Canada Gazette

The Canadian Grain Commission (the Commission) derives its authority from the Canada Grain Act (the Act). The Commission's mandate as set out in the Act is to, in the interests of producers, establish and maintain standards of quality for Canadian grain and regulate grain handling in Canada, to ensure a dependable commodity for domestic and export markets.

The Canada Grain Regulations (the Regulations) are made by the Commission (with the approval of the Governor in Council), and help the Commission fulfill its obligations under the Act. The Regulations are updated annually or as necessary to ensure that the Commission meets the needs of producers and industry in marketing Canadian grain domestically and abroad.

The changes being implemented are either of a substantive or a housekeeping nature. For example, the Regulations are being amended to improve readability, clarity, and ease of use and to ensure consistency of language. Headings are being added to provide a descriptive caption for the provisions following. Other provisions of the Regulations are being amended, or repealed, to reflect current practices.

The changes explained below do not increase the regulatory burden on industry or the public.

Licensed primary and process elevators and grain dealers must tender security to the Commission to cover their liabilities to producers who are holders of eligible documents, i.e. cash purchase tickets, grain receipts and elevator receipts. If a licensee defaults on obligations to the holders, the Commission can realize on the security (e.g. letters of credit) to settle obligations. This means that a producer delivering to a licensee has reduced risk that he or she will suffer a financial loss if a licensee fails to honour his or her obligations. Licensees report their liabilities to the Commission and are required to tender more security if levels are inadequate.

After extensive consultations involving producers and the grain industry, the Act was amended in the mid-1990s to limit the eligibility of producers to receive compensation under this risk coverage. The period of coverage was reduced from one year to a maximum of 90 days after the date grain is delivered to a licensee. Another amendment was introduced requiring producers to notify the Commission of refusal to pay within 30 days of that refusal. The Commission misinterpreted this provision as meaning that the coverage for cash purchase tickets (or cheques) was 30 days. Licensees reported their liabilities based on the Commission's interpretation of the 30-day rule and security tendered to the Commission reflected 30-day coverage. Extensive communications initiatives were conducted advising producers of the 30/90 day provisions.

A producer recently challenged the Commission's decision to deny his claim for security based on the fact that his cheque was older than 30 days. The Federal Court ruled that the producer's claim was valid and clarified that the intent of the 30-day provision was not to limit security coverage for unpaid cash purchase tickets (or cheques) to 30 days from its issuance. Instead, the time eligibility limit only applies to cash purchase tickets (or cheques) which are actually refused by the financial institution against which it was drawn.

The Commission is proposing to amend section 17 of the Regulations so that coverage on a cash purchase ticket is effectively 30 days from the date the ticket is issued. This is the time frame for eligible coverage which has been understood by producers and the industry to be in place since 1995. Producers must take steps to ensure that tickets are surrendered within that time frame. Licensees will report liabilities and post security as they did prior to the Court's decision.

Subsection 8(2), which specifies how unofficial samples (see footnote 1) of grain are to be disposed of by the Commission, is being repealed. Subsection 8(1), which specifies how official samples (see footnote 2) are to be disposed of, will be amended to include unofficial samples. The retention period for unofficial samples will be addressed in a new provision, i.e. subsection 7(8).

Section 28 is being repealed because the abbreviations used for grain inspection purposes can be found in the Official Grain Grading Guide (OGGG).

Paragraph 64(c.1) is being repealed since it may be interpreted incorrectly that an elevator cannot handle grain while fumigated grain is in store. This is contrary to paragraph 64(c) that authorizes the Commission to provide specific instruction to the elevator as to the handling of fumigated grain when necessary.

Schedule 5 is being repealed because the abbreviations used for grain inspection purposes can be found in the OGGG.

Paragraph 60(1)(b) is being amended to replace the word "weighover" with the hyphenated word "weigh-over," to conform to usage in the definition section of the Act.

Subsection 6(3) is being amended to underscore that official inspection is grading of the official sample taken by the Commission and that the inspection certificate issued is based on the official sample. This is consistent with the definition of "official inspection."

