Canada Gazette, Part I, Volume 157, Number 19: Regulations Amending the Small Vessel Regulations

May 13, 2023

Statutory authority
Canada Shipping Act, 2001

Sponsoring department
Department of Transport

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

• improve the quality of data collected and stored within the PCELS;
• enhance vessel owner identification;
• support enforcement activities and emergency response;
• balance the financial burden of the PCL program’s costs between those who use pleasure craft licensing services and the Canadian public, and recover costs associated with administering the PCL program; and
• ensure that MICs issued by Transport Canada are assigned to active businesses to support the compliance of vessels manufactured and/or imported for sale in Canada with the requirements outlined in the SVR.

Issues

Transport Canada is proposing to enhance its PCELS, a national database that contains records of all PCLs, through regulatory amendments to the SVR. These proposed amendments are needed to address the following issues:

• The PCELS contains inaccurate or outdated licence holder information, which creates problems for enforcement partners that rely on this data to conduct investigations and enforce regulations. This inaccurate or outdated information can be attributed to
  • changes made in the type of information collected when issuing PCLs over the last 60 years (i.e. email addresses are now collected),
  • long licence renewal periods for PCLs issued since May 2010 (10 years) and no renewal requirements for PCLs issued before May 2010,
  • long periods of time (90 days) that pleasure craft can be operated with an outdated PCL, and
  • limited ministerial authorities to cancel PCLs, including those that are no longer active;
• The SVR licensing provisions are narrow in scope and do not capture certain pleasure craft, such as wind-powered vessels above six metres in length. This limitation inhibits Transport Canada’s ability to identify and hold accountable the operators of these vessels should they be in non-compliance with the requirements outlined in several marine and environmental programs (e.g. the Wrecked, Abandoned or Hazardous Vessels Act [WAHVA]);
• As there is currently no fee for licencing, the costs of administering the pleasure craft licensing program (i.e. processing applications for new licences, licence renewals, licence transfers, or replacement licences) are currently borne by Canadian taxpayers, rather than by PCL holders.

In addition, Transport Canada has out-of-date records in the MIC database that are associated with inactive businesses. Since Transport Canada is limited to a finite number of MICs it can assign and it cannot create new MICs, it has to ensure that MICs are assigned to active businesses. Currently, there are no regulatory requirements about MICs with respect to certain administrative responsibilities, such as keeping contact information up to date. Therefore, when a business ceases to operate and does not inform Transport Canada of this change, the MIC is not released, and Transport Canada is unable to reassign it. As a result, the integrity of the data in Transport Canada’s MIC database is adversely affected and the number of available MICs Transport Canada can assign to active businesses is reduced.

Background

Under the Canada Shipping Act, 2001, the Governor in Council, on the recommendation of the Minister of Transport, has the authority to make regulations respecting pleasure craft licensing, including the issuance, cancellation, or transfer of PCLs, the setting and payment of fees for services provided in the administration of pleasure craft licensing, as well as regulations respecting hull serial numbers that identify small vessels (including pleasure craft and the manufacturers of those small vessels), and the manufacturing, importing, construction and selling of pleasure craft.

Transport Canada’s Office of Boating Safety is responsible for overseeing regulations, standards and policies, enforcement, and technical services for pleasure craft. The Office of Boating Safety encourages safe recreational boating practices and supports the enforcement of compliance with regulations. As part of the Office of Boating Safety’s mandate, the program manages the PCELS, provides oversight of PCL applications (both online and mail-in), including applications for demonstration licences that are used by businesses such as boat dealers for the purposes of selling pleasure craft, and responds to public inquiries regarding PCLs. The Office of Boating Safety also supports law enforcement, search and rescue partners (i.e. designated enforcement organizations [DEOs]),^{footnote 4} and the Canadian Coast Guard by providing access to information contained in the PCELS to aid in investigations and emergency response activities.

Transport Canada’s Navigation Protection Program and the Canadian Coast Guard also use the PCELS during investigations and to enforce WAHVA, which includes a compliance and enforcement regime for wrecked, abandoned or hazardous vessels.

Services for PCLs, including licence issuance and the processing of PCL applications, are contracted out by Transport Canada to a third-party service provider. In addition, Transport Canada has a separate agreement with Service Canada to provide general boating safety information, including information about pleasure craft licensing, to the public via the Boating Safety Info Line at 1‑800‑267‑6687.

Pleasure craft licensing requirements apply to all pleasure craft equipped, even temporarily, with one or more engines (gas and electric) whose aggregate power is 7.5 kilowatts (i.e. 10 horsepower) or more. Owners of these pleasure craft are required to apply to Transport Canada to obtain a PCL document containing a unique licence number assigned and used to identify their specific pleasure craft. This licence number must be displayed on both sides of the bow of the pleasure craft.

Inaccurate and incomplete data in the PCELS

Information in the PCELS tends to degrade over time as pleasure craft age and are sold, often multiple times. While the SVR have requirements to ensure licence information remains up to date, these requirements still result in significant data gaps in the PCELS. In addition, since PCLs were established in 1962, the type of information requested in the PCL application has changed significantly, resulting in data gaps in older PCL records (e.g. email addresses are now requested).

The most effective way to validate licence information is through licence renewals; however, not all licences are subject to regular renewals. Before the SVR were amended in May 2010, PCLs were issued with no expiration dates or renewal requirements (i.e. lifetime licences). Once the SVR were amended in May 2010, a 10-year validity period was introduced, but only for newly issued licences. Lifetime licences only change into 10-year licences when the licence holder updates information or when a new owner transfers the licence to their name. There are still approximately 1.5 million lifetime licences in the PCELS, and Transport Canada is unable to validate their accuracy.

Furthermore, requirements in the SVR regarding the timeline for transferring an existing PCL or updating licence holder information are unclear and represent timelines that were established when licence holders could only mail in applications, as opposed to applying online. For example, when a pleasure craft is sold, the SVR state that the new owner must “immediately” apply to the Minister of Transport for the transfer of the associated PCL, but do not present a specific time frame under which this must occur. In addition, following the sale of a pleasure craft and the application to transfer an existing PCL, the SVR allow the new owner to operate the pleasure craft with an outdated licence for up to 90 days, provided that there is documentation on board showing that an application has been made to transfer the existing PCL and the date when the pleasure craft changed ownership. Similarly, PCL holders can operate their pleasure craft for 90 days with outdated information (name or address) on their licence, provided documents are kept on board that confirm an application was made to Transport Canada for the name or address change. The lack of clear timelines for transferring an existing PCL and the extended period for which a pleasure craft can be operated with an out-of-date licence present a challenge for DEOs and emergency response agencies who rely on data captured in the PCELS, especially as 90 days represents most of the boating season in many areas of Canada.

Finally, the Minister has limited authority under the SVR to cancel a PCL and cannot currently cancel a licence upon request from a PCL holder, unless cancellation is for a reason specified in the SVR (e.g. registering the vessel as something other than a pleasure craft), or when individuals are not in compliance with licensing requirements (e.g. failing to update contact information).

The inability to cancel a PCL upon request from a PCL holder without a specified reason in the SVR or when individuals are not in compliance with licensing requirements results in many out-of-date records in the PCELS for licences that are either no longer valid or are associated with pleasure craft that are no longer in service.

DEOs and search and rescue agencies

Information in the PCELS is crucial to conserve both resources and time for DEOs and for search and rescue agencies when responding to marine emergencies or conducting investigations related to marine incidents. If a vessel is found floating adrift, DEOs and search and rescue agencies need to be able to quickly identify the owner of the vessel and attempt to contact them to determine if there has been an accident where an emergency response is required, or if a vessel has simply floated away, possibly after severe weather, or because the vessel was not securely tied to a dock, shore, or anchor. If PCL holder information is inaccurate, valuable resources and time are spent by search and rescue agencies and local enforcement trying to locate the correct licence holder to determine the nature of the issue. Similarly, if a vessel is found recently wrecked or overturned, accurate information in the PCELS would help to quickly determine if the operator of the vessel is missing, has abandoned their vessel, or has found refuge following an accident.

DEOs also rely on the PCELS during marine patrol stops to ensure PCL holders are in compliance with applicable licensing requirements (e.g. carrying a valid licence on board). This is necessary as DEOs rely on pleasure craft being properly licensed when conducting enforcement activities, such as identifying and holding responsible vessel operators who may be violating other regulatory requirements (e.g. speeding, lacking proper safety equipment, operating in restricted areas). If licensing information is inaccurate, DEOs may be required to contact multiple people to determine and hold responsible the correct licence holder. In one instance, it was reported that up to 15 people had to be contacted prior to determining a vessel’s correct licence holder.

