Administrative Monetary Penalties (Motor Vehicle Safety) Regulations: SOR/2023-154
Canada Gazette, Part II, Volume 157, Number 14
Registration
SOR/2023-154 June 23, 2023
MOTOR VEHICLE SAFETY ACT
P.C. 2023-659 June 23, 2023
Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, makes the annexed Administrative Monetary Penalties (Motor Vehicle Safety) Regulations under paragraphs 16.1(a)footnote a and (b)footnote a of the Motor Vehicle Safety Act footnote b.
Administrative Monetary Penalties (Motor Vehicle Safety) Regulations
Definition
Definition of Act
1 In these Regulations, Act means the Motor Vehicle Safety Act.
Overview
Overview
2 These Regulations complete the administrative monetary penalty scheme set out in the Act for the contravention of certain of its provisions and of certain provisions of its regulations and of the orders made under the Act.
Designated Provisions
Designation — Act and Regulations
3 (1) A provision of the Act or of its regulations that is set out in column 1 of the schedule is designated as a provision the contravention of which may be proceeded with as a violation in accordance with sections 16.13 to 16.23 of the Act.
Maximum amount payable
(2) The maximum amount payable in respect of a violation referred to in subsection (1) is
- (a) in the case of an individual, the amount set out in column 2 of the schedule; and
- (b) in the case of a corporation or a company, the amount set out in column 3 of the schedule.
Designation — orders
4 (1) An order made under any of subsections 8.1(1), 10(2.1), 10(4), 10.1(4), 10.1(7) and 10.4(4), section 10.5, subsections 10.6(1), 10.61(1) and 13(1), section 13.1, paragraph 15(4)(e) and section 15.1 of the Act is designated as a provision the contravention of which may be proceeded with as a violation in accordance with sections 16.13 to 16.23 of the Act.
Maximum amount payable
(2) The maximum amount payable in respect of a violation referred to in subsection (1) is
- (a) in the case of an individual, $4,000; and
- (b) in the case of a corporation or a company, $200,000.
Coming into Force
90th day after publication
5 These Regulations come into force on the 90th day after the day on which they are published in the Canada Gazette, Part II.
SCHEDULE
(Section 3)
Designated Provisions
PART 1
| Item | Column 1 Designated Provision |
Column 2 Maximum Amount Payable ($) Individual |
Column 3 Maximum Amount Payable ($) Corporation or Company |
|---|---|---|---|
| 1 | Subsection 3(2.1) | 400 | 20,000 |
| 2 | Subsection 3(3) | 4,000 | 200,000 |
| 3 | Subsection 3(4) | 4,000 | 200,000 |
| 4 | Section 4 | 4,000 | 200,000 |
| 5 | Subsection 5(1) | 4,000 | 200,000 |
| 6 | Section 6 | 4,000 | 200,000 |
| 7 | Subsection 7(1.01) | 2,000 | 200,000 |
| 8 | Subsection 7(1.2) | 2,000 | 100,000 |
| 9 | Subsection 7(1.3) | 2,000 | 100,000 |
| 10 | Subsection 7(5) | 4,000 | 200,000 |
| 11 | Section 8 | 4,000 | 200,000 |
| 12 | Subsection 10(1) | 4,000 | 200,000 |
| 13 | Paragraph 10(3)(a) | 4,000 | 200,000 |
| 14 | Subsection 10.1(1) | 4,000 | 200,000 |
| 15 | Paragraph 10.1(5)(a) | 4,000 | 200,000 |
| 16 | Section 10.2 | 4,000 | 200,000 |
| 17 | Section 10.3 | 4,000 | 200,000 |
| 18 | Subsection 10.4(1) | 4,000 | 200,000 |
| 19 | Subsection 10.4(2) | 4,000 | 200,000 |
| 20 | Subsection 10.4(3) | 4,000 | 200,000 |
| 21 | Subsection 15(5) | 4,000 | 200,000 |
| 22 | Subsection 15(7) | 4,000 | 200,000 |
| 23 | Section 16 | 4,000 | 200,000 |
PART 2
| Item | Column 1 Designated Provision |
Column 2 Maximum Amount Payable ($) Individual |
Column 3 Maximum Amount Payable ($) Corporation or Company |
|---|---|---|---|
| 1 | Subsection 6.4(4) | 4,000 | 200,000 |
| 2 | Subsection 6.6(2) | 4,000 | 200,000 |
| 3 | Paragraph 9(1)(a.1) | 4,000 | 200,000 |
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
The Motor Vehicle Safety Act (MVSA) functions on the principle of self-certification, where the companies that manufacture, distribute and/or import vehicles, tires or equipment for use in the restraint of children and disabled persons (hereafter referred to as products) certify compliance with the requirements by marking the products to this effect and keeping documented evidence of compliance. Transport Canada (TC) verifies compliance through testing, inspection, and other oversight activities. Additional information on the Motor Vehicle Safety (MVS) Oversight Program is available in the Oversight Guidelines — Motor Vehicle Safety, which outline TC’s oversight role as it relates to the MVSA and its regulations, and the general responsibilities and obligations of industry and members of the public.
