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2.1 Strategic Outcome:  A safe and secure transportation system that contributes to Canada's social development and security objectives

• 2.1.1 New Security Policies and Programs
  2.1.2 Smart Regulation
• 2.1.3 Safety and Security Management Systems

2.2 Strategic Outcome:  An efficient transportation system that contributes to Canada's economic growth and trade objectives

• 2.2.1 Market-based Policy Framework
  2.2.2 Infrastructure, Gateways and Trade Corridors
  2.2.3 Innovation

2.3 Strategic Outcome:  An environmentally responsible transportation system that contributes to Canada's sustainable development objectives

• 2.3.1 Climate Change
  2.3.2 Environmental Assessment
  2.3.3 Environmental Protection and Remediation

2.1 Strategic Outcome: A safe and secure transportation system that contributes to Canada's social development and security objectives

Resource allocation to this strategic outcome for 2005-06 ($ thousands):

Note: The spending by Strategic Outcome includes a reallocation of departmental administration.

As displayed in the Main Estimates, the two program activities under this strategic outcome are "Policies, Rule‑making, Monitoring and Outreach in support of a safe and secure transportation system" and the Crown corporation "Canadian Air Transport Security Authority". This report provides information on the first program activity only. The Crown corporation has prepared its own annual corporate plan.

The Safety and Security program activity covers policies, rule-making, monitoring and enforcement, and outreach in support of a safe and secure transportation system. It also encompasses the development of national legislation, regulations and standards, and carries out monitoring, testing, inspection, enforcement, education and developmental activities to promote safety and security in all transportation modes. It also covers emergency preparedness plans and delivers aircraft services to government and other transportation bodies.

Transport Canada's 2005-2006 Report on Plans and Priorities outlined a number of important areas for the department to focus its efforts in ensuring a safe and secure transportation system. The following section provides highlights of Transport Canada's progress in these areas by program priority.

2.1.1 New Security Policies and Programs

Marine Security

During 2005-06 Transport Canada carried out key initiatives in enhancing marine security:

• Transport Canada continued its work and collaboration with the Department of National Defence in establishing the Marine Security Operation Centres (MSOCs) on the east and west coasts (i.e. in Halifax, Nova Scotia, and Victoria, British Columbia). The MSOCs will actively target vessels to ensure compliance with the ISPS Code and to help other government departments in maritime domain awareness. The Department of National Defence with Transport Canada's active support manages the MSOCs.

• Transport Canada continued to work with its international partners in harmonizing marine security, in particular with the U.S. and the International Maritime Organization (IMO). Bi‑annual consultations with the Canadian Marine Advisory Committee (CMAC) were completed in 2005-06, including working groups on the development of proposed Regulations for Domestic Ferries. Transport Canada also participated at key IMO Committees for the development and agreement of regulatory requirements and establishing the training and the provision of regulatory guidance/interpretation of the Marine Transportation Security Regulations for both internal and external stakeholders.

• Transport Canada continued with its work in carrying out the Marine Security Contribution Program and granting over $15 million in funding for security enhancements during 2005-06. The program helps fund projects for such initiatives as the purchase of surveillance equipment, including cameras and closed-circuit TV systems; improvements to dockside and perimeter security and access control, such as fencing, gates, signage and lighting; training and other port security enhancements.

• Significant progress was made in implementing the Marine Transportation Security Clearance Program including the development of the draft regulatory package. In preparation of this package, the consultative approach that had been utilized in the past continued and several sessions were held with industry, in order to present the proposed direction for the regulations and more fully understand the effect this might have on industry.

Aviation Security

In 2005-06 the department launched its new Advisory Group on Aviation Security, which acts as the primary consultative mechanism for aviation security. In addition, to augment the rigorous security standards already in place, Transport Canada introduced or made significant progress towards developing new or enhanced security regulations, such as:

• 100 per cent hold baggage screening requirements (expected to come into effect in 2006‑07, with voluntary compliance in place on January 1, 2006);

• amendments to the prohibited items list and the requirement to ask security screening questions to reflect changes in operations and risk;

• new identity screening regulations, which will complement the Canadian Passenger Protect Program (expected to come into effect in 2006‑07); and

• the Restricted Area Identification Card program requirements (expected to come into effect in 2006‑07).

Transport Canada also completed some preliminary analysis work needed to undertake a broad-based review of the security regulatory framework, which is expected to take place over the next five years as part of the department's Smart Regulations program.

Transport Canada has assessed the risk posed by Man-Portable Air Defence Systems (MANPADS) and a range of possible countermeasures. In 2005‑06, Transport Canada continued to conduct MANPADS vulnerability assessments at a number of Canadian airports, using an approach that is consistent with international best practices.

In close cooperation with its stakeholders, Transport Canada conducted or participated in a number of awareness campaigns for the general public or employees working at key transportation-related sites including airport and air cargo handling facilities. The department is also providing significant guidance and expertise to industry partners in the development of aviation security training material, such as training to airport ground personnel.

Legislative and regulatory enhancements, awareness campaigns and industry training initiatives, international initiatives, and research and development activities have all led to increasing public confidence in aviation safety and security. Research conducted on behalf of the department concluded that:

• a majority of Canadians (64 per cent) rated the safety and security of the air mode of transportation as "high";

• the percentage of Canadians, who agree that there are sufficient security procedures in place to protect air travellers even if they cannot see them, increased by 5 percentage points from 2002 up to 71 per cent, and recent polling suggests that this percentage has further increased to 76 per cent; and

• the majority of Canadians (77 per cent) have a moderate to high confidence in the federal government's ability to prevent terrorist attacks against Canada's airports.

International Influence on Security and Emergency Preparedness

Emergency Preparedness and counterterrorism capabilities continued to be a focal point for the department in 2005‑06. The department led, or collaborated on, a number of high profile training exercises to assess Canada's ability to act quickly, decisively and effectively in concert with other partners in the event of a terrorist attack, a security-related threat such as radiological contamination, or other emergencies.

Transport Canada continued to work with other federal government departments, the provinces, industry partners and other governments in order to share information and best practices, and increase capabilities to respond to potential incidents in accordance with the Chemical, Biological, Radiological or Nuclear (CBRN) Response Program for the transportation of dangerous goods. The department established a database of industrial emergency responders, their capabilities relating to specific products, and geographical areas of response. Potential industrial responders have been provided with additional awareness training, and many have expressed interest in the project. There are approximately thirty organizations participating on the CBRN Response Program on a voluntary basis at this time.

