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Proceedings of the Standing Joint Committee for the 
Scrutiny of Regulations

Issue No. 46 - Evidence - February 21, 2019

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OTTAWA, Thursday, February 21, 2019

The Standing Joint Committee for the Scrutiny of Regulations met this day at 8:30 a.m. for the review of Statutory Instruments.

Mr. Harold Albrecht (Joint Chair) in the chair.

APPEARANCE OF WITNESSES FROM FINANCE CANADA

SOR/2001-390 — FORM OF PROXY (BANKS AND BANK HOLDING COMPANIES) REGULATIONS

(For text of documents, see Appendix A, p. 46A:1.)

The Joint Chair (Mr. Albrecht): Committee members, our first agenda item this morning has to do with the appearance of witnesses from Finance Canada. You’ve had a chance to read through the agenda material.

This situation has been ongoing for far too long and hopefully our witnesses will be able to shed light on progress being made.

Welcome, Ms. Anderson. I believe you’re going to lead us off this morning.

Leah Anderson, Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance Canada: Good morning and thank you, Mr. Joint Chair.

I am Leah Anderson, Assistant Deputy Minister, Financial Sector Policy Branch with the Department of Finance. I’m joined by my colleagues Eleanor Ryan, Director General, Financial Institutions Division; and Mary O’Connor, Senior Advisor, Financial Institutions Division.

I appreciate the opportunity to speak with the committee today to discuss the Department of Finance’s way forward to respond to the committee’s legitimate concerns with the out-of-date references in the Form of Proxy (Banks and Bank Holding Companies) Regulations and the timing for implementation of the changes.

[Translation]

The department is working diligently with the Department of Justice to keep the legislation and regulations of federal financial institutions current and aligned with best practices.

[English]

The department has undertaken, since 2004, three major reviews of financial institutions statutes to adapt the framework to new trends and position it for the future. The reviews resulted in new legislation and regulations. In addition, the department continues to proactively refine the legislative and regulatory frameworks as warranted and communicates these plans through the annual budget.

On the issue of the Form of Proxy Regulations, as I will explain in my remarks, these are very much next on our list.

[Translation]

The department values and respects the work of the committee, and we take the issues that the committee raises seriously.

[English]

The Financial Sector Policy Branch has worked with the Department of Justice to resolve a range of issues that the committee has raised with the department over time. In recent years, for example, the second Budget Implementation Act, 2018, that received Royal Assent on December 13, 2018, contained a number of amendments proposed to address concerns raised by this committee. These matters that we addressed included concerns identified with various electronic documents regulations made under the financial institutions statutes and the legislative authority in the Bank Act related to the Access to Funds Regulations as they apply to foreign banks.

[Translation]

Before I deal specifically with the Form of Proxy Regulations, let me step back and provide context for the discussion.

Corporate governance is essential to the safe and sound functioning of federal corporations and federal financial institutions.

[English]

The Minister of Innovation, Science and Economic Development Canada is responsible for the legal framework for general business corporations that is set out in the Canada Business Corporations Act and the Canada Cooperatives Act and their accompanying regulations.

The federal financial institutions statutes typically follow the same baseline corporate governance standards as the Canada Business Corporations Act, with some modification to reflect the unique nature of federal financial institutions.

In developing policy and legislation tailored to the financial sector, the department levers the expertise of Innovation, Science and Economic Development officials and the policy directions set out in the Canada Business Corporations Act.

Similarly, the regulations for federal financial institutions use the Canada Business Corporations Regulations as a reference point, with modifications where appropriate.

[Translation]

Let me turn now to the matter the committee has asked me to discuss, which concerns the Form of Proxy Regulations for banks and bank holding companies.

[English]

The primary objective of the Form of Proxy Regulations is to provide shareholders with adequate information about the bank in order to enable them to exercise their voting rights in an informed manner through a proxy rather than in person. Over the past two decades, the proxy system has evolved in response to changing best practices and new technologies. The current Form of Proxy Regulations under the Bank Act make references to the Canada Business Corporations Regulations under the Canada Business Corporations Act. The Canada Business Corporations Regulations then make references to the Canadian Securities Administrators’ National Instruments. The national instruments are guidelines intended to harmonize securities regulations across the provinces.

It has become apparent that this design is challenging because the Bank Act’s Form of Proxy Regulations can become out of date or out of scope if the Canada Business Corporations Regulations or, indeed, the national instruments change or are repealed over time. We need a sustainable solution.

In the past, the department took steps to amend outdated cross references in the Bank Act’s Form of Proxy Regulations to align with the revised Canada Business Corporations Regulations. However, further changes to the CBCA, the Canada Business Corporations Regulations, rendered the amendments outdated before they were introduced. So it’s been a regular challenge.

[Translation]

The issues that this committee has identified with the Form of Proxy Regulations are very legitimate. We’ve taken concrete actions to respond.

[English]

Following our conclusions for the most recent comprehensive review of financial institutions legislation, Budget 2018 announced that legislative amendments would be proposed to modernize corporate governance for federal financial institutions. Changes to the Form of Proxy Regulations are seen as an important element of this modernization effort, as announced in Budget 2018.

