Vol. 148, No. 6 — March 12, 2014

Registration

SOR/2014-39 February 28, 2014

CANADIAN AGRICULTURAL LOANS ACT

Regulations Amending the Farm Improvement and Marketing Cooperatives Loans and Fees Regulations, 1998

P.C. 2014-169 February 28, 2014

His Excellency the Governor General in Council, on the recommendation of the Minister of Agriculture and Agri-food and the Minister of Finance, pursuant to sections 4 (see footnote a) and 6 (see footnote b) and subsections 12(1) and 15(1) (see footnote c) of the Canadian Agricultural Loans Act (see footnote d), makes the annexed Regulations Amending the Farm Improvement and Marketing Cooperatives Loans and Fees Regulations, 1998.

REGULATIONS AMENDING THE FARM IMPROVEMENT AND MARKETING COOPERATIVES LOANS AND FEES REGULATIONS, 1998

AMENDMENTS

1. The title of the Farm Improvement and Marketing Cooperatives Loans and Fees Regulations, 1998 (see footnote 1) is replaced by the following:

CANADIAN AGRICULTURAL LOANS REGULATIONS

2. (1) The definition “guaranteed farm improvement loan” in subsection 1(1) of the Regulations is repealed.

(2) The definition “Act” in subsection 1(1) of the Regulations is replaced by the following:

“Act” means the Canadian Agricultural Loans Act. (Loi)

(3) The definitions “repair” and “works for drainage” in subsection 1(2) of the Regulations are replaced by the following:

“repair” includes the painting of any structure and the purchase of the material and services required for a repair. (réparation)

“works for drainage” means works related to the making of a drainage ditch, tiling and drainage installations and pumping and diking installations and includes works for the prevention of soil erosion by water. (travaux de drainage)

3. (1) Paragraph 2(e) of the Regulations is replaced by the following:

(2) Paragraph 2(g) of the French version of the Regulations is replaced by the following:

(3) Paragraph 2(i) of the French version of the Regulations is replaced by the following:

4. Section 3 of the Regulations is replaced by the following:

3. For the purpose of subparagraph 4(1)(c)(iv) of the Act, other prescribed animals are game birds, ostrich, emu and rhea.

5. Section 4 of the Regulations is replaced by the following:

4. The consolidation and refinancing of debts incurred for any of the purposes set out in paragraphs 4(1)(a) to (h) and 6(1)(a) to (d) of the Act are purposes for which the lender may be indemnified.

6. (1)Paragraph 5(a) of the Regulations is replaced by the following:

(2) The portion of paragraph 5(b) of the Regulations before subparagraph (i) is replaced by the following:

(3) Subparagraphs 5(b)(i) and (ii) of the French version of the Regulations are amended by replacing “biens immeubles” with “immeubles ou biens réels”.

(4) Subparagraph 5(b)(iii) of the Regulations is replaced by the following:

7. Section 6 of the Regulations is repealed.

8. Section 12 of the Regulations is replaced by the following:

12. In the event of actual or impending default in the repayment of a loan, the lender may, with the approval of the Minister and the borrower, alter or revise any of the terms of the loan, or any agreement in connection with the loan, and that alteration or revision shall not discharge the liability of the Minister in respect of the loan under the Act.

9. Section 13 of the French version of the Regulations is replaced by the following:

13. Avant que le prêt soit entièrement remboursé, le prêteur ne peut, sans l’autorisation écrite du ministre, donner quittance d’une sûreté ou consentir à une substitution de celle-ci.

10. Section 15 of the Regulations is replaced by the following:

15. A lender shall take security for the repayment of a loan in one or more of the following forms, as appropriate:

11. Section 16 of the Regulations is replaced by the following:

16. (1) A lender shall register every loan with the Minister, in a form approved by the Minister,

(2) The Minister shall extend the time within which a lender may register the loan on the written application of the lender if the application is received before the expiration of the time set out in paragraph (1)(a) or (b), as the case may be, and the borrower is not in default.