Transport Canada also continued to enhance Canada's influence and reputation on the international stage by working with organizations such as the International Civil Aviation Organization (ICAO), the European Civil Aviation Conference, the International Maritime Organization, the North Atlantic Treaty Organization (NATO), and other governments (e.g. U.S. Department of Homeland Security). An example of Transport Canada's significant international security achievements is the collaborative effort being made under the Security and Prosperity Partnership (SPP) of North America. The SPP created an unprecedented commitment between Canada, the U.S. and Mexico to enhance the security, economic well-being and quality of life for citizens of North America. Under the SPP, Transport Canada is leading or co-leading in 52 transportation security initiatives including: transportation security clearances, hold baggage screening, air cargo security, passenger assessment, critical infrastructure, and emergency response, among others. The department is making significant progress in collaborating with its Mexican and U.S. counterparts on many security policies and regulations, and all security initiatives are currently on track as a result of this continued co-operation.

Other key international security and emergency preparedness achievements include:

• Continuing to implement of the transportation-related aspects of the Smart Border Declaration and its companion 30-point action plan to improve the security of shared border services, assure the flow of people and goods, and protect the critical transportation infrastructure;

• Contributing to the counterterrorism capacity building program, through which Canada can influence and harmonize the counterterrorism efforts of other nations (e.g. sponsoring projects to secure funding for ICAO's Universal Security Audit Program and Aviation Security Awareness Training Program);

• Participating and responding to the ICAO's Universal Security Audit Program in cooperation with other countries and international agencies to enhance aviation security and align Canadian and international standards;

• Collaborating with the U.S. and other international partners such as the U.K. in major emergency preparedness and counterterrorism exercises, to assess Canada's ability to act quickly, decisively and effectively in concert with international partners in the event of a terrorist attack, security-related threat such as radiological contamination, or other emergencies; and

• Supporting the ICAO Aviation Security Awareness Training Program through the participation of subject matter experts in training workshops in the Latin America and the Caribbean regions, and sharing expertise on aviation security activities.

Surface and Multi-Modal Security

The 2004 bombing attacks in Madrid, Spain, and the July 2005 bombings in London, England, have led Canada to focus more closely on transportation security in high volume passenger transportation sectors. The passenger rail and public transit sector presents unique security challenges because it consists of extensive, open systems that move high volumes of passengers daily. Although Transport Canada has the lead responsibility for national transportation security, all partners play a role with respect to the related function of emergency management, including preparedness and response.

In November 2005, the department announced an Immediate Action Plan to address security priorities that have been identified by the Government of Canada in collaboration with its partners, to enhance security for passenger rail, public transit and ferry operations through five inter-linked, complementary components:

• Creating a new passenger rail and public transit security contribution program, called Transit-Secure, focused on commuter rail, subway and major transit systems;

• Enhancing Transport Canada's ability to provide security expertise and specialized technology assessments and coordinating the development and sharing of best practices with partners in rail and public transit security;

• Allowing domestic ferry security enhancements to be eligible for funding under Transport Canada's Marine Security Contribution Program;

• Conducting urban transit emergency preparedness exercises to be led by Public Safety and Emergency Preparedness Canada in collaboration with key jurisdictions and stakeholders; and

• Creating a new Urban Transit Task Force on intelligence, policing and response led by Public Safety and Emergency Preparedness Canada.

In 2005‑06, as part of its information sharing program, Transport Canada expanded the rail information sharing network to include major urban transit authorities. The granting of security clearances permits the sharing of classified intelligence information as needed or during conference calls to discuss regulations.

With respect to multi-modal initiatives, Transport Canada continued to collaborate with the U.S. on the Canada-U.S. Cargo Security Project. This project is to evaluate technology used to track the movement of cargo containers transiting in the supply chain and detect any security breaches as they move through the transportation system.

In addition, Transport Canada, along with the Canada Border Services Agency and Natural Resources Canada, worked with the U.S. administration to ensure continued access to American markets for dangerous goods drivers (including explosives) and drivers commercially licensed in Canada. As a result of this work, the Free and Secure Trade (FAST) commercial driver card will be accepted as proof that drivers registered to operate in Canada have met the new U.S. requirements, which came into effect on August 10, 2006. In the longer-term, the Government of Canada is co-operating with the U.S. through the Security and Prosperity Partnership on background checks for transportation workers who cross the Canada-U.S. border and work in our respective countries. The department is committed to a made-in-Canada solution that will satisfy both Canadian and international requirements.

2.1.2 Smart Regulation

In 2006, Transport Canada, as a major regulatory department, played a key role in the Government of Canada's commitment to regulating smarter. In practical terms, this meant regulations that were more focused on safety and security results with targeted interventions, and that were designed, where appropriate, to give industry the flexibility to be innovative in meeting those outcomes.

Although the Canada Shipping Act, 2001 (CSA 2001) received Royal Assent on November 1, 2001, the act does not actually come into force until the regulations needed in support of it are in place. These regulations are being adressed in two phases. In Phase 1, more than 50 existing regulations are being reformed and streamlined. In Phase 2, the remaining regulations are being modernized to be consistent with the requirements of the new act. The

CSA 2001 will come into force once the regulations being developed in Phase 1 have been completed, which is expected in early 2007. Until then, the existing Canada Shipping Act (CSA) and its related regulations remain in full force and effect.

The CSA is the principal piece of legislation governing personal safety and environmental protection in Canada's marine sector. It applies to Canadian vessels operating anywhere and to foreign vessels operating in Canadian waters.

By way of two Orders in Council, one in December 2003 and one in March 2004, the Governor in Council, on the recommendation of the Prime Minister, transferred CSA legislative and regulatory responsibilities relating to pleasure craft safety, marine navigation services, pollution prevention and response, and navigable waters, from Fisheries and Oceans Canada to Transport Canada.

With these added responsibilities, Transport Canada conducted cross-country public consultations throughout 2004 and 2005 on the regulations being developed in Phase 1. These consultations took place primarily at the spring and fall regional and national meetings of the Canadian Marine Advisory Council. Several of the individual projects have also been the subject of outreach sessions with stakeholders at various strategic locations across Canada. By the end of 2005, the consultations for Phase 1 had, for the most part, concluded. There were still a few individual projects under consultation, but most are now in the legal drafting phase.

Some of the streamlined regulations to come out of Phase 1 are related to issues such as administrative monetary penalties; ballast water; vessel operation restrictions; cargo fumigation and tackle; collision, competency of operators of pleasure craft; environmental response; fire safety; fishing vessel safety; heritage wreck; load lines; marine personnel; prevention of pollution from ships and for dangerous chemicals; small vessels; vessel clearance; vessel registration and tonnage. Vessel certificates; safety management; ships registry; licensing fees tariffs and appeal from detention orders have been added to the list of Phase 1 regulations, along with three minor regulations that need to be repealed. For more information on the CSA 2001 regulatory reform project, visit http://www.tc.gc.ca/marinesafety/menu.htm

To regulate smarter, Transport Canada had also committed to establishing safety management system regulations for aviation organizations. These regulations consist of safety goals; performance targets; risk assessments; responsibilities and authorities; rules and procedures; and monitoring and evaluation processes. Rather than telling aviation organizations how to do it, this smarter way of regulating tells them what needs to be achieved so they are able to determine how to achieve the results based on their in-depth knowledge of their own operations.