The department has taken a series of steps to actually implement the proposal in recent years. In particular, we have dedicated resources to hire a specialist in corporate governance to identify a sustainable solution to the Form of Proxy Regulations. We’ve retained the services of an outside lawyer to support the department’s work. We’ve consulted extensively with stakeholders and worked with the Department of Justice to draft the legislation. These steps have positioned the department to make recommendations to the government on how to resolve the inconsistencies that your committee has identified with the regulations.

The envisaged approach is to remove the cross references altogether and set out clear expectations for proxies all in one place and then keep them actively up to date over time. To do this, the department needs to first broaden legislative authorities to describe the information that must be contained in the form of proxy and the required disclosures. The current legislative authority does not permit this permanent solution. Legislative changes are therefore first required.

Subject to approval by Parliament of proposed legislative amendments, the department would recommend amendments to the Form of Proxy (Banks and Bank Holding Companies) Regulations to set out the expectations in the Form of Proxy Regulations itself rather than refer to those other sets of regulations and national instruments that I referenced earlier. This would prevent future misalignments in a sustainable fashion.

[Translation]

The timing of the introduction of legislation is subject to the approval of the Department of Finance and the government house leader.

[English]

Subject to this approval, and should the proposed legislative changes receive Royal Assent, the department would prioritize drafting amendments to the Form of Proxy Regulations. The timing of these regulatory amendments is subject to the availability, of course, of drafting resources at the Department of Justice and approval by the Treasury Board.

In conclusion, let me reiterate that the department takes the issues raised by this committee very seriously. The issues are very legitimate. The department has found a sustainable solution, and we are committed to implementing it as soon as is feasible. We announced plans to do that last budget, and it is subject to the necessary approvals at this point. As I said earlier, it’s next on our list.

[Translation]

Thank you again for inviting me to address this committee. I would be happy to answer any questions you may have.

[English]

We have the pleasure of having two deep experts on the subject with me today.

The Joint Chair (Mr. Albrecht): Thank you very much, Ms. Anderson. We’ll open it up now to the committee members.

I want to remind us of the background that our counsel has provided for us dating back to March of 2004. I’m hopeful that we can make some great progress here.

[Translation]

Senator Mégie: At first, when reading the documents, we wondered how the department would organize itself. I’m pleased to see that you’ve already set aside resources for the corporate governance specialist. Has he already been hired and has he started working?

[English]

Ms. Anderson: We have. I would add that they’re very advanced in the work. We’re actually at the stage of drafting legislation.

[Translation]

Senator Mégie: In the meantime, we’re still working with the old repealed regulations. If we want something, we must refer to them.

[English]

Eleanor Ryan, Director General, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance Canada: The regulations have not been repealed. They are on the books. As they contain what I call the leapfrog cross references, the loop between those cross references has been broken and they really are not effective at this point in time.

Mr. Shields: I appreciate the witnesses being here today. I’m not a tax expert, but I can read. It looks to me like you’ve got more lives than a cat. If I read through this, the number of excuses that have been used for many years is a litany in itself.

When I see you say that things expired before it, no kidding they expired. If you take too long to do something, they expire and they’re no longer good. That’s an excuse you have used: They expired. Saying, “Well, we wrote that but it has expired” makes no sense.

But you say it’s legitimate. Then you’re through the process of doing legislation, and we’re a few months from being done. If we wait a few more months, it will be done and we won’t have to worry about this because we’ll be in a new session with a new government.

So, I find what you’re saying very hollow. Yes, it’s legitimate what you’re saying, but since 2004? I’m not a tax expert, but I really have a problem finding that there is some validity in what you just said. Sorry. I don’t get it.

Ms. Anderson: I appreciate the comment and the passion behind what you’re saying. I do say that we are committed to addressing it. I can’t speak to what has happened over the last 14 years, but we’re definitely on it. We have a plan and we’re well along in the implementation.

The difference this time, as I alluded to in my remarks, is that we won’t be in this loop of trying to catch up because we’re putting it in a fulsome form so that it stays current without those cross references. It will be a sustainable solution.

Mr. Shields: It depends on what somebody else does with it. You can write all you want, but if it doesn’t get passed in legislation, you can say: “Well, it isn’t our fault. Those guys over there didn’t pass the legislation, didn’t get to it. It isn’t on their agenda.” You can get out of this again by pointing to someone else as the excuse.

Ms. Anderson: We want to get this done.

Mr. Shields: Okay. Thanks.

Mr. El-Khoury: Thank you, Ms. Anderson, and your colleagues for coming to illustrate some ambiguity for us since 2001, I believe, not 2004.

As you stated in your presentation, some steps were taken like hiring some consultant lawyer, talking to stakeholders and working with the Department of Justice. But for us, is there any timetable? Can we know when those modifications will be presented? That’s question number one.

Question number two:

[Translation]

The repealed regulations are no longer available on legal research websites such as CanLII and the Department of Justice website. How should people determine their obligations?

[English]

The Joint Chair (Mr. Albrecht): Ms. Anderson, do you want to respond to that?

Ms. Anderson: On the timeline, given the steps we have taken, which I outlined in my remarks, we’re in a position to make a recommendation to the government. We’re ready at the earliest opportunity.