During its oversight activities, TC periodically encounters situations where persons or companies have failed to comply with legislative requirements. When TC encounters non-compliance, TC will first confirm if any actions, such as a recall, or a stop on sales, have been taken by the person or company to address the issue. If no actions have been taken, the MVSA provides for the Minister, by way of an order, to order the company or person to correct a defect or non-compliance. The Oversight Guidelines — Motor Vehicle Safety detail TC’s approach in relation to such orders.
Currently, if TC identifies non-compliance, it generally has only two options for addressing it: (i) issue a warning or (ii) recommend that a prosecution be pursued against the non-compliant party. The lack of options can lead to inconsistent results: some offences may not be resolved whereas a prosecution may be disproportionate relative to the nature of the violations.
As warnings may not serve as a strong enough deterrent and prosecutions are mainly reserved for the most severe cases, alternative options are necessary to allow greater flexibility for enforcement. In line with several other modes of transportation that TC regulates, administrative monetary penalties (AMPs) were identified as a suitable complement to TC’s current enforcement tools under the MVSA.
AMPs are a flexible enforcement tool for federal offences of a regulatory nature. AMPs allow TC to take a measured and efficient approach, which tailors the enforcement response to the seriousness of the violation, through the issuance of monetary penalties, as an alternative to recommending prosecution, to anyone found to have violated requirements. AMPs allow the violator to choose to pay the penalty without having to appear in court. They are designed to bring regulated entities into compliance without the legal ramifications of a criminal record or imprisonment. AMPs help to promote compliance while minimizing the regulatory burden on Canadians and industry. Finally, the use of AMPs to enforce the MVSA is consistent with the enforcement approach used by TC in other modes of transportation.
Background
The MVSA prescribes minimum safety and record-keeping requirements for these products, and also compels manufacturers, distributors and importers of regulated products to take action when they become aware of safety defects in their products, or non-compliance to applicable safety standards. In addition to requirements for companies, the MVSA also has requirements for persons who import vehicles through the Registrar of Imported Vehicles program or who import vehicles for special purposes, such as further manufacturing, testing and evaluation, or visitors transiting through Canada.
In 2018, the Government of Canada amended the MVSA under Bill S-2, An Act to amend the Motor Vehicle Safety Act and to make a consequential amendment to another Act, to strengthen the enforcement and compliance regime to further protect the safety of Canadians. These legislative amendments provide the Governor in Council with the authority to make regulations to establish AMPs for the contravention of designated provisions of the MVSA and/or regulations and orders made pursuant to the MVSA. The 2018 amendments to the MVSA set the maximum amount payable for any AMP as not more than $4,000, in the case of an individual, and not more than $200,000, in the case of a corporation or company. The penalty-issuing authority is a new enforcement tool designed to help promote compliance with motor vehicle and equipment safety requirements. To that end, the Administrative Monetary Penalties (Motor Vehicle Safety) Regulations (the Regulations) designate legislative and regulatory provisions as enforceable via AMPs and fix the penalty amounts payable for non-compliance with those designated provisions.
Objective
The objective of the Regulations, which establish the details of an AMPs regime under the MVSA, is to ensure a more predictable, transparent, and flexible enforcement regime for both TC and regulated parties.
An AMPs regime will allow the enforcement of violations that do not warrant prosecution, but for which a warning is not a sufficient response. The implementation of a flexible, transparent, and predictable enforcement regime that includes warnings, AMPs, and prosecutions is expected to reduce non-compliance with the MVSA, its regulations and orders, thereby helping to ensure the safety of motor vehicles and motor vehicle equipment in Canada.