Supporting enforcement of WAHVA

Enforcement of WAHVA relies on the ability to accurately identify vessel owners by using information contained in the PCELS. WAHVA, which came into force on July 30, 2019, prohibits vessel abandonment and introduces strict fines or penalties to enforce the prohibition. It also allows the government to recover costs and expenses incurred from owners of wrecked, abandoned or hazardous vessels when the government takes action to address these vessels. It has been noted at national engagement sessions^{footnote 5} for WAHVA and through witness testimony when WAHVA was tabled at the House of Commons Standing Committee on Transport, Infrastructure and Communities, that current shortcomings in the existing pleasure craft licensing system are an issue for the enforcement of WAHVA, and that a stronger licensing regime is a critical component of its successful implementation.

Scope of pleasure craft requiring PCLs

Under the SVR, licences are required for all pleasure craft that are equipped (even temporarily) with one or more primary propulsion engines whose aggregate power adds up to 7.5 kilowatts or more, regardless of the size of the pleasure craft. These requirements are narrow in scope, as certain pleasure craft, such as wind-powered vessels above six metres in length, are not currently subject to licensing requirements. As a result, Transport Canada is not able to easily identify operators of these vessels in the event of an emergency, a wrecked or abandoned vessel, and/or to ensure that operators are complying with the regulatory requirements of marine and environmental programs.

No service fee for pleasure craft licensing services

Transport Canada does not charge any fees for pleasure craft licensing services. As a result, the costs for the program, which solely benefit PCL holders, are entirely borne by Canadian taxpayers. This situation also creates a challenge for Transport Canada which is required to risk manage the funds associated with the pleasure craft licensing program every year as opposed to being able to rely on fees from users to cover the costs.

Inaccurate information in MIC database

As per an agreement with the United States, Transport Canada only issues MICs starting with the letters Q, Y and Z, while the United States issues MICs starting with the remaining letters of the alphabet. Since MICs are a three-figure combination, there are only a finite number of combinations that can be made. Transport Canada is actively working to update the MIC database to ensure that MICs assigned to inactive businesses can be appropriately reassigned. It is essential that MICs be available to be assigned to active manufacturers and importers to ensure that vessels manufactured or imported for sale in Canada comply with the safety requirements of the SVR. While Transport Canada is not currently out of available MIC numbers, it is important to ensure that those associated with inactive businesses are made available to ensure the longevity and efficiency of Transport Canada’s MIC database.

Reassigning MICs has posed challenges as Transport Canada has limited abilities to cancel a MIC for reasons of regulatory non-compliance. Currently, requirements do not exist in the SVR for manufacturers, builders, rebuilders, and importers of vessels to keep their contact information up to date. While MIC holders do this in practice and other means are used to validate contact information (e.g. through annual production reports and declarations of conformity submitted by MIC holders), out-of-date records still exist in the database for businesses who have failed to inform Transport Canada of their business status. Several of these businesses would appear to be inactive and, therefore, are no longer in need of a MIC. While Transport Canada makes every reasonable effort to confirm the status of these businesses, such as through phone, email and fax, Transport Canada is unable to cite regulatory non-compliance, such as not keeping contact information up to date, as justification for reassigning a MIC.

Objective

The proposed amendments to the SVR aim to

• enhance and improve the integrity of the PCL program, which, due to data gaps, is not administered or enforced effectively, efficiently or consistently;
• support the timely identification and removal of wrecked and/or abandoned vessels, which are a hazard to the marine environment;
• ensure that PCL holders who benefit from the PCL program pay an equitable share of the costs for the program; and
• improve the quality of data collected and stored within Transport Canada’s MIC database to ensure MICs are held exclusively by active businesses.

Description

Licence validity periods

The proposed amendments would establish a new five-year validity period for PCLs. This change would facilitate more frequent updates to licence holder information. The renewal period for licensed pleasure craft in the PCELS would also align with the registration period for other small vessels captured in the Small Vessel Register (but not on the same five-year renewal cycle). Therefore, this change would ensure that small vessels operating in Canada are on a five-year renewal cycle, including pleasure craft.

The proposed amendments would also require lifetime licences issued before May 2010 to be renewed every five years. This requirement would enable Transport Canada to update information in the PCELS for the approximately 1.5 million lifetime PCLs and would help determine if any licensed pleasure craft are no longer in service.

The transition to the five-year validity regime for lifetime licences would be done over the course of six years. During the phase-in approach, there would be an education and outreach campaign that would be used to inform all PCL holders, including lifetime licence holders, that their licence will expire and of steps on how to keep their licence valid, should they choose to do so. If the licence holder does not respond, the lifetime licence would be cancelled. Given that the renewal rate for 10-year PCLs over the past 2 years was only 15%, not many lifetime licences are expected to transition to the 5-year renewal cycle. In addition, many of the older records of the lifetime licences do not contain contact information for reaching out to those PCL holders. Therefore, it is anticipated that most of the lifetime licences will be cancelled, particularly those that were issued over 20 years ago.

Similarly, existing 10-year licences would also be brought into the new 5-year validity regime once those licences expire or are transferred to a new owner. In current practice, notices are sent to PCL holders with 10-year licences 90 days prior to their licence’s expiration date. If the licence holder does not renew their licence, their licence is flagged as “expired” in the PCELS.

A public education and outreach campaign will be launched across Canada in both official languages to educate PCL holders on the new licensing requirements and vessel management responsibilities. This campaign would also support efforts to inform PCL holders with outdated contact information of PCL requirements. Existing Office of Boating Safety partnerships will be leveraged to increase the promotion of this messaging across Canada, including in northern and remote communities. Anyone who continues to operate their pleasure craft with an expired or cancelled PCL is committing an offence under the SVR and would be subject to fines.

Transfer of licence, new licences and updates to PCL information

As part of the proposed amendments, a pleasure craft would not be able to be operated until the owner obtained a licence. The new owner of a pleasure craft would need to apply to transfer a PCL. This requirement would help ensure that PCL information is updated in a timely manner. The proposed amendments would also reduce the amount of time (from 90 days to 30 days) that a licence holder can operate their pleasure craft following changes to their name or address recorded on the licence while waiting for their updated licence. The requirement to carry the relevant documents on board for both provisions would remain in place. Overall, these proposed amendments would improve the quality of the data contained in the PCELS.

Cancelling a PCL

The proposed amendments would enable the Minister to cancel a PCL when

• a licence holder has failed to update or transfer a licence;
• a licence holder has failed to renew a licence upon expiry (i.e. a new or a lifetime licence is not renewed); or
• by request from a licence holder (e.g. a PCL holder no longer uses the pleasure craft).

In instances where a licence holder has requested that their PCL be cancelled, the proposed amendments would also allow the Minister of Transport to specify how the cancellation must be made (i.e. setting out the information that must be provided when applying to cancel a PCL).

These proposed amendments would help ensure pleasure craft that are no longer in service are listed as inactive in the PCELS, providing Transport Canada with a clear picture as to how many pleasure craft are currently operating in Canada.

Scope of pleasure craft requiring PCLs

The proposed amendments to the SVR would expand pleasure craft licensing requirements to apply to all wind-powered pleasure craft that are above six metres in length, except for human-powered vessels (e.g. kayaks, canoes, dragon boats). These wind-powered pleasure craft were previously excluded from SVR requirements. Expanding licensing requirements to wind-powered vessels above six metres in length would provide a more comprehensive dataset of pleasure craft in the PCELS. It would also strengthen vessel owner identification of these vessels for search and rescue agencies in the event of emergency situations and for DEOs to ensure licence holders for these vessels comply with the regulatory requirements of marine and environmental programs, such as WAHVA.

The expansion of the licensing requirements for wind-powered pleasure craft that are above six metres in length would come into force two years after the proposed amendments are published in the Canada Gazette, Part II. Operators of these pleasure craft could obtain a licence at any time during this two-year period. If they do not obtain a pleasure craft licence by the end of the two-year period and continue to operate the pleasure craft, they would be committing an offence under the SVR and would be subject to fines under the Contraventions Regulations. Notice of the new requirements for these operators will be communicated as part of this project’s ongoing education and outreach campaign.

Introduce a service fee for pleasure craft licensing services

This regulatory proposal would introduce a new $24 service fee to PCL holders in the SVR for

• a new PCL;
• a PCL renewal;
• a PCL transfer; or
• a request for a replacement PCL document.

This service fee would not apply when changing personal information (e.g. an address or phone number) or cancelling a licence, so as not to discourage licence holders from keeping their information up-to-date. The proposed amendments are expected to increase the annual number of PCL transactions^{footnote 6} processed and increase program costs. Therefore, recovered costs from the service fee would help to cover a portion of the costs associated with administering the pleasure craft licensing program, which is currently funded 100% by Canadian taxpayers.

Administration costs for the pleasure craft licensing program vary from year to year, depending on the number of licence transactions processed. A costing analysis determined that it costs $24.16 for Transport Canada to process a PCL transaction. The proposed new service fee of $24 per transaction would represent a 99% cost recovery rate for Transport Canada and would rebalance the financial burden of the program’s administration costs from Canadian taxpayers to PCL holders, as PCL holders are the primary beneficiaries of the program.