Mr. El-Khoury: When?

Ms. Anderson: Introduction of legislation is, again, the prerogative of the leader of the house and the minister, but we’re ready.

The Joint Chair (Mr. Albrecht): Just for clarification, being ready is different than having done it. When do you intend to actually present it to the leader of the house? Are you ready to present? I think that’s the question.

Mr. El-Khoury: Exactly.

Ms. Anderson: We need to seek Minister of Finance final approval to move forward.

The Joint Chair (Mr. Albrecht): The second question Mr. El-Khoury had was regarding the website information being missing.

Ms. Ryan: I have not looked at the Justice website, but as a practical matter, the banks follow provincial securities rules in this area. As I said, because the regulations refer to the CBCR which leapfrogs to national instruments, the link has been broken and they are not really effective anymore.

To the best of my knowledge, they have not been repealed. They will be repealed when we replace them with these new regulations. But, in practice, the banks follow the provincial securities requirements, so the banks are aware of the expectations.

[Translation]

Mr. Dusseault: I share some of the frustrations expressed by my colleagues, especially since my question concerns the fact that the legislative amendment was announced, as you said, in the 2018 Budget. However, since the 2018 Budget speech last March, there have been two budget implementation bills containing more than 500 pages each. It’s surprising to see that the amendment couldn’t be included in one of the bills.

Why wasn’t the amendment included in one of the two budget implementation bills following the 2018 Budget? Why was the amendment announced in the 2018 Budget if it wasn’t ready to be included in one of the next two budget implementation bills?

[English]

Ms. Anderson: During that budget cycle, these amendments are very much the product of a number of years of review, but most recently, the 2019 legislative review of all the financial institution statutes, and this was a key component. We’ve introduced the amendments stemming from that review in phases. It is very much a question of priorities and having the expertise and identifying the appropriate solution.

As I mentioned earlier, this is next on our list. We wanted to forecast that this is a priority and that our intention is to move forward as quickly as possible, which we’re in a position to do at this point.

Ms. Ryan: Perhaps just one more technical element. The Canada Business Corporations Act amendments were given Royal Assent just in December 2018, so we are also integrating that legislative element into our legislative amendments.

[Translation]

Mr. Dusseault: You said that this is part of a broader framework for reviewing legislation related to financial institutions. As I recall, there were things in the budget implementation bills, particularly concerning financial technology companies. I suppose that this is part of the broader discussion.

Ms. Anderson: Yes.

[English]

Mr. Badawey: I want to thank you for coming out today and giving us this information. I’m not going to discuss the past. I’m sure your predecessors have to wear that, not you. I have to congratulate you in terms of how far you’ve come on this file. It sounds like, from the notice we’ve received, that this is the amenable solution you’re seeking. With respect to the cross references, they are being looked after. We’re hoping it comes back sooner than later.

I have to explain why you see the frustration in this committee, because week after week we are constantly seeing some reason in background reports that show work has not been done since 2004, 2009 or 2010, and, therefore, frustration on each and every file accrues over time. The tone can sometimes be a bit frustrating, so I do apologize for that. However, great work.

The only thing that I would ask is that when it does go to ministerial approval, we get an update on the direction the minister actually takes so that we can also get a follow-up on a timeline.

Ms. Anderson: Absolutely.

Mr. Badawey: Thank you.

Mr. Miller: I have to echo some of the comments here and put some things in perspective. About three months before Mr. Simms, Mr. Scarpaleggia and I came to this place in 2004 is when this issue started. Here we are, 15 years later, and what I really find frustrating about this — and departments, you need to get it — is why the average citizen out there has no time or no respect for government. This wasn’t Paul Martin’s problem. It wasn’t the Harper government’s problem and it isn’t the Trudeau government’s problem. This is a bureaucracy problem of giving the appearance that they don’t give a dang. I know that’s not the case, but that’s the appearance.

Mr. Chair, I’m not coming back to this place this fall. It would be nice in my 15 years if we could see this finally finished.

The Joint Chair (Mr. Albrecht): Would you like to move a motion to that effect, to get this done before June of 2019?

Mr. Miller: You got it.

The Joint Chair (Mr. Albrecht): We heard the presentation by our witnesses and their proposed solutions. Are there any questions that committee members need clarified? Are we comfortable?

The current proposal is that we will go to the Minister of Finance and to the house leader and hopefully be presented — again, considering the legislative timeline, I must admit that I’m a little skeptical as to whether or not it can be done in this session. I’m hopeful that it can. Realistically, is there any way it could be presented in this spring session? I know you can’t speak for the house leader.

Ms. Anderson: I think we’re in a position to move forward and we do hope to fulfil your legacy, sir.

The Joint Chair (Mr. Albrecht): Mr. Miller didn’t hear that. I’ll forward that on.

Mr. Miller, we’re given some hope.

Mr. Miller: I’m listening.

The Joint Chair (Mr. Albrecht): Any further questions or comments by committee members?

We’re going to look forward to, as Mr. Badawey asked, an update as to when this is actually presented to the Minister of Finance, his or her response at that point, and that will give us greater hope that this will actually be expedited before this session is finished.

