Canada Gazette, Part I, Volume 156, Number 19: Administrative Monetary Penalties (Motor Vehicle Safety) Regulations
May 7, 2022
Motor Vehicle Safety Act
Department of Transport
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
The Motor Vehicle Safety Act (MVSA) functions on the principle of self-certification, where the companies that manufacture, distribute and/or import vehicles, tires or equipment for use in the restraint of children and disabled persons (hereafter referred to as products) certify compliance with the requirements by marking the products to this effect and keeping documented evidence of compliance. Transport Canada (TC) verifies compliance through testing, inspection, and other oversight activities. Additional information on the Motor Vehicle Safety (MVS) Oversight Program is available in the MVS Oversight Guidelines, which outline TC’s oversight role as it relates to the MVSA and its regulations, and the general responsibilities and obligations of industry and members of the public.
During its oversight activities, TC periodically encounters situations where persons or companies have failed to comply with legislative requirements. When TC encounters non-compliance, TC will first confirm if any actions, such as a recall, or a stop on sales, have been taken by the person or company to address the issue. If no actions have been taken, the MVSA provides for the Minister, by way of an order, to order the company or person to correct a defect or non-compliance. The MVS Oversight Guidelines detail TC’s approach in relation to such orders.
Currently, if TC identifies non-compliance, it generally has only two options for addressing it: (i) issue a warning or (ii) recommend that a prosecution be pursued against the non-compliant party. The lack of options can lead to inconsistent results: some offences may not be resolved whereas a prosecution may be disproportionate relative to the nature of the violations.
As warnings may not serve as a strong enough deterrent and prosecutions are mainly reserved for the most severe cases, alternative options are necessary to allow greater flexibility for enforcement. In line with several other modes of transportation that TC regulates, Administrative Monetary Penalties (AMPs) were identified as a suitable complement to TC’s current enforcement tools under the MVSA.
AMPs are a flexible enforcement tool for federal offences of a regulatory nature. AMPs allow TC to take a measured and efficient approach, which tailors the enforcement response to the seriousness of the violation, through the issuance of monetary penalties, as an alternative to recommending prosecution, to anyone found to have violated requirements. AMPs allow the offender to choose to pay the penalty without having to appear in court. They are designed to bring regulated entities into compliance without the legal ramifications of a criminal record or imprisonment. AMPs help to promote compliance while minimizing the regulatory burden on Canadians and industry. Finally, the use of AMPs to enforce the MVSA would be consistent with the enforcement approach used by TC in other modes of transportation.
The MVSA prescribes minimum safety and recordkeeping requirements for these products, and also compels manufacturers, distributors and importers of regulated products to take action when they become aware of safety defects in their products, or non-compliance to applicable safety standards. In addition to requirements for companies, the MVSA also has requirements for persons who import vehicles through the Registrar of Imported Vehicles program or who import vehicles for special purposes, such as further manufacturing, testing and evaluation, or visitors transiting through Canada.
In 2018, the Government of Canada amended the MVSA under Bill S-2, An Act to amend the Motor Vehicle Safety Act and to make a consequential amendment to another Act, to strengthen the enforcement and compliance regime to further protect the safety of Canadians. These legislative amendments provide the Governor in Council with the authority to make regulations to establish AMPs for the contravention of designated provisions of the MVSA and/or regulations and orders made pursuant to the MVSA. The 2018 amendments to the MVSA set the maximum amount payable for any AMP as not more than $4,000, in the case of an individual, and not more than $200,000, in the case of a corporation or company. The penalty-issuing authority is a new enforcement tool designed to help promote compliance with motor vehicle and equipment safety requirements. To use this tool, TC is proposing a new regulation that would designate legislative and regulatory provisions as enforceable via AMPs and would also fix the penalty amounts payable for non-compliance with those designated provisions.
This regulatory proposal would establish the details of an AMPs regime under the MVSA, and its objective is to ensure a more predictable, transparent, and flexible enforcement regime for both TC and regulated parties.
An AMPs regime would allow the enforcement of violations that do not warrant prosecution, but for which a warning is not a sufficient response. The implementation of a flexible, transparent and predictable enforcement regime that includes warnings, AMPs, and prosecutions is expected to reduce non-compliance with the MVSA, its regulations and orders, thereby helping to ensure the safety of motor vehicles and motor vehicle equipment in Canada.
