Regulations Amending the Canada Grain Regulations: SOR/2022-77

Canada Gazette, Part II, Volume 156, Number 9

Registration
SOR/2022-77 April 7, 2022

CANADA GRAIN ACT

P.C. 2022-341 April 6, 2022

The Canadian Grain Commission, pursuant to section 83.2^{footnote a} of the Canada Grain Act ^{footnote b}, makes the annexed Regulations Amending the Canada Grain Regulations.

Winnipeg, March 3, 2022

Doug Chorney
Chief Commissioner

Patty Rosher
Assistant Chief Commissioner

Lonny McKague
Commissioner

Her Excellency the Governor General in Council, on the recommendation of the Minister of Agriculture and Agri-Food, pursuant to section 83.2^{footnote a} of the Canada Grain Act ^{footnote b}, approves the making of the annexed Regulations Amending the Canada Grain Regulations by the Canadian Grain Commission.

Regulations Amending the Canada Grain Regulations

Amendment

1 Subsection 65(2) of the Canada Grain Regulations ^{footnote 1} is replaced by the following:

(2) The declaration must be made and provided for every kind of grain — and for each class, if any, of every kind of grain — that is set out in the document entitled Kinds of Grain that Require a Declaration of Eligibility for Delivery of Grain, published by the Commission, as amended from time to time.

Coming into Force

2 These Regulations come into force on July 1, 2022, but if they are registered after that day, they come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues

Subsection 65(2) of the Canada Grain Regulations (CGR) states that “[t]he declaration must be made and provided for every kind of grain and, if there are classes of that kind of grain, for each class of that grain.” Subsection 5(1) of the CGR lists the grains covered by the provisions of the Canada Grain Act (CGA).^{footnote 2}

The declaration obligation regarding grain applies to all persons, including licensees, who sell grain to a Canadian Grain Commission (CGC) licensee in Canada and to all deliveries of grains prescribed under the CGA, including grains not subject to variety registration^{footnote 3} in Canada and unregistered grain varieties.

Since declarations became an obligation under the CGA on July 1, 2020, grain sector stakeholders in eastern Canada have expressed opposition to the rationale for this requirement in eastern Canada. Several producer and industry organizations from Ontario, Quebec and Atlantic Canada, and Cereals Canada requested that the CGC amend the regulatory declaration requirements to consider eastern Canada’s grain production practices, operating context, and market dynamics, and recognize that declarations for the purpose of maintaining Canadian grain quality do not have the same value for all grain kinds. Specifically, eastern Canadian grain sector stakeholders have expressed concerns with the declaration rationale for grains not subject to variety registration (e.g. corn and food-grade soybeans), for grains for which no merit criteria apply during the variety registration process (e.g. oilseed soybeans) and with the potential challenges of requiring declarations for these crops.

Some producer groups in eastern Canada opposed to the declarations also engaged western producer groups to raise concerns about the declaration system currently in place across western Canada. As a result, several western cereal commissions have formally identified concerns regarding the applicability of declarations to grains other than wheat. Several stakeholders, most notably producer groups in eastern Canada, also raised concerns with declaration requirements in their submissions during the consultation phase of the Agriculture and Agri-Food–led CGA review process.

Based on consultation feedback from Canadian grain sector stakeholders, the CGC is amending the CGR using incorporation by reference to adjust the grain kinds for which a declaration must be made and provided.

Background

The CGC is responsible for establishing and maintaining Canada’s grain quality standards. Its programs result in shipments of grain that consistently meet contract specifications for quality, safety and quantity. The CGC regulates the grain industry to protect producers’ rights and ensure the integrity of grain transactions.

Incorporation by reference

On July 1, 2020, the CGA was amended to establish the authority, and its associated requirements, for the CGC to incorporate by reference any document in the same manner as other Agriculture and Agri-Food Canada portfolio partners. Subsection 118.1(1) of the CGA states that a regulation made by the CGC under the CGA may incorporate by reference any document, regardless of its source, either as it exists on a particular date or as it is amended from time to time. Documents incorporated by reference have the force of law.

Once a document is incorporated by reference, it can be modified without needing to change the regulations. This authority increases flexibility and facilitates responsiveness to grain sector needs. To support transparency, the CGC provides stakeholders with an opportunity to comment on proposed modifications to incorporated documents prior to making any changes, unless the proposal addresses an immediate risk to the grain quality assurance system or is a minor administrative adjustment.

