Regulations Amending the Presentation of Persons (2003) Regulations: SOR/2024-147

Canada Gazette, Part II, Volume 158, Number 14

Registration
SOR/2024-147 June 21, 2024

CUSTOMS ACT

P.C. 2024-799 June 21, 2024

Whereas subsection 1(1) of the annexed Regulations gives effect to a public announcement made on November 29, 2007, known as Customs Notice 07-034, and has a relieving effect only;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, makes the annexed Regulations Amending the Presentation of Persons (2003) Regulations under paragraph 11.1(3)(f)footnote a and section 167.1footnote b of the Customs Act footnote c.

Regulations Amending the Presentation of Persons (2003) Regulations

Amendments

1 (1) Subsection 24(1) of the Presentation of Persons (2003) Regulations footnote 1 is replaced by the following:

NEXUS and FAST programs

24 (1) The fee for the issuance or renewal of an authorization referred to in section 6.1 or 6.2 is

(2) Subsection 24(1) of the Regulations is replaced by the following:

NEXUS program

24 (1) The fee for the issuance or renewal of an authorization referred to in section 6.1 is US$120.

FAST program

(1.01) The fee for the issuance or renewal of an authorization referred to in section 6.2 is US$50.

(3) Subsection 24(4) of the Regulations is replaced by the following:

Children under 18 years of age

(4) A child who is under 18 years of age on the day on which they make their application for an authorization is not required to pay a fee under this section if

Coming into Force

2 (1) Subject to subsection (2), these Regulations come into force at 12:00:01 a.m. Eastern Daylight Time on October 1, 2024, but if they are registered after that day, they come into force at 12:00:01 a.m. Eastern Daylight Time on the day after the day on which they are registered.

(2) Subsection 1(1) is deemed to have come into force on December 1, 2007.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

Recent program financial reviews conducted by the Canada Border Services Agency (CBSA or the Agency) and the United States Customs and Border Protection (U.S. CBP) have identified a growing gap between program revenues and costs for the NEXUS program. This deficit compromises both organizations’ ability to adequately fund operations or invest in processing capacity supporting the NEXUS program. As the primary administrator of the NEXUS application process, the U.S. CBP is increasing the fee for the NEXUS program, including charging the application fee for minors whose parent or guardian is not also applying to — or already a member of — the NEXUS program. Amendments are required to align the application costs in Canadian regulations and apply the fee to select minors. Amendments are also needed to align the fee amounts for the FAST program in the regulations.

Background

The NEXUS program is a joint initiative between the CBSA and the U.S. CBP that enables pre-approved, low-risk travellers to present themselves in an alternative manner and receive expedited border clearance into both Canada and the U.S. NEXUS is voluntary, with membership limited to eligible Canadian and U.S. citizens and permanent residents, as well as Mexican nationals who are members of Mexico’s domestic trusted traveller program.

NEXUS was created in 2000 as a land-based pilot to facilitate border processing at a limited number of ports along the Canada–U.S. border. NEXUS launched as a full-fledged program in 2002. In 2006, travellers in the air and marine mode were able to apply to the NEXUS program, expanding its scope significantly. By expediting the processing of trusted travellers, the Agency can prioritize directing resources toward travellers of high or unknown risk at the point of entry. As a result, the processing of all travellers is more efficient, since trusted travellers can be physically separated at the border and processed in an expedited fashion, increasing overall throughput, and offsetting maintenance costs.

Fee structure

The fee for NEXUS is set in the Presentation of Persons (2003) Regulations (the Regulations) and is subject to a fee-sharing arrangement between the CBSA and the U.S. CBP. The NEXUS fee, and any changes to it, are not subject to the Service Fees Act.