The proposed $24 service fee was determined based on the level of effort to provide licensing services (which Transport Canada contracts out to a third party), the benefits accrued to PCL holders, and the ability of pleasure craft owners to absorb this new service fee, which is comparable to similar fees in other jurisdictions.

The proposed service fee would adhere to the requirements of the Service Fees Act (SFA) and its related instruments, such as the Directive on Charging and Special Financial Authorities. In line with these requirements, Transport Canada developed a fee proposal and provided it to the Treasury Board of Canada Secretariat (TBS) in August 2020, prior to starting public consultation in November 2020 on the fee and other proposed amendments to the SVR.

Changes to original fee proposal

Transport Canada is proposing that the amount of the PCL fee be $24, instead of the $15 figure cited in the original fee proposal. This increase is necessary due to changes in the cost inputs since 2019, which formed the basis of the fee proposed in 2020. Annual service processing costs have increased and the estimated number of PCL transactions that would be subject to the fee has decreased. Transport Canada now has new data on the actual rate of renewals observed in 2020–21 and 2021–22 for 10-year validity PCLs issued in 2010–11 and 2011–12. The rate of renewal is below the estimates used to inform the original $15 fee.

Higher service delivery costs, combined with a smaller number of transactions across which program costs can be spread, means the “cost per unit” to process a PCL transaction has increased. This unit cost forms the foundation for the service fee. To meet the objective of ensuring that PCL holders who benefit from the PCL program pay a balanced share of the costs of the program, Transport Canada needs to increase the proposed amount of the service fee.

In addition, Transport Canada is proposing to include a clause in the SVR that would adjust the fee annually for inflation. This “adjustor” clause would ensure that the service fee keeps pace with the rising costs of administering the PCL program over time, and that PCL holders, who are the primary beneficiaries of the service, continue to pay for program costs in line with the intended regulatory objective. The original fee proposal contemplated that Transport Canada may pursue such an approach.

Low-materiality Fees Regulations applicability

Because the proposed service fee is less than $51, it would be considered a “low-materiality” fee under the Low-materiality Fees Regulations. As a result, pursuant to subsection 22(1) of the SFA, the fee would be exempt from several SFA requirements, including consultation, performance standards, remissions and annual adjustment.

However, Transport Canada intends to meet the spirit of the SFA with respect to most aspects of the PCL fee, despite the “low-materiality” designation. For example, Transport Canada has consulted with stakeholders extensively on the amendments noted above, including the proposed fee, and will continue to do so as part of the regulatory development. As noted above, the fee would be subject to an annual adjustment clause. Finally, while performance standards are not mandatory for low-materiality fees, Transport Canada would strive to adhere to the five-day service standard outlined in the “Service Standards” section below, which will also ensure compliance with the requirements of the Policy on Service and Digital and the Directive on Service and Digital. With respect to the low-materiality exemption for remissions, that would remain in effect. As a result, Transport Canada would not need to remit a portion of the PCL fee to a client in cases where a service standard is not met.

Linkage with the proposed Vessel Remediation Fund

Transport Canada is also proposing the creation of a regulatory charge to finance a proposed Vessel Remediation Fund that would support measures to address wrecked, abandoned or hazardous vessels. The charge would be collected at the same time as, and be in addition to, the service fee for obtaining a new, transferred, or renewed PCL. Details of the initiative are provided in the Regulatory Charge (Fee) Proposal for the Vessel Remediation Fund.^{footnote 7} Legislative changes are still required to be made to WAHVA to authorize the fund. Stakeholders will be afforded additional opportunities in the future to provide feedback on the proposed fund once the related regulatory development occurs. The PCL service fee is expected to be in force prior to the launch of the Vessel Remediation Fund.

Application process

As is done currently, licence holders would be able to submit applications online or by mail for new PCLs or for requests to renew, transfer, or replace an existing PCL. Consistent with existing requirements, licence holders would only be able to cancel their PCL by mail, provided the application is complete and includes a note explaining the reason for cancellation, and is accompanied by the appropriate supporting documentation. Only accepting mail-in cancellations would continue to prevent erroneous cancellations (i.e. a pleasure craft is sold and the previous PCL holder cancels the licence when the onus is on the new PCL holder to transfer the licence into their name).

Transport Canada would continue to email PCLs to requesters who applied online, and mail PCLs to requesters whose applications were received through traditional mail, provided the application is complete and all supporting documentation is attached.

Manufacturer’s identification code

The proposed amendments would require MIC holders to inform Transport Canada of any changes to their name, address or other contact information within 30 days of the change. Up-to-date contact information is important as it enables Transport Canada to contact MIC holders to ensure proper oversight and compliance with the SVR. While providing current information is already done in practice by all MIC holders of active businesses, who routinely confirm their contact information through the submission of documents to Transport Canada (e.g. through declarations of conformity and annual production reports), formalizing the requirement would ensure that businesses who are not active, and are not updating their contact information, could have their MIC reassigned after Transport Canada has exhausted methods of contacting the business. As the requirement to keep contact information up to date is done already in practice by all active MIC holders, the proposed amendments would not result in any administrative burden to active businesses.

Regulatory development

Consultation

Since 2016, regular consultations were held regarding improvements to pleasure craft licensing through annual and regional meetings of the Canadian Marine Advisory Council (CMAC) and meetings of the National Recreational Boating Advisory Council (NRBAC), which are composed of stakeholders who have an interest in recreational boating.

Starting in 2019, Transport Canada shared the proposed amendments to the SVR to address concerns raised regarding pleasure craft licensing with stakeholders at CMAC and NRBAC meetings. Stakeholders were generally supportive of the proposed amendments. Most comments received throughout these meetings were directed toward the proposed amendments to reduce licence validity periods and the introduction of the proposed service fee. In a fall 2019 CMAC meeting, a law enforcement representative stressed the importance of a shorter licence validity period (i.e. less than five years), noting that longer licence validity periods have contributed to inaccurate vessel owner information causing delays when locating licence holders. While this suggestion was considered at the fall 2019 CMAC meeting and the March 2019 National Enforcement Roundtable (detailed below), Transport Canada moved forward with a set five-year validity period to be consistent with the registration period for other vessels. It was also suggested at the fall 2019 CMAC meeting that a lack of public awareness of PCL requirements was a contributing factor to inaccurate vessel owner information. As a result, Transport Canada would launch an awareness and education campaign when the proposed amendments come into force. As part of the campaign, representatives from Transport Canada would travel to marinas and docks across Canada to promote the regulatory amendments and participate at industry events such as boat shows. Updates would also be provided to the public through social media, Canadian news sources and the Office of Boating Safety web pages.

Most recently, at the 2021 spring and fall CMAC and NRBAC meetings, stakeholders were updated on the proposed amendments and given an overview of the recent online Let’s Talk Transportation consultation, including the Fee Proposal for Pleasure Craft Licensing Program (detailed below). No opposition was raised about the proposed amendments or the proposed service fee.

In addition, consultations (as part of the Oceans Protection Plan) were held from 2016 to 2018 on the National Strategy to Address Abandoned and Wrecked Vessels, including the new WAHVA, and efforts to improve vessel owner identification. Overall, stakeholders including marine industry and trade associations; law enforcement; boating safety organizations; recreational boaters; boating safety course providers; boating safety advocates; pleasure craft dealers; associations representing cottagers; associations representing anglers, hunters, trappers and recreational fishers; and the general public expressed support for increased vessel owner responsibility and liability for wrecked and abandoned vessels, and the need to improve vessel owner identification. Law enforcement was also consulted at a National Enforcement Roundtable in March 2019 and their feedback helped inform the proposed amendments.

Let’s talk transportation

Between November 12, 2020, and January 15, 2021, Transport Canada held an online consultation on the proposed amendments through Transport Canada’s Let’s Talk Transportation web page, which was promoted to the public via social media. This consultation also included the Fee Proposal for Pleasure Craft Licensing Program. In addition, Transport Canada held three virtual consultation sessions with stakeholders outlining the proposed amendments. In total, about 900 comments on the proposed amendments were received through these consultations. A small number of participants opposed the proposal to reduce licence validity periods to five years because of concerns about the potential increase in costs to the pleasure craft licensing program. In addition, participants also noted alternative measures that Transport Canada could implement to improve the validity of licence holder information, such as increasing awareness of licensing requirements and issuing expiration notices to licence holders. While Transport Canada has begun efforts to increase awareness of licensing requirements and has begun and will continue to issue expiration notices for licences, the proposed amendment to reduce licence validity periods to five years remains unchanged. This decision is consistent with feedback received from enforcement agencies who have expressed that a shorter licence validity period would help keep licence information up to date and also takes into consideration the lack of opposition received on this topic from stakeholders during the virtual consultation sessions. The decision to reduce the licence validity period was also informed by a comparison of licence validity periods in other jurisdictions.

