Regulations Amending the Small Vessel Regulations: SOR/2020-279
Canada Gazette, Part II, Volume 154, Number 26
Registration
SOR/2020-279 December 16, 2020
CANADA SHIPPING ACT, 2001
P.C. 2020-1059 December 14, 2020
Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to sections 120 footnote a and 207 footnote b of the Canada Shipping Act, 2001 footnote c, makes the annexed Regulations Amending the Small Vessel Regulations.
Regulations Amending the Small Vessel Regulations
Amendment
1 Subsection 803(1) of the Small Vessel Regulations footnote 1 is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (b) and by repealing paragraph (d).
Coming into Force
2 These Regulations come into force on the day on which they are published in the Canada Gazette, Part II.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
The current requirement in the Small Vessel Regulations (SVR) for a completed Declaration of Conformity (DOC) to be witnessed, signed by authorized personnel and mailed to Transport Canada (TC) presents a regulatory barrier to digitization, innovation, and increased efficiency. It delays the process and requires TC to maintain original paper copies of the DOCs that are subsequently stored in limited physical office space.
Background
To support digitization, innovation, and increased efficiency, TC put forward, through Bill C-97 (under the Budget Implementation Act, 2019), an amendment to the Canada Transportation Act (CTA 2006) that authorizes the electronic administration and enforcement of Acts under the Minister of Transport’s authority, including the Canada Shipping Act, 2001 (CSA 2001). Bill C-97 received Royal Assent on June 21, 2019, and the amendment to the CTA 2006 entered into force immediately.
Under the CSA 2001, the SVR is the primary regulatory mechanism by which TC manages the safety equipment carriage and construction requirements for small vessels. The SVR also provides the regulatory framework for pleasure craft licensing.
Under section 803 of the SVR, builders, manufacturers, rebuilders and importers of vessels propelled or designed to be propelled by an engine are required to submit a DOC to TC and provide a copy of that DOC to the end user at the time of initial transfer of ownership of the vessel that
- i. discloses the principal dimensions and specifications of the vessel;
- ii. attests to the details of the vessel’s compliance with construction requirements; and
- iii. provides the information appearing on the compliance notice.
The DOC serves as a formal attestation of compliance with Parts 7, 8 and 9 of the SVR. DOCs are submitted by a Canadian resident or corporation registered with TC as the Canadian manufacturer or importer of the vessels, and serve to demonstrate that the submitter is taking responsibility for ensuring that those vessels meet the requirements of the Regulations.
The existing process set out in the SVR requires the DOC to be signed by a Canadian Responsible Officer (CRO). A CRO is either an individual or an executive within a corporation who is authorized by the corporation to act as a signatory in attesting to the compliance of vessels with the SVR. The CRO must be a Canadian resident and must be registered as the CRO for a manufacturer or importer by formal application to TC. The SVR requires that the signing of the DOC by the CRO be witnessed by a person authorized to administer oaths under the laws of Canada or a province, such as a commissioner of oaths, paralegal or notary. There is an average cost (validated through stakeholder consultations) of $20 per DOC for this service.
Once submitted to TC, a DOC is validated through both an administrative and technical review. The administrative review ensures the manufacturer/importer information in the DOC aligns with the information on file. It also validates the model name of the vessel and completeness of the form, up to and including a verification that the DOC is the original copy and has been signed as well as witnessed by a person authorized to administer oaths. The technical review assesses the compliance details to ensure the information correlates with a vessel of that type and size and represents compliance with regulatory requirements. When questions arise during either review, a request for clarification is made to the CRO. The DOC is not processed until it can be considered complete and all concerns have been adequately addressed. Once the DOC has been validated, the CRO is advised that the process is complete by email or letter, as needed. The service standard for the processing of a DOC is 30 business days.
The original intent behind the requirement that the signing of a DOC must be witnessed by a person authorized to administer oaths under the laws of Canada or a province was to mitigate the risk of fraudulent signature of a DOC by someone other than a person recognized by TC as a CRO. However, there are additional steps to validating a DOC involving communication with the CRO which also serve to mitigate the risk of fraud. These steps include
- a Notice of Receipt of a DOC sent by TC to the CRO;
- communication between TC and the CRO requesting clarifications or corrections to information on the DOC; and
- a final notice sent to the CRO informing them that the DOC has been processed.
If it is believed that a DOC was fraudulently signed, the CRO would respond to one of these communications and alert TC to any issue or misrepresentation. It is unlikely a CRO would willingly accept responsibility for a DOC submitted without their knowledge. This risk is further mitigated through enrollment in Phase II of the online DOC process which is discussed in more detail below.