Thank you very much for appearing today.

Ms. Anderson: Thank you.

SOR/2018-114 — REGULATIONS AMENDING THE SPECIAL ECONOMIC MEASURES (VENEZUELA) REGULATIONS

(For text of documents, see Appendix B, p. 46B:1.)

The Joint Chair (Mr. Albrecht): We’re going to move to agenda Item No. 2, the regulations amending the special economic measures for Venezuela. We look to our general counsel for a summary.

Cynthia Kirkby, Acting General Counsel to the Committee: As members will be aware, the situation in Venezuela is complicated, so I would like to begin by emphasizing the legal question that has arisen in this file. The question is not whether there should be sanctions imposed, which is a question of policy. The question is, rather, whether this instrument is authorized by law, which is a question of legality.

Through the Special Economic Measures Act, Parliament authorized the Governor-in-Council to make orders or regulations with respect to the restriction or prohibition of certain activities when the Governor-in-Council is of the opinion that certain circumstances have occurred. The relevant circumstance in this instance is found in paragraph 4(1.1)(a) of the act, and it states:

. . . an international organization of states or association of states, of which Canada is a member, has made a decision or a recommendation or adopted a resolution calling on its members to take economic measures against a foreign state.

It is clear that this is the relevant circumstance of those enumerated in the act because the recommendation portion of the regulations begins, “Whereas the Governor in Council is of the opinion that the Association Concerning the Situation in Venezuela, of which Canada is a member, has made a decision calling on its members to take economic measures against Venezuela.” The question is whether Parliament intended for the regulation-making power to be exercised in relation to the decision of an entity such as the Association Concerning the Situation in Venezuela.

Excerpts from the parliamentary record are reproduced in the note and may be instructive with respect to Parliament’s intent in amending section 4 of the Special Economic Measures Act in 1992. For example, at the legislative committee studying the proposed amendments, a legal adviser for the Office of the Secretary of State for External Affairs stated that “the implementation of a decision by an international organization” would be “done within the context of a very broad international consensus.”

At third reading in the House of Commons, the Parliamentary Secretary to the Secretary of State for External Affairs stated that the bill would “enable us as a country to combine with other nations of the world through multilateral organizations and have combined forces to deal with despotism and aggression wherever it is in the world when we are called upon to do so.”

At second reading in the Senate, Senator Kelleher, a former Solicitor General of Canada and Minister for International Trade, stated that:

The [bill] would allow, but not require, Canada to give effect to the decisions of international organizations and associations of states to which it belongs. It reflects long-standing Canadian policy of applying sanctions only where there is broad international agreement on their necessity and usefulness.

This can be contrasted with the Association Concerning the Situation in Venezuela which, according to the Regulatory Impact Analysis Statement, or RIAS, has two members: Canada and the United States. Further, according to the RIAS, the United States had already been targeting persons in Venezuela for sanctions since 2014.

Further still, here is some information gleaned from the government response to the July 2017 report of the Standing Senate Committee on Foreign Affairs and International Trade on the deepening crisis in Venezuela. First, Canada and its like-minded partners of the Organization of American States, or OAS, made efforts to develop a consolidated position outlining a way forward but failed to reach consensus. It is subsequent to this that Canada and the United States formed the Association Concerning the Situation in Venezuela.

To conclude, it appears that Parliament’s intent was for this regulation-making power to be exercised to give effect to a decision of a multilateral organization representing broad international consensus. In this instance, however, it appears the regulation-making power was instead exercised on the basis of a decision made by a bilateral organization which was formed in the aftermath of the OAS failing to achieve broad international consensus on the same topic.

The question is, therefore, whether this is a lawful exercise of the legislative authority that Parliament has delegated. Just to reiterate, the legal question is not whether sanctions against Venezuela are good policy. If the exact same regulations had been made to give effect to a decision of a multilateral organization reflecting broad international consensus, there would be no cause for concern under the joint committee’s scrutiny criteria.

One option to proceed would be to write an additional letter, but I will note that witnesses from Global Affairs Canada will likely appear before the committee at the March 21 meeting. So another option would be to bring this file back on that date to ask for more information about how the department sees this instrument as falling within the legislative authority that Parliament delegated.

The Joint Chair (Mr. Albrecht): Thank you.

Mr. Simms, please go ahead.

Mr. Simms: Let me start by saying I’m new, so I may provoke more laughter than anything thought-provoking.

I read this last night with a great deal of interest, only because I think the intent of what was set to do with these particular individuals from Venezuela was the right thing to do.

Larry, you’re a hunter; you’ll understand this expression. We’re right on target, but we’re wide of the mark when it comes to this. I think this is a misuse of 4(1.1). If the parliamentary secretary is saying this, obviously that’s the minister. The primary function of a parliamentary secretary is to represent a minister in the house. Senator Kelleher said quite clearly, “There is good reason for the policy. Economic sanctions are more likely to influence the target state” — back to the target — “where there is broad international commitment to them.”

My issue is that it was done with the United States — solely with them — based on actions they took several months before that. It almost seems like it was an answer in search of some kind of question or some kind of legislation, I should say, that didn’t exist.