While limited, feedback received on expanding the application of licensing requirements was generally mixed, with some participants supporting the expansion of licensing requirements to include all motorized watercraft and pleasure craft with electric motors, while others opposed expanding requirements to include all pleasure craft above six metres in length, such as sail-alone vessels that are not currently subject to licensing requirements. Given the challenges faced by DEOs when responding to emergencies involving sail-alone vessels that are not licensed, Transport Canada decided to proceed with the proposed amendment to broaden the scope of licensing requirements to include wind-powered vessels that are above six metres in length. This broader scope would ensure that Transport Canada could better monitor regulatory compliance for sail-alone vessels.

While Transport Canada consulted extensively on the proposed requirement to expand the application of licensing requirements, there was not explicit consultation on the two-year grace period that would be implemented for operators newly subject to the licensing requirements. Nevertheless, TC is confident that a two-year grace period is fair, as it will provide sufficient time to train law enforcement agencies and educate operators on the new requirements prior to their coming into force.

Stakeholders’ views were also mixed on the proposed amendments to reduce the time frame for owners to notify Transport Canada of changes to licence information, with some noting 30 days was not enough time to transfer a licence between sellers and buyers and others noting changes should be instantaneous. Given advancements in Transport Canada’s licensing system, which permits PCL applications to be done online and processed in as little as 5 days, as well as input received from enforcement agencies who favoured a shorter time frame for updating licences, the decision was made to maintain the proposed 30-day timeline.

About half of the respondents disagreed in principle with the introduction of any fee, and the other half of respondents had no opinion or agreed to the principle that those who directly benefit from a service should pay a bigger share of the costs. About half of the respondents indicated that a $15 fee to process an application for a new pleasure craft licence seemed quite reasonable and noted that it would represent a very small cost compared with the cost to own and operate a pleasure craft. Furthermore, some hoped that the proceeds from the fee would support boating safety, boating infrastructure, or management of abandoned boats. A full breakdown of comments is available in the What We Heard Report published on Transport Canada’s website on April 13, 2021.

As discussed above, Transport Canada is now proposing that the price of the PCL service fee be set at $24 and adjusted annually for inflation. Given that the new proposed price represents an increase of $9 for a licence valid for five years, the economic impact to stakeholders of this change is very low. Nonetheless, upon prepublication of the proposed amendments to the SVR, Transport Canada will engage in targeted outreach to the recreational boating community using email and social media, in addition to the usual communication channels to keep stakeholders informed.

Consultation on MIC requirements

The proposed amendments to formalize the current practice for MIC holders to update their contact information as a requirement in the SVR were added later in the regulatory process and therefore were not part of initial consultations. A targeted consultation with stakeholders impacted by the proposed amendments took place in summer 2021. No concerns were raised.

Impact of COVID-19

While the COVID-19 pandemic has negatively impacted many facets of the Canadian economy, the recreational boating sector has grown. Between March and December 2020, Transport Canada recorded over 137 000 PCL transactions, a 20% increase as compared to the same period in 2019. Therefore, it is clear that COVID-19 has not reduced interest in buying or operating pleasure craft. Given that the proposed service fee is low relative to the cost of purchasing, operating and maintaining a pleasure craft, it is not expected that the introduction of the service fee, even in the COVID-19 context, would have an impact on new pleasure craft purchases or on operating existing pleasure craft. This conclusion is consistent with findings from a study^{footnote 8} commissioned by Transport Canada prior to the pandemic that found the introduction of modest fees for pleasure craft would have no discernable impact on purchasing or operating decisions with respect to pleasure craft.

Consultation with other federal departments

Transport Canada confirmed the Canadian Coast Guard’s support for this regulatory proposal. This regulatory proposal would enhance pleasure craft licensing, helping to support the Canadian Coast Guard’s mandate on its search and rescue operations, and the removal of vessels of concern located within waters in its specific areas of jurisdiction.

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 the proposal gives rise to modern treaty implications. This assessment examined the geographic scope and subject matter of the proposal in relation to modern treaties in effect. While no treaty obligations were identified, for the purposes of good governance, treaty groups will be notified about the proposal, as this could be of interest to their members engaged in fishing, harvesting and other daily living activities using small vessels, including pleasure craft. Letters were sent to modern treaty groups and National Indigenous Organizations notifying them of the proposal in late fall 2021. The proposal was also included in newsletters to Indigenous communities and organizations distributed by Transport Canada’s Indigenous Relations Unit in June and October 2022. No comments were received; however, the Métis Nation of Alberta requested further information via a follow-up meeting and asked to be notified when the proposal was prepublished in the Canada Gazette.

Instrument choice

As part of this regulatory project, amendments are being proposed to the current pleasure craft licensing regime to enhance the integrity of data collected in the PCELS and to recover costs associated with administering the pleasure craft licensing program. Current regulatory requirements allow for the existence of lifetime licences, which are more likely to contain out-of-date information given that there are no regular points of contact between Transport Canada and lifetime licence holders. In addition to this, the regulations currently permit PCL holders to operate their pleasure craft with out-of-date information for 90 days, which in some areas is an entire boating season. Out-of-date information can impede and delay search and rescue efforts and enforcement activities. Based on the information in the existing database, it is clear that, in the absence of regulatory intervention, there would be no way to ensure that licence holder information is kept up to date.

In addition, because certain pleasure craft, such as sail-alone vessels, are not subject to licensing requirements, it is difficult for DEOs and search and rescue agencies to respond effectively to emergencies involving these vessels or to ensure they remain in compliance with the SVR. Therefore, regulatory intervention is required to ensure a consistent approach to regulating all pleasure craft.

Finally, regulatory intervention is needed to introduce a $24 service fee for PCL transactions. Fees can only be set using the regulatory authorities provided under the Canada Shipping Act, 2001. Therefore, in order to establish the proposed fees, a regulatory change is necessary.

Regulatory analysis

A pleasure craft licensing fee of $24 would be introduced for processing the issuance, renewal, transfer or request for a replacement licence. The fee would rebalance the costs to administer the PCL program from Canadian taxpayers to PCL licence holders (who are the primary beneficiaries). In addition, lifetime and 10-year licences would be phased out and replaced with 5-year licences, which would require licence holders to spend more time submitting renewal documentation. Transport Canada would be affected by the increased demand for PCL transactions processed by a third-party service provider, hiring additional employees to support the program, and hosting education and outreach activities to notify stakeholders of the new requirements in the SVR.

Benefits and costs

The total cost of the proposed amendments is estimated to be $39.28^{footnote 9} million between 2024 and 2033 (present value in 2022 Canadian dollars, discounted to the year 2024 at a 7% discount rate), of which $34.99 million would be carried by PCL holders and $4.29 million by Transport Canada. These estimated costs represent pleasure craft licensing fees, the opportunity costs for users to apply for these licences, postage costs for users that mail in applications and other costs to the Government of Canada with the administration of the pleasure craft licensing program. Of the $34.99 million cost attributed to domestic PCL holders, $29.34 million would be due to the introduction of the service fee.

The proposed amendments would also benefit Canadian taxpayers, as the recovered costs of $29.34 million from the service fee charged to domestic PCL holders, and $0.35 million from foreign PCL holders, would rebalance their financial burden to recover the cost of Transport Canada providing these services.

Therefore, the proposed amendments would result in a net cost of $9.59 million over the 10-year period between 2024 and 2033. Despite the net monetized cost, Transport Canada considers the proposed amendments to be in the public interest of Canadians because of the qualitative benefits anticipated, which include strengthening the integrity and efficacy of the licensing program, supporting more efficient clean up and recovery efforts, reducing and deterring non-compliance and helping to minimize the negative environmental impacts of wrecked and abandoned vessels.

Analytical framework

The costs and benefits for the proposed amendments have been assessed in accordance with the Treasury Board of Canada Secretariat’s (TBS) Policy on Cost-Benefit Analysis. Where possible, impacts are quantified and monetized, with only the direct costs and benefits for stakeholders being considered in the cost-benefit analysis.

Benefits and costs associated with the proposed amendments are assessed based on comparing the baseline scenario 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 amendments. The regulatory scenario provides information on the intended outcomes because of the proposed amendments. Details are further discussed below.

The proposed amendments would result in a greater portion of the costs for the administration of the pleasure craft licensing program being carried by the users of the program. Both domestic and foreign licence holders, whose pleasure crafts are principally maintained and operated in Canada, would be affected, with the domestic licence holders bearing a greater portion of these costs. Following the Treasury Board of Canada Secretariat’s Policy on Cost-Benefit Analysis, the scope of this analysis is at the societal level, analyzing costs and benefits attributed to Canadians. Due to the cost-recovery nature of this initiative, the incremental costs to domestic licence holders represent a shift of the cost burden from Canadians (represented by Transport Canada) to the Canadian licence holders. Incremental costs to foreign stakeholders would represent a net increase in the cost recovered by Transport Canada (since these costs would not be borne by Canadians). Therefore, costs to domestic licence holders would have neutral impact on the Canadian society, while costs to foreign licence holders are considered a benefit to Canadians.