Canada–United States–Mexico Agreement

The Canada–United States–Mexico Agreement Implementation Act was effective July 1, 2020, and contained amendments to CGA to bring it into conformity with Canada’s obligations under the Canada–United States–Mexico Agreement (CUSMA). As part of addressing concerns from the United States about discriminatory treatment of U.S. grown grain, particularly as it relates to the Canadian statutory grain grading system, and continue to uphold the Canadian grain quality and safety assurance system, the CGA was amended to establish the obligation to make and provide declarations regarding grain and provide the CGC authority to make regulations with respect to declaration form and content, timing of provision, and to whom it must be provided.

Because of the legislative change, concurrent amendments were made to the CGR to reflect the new declaration obligation. Section 65 was added to incorporate by reference a “Declaration of Eligibility for Delivery of Grain” form,^{footnote 4} prescribe that these forms must be provided to recipients of grain deliveries, and also prescribe that a declaration must be provided annually for every kind and/or class of grain delivered to each licensee.

Declarations represent a practical and relatively low-impact approach to ensuring the dependability and quality of grain entering the Canadian licensed grain handling system. Declarations help accommodate U.S. grown grain by making sure that reliable information on seed variety registration is provided at the time of delivery. This type of information is important to reconcile the different regulatory systems in Canada and the United States and make delivery acceptance decisions and determinations on grade assignment so that producers receive the grain grade and payment for which they are eligible.

Variety registration system

The CGC’s “Declaration of Eligibility for Delivery of Grain” form is currently linked to the variety registration^{footnote 5} to protect the quality outcomes of registration. This linkage is a key component of the Canadian grain quality and safety assurance system and is established in section 28 of the CGA.

Grains regulated by the CGA that are not subject to variety registration include corn, chickpeas, and food-grade soybeans. Grains that are subject to variety registration are assigned to different parts, as specified in Schedule III of the Seeds Regulations:^{footnote 6}

• Part I crops require preregistration field trials, lab analyses and merit assessment (quality, agronomy, and pathology [disease]).^{footnote 7} Most CGA-regulated grains fall within Part I.
• Part II crops require preregistration field trials and lab analyses. Merit criteria do not apply. Only one CGA-regulated grain is in Part II — safflower.
• Part III crops can be registered without preregistration field trials. Merit criteria do not apply. Three CGA-regulated grains are in Part III — canaryseed, soybeans (oilseed) and sunflowers.

Declaration implementation

Implementation of CGC statutory declarations began in western Canada^{footnote 8} effective August 1, 2020, the start of the western Canadian crop year. CGC declarations were built on the existing commercial declaration process already in use across the grain sector, and flexibility was provided to integrate the regulatory requirement with this process. Many western Canadian licensees have chosen to integrate the CGC declaration requirements into their commercial declaration forms or grain delivery contracts to reduce their administrative burden, while making it clear which information fields are regulatory requirements.

However, it became apparent early in the communication process with eastern stakeholders that a July 1, 2020, implementation date for eastern Canada^{footnote 9} (the start of the eastern Canada crop year) was not possible. Unlike western Canada, the eastern grain sector did not have a pre-existing process to facilitate the implementation of statutory delivery declarations. As a result, the CGC provided an exemption by a CGC order in eastern Canada from the declaration requirement for the 2020–2021 crop year and subsequently the 2021–2022 crop year. This provided more time for elevators and producers to develop an implementation plan for the 2022–2023 crop year.

Objective

To preserve the integrity of the Canadian grain quality and safety assurance system, while improving flexibility and facilitating responsiveness to grain sector needs by

• applying a national declaration approach across the CGC-licensed grain handling system with consistent requirements in both western Canada and eastern Canada; and
• aligning the requirement for declarations with grains designated under the CGA that are subject to variety registration, and for which merit criteria applies as part of variety registration (i.e. only grains within Part I of Schedule III of the Seeds Regulations).

Description

The regulatory amendment will

• amend subsection 65(2) of the CGR to incorporate by reference a list of grains for which a declaration must be made and provided, established by the CGC and made available on the CGC website.