12. The portion of subsection 17(2) of the Regulations before paragraph (a) is replaced by the following:

(2) For the purposes of subparagraphs 4(3)(e)(i) and 6(2)(e)(i) of the Act, the charge is the administration charge in respect of a loan charged by the lender up to a maximum amount of

13. Section 18 of the Regulations and the heading before it are repealed.

14. Subsections 19(2) and (3) of the Regulations are replaced by the following:

(2) If a borrower is in default in respect of a payment on a loan made for a purpose set out in subsection 4(1) or 6(1) of the Act, the lender shall register, for a period of 10 years, the security referred to in section 15 that the lender holds with respect to the loan and take any of the following measures that will minimize the loss sustained by the lender in respect of the loan or that will maximize the amount recovered:

(3) Unless a claim for loss has been submitted in accordance with section 20, the lender shall submit a Report on Defaulted Loan to the Minister

15. Section 20 of the Regulations is replaced by the following:

20. (1) A lender shall take all of the measures described in subsection 19(2) that are applicable before submitting to the Minister a claim for loss sustained as a result of a loan.

(2) A claim for loss shall be submitted within 18 months of the default date or, if an extension has been granted by the Minister, then within that extended time period.

(3) The Minister shall, on the written request of the lender, extend the period of 18 months so that a lender can continue to carry out the collection measures prior to submitting its claim for loss, if the request is received within 18 months of the default date.

(4) A claim for any loss shall be submitted to the Minister in the form approved by the Minister, together with a copy of the borrower’s application form and proof of registration of the security referred to in section 15, if applicable.

(5) The lender shall provide the Minister with any other documentation that the Minister may require to justify payment to the lender.

(6) The payment is to be made within 60 days after the Minister approves the claim for loss.

16. The heading before section 22 and sections 22 and 23 of the Regulations are repealed.

COMING INTO FORCE

17. 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.)

Issues and objectives

These regulatory amendments make consequential amendments to the Farm Improvement and Marketing Cooperatives Loans and Fees Regulations, 1998 (the Regulations) administered by Agriculture and Agri-Food Canada (AAFC), due to the coming into effect of the Canadian Agricultural Loans Act (CALA) on June 18, 2009, which modified and renamed the Farm Improvement and Marketing Cooperatives Loans Act (FIMCLA). They also address comments and recommendations provided by the Standing Joint Committee for the Scrutiny of Regulations (SJCSR).

Description and rationale

2009 legislative change

In addition to changing the name of the Act, the 2009 legislative change increased loan limits, expanded eligibility and increased the percentage value of the assets that could be financed for beginning farmers. These changes were in response to recommendations AAFC received from the 2006 national consultations undertaken by AAFC with producers and financial institutions on modernizations required for the FIMCLA. The consultations were undertaken as directed by the Government of Canada to review the program to make it more responsive to the agricultural sector.

Amendments

These regulatory amendments do not make any substantive changes to the Regulations. They make consequential amendments to update the Regulations to be consistent with the authorities in the 2009 CALA and address any remaining concerns from correspondence with the SJCSR, including aligning the English and French texts of the Regulations.

The proposed regulatory changes neither increase nor decrease the compliance or administrative burden of the loans program nor costs to either small business or government.

To ensure consistency with the 2009 CALA legislative changes and to improve clarity of understanding, the name of the Regulations has been changed from the Farm Improvement and Marketing Cooperatives Loans and Fees Regulations, 1998 to the Canadian Agricultural Loans Regulations.

To align the Regulations with the 2009 CALA legislative changes, the preamble has been updated to refer to the CALA and to correct the numbering of the sections referenced therein (i.e. sections 4, 6, 12 and 15 of CALA).

To allow the purchasing and planting of all types of syrupproducing trees to qualify for loans, the specific references to “maple” in paragraph 2(e) of the Regulations have been deleted.

Subsections 4(2) and 4(3), which concern the consolidation and refinancing of loans, have been repealed. The SJCSR has identified that these requirements are already provided for in the legislation [i.e. paragraphs 4(1)(i), 6(1)(e) and 15(1)(i) and the definition of “prescribed”].

