Fee proposal for Pleasure Craft Operator Competency Program

Transport Canada is proposing changes to the Pleasure Craft Operator Competency Program. This document describes the context, policy rationale and analyses that informed the proposed changes.

Related acts and regulations: Canada Shipping Act, 2001, Competency of Operators of Pleasure Craft Regulations (SOR/99-53)

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Executive summary

Transport Canada's Pleasure Craft Operator Competency Program is responsible for developing and maintaining the regulations, standards, policies and guidelines related to operator competency requirements for recreational boaters.

The Pleasure Craft Operator Competency Program oversees course providers that offer Transport Canada accredited boating safety courses and tests to the public. This allows Canadians to get a Pleasure Craft Operator Card, in a way that complies with the Competency of Operators of Pleasure Craft Regulations. As part of this process, Transport Canada delivers course accreditation services to course providers and gives them access to official, standardized testing materials.

Course providers charge clients between $50 and $70 to take their course and get their Pleasure Craft Operator Card. While some providers are not-for-profit, many are successful businesses. Course providers currently receive course accreditation, course accreditation maintenance and access to test materials for free from Transport Canada and at the cost of Canadian taxpayers.

Transport Canada proposes to introduce fees for the Pleasure Craft Operator Competency Program's services as part of the department's Fee Modernization initiative. Following costing exercises, it was determined that the cost to administer the program is approximately $1.7 million per year.

This fee proposal introduces two new fees:

  • a course accreditation application fee of $5,000 (which would be paid by course providers every five years)
  • a course accreditation maintenance and test materials access fee of $8.50 (which would be paid by course providers for each Pleasure Craft Operator Card issued)

These new proposed fees were set by considering:

  • how these services benefit companies and individuals
  • what other countries charge for the similar services
  • the business environment and economic context of the course providers

By introducing this fee regime, Transport Canada will:

  • balance the cost between service recipients and Canadian taxpayers
  • strengthen the administration of the Pleasure Craft Operator Competency Program
  • align with international jurisdictions which charge similar fees

This fee proposal is part of Transport Canada's plans to modernize transportation laws, regulations, fees and services.

1 Purpose

This document is a Fee Proposal outlining proposed changes to fees and regulations related to Transport Canada's (TC) Pleasure Craft Operator Competency Program (Program), and describes the context, policy rationale, costing and pricing analyses relevant to the development of the fee design and the introduction of fees.

This Fee Proposal is a tool for engagement with Program stakeholders, most notably current or prospective boating safety course providers. It also serves to introduce TC's approach to Canadians generally, particularly people who hold or are considering obtaining a Pleasure Craft Operator Card (PCOC). Comments on the content of this document can be submitted to TC's Let's Talk Transportation website.

TC will consider all comments received on this Fee Proposal, and expects to publish the proposed regulatory changes in the Canada Gazette, Part I, in spring/summer 2021.

2 Issue

Currently, 21 course providers deliver TC accredited Pleasure Craft Operator Competency courses and tests to Canadians and approximately 157,000 PCOCs are issued annually. Fees for the courses and tests are established by the course providers and range from $50 to $70 to complete a boating safety course, take the TC test, and obtain a PCOC.

The primary benefits of the course accreditation, course accreditation maintenance and test materials access services provided by TC are realized by the course providers, yet all of the costs incurred by TC to manage this Program are borne by Canadian taxpayers.

3 Objective

Under this Fee Proposal, TC proposes to set 2 new fees. These fees will shift the financial burden of the Program's administration costs from Canadian taxpayers to the course providers who benefit from the Program.

4 Current environment

4.1 Program profile

The Program is responsible for the development and maintenance of regulations, standards, policies and guidelines related to operator competency requirements for recreational boaters who operate motorized pleasure craft. The objective of the Program is to both prevent and reduce the number of boating related fatalities and injuries.

The Program provides regulatory oversight of course providers (third party organizations and businesses) which deliver boating safety courses, testing and card issuance services to the public. Canadians obtain a PCOC to be in compliance with the Competency of Operators of Pleasure Craft Regulations (COPCR). TC performs course accreditation services, monitors course providers, and maintains and updates the Pleasure Craft Operator Competency Database System (PCOCDS), which includes cardholder information and test results, and a repository of TC boating safety test questions for course providers to use.

The Program's COPCR came into force on April 1, 1999. These regulations require anyone operating a pleasure craft fitted with a motor and used for recreational purposes to carry proof of competency on board.

Currently, accepted proofs of competency are:

  • a PCOC – this is the most common proof of competency, obtained after passing an accredited boating safety test from a course provider
  • proof of having passed a boating safety course in Canada before April 1, 1999
  • a completed rental boat safety checklist (for rental boat agencies and valid only for the rental period)
  • a specified marine certificate

The regulations also specify the conditions under which a PCOC can be obtained, thus establishing the system for accreditation of boating safety courses delivered by course providers to Canadians wanting to obtain their PCOC.