At the time of its launch in 2002, the program’s five-year membership fee was $80 Canadian dollars (Can$) for paper applications or $50 American dollars (US$) for online applications for travellers over the age of 18. However, in 2007, Customs Notice 07-034 (PDF) (pdf) reduced the fee to Can$50 for paper applications, to align with the US$50 fee for online applications when both currencies were trading at par, establishing an equitable fee structure for both paper and online applications. In 2019, the CBSA ceased accepting paper applications, leaving the U.S.-maintained online portal as the only option for the submission of NEXUS applications, at a cost of US$50.

While in practice travellers currently pay the US$50 application fee, the fee established in the Regulations is Can$80, meaning that the Regulations do not reflect current practices.

The 2004 Memorandum of Understanding (MOU) entitled Arrangement for the Collection and Remittance of NEXUS Fees governs how the NEXUS application fee revenues are collected and shared. On May 18, 2007, the arrangement was updated to stipulate that the CBSA and U.S. CBP agree to remit one half of each application to the other party on a quarterly basis. This meant that US$25 from each online application submitted to the CBP would be remitted to the CBSA.

The fee for the FAST program, a jointly administered commercial clearance program designed to ensure safety and security while expediting legitimate trade across the Canada–U.S. border, is currently identical to that of NEXUS and is established under the same enabling authorities. FAST is administered through its own MOU between Canada and the U.S., the Arrangement between the Canada Border Services Agency and the United States Customs and Border Protection for the collection and remittance for FAST fees; in the 2007 Customs Notice, the FAST fee was reduced from Can$80 to US$50 along with the NEXUS fee. As with NEXUS, this change has not been formalized in regulation, though all applicants currently pay US$50 when submitting an application via the U.S.-maintained portal.

Program sustainability

NEXUS application volumes have grown significantly. As of February 2024, there were nearly 1.8 million NEXUS members — 78% of whom were Canadian citizens. The program has evolved greatly since its inception and Canada and the U.S. have made significant investments in physical infrastructure and program administration. In recent years, NEXUS highway lanes were added to 14 new Canadian locations, while airport kiosks were replaced across Canada. To support these investments, the Government of Canada has allocated public funds to the NEXUS program, including through the Canada–U.S. Beyond the Border Action Plan. However, the fee has not increased since the program’s inception.

The costs of processing a NEXUS application have also increased in the 20 years since the program’s inception; hence, revenues have not kept pace.

In 2015, a CBSA Internal Financial Review determined that NEXUS costs outweighed revenue derived from the application fee. A fee increase is necessary to address persistent annual program losses and reduce the NEXUS program’s reliance on government appropriations.

Persons under the age of 18, who make up approximately 10% of the NEXUS membership population, have been exempt from payment of the fee since the program’s inception; the regulations include a fee exemption for minors for NEXUS and all other applicable Trusted Traveller Programs. The U.S. has had a different approach, as NEXUS’ fee exemption for minors is inconsistent with their other Trusted Traveller Programs (Global Entry and SENTRI). The SENTRI program has a complex family option plan, while the Global Entry program charges minors the full application fee. In an effort to adopt a consistent policy across their suite of Trusted Traveller Programs, the U.S. advised the CBSA of their intention to limit the fee exemption for NEXUS so that the fee would only be charged to a minor if their parent or guardian is not also submitting an application — or is already a member of — the NEXUS program.

Objective

The objective of this amendment is to improve the NEXUS program’s financial viability and effectiveness and reduce its reliance on government appropriations for the foreseeable future.

This amendment also seeks to align regulations with current fee amounts.

Description

The Regulations are amended to establish the NEXUS and FAST Program application fees at Can$50 for a paper application and US$50 for an application by electronic means.

This amendment is retroactive and is deemed to have come into force on December 1, 2007.

The Regulations are amended to

These changes come into force at 12:01 a.m. Eastern Daylight Time on October 1, 2024.

Regulatory development

Consultation

No consultations or prepublication comment period in the Canada Gazette, Part I, were undertaken in respect of this amendment; consultations would not change the need for alignment with the U.S. fee, including the new posture on minors, nor the need to improve the cost effectiveness of the NEXUS program.