In defence of that, a letter came from Global Affairs on October 29. Let me just turn to that. It states:

In the view of Global Affairs Canada, the Act does not preclude an association of states from being comprised of two members.

If this is a nuclear treaty and it’s only Russia and the United States, fine, you’ve got a broad range of opinion that constitutes that, but I don’t think just us and them over a situation in Venezuela, when there are other places you can go to like the Lima Group or the Organization of American States — now there is your broad consensus.

But then they say it doesn’t preclude including other members in the future. It may include other members. Well, the European Union may include Turkey, but that’s not going to happen tomorrow and probably not going to happen in our lifetime.

Sorry, I don’t mean to sound facetious about this, but I think somebody should be brought in here to do this, because if you want to go after these Venezuelans, which I think is right and justified, you need to come up with the right regulations through legislation to do that.

The Joint Chair (Mr. Albrecht): I think you pointed out that the OAS was approached but failed to reach an agreement.

Mr. Simms: Correct. I’m just stating that the OAS was probably what the legislation had in mind.

The Joint Chair (Mr. Albrecht): Right. I just wanted to clarify that.

Mr. Badawey: I think this is the second issue that has been raised. As per the opinion of the regulation itself, what legal counsel is also looking for is the actual validity of the legality of the regulation.

I agree with Mr. Simms and you, Mr. Chairman, to bring the folks in and discuss the issue that you’ve raised within the regulation, which is the legality of it.

Second is Mr. Simms’ concern with respect to the regulation itself and the contents of same.

I would agree, Mr. Chair, to bring them in to ask those questions and hopefully get the answers that we’re expecting, especially clarification.

The Joint Chair (Mr. Albrecht): I’m seeing some nodding of heads. We have a few other members who wish to speak.

[Translation]

Mr. Dusseault: I want to support the request to include it in the testimony of the Department of Global Affairs officials. However, I was wondering whether the current legislation makes it possible to impose economic sanctions through a method other than the chosen method, which is the use of an association of countries. Can it be done another way?

The Global Affairs officials could be asked why they used this method, which required a great deal of flexibility, when they could have used an easier, more direct and clearer method to do the same thing.

Ms. Kirkby: We can legislate under four circumstances.

[English]

There is the international organization of states. There is a grave breach of international peace and security. There is a gross and systematic human rights violation, and then paragraph (d) is a national — it’s very long. But there are four different circumstances under which the regulations can be made.

The Joint Chair (Mr. Albrecht): But I think the question is: Could it be used unilaterally, or does it always have to be in context of the association?

Ms. Kirkby: It’s only the first one where it needs to be an international organization of states. The other ones don’t refer to anyone else.

[Translation]

Mr. Dusseault: Why did they use the first method, when there were only two countries? It’s a bit surprising. I know that you can’t answer the question. However, this shows that we must invite witnesses who can answer it.

Mr. El-Khoury: Canada and the United States created an association. Parliament’s intention was to infer that an association within the meaning of the legislation must have more than two states. If so, the goal and criteria haven’t been fulfilled. How can they then impose sanctions?

[English]

The Joint Chair (Mr. Albrecht): I think that is the nub of the question that we’re all trying to get to, and I think the only way to get an answer directly from the department is to have them here. Even then, I still question the validity of the current applications of the sanctions with just the two member states.

Ms. Kirkby: They do make the point in their letter that it’s not prohibited. The act doesn’t specifically say it has to be more than two states, which is true. They are correct; it doesn’t say that. But that doesn’t appear to be what Parliament intended.

The Joint Chair (Mr. Albrecht): Given the number of references to the conversation in Parliament itself, and the parliamentary secretary and others who referred to a broad consultation and other nations, with an “s,” I think it’s quite clear there was a different intention.

Any further comments? If not, on March 21, we’ll have the witnesses from the department, and we’ll have this file before us, in addition to the other one.

We will now move to Item 3 on our agenda.

SOR/2015-220 — ORDER AMENDING THE EXPORT CONTROL LIST

(For text of documents, see Appendix C, p. 46C:1.)

Ms. Kirkby: The issue on this file is what precise provision of the Export and Import Permits Act authorizes the making of this Order Amending the main Export Control List. According to the Regulatory Impact Analysis Statement, the intent of the order is to ensure that export permits continue to be required for softwood lumber products exported to the U.S. so “as to have access to reliable, accurate data on the province or territory of origin, the volume and the pricing for exports of softwood lumber products.”

The previous order in relation to softwood lumber, which is SOR/2007-14, cited paragraph 3(1)(d) of the act, which authorizes the Governor-in-Council to include goods on the Export Control List where it is deemed necessary for the purpose of implementing an intergovernmental arrangement or commitment.

The softwood lumber agreement with the United States expired in 2015, however, and it is evident that paragraph 3(1)(d) cannot be relied upon to legislate where there is no intergovernmental arrangement or commitment to implement. As a result, Global Affairs Canada was asked in 2015 to identify the precise enumerated provision that authorized the retention of softwood lumber products on the Export Control List from 2015 on.