Unless otherwise stated, all costs and benefits are in present values expressed in 2022 Canadian dollars, discounted to the year 2024 at a 7% discount rate, over a 10-year period from 2024 to 2033.

Data and assumptions used to project PCL transaction volume

The PCL transaction volumes projected during the analytical period were based on data provided by the PCELS and the third-party service provider that delivers PCL services on behalf of Transport Canada. In particular

• future transaction volumes relating to new, transfer, replacement and amendment/update requests were projected based on the average of annual requests between 2010 and 2022, since the annual requests observed over this period were relatively stable.
• future transaction volumes relating to existing PCL renewals were projected as follows:
  • PCLs issued with a 10-year validity would be renewed at a rate of 15%, based on renewal data of such PCLs issued in 2010–2011 and 2011–2012;
  • PCLs issued with a lifetime validity would be renewed at a rate ranging between 5% and 15%, depending on when they were issued. For example, a renewal rate of 15% was applied to those issued between 2006 and May 2010 and 13% applied to those issued between 2000 and 2005;^{footnote 10} and
  • PCLs issued with a 5-year validity would be renewed beginning in 2029 at a rate of 30% (double the 15% renewal rate for 10-year validity PCLs). This value was chosen to reflect the expected increase in renewals that would occur once the licence validity period is reduced from lifetime or 10 years to 5 years.

There is some inherent uncertainty in the future PCL transaction volume projection given that it is unknown exactly how many of the 1.5 million PCLs with a lifetime validity relate to vessels that are still in service with owners who can be reached and are ready to comply with the new requirement to renew their PCLs. However, the third-party service provider is aware of the possibility of fluctuations to the projected transactions that it would process each year and has accounted for this possibility in its operational plan.

Baseline and regulatory scenarios

Under the baseline scenario, there were approximately 2.5 million active PCLs in Canada as of July 2021. Approximately 1.5 million of these are lifetime licences issued prior to May 2010 that do not require renewal, and 0.9 million were issued on or after May 2010, with a validity period of 10 years. PCL holders are not required to pay fees when applying for new PCLs, or renewing, transferring, or requesting a replacement of their existing PCLs. In addition, operators of certain types of pleasure craft, such as wind-powered vessels, are not subject to the PCL requirements prescribed in the SVR. Furthermore, PCL transactions are processed by a third-party service provider that invoices Transport Canada based on the number of processed licence requests. In addition, as part of an agreement between Transport Canada and Service Canada, Service Canada responds to inquiries from the public about the PCL program, a service for which Transport Canada is also periodically invoiced.

Under the regulatory scenario, lifetime licences would be phased out over a 6-year period and be replaced by those with a 5-year validity. Likewise, licences with a 10-year validity period would be replaced by licences with a 5-year validity period upon their expiry dates or upon transfer of the licence. When PCL holders apply for new licences, or renew, transfer, or request a replacement of an existing licence, a service fee of $24 would be charged to continue the legal operation of their vessel. Furthermore, the proposed amendments would expand the scope of the SVR’s application to include wind-powered vessels that are above six metres in length, excluding all human-powered vessels such as dragon boats and kayaks. The inclusion of other types of pleasure craft would increase the number of newly issued licences by an estimated 25 000 in total between 2024 and 2026, which would then be subject to renewal thereafter. Similar to practices under the baseline scenario, Transport Canada would be invoiced by a third-party service provider based on the number of processed PCL transactions and by Service Canada based on the number of telephone inquiries from the public.

Table 1 outlines PCL holder requirements under the baseline and regulatory scenarios. The number of affected PCL holders represents the estimated number of current PCL holders (for lifetime and 10-year validity PCLs) or prospective PCL holders (for wind-powered vessels that are above six metres in length) who will obtain a new or renewed PCL under the proposed new 5-year validity regime. For lifetime and 10-year PCLs, these estimates consider actual renewal rates for 10-year validity PCLs issued in 2010–11 and 2011–12. There are currently more lifetime and 10-year validity PCLs in existence than the figures shown in the table, but the difference represents PCLs that are not expected to be renewed.

Table 1: PCL holder requirements under the baseline and regulatory scenarios

Requirement	Baseline scenario	Regulatory scenario	Number of affected PCL holders
Licence with lifetime validity	No renewal required (except when owner information changes).	Licences to be phased out over a 6-year period and replaced by those with a 5-year validity. $24 service fee to be charged for processing licence issuance, renewal, transfer or replacement.	169 442
Licence with a 10-year validity	Renewal required every 10 years. No fee charged for licence issuance, renewal, transfer, or replacement.	Renewal required every 5 years upon expiration under the baseline scenario. $24 service fee to be charged for processing licence issuance, renewal, transfer or replacement.	679 168
Licence for wind-powered vessels above six metres in length	No licence required.	New licences to be phased in during a 2-year period, with a 5-year validity. Renewal required every 5 years. $24 service fee to be charged for processing licence issuance, renewal, transfer or replacement.	25 000

Source: Transport Canada’s Pleasure Craft Electronic Licensing System, accessed in 2022 with assumptions applied.

Stakeholder profile

The stakeholders immediately affected by the regulatory amendments are domestic and foreign PCL holders whose pleasure crafts are principally maintained and operated in Canada, as they would be subject to service fees for processing licence issuance, renewal, transfer or replacement. Transport Canada would also be affected due to processing licence transactions. While the PCL holders and the Government of Canada would incur costs associated with the proposed amendments, most of the costs would be borne by domestic PCL holders. In addition, manufacturers, builders, rebuilders, and importers of pleasure craft who hold MICs would be subject to a new requirement to update contact information within 30 days of a change.

Table 2 outlines the number of active PCLs by province as of 2020, of which 45% of PCLs are issued to pleasure craft located in Ontario, followed by 17% in Quebec and 13% in British Columbia. Foreign PCL holders (i.e. non-Canadian residents) make up approximately 1.18% of issued licences.

Table 2: Number of active PCLs by Canadian province

Province	Number of active PCLs
Alberta	205 462
British Columbia	361 532
Manitoba	122 064
New Brunswick	53 201
Newfoundland and Labrador	57 612
Nova Scotia	58 001
Northwest Territories	6 864
Nunavut	344
Ontario	1 215 139
Prince Edward Island	11 414
Quebec	460 487
Saskatchewan	109 752
Yukon	5 285
Non-residents	31 799

Source: Third-party Service Provider Annual Report, 2020.

Costs

The total costs of the proposed amendments are estimated to be $39.28 million. Domestic licence holders would assume costs of $34.99 million, of which $29.34 million is associated with the introduction of the licensing service fee and $5.65 million for the completion and submission of licensing applications. Transport Canada would incur costs of $4.29 million, of which $2.35 million is associated with the service provided by a third-party service provider, $0.80 million with service provided by Service Canada, $0.61 million with additional hiring and $0.54 million with outreach and advertising.

Costs to PCL holders

Service fee

The proposed amendments would introduce a $24 service fee^{footnote 11} for each licence transaction, including processing the issuance of a new licence, processing the transfer of a licence, processing the request for a replacement licence and processing the renewal of an existing licence. Stakeholders subject to this new fee include all existing and new PCL holders with a pleasure craft that is (1) powered by one or more motors adding up to 7.5 kW (10 horsepower) or more, and (2) wind-powered and above six metres in length but excluding all human-powered vessels such as canoes, dragon boats and kayaks. The proposed amendments would result in a total of approximately two million^{footnote 12} transactions that would be subject to the service fee between 2024 and 2033, with the annual transactions varying between approximately 150 450 and 189 000. As a result, the total cost associated with the new service fee would be $29.34 million.

Opportunity costs for additional transactions

Since the proposed amendments would require that all existing active PCL holders renew their licence more frequently (from no renewal or every 10 years to every 5 years), there would be an increase of time spent by licence holders for submitting the corresponding documentation online or by mail.

Transport Canada estimated that, on average, PCL holders would need to spend time on applying for or renewing an additional 80 710 PCL transactions per year, including^{footnote 13}

• 21 060 additional transactions due to the elimination of lifetime licences;
• 33 960 additional transactions due to the elimination of 10-year licences;
• 3 250 additional transactions due to the inclusion of other types of pleasure craft; and
• 22 440 additional transactions due to transfers, replacements and new PCLs.

It is estimated that an online application would take a PCL holder approximately 15 minutes to complete, at an average hourly wage rate of $40.62,^{footnote 14} which would result in a total cost of $5.53 million. In addition, approximately 20% of applications would be submitted by mail, with the postage cost of $1.07^{footnote 15} per letter mail; therefore, the additional cost of mailing PCL applications would be $0.12 million. In total, the cost associated with completing and submitting PCL applications would be $5.65 million.