In May 2018, TC launched Phase I of the online DOC process, which allowed clients to access the DOC form online. However, this service was restrictive as the DOC still needed to be printed before it could be filled out, signed, witnessed by a person authorized to administer oaths, and returned by mail to TC.
In February 2020, TC launched Phase II of the online DOC process to improve the usability and efficiency of the Phase I service both internally and externally. Phase II improvements allow a user to log into a secure dashboard to enter the DOC data directly into a database and upload photos and signatures electronically without the need for any data entry by TC staff. This information is then reviewed by TC for accuracy and completeness and either processed or returned to the stakeholder electronically for correction or clarification. In order to use the online services, a CRO must request an enrollment key from TC program administrators in order to become enrolled. Enrollment keys are used in conjunction with the person’s GC key footnote 2 for further validation.
Although the implementation of Phase II has improved the efficiency and accessibility of the DOC process, because the SVR requires that the DOC be signed in front of a witness authorized to administer oaths, it is not possible for the entirety of the process to be completed online while this regulatory requirement remains in place. Under the current process, the CRO must print a copy of the DOC to physically sign before a witness, and submit it, either by mail or electronically (via a scanned copy of the signature) to TC as a means of satisfying the requirements paragraph 803(1)(d) of the SVR. The online platform has been designed in such a way that once this requirement for a witness is removed, the platform can easily be updated to allow the entire DOC process to be completed online with negligible cost to TC.
Objective
The objective of this regulatory amendment is to improve efficiency in the DOC submission process in a manner that reflects industry practices and feedback, and supports TC’s direction regarding digitization and innovation.
This amendment will result in cost savings to small vessel manufacturers and importers, as they will save the time and costs associated with paying and accompanying a person authorized to administer oaths to witness the signature, and mailing them to Transport Canada (usually by courier). This amendment will also result in cost savings to the government because it is expected that the addition of an option to submit DOCs electronically will lead to nearly all DOCs being submitted online, reducing the number of DOCs that must be manually processed and stored. These cost savings have been quantified and monetized, and the results are provided in the “Regulatory analysis” (including benefits and costs) and the “One-for-one rule” sections.
Description
The amendment repeals paragraph 803(1)(d) of the SVR that the signature of a DOC be witnessed by a person authorized to administer oaths. This will allow for the DOC to be completed and sent to TC electronically. The option to submit a paper DOC by mail will remain available without the requirement for a witness.
Regulatory development
Consultation
In spring and fall 2019, and again in summer 2020, TC consulted with a range of manufacturing and importing stakeholders to gain insight into the end users’ experience with the small vessel compliance process and its services, and to validate economic assumptions and data used to estimate the impact of the amendments. Consultations were held at national Canadian Marine Advisory Council (CMAC) meetings and through teleconferences and email campaigns. Stakeholders feel that the requirement to have the signing of DOCs witnessed by a person authorized to administer oaths is inefficient and delays the submission process. There was broad support for TC’s plan to update and digitize the DOC process. Comments received on TC’s economic assumptions and data were all supportive.
The amendment is a result of stakeholders identifying this issue as an irritant during consultations. Stakeholders have been informed during the aforementioned consultations that TC was developing an amendment to the SVR and no negative comments or concerns were raised. There are no further consultations scheduled for this amendment.
Because this amendment is minor in nature, imposes no costs, reduces administrative burden, improves accessibility, is broadly supported by stakeholders, and has been undertaken in response to stakeholder requests, it was not prepublished in the Canada Gazette, Part I.
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 amendment is likely to give rise to modern treaty obligations. The assessment examined the geographic scope and subject matter of the proposal in relation to modern treaties in effect and no modern treaty obligations were identified.
Instrument choice
Because the SVR contains the requirement that the signing of a DOC be witnessed by a person authorized to administer oaths under the laws of Canada or a province, a non-regulatory approach is not possible. In order to allow the electronic submission of DOCs to be completed entirely online, the only option is to amend the SVR.
Regulatory analysis
The amendment will result in a total cost saving of approximately $639,400 in present value (2019 Canadian dollars, 7% discount rate, base year of discounting in 2020) between 2021 and 2030. $626,400 will be saved by the regulated community as there is no longer a need to have a person authorized to administer oaths witness the signing of a DOC. The Government of Canada (represented by TC) will save $13,000 as TC officials expect to see a reduced number of paper-based DOC submissions that must be manually processed.