The aviation industry had also been given flexibility for innovation in services provided solely to private businesses. These aviation services have historically experienced an extremely low accident rate, and changes to the rules in 2006 have provided various parts of industry with additional opportunities to improve the efficiency of their operations by allowing operators to play a more direct role in managing their own safety systems while not compromising safety.

As reported in the 2004‑2005 Departmental Performance Report, Transport Canada has completed the initial phase of implementing Safety Management Systems (SMS) by publishing the first series of regulations, which apply to specific certificate holders. The consultation process has been completed for various parts of the subsequent phases of SMS implementation and the department is now moving towards full implementation. The implementation of the SMS program will result in improving safety through pro-active management rather than reactive compliance with regulatory requirements.

In 2005‑06, an analysis of the issues, alternatives and solutions was concluded regarding the Transportation of Dangerous Goods Act, 1992 review. Amendments to the act are expected to be proposed in the fall of 2006. More information on the review of the Transportation of Dangerous Goods Act, 1992 can be found at http://www.tc.gc.ca/tdg/consult/actreview/menu.htm.

While Transport Canada's goal is to enhance international standards and regulations when transporting dangerous goods, enhancing safety without hindering trade remains an important objective. In 2005‑06, Transport Canada's Transport of Dangerous Goods Directorate led the United Nations Sub-committee of Experts on the Transport of Dangerous Goods in reviewing testing requirements for intermediate bulk containers (IBCs), which resulted in the adoption of some revisions to the Model Regulations that will enhance safety by tightening or, where necessary, clarifying the requirements for testing IBCs. These revisions will be adopted by the International Maritime Organization and possibly by the International Civil Aviation Organization and other international regulatory bodies, and by national authorities, thus enhancing international and domestic harmonization of requirements.

2.1.3 Safety and Security Management Systems

A safety management system (SMS) or security management system (SeMS) is a formalized framework for integrating safety or security into the daily operations of a transportation organization. It includes setting clear goals and performance targets, conducting risk assessments, establishing clear responsibilities and authorities, maintaining rules and procedures that are well documented and communicated to all employees, and regularly conducting internal inspections and evaluations. In the larger sense, this leads to a more thorough identification and resolution of potential systematic safety or security problems. Transport Canada is confident that using SMS and SeMS will make a safe and secure transportation system even safer and more secure.

The implementation of SMS involves a progressive development, and Transport Canada's Civil Aviation Directorate has adopted a phased-in approach to this implementation. The initial phase of SMS became effective through regulations in May 2005 and provided aviation organizations with the flexibility to decide how to meet the safety requirements. Following this initial phase, Transport Canada agreed to establish the Small Operator Pilot Implementation Project to address industry concerns regarding the application of SMS to smaller air operators and aviation maintenance organizations. The result of this initiative will give Transport Canada the opportunity to evaluate and determine the appropriate adjustments required to complete a series of regulations. In addition, a briefing campaign, which comprised a series of national and regional information sessions, was initiated in Spring 2005 to further educate all stakeholders. For more information on SMS in civil aviation, please visit: http://www.tc.gc.ca/CivilAviation/SMS/menu.htm.

Marine Transportation Safety Management Systems have been in place since 1998 when they were implemented on a worldwide basis for tankers, bulk carriers and passenger ships in international trade. In 2002, these requirements were extended to almost all vessels trading internationally and are implemented through the Safety Management Regulations. To date, close to 60 Canadian vessels have obtained the required statutory certification issued by classification societies on behalf of Transport Canada. Through a well established monitoring program, Transport Canada directly monitored eight of the audits carried out by these authorized organizations, and reviewed 20 additional audit reports in 2005. Transport Canada continues to support the voluntary adoption of SMS by vessels operating in Canadian waters, and is reviewing the feasibility of implementing SMS for operators of Canadian domestic vessels, including small passenger vessels.

Transport Canada has also made progress in developing a framework outlining an approach to security management systems. Work will continue over the next year, including consultations with stakeholders. A finalized framework is expected in 2006‑07, which will guide the review of the aviation security regulatory framework over the next several years.

2.2 Strategic Outcome: An efficient transportation system that contributes to Canada's economic growth and trade objectives

Resource allocation to this strategic outcome for 2005‑06 ($ thousands):

Note: The spending by Strategic Outcome includes a reallocation of departmental administration.

As displayed in the Main Estimates, the program activities under this strategic outcome include "Policies, Programs and Infrastructure in support of a market‑based framework" and three Crown corporations: Jacques Cartier and Champlain Bridges Inc., Marine Atlantic Inc. and VIA Rail Canada Inc. This report provides information on the first program activity only. The Crown corporations have prepared their own annual corporate plans.

This program activity encompasses the development of transportation policies, legislation, programs and infrastructure support in such a manner that competition and market forces guide the growth and development of the national transportation system. A strong and healthy marketplace encourages existing competitors and new entrants to innovate and provide new services to meet the transportation needs of Canadians. Contributing activities include monitoring and analysis of the Canadian transportation system; annual reporting on the health of the system; economic studies; and the development of new policies. Transport Canada also administers airport, port, highway and bridge subsidy programs and performs landlord and monitoring functions for the department for ports, airports and air navigation system sites. Under the infrastructure element of this program activity, Transport Canada negotiates the divestiture of ports, airports and Seaway lands to local interests, and operates airports and ports until their transfer, as well as federally-owned remote airports and remote ports.

Transport Canada's 2005‑2006 Report on Plans and Priorities outlined a number of important areas for the department to focus its efforts in contributing to an efficient transportation system. The following section provides highlights of Transport Canada's progress in these areas by program priority.

2.2.1 Market-based Policy Framework

Competition and free market forces stimulate performance and increased productivity. A robust marketplace encourages seasoned competitors and new entrants to innovate to improve services and meet the ever-changing transportation needs of Canadians. Both public and private sector investments are critical in achieving a competitive, world-class transportation system, but any government interventions should be targeted to situations where market forces are insufficient to achieve desirable outcomes. Transport Canada has been working on several fronts to support a strong and vigorous marketplace framework for our national transportation system. In many cases, these activities were directly affected by the federal election process, and the change in government. Brief updates concerning some of Transport Canada's activities over the 2005‑06 fiscal year follow.

Canada Transportation Act amendments

Legislation proposing amendments to the Canada Transportation Act (Bill C‑44) died on the Order Paper when Parliament was prorogued. The goal of Bill C‑44 was to foster responsive transportation services and capacity within a stable policy framework and encourage an investment climate supporting economic growth and secure international trade. It is the intention of the new government to consult stakeholders on some proposed changes and then to proceed with amendments based primarily along the lines of the former Bill C‑44. The amendments may be divided into smaller, more manageable bills in order to expedite passage.