The proposed Regulations would designate provisions of the MVSA, the Motor Vehicle Safety Regulations (MVSR) as well as orders for which an AMP could be issued.
The new AMPs regime would include flexible penalty amounts. The MVSA limits the maximum amount payable for a violation to $4,000 for an individual, and $200,000 for a corporation or company. The proposed Regulations contain individual designated provisions with their own maximum amounts, which may be lesser than these maximums depending on the nature of the violation.
In order to determine the maximum penalty amounts associated with each designated provision in the proposed Regulations, TC analyzed the legislative provisions, as well as all of their related regulatory requirements, assessing the potential maximum severity of non-compliance with the requirement.
Each requirement was then assessed in relation to the seven factors which are taken into account when assessing the severity of any violation, in accordance with TC’s departmental enforcement standards, and the MVS Oversight Guidelines.
|Harm or risk||The harm or risk posed by the non-compliance|
|Degree of negligence or deliberateness||How negligent was the company or person? Was the non-compliance deliberate or accidental?|
|Compliance history||Whether the company or person has a history of past non-compliance|
|Economic benefit||Whether the non-compliance caused the company to benefit financially, or derive a competitive advantage|
|Mitigation of harm||How the company or person acted to mitigate the risks once the issue was detected|
|Cooperation with TC||The level of cooperation with Transport Canada in relation to the non-compliance|
|Detection of contravention||Whether the company or person reported the non-compliance, if it was discovered jointly, or discovered by Transport Canada alone|
TC has the ability to adjust AMP penalty amounts, not exceeding maximums, by taking into account these factors in relation to the circumstances of the violation. The maximum amounts would therefore be reserved for the most severe non-compliance situations. For this reason, the analysis looked at the worst-case scenario for both the violation, and factors that do not directly relate to the violation being rated, such as a company or person’s compliance history.
Through this analysis, all violations were rated as low, medium or high severity, and the highest rating associated with any given violation was used to establish the proposed penalty limit.
The proposed Regulations would designate as an AMP a total of 26 provisions, distributed as follows:
- Motor Vehicle Safety Act (23); and
- Motor Vehicle Safety Regulations (3).
Some examples of proposed designated provisions are provided in the tables below, including whether a new penalty could be issued for each day that a violation continues. Please note that the description of the violations are not included in the proposed Regulations and are provided here to facilitate understanding only.
|Provision||Description of violation||Severity of violation||Separate violation for each day?|
|Subsection 3(2.1)||Failing to provide the Minister with the address of the premises at which the national safety mark is to be applied||Low||No|
|Paragraph 5(1)(g)||Failing to maintain records allowing an inspector to determine compliance of a vehicle, tire or child car seat||High||No|
|Subsection 7(1.2)||Failing to export a U.S.-registered rental vehicle from Canada within 30 days, or any other prescribed period, beginning on the day on which the vehicle is imported||Medium||Yes|
|Section 8||Failing to provide the Minister with the means to retrieve or analyze information created or recorded by the vehicle or equipment||High||Yes|
|Subsection 10(1)||Failing to give notice of any defect in the design, manufacture or functioning of the vehicle or equipment||High||Yes|
|Provision||Description of violation||Severity of violation||Separate violation for each day?|
|Subsection 6.4(4)||Failing to ensure that new gross vehicle weight ratings (GVWRs) or new gross axle weight ratings (GAWRs) are displayed on the intermediate manufacturer’s information label||High||No|
|Subsection 6.6(2)||Failing to ensure that new GVWRs or new GAWRs are displayed on the compliance label for the completed vehicle||High||No|
|Paragraph 9(1)(a.1)||Failing to respect the gross axle weight ratings and gross vehicle weight rating of the vehicle recommended by the original manufacturer||High||No|
Consultation — What we heard
TC first published preliminary details of the MVS AMPs regulatory initiative on TC’s “Let’s Talk Transportation” webpage in November 2020, soliciting comments from industry and the public. Following this, TC held targeted informal consultations with several stakeholder associations representing the light duty, heavy duty, motorcycle, off-highway, and tire manufacturing industries, which had expressed interest in meeting with TC directly.