Modern treaty obligations and Indigenous engagement and consultation

As required by the Cabinet Directive on Regulation, an assessment of modern treaty implications was conducted on the regulatory amendments. No modern treaty implications are anticipated because Indigenous peoples in Canada are not impacted by the amendment.

Instrument choice

As the NEXUS fees are set in regulation, regulatory amendments are the only viable option.

Regulatory analysis

Benefits and costs

Summary

The cost-benefit analysis measures the costs and benefits attributed to stakeholders once the NEXUS fee is increased and once the Canadian regulations are amended to reflect the new fee. The estimates included here represent the impact of the regulations to NEXUS users (adults and minors) and Canadian taxpayers. The analysis also reports the impact on minors only, as persons under 18 years of age are no longer exempt from paying the fee if they do not apply with their parents/guardians, or their families are not current members. To note, the NEXUS fee is charged in U.S. dollars; therefore, the analysis makes assumptions to account for changes in the U.S.–Canada exchange rate over the 10-year period.

While no formal CBA survey was completed, the CBSA conducted a representative survey in 2016 of over 7 000 existing members, which included a question on possible NEXUS fee adjustments. Besides this survey, no additional consultations have been undertaken by the CBSA. The full CBA report is available upon request at CBSA.Traveller_Pol-Pol_voyageurs.ASFC@cbsa-asfc.gc.ca (Sara Tutecky).

Analytical framework

The baseline scenario refers to the situation which would transpire in the absence of any regulatory action and the status quo would be maintained. Without the regulatory amendment, the U.S. CBP would increase the NEXUS fee, but the program would not function as needed for Canadian citizens and create a legal liability because the regulations in Canada would not be implemented. Consequently, the regulatory scenario increases the fee in Canada to US$120 (Can$152) from US$50 (Can$62). To note, reported Canadian values will fluctuate over time based on the exchange rate.

In addition, in the baseline, the Fee Sharing Arrangement is not updated, and the US continues to remit US$25 (Can$32) to the CBSA. Under the regulatory scenario, the Fee Sharing agreement is renegotiated so that the CBSA is remitted US$40 (Can$51) per application. This means that for every application, the Government of Canada will receive US$15 (Can$19) more in fee revenue to cover the costs of the program. Thus, this change in the Fee Sharing agreement shifts more of the CBSA’s financial burden for NEXUS to applicants and away from Canadian taxpayers, positioning the program for long-term sustainability.

Regarding the change in the exemption for minors, approximately 10% of the NEXUS membership population is under the age of 18 years and based on CBSA assumptions, only about 5% of that sample will be charged since their parent or guardian is not also applying or is already a member of the NEXUS program. For this subset of NEXUS membership, the application fee will increase from US$0 in the baseline scenario to US$120 (Can$152) in the regulatory scenario.

Estimated benefits and costs

Results

The benefits and costs occur over 10 periods of 12 months (2024–2033), are discounted at a 7% rate, and assume the US$/Can$ exchange rate fluctuates from $1.27 in 2024 to $1.29 by 2034.

It is estimated that applications made by Canadians will be 353 468 in the first period, rising to 467 022 in the final period. These forecasts assume an initial drop in applications in the first two periods due to the fee increase; however, applications will rebound to 339 375 in 2026–2027 and will exhibit growth for the remainder of the forecast.

Costs to all NEXUS applicants (adults and minors) will total Can$230.6 million (PV) from 2024 to 2033, equivalent to an annualized cost of Can$32.8 million. Benefits to Canadian taxpayers as a result of increased revenue from the NEXUS fee as part of the new Fee Sharing agreement are expected to total Can$49.4 million (PV) over the 10-year period, equivalent to an annualized value of Can$7.0 million. All in all, the total impact will be a net cost of Can$181.2 million (PV) over the entire 10-year period, or Can$25.8 million annually.