International Air Agreements

The successful negotiation of an Open Skies air bilateral agreement with the United States in November 2005 was preceded by research, preparation and extensive consultation with stakeholders. A document entitled Canada-United States Air Transport Agreement - Consultations with Stakeholders was released in May 2005 and formed the basis for stakeholder discussions. Other successful negotiations resulting in expanded air service rights included China, India and Greece. Unsuccessful negotiations were held with France, the Ukraine, and Panama. All negotiations and discussions clarified Canadian expectations to the other country.

Disposal of the Federal Hopper Car Fleet

In Budget 1996, the government announced its intention to dispose of the federal fleet of railway grain hopper cars. This fleet of 12,400 cars has been used for the transportation of western Canadian grain for the past 30 years. In November 2005, the government announced an agreement in principle to transfer the cars to the Farmer Rail Car Coalition, a farmers' organization from Saskatchewan. Negotiations on the detailed transfer agreement were not completed before the election was called, however, and the transfer was not completed. The new government subsequently announced it would retain the cars in order to maximize benefits for farmers and taxpayers.

Marine Insurance

New regulations for marine carriers to acquire and maintain insurance coverage sufficient to meet their liability to passengers have been drafted. However, they have been put on hold pending further consultations with the marine adventure tourism industry on a possible exemption. Industry concerns were raised as part of a consultation process on amendments to the Marine Liability Act (MLA). The regulations will be held in abeyance pending the amendment of the MLA.

Data Collection

Following a ten-month pilot project, Transport Canada initiated the Electronic Collection of Air Transportation Statistics XE "Electronic Collection of Air Transportation Statistics" (ECATS) program to improve the quality, scope and timeliness of air transportation statistics for policy formulation, planning and decision-making. During 2005‑06, Phase I of the ECATS initiative was successfully completed. Phase I focused on operational air data collection and covered all scheduled airlines serving Canada as well as airlines operating charter services with a minimal size aircraft. Phase II will fill gaps in air cargo reporting, seek more detailed air cargo information, and expand the number airlines filing through ECATS.

In 2005‑06, Transport Canada also led the development of a strategy for conducting a fourth National Roadside Survey (NRS). The NRS is a joint federal-provincial-territorial data collection and analysis project, using passive data gathering technology to provide information on trucking operations. The scope of the coverage of the trucking operations includes the National Highway System network and encompasses not only Canadian-based commercial trucking firms but also U.S.-domiciled trucking firms operating in the Canada-U.S. trade context and private trucks operated by shippers for their own account.

Aviation War Risk Liability Program

The Aviation War Risk Liability Program was introduced as an interim measure in the aftermath of September 11, 2001 to provide an indemnity for third party aviation war risk liability to Canadian air transportation companies that could not obtain suitable insurance coverage on commercially acceptable terms. The objectives of the program are to ensure business continuity and enable Canadian aviation stakeholders to maintain a level playing field with foreign equivalents. The department continues to monitor the aviation insurance market, and make adjustments to the program as appropriate.

Port Divestiture

For the past decade, Transport Canada has been transferring the ownership and operation of its regional/local and remote ports to other federal departments, provincial governments and local interests, including municipalities. The ultimate results of these port divestiture efforts contribute to transportation's role as an economic enabler. The divestiture program has placed the operation of transferred ports in the hands of those best suited to respond to the local circumstances, contributing to a more effective and efficient transportation system.

As of March 31, 2006, Transport Canada had divested 466 (85 per cent) of its original 549 ports, which includes six transfers, and one port demolition during the 2005‑06 fiscal year. These transfers have resulted in an estimated net savings to the Canadian taxpayer of $211 million that would otherwise have been spent on operating and maintaining the ports. During 2005‑06, the department contributed $58.7 million to local interests from the Port Divestiture Fund to facilitate divestiture of the ports, bringing the total expenditure from the Fund to $203.2 million since the beginning of the program.

The Port Divestiture Program expired on March 31, 2006, and options for the future management of Transport Canada ports are currently under review.

For more information on the Port Divestiture Program, please consult: http://www.tc.gc.ca/programs/ports/menu.htm.

2.2.2 Infrastructure, Gateways and Trade Corridors

Supporting the smooth flow of people and goods as well as creating the right conditions to encourage investments in transportation infrastructure remain key areas of focus for this department. Transport Canada works in co-operation with other levels of government to ensure the viability and competitiveness of our transportation system. Strong and sustainable infrastructure is necessary to support the ever-increasing volume of trade and tourism traffic accessing Canada's highways, borders, gateways and trade corridors.

Using the "gateway" approach, we can move strategically to take advantage of the convergence of opportunities related to international commerce, geography and transportation. Its objective is to maximize the efficiency of our major trade-based gateways and corridors, and to ensure policies are coordinated in order to take full advantage of them.

Canada Airports Act

In 2005‑06, Transport Canada undertook extensive consultations with major stakeholders, including airport authorities, other airport operators, air carriers, and their respective associations, to inform them of the development of a proposed Canada Airports Act. Consultations were also undertaken with provincial and territorial officials and other departments of the federal government. Consultations occurred on an ongoing basis and assisted in meeting the needs and concerns of stakeholders when developing the legislation.

Airport Rent

In May 2005, the department completed its rent review process with the introduction of a new formula that targets savings of approximately $8 billion across all airport authorities over the life of the leases. As a result of this new policy, in the summer and fall of 2005, the department consulted with the Canadian Airports Council and prepared amendments to the Airport Authority Ground Leases so the new Rent Policy would take effect on January 1, 2006. Eighteen of the twenty-one airport authorities decided to sign amended leases.

Monitoring the National System of Airports

Transport Canada developed a procedure to address extreme circumstances in the National Airports System. The procedure sets out the steps to determine the nature of the threat, whether the threat is to one airport or the system as a whole, who is responsible (both initially and in the mid-to long-term), and what options may be appropriate.

Work is ongoing to develop an effective and comprehensive system to monitor the National Airports System. The first stages of a program to assess the financial viability of airport authorities has been completed, resulting in the creation of a template allowing departmental officials to assess the financial health of Airport Authorities using information available to the public and provided by the Authorities themselves. To date, seven of the 21 Authorities have been assessed using this template.

Airport Federal Space Review

Federal departments are required to occupy space at international and national airports for the purposes of processing incoming international passengers and for security programs. With a few exceptions, space and facilities have been traditionally provided to federal departments at no charge, as the programs are essential to public services. Since September 11, 2001, there has been a need to increase the federal presence at airports to fulfill the government's expanded safety and security roles. As a result of discussions between the departments and agencies involved, work to achieve a degree of consistency regarding accommodation practices was undertaken. In March 2006, a set of "guiding principles" was adopted as a basis for common understanding between departments and agencies using accommodations in Canadian airports. In addition, the Canada Border Services Agency agreed to update the Facilities Planning Manual, which is a guidebook of standards used by the Government of Canada to plan for accommodations requirements at airports. This will address the need for consistency in the treatment of federal space requirements at airports in the future.