Description
The Regulations designate provisions of the MVSA, the Motor Vehicle Safety Regulations (MVSR) as well as orders for which an AMP could be issued.
The new AMPs regime includes flexible penalty amounts. The MVSA limits the maximum amount payable for a violation to $4,000 for an individual, and $200,000 for a corporation or company. The Regulations contain individual designated provisions with their own maximum amounts, which may be lesser than these maximums depending on the nature of the violation.
In order to determine the maximum penalty amounts associated with each designated provision in the Regulations, TC analyzed the legislative provisions, as well as all of their related regulatory requirements, assessing the potential maximum severity of non-compliance with the requirement.
Each requirement was then assessed in relation to the seven factors which are taken into account when assessing the severity of any violation, in accordance with TC’s departmental enforcement standards, and the Oversight Guidelines — Motor Vehicle Safety.
| Factor | Description |
|---|---|
| Harm or risk | The harm or risk posed by the non-compliance |
| Degree of negligence or deliberateness | How negligent was the company or person? Was the non-compliance deliberate or accidental? |
| Compliance history | Whether the company or person has a history of past non-compliance |
| Economic benefit | Whether the non-compliance caused the company to benefit financially, or derive a competitive advantage |
| Mitigation of harm | How the company or person acted to mitigate the risks once the issue was detected |
| Cooperation with TC | The level of cooperation with TC in relation to the non-compliance |
| Detection of contravention | Whether the company or person reported the non-compliance, if it was discovered jointly, or discovered by TC alone |
Enforcement officers have the ability to adjust AMP penalty amounts, not exceeding maximums, by taking into account these factors in relation to the circumstances of the violation. The maximum amounts would therefore be reserved for the most severe non-compliance situations. For this reason, the analysis looked at the worst-case scenario for both the violation and factors that do not directly relate to the violation being rated, such as a company or person’s compliance history.
Through this analysis, all violations were rated as low, medium or high severity, and the highest rating associated with any given violation was used to establish the penalty limit.
The Regulations designate as an AMP a total of 26 provisions, distributed as follows:
- Motor Vehicle Safety Act (23 provisions); and
- Motor Vehicle Safety Regulations (3 provisions).
Some examples of designated provisions are provided in the tables below, including whether a new penalty could be issued for each day that a violation continues. Please note that the descriptions of the violations are not included in the Regulations; they are provided here to facilitate understanding only.
| Provision | Description of violation | Severity of violation | Separate violation for each day? |
|---|---|---|---|
| Subsection 3(2.1) | Failing to provide the Minister with the address of the premises at which the national safety mark is to be applied | Low | No |
| Paragraph 5(1)(g) | Failing to maintain records allowing an inspector to determine compliance of a vehicle, tire or child car seat | High | No |
| Subsection 7(1.2) | Failing to export a U.S.-registered rental vehicle from Canada within 30 days, or any other prescribed period, beginning on the day on which the vehicle is imported | Medium | Yes |
| Section 8 | Failing to provide the Minister with the means to retrieve or analyze information created or recorded by the vehicle or equipment | High | Yes |
| Subsection 10(1) | Failing to give notice of any defect in the design, manufacture or functioning of the vehicle or equipment | High | Yes |
| Provision | Description of violation | Severity of violation | Separate violation for each day? |
|---|---|---|---|
| Subsection 6.4(4) | Failing to ensure that new gross vehicle weight ratings (GVWRs) or new gross axle weight ratings (GAWRs) are displayed on the intermediate manufacturer’s information label | High | No |
| Subsection 6.6(2) | Failing to ensure that new GVWRs or new GAWRs are displayed on the compliance label for the completed vehicle | High | No |
| Paragraph 9(1)(a.1) | Failing to respect the gross axle weight ratings and gross vehicle weight rating of the vehicle recommended by the original manufacturer | High | No |
Regulatory development
Consultation prior to the prepublication in the Canada Gazette, Part I
TC first published preliminary details of the MVS AMPs regulatory initiative on TC’s “Let’s Talk Transportation” web page in November 2020, soliciting comments from industry and the public. Following this, TC held targeted informal consultations with several stakeholder associations representing the light-duty, heavy-duty, motorcycle, off-highway, and tire manufacturing industries, which had expressed interest in meeting with TC directly.