Subsection 7(1) authorizes the Commission to grade unofficial samples of any licensee or producer having an interest in any grain. This subsection is being amended to authorize the grading of unofficial samples requested by any person not required to be licensed or exempted from licensing under section 44 of the Act.

Paragraphs 7(3)(a) and (b) and subsection 7(4) are being amended to reference the documentation that now accompanies unofficial samples rather than "shipping tags" because shipping tags are no longer used. Form IS-12-7 is currently used as the identification document accompanying unofficial samples.

Subsection 7(8) is being added to specify 20 days as the retention period for unofficial samples; the same as official samples.

Subsection 8(1) is being amended to include unofficial samples. The required retention period for unofficial samples will be specified under the new subsection 7(8).

Paragraph 16(e.1) is being amended to include the words "and weighing" prior to the word "equipment" to make explicit that licensees must also keep weighing equipment and surrounding areas clean.

Paragraph 47(a) is being amended to clarify that grain must move directly from a conveyance to a ship at a licensed terminal and transfer elevator in order for the elevator to receive grain without causing it to be officially inspected and weighed by the Commission and without issuing an elevator receipt for it. This type of shipment is referred to as a "direct hit."

Subparagraph 50(a)(ii) stipulates that the operator of a licensed transfer elevator may receive grain without causing it to be officially inspected by the Commission, if it is western grain and either it has previously been officially inspected or an unofficial sample of the grain has been graded on or before receipt. This subparagraph is being amended to make explicit that the unofficial sample of grain must be graded by the Commission.

Paragraph 69(a) is being amended to include the words "structurally sound" after the word "dry" thus prohibiting elevators from loading conveyances with lids or doors that do not close properly. This will ensure that the grain is protected and held securely.

The heading "Discharge of Grain Containing Dockage" is being added prior to section 53 to describe the content of the provisions that follow.

Schedule 4, Form 7, page 2 "Special Bin Primary Elevator Receipt" is being amended to delete the word "by" as it is superfluous.

One option is to change licensing and security practices and procedures to accord with the Federal Court's decision. The Commission feels that this option does not encourage producers to liquidate their cash purchase tickets as soon as possible and results in increased licensee liabilities to producers, which requires licensees to post additional security thus raising their costs and lowering the amount provided to producers.

No alternatives were considered for the proposed housekeeping changes since they are routine in nature.

The amendment will confirm previously accepted practices and encourage producers to settle cash purchase tickets within 30 days of issuance. There are no additional costs associated with this amendment.

The proposed housekeeping changes should assist the industry in referencing and complying with the Regulations. There are no additional costs associated with these amendments.

The Commission informed the Country Elevator Association (CEA) and the Canadian Special Crops Association (CSCA) of the Federal Court ruling that cash purchase tickets are eligible for security for 90 days from the date grain is delivered rather than 30 days from the delivery date provided the producer does not get refused payment by the financial institution on which the ticket was drawn. The CSCA did not comment on the judicial decision. The CEA responded by proposing an amendment to the Regulations which would keep coverage for cash purchase tickets to a maximum of 30 days from the date of delivery thereby reducing their security costs. The Commission also discussed the proposed change with the special crops industry licensing and security committee which is composed of representatives of the CSCA and the Western Canadian Marketers and Processors Association; this committee did not object to the proposed change.

Given that the housekeeping changes do not impose additional or different regulatory obligations, consultations are not necessary. No opposition is anticipated.

All of the changes will have no impact on compliance and enforcement responsibilities. No new enforcement mechanisms are being implemented in respect of the proposed changes.

Catherine Jaworski, Manager, Policy, Planning and Producer Protection, Canadian Grain Commission, 600–303 Main Street, Winnipeg, Manitoba R3C 3G8, (204) 984-7268 (telephone), (204) 983-4654 (fax), cjaworski@grainscanada.gc.ca (email).

Notice is hereby given that the Canadian Grain Commission, pursuant to subsection 116(1) (see footnote a) of the Canada Grain Act, proposes, with the approval of the Governor in Council, to make the annexed Regulations Amending the Canada Grain Regulations.