The SJCSR has also recommended that the language in subparagraph 5(b)(iii) and sections 13 and 15 be amended to ensure that the French and English versions are consistent.

To align the Regulations with the 2009 CALA legislative changes, section 6, which concerns the appropriate percentage in respect of the cost of acquisition, has been repealed as this is already provided for in the legislation [i.e. paragraphs 9(a) and (b) of the Act].

The SJCSR has recommended that section 12 be redrafted to reflect authority given by paragraph 15(1)(c) of the CALA to address a sub-delegation issue. Currently, section 12 allows any alteration or revision of loan terms or any agreement to the loan without discharging the Minister’s liability to the lender under the Act. However, the Act limits loan alterations or revisions to instances when there is an actual or impending default in the repayment of the loan. This amendment will limit the authorization of the Minister to cases where there is an actual or impending default.

Also, following the recommendations of the SJCSR, the word “may” has been replaced with “shall” in subsection 16(2), which concerns extending the time period a lender has to register a loan. It has also been ensured that the French and English are consistent. Moreover, the words “if the Minister is satisfied” have been deleted to remove subjectivity and correct a sub-delegation issue, as the authority under this section is given to the Governor-in-Council through the Act.

The SJCSR has recommended that section 18 of the Regulations be repealed to correct a sub-delegation issue, as the information that the Minister needs to evaluate actions on a loan (revisions, defaults and claims) is already provided for in the legislation [i.e. paragraph 15(1)(c) of the Act for revisions] and in the Regulations (i.e. section 19 for loan defaults and section 20 for claims for loss). Section 18 of the Regulations has been repealed.

The SJCSR has identified that paragraphs 19(2)(a) and 19(3)(a) must be redrafted to remove the requirement to obtain the Minister’s consent, which will correct a sub-delegation issue, as the authority under these paragraphs is given to the Governor-inCouncil through the Act.

The SJCSR has requested that subsection 20(1) be redrafted to delete “Unless otherwise authorized in writing by the Minister,” and that criteria be established to depart from the general rule in either subsection 20(1) or 20(2). This will correct a sub-delegation issue, as the authority under this section is given to the Governor-in-Council through the Act.

The SJCSR has requested that subsection 20(3) be split in two so that the lender firstly submits a claim for loss to the Minister and secondly, afterwards, the Minister can require any other documentation.

To better align the Regulations with the 2009 CALA legislative changes, section 22, which concerns collection efforts by a lender, has been repealed as section 19 of the Act confers all rights and powers of the lender in respect of the loan to the Minister.

The SJCSR has also identified that paragraph 20(5)(c) must be amended to delete the phrase “in the manner that the Minister directs” and set out the measures that should be taken. This has corrected a sub-delegation issue, as the authority under this section is given to the Governor-in-Council through the Act.

To align the Regulations with the 2009 CALA legislative changes, section 23, which concerns the former prescribed proportion under the FIMCLA, has been deleted, as the referenced section 10 of the Act was repealed.

“One-for-One” Rule

The “One-for-One” Rule does not apply. There is no administrative cost or savings achieved with these amendments.

Small business lens

The small business lens does not apply. There is no cost to small business associated with these amendments.

Consultation

Agriculture and Agri-Food Canada received recommendations from the 2006 national consultations with producers and financial institutions on modernizations required for the FIMCLA.

No additional consultations have been undertaken specifically on these proposed regulatory changes as they are administrative in nature.

Implementation, enforcement and service standards

These Regulations come into force on the day on which they are registered. They will provide increased clarity and consistency in the application and interpretation of the Regulations. The amendments will not affect AAFC’s current enforcement activities.

Contacts

Glenda Taylor
Assistant Director
Financial Guarantee Programs Division
Telephone: 613-773-3412
Email: Glenda.Taylor@agr.gc.ca

Bob Shalla
CALA Program Manager
Financial Guarantee Programs Division
Telephone: 613-773-2036
Email: Bob.Shalla@agr.gc.ca