The majority of stakeholders were supportive of an AMPs regime being implemented under the MVSA, as AMPs offer a flexible tool for enforcing measures against federal offences of a regulatory nature. Although stakeholders found it difficult to provide substantive comments at the early stages of policy and regulatory development, most comments received fell into the following categories.
Fairness
TC received several comments on how AMPs would need to be issued, and penalty amounts assessed, using clear, fair, transparent and repeatable criteria that would be shared with industry in advance of the implementation of the Regulations. Stakeholders were advised that information on the MVS AMPs regime could be found in the Oversight Guidelines — Motor Vehicle Safety, which were updated throughout the development of the Regulations.
Penalty amounts
Industry stakeholders expressed concerns about the total penalty amounts that could accrue in relation to an instance of non-compliance. Under the MVSA, in some cases, violations committed or continued on more than one day could lead to separate penalties for each day. In many cases, a separate violation may also occur in relation to each product that is manufactured or imported in a manner that fails to meet requirements. Given the production volumes involved in the manufacture of these products, many stakeholders commented on the need for clarity in how TC would assess penalties for multi-day violations, or when multiple products are non-compliant. Industry also expressed concern that the potential penalty amounts in these situations could cause severe financial harm to companies, in addition to the potential for reputational harm caused by the issuance of an AMP.
Proactive disclosure and cooperation
Several industry associations, representing manufacturers and importers of vehicles and tires, expressed concern that the new AMPs regime might affect collaboration between TC and industry, as well as proactive disclosure. Under the MVSA, companies address safety defects or non-compliance through a Notice of Defect (MVSA, section 10) or Notice of Non-Compliance (MVSA, subsection 10.1(1)). These notices are commonly referred to as recalls. Many such notices are filed by companies proactively, with no TC involvement, to address accidental or unintended problems, and products are recalled to correct any safety problems. TC also works to detect such issues by investigating potential safety defects, and verifying compliance through inspections and testing, often working collaboratively with industry to identify issues.
During consultations, industry expressed concern that TC might begin issuing AMPs in relation to situations where companies act in good faith to correct accidental or unintended problems, which would serve to discourage positive behaviours such as collaboration and proactive disclosure.
TC’s evaluation of comments
TC concluded that the concerns identified by industry closely align with its objectives for an effective AMPs regime. A fair and transparent system is not only beneficial to industry, but also to TC as the regulator, as it would increase industry confidence in the regulator, and constitute a more effective deterrent given that actions and penalty amounts can be anticipated. This is also the case for the industry’s concerns relating to the effect of AMPs on proactive disclosure and collaboration. TC’s objective for any enforcement action is to promote compliance with the MVSA as well as encourage positive behaviours (such as self-declaration of non-compliance and cooperation with TC), while redressing negative ones (reckless or deceitful behaviour, etc.). To this end, TC’s decisions would take into account not only the violation, but the surrounding factors, to establish the required enforcement action. Cases of accidental non-compliance, where violators were diligent in their compliance efforts, and proactively disclosed violations without TC intervention, would be unlikely to result in an AMP given that these behaviours are to the benefit of the regulator.
There is also alignment between TC’s desired outcomes and industry concerns with respect to penalty amounts. While TC aims to create an MVS AMPs regime that allows for the ability to tailor penalty amounts to the circumstances of the offence, there is also agreement that a clear method to assess and calculate penalty amounts within the allowable range must be established.
TC noted that nearly all comments received during the development of the Regulations related to TC’s overall enforcement policy and procedural considerations. At the time the consultations on the proposed MVS AMPs regime were held, stakeholders had been provided high-level overviews of TC’s enforcement decision-making process, and many stakeholders believed clarity in the Regulations and supporting documents was necessary in order to fully understand how the MVS AMPs regime would be applied. In reference to these comments, a draft of TC’s standard operating procedure on the subject was shared with stakeholders in March 2022.
Prepublication in the Canada Gazette, Part I
The Administrative Monetary Penalties (Motor Vehicle Safety) Regulations were prepublished in the Canada Gazette, Part I, on May 7, 2022, for a period of 75 days. Comments were received from three stakeholder groups during this time. The comments received were receptive to the establishment of an AMPs regime, but reiterated many of the previous concerns shared during earlier consultations — namely, the need for the regime to be fair, transparent, and equitable.