Costs to Transport Canada

Service agreements

As previously described in the “Background” section, a third-party service provider and Service Canada provide services (e.g. process PCL transactions, maintain the PCELS and provide customer support) to PCL holders on behalf of Transport Canada. They then invoice Transport Canada based on the number of licence transactions and inquiries. Using historical data, it is expected that^{footnote 16}

• the third-party service provider would process 80% of licence applications submitted online with a unit cost of $11.96, and 20% of licence applications submitted by mail with a unit cost of $26.33; and
• Service Canada would manage the nationwide Boating Safety Info-line and respond to inquiries on the PCL regime with a unit cost of $4.16.

It is estimated that the total costs from PCL service providers would be $3.14 million: $2.35 million would be accrued by the third-party service provider, and $0.80 million by Service Canada.^{footnote 17}

Additional hiring

It is expected that Transport Canada would hire additional resources, starting in 2024, as follows:

• one indeterminate employee at the AS-03 level (0.25 [full-time equivalent (FTE)]) to support the increased volume of PCL inquiries expected to be fielded by the Office of Boating Safety; and
• one indeterminate employee at the GT-04 level (0.5 FTE) to support outreach and awareness.

As a result, incremental costs are estimated to be $0.61 million over the analytical period.^{footnote 18}

Transport Canada would also hire 12 summer students to support their outreach and awareness program in 2023. The students are expected to travel across Canada to help promote the regulatory amendments, including 15 overnight stays, 45 travel days, meals and incidentals in 2023. The total costs are estimated to be $0.22 million incurred in 2023 ($0.17 million associated with their wages and $0.05 million associated with their travel, meals and incidentals). These costs would be incurred in 2023, prior to the registration of the Regulations; therefore, they would be out of the scope of the cost-benefit analysis and considered sunk costs.

Education and outreach

It is expected that Transport Canada would participate in outreach activities, starting in 2024 for each year of the analytical period, as follows:

• organize an education and outreach campaign to disseminate boating safety materials and participate in industry events; and
• notify stakeholders of the requirements when the regulations come into force using social media, Canadian news sources and the Office of Boating Safety web pages.

It is estimated that the total costs from education and outreach activities would be $0.54 million: $0.18 million associated with the outreach campaign and $0.36 million associated with advertising.

Costs to MIC Holders

The proposed amendments would formalize the current practice for MIC holders to update the Minister of Transport if there is a change to information, such as the business name or address, within 30 days of the change as a requirement in the SVR. Based on Transport Canada’s MIC database, it is expected that all active MIC holders already voluntarily update information to Transport Canada, as per normal business practice and therefore this amendment would not impose incremental costs on businesses. For illustration purposes only, it is estimated that each occurrence, per business, would amount to approximately $6.77.^{footnote 19}

Benefits

The proposed amendments would result in a rebalancing of cost from Canadians to PCL holders, as a $24 service fee per transaction would be charged to PCL holders for processing the licence issuance, transfer, replacement, or renewal. As a result, the total cost recovered would be $29.69 million, $29.34 million of which would be from Canadian PCL holders (neutral impact on the Canadian society), and $0.35 million from foreign PCL holders (a net benefit to Canadian taxpayers).

Break-even analysis

As stated above, the total net present value cost of the proposed amendments is $9.59 million. The number of wrecked and abandoned vessels within Canadian waters were evaluated using a break-even analysis, which aims to determine the percentage reduction of wrecked vessels required to equal or surpass the net cost of the proposal. More accurate information on vessel owners stationed within the PCELS is not expected to prevent the abandonment of vessels. Transport Canada believes that the proposed amendments, specifically the anticipation of more accurate information stemming from increased PCL renewals, could deter non-compliance and result in fewer occurrences, improving boating safety and minimizing environmental impacts of wrecked and abandoned vessels.

The cost for remediating, removing or disposing of a wrecked or abandoned vessel (or problem vessel) depends on many factors specific to the vessel itself, such as the length, the material, the degree of deterioration and the location. The average cost ranges from $15,000 to $75,000 depending on the type of pleasure craft, the action required (removal, disposal, dismantle, etc.), the complexity of the task and the state of the industry in the region.^{footnote 20} The Canadian Coast Guard national inventory has identified that 83% of total problem vessels (including pleasure craft, commercial vessels) have no known owners. Although the proposed amendments are not expected to provide benefits in situations where licence holders do not actively renew their licences (Transport Canada will not have accurate data to identify vessel owners and hold them responsible for removal costs), it is anticipated that with a higher degree of owner accountability, vessel owners will be incentivized to responsibly manage their vessels moving forward, which could further benefit the environment and mitigate damage to Canadian ecosystems where wrecked vessels would be found.

Given a lack of available research and literature on the correlation between stored vessel owner data and non-compliance, Transport Canada cannot predict or assume the magnitude of this impact before analyzing the change of compliance after the amendments come into force.

It is estimated that at the break-even point in the central analysis, a reduction of 7.30%, or an average yearly reduction of 21 fewer occurrences in the regulatory scenario compared to the baseline scenario would be required. Transport Canada believes that this expected reduction is achievable.

Cost-benefit statement

Number of years: 10 (2024–2033)
Base year for costing: 2022
Present value base year: 2024
Discount rate: 7%

Table 3: Monetized costs (in millions)

Impacted stakeholder	Description of cost	First year: 2024	Annual average (2025–2032)	Final year: 2033	Total (present value)	Annualized value
Domestic PCL holders	Service fees	$4.0	$2.91	$2.04	$29.34	$4.18
	Licence applications	$0.42	$0.56	$0.67	$5.53	$0.79
	Mail-in application postage fees	$0.01	$0.01	$0.01	$0.12	$0.02
Government of Canada (represented by Transport Canada)	Service contracts	$0.30	$0.32	$0.30	$3.14	$0.45
	Additional hires	$0.08	$0.06	$0.04	$0.61	$0.09
	Education and outreach campaign and advertising	$0.07	$0.05	$0.04	$0.54	$0.08
All stakeholders	Total costs	$4.88	$3.91	$3.10	$39.28	$5.59

Table 4: Monetized benefits (in millions)

Impacted stakeholder	Description of benefit	First year: 2024	Annual average (2025–2032)	Final year: 2033	Total (present value)	Annualized value
Canadians (represented by Transport Canada)	Service fees from domestic PCL holders	$4.0	$2.91	$2.04	$29.34	$4.18
	Service fees from foreign PCL holders	$0.05	$0.03	$0.02	$0.35	$0.05
All stakeholders	Total benefits	$4.05	$2.94	$2.06	$29.69	$4.23

Table 5: Summary of monetized costs and benefits (in millions)

Impacts	First year: 2024	Annual average (2025–2032)	Final year: 2033	Total (present value)	Annualized value
Total costs	$4.88	$3.91	$3.10	$39.28	$5.59
Total benefits	$4.05	$2.94	$2.06	$29.69	$4.23
NET IMPACT	-$0.83	-$0.97	-$1.04	-$9.59	-$1.36

Qualitative benefits

The pleasure craft licensing regime supports emergency response and enforcement activities, including WAHVA, by using data within the PCELS to identify licence holders and their associated vessels. The increased ability to accurately identify licence holders of pleasure craft found adrift or pleasure craft that are wrecked, abandoned or hazardous using new information reported to Transport Canada could assist in reducing emergency response time and lead to more effective and targeted rescues in the case that stakeholders update their data in compliance with the SVR (reduction in widespread search and rescue missions). It is often difficult for Transport Canada and the Canadian Coast Guard to identify licence holders, as some data in the PCELS is outdated due to the lengthy or non-existent licence renewal frequencies. Licence holders may also feel more inclined to take advantage of this information gap when deciding to abandon their vessel, especially when remediation is an impossibility. It is anticipated that, with more accurate information housed by Transport Canada, licence holders would be deterred from abandoning their vessel and encouraged to remain responsible for it throughout its lifespan (ensuring they meet regulatory requirements) and until the end of its life (ensuring an owner properly disposes of their pleasure craft). There is an increased likelihood that with more updated information in the PCELS, PCL holders that comply with the proposed amendments (i.e. actively renew their licences and therefore their information stored in the PCELS) and abandon their vessel would be identified and held responsible for costs associated with removing and disposing of the vessel. In the absence of these proposed amendments, if the owner cannot be identified, these costs may be assumed by the Government of Canada through sponsored programs funding removal. A potential reduction and definite transfer of costs and associated responsibility for the abandoned vessels would result in cost savings to the Government of Canada.