National Highway System

At the September 2005 meeting of the Council of Ministers responsible for Transportation and Highway Safety, the National Highway System (NHS) was increased by another existing11,000 km. The updated NHS now consists of three distinct categories: core routes, feeder routes, and northern and remote routes. The core NHS includes the expanded NHS (approved by the Council of Ministers in September 2004) plus 600 km of key intermodal connectors and approximately 10,400 km of feeder and northern and remote routes. Overall, the NHS network has increased from just over 24,300 km in 1988 to over 38,000 km in 2005. This amounts to an overall increase of 56 per cent.

All additions and amendments to the NHS were based on detailed and agreed upon operational and technical criteria. Transport Canada performed the due diligence in all cases to ensure consistent and uniform application of the criteria across the nation.

Asia-Pacific Gateway Initiative

In October 2005, the previous government announced the Pacific Gateway Strategy, including the introduction of the Pacific Gateway Act (Bill C‑68), which proposed the creation of the Pacific Gateway Council to help shape the development of the Pacific Gateway. With the dissolution of Parliament in November 2005, Bill C‑68 died on the Order Paper.

The new Government remains committed to promoting the Asia-Pacific Gateway and Corridor, and Cabinet approval was secured for a new Asia-Pacific Gateway and Corridor Initiative that will emphasize early results and a more streamlined process. This includes the development of a process to arrive at long-term strategy, policy, and investment priorities for this initiative. It will strengthen Canada's competitive position in international commerce by further developing and exploiting its Asia-Pacific Gateway and Corridor.

Canada Marine Act Review

In 2004‑05, the result of studies, in conjunction with the Canada Marine Act (CMA) review panel's recommendations, were used to guide the department's efforts with respect to amendments to the CMA. Former Bill C‑61 was introduced in Parliament in June 2005, but died on the Order Paper. As a result, a revised package of amendments to the CMA is being considered in the context of the CMA review, stakeholders' reaction to Bill C‑61, as well as in the context of new and emerging trends and the priorities and directions of the government and the Minister of Transport, Infrastructure and Communities. Any amendments would support a strategy to encourage competitiveness in the marine transportation sector, consider the long-term role of ports in Canada and their communities, and maintain the safety and security of Canadian waterways and ports. Transport Canada will work in partnership with other levels of government and consult with marine stakeholders before tabling a new Bill in Parliament in 2006‑07.

Ridley Terminals

In February 2006, the Minister of Transport, Infrastructure and Communities announced that the Government of Canada made a public policy decision to set aside the Request for Proposal process for the divestiture of Ridley Terminals Inc. (RTI) to ensure that the long-term future operation of RTI supports industry and trade objectives. RTI will continue to be maintained as a Crown corporation. At the same time, the government rescinded the Directive prohibiting RTI from entering into any long-term agreements, in excess of 18 months, without the prior written approval of the Minister of Transport, Infrastructure and Communities. With the approval of its 2006‑2010 Corporate Plan in June 2006, the corporation may now enter into long-term contracts. If the favourable coal market continues, RTI predicts to be financially viable by early 2007.

Intermodal Freight

Transport Canada's proposed freight strategy has always been part of a wider strategic commitment to transportation gateways and trade corridors. In the course of 2005‑06, the freight strategy evolved into a more focused analysis of specific gateways and trade corridors, in part as a result of the emergence of the Asia-Pacific Gateway Initiative. At the same time, the focus also partially shifted to the trade aspects of transportation gateways and corridors. In March 2006, Transport Canada hosted a trade and transportation workshop to allow invited federal/provincial/territorial representatives to gather knowledge from renowned experts in the field, and to understand the challenges and opportunities for Canada and the implications for policy development. Transport Canada will pursue the discussion with the various stakeholders to improve the development and the efficiency of the intermodal freight system

Great Lakes - St. Lawrence Seaway Study

The implementation of study tasks, projects and technical analyses across a number of areas of study continued in 2005‑06.

A Report on Stakeholder Engagement, which was publicly released in spring 2005, presents a summary of the major issues and themes raised during the course of the public meetings that were held in 2004. A detailed analysis of the major issues and themes identified was undertaken in spring 2005. Subsequently, a Response to the Report on Stakeholder Engagement was publicly released in summer 2005. Both reports may be found on the study website at http://www.glsls-study.com/. In addition, two consultative roundtable sessions were held in fall 2005, in Quebec and Cleveland, to clarify how major issues and themes are being addressed in the context of the study's tasks, projects and technical analyses. A final study report is expected by spring 2007.

Strategic Highway Infrastructure Program (SHIP)

Additional information on SHIP is available at http://www.tc.gc.ca/SHIP/menu.htm.

SHIP Highway Construction Component

Under the highways construction component of SHIP, 16 projects were completed in 2005‑06 in various provinces and territories under the $485 million allocation. These projects will enhance the safe and efficient movement of people and goods, support trade and economic development, and promote sustainable transportation.

SHIP Border Crossing Transportation Initiative

Under the border crossing transportation initiative of SHIP, two projects were completed in 2005‑06 in British Columbia. These projects will improve safety and capacity, as well as access to the border for low risk trucks and passengers pre-screened under the Free and Secure Trade (FAST) and NEXUS programs..

The environmental assessment phase of the process to address cross-border transportation needs in the Windsor-Detroit area for the next 30 years continued throughout 2005‑06 under the auspices of the Canada-U.S.-Ontario-Michigan Border Transportation Partnership. In November 2005, the list of fifteen alternative crossing options was narrowed to two options within a single area of continuing analysis. During fiscal year 2006‑07, a single preferred option will be identified. These projects will ease traffic congestion and will result in a safer and more efficient highway system for all Canadians. For further project-specific details on the Windsor Gateway, please consult: http://www.partnershipborderstudy.com/ and http://www.tc.gc.ca/mediaroom/releases/nat/2005/05-gc003e.htm.

SHIP Transportation Planning / Modal Integration Initiative

Transport Canada has made $5 million available for academic research studies and applied transportation initiatives that advance transportation planning and modal integration in urban areas and along transportation corridors. The department has funded several transportation planning/modal integration (TPMI) studies in British Columbia, Alberta, Ontario, Quebec and Nova Scotia related to rapid transit links, rail corridors, supply chain, short sea shipping and goods movement studies. As well, a second call for proposals issued in November 2005 was successfully completed with the announcement, in June 2006, of 13 winning projects. These will receive federal funding of approximately $1.0 million. To date, most of the $5 million available for funding has been granted to 45 projects across the country. By encouraging the development of innovative approaches to transportation issues, these projects will increase the efficiency of the transportation system as a whole and improve its sustainability. For further project-specific details concerning the two TPMI call for proposals, consult: http://www.tc.gc.ca/mediaroom/releases/nat/2004/04-h061e.htm and http://www.tc.gc.ca/mediaroom/releases/nat/2006/06-h057e.htm.