As was indicated in the Canada Gazette, Part I, publication, the Regulations are only a part of the overall AMPs regime. Provisions contained in the MVSA, TC’s enforcement policies and procedures, as well as the Regulations, must be considered to understand how TC will use and apply AMPs. For this reason, comments related to procedural or administrative considerations that would have an impact on the application and use of the Regulations were considered as part of TC’s review. Comments received associated with existing MVSA requirements or TC enforcement policies did not have any impact on the Regulations, and were therefore not considered. As an example of comments received that fell outside of the scope of the Regulations, one stakeholder group requested that the maximum time period allowable to request a review, should a penalty be issued, be extended from 30 days to a minimum of 60 days. Given that this requirement is prescribed in the MVSA, enacted in 2018 as part of the Strengthening Motor Vehicle Safety for Canadians Act, TC could not alter this requirement in the Regulations. Another stakeholder group requested that TC add information on other enforcement actions, such as warnings, in its AMPs regulations. This item falls under TC’s Enforcement Policy which is aligned with other TC enforcement policies used across TC, and thus not part of the Regulations.
Implementation and training
Two stakeholder groups expressed concerns about the implementation of the AMPs regime and how TC will ensure fairness and consistency. Both expressed the need to ensure that enforcement officers investigating violations and tribunal members conducting reviews and appeals are knowledgeable in relation to the automotive industry and the MVSA. One stakeholder group also requested that, after the Regulations are published in the Canada Gazette, Part II, TC provide a 180-day grace period before any penalties are issued, and both associations requested additional opportunities to discuss the AMPs regime with TC prior to the coming into force of the Regulations.
Enforcement officers will be provided training on the new penalties in order to ensure that the penalties are applied appropriately and consistently in accordance with existing TC policy. TC also intends to hold meetings so that industry is aware of the procedural and regulatory considerations relating to the MVSA AMPs regime before the Regulations come into force, which will be 90 days after they are published in the Canada Gazette, Part II. TC considered the request for 180-day delay before the penalties come into effect but concluded that 90 days would provide industry stakeholders sufficient time to prepare. It should be noted that the Regulations do not introduce any new requirements; therefore, all stakeholders should already be in compliance with all requirements for which penalties will apply.
Penalty amounts, calculation, and severity
Two stakeholder groups expressed concerns regarding the penalty amounts defined in the Regulations, reiterating concerns shared during the initial consultations. One stakeholder group indicated that some infractions are, by their nature, considerably more egregious than others with respect to consequence to safety. Another stakeholder suggested that the reputational harm resulting from an AMP of any size for a motor vehicle or motor vehicle equipment manufacturer is much more significant than in most other industries. In addition, two stakeholder groups commented on the possibility of AMPs being issued on a per-vehicle or per-day basis, depending on the type of violation, indicating that they would prefer if the Regulations defined where TC could apply per-vehicle or per-day violations. One stakeholder group also indicated their preference that TC include more detailed information in the Regulations as to the procedural aspects of AMPs (e.g. when and why an AMP would be issued as opposed to another type of enforcement action, and how a penalty amount might be defined or calculated), so that TC could not arbitrarily change its methodology without going through the regulatory process, which would necessitate consultations with industry stakeholders.
TC acknowledges that the severity and circumstances surrounding a violation that leads to an AMP may vary considerably, and that there may be considerations in assessing penalty amounts which may differ from other AMPs regimes. From the outset, TC has communicated that AMPs would form one aspect of TC’s graduated enforcement approach, which allows an officer to consider several factors and tailor the enforcement action accordingly. Any enforcement action, including an AMP, is public and could result in reputational harm in the marketplace; manufacturers must take this into consideration as an item is escalated through TC’s graduated enforcement approach.
Throughout the development of the Regulations, TC has held several consultation events with industry and shared advance copies of the policies and procedures that will govern how AMPs will be applied and calculated, clearly detailing how TC has the ability to adjust penalty amounts significantly to take into account several factors. Additional information on this graduated approach is provided in TC’s Oversight Guidelines — Motor Vehicle Safety. The AMP policies and procedures are aligned with other AMPs regimes used in other modes of transportation that TC regulates. TC believes that having the ability to quickly adjust its AMPs regime is also of benefit to industry.
