Vol. 144, No. 7 — March 31, 2010

Registration

SOR/2010-55 March 11, 2010

CANADA GRAIN ACT

Regulations Amending the Canada Grain Regulations

P.C. 2010-258 March 11, 2010

Whereas the Canadian Grain Commission is of the opinion that the control of licensed terminal and transfer elevators discharging grain for export to the United States is not essential for maintaining the quality, safe-keeping and orderly and efficient handling of grain in Canada;

Therefore, the Canadian Grain Commission, pursuant to subsection 116(1) (see footnote a) and section 117 (see footnote b) of the Canada Grain Act (see footnote c), hereby makes the annexed Regulations Amending the Canada Grain Regulations.

Winnipeg, Manitoba, February 9, 2010

ELWIN HERMANSON
Chief Commissioner of the Canadian Grain Commission
JIM SMOLIK
Assistant Chief Commissioner of the Canadian
Grain Commission
DAHL
Commissioner of the Canadian Grain Commission

Her Excellency the Governor General in Council, on the recommendation of the Minister of Agriculture and Agri-Food, pursuant to subsection 116(1) (see footnote d) and section 117 (see footnote e) of the Canada Grain Act (see footnote f), hereby approves the annexed Regulations Amending the Canada Grain Regulations made by the Canadian Grain Commission.

REGULATIONS AMENDING THE CANADA GRAIN REGULATIONS

AMENDMENTS

1. The heading after section 47 of the Canada Grain Regulations (see footnote 1) is replaced by the following:

RECEIPT AND DISCHARGE OF GRAIN FROM LICENSED TERMINAL AND TRANSFER ELEVATORS

48. The operator of a licensed terminal elevator may discharge grain that is for export to the United States

(a) without causing it to be officially inspected if the operator submits to the Commission within three days after the day on which the discharge of the grain is completed a report respecting the discharge in a format acceptable to the Commission; and

(b) without causing it to be officially weighed if the operator submits to the Commission within three days after the day on which the discharge of the grain is completed a report respecting the discharge in a format acceptable to the Commission.

2. (1) Subparagraph 50(b)(ii) of the Regulations is replaced by the following:

(ii) it is for export to the United States, or

(2) Subparagraph 50(d)(ii) of the Regulations is replaced by the following:

(ii) it is for export to the United States.

3. Paragraph 70(1)(b) of the Regulations is replaced by the following:

(b) any grain for export to a final destination in the United States on condition that the Commission is notified in writing before the grain is transported; and

COMING INTO FORCE

4. These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue and objectives

Section 70 of the Canada Grain Act (the Act) requires that all grain received into or discharged from an elevator be officially weighed and inspected, unless specifically exempted by regulation or by order of the Canada Grain Commission (CGC). The CGC provides official weighing and inspection services, and charges a fee for their use. Currently, the Canada Grain Regulations (section 50) exempt shipments of grain for export to the United States by way of rail or truck from certain types of facility from requirements for official weighing and inspection. These exemptions cover most grain exported to the United States; however, the small proportion of grain exported by way of vessel or discharged from terminal elevators is not exempted. Over a period of several years, stakeholders have expressed concern to the CGC that the inconsistent requirements represent a competitive advantage or disadvantage for an industry participant using one conveyance type in relation to another.

In order to address the uneven regulatory framework and eliminate unnecessary costs to industry, since August 2009 the CGC has been exempting shipments of grain to the United States by vessels from official weighing and inspection requirements on a case-by-case basis by way of order. The objective of this regulatory amendment is to formalize this practice in the Canada Grain Regulations by eliminating weighing and inspection requirements for all shipments of grain to the United States regardless of the type of facility or conveyance.

Description and rationale

Grain is exported from Canada to the United States from different types of licensed facilities (e.g. primary elevators, transfer elevators, terminal elevators) and by several different types of conveyance (i.e. rail, truck, and vessel). As outlined in Table 1, different requirements currently apply for official inspection and weighing, depending on the type of facility and the type of conveyance.

Table 1 — Current Requirements for Official Weighing and Inspection for Grain Exported to the United States as per the Canada Grain Act and Regulations

Conveyance Type	Facility Type	Official Weighing and Inspection Required
Vessel	Primary Elevators	Not applicable
	Transfer Elevators	YES
	Terminal Elevators	YES
Rail	Primary Elevators	NO
	Transfer Elevators	NO
	Terminal Elevators	YES
Truck	Primary Elevators	NO
	Transfer Elevators	NO
	Terminal Elevators	YES

Most Canadian grain exported to the United States has been exempted from official inspection and weighing for some time (i.e. the grain transported by rail or truck from primary and transfer elevators). As indicated in Table 2, over the 5 crop years from 2003/04 through 2007/08, a low of 83%, and a high of 96% of grain was exported without official inspection and weighing. These amendments would therefore affect only the remaining 4% to 17% of grain exports to the United States (i.e. the grain transported by vessel and the grain discharged from terminal elevators).