Benefits and costs
Benefits and costs associated with the amendment are assessed based on comparing the baseline scenario against the regulatory scenario, in accordance with the Treasury Board of Canada Secretariat (TBS)’s Cost-Benefit Analysis Guide (PDF). The baseline scenario depicts what is likely to happen in the future if the Government of Canada does not implement the amendment. The regulatory scenario provides information on the intended outcomes as a result of the amendment.
Unless otherwise noted, benefits and costs are in present values using 2019 Canadian dollars, 7% discount rate, discounted to the year of 2020, for the period between 2021 and 2030.
The COVID-19 pandemic is not expected to have an impact on the number of DOC submissions. DOCs are prepared and submitted primarily for new vessel models. Similar to the automobile industry, new models are developed to replace existing aging models or to fit a new purpose or demographic in order to remain competitive in the market. The development of these new products is costly and often forecasted and scheduled several years in advance. Throughout the pandemic, it has been observed that the market has remained strong, and therefore TC does not expect much fluctuation with new vessel models in future years.
The baseline scenario depicts what is likely to happen in the future if the Government of Canada does not implement the amendment. Through stakeholder outreach, it became evident that some small boat dealers are not aware of the requirement to submit DOCs. Therefore, since late 2019, TC has launched awareness campaigns to promote compliance. As a result, TC subject matter experts expect to receive 500 DOC submissions in 2020, footnote 3 which will increase by 25% in 2021, 10% in 2022, 5% in 2023, and 1% in 2024 and the following years.
In addition to the awareness campaigns, TC also launched Phase II of the online DOC process in February 2020. This created an online portal to allow for electronic DOC submissions: regulatees are able to fill the DOCs (in a fillable PDF format) online for a person authorized to administer oaths to review and sign, in most cases by an external notary. Once complete, the regulatees can either mail the hardcopy DOCs to TC, or submit them electronically with the signature page attached. If submitted by mail, TC officials will need to manually process the DOCs to add them into the database. Since the launch of Phase II, until September 24, 2020, there were approximately 30 stakeholders actively using the online portal. During this period, TC received 367 DOC submissions, 156 (or 42%) of which were submitted online. However, these online submissions are mostly from large companies who are already using the online portal, and it is likely that some smaller stakeholders, whether they are already aware or just become familiarized with the DOC requirement, would take time to transit from paper submission to online submission. It is expected that about 45% of DOCs will be submitted electronically in 2020, which will increase by 5% in each of the following years and reach 95% in 2030.
Table 1 below presents detailed assumptions and data used to estimate costs under the baseline scenario. These assumptions and data were validated with stakeholder representatives in summer 2020.
| Item |
Performer |
Required time |
Cost |
Source |
|---|---|---|---|---|
Completing a DOC |
Senior management |
0.75 hours |
$54.95/hour table 1 note * |
Wage rate: Statistics Canada Required time: TC subject-matter expert |
Reviewing the DOC with a person authorized to administer oaths |
Senior management |
1.5 hours per DOC |
$54.95/hour table 1 note * |
Wage rate: Statistics Canada Required time: TC subject-matter expert |
Cost of having the signing of DOCs witnessed |
A person authorized to administer oaths under the laws of Canada or a province |
$20 per DOC |
TC subject-matter expert |
|
Cost of courier |
Senior management |
$20 per 5 DOCs (on average, one mailed package contains 5 DOCs) |
TC subject-matter expert |
|
TC official processing paper-based DOCs |
PM-02 (Program Administration) |
0.5 hours (30 minutes) |
$31.6/hour table 1 note * |
Wage rate: Government of Canada Required time: TC subject-matter expert |
Table 1 note(s)
|
||||
It is estimated that, under the baseline scenario, the regulated community will incur a total cost of approximately $891,000 as a result of completing the DOCs ($261,200), reviewing the DOCs with a person authorized to administer oaths ($522,400), and paying a person authorized to administer oaths to witness the signing of a DOC ($101,400) and courier ($6,000). TC will also incur a total cost of $29,600 for manually processing paper-based DOC submissions. footnote 4
Under the regulatory scenario, regulatees are no longer required to have the signing of the DOC witnessed by a person authorized to administer oaths under the laws of Canada or a province. Similarly to the baseline scenario, stakeholders will take time to transit from paper submission to online submissions. However, since the regulations will make online submission easier, it is expected that TC will receive more DOCs via online submissions. In addition, submitting DOCs by mail will continue to be an option for stakeholders who would prefer not to transfer over to the electronic system. With this in mind, it is assumed that about 45% of DOCs will be submitted electronically in 2020, which will increase by 10% in each of the following years; until it reaches 95% in 2025. By that time the proportion of online submissions is expected to remain constant over the rest of the analytical time frame. As previously explained under the baseline scenario, the lack of full compliance with respect to submitting DOCs is due to some members of the regulated community being unaware of the requirement; the online portal and the amendment will simplify the submission process of DOCs but are not expected to increase the number of DOCs received for processing. Hence, regulatees will only incur a total cost of $264,600, $261,200 of which is to complete DOC submissions $3,400 of which would be for couriers. The Government of Canada will incur a cost of $16,600 to manually process paper-based DOC submissions.