The initial response is dated April 12, 2016. The department confirms that the order was made on the basis of an enumerated purpose set out in section 3(1) of the act. It goes on to state:

Regrettably, we cannot provide you with further explanation at this time, as this could constitute a waiver of solicitor-client and litigation privilege.

This file was presented to the joint committee on June 2, 2016, at which time General Counsel Peter Bernhardt explained why this response was, in fact, no response at all. I will quote from the remarks he made at that time:

As is explained in the note in the material, solicitor-client privilege can be waived by the client and, in any event, cannot prevent a parliamentary committee from requiring the disclosure of information. If the joint committee wishes the information, it must be provided, whether in writing or by witnesses in person. It is for the committee to decide what information it wants and how it wants to receive it. This aside, it’s fairly obvious that the communication of this type of information is extremely routine.

There is also the suggestion that the precise authority is subject to litigation privilege, because if negotiations on a new softwood lumber agreement break off, the U.S. might take retaliatory action. I suggest this seems a bit fanciful. Litigation privilege is based on the need to protect information when you are preparing for a trial.

Here, I think, it’s simple: Either the department believes the order is authorized under subsection 3(1) or it does not. If it can assert, as it has, that the order is legal, it can presumably identify the specific paragraph it is relying on to come to that conclusion. This is hardly the sort of information that has to be protected from disclosure when preparing for a trial.

Members decided at the 2016 meeting to remind Global Affairs Canada of these principles, although it was also agreed that the precise enabling provision could be identified orally to the committee’s counsel if the department preferred.

The information requested was not provided at either of two subsequent meetings between departmental officials and committee counsel, and Global Affairs Canada’s latest letter, dated November 22, 2017, contains another bald assertion seeking to reassure the committee that this order “was made pursuant to an enumerated purpose set out in section 3(1) of the act.”

What has changed since this file was last before the committee is that recent amendments to the Export and Import Permits Act would add a new enabling provision that, had it been in force in 2015, could have provided the necessary authority for the 2015 order. Specifically, Bill C-47 would authorize the Governor-in-Council to include goods on the Export Control List where it is deemed necessary for the purpose of facilitating the collection of information in respect of the exportation of goods that were, are, or are likely to be the subject of trade investigations or trade disputes.

The department’s latest letter states:

It is the intention of the Government of Canada to remove and re-add Softwood Lumber Products to the Export Control List pursuant to this new provision following the coming into force of this legislation in order to avoid having to make regulatory amendments upon each entry and expiry of a softwood lumber agreement.

Once this occurs, there will be no ongoing concern about what enabling authority is being relied upon for the inclusion of softwood lumber products on the Export Control List. Nonetheless, this does not address the issue still before the committee: What is the legal authority for the 2015 order?

If members wish, this file can also be added to the March 21 meeting when witnesses from the department are expected to appear to ensure a reply is, at long last, received to what should be a very straightforward question.

The Joint Chair (Mr. Albrecht): That’s certainly an option.

I’m wondering if the committee would like to add more weight to that matter ahead of time with another letter saying we expect an answer. We don’t want to just discuss it at that meeting. We expect an answer. I’ll leave that to the committee.

Mr. Badawey: Although it’s always nice to satisfy our aggressive nature — and I can relate to that — Bill C-47 received Royal Assent back in December 2018. I think with that we see some movement, albeit I do sympathize with legal counsel in that the fact remains that the department has failed to identify the precise enabling authority relied upon to date.

I would suggest, as you did, Mr. Chairman, that we send correspondence to the department to ask them that very question, and the expectation would be for them to follow up with an answer at our March 21 meeting.

The Joint Chair (Mr. Albrecht): Does anyone else want to speak to this issue? Are we in general agreement?

Hon. Members: Agreed.

The Joint Chair (Mr. Albrecht): So ordered.

That will probably be a fairly full agenda. We should not book anything else for that particular day.

Next is Item 4 under “Reply Satisfactory (?)” on our agenda.

SOR/2015-152 — REGULATIONS AMENDING THE FREEZING ASSETS OF CORRUPT FOREIGN OFFICIALS (TUNISIA AND EGYPT) REGULATIONS

SOR/2016-41 — REGULATIONS AMENDING THE FREEZING ASSETS OF CORRUPT FOREIGN OFFICIALS (TUNISIA AND EGYPT) REGULATIONS

(For text of documents, see Appendix D, p. 46D:1.)

Geoffrey Hilton, Counsel to the Committee: These instruments added, maintained and removed people from the regulations’ politically exposed foreign persons list for Tunisia and Egypt, but their recommendation portion only referred to adding people to and maintaining people on the list. Consequently, Global Affairs Canada was asked if they could include a statement referencing delisting in the recommendation portion of future instruments that remove individuals from the list, especially since they had done so in the past.

Initially, Global Affairs misunderstood the request and believed they were asked to provide specific reasons for the delisting of each individual.

After the joint committee considered the file on March 4, 2018, counsel attempted to clarify the matter with Global Affairs and sought their assurance simply that future instruments that delist people would include a statement to that effect in the recommendation portion, even if only in general terms.

Global Affairs states in its latest response that it will now endeavour to do so where appropriate. However, they still appear to not understand the committee’s request since, in the same response, they again assert their original position that they are not able to provide specific reasons for an individual’s delisting even though that was never what the committee was requesting.