Canada Strategic Infrastructure Fund and Border Infrastructure Fund

Transport Canada worked closely with Infrastructure Canada on the strategic implementation of key surface transportation infrastructure projects. $2.6 billion in federal funding for transportation-related projects have been announced under the Canada Strategic Infrastructure Fund and negotiations with provinces, territories and municipalities are ongoing. Project construction has started for most of the projects, which will enable the safer and faster movement of people and goods on Canada's major land transportation routes; reduce production of greenhouse gases and airborne pollutants; encourage more effective urban development; increase economic activity including tourism; and encourage the use of innovative technologies and practices to minimize greenhouse gas emissions. One project was completed in Yukon.

The department also worked with Infrastructure Canada to implement projects aimed at improving border efficiency and reduced congestion. $505.1 million in federal funding for border improvement projects have been announced under the Border Infrastructure Fund. Project construction has started at Canada's five major crossings: Windsor, Sarnia, Niagara and Fort Erie, Ontario; and Douglas, British Columbia. These projects will reduce border congestion and expand existing infrastructure capacity to support ongoing economic growth. On project was completed in the Yukon.

Airports Capital Assistance Program

The Airports Capital Assistance Program assists eligible airports with the financing of capital projects related to safety, asset protection and operating cost reduction. Between 2000‑01 and 2004‑05, a total of 203 projects were funded; over 99 per cent of these projects were directly related to airside safety. These projects will result in overall operating savings at airports of over $28.5 million and have extended the life of airport assets by an average of 17 years. No case of urgent safety needs went unfunded. Treasury Board renewed the program for the period of 2005‑06 to 2009‑10. In 2005‑06, 64 new projects were announced, totalling over $52 million.

2.2.3 Innovation

An innovative and integrated transportation system is necessary to support Canada's success in the global marketplace. Through its innovation, research and development and skills development initiatives, Transport Canada works with other public and private sector organizations to increase the responsiveness, flexibility, and performance of the Canadian transportation sector.

Strategic Research and Development

Ongoing organizational changes in the department continue to bring Transport Canada's innovation, research and development (R&D), and policy research activities into alignment with the Government of Canada's vision of an efficient and competitive economy. A unit has been created to examine the department's overall approach to innovation and R&D from a policy perspective, and to foster relationships with other public and private sector organizations. Through academic workshops and internal consultations held throughout 2005, Transport Canada has laid the groundwork for a strategic approach to R&D management within the department.

Transportation Development Centre

R&D conducted through the Transportation Development Centre (TDC) supports the department's strategic goal of maintaining a competitive and productive transportation system that is safe, secure, and environmentally responsible. Results of TDC's research are made publicly available on the Internet at http://www.tc.gc.ca/tdc/menu.htm. Approximately 60 technical reports and summaries were released in 2005‑06.

Major research in 2005‑06 included the Highway-Railway Grade Crossing Research Program. One project under this study examined factors that contribute to collisions at farm and private crossings. A detailed causal analysis of railway trespassing, and potential countermeasures was also initiated. Other projects undertaken by the TDC in 2005‑06 include planning for the operational test phase of the development of a comprehensive, integrated fatigue management program for the North American commercial motor carrier industry and a one-year pilot test to determine whether the Traffic and Criminal Software system can meet the traffic safety data collection needs of Canadian jurisdictions and integrate effectively with existing government databases.

TDC organized the Seventh Annual Workshop on Highway-Railway Grade Crossing Research in November 2005, which drew more than 170 participants for two days of technical meetings in Montreal. The centre also played an important role in the organization of a major international conference on fatigue management in transportation operations in Seattle, Washington in September 2005. Co-sponsored by Transport Canada and the U.S. Federal Motor Carrier Safety Administration, the event drew nearly 200 researchers and representatives from government and industry.

Intelligent Transportation Systems

Intelligent Transportation System (ITS) refers to the integrated application of information processing, communications and sensor technologies to transportation infrastructure and operations that support the efficiency, safety, security, and sustainability of the transportation system. Under the Strategic Highway Infrastructure Program, $30 million is dedicated to ITS and, to date, some $17 million has been spent or committed. Significant progress has been made under the ITS Strategic Plan over the past year:

• Contribution agreements have been signed with 14 recipients selected under the most recent call for proposals for deployment and integration. Four projects under this call for proposals, plus two from a previous call, have been completed, including the demonstration of a prototype management system for oversize vehicles; the development of a strategic plan to guide ITS investments in Quebec; and the implementation and integration of ITS technologies to improve traffic management and traveller information at a bridge crossing;

• Seven R&D projects were completed, including the development of: intelligent sign management systems, work zone traffic management on streets and highways, and a communication driver for dynamic message sign; and

• Transport Canada has signed and announced contribution agreements with several provinces and territories including three agreements for general deployment, four agreements for Road Weather Information Systems (RWIS), and two agreements for R&D projects. Three of the previous agreements for RWIS have been completed, resulting in the implementation of 30 stations. Several components of the provincial/territorial R&D and deployment agreements have also been concluded, including the implementation of additional RWIS stations, and the creation of centres of excellence for rural and rail ITS, and ITS and Freight Security.

For more information about ITS visit: http://www.its-sti.gc.ca/en/menu.htm.

Transport Canada has continued to act as a catalyst between different levels of government, industry, academia and other stakeholders to support transportation skills development. In June 2005, Transport Canada hosted a successful National Transportation Skills Development Forum to assist stakeholders in identifying ways to address top skills development priorities. In September 2005, Transport Canada was instrumental in the establishment of a federal-provincial-territorial government Skills Development Task Force to examine skills development issues within and across jurisdictional boundaries. The department co-chairs the Task Force and is active on its sub-committees. The department also funded the expansion of the Western Transportation Advisory Council's bilingual TranspoCity (http://www.transpocity.ca/) website to promote interest in and awareness of transportation careers among Canadian youth.

Transport Canada also funded the National Training Program that is responsible for the development and administration of technical training courses for the marine inspection community. This ensures inspectors are in compliance with changing rules and regulations and are knowledgeable of the acts and regulations impacting Marine Safety. In 2005‑06, the program delivered 14 courses to 175 Marine Safety inspectors across Canada. Ongoing developments include a national policy for mandatory training of inspectors prior to appointment, continued emphasis on small vessel inspections, and backup for regional inspectors when they are assisting with the delivery of training courses. In addition, the development of the necessary training modules were completed to ensure that marine inspectors will be conversant with the changes that will come as a result of the Canada Shipping Act 2001 coming into force in the spring of 2007.

2.3 Strategic Outcome: An environmentally responsible transportation system that contributes to Canada's sustainable development objectives

Resource allocation to this strategic outcome for 2005‑06 ($ thousands):

Note: The spending by Strategic Outcome includes a reallocation of departmental administration.

As displayed in the Main Estimates, the program activity under this strategic outcome is "Policies and Programs in support of sustainable development".

This program activity encompasses the development and implementation of programs and policies to protect the natural environment and to achieve a more sustainable transportation system in Canada.