The majority of stakeholders were supportive of an AMPs regime being implemented under the MVSA, as AMPs offer a flexible tool for enforcing measures against federal offences of a regulatory nature. Although stakeholders found it difficult to provide substantive comments at the early stages of policy and regulatory development, most comments received fell into the following categories.
TC received several comments on how AMPs would need to be issued, and penalty amounts assessed, using clear, fair, transparent and repeatable criteria that would be shared with industry in advance of the implementation of the proposed Regulations. Stakeholders were advised that information on the MVS AMPs regime could be found in the MVS Oversight Guidelines, which would be updated throughout the development of the regulatory proposal.
Industry stakeholders expressed concerns about the total penalty amounts that could accrue in relation to an instance of non-compliance. Under the MVSA, in some cases, violations committed or continued on more than one day could lead to separate penalties for each day. In many cases, a separate violation may also occur in relation to each product that is manufactured or imported in a manner that fails to meet requirements. Given the production volumes involved in the manufacture of these products, many stakeholders commented on the need for clarity in how TC would assess penalties for multi-day violations, or when multiple products are non-compliant. Industry also expressed concern that the potential penalty amounts in these situations could cause severe financial harm to companies, in addition to the potential for reputational harm caused by the issuance of an AMP.
Proactive disclosure and cooperation
Several industry associations, representing manufacturers and importers of vehicles and tires, expressed concern that the new AMPs regime might affect collaboration between TC and industry, as well as proactive disclosure. Under the MVSA, companies address safety defects or non-compliance through a Notice of Defect (MVSA, section 10) or Notice of Non-Compliance (MVSA, subsection 10.1(1)). These notices are commonly referred to as recalls. Many such notices are filed by companies proactively, with no TC involvement, to address accidental or unintended problems, and products are recalled to correct any safety problems. TC also works to detect such issues by investigating potential safety defects, and verifying compliance through inspections and testing, often working collaboratively with industry to identify issues.
During consultations, industry expressed concern that TC might begin issuing AMPs in relation to situations where companies act in good faith to correct accidental or unintended problems, which would serve to discourage positive behaviours such as collaboration and proactive disclosure.
Consultation — TC’s response
TC has concluded that the concerns identified by industry closely align with its objectives for an effective AMPs regime. A fair and transparent system is not only beneficial to industry, but also to TC as the regulator, as it would increase industry confidence in the regulator, and constitute a more effective deterrent given that actions and penalty amounts can be anticipated. This is also the case for industry’s concerns relating to the effect of AMPs on proactive disclosure and collaboration. TC’s objective for any enforcement action is to promote compliance with the MVSA as well as encourage positive behaviours (such as self-declaration of non-compliance and cooperation with TC), while redressing negative ones (reckless or deceitful behaviour, etc.). To this end, TC’s decisions would take into account not only the violation, but the surrounding factors, to establish the required enforcement action. Cases of accidental non-compliance, where violators were diligent in their compliance efforts, and proactively disclosed violations without TC intervention, would be unlikely to result in an AMP given that these behaviours are to the benefit of the regulator.
There is also alignment between TC’s desired outcomes and industry concerns with respect to penalty amounts. While TC aims to create an MVS AMPs regime that allows for the ability to tailor penalty amounts to the circumstances of the offence, there is also agreement that a clear method to assess and calculate penalty amounts within the allowable range must be established.
TC has noted that nearly all comments received to date relate to TC’s overall enforcement policy and procedural considerations. At the time the consultations on the proposed MVS AMPs regime were held, stakeholders had been provided high-level overviews of TC’s enforcement decision-making process, and many stakeholders believed clarity in the proposed Regulations and supporting documents was necessary in order to fully understand how the MVS AMPs regime would be applied. In reference to these comments, a draft of TC’s standard operating procedure on the subject was shared with stakeholders in March 2022.
Modern treaty obligations and Indigenous engagement and consultation
In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, an analysis was undertaken to determine whether the regulatory proposal is likely to give rise to modern treaty obligations. This assessment examined the geographic scope and subject matter of the regulatory proposal in relation to modern treaties in effect and no modern treaty obligations were identified.