This list aligns the requirement for declarations with grains designated under the CGA that are subject to variety registration, and for which merit criteria applies as part of variety registration. As a result of this change, the following grains will be effectively excluded from the declaration requirement: canaryseed, chickpeas, corn, safflower, soybeans (oilseed and food grade), and sunflower (non-ornamental). These grain kinds will not be included on the list incorporated by reference.

Regulatory development

Consultation

Eastern Canada Declarations Working Group

In spring of 2021, the CGC established an Eastern Declarations Working Group comprised of a broad membership of grain sector stakeholders from Ontario, Quebec, and Atlantic Canada to better understand eastern grain handling context, consider potential regulatory amendments, and support successful implementation of delivery declarations in eastern Canada. Meetings were held between May and November during which several contextual issues were identified for consideration. In particular, the eastern grain handling system is more focused on domestic markets and consumption in comparison to the export market-focused western grain handling system. Also, only terminal elevators are licensed by the CGC in eastern Canada; eastern country (or primary) elevators are regulated provincially. Finally, grain production in eastern Canada is dominated by corn, soybeans, and wheat, which represent the only three grains routinely delivered to CGC-licensed facilities. Concerns were voiced about the rationale for requiring declarations for corn and food-grade soybeans, as these grains are not subject to the variety registration process, and for oilseed-grade soybeans, which do not require merit assessment as part of the registration process.

Regulatory proposal consultations

After considering feedback from the Eastern Canada Declarations Working Group, throughout the week of November 15–19, 2021, the CGC held a number of targeted virtual stakeholder discussions outlining a regulatory proposal to amend the application of the declaration requirement from all grain types regulated under the CGA to only those grain types that are subject to variety registration under the Seeds Act and the Seeds Regulations, and for which merit criteria applies as part of the variety registration process. A detailed presentation was provided to stakeholders prior to the virtual discussions to help inform the conversations.

Eastern Canada

Members of the Eastern Canada Declarations Working Group generally reacted favourably to the regulatory proposal. While there remain some concerns about the necessity of declarations in eastern Canada and about implementation burden, the collective view was that the proposal addressed the bulk of eastern stakeholder concerns. Collaboration on communication and producer education activities leading up to the declaration implementation was also discussed.

Western Canada

Discussions were held with a broad range of grain producer stakeholders, including most provincial commodity commissions across the Prairie provinces and several national producer and commodity organizations. Reactions ranged from a general lack of awareness of the declaration requirement to general support for the CGC’s regulatory proposal. There was acknowledgement that the current declaration requirements were designed to address U.S. trade concerns about the treatment of U.S. grain while protecting the Canadian grain quality and safety assurance system. One national producer association expressed concerns that the regulatory proposal may provide an incentive for crop types to move away from merit criteria as a part of variety registration.

Several groups asked why the CUSMA provisions for wheat were expanded to cover all grains regulated under the CGA, resulting in declarations being required for all grain kinds. The CGC indicated that there were several considerations leading to this decision, including that the CGC does not generally set requirements specific to one grain kind, and the strategic value of consistency from a trade perspective. The CGC clarified that its regulatory proposal must align with the CGA authority which permits U.S. grown grain of a registered variety in Canada to receive a statutory Canadian grain grade.

Some western producer organizations also raised other issues related to declarations, but not tied directly to the regulatory proposal. The CGC acknowledged these concerns, but noted that these issues are outside the statutory declaration requirement and the regulatory proposal. The CGC expressed a willingness to participate in broader policy discussions on these issues in a separate process.

Modern treaty obligations and Indigenous engagement and consultation

The CGC conducted a modern treaty assessment, and determined that there are no modern treaty obligations associated with this regulatory amendment. No direct impacts to Indigenous peoples are anticipated.

Instrument choice

Using a regulatory instrument to amend the grain kinds for which a declaration must be made and provided is the only available option. Incorporating the list of grains by reference provides the flexibility and responsiveness necessary for future updates to grain kinds that require a declaration.