TC also concluded that it is not necessary to define in regulation which violations could be applied on a per-vehicle/equipment or per-day basis. Violations for which a per-day or per-vehicle AMP can be issued could also be prosecuted or addressed through another type of enforcement response such as warnings or prosecutions. This is a function of subsection 17(2.1) of the MVSA, for offences that are committed or continue for more than one day, and the language of the MVSA where requirements relate to each vehicle. For instance, subsection 5(1) of the MVSA clearly states that the provisions apply to each vehicle or item of equipment imported, manufactured, or sold. For greater clarity, TC intends to provide stakeholders an information session after the publication in Part II of the Canada Gazette and within the 90 days prior to the coming into force of the Regulations. The information session, which will help stakeholders prepare for the entry into force of the penalties, will summarize, among other things, which provisions of the MVSA could be pursued on a per-day or per-vehicle/equipment basis for any type of enforcement response. The information session will also provide up-to-date policy documents (which were shared throughout the consultation process) and will provide manufacturers with the opportunity to clarify any outstanding questions related to TC’s enforcement policy.
Compliance history and publication
As part of its enforcement regime, TC maintains documentation on the compliance history of a company in relation to the MVSA. A corporation or individual’s compliance history is one of the factors taken into consideration in TC’s graduated enforcement approach. One association commented that the Regulations should stipulate that graduated enforcement should only consider violations that are similar in nature and weight, and that the compliance history should only keep records for two years, in accordance with subsection 18(2) of the MVSA.
While a reoccurring violation would likely increase the severity of TC’s enforcement response, TC’s graduated enforcement approach would also consider other enforcement actions as part of its assessment of the violator’s compliance history. Even if the violations are unrelated, they could serve to show a general disregard for complying with requirements and indicate the need for a more severe enforcement response.
TC does not believe that a two-year limit on compliance history would be appropriate, nor that subsection 18(2) of the MVSA would be of relevance in this matter, which serves to prohibit TC from instituting a prosecution in relation to a summary conviction later than two years after the time when the subject matter of the prosecution arose.
After careful consideration of the comments received, no changes were deemed necessary to the Regulations as originally proposed and they remain unchanged from prepublication.
Modern treaty obligations and Indigenous engagement and consultation
In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, an analysis was undertaken to determine whether the Regulations are likely to give rise to modern treaty obligations. This assessment examined the geographic scope and subject matter of the Regulations in relation to modern treaties in effect and no modern treaty obligations were identified.
Instrument choice
All violations under the MVSA and its associated regulations cannot realistically be prosecuted. The strenuous resource costs and time frames for a prosecution would not be in the public interest for the vast majority of instances of non-compliance. In the absence of an enforcement tool to address regulatory violations that would not warrant a prosecution, but for which a warning is not a sufficient response, under-enforcement of the MVSA and its regulations would continue without the Regulations.
AMPs are an ideal enforcement instrument because they are flexible with a range of penalty amounts and are easily administered. This is in contrast to warnings (which have no punitive effect and are minimally coercive) and recommending prosecution, which requires a resource-exhaustive investigation, cooperation with the Public Prosecution Service of Canada, and other court-related resources. An AMPs regime is the best option to improve the enforcement of the MVSA. Developing regulations in accordance with paragraphs 16.1(a) and (b) of the MVSA is the only option to implement an AMPs regime and provide this essential enforcement tool to TC officials. No non-regulatory options were considered.
Regulatory analysis
The Regulations designate provisions of the MVSA, the MVSR, and orders made pursuant to the MVSA for which an AMP can be imposed. An AMPs regime will provide TC with additional tools and instruments to provide a proportionate response to non-compliance.
Analytical framework
The costs and benefits for the Regulations have been assessed in accordance with the Treasury Board Secretariat (TBS) Policy on Cost-Benefit Analysis by comparing the baseline 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 Regulations. The regulatory scenario provides information on the intended outcomes because of the Regulations. Where possible, impacts are quantified and monetized, with only the direct costs and benefits for stakeholders being considered in the analysis.
Taxes, levies and other charges constitute transfers from one group to another and are therefore not considered to be compliance or administrative costs, including if intended as incentives to foster compliance and change behaviour. Correspondingly, the costs to pay for AMPs, as well as the revenue to the Government of Canada generated through AMPs, are not considered costs nor benefits within the scope of the regulatory analysis since they are outside the normal course of business, occurring only in instances of non-compliance.
Unless otherwise stated, all costs are expressed in present value terms (2020 Canadian dollars, at a 7% discount rate) over a 10-year analytical period (2023 to 2032).