All violations under the MVSA and its associated regulations cannot realistically be prosecuted. The strenuous resource costs and time frames for a prosecution would not be in the public interest for the vast majority of instances of non-compliance. In the absence of an enforcement tool to address regulatory violations that would not warrant a prosecution, but for which a warning is not a sufficient response, under-enforcement of the MVSA and its regulations would continue without the proposed Regulations.
AMPs are an ideal enforcement instrument because they are flexible with a range of penalty amounts and are easily administered. This is in contrast to warnings (which have no punitive effect and are minimally coercive) and recommending prosecution, which requires a resource-exhaustive investigation, cooperation with the Public Prosecution Service of Canada, and other court-related resources. An AMPs regime is the best option to improve the enforcement of the MVSA. Developing regulations in accordance with not yet in force paragraphs 16.1(a) and (b) of the MVSA is the only option to implement an AMPs regime and provide this essential enforcement tool to TC officials. No non-regulatory options were considered.
The proposed Regulations would designate provisions of the MVSA, the MVSR, and orders made pursuant to the MVSA for which an AMP can be imposed. An AMPs regime would provide TC with additional tools and instruments to provide a proportionate response to non-compliance.
The costs and benefits for the proposed Regulations have been assessed in accordance with the Treasury Board Secretariat (TBS) Policy on Cost-Benefit Analysis by comparing the baseline against the regulatory scenario. The baseline scenario depicts what is likely to happen in the future if the Government of Canada does not implement the proposed Regulations. The regulatory scenario provides information on the intended outcomes because of the proposed Regulations. Where possible, impacts are quantified and monetized, with only the direct costs and benefits for stakeholders being considered in the analysis.
Taxes, fees, levies and other charges constitute transfers from one group to another and are therefore not considered to be compliance or administrative costs, whether they are intended as incentives to foster compliance and change behaviour or whether their purpose is to recover the costs of providing a service. Correspondingly, the costs to pay for AMPs, as well as the revenue to the Government of Canada generated through AMPs, are not considered costs nor benefits within the scope of the regulatory analysis since they are outside the normal course of business, occurring only in instances of non-compliance.
Unless otherwise stated, all costs are expressed in present value terms (2020 Canadian dollars, at a 7% discount rate) over a 10-year analytical period (2023 to 2032).
The proposed Regulations will impact the Government of Canada, as TC officials (including enforcement officers) need to be informed and become familiar with the new MVS AMPs regime.
Industry, including manufacturers, importers, distributors, as well as members of the public, would be subject to the proposed AMPs if they are found to have contravened any of the designated provisions of the MVSA or the MVSR, or an order made pursuant to the MVSA.
Baseline and regulatory scenarios
In the baseline scenario, TC officials do not have access to flexible enforcement tools that are proportionate and reflect violation severity. When encountering non-compliance with the MVSA and associated regulations, TC officials can usually either issue a warning or prosecute for non-compliance. In the absence of these proposed Regulations, responses to non-compliance would continue to be over-enforced, under-enforced or not enforced at all.
In the regulatory scenario, the proposed AMPs regime would address the challenges enforcement officers are facing in the current compliance environment. The proposed Regulations would provide decision-making capabilities to bring regulated parties into compliance through proportional responses, while assessing the underlying risk and harm of violations.
Benefits and costs
The proposed Regulations would provide TC with an additional enforcement option to respond to and deter non-compliance. AMPs, in contrast to the existing prosecution option, are expected to be a less resource-intensive, more rapid, means to address instances of non-compliance. As such, the proposed AMPS regime could reduce costs and lead to greater efficiency in enforcing the MVSA and regulations made pursuant to the MVSA.
The present value incremental cost (at 7% discount rate) to the federal government of the AMPs regime under the MVSA is estimated to be $1.74 million in 2020 dollars over the 10-year analytical time frame (2023 to 2032).
As previously stated, the proposed Regulations may reduce the monetary and non-monetary burden on the Canadian government by avoiding the costly and lengthy prosecution option when faced with non-compliance. The benefits of the proposed Regulations are that an AMPs regime would provide TC with an additional enforcement option to enforce the MVSA and related regulations and deter non-compliance in conjunction with the existing prosecution option. In some cases, AMPs would be a less resource-intensive, more rapid, means to address non-compliance than the prosecution option. As such, AMPs may reduce costs and lead to greater efficiency in enforcing the MVSA and regulations related to the MVSA.