Regulatory analysis

Benefits

Grain kinds that require a declaration

Guided by the CGA, the CGC works in the interests of grain producers to establish and maintain standards of quality for Canadian grain, regulate grain handling in Canada, and ensure that grain is a dependable commodity — all factors that benefit the economy, trade, business and health and safety of Canadians. Amending the grain kinds for which the declaration obligation applies will better align the CGC declaration requirements with the overall Canadian grain handling context by accounting for the different grain production practices and market realities in the western and eastern grain sectors. This change will facilitate national implementation of declarations across the CGC-licensed grain handling system and, in turn, support the integrity of the Canadian grain quality and safety assurance system while delivering on Canada’s trade commitments.

In some limited situations, compliance burden may be reduced for producers and licensees growing or handling deliveries of only grain kinds that are excluded from the declaration requirement (e.g. corn, soybeans). Measures put in place to support declaration obligations by country elevators or other parties not regulated by the CGC may also be reduced in this situation. However, as the CGR requires that a declaration must be provided for every grain kind and/or class at least once per crop year that covers all grain types at each licensee receiving deliveries, these savings will be very limited for both producers and grain handlers, as in most cases, multiple grain kinds are grown, delivered, and handled each crop year as part of standard crop rotation and business practices.^{footnote 10}

Costs

Grain kinds that require a declaration

Adjusting the grain kinds that require a declaration will result in no incremental regulatory compliance costs to CGC-licensees in western Canada, eastern Canada, producers or the CGC.

Small business lens

The small business lens does not apply, as there are no costs on small business.

One-for-one rule

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

Regulatory cooperation and alignment

This regulatory amendment is consistent with Canada’s trade obligations under article 2.3, paragraph 1 (National Treatment) of the Canada–United States–Mexico Agreement. Agriculture and Agri-Food Canada’s Market Access Secretariat and the Canadian Food Inspection Agency’s Seed Section have no opposition to the amendment.

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

No gender-based analysis plus (GBA+) impacts have been identified for this regulatory amendment.

Rationale

Incorporation by reference

Updates to variety registration information, changes in grain marketing practices, and market access issues can occur regularly. As such, incorporating by reference the list of grain kinds that require a declaration will enable timely updates without requiring a regulatory change and help support Canadian grain quality and dependability. Moving forward, this flexibility and responsiveness will be beneficial, as the Canadian Food Inspection Agency is currently reviewing the variety registration system as part of its seed regulatory modernization initiative.

Grain kinds that require a declaration

Adjusting the grain kinds included on the incorporated list accounts for the different grain production practices, operational context, and market realities of the western and eastern Canadian grain sectors. This amendment acknowledges that declarations for the purpose of maintaining the integrity of Canadian grain quality are not the same for all grain kinds and will address many of the concerns of Canadian grain handlers, producer groups and commodity associations.

Specifically, the amendment will effectively result in declarations not being required for the majority of deliveries of eastern grain to the 18 CGC-licensed terminal elevators in eastern Canada. In eastern Canada, 70% of production is corn and 18% of production is soybeans, for a total of 88% of grain production that will not be subject to the declaration requirement. Declarations will only be required for one grain kind that is regularly delivered to CGC-licensed eastern terminal elevators — wheat, at 8% production.

Amending the grain kinds that require a declaration will facilitate national implementation of declarations with consistent requirements in both western and eastern Canada for the 2022–2023 crop year, while continuing to protect Canada’s grain quality assurance system. To expedite implementation, eastern terminal elevators and sector stakeholders have the ability to leverage existing declaration processes in western Canada.

Implementation and compliance and enforcement

Implementation

The regulatory amendment is targeted to come into force on July 1, 2022.

As part of implementation, a communication strategy will involve notification to all Canadian grain sector stakeholders and updates to the CGC website prior to the amendment’s coming into force.

The CGC “Declaration of Eligibility for Delivery of Grain” form, CGC program documentation, and information technology have been updated to support the regulatory amendment.

Compliance and enforcement

Prior to the start of each new crop year, the CGC will review, update, and post the “Declaration of Eligibility for Delivery of Grain” form and the “Kinds of Grain that Require a Declaration of Eligibility for Delivery of Grain” list on its website. Evidence that declarations are in use by licensees will continue to be part of the CGC’s licensing and auditing processes.

Contact

Melanie Gustafson
Senior Policy Analyst
Canadian Grain Commission
303 Main Street
Winnipeg, Manitoba
R3C 3G8
Telephone: 204‑292‑5721