Transport Canada's 2005‑2006 Report on Plans and Priorities outlined a number of important areas for the department to focus its efforts in protecting the physical environment. The following section provides highlights of Transport Canada's progress in these areas by program priority.

2.3.1 Climate Change

2004‑2006 Sustainable Development Strategy

Transport Canada's third Sustainable Development Strategy was tabled in Parliament on February 16, 2004. This strategy outlines the department's vision of sustainable development and its action plan for promoting a more sustainable transportation system in Canada. It defines seven challenges and 32 specific commitments for the period 2004‑2006. To date, over 90 per cent of the 173 targets in the strategy are on track, complete or ongoing. In 2005‑06, the department also began the process for developing the 2007‑2009 Sustainable Development Strategy, which is due to be tabled in December 2006. Please see table 14 for additional information on Transport Canada's Sustainable Development Strategy. For more information, please visit http://www.tc.gc.ca/SDS.

Climate Change Programs

Four programs for which Transport Canada was allocated some $60 million (Freight Efficiency and Technology Initiative, Freight Efficiency Program, Urban Transportation Showcase Program and Advanced Technology Vehicles Program) were subject to review by Treasury Board, along with some $1 million in funding that Transport Canada received to provide support for programs led by other departments (i.e., the One-Tonne Challenge and the Climate Change Impacts and Adaptation Program). All of Transport Canada's programs rated well in the review.

On April 5, 2005, the Government of Canada and the Canadian automobile industry signed an agreement to act on climate change. Under the agreement, carmakers will voluntarily work to reduce annual greenhouse gas (GHG) emissions from light-duty vehicles by 5.3 Megatonnes (Mt) in 2010. The agreement gives consumers fuel-saving choices, focuses on immediate action to achieve GHG reductions, and provides a cost-effective solution for government, industry and consumers. Natural Resources Canada, Transport Canada, Environment Canada and Industry Canada were actively involved in this initiative.

A joint government-industry monitoring committee has been established to track the Canadian automotive industry's performance under an Memorandum of Understanding (MOU). Transport Canada, Environment Canada and Natural Resources Canada are represented on this committee. Emissions reductions will be monitored year by year, with interim goals in the years leading up to 2010. The annual reports from the committee will be available to the public, as is the MOU.

Freight Efficiency and Technology Initiative and Freight Efficiency Program

The Freight Efficiency and Technology Initiative (FETI) and the Freight Efficiency Program (FEP) have supported continuous energy-efficiency improvements through the funding of demonstration projects and projects to purchase and install efficiency-enhancing technologies. In 2005‑06, a total of eleven freight-focused projects were initiated with the signing of the programs' contribution agreements. These projects range from the demonstration of biodiesel in a marine application to the demonstration of the fuel efficiency improvements that are possible through the use of parallel diesel-electric hybrid technology in both urban and rural environments. Transport Canada committed approximately $2.24 million towards these eleven projects in 2005‑06. To date, Transport Canada has committed over $7 million towards energy efficiency enhancing initiatives through the Freight Sustainability Demonstration Program and the Freight Incentives Program (FIP). FIP hosted its second funding deadline of which ten projects were recommended for funding. Of the ten projects, six are currently being implemented. The Freight Sustainability Demonstration Program also hosted its last funding deadline of which five projects were recommended for funding.

Transport Canada worked together with the Canadian Industrial Transportation Association (CITA), Supply Chain and Logistics Canada and industry to organize the initial components of the Shipper Awareness Program. Initial work included participation in CITA's First Confidential Benchmarking Survey. Transport Canada also completed a feasibility study to identify potential sites in Canada for the implementation of marine shore power pilot projects.

Significant progress has been made with respect to the department's work to negotiate voluntary performance agreements with industry. On June 29, 2005 the Government of Canada and the Air Transport Association of Canada signed an agreement to reduce the growth of greenhouse gas emissions in Canada's aviation sector. This agreement is the first of its kind within the aviation sector in Canada and in the world. The department also made significant strides to complete the negotiation of a similar agreement with the Railway Association of Canada and Environment Canada.

The Shipper Awareness Program is also working towards enhancing shippers' understanding of the environmental impacts of their business decisions, and improving the uptake of transportation alternatives available to them with the aim of reducing GHG emissions. In 2005‑06 the department participated in the Canadian Industrial Transportation Association's first Confidential Benchmarking Survey and, in February and March 2006, four shipper focus group sessions were conducted by Supply Chain Logistics Canada on behalf of Transport Canada in Toronto, Calgary, Montreal and Moncton to gauge shippers' awareness of the environmental impacts of their transportation choices as well as identify promising methods to inform shippers about this topic.

Urban Transportation Showcase Program

The Urban Transportation Showcase Program (UTSP) is a $40-million initiative to demonstrate and evaluate the impacts of integrated strategies to reduce GHG emissions from urban transportation. There are presently showcase demonstrations underway in five city regions (Halifax, Waterloo, Greater Toronto and Hamilton, Vancouver, and Whitehorse). The program's goals also include supporting and disseminating information on innovative approaches to sustainable transportation, which is done through the Information Network. In 2005, the program's Information Network supported two national workshop series (Transportation Association of Canada's Sustainable Transportation Master Plan Guidelines and Association of Commuter Transportation Canada's Transportation Demand Management) and various other learning events that focused on case studies and best practices from international and Canadian projects and initiatives. Over a thousand members of the program's target group attended these sessions and workshops supported by the UTSP. Two awards programs were also supported: the Transportation Association of Canada's Sustainable Urban Transportation Award and the Federation of Canadian Municipalities' Sustainable Transportation Award. The recipients were the Canadian Institute of Transportation Engineers for its "Promoting Sustainable Transportation Through Site Design: A Proposed Recommended Practice", and the City of Vancouver for the Southeast False Creek Sustainable Transportation Strategies project.

Postcards about the UTSP, the Information Network and the ongoing showcases were designed and distributed to over a thousand contacts nationally last fall, helping to highlight the progress and lessons learned of the five demonstration showcases and other case study materials posted on the website. The program also supported the development of a best practice on Transit Priority Measures. Over a thousand copies of this publication have been distributed. For further information on the program's showcases and information network, please visit http://www.tc.gc.ca/utsp.

Advanced Technology Vehicles Program

The Advanced Technology Vehicles Program (ATVP), which forms part of the Motor Vehicle Fuel Efficiency Initiative, supports the achievement of a 5.3 MT voluntary light-duty vehicle GHG emissions improvement target for model year 2010. The goal of this program is to encourage the supply and consumer demand of advanced technology vehicles in Canada and to determine the viability of emerging and future technologies. As of March 2006, the ATVP had purchased 135 vehicles from around the world incorporating various advanced technologies. Sixty-one of these vehicles have been evaluated for on-road usability. A total of 719 track tests and 280 formal laboratory tests have been completed. The ATVP has undertaken 178 events and promotional activities. Millions of Canadians have participated in these events. For information about this program or upcoming events, please visit: http://www.tc.gc.ca/auto.