There is no additional cost expected to obtain access to the online platform. It is entirely web-based and similar in format to other online forms. The ability to access and navigate the Internet are the primary skills needed and answers to questions or instructions specific to the use of the platform are provided by TC staff upon request by the regulatees.
Therefore, the amendment will result in a total cost savings of $639,400. Of these cost savings, $626,400 will be saved by regulatees as a result of no longer needing to accompany a person authorized to administer oaths to review the DOCs ($522,400), and not paying for a notary ($101,400) and courier ($2,600). The Government of Canada will save $13,000 for manually processing fewer paper-based DOC submissions.
Small business lens
The small business lens applies as there are impacts on small businesses associated with the proposal. Based on DOC submissions in the past, TC subject-matter experts estimate that about 90% of DOCs were submitted by small businesses, most of which are independent small boat dealers. Therefore, it is expected that 90% of cost savings to the regulated community, or approximately $563,800, will be to small businesses.
While the objectives of the amendment are to improve efficiency in the DOC submission process for regulatees and to promote compliance, the continued acceptance of non-electronic DOC submissions will provide flexibility for small businesses that may not have the capacity to transfer over to the electronic system.
One-for-one rule
The one-for-one rule applies since there is an incremental decrease in administrative burden on business, and the amendment is considered an “OUT” under the rule.
By removing the requirement to have a person authorized to administer oaths witness the signing of a DOC, regulatees will no longer need to spend time with such a person during the review. Using assumptions and data presented in Table 1 above, and the methodology developed in the Red Tape Reduction Regulations, it is estimated that the regulated community will incur a total administrative cost saving of $237,518 in present value (2012 Canadian dollars, 7% discount rate, base year of discounting in 2012) for a 10-year period between 2020 and 2029, or an annualized administrative cost saving of $33,817.
Regulatory cooperation and alignment
This amendment is not related to a work plan or commitment under a formal regulatory cooperation forum. While this amendment is not tied to a formal regulatory cooperation initiative, this proposal aligns broadly with efforts across the Government to modernize, simplify and automate administrative processes. It further supports TC’s direction on digitization and innovation and aligns with 2019 amendments to the Canada Transportation Act, 2006 under Bill C-97 that enable the Minister of Transport to electronically administer and enforce TC’s Acts.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.
Gender-based analysis plus (GBA+)
There are no disproportionate impacts expected to result from this amendment on any groups, including those linked to identity factors such as sex, gender, race, ethnicity and physical abilities. The amendment is expected to be particularly beneficial for persons with disabilities that may affect mobility, as this amendment eliminates the need to make arrangements for travel in order to sign a DOC in front of a witness. The online platform also includes the option to increase the viewing pane for DOC form submissions to assist persons with visual impairments to more clearly read information and requirements.
All clients who are required to submit a DOC are expected to benefit from the option to complete the DOC process online due to the convenience of online submissions and cost savings from no longer needing to have the signing of the DOC witnessed by a person authorized to administer oaths under the laws of Canada or a province.
For persons without access to (or unable to use) an electronic option, the mail-in option is being retained.
Implementation, compliance and enforcement, and service standards
Implementation
The amendment comes into force on the day on which it is published in the Canada Gazette, Part II. As the online platform through which DOCs can be submitted is already in place, clients will be able to complete their submissions entirely online as soon as the amendment is in force.
The service standard for the processing of any DOC is 30 business days to complete the review and finalize the process. It is anticipated that this standard will be consistently met unless unforeseen circumstances are encountered such as prolonged absences or technical difficulties.
Manufacturers or importers not complying with the requirement respecting DOCs are punishable under CSA 2001 section 208. The amendment does not change the various processes in place to maintain oversight and ensure compliance with the Regulations. Upon the coming into force of this amendment, the only notable change will be the removal of the requirement to have the signing of the DOC witnessed by a person authorized to administer oaths under the laws of Canada or a province, which has virtually no impact on the overall program or its processes.
Contact
Jessica King
Manager
Horizontal Policy and International Affairs
Marine Safety and Security
Telephone: 343‑571‑6037
Email: jessica.king@tc.gc.ca