The PCOC should not be confused with a Pleasure Craft Licence (PCL). The PCOC shows that the operator understands basic rules and how to safely operate a boat, and as mentioned, must be carried on board. In these ways, it is similar to a driver's license. A PCL is a document with a unique licence number for a pleasure craft which serves as identification for the vessel and vessel owner. This information is used by search and rescue personnel and enforcement organizations during an emergency or investigation. The PCL number must be visibly displayed on both sides of a boat's bow.

The PCOC is also important to Canadian boaters who want to boat in the United States since many waterways share a border between the two countries. The United States National Association of Boating Law Administrators (NASBLA) recognizes the equivalency of the Canadian PCOC, which means that all states following NASBLA's standards also recognize the Canadian card. This helps to ensure that the thousands of boaters who transit between Canadian and American waters are not impacted by differing competency requirements. Similarly, the COPCR recognizes competency requirements of any state or country as proof of competency in Canada for foreign visitors.

Since the Program was introduced, the number of recreational boating related fatalities in Canada has reduced by half. By continuing to increase boating safety knowledge, raise awareness of safety issues, encourage more responsible behaviour, and increase compliance with regulations related to pleasure craft, the Program promotes safe boating education and aims to further reduce the number of accidents and fatalities on Canada's waterways.

4.2 Statutory framework

The Canada Shipping Act, 2001 Paragraph 35(1)(g) provides the Governor in Council, on the recommendation of the Minister of Transport, the authority to make regulations and set fees for services. The COPCR outlines the services that are provided to course providers by the Program. The new fees will be added to these regulations.

The statutory authority for the COPCR is found under Part 10 of the Canada Shipping Act, 2001, Paragraphs 207(1)(b), (c) and (d).

4.3 Existing fees

Currently, there are no fees for services provided by TC to course providers. Canadian taxpayers are bearing the full cost of providing these services.

5 Fee modernization at TC

Some TC services have been provided to individuals and industry free of charge while fees for other services have not been updated in over 20 years and therefore do not reflect the real cost to TC to deliver those services. As a result, Canadian taxpayers are bearing a high proportion of the costs of providing services to transportation stakeholders.

The Service Fees Act (SFA) was enacted in 2017 and provides an updated legal framework governing fee setting. The SFA represents the Government's commitment to modernizing its services and delivering value to Canadians. The SFA applies to all TC fees that currently exist and those that TC plans to introduce.

Over the next few years, TC will:

  • introduce new fees
  • increase existing fees
  • simplify fee structures

Fee modernization will be achieved primarily through regulatory changes. The project is part of a broader plan to:

  • modernize laws, regulations, rules and standards
  • ensure TC continues to uphold safety and security
  • ensure TC can continue to support innovation in the transportation sector

6 Cost analysis

TC undertook a costing exercise to estimate the cost of delivering the Program's services. The exercise adhered to the Treasury Board of Canada Secretariat (TBS) Guide to Cost Estimating and followed established methodologies to arrive at supportable cost estimates.

6.1 Determining full cost

Costing for cost recovery purposes requires calculation of the "full cost" of delivering services. According to the Financial Administration Act and applicable TBS guidance, full cost is the upper legal limit that can be recovered through service fees, and represents the departure point for pricing decisions. A full cost estimate comprises all relevant resource costs incurred to deliver an activity or provide a service, including direct and indirect costs, specifically:

  • employee salaries
  • operating and maintenance
  • amortization of capital assets
  • program support
  • internal services
  • centrally managed costs, such as employee benefit plans
  • services provided by other departments, such as office accommodations

TC developed a costing model that captures these cost elements and applies principles of activity-based costing to assign costs to activities and services provided by the department based on their use of resources. For Pleasure Craft Operator Competency services, three years of actual expenditure and full-time equivalent (FTE) details were extracted from TC's financial systems (covering fiscal years 2016–2017 to 2018–2019), data on time-tracked hours was sourced from TC's internal tracking system, and metrics on call volumes from the TC Office of Boating Safety InfoLine were factored into the costing model.

The Program is well-established and planned amendments to the COPCR will not materially change the way the Program delivers its services. Therefore, it is appropriate to use historical costs to estimate the annual, ongoing cost to deliver the services in the future.

The results of the costing analysis indicate that the estimated ongoing full cost of delivering the Program's services is $1.7 million per year. It is estimated that TC incurs costs of about $0.4 million annually to provide the services of reviewing and making determinations on approval for course accreditation applications, while incurring costs of about $1.3 million per year to provide the services of reviewing course manuals and guides, monitoring course providers, maintaining the Program's database system, and developing the Program's tests and making them available to course providers.

7 Fee level analysis and proposed fees

7.1 Fee level analysis

As noted, the full cost of providing services represents the maximum possible amount that TC can legally recover. TC applied a series of pricing considerations to determine the proposed fee levels. The factors considered include:

  • Public-Private Benefit Assessment: Determines the level of benefit that TC's services provide to course providers versus the Canadian public generally
  • International comparison: Examines comparable jurisdictions to see what, if any, fees are charged for similar services under other regimes
  • Stakeholder impact analysis: Assesses the impact the fees would have on course providers, as well as associated impacts to other stakeholders such as prospective PCOC holders

The results of the pricing analysis indicated that setting fee levels at a rate that would recover 100 percent of costs was not appropriate. How each pricing factor was considered is described below.