Stakeholder profile
The Regulations will impact the Government of Canada, as TC officials (including enforcement officers) need to be informed and become familiar with the new AMPs regime.
Industry, including manufacturers, importers, distributors, as well as members of the public, will be subject to AMPs if they are found to have contravened any of the designated provisions of the MVSA or the MVSR, or an order made pursuant to the MVSA.
Baseline and regulatory scenarios
In the baseline scenario, TC officials do not have access to flexible enforcement tools that are proportionate and reflect violation severity. When encountering non-compliance with the MVSA and associated regulations, TC officials can usually either issue a warning or prosecute for non-compliance. In the absence of the Regulations, responses to non-compliance would continue to be over-enforced, under-enforced, or not enforced at all.
In the regulatory scenario, the Regulations are made, establishing an AMPs regime, which will address the challenges enforcement officers are facing in the current compliance environment. The Regulations allow enforcement officers to bring regulated parties into compliance through proportional responses, while assessing the underlying risk and harm of violations.
Benefits and costs
The Regulations will provide TC with an additional enforcement option to respond to and deter non-compliance. AMPs, in contrast to the existing prosecution option, are expected to be a less resource-intensive, more rapid, means to address instances of non-compliance. As such, the AMPS regime could reduce costs and lead to greater efficiency in enforcing the MVSA and regulations made pursuant to the MVSA.
The present value incremental cost (at 7% discount rate) to the federal government of the AMPs regime under the MVSA is estimated to be $1.74 million in 2020 dollars over the 10-year analytical time frame (2023 to 2032).
Benefits
As previously stated, the Regulations may reduce the monetary and non-monetary burden on the Canadian government by avoiding the costly and lengthy prosecution option when faced with non-compliance. The main benefit of the Regulations is that the AMPs regime will provide TC with an additional enforcement option to enforce the MVSA and related regulations and deter non-compliance in conjunction with the existing prosecution option. In some cases, AMPs would be a less resource-intensive, more rapid means to address non-compliance than the prosecution option. As such, AMPs may reduce costs and lead to greater efficiency in enforcing the MVSA and related regulations.
Costs
The AMPs regime will cost $1.74 million between 2023 and 2032 (discounted at 7%, 2020 dollars). The annual costs are presented below in Table 5.
To support and enforce the AMPs regime under the MVSA framework, investigation, enforcement, and program management specialists are needed.
The costs encompass the salary of four full-time positions (in 2020 dollars) as per TBS’s directive and the overhead costs associated with administrative activities and benefit allowances.footnote 1
It is anticipated that these four full-time employees (FTEs) would work on other TC portfolios as well. This fact has been considered in the estimates. It is hypothesized that between 2023 and 2025, marked by administrative pre-requirements (e.g. training), implementation and enforcement of the newly established AMPs regime, the four referenced FTEs would spend 60% of their time on MVS-related AMPs activities. From 2026 and onward, with the full enactment of the MVS AMPs regime, they would spend 50% of their time on MVS-related AMPs. High and low scenario estimates are provided in the “Sensitivity analysis” section of the regulatory analysis below.
| Year | Annual incremental cost |
|---|---|
| 2023 | $258,886 |
| 2024 | $241,950 |
| 2025 | $226,121 |
| 2026 | $176,107 |
| 2027 | $164,586 |
| 2028 | $153,819 |
| 2029 | $143,756 |
| 2030 | $134,351 |
| 2031 | $125,562 |
| 2032 | $117,348 |
| Total | $1,742,486 |
Sensitivity analysis
Effort required
As previously stated, the analysis assumes that the four required FTEs will allocate 60% of their time to MVS AMPs between 2023 and 2025 and 50% from 2026 and onward. In the sensitivity analysis, different task allocation scenarios are assessed and results are tested based on these different hypotheses. In one scenario, it is assumed that the FTEs would allocate 70% of their time to MVS AMPs between 2023 and 2025 and 60% from 2026 and onward. Since the allocation of the required time spent on AMPS under this hypothesis is greater than the originally presented scenario, this will be labelled as the high scenario. The high scenario assumes that the management, implementation and enforcement of the AMPs regime due to its complex nature would require a higher degree of time commitment. On the other side of the spectrum, the low scenario takes into account the effect of FTEs allocating less time on the MVSA AMPs. Under this scenario, the four FTEs would allocate 50% of their time spent on AMPs between 2023 and 2025 and 40% from 2026 and onward.