Table 2 — Canadian Grain Exports to the United States exempt from Official Inspection and Weighing Requirements

Crop Year	Total Canadian Exports of grain to the US (metric tonnes)	Exports exempt from Official Inspection and Weighing (% of total)
2003/04	1 833 264	96%
2004/05	2 004 558	83%
2005/06	2 546 179	86%
2006/07	4 281 286	83%
2007/08	5 032 187	92%
Source: CGC Statistics

In January and February 2009, the CGC consulted stakeholders on this proposal (details provided below). This consultation revealed that in most instances, official inspection and weighing by a Canadian government agency (i.e. the CGC) is not sought by United States buyers of Canadian grain. The CGC subsequently announced a decision that effective August 1, 2009, all shipments of grain from Canada to the United States would be exempted from official inspection and weighing. This decision is currently being implemented under the CGC’s authority to grant exemptions by order from specific requirements of the Canada Grain Act, on a case-by-case basis.

This regulatory amendment modifies the Canada Grain Regulations to exempt all shipments of grain from Canada to the United States from official inspection and weighing requirements, regardless of facility type or conveyance type. These Regulations will continue to require exporters to report to the CGC basic data pertaining to exempted shipments for statistical purposes and in order to facilitate the CGC’s administration of the industry-utilized Grain Inventory Accounting System (GIAS).

Benefits and costs

For industry stakeholders, the key benefits of this regulatory amendment are reduced costs for mandatory inspection and weighing and efficiencies resulting from a more consistent regulatory framework. The estimated annual reduction in mandatory inspection and weighing costs to industry (based on the 2007/08 crop year) is $340,000. There are no anticipated costs to industry.

The regulatory amendment will benefit the CGC by eliminating the administrative costs associated with issuing exemption orders for grain shipped to the United States by vessel on a case-by-case basis. The lost revenue from mandatory inspection and weighing represents a cost to the CGC. However, $340,000 is a very small fraction of the total annual CGC revenues derived from inspection and weighing activities.

Consultation

Industry stakeholders have been expressing concern over the inconsistent requirements for official weighing and inspection of grain exported to the United States for several years. In January 2009, the CGC produced a consultation document seeking comments related to this proposal, which was emailed directly to 67 stakeholder organizations and made available on the CGC Web site. A staff bulletin was issued to all CGC employees. CGC officials also met in person with key stakeholders and hosted a teleconference open to any interested party. Key external stakeholder groups include producer organizations, grain industry organizations and grain marketers. The general public is not generally directly interested in CGC programs or policies.

Nine formal responses were received from external stakeholders (3 producer organizations, 4 grain industry organizations representing a majority of grain handling companies in Canada, and 2 others). Eight of the nine responses were strongly supportive, reflecting the fact that the CGC has been lobbied to make this change for some time. Several stakeholders commended the CGC for listening to and addressing stakeholders’ concerns in order to maintain the sector’s competitiveness. Two stakeholders agreed with the proposal provided that the CGC remain an optional service provider for vessel shipments to the United States. This is consistent with the CGC’s proposal and operational policy.

The single opposing view was expressed by the National Farmers Union (NFU) who suggested that the proposal would lead to an overall weakening of the Canadian grain quality assurance system and the protections it affords producers. While acknowledging that producers ultimately pay the costs of regulation on the grain industry, the NFU argued that the costs involved are well worthwhile. The NFU expressed concern that private, for-profit grain inspection companies cannot be trusted to provide unbiased, fair, and accurate measurement of grade and weight. The CGC carefully reviewed and considered the NFU submission, but remains unconvinced that this proposal to eliminate official inspection and weighing requirements on grain exported to the United States poses an unacceptable risk to the Canadian grain quality assurance system, nor does it impact the CGC’s abilities to protect producer interests. This conclusion was based on the experiences related to the bulk of Canadian grain already exported to the United States without official inspection or weighing, many of which are inspected and weighed by private inspection companies. No changes were made to the proposed regulatory amendment as a result of this comment.

Implementation, enforcement and service standards

With the coming into force of these Regulations, exporters will no longer be required to seek exemptions from official inspection and weighing requirements on a case-by-case basis. Exporters will continue to be required to report to the CGC basic data pertaining to exempted shipments for statistical purposes and in order to facilitate the CGC’s administration of the industry-utilized Grain Inventory Accounting System (GIAS). The CGC anticipates no issues with reporting compliance.

Contact

Nathan Gerelus
Policy Analyst
Corporate Services
Canadian Grain Commission
600–303 Main Street
Winnipeg, Manitoba
R3C 3G8
Telephone: 204-983-5701
Fax: 204-983-4564
Email: nathan.gerelus@grainscanada.gc.ca

Footnote a
S.C. 2001, c. 4, s. 89

Footnote b
S.C. 1998, c. 22, par. 25(t)

Footnote c
R.S., c. G-10

Footnote d
S.C. 2001, c. 4, s. 89

Footnote e
S.C. 1998, c. 22, par. 25(t)

Footnote f
R.S., c. G-10

Footnote 1
C.R.C., c. 889; SOR/2000-213

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