Moving On Sustainable Transportation

The Moving On Sustainable Transportation (MOST) program is a key departmental initiative for supporting innovative, community-based, sustainable transportation projects to facilitate a transition to a more sustainable transportation system. The projects funded addressed a wide range of sustainable transportation issues such as active transportation, public transit, urban planning and smart growth, and transportation demand management programs.

An evaluation that was conducted in January 2006 found that:

• The MOST Program is aligned with current government priorities for the environment and strives to encourage Canadians to make more sustainable transportation choices.

• There is an on-going demand for the MOST Program from stakeholders as well as a demand for longer-term funding for sustainable transportation projects.

• There is a legitimate and necessary role for government in the MOST Program. It is the only Canadian federal contribution program that is dedicated to providing contributions for sustainable transportation projects.

To learn more about the program, please visit http://www.tc.gc.ca/. More information on findings relating to the success of the program is available at http://www.tc.gc.ca/programevaluation/reports/menu.htm.

One-Tonne Challenge

The One-Tonne Challenge was a three-year social marketing climate change initiative that encouraged Canadians to reduce their personal GHG emissions by one tonne. Transport Canada provided expert advice on transportation issues to help the lead departments, Environment Canada and Natural Resources Canada, design and implement the One-Tonne Challenge marketing campaign. As well, Transport Canada developed content on sustainable transportation, active transportation and urban transportation for communications and web-based products, and played a significant role in securing strategic partnerships with private stakeholders active in the transportation sector. The department also developed and implemented an innovative internal communications plan to raise awareness of the One-Tonne Challenge among its employees.

Impacts and Adaptation

There are many studies underway to determine the potential impacts of climate change and the actions that Canadians could take to adapt to these impacts while reducing adverse effects. In this context, Transport Canada continues to work to better understand the vulnerabilities of the transportation system and to develop effective strategies to respond to negative impacts. The department has continued to work with other federal government departments to develop an effective policy framework with respect to climate change impacts and adaptation.

Fuel Consumption Program

The role of the Fuel Consumption Program (FCP) is to administer the voluntary Government/Industry Fuel Consumption Program. The program is expected to result in increased public awareness of vehicle fuel efficiency and more fuel-efficient new light duty vehicles in Canada. Performance will be measured through the continued maintenance of the Vehicle Fuel Economy Information System; numerical audits of data submitted by manufacturer; confirmatory tests of a limited sample of new motor vehicles; and initiatives to inform the Canadian public about low carbon fuels and fuel-efficient vehicles through the Fuel Consumption Guide and other means. In 2006‑07, Transport Canada will be seeking the resources necessary to strengthen both the Advanced Technology Vehicles Program and the FCP, and to place them on a more sustainable footing.

Study and Agreement for the Rail Industry

A study was undertaken by the Railway Association of Canada (RAC) to make projections regarding the possible outcomes from the Memorandum of Understanding (MOU) in terms of GHG and Criteria Air Contaminant (CAC) reductions. A final report entitled "Present and Future Canadian Railway Activity and Emissions Profile" was submitted on July 28, 2005. The report considered four potential railway business scenarios, and included assumptions regarding traffic growth, locomotive replacement rate, and engine rebuilding activity versus energy efficiency improvements.

On September 7, 2005, RAC presented to government officials a draft MOU with specific targets for GHG and CAC. Negotiations continued, into the fall, between Transport Canada, Environment Canada and the Railway Association of Canada with the goal to finalize the MOU. Work continues in this area.

2.3.2 Environmental Assessment

On March 29, 2004, responsibility for the Navigable Waters Protection Program was transferred from Fisheries and Oceans Canada to Transport Canada. Certain approvals under the Navigable Waters Protection Act (NWPA) trigger the need for an environmental assessment under the Canadian Environmental Assessment Act. Transport Canada is now responsible for ensuring that these environmental assessments are carried out and for approving them.

Since that time, both the number of environmental assessments completed and the number of environmental assessments underway have increased significantly due to the NWPA transfer. This increase has significant resource implications for the department. During 2005‑06, a new guide titled "Proponents' Guide to Environmental Assessment Pursuant to the Canadian Environmental Assessment Act" was developed to reflect the environmental assessment requirements for proponents. This guide has a specific section for the Navigable Waters Protection Act applicants. The department will continue to monitor how many environmental assessments are completed or initiated each fiscal year. For more information, please visit http://www.tc.gc.ca/programs/environment/environmentalassessment/menu.htm.

2.3.3 Environmental Protection and Remediation

In January 2005, with the support of the Federal House in Order initiative, Transport Canada invited 92 departments and agencies to join the Transit Pass Program in the National Capital Region (NCR). Since that time, the department's Transit Pass Program Office has been working with departments and agencies in the NCR to introduce the program and allow employees to access discounted transit passes through payroll deduction or pre-authorized payment. As of April 2006, 81 departments and agencies had successfully joined the program, with over 12,000 employees enjoying the benefits of an annual transit pass with a convenient payment method.

Transport Canada also continued to promote "Commuter Options: The Complete Guide for Canadian Employers". The guide is available through Transport Canada's website and is marketed with promotional material, through partners like the Association of Commuter Transportation Canada, and through departmental workshops. Four workshops were delivered in 2005‑06 in Burlington, Richmond Hill, Winnipeg and Calgary with over 100 participants/organizations.

Transport Canada continues to undertake work as detailed in its Contaminated Sites Management Plan in support of the department's commitment to manage its sites in a responsible manner. During 2005‑06, Transport Canada spent $22.0 million on the assessment and remediation/risk management of contaminated sites. This includes $13.9 million from the Federal Contaminated Sites Accelerated Action Plan (FCSAP). FCSAP funding was provided for four remediation and eight assessment projects. For more information, please visit http://www.tc.gc.ca/programs/environment/contaminatedsites/menu.htm.

Transport Canada initiated an aggressive program to increase the effectiveness of its National Aerial Surveillance Program in order to reduce the frequency of illegal pollution discharges from vessels. The expected result of this program is to further protect the oceans from any adverse effects of shipping by increasing patrols, improving surveillance measures and modernizing detection equipment. In 2005‑06, Transport Canada purchased two pieces of state of the art marine pollution surveillance equipment. One patrol aircraft operating on Canada's East Coast is being outfitted with this equipment. A second aircraft is currently being sought and will be equipped to patrol Canada's West Coast. In addition, Transport Canada increased the number of pollution surveillance patrol hours from an average of 1,100 hours per year to 1,548 hours in 2005‑06, an increase of 41 per cent.

Transport Canada continued to work towards reducing greenhouse gas emissions in the rail sector. Specifically, it worked with Environment Canada and the Railway Association of Canada on expanding the existing Environmental Performance Agreement to include more effective plans and targets to reduce greenhouse gas emissions, and control over toxic emissions.