It should be noted, a portion of the costs reported above is attributed to minors who apply independently of their families. They currently are not charged for their application; however, under the regulatory scenario, they will be charged a fee of US$120 (Can$152). It is estimated that the fee increase will apply to approximately 5% of total applications from those under 18 years of age, which represent approximately 10% of total applications. This translates to approximately 1 800 applications in the first period, rising to more than 2 300 by the end of the forecast period. The costs attributed to minors applying independently of their families will be Can$2.0 million (PV) of the total reported $230.6 million (PV).

Cost-benefit statement
Table: Monetized costs and benefits
Impacts Year 1 Year 5 Year 10 Total 10 years
(PV)		 Annualized value
All stakeholders
Benefits to taxpayers $6,719,920 $6,866,922 $9,027,491 $49,410,586 $7,034,956
Costs to NEXUS users $31,359,625 $32,045,964 $42,128,291 $230,582,736 $32,829,794
NET COST IMPACT $24,639,705 $25,178,972 $33,100,800 $181,172,150 $25,794,838

Qualitative impacts

Small business lens

Analysis under the small business lens concluded that this amendment will not impact Canadian small businesses. The NEXUS program is only available to individuals and NEXUS lanes and facilities cannot be used when commercial goods are declared, limiting the business value of the program. The retroactive amendments to decrease FAST program fees do not have incremental impacts on small businesses.

One-for-one rule

The one-for-one rule does not apply to this amendment, as there is no change in administrative costs or burden to business.

Regulatory cooperation and alignment

The amendment aligns the fees for the NEXUS and FAST programs with the U.S. to reflect the joint administration of the program.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that this amendment has no positive or negative impacts on the environment. Therefore, a strategic environmental assessment is not required.

Gender-based analysis plus

A gender-based analysis plus (GBA+) analysis was undertaken, and regional impacts were found with respect to the NEXUS fee increase. Given the concentration of NEXUS members in certain border communities, the impact of a fee increase may disproportionately impact members or potential applicants in these geographical locations. The greatest impact will be seen at ports of entry where NEXUS volumes are highest, such as the lower mainland of British Columbia. For example, NEXUS passages make up close to half of all passages at the Boundary Bay border crossing. It should be noted that participation in NEXUS is voluntary; individuals can choose not to apply if they do not wish to pay the increased fee amount.

Implementation, compliance and enforcement, and service standards

Implementation

The changes to the NEXUS and FAST programs announced in the 2007 Customs Notice come into force retroactively, effective December 1, 2007. Since these changes reflect current operations, there are no implementation requirements. The CBSA will ensure responsive communications are prepared should existing members or prospective applicants inquire about the impact of these amendments.

The amendment to increase the NEXUS application fee and impose a limit on the fee exemption for persons under the age of 18 will come into force on October 1, 2024, at 12:01 a.m. Eastern Daylight Time or on the day on which they are registered, whichever is later.

The Agency will update the NEXUS web pages on the CBSA websites, inform current NEXUS members of the changes via email, and advise consultative bodies and working groups, including the Air Consultative Committee, through standing engagement forums.

All applications received after the coming-into-force date, including new applications or membership renewals, will be subject to the revised fee. As per existing practice, all applications will be submitted through the U.S. trusted traveller application portal and payment will be charged to a credit card in U.S. dollars. The payment is taken during the application process and, as such, all applications received prior to the coming-into-force date will not be affected by the fee increase.

The CBSA will continue to report annually on revenues collected for its trusted traveller programs, including NEXUS, as well as key performance indicators, including application processing times.

Contact

Sara Tutecky
Acting Executive Director
Traveller Policy Division
Canada Border Services Agency
191 Laurier Avenue West, 8th Floor
Ottawa, Ontario
K1A 0L8
Email: CBSA.Traveller_Pol-Pol_voyageurs.ASFC@cbsa-asfc.gc.ca