Sensitivity analysis

As previously described, several assumptions have been made to estimate the costs of the proposed amendments. To address the effect of uncertainty and variability on these assumptions, a sensitivity analysis is conducted, where variables are assigned different values and outcomes are re-evaluated. A sensitivity analysis was performed on the following variables: analytical time frame and discount rates.

Analytical time frame

A 10-year analytical time frame was used for the central analysis, whereas the sensitivity analysis presents the results should a 15-year time frame have been used.

Discount rate

The central analysis used a 7% discount rate as recommended by the Treasury Board Secretariat. The sensitivity analysis presents the results should a 3% discount rate have been used, as well as if there was no discounting.

Table 6: Sensitivity analysis results for the net cost (in millions)

Time frame / Discount rate	10-year time frame	15-year time frame
Undiscounted	$13.76	$22.22
3%	$11.70	$17.65
7%	$9.59 table c4 note a	$13.37
Table c4 note(s) Table c4 note a Central scenario used in main analysis Return to table c4 note a referrer

Distributional analysis

As mentioned previously, PCL holders in Canada would be impacted by the proposed amendments. It is estimated that the largest share of costs would be attributed to residents of Ontario, followed by residents of Quebec and British Columbia. Table 7 provides a breakdown of the costs to PCL holders in Canada.

Table 7: Costs to PCL holders, by province (in millions)

Province	Share of costs	Total cost
Ontario	45.56%	$15.94
Quebec	17.27%	$6.04
British Columbia	13.55%	$4.74
Alberta	7.70%	$2.70
Manitoba	4.58%	$1.60
Saskatchewan	4.11%	$1.44
Nova Scotia	2.17%	$0.76
Newfoundland and Labrador	2.16%	$0.76
New Brunswick	1.99%	$0.70
Prince Edward Island	0.43%	$0.15
Northwest Territories	0.26%	$0.09
Yukon	0.20%	$0.07
Nunavut	0.01%	$0.00
Total	100%	$34.99

In addition, costs to PCL holders would be distributed unevenly, which is presented in detail in Table 8 below.

Table 8: Costs to PCL holders, by type of transaction (in millions)

Type of transaction	Share of cost	Total cost
Elimination of lifetime licences	12%	$4.34
Elimination of 10-year licences	40%	$13.90
Inclusion of wind-powered pleasure craft above six metres in length	2%	$0.65
Others (transfers, replacements and new PCLs)	46%	$16.10
Total	100%	$34.99

Small business lens

The analysis under the small business lens concluded that the proposed amendments would impact small businesses holding demonstration licences. Demonstration licences are held by local and regional watercraft dealers operating across Canada and are affected by the associated service fee. Using data from the PCELS, among 485 watercraft dealers across Canada holding demonstration licences, 437 of them are small businesses with 743 demonstration licences. It is estimated that these small businesses would generate a total of 1 719 transactions (240 are related to new applications, 478 related to replacing the lifetime licences with those of a five-year validity, and 1 001 related to renewals) in the analytical period. There would also be an incremental administrative burden imposed on small businesses associated with more frequent licensing renewals (opportunity cost) and postage. Given the relatively low impact anticipated to small businesses, no regulatory flexibilities were considered. It should be noted that a single demonstration licence can be used for all pleasure craft owned within a business’s inventory. It is worth noting that, although some pleasure craft dealers apply for PCLs on behalf of individuals, costs associated with these transactions would be transferred and borne solely by the individual PCL holder.

The total cost per impacted small business is estimated to be $72.95, or $10.39 on an annualized basis.

Small business lens summary

• Number of small businesses impacted: 437
• Number of years: 10 (2024–2033)
• Base year for costing: 2022
• Present value base year: 2024
• Discount rate: 7%

Table 9: Compliance costs

Activity	Annualized value	Present value
Service fees	$3,769	$26,475
Total compliance cost	$3,769	$26,475

Table 10: Administrative costs

Activity	Annualized value	Present value
Licence applications and mail-in postage fees	$770	$5,405
Total administrative cost	$770	$5,405

Table 11: Total compliance and administrative costs

Totals	Annualized value	Present value
Total cost (all impacted small businesses)	$4,539	$31,880
Cost per impacted small business	$10.39	$72.95

One-for-one rule

The one-for-one rule applies since there is an incremental increase in the administrative burden on businesses holding demonstration licences, and the proposal is considered an “IN” type burden under the rule. The proposed amendments would impose more frequent application renewals to businesses holding demonstration licences, which would result in additional time spent (opportunity cost) and potential postage costs in order to comply with the amendments. Using the methodology developed in the Red Tape Reduction Regulations, it is estimated that the annualized additional administrative costs imposed would be $310, or an annualized cost of $0.64 per business, to the 485 affected stakeholders (present value in 2012 Canadian dollar, discounted to the year 2012 with a 7% discount rate for a 10-year period between 2024 and 2033).

The total number of estimated transactions that would impact the administrative cost of businesses holding demonstration licences (485 businesses) is 1 118 over the analytical period. This is equal to the total number of transactions projected for businesses in years 2029 to 2033. The administrative costs attributed to businesses are equal to the opportunity cost of renewing licences earlier than otherwise required under the baseline scenario.^{footnote 21}

The requirement for MIC holders to update their contact information within 30 days of a change is considered an administrative burden; however, given that all impacted stakeholders already comply with this requirement in the baseline scenario, the proposed amendments would not result in an incremental change in the administrative burden for MIC holders.

Regulatory cooperation and alignment

The proposed regulatory amendments are not linked to international agreements or obligations, nor are they part of any existing formal regulatory cooperation initiative.

Although there were no formal requirements or commitments to align with other international jurisdictions, licensing and registration fees for certain states in the United States of America and states in Australia were considered when developing the Fee Proposal for Pleasure Craft Licensing (fee proposal)^{footnote 22}. A direct comparison of programs between jurisdictions is difficult, as other jurisdictions require licensing or registration for different types and lengths of vessels, have varied validity periods, and sometimes include vessel titling in the fee. However, even before considering validity periods, Transport Canada’s new proposed $24 PCL fee is comparable to, or lower than, similar vessel licensing fees in the many jurisdictions analyzed in the original fee proposal. In addition, the proposed renewal period of five years is longer than those offered in most other international jurisdictions outlined in the fee proposal, meaning Canadians would pay renewal fees less frequently than pleasure craft owners located in those jurisdictions examined. Overall, the proposed PCL service fee would be less expensive than many other countries when the renewal frequency is considered.

Alignment with other Transport Canada regulations

Proposed amendments to the SVR would also align the pleasure craft licensing regime more closely with other Transport Canada marine programs. The proposed amendments to reduce the renewal period of PCLs from 10 years to 5 years would support efforts by Transport Canada to align with the registration period for other small vessels captured in the Small Vessel Register, which is 5 years. This change would support ongoing efforts to align the renewal periods for small vessels operating in Canada, including pleasure craft.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, and the Transport Canada Policy Statement on Strategic Environmental Assessment (2013), the strategic environmental assessment (SEA) process was followed for this 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 analysis of the proposed amendments indicates that this project would not have significant or disproportionate impacts on any specific groups considered under the gender-based analysis plus (GBA+) lens. The regulatory project targets specific client bases within the marine sector: current and future PCL holders, search and rescue agencies, DEOs, and MIC holders. Research conducted by the National Marine Manufacturer’s Association in 2016 shows that participants in recreational boating are broadly gender balanced between men and women, with 52% being male and 48% being female.

Proposed amendments related to pleasure craft licensing would enhance the information captured in the PCELS and equally benefit all Canadians who engage in recreational boating, as well as search and rescue partners, and DEOs who rely on information in the PCELS to respond to marine emergencies, and to enforce laws protecting waterways, respectively. The PCL application form does not collect information regarding identity factors, including sex, gender, race, ethnicity, income level or religion, nor is such information contained in the PCELS. The MIC database similarly does not collect any information regarding identity factors, such as sex, gender, race, income level or religion.

The proposed introduction of a service fee every five years to renew a PCL may impact low-income PCL holders more than middle class or wealthy PCL holders. However, as noted, during consultations stakeholders did not take issue with the proposed amount of the fee (initially $15) as it was considered quite reasonable, especially in comparison to the other costs associated with purchasing, operating, maintaining and owning a pleasure craft. The proposed price increase of $9 (for a new fee amount of $24, adjusted annually for inflation) does not substantively change the fact that the updated fee amount would remain affordable for PCL holders. Therefore, it is not expected that the proposed service fee would unduly burden PCL holders, nor pleasure craft owners who are newly subjected to the licensing requirements set out in the SVR.

Implementation, compliance and enforcement, and service standards

Implementation

The majority of the proposed regulatory amendments would come into force upon publication in the Canada Gazette, Part II. The expansion of the licensing requirements for wind-powered pleasure craft that are above six metres in length would come into force two years after publication in the Canada Gazette, Part II.

