Issuance of licence (all classes) for one month or partial month | Licence | $381.64 |
| Producer Railway Cars | ||||
| 11 | Producer railway car application (payable by the producer) | Processing of a complete application for a producer railway car |
Railway car | $29.00 |
| Inspection of Submitted Samples | ||||
| 12 | Inspection of submitted sample (payable by the person submitting the sample) | Inspection of sample of grain or screenings and issuance of certificate | Sample | $45.78 |
| Sampling services | ||||
| 13 | Official sample (payable by the person making the request) | At the time of official inspection, obtaining and supplying a portion of the representative grain sample and identifying the portion with a Canadian Grain Commission seal | Sample | $68.68 |
| Documentation | ||||
| 14 | Documentation issued (payable by the person making the request) | Provision of the following types of supplemental documentation:
|
Document | $71.77 |
NOTES:
Fees for all items
1 Fees are exclusive of the goods and services tax.
Fees for items 1 and 4
2 Fees are calculated to the nearest cent.
Fees for items 2 and 5
3 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 (per item 14).
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