The AMPs regime would cost $1.74 million between 2023 and 2032 (discounted at 7%, 2020 dollars). The annual costs are presented below in Table 5.
To support and enforce the AMPs regime under the MVSA framework, investigation, enforcement and program management specialists are needed.
The costs encompass the average salary of four full-time positions (in 2020 dollars) as per the Treasury Board Secretariat’s directive and the overhead costs associated with administrative activities and benefit allowances.
It is anticipated that these four full-time employees (FTEs) would work on other TC portfolios as well. This fact has been considered in the estimates. It is hypothesized that between 2023 and 2025, marked by administrative pre-requirements (e.g. training), implementation and enforcement of the newly established AMPs regime, the four referenced FTEs would spend 60% of their time on MVS-related AMPs activities. From 2026 and onward, with the full enactment of the MVS AMPs regime, they would spend 50% of their time on MVS-related AMPs. High and low scenario estimates will be provided in the “Sensitivity analysis” section of the regulatory analysis below.
|Year||Annual incremental cost|
As previously stated, the analysis assumes that the four required full-time employees would allocate 60% of their time to MVS AMPs between 2023 and 2025 and 50% from 2026 and onward. In the sensitivity analysis, different task allocation scenarios are assessed and results are tested based on these different hypotheses. In one scenario, it is assumed that the full-time employees would allocate 70% of their time to MVS AMPs between 2023 and 2025 and 60% from 2026 and onward. Since the allocation of the required time spent on AMPS under this hypothesis is greater than the originally presented scenario, this will be labelled as the high scenario. The high scenario assumes that the management, implementation and enforcement of the AMPs regime due to its complex nature would require a higher degree of time commitment. On the other side of the spectrum, the low scenario takes into account the effect of full-time employees allocating less time on the MVSA AMPs. Under this scenario, the four FTEs would allocate 50% of their time spent on AMPs between 2023 and 2025 and 40% from 2026 and onward.
The central analysis used a 7% discount rate as recommended by the Treasury Board Secretariat. The results using a 3% discount rate as well as not discounting are presented in Table 6.
|No discount rate||$2.45|
|3% discount rate||$2.10|
|7% discount rate||$1.74|
Analytical time frame
In the central scenario, the analytical time frame is a 10-year planning horizon from 2023 to 2032. Table 7 presents the total costs in 15- and 20-year planning horizons.
Small business lens
The small business lens does not apply as penalties are not considered compliance burden for the purposes of the small business lens.
The one-for-one rule does not apply as the proposed amendments would not result in an incremental change in the administrative burden. Penalties are not captured under the definition of administrative burden. Although a new title would be introduced, the one-for-one rule does not apply because the new title would not introduce administrative burden.
Regulatory cooperation and alignment
This regulatory proposal is not being introduced to comply with an international agreement or obligation, nor does it have any impacts related to a work plan or commitment under a formal regulatory cooperation forum.
AMPs regimes are common in the Canadian federal regulatory landscape, and several AMPs regimes are already in place at TC. The decision-making processes contained in TC’s oversight policy and associated operating procedures are aligned with those in place within other modes at TC.
In addition, the United States National Highway Traffic Safety Administration, whose mandate aligns with that of TC’s Motor Vehicle Safety directorate, also makes use of a civil penalty scheme for the enforcement of their National Traffic and Motor Vehicle Safety Act, regulations and standards. A Canadian MVS AMPs regime will allow TC to take enforcement action that is aligned with the enforcement regime in the United States.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.
Gender-based analysis plus
When applying the gender-based analysis plus lens to this regulatory proposal, it was determined that these administrative Regulations are not expected to disproportionately impact any group of persons on the basis of identity factors such as gender, race, ethnicity, sexuality, religion, and age. Moreover, during consultations with stakeholders, no concerns were raised about disproportionate impacts based on identity factors.
Implementation, compliance and enforcement, and service standards
The proposed Regulations would come into force on the 90th day after the day on which they are published in the Canada Gazette, Part II. This would provide stakeholders with sufficient time to familiarize themselves with the proposed Regulations, as well as associated policies and operating procedures. The AMPs regime will be available for use as soon as the proposed Regulations are in force.