If the committee is satisfied with Global Affairs’ response, counsel will monitor future amending regulations that delist individuals to ensure that the relevant statement is included in the recommendation portion. If not, a follow-up letter can be sent seeking confirmation that Global Affairs clearly understands the committee’s concerns so that the issue is not at risk of reoccurring.

The Joint Chair (Mr. Albrecht): I think it’s quite clear that if they misunderstood our rationale, we don’t want the reasons for delisting but simply the recommendations. Could that be reaffirmed in a follow-up letter as well?

Mr. Hilton: That’s certainly possible, yes.

The Joint Chair (Mr. Albrecht): Any questions from committee members? All in agreement with that.

Next is Item 5 on our agenda.

[Translation]

SOR/2006-231 — REGULATIONS AMENDING THE CANADA LABOUR STANDARDS REGULATIONS

(For text of documents, see Appendix E, p. 46E:1.)

Ms. Kirkby: This file was last presented to the committee on October 9, 2014. Since then, three of the four promised corrections have been made.

The remaining issue concerns the word “directeur” in the French version of Part I of Schedule I of the regulations, which corresponds to two words, “director” and “manager,” in the English version. To achieve consistency, either one term should be used in the English version, or two different terms in the French version.

Since 2014, the department has stated that this amendment would be included as part of a broader review of Schedule I of the regulations. The review was postponed, and the department stated that the promised correction would be part of another regulatory initiative scheduled for January 2019. However, the amendment hasn’t been included yet, so legal counsel can follow up by asking why the deadline wasn’t met and when the department plans to publish the latest amendment.

[English]

The Joint Chair (Mr. Albrecht): Mr. Badawey?

Mr. Badawey: I would take the recommendation and follow up with them. But, again, I think the word “expect” should be used.

The Joint Chair (Mr. Albrecht): Do you want to add that we expect it by a certain date?

Mr. Badawey: By the time they get the letter, it’s going to be March, so let’s say April or the next week of March.

In all fairness, Mr. Chairman, April would be fine.

Ms. Kirkby: Expect it to be completed in April?

Mr. Badawey: By April.

The Joint Chair (Mr. Albrecht): By April 1.

Mr. Badawey: April 2, because we don’t want to make it an April Fool’s joke.

The Joint Chair (Mr. Albrecht): I think we’re sensing general agreement with that direction. All agreed?

Hon. Members: Agreed.

The Joint Chair (Mr. Albrecht): Next is Item 6 on our agenda.

[Translation]

SOR/2011-136 — REGULATIONS AMENDING THE GREAT LAKES PILOTAGE REGULATIONS

(For text of documents, see Appendix F, p. 46F:1.)

Mr. Hilton: Seven issues were initially raised with Transport Canada on March 30, 2016, regarding the failure to consistently use a defined term, missing or extra words, and questions about the application of provisions relating to qualifications and competence.

Transport Canada initially confirmed that the Great Lakes Pilotage Authority had agreed to resolve the issues raised and that it would propose amendments in fall 2017.

This deadline was later moved to “the end of spring 2018” given the complexity of the project and ongoing consultations. Spring 2018 passed without pre-publication. After legal counsel followed up, Transport Canada confirmed that the work is ongoing and that the authority is striving ensure the pre-publication of the amendments by spring 2019.

Legal counsel can follow up again in early spring, around the end of March 2019.

[English]

The Joint Chair (Mr. Albrecht): We need some specific dates. Spring is far too nebular. I know there’s a definition for spring. Can we put a date on this?

Mr. El-Khoury: We’ll leave it up to you, Mr. Chair.

The Joint Chair (Mr. Albrecht): Again, we want to move these things forward expeditiously, but we also want to be reasonable.

Mr. Badawey: May 1.

The Joint Chair (Mr. Albrecht): We expect it to be prepublished in the Gazette by May 1.

We’ll get one other file closed before you leave, Mr. Miller.

Mr. Simms: This is my first day, and I realize you should specify the year, after the first issue.

The Joint Chair (Mr. Albrecht): That’s more true than we care to admit. I see general agreement that we ask for it to be prepublished by May 1, 2019.

Mr. Badawey: The word of the day today is “expect.”

The Joint Chair (Mr. Albrecht): Moving on to Item 7.

[Translation]

SI/2017-71 — JUSTICE FOR VICTIMS OF CORRUPT FOREIGN OFFICIALS PERMIT AUTHORIZATION ORDER

SOR/2017-233 — JUSTICE FOR VICTIMS OF CORRUPT FOREIGN OFFICIALS REGULATIONS

(For text of documents, see Appendix G, p. 46G:1.)

Mr. Hilton: For agenda Items 7 and 8, please note that an error occurred when the documents were printed.

The French version of the November 16, 2018 note and the February 13, 2018 letter for Item 7 were added by mistake to the Item 8 documents.