Stakeholders would be informed of the proposed regulatory changes through regular communication tools, such as updates on the Transport Canada website, and email notifications sent via the CMAC membership list. In addition, stakeholders continue to be updated on the progress of this regulatory project at national and regional meetings of the CMAC, as well as the NRBAC.

Ten-year licence holders would receive a notice that their licence will expire with steps on how to retain and keep their licence valid. Transport Canada plans to consult with stakeholders on these changes through the Canada Gazette, Part I, package. As noted, an extended 60-day consultation period is proposed, and given the new changes, Transport Canada further proposes to supplement its usual Canada Gazette, Part I, consultation efforts with targeted outreach as well (e.g. social media posts and emails to the recreational boating community) to provide all stakeholders with a meaningful opportunity to provide feedback on Transport Canada’s plans. All commonly used payment methods would be accepted for online PCL service fee transactions (e.g. credit card, Interac) while money orders would also be accepted for PCL applications sent via traditional mail.

Compliance and enforcement

Enforcement of the SVR would be unchanged as a result of the proposed amendments. Enforcement actions are carried out by any enforcement officer specified under section 194 of the Canada Shipping Act, 2001. Under the Contraventions Regulations, people found in non-compliance with the licensing requirements could be subject to a $250 fine. For provinces that do not have the Contraventions Regulations in place, enforcement partners can issue a summary conviction.

Service standards

Pleasure craft licensing

Prior to the COVID-19 pandemic, there was a service standard of five business days to process a completed PCL application request. The proposed amendments would not alter this set service standard, and licences would continue to be issued within five working days (plus mailing time, if applicable). The yearly service standard report in 2019 indicated that the five-day service standard was met 99% of the time for both mail-in and online PCL applications.

During the COVID-19 pandemic, Transport Canada noted an increased interest in recreational boating, and saw an increase of over 20% in pleasure craft licensing transactions. Due to the pandemic restrictions placed on access to workplaces, delays were unavoidable in meeting the 5-day service standard. To set clear guidelines and customer expectations, the service standard for pleasure craft licensing services was increased to 15 business days as a temporary measure. Transport Canada intends to return to the 5-day service standard as soon as is practical to do so.

Contact

Honey Walsh
Chief
Office of Boating Safety
Marine Safety and Security
Transport Canada
Place de Ville, Tower C
330 Sparks Street
Ottawa, Ontario
K1A 0N5
Telephone: 613‑790‑6230
Email: MSSRegulations-ReglementsSSM@tc.gc.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council proposes to make the annexed Regulations Amending the Small Vessel Regulations under paragraph 35(1)(g)^{footnote a} and sections 120^{footnote b} and 207^{footnote c} of the Canada Shipping Act, 2001^{footnote d}.

Interested persons may make representations concerning the proposed Regulations within 60 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 Honey Walsh, Chief, Office of Boating Safety, Marine Safety and Security, Department of Transport, Place de Ville, Tower C, 8th Floor, 330 Sparks Street, Ottawa, Ontario K1A 0N5 (tel.: 613‑790‑6230; email: MSSRegulations-ReglementsSSM@tc.gc.ca).

Ottawa, April 27, 2023

Wendy Nixon
Assistant Clerk of the Privy Council

Regulations Amending the Small Vessel Regulations

Amendments

1 (1) Section 100 of the Small Vessel Regulations ^{footnote 23} is replaced by the following:

100 (1) Subject to subsection (2), this Part applies in respect of a pleasure craft — other than a human-powered pleasure craft — that is principally maintained or operated in Canada and is equipped, even temporarily, with one or more primary propulsion engines whose aggregate power is at least 7.5 kW.

(2) Only section 110 applies in respect of a pleasure craft that is registered

• (a) under the Act; or
• (b) in a foreign state as having the right to fly the flag of that state.

(2) Subsection 100(1) of the Regulations is replaced by the following:

100 (1) Subject to subsection (2), this Part applies in respect of a pleasure craft — other than a human-powered pleasure craft — that is principally maintained or operated in Canada and

• (a) is equipped, even temporarily, with one or more primary propulsion engines whose aggregate power is at least 7.5 kW; or
• (b) is wind-powered and more than 6 m in length.

2 The heading before section 101 and sections 101 to 103 of the Regulations are replaced by the following:

Requirements

101 The owner of a pleasure craft shall ensure that the following requirements are met when it is being operated:

• (a) the pleasure craft is licensed by the Minister;
• (b) a copy of the licence is kept on board; and
• (c) the owner’s name and address on the licence are accurate.

3 The heading before section 104 and sections 104 to 106 of the Regulations are replaced by the following:

Exception

104 (1) In the case of a change of a pleasure craft owner’s name or address — other than in the case of a transfer of ownership referred to in section 109 — the owner shall submit an application to the Minister to update the licence no later than 30 days after the date of the change.

(2) Despite paragraph 101(c), the pleasure craft may continue to be operated until the day on which the owner receives an updated licence if documents are kept on board confirming the new name or address of the owner, as the case may be, and the date of the change.

Validity Period

105 A pleasure craft licence is valid for a period of five years beginning on the day on which it is issued, transferred or renewed.

Validity Period — Licences Issued Before April 29, 2010

106 Despite section 105, a pleasure craft licence that was issued before April 29, 2010 is valid until the date set out in column 2 of the table to this section that corresponds to the period set out in column 1 within which the licence was issued.

TABLE

Item	Column 1 Period of Issuance	Column 2 Date Validity Ends
1	December 31, 1974 or earlier	December 31, 2024
2	January 1, 1975 to December 31, 1985	December 31, 2025
3	January 1, 1986 to December 31, 1995	December 31, 2026
4	January 1, 1996 to December 31, 1999	December 31, 2027
5	January 1, 2000 to December 31, 2005	December 31, 2028
6	January 1, 2006 to April 28, 2010	December 31, 2029

4 Section 107 of the Regulations is replaced by the following:

107 (1) An application for the cancellation of a pleasure craft licence may be made to the Minister by the pleasure craft owner.

(2) An application for cancellation shall be made in any of the following circumstances:

• (a) the owner ceased operating the pleasure craft because it is no longer seaworthy;
• (b) the licence is a demonstration licence and the licence holder no longer sells pleasure craft in the course of a commercial enterprise or is using the pleasure craft for a purpose other than demonstration.

(3) The Minister shall cancel a licence in any of the following circumstances:

• (a) the owner or demonstration licence holder, as the case may be, applies for cancellation under subsection (1) or (2);
• (b) the Minister believes on reasonable grounds that the applicant provided false or misleading information in their application for a licence;
• (c) the Minister believes on reasonable grounds that the licensing requirements are no longer met;
• (d) the licence was issued in error.

(4) The Minister shall notify the owner or demonstration licence holder, as the case may be, of the date on which the cancellation takes effect.

(5) In the case of paragraphs (3)(b) and (c), before cancelling a licence, the Minister shall notify in writing the owner or demonstration licence holder, as the case may be,

• (a) of the reason for the proposed cancellation;
• (b) of the date on which the cancellation takes effect; and
• (c) that the owner or demonstration licence holder, as the case may be, may make written representations to the Minister concerning the proposed cancellation no later than 30 days after the day on which they receive the Minister’s notice.

(6) In the case of paragraph (3)(d), before cancelling a licence, the Minister shall notify in writing the owner or demonstration licence holder, as the case may be,

• (a) of the reason for the proposed cancellation; and
• (b) of the date on which the cancellation takes effect.

5 Section 109 of the Regulations is replaced by the following:

109 In the case of a transfer of ownership of a licensed pleasure craft, the new owner shall apply to the Minister for transfer of the licence.

6 Section 110 of the Regulations is replaced by the following:

110 The owner of a pleasure craft shall not operate it or permit it to be operated if it is marked with a number that is not its licence number or its registration number issued under Part 2 of the Act and if that number could be confused with a licence number or a registration number.

7 Section 112 of the Regulations is replaced by the following:

Fees

112 (1) A fee of $24 is payable to the Minister at the time of submission of any of the following applications:

• (a) for the issuance of an initial licence;
• (b) for the issuance of a replacement licence referred to in section 206 of the Act;
• (c) for the renewal of a licence;
• (d) for the transfer of a licence.

(2) The fee set out in subsection (1) is to be adjusted in each fiscal year on April 1 by the percentage change over 12 months in the April All-items Consumer Price Index for Canada, as published by Statistics Canada under the Statistics Act, for the previous fiscal year.

8 The Regulations are amended by adding the following after section 904:

905 A builder, manufacturer, rebuilder or importer that has obtained a manufacturer’s identification code shall inform the Minister in writing of any change of their name, address or other contact information no later than 30 days after the date of the change.

Coming into Force

9 (1) These Regulations, except subsection 1(2), come into force on the day on which they are published in the Canada Gazette, Part II.

(2) Subsection 1(2) comes into force on the second anniversary of the day on which these Regulations are published in the Canada Gazette, Part II.

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