| Sensitivity | Cost |
|---|---|
| Low | $1.42 |
| Mid (central) | $1.74 |
| High | $2.07 |
Discount rates
The central analysis used a 7% discount rate as recommended by TBS. The results using a 3% discount rate as well as not discounting are presented in Table 6.
| Discount rate | Cost |
|---|---|
| No discount rate | $2.45 |
| 3% discount rate | $2.10 |
| 7% discount rate | $1.74 |
Analytical time frame
In the central scenario, the analytical time frame is a 10-year planning horizon from 2023 to 2032. Table 7 presents the total costs in 15- and 20-year planning horizons.
| Time frame | Cost |
|---|---|
| 15 years | $2.22 |
| 20 years | $2.57 |
Small business lens
The small business lens does not apply, as penalties are not considered compliance or administrative burden for the purposes of the small business lens.
One-for-one rule
The one-for-one rule does not apply, as the Regulations will not result in an incremental change in the administrative burden. Penalties are not captured under the definition of administrative burden. Although a new title will be introduced, the one-for-one rule does not apply because the new title will not introduce administrative burden.
Regulatory cooperation and alignment
The Regulations are not being introduced to comply with an international agreement or obligation, nor do they have any impacts related to a work plan or commitment under a formal regulatory cooperation forum.
AMPs regimes are common in the Canadian federal regulatory landscape, and several AMPs regimes are already in place at TC. The decision-making processes contained in TC’s oversight policy and associated operating procedures are aligned with those in place within other modes at TC.
In addition, the United States National Highway Traffic Safety Administration, whose mandate aligns with that of TC’s Motor Vehicle Safety directorate, also makes use of a civil penalty scheme for the enforcement of their National Traffic and Motor Vehicle Safety Act, regulations and standards. A Canadian MVS AMPs regime will allow TC to take enforcement action that is aligned with the enforcement regime in the United States.
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+)
The Regulations are not expected to disproportionately impact any group of persons on the basis of identity factors such as gender, race, ethnicity, sexuality, religion, and age. Moreover, during consultations with stakeholders, no concerns were raised about disproportionate impacts based on identity factors.
Implementation, compliance and enforcement, and service standards
The Regulations will come into force on the 90th day after the day on which they are published in the Canada Gazette, Part II. This will provide stakeholders with sufficient time to familiarize themselves with the Regulations, as well as associated policies and operating procedures. The AMPs regime will be available for use as soon as the Regulations are in force.
The Regulations do not add any new requirements; they simply create an additional regime for enforcing the MVSA and its regulations by designating provisions of the MVSA and the MVSR and setting out maximum penalties for each designated provision. Companies and persons that comply with the requirements of the MVSA and applicable regulations would not be impacted by the Regulations. In addition, not all violations will result in TC pursuing an AMP. As is detailed in TC’s oversight policy, other tools, such as warnings, prosecutions, or revocations, can be used to address violations. In all cases, the enforcement response taken by TC will continue to be tailored to achieve both compliance and deterrence.
No service standards are planned for AMPs. In accordance with section 16.23 of the MVSA, TC must issue an AMP no later than two years after the time when the non-compliance is believed to have occurred. Given this constraint, TC will proceed quickly to address non-compliance when an AMP is the required enforcement action.
Payment of penalties, which must be made by credit card, or a certified cheque or money order made payable to the Receiver General for Canada, will need to be made within 30 days after the day on which a notice of violation is served.
Anyone who is issued a monetary penalty can ask to have that decision reviewed and appealed by the Transportation Appeals Tribunal of Canada (the Tribunal). The Tribunal will review the decision and then decide to either uphold, vary (change) or set aside the penalty.
To ensure that AMPs will be applied in a fair, impartial, predictable, and nationally consistent manner, appropriate training programs will be developed and implemented by TC to ensure that enforcement officers take a similar approach in similar circumstances to achieve similar results.
Contact
Kyle Hendershot
Senior Regulatory Development Engineer
Standards and Regulations
Multi-Modal and Road Safety Programs
Transport Canada
330 Sparks Street
Ottawa, Ontario
K1A 0N5
Telephone: 613‑218‑4925
Email: RegulationsClerk-ASFB-Commisauxreglements@tc.gc.ca