[English]

Two issues were raised with Global Affairs Canada on February 13, 2018, in respect of these instruments. For the first issue, under section 5 of the Justice for Victims of Corrupt Foreign Officials Act, also known as the Sergeï Magnitsky Law, regulations must be tabled in each house of Parliament within 15 days after they are made. While there was no issue with the tabling requirement in the House of Commons, it wasn’t clear whether the instruments were tabled in the Senate. Global Affairs later provided proof that both instruments were deposited on time with the Clerk of the Senate. The tabling was not recorded in the Journals of the Senate until two weeks after they were sent to the Clerk, but for the purposes of the act, Global Affairs did appear to satisfy the statutory requirements, so that issue was resolved.

For the second issue, Global Affairs had cited in the executive portion of the regulations a provision that did not confer regulation-making powers rather than the provision that did. Global Affairs advised in their August 7, 2018, letter that they would address the issue and provide an update on an amendment within six months — so by February 7, 2019 — which they did not do. However, it is not clear how they intend to make the amendment because the regulations’ text is not being changed.

One option is to ask for an update on how they intend to address the issue and when this is expected to occur. If they provide this information, then it could be useful for any future file that deals with a similar issue. Or, the committee could accept that they will cite the correct provision moving forward since the error was not repeated in a subsequent amending regulation.

The Joint Chair (Mr. Albrecht): Committee members, what’s your wish on this one?

Mr. Simms: The second part requires a great deal of trust in us and them. Is that correct?

Mr. Hilton: Moving forward, they didn’t repeat the error, so they evidently are aware of the error. It’s just whether or not the committee wants to follow up on the department’s original statement of saying that they would address the problem.

Mr. Simms: We can address it, but do we have the time to do it? How long would this take? It wouldn’t take very long, would it?

Ms. Kirkby: To write a letter.

Mr. Simms: That’s fine, then. We should do that.

The Joint Chair (Mr. Albrecht): All agreed?

Hon. Members: Agreed.

The Joint Chair (Mr. Albrecht): So ordered.

Next is Item No. 8.

SOR/2018-55 — REGULATIONS AMENDING THE QUEBEC FISHERY REGULATIONS, 1990

(For text of documents, see Appendix H, p. 46H:1.)

Ms. Kirkby: This instrument addressed certain issues raised in respect to the Quebec fishery regulations but gave rise to certain other issues. The first is that although one provision of the regulations was amended to use the defined term “ministry” rather than the undefined term “department,” the same error was not corrected in a different provision.

The second issue is that the “Chinese mitten crab” was added to one schedule of fish not to be used as bait but was not added to the schedule where the names of fish are set out with their scientific names. The Department of Fisheries and Oceans has advised it will address both issues in a Miscellaneous Amendments Regulations package expected for spring of 2019, and an update in this regard could be sought.

The Joint Chair (Mr. Albrecht): Agreed?

Mr. Miller: With this one, it looks like they’re on it and they’re going to do it. Being on this committee for only the last six months, is there a history with some departments, like Finance that was here earlier, that take much longer to make the changes requested or required than others? One is a matter of months, or a year, I guess, and the other one is 15 years. Just in general terms; I don’t want to take up too much time on this.

Ms. Kirkby: I don’t have a good sense of that at the moment. A lot of it has to do with what else they have on their plate at the time. Sometimes there is one that they can sneak something into in order to address our concerns, which usually results in a faster turnaround time. But often if they have a lot of things that are priorities, then our concerns take longer.

Mr. Miller: Okay. Thanks.

The Joint Chair (Mr. Albrecht): All finished, but do you want to make a comment on Item 9?

[Translation]

SOR/2018-219 — REGULATIONS AMENDING THE METAL AND DIAMOND MINING EFFLUENT REGULATIONS

Mr. Hilton: This instrument resolves the lone issue raised in 2018 in connection with SOR/2018-219. Specifically, the English version identified a portion of a watercourse extending downstream from a certain point, and the French version identified the portion extending upstream from that point.

The amendment corrects this error so that both versions now refer to the portion of the watercourse extending downstream from that point.

As a result, the previous file was closed, and this file can also be closed.

[English]

The Joint Chair (Mr. Albrecht): Are we agreed that we will let this one close?

Hon. Members: Agreed.

The Joint Chair (Mr. Albrecht): So ordered.

Thank you very much. That concludes our agenda items for today.

Mr. Shields: Just following up, Mr. Chairman, we had a file before us to do with Siksika and the national parks. Have we heard —

Ms. Kirkby: Yes. It was in the Gazette yesterday. I haven’t had a chance to look at what was actually published, but I assume it does address the problem.

Mr. Shields: Great.

The Joint Chair (Mr. Albrecht): So it was gazetted yesterday?

Ms. Kirkby: Yes.

The Joint Chair (Mr. Albrecht): Thank you, Mr. Shields.

I think it’s incumbent upon all of us, if we have specific areas of interest, to ask about a follow-up, because we can’t be experts on all of these issues.

Mr. Badawey: I recall Mr. Shields bringing up an issue — I believe it might have been at Heritage Committee last night. Was that the issue?

Mr. Shields: Yes.

Mr. Badawey: Okay, great. Thank you.

The Joint Chair (Mr. Albrecht): Seeing no further items, our next meeting is next Thursday. Senator Day will be chairing that meeting as I plan not to be here.

(The committee adjourned.)