Interested persons may make representations with respect to the proposed Regulations to the Canadian Grain Commission within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Cari Miller, Canadian Grain Commission, 600-303 Main Street, Winnipeg, Manitoba R3C 3G8 (tel.: (204) 983-3081; fax: (204) 983-2751; e-mail: cmiller@grainscanada.gc.ca).

1. The portion of subsection 6(3) of the Canada Grain Regulations (see footnote 3) before paragraph (a) is replaced by the following:

(3) An official sample shall be retained for the period beginning on the date of the grading of the sample and ending

7. (1) Any licensee or any person not required to be licensed or exempted from licensing under section 44 of the Act may forward an unofficial sample of grain to any regional inspection office of the Commission for a determination of one or more of its grade, dockage and other quality factors.

(2) Paragraphs 7(3)(a) and (b) of the Regulations are replaced by the following:

(a) state on a form supplied by the Commission that accompanies the sample the name and post office address of each person to whom the report as to the grade, dockage and other quality factors of the sample is to be sent; and

(b) place on the form a distinguishing number or mark of identification that the shipper has not previously used in respect of any other sample during that crop year.

(4) On receipt of a sample and its accompanying form forwarded in accordance with this section, an inspector shall examine the sample and make the requested determination of its grade, dockage or other quality factors and transmit a copy of the determination in writing to each person named on the form.

(4) Section 7 of the Regulations is amended by adding the following after subsection (7):

(8) An unofficial sample shall be retained for the period beginning on the date of the grading of the sample and ending not less than 20 days after that date.

3. Subsections 8(1) and (2) of the Regulations are replaced by the following:

8. (1) Official samples and unofficial samples forwarded to the Commission for grading shall be sold by public tender within a reasonable time after the end of the required retention period for the samples under subsection 6(3) or 7(8).

(e.1) keep sampling and weighing equipment and areas surrounding the equipment clean and accessible; and

17. The period prescribed for the purpose of paragraph 49(3)(a) of the Act is

(a) if an elevator receipt or grain receipt is issued on delivery of the grain, 90 days; and

(b) if a cash purchase ticket or other bill of exchange is issued on delivery of the grain or is later issued on surrender of an elevator receipt or grain receipt in respect of the grain, the lesser of

(i) 90 days, and

(ii) the period that ends 30 days after the day on which the cash purchase ticket or other bill of exchange is issued.

(a) the grain is transferred directly from a railway car or other conveyance to a ship and is officially inspected and weighed on transfer to the ship; and

8. (1) Subparagraph 50(a)(ii) of the Regulations is replaced by the following:

(ii) it is western grain and either it has previously been officially inspected or an unofficial sample of the grain has been graded by the Commission on or before receipt;

(2) Subparagraph 50(b)(iii) of the English version of the Regulations is replaced by the following:

(iii) it is eastern grain for export by ship, it has previously been officially inspected and it meets the conditions in respect of its sale and inspection that are set out in the document published under the authority of the Commission and entitled Policy for Previously Inspected Eastern Grain;

10. Paragraph 60(1)(b) of the English version of the Regulations is replaced by the following:

(b) after the weigh-over, supply to the Commission a report of the stocks in store in Form 8 of Schedule 4.

11. Section 64 of the Regulations is amended by adding the word "and" at the end of paragraph (c) and by repealing paragraph (c.1).

13. Paragraph 70(1)(b) of the French version of the Regulations is replaced by the following:

b) tout grain destiné à l'exportation, par rail ou par camion, dont la destination finale est la zone continentale des États-Unis, à condition d'en aviser au préalable la Commission par écrit;

14. The portion of page 2 of Form 7 of Schedule 4 to the English version of the Regulations that is under the heading "Special Bin Primary Elevator Receipt:" and before paragraph (a) is replaced by the following:

On surrender of this receipt and the payment or tender of all lawful charges in respect of the grain described, the identical grain will be delivered either

16. These Regulations come into force on the later of the day on which they are registered and August 1, 2005.

Official sample means a sample taken from a parcel of grain by a person authorized by the Commission to take the sample or by any sampling device authorized by the Commission.