The proposed Regulations do not add any new requirements; they simply create an additional regime for enforcing the MVSA and its regulations by designating provisions of the MVSA and the MVSR and setting out maximum penalties for each designated provision. Companies and persons that comply with the requirements of the MVSA and applicable regulations would not be impacted by the proposed Regulations. In addition, not all violations would result in TC pursuing an AMP. As is detailed in TC’s oversight policy, other tools, such as warnings, prosecutions, or revocations, can be used to address violations. In all cases, the enforcement response taken by TC will continue to be tailored to achieve both compliance and deterrence.
No service standards are planned for AMPs. In accordance with not yet in force section 16.23 of the MVSA, TC must issue an AMP no later than two years after the time when the subject matter of the proceedings arose. Given this constraint, TC would proceed quickly to address non-compliance when an AMP is the required enforcement action.
Payment of penalties, which must be made by credit card, or a certified cheque or money order made payable to the Receiver General for Canada, would need to be made within 30 days after the day on which a notice of violation is served.
Anyone who is issued a monetary penalty can ask to have that decision reviewed and appealed by the Transportation Appeals Tribunal of Canada (the Tribunal). The Tribunal will review the decision and then decide to either uphold, vary (change) or set aside the penalty.
To ensure that AMPs will be applied in a fair, impartial, predictable and nationally consistent manner, appropriate training programs will be developed and implemented by TC to ensure that enforcement officers take a similar approach in similar circumstances to achieve similar results.
Standards and Regulations
Multi-Modal and Road Safety Programs
330 Sparks Street
PROPOSED REGULATORY TEXT
Notice is given that the Governor in Council, pursuant to paragraphs 16.1(a)footnote a and (b)footnote a of the Motor Vehicle Safety Actfootnote b, proposes to make the annexed Administrative Monetary Penalties (Motor Vehicle Safety) Regulations.
Interested persons may make representations concerning the proposed Regulations within 75 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 Jean-Michel Roy, Acting Manager, Standards and Regulations, Multi-Modal and Road Safety Programs, Department of Transport, 330 Sparks Street, Ottawa, Ontario K1A 0N5 (email: RegulationsClerk-ASFB-Commisauxreglements@tc.gc.ca).
Ottawa, May 2, 2022
Assistant Clerk of the Privy Council
Administrative Monetary Penalties (Motor Vehicle Safety) Regulations
Definition of Act
1 In these Regulations, Act means the Motor Vehicle Safety Act.
2 These Regulations complete the administrative monetary penalty scheme set out in the Act for the contravention of certain of its provisions and of certain provisions of its regulations and of the orders made under the Act.
Designation — Act and Regulations
3 (1) A provision of the Act or of its regulations that is set out in column 1 of the schedule is designated as a provision the contravention of which may be proceeded with as a violation in accordance with sections 16.13 to 16.23 of the Act.
Maximum amount payable
(2) The maximum amount payable in respect of a violation referred to in subsection (1) is
- (a) in the case of an individual, the amount set out in column 2 of the schedule; and
- (b) in the case of a corporation or a company, the amount set out in column 3 of the schedule.
Designation — orders
4 (1) An order made under any of subsections 8.1(1), 10(2.1), 10(4), 10.1(4), 10.1(7) and 10.4(4), section 10.5, subsections 10.6(1), 10.61(1) and 13(1), section 13.1, paragraph 15(4)(e) and section 15.1 of the Act is designated as a provision the contravention of which may be proceeded with as a violation in accordance with sections 16.13 to 16.23 of the Act.
Maximum amount payable
(2) The maximum amount payable in respect of a violation referred to in subsection (1) is
- (a) in the case of an individual, $4,000; and
- (b) in the case of a corporation or a company, $200,000.
Coming into Force
90th day after publication
5 These Regulations come into force on the 90th day after the day on which they are published in the Canada Gazette, Part II.
Maximum Amount Payable ($)
Maximum Amount Payable ($)
Corporation or Company
Maximum Amount Payable ($)
Maximum Amount Payable ($)
Corporation or Company