7.1.1 Public-Private Benefit Assessment

Determining what constitutes public benefit vs. private benefit is fundamental to decisions regarding what services should be subject to fees and what the cost recovery rate (the percentage of the costs paid by the user) should be.

A Public-Private Benefit Assessment (PPBA) was conducted using the PPBA tool developed by TBS. The PPBA tool estimates the degree to which a service provides private benefits to the requestor, above and beyond those enjoyed by the general public.

The PPBA tool estimated that 100 percent of the benefits of the Program's services accrue to the course providers who use the services. In particular, the services enable course providers to participate in a commercial activity and earn revenue. Without giving consideration to any other factors, if 100 percent of the benefit of a service accrues to the service recipient, it is reasonable to expect that they would pay a high percentage of the costs associated with providing that service.

7.1.2    International comparison

Making a comparison of boating safety education programs across jurisdictions is challenging due to different service delivery models, funding structures, and regulatory frameworks. In contrast to Canada, countries with developed recreational boating sectors such as the United States and Australia have no federal legislation requiring mandatory national boating safety education; rather, each state within the specific country develops and sets its own safe boating laws and regulations. Consequently, the requirements for boating safety education vary greatly with regard to the operator's age, the type of vessel (e.g. sail boat/motorboat/personal watercraft), the boat's length, the engine's power and the expected duration of boat operation.

The international comparison below focuses on those jurisdictions that have similar mandatory boating safety education requirements to those of Canada. Although boating safety education requirements vary widely between jurisdictions, TC found that the states of Texas, Washington, Oregon and Virginia have comparable mandatory boating safety education requirements. The international analysis also includes a comparison of Canada's course accreditation regime to that of NASBLA since this organization plays an integral role in approving boating safety education courses in the United States.

Table 1 compares course accreditation fees and Table 2 compares fees charged per card issued. As shown, TC's proposed fee for course accreditation is comparable to NASBLA's fee structure. Additionally, TC's proposed course accreditation fee will cover a longer period of accreditation (5 years versus 3 years under NASBLA). The proposed fee to be charged per PCOC card is also close, and in fact lower, than the fees charged per card by Texas, Washington, Oregon and Virginia.

Table 1: Comparison of course accreditation fees
  Canada (proposed) NASBLA
(all fees in USD)
States in the United States of America
Accreditation fee $5,000

Fee structure varies by membership (member / non-member):

  • New / Renewal Conformity Assessment: $500 / $750 per day
  • Knowledge-based: CD, classroom, printed course materials – 1-4 days (maximum fee): $500-$2000 / $750-$3000 – 1 day minimum
  • Internet-based: 3-7 days (maximum fee): $1500-$3500 / $2250-$5250 – 3 day minimum
  • Policy Section 9.3A Interactivity Review (Optional): $1700 / $2000
  • Administrative Fees - Annual Maintenance/Licensing Fee per course provider: $0 / $350
  • Appeal fee: $50

(refunded if appeal is successful)

No Charge
Accreditation validity 5 years 3 years 3 years
Table 2: Comparison of fees charged per card
  Canada (proposed) Texas Washington Oregon Virginia
Amount per new card issued $8.50 $10 USD $10.50 USD $20 USD $10 USD
Payable by Course provider Course provider* Boater Course provider* Boater
Payable to Transport Canada State State State State
Validity Lifetime Lifetime Lifetime Lifetime Lifetime
(*applicant/boater pays course provider, who then pays the state)

7.1.3 Stakeholder impact analysis

A primary goal of TC's Fee Modernization initiative is to have those who benefit the most from services pay a greater share of the costs. This goal must be balanced with TC's role as a regulator and economic enabler. The fees proposed for Pleasure Craft Operator Competency were developed by taking into consideration the economic context in which course providers operate.

According to TC data, approximately 157,000 PCOCs are issued annually by course providers. About 94% of these cards are obtained over the internet, 2.6% are obtained by taking a classroom course, and 3.4% are from challenge tests.

Currently, 21 course providers deliver accredited boating safety courses and issue PCOCs to qualified prospective PCOC holders. All fees for courses, tests and card issuance services are established by the course providers and there is a significant diversity in the size of these organizations. The potential impacts from introducing fees vary predominantly based on the size of the individual businesses, their number of clients, and their respective ability to absorb additional costs. The introduction of fees may make it difficult for relatively non-active course providers to continue to operate.

While the coronavirus pandemic has negatively impacted many facets of the Canadian economy, evidence suggests that Canadians have increased their participation in recreational boating in 2020. Notably, TC recorded a significant increase in the number of people seeking to obtain a PCOC between April and June, during the height of the pandemic. During this period, about 95,000 Canadians successfully passed a boating safety course and were issued a PCOC, which is approximately double the number of PCOCs issued during these months in a typical year. This means accredited boating safety course providers are earning more revenues than usual during the pandemic.

Prospective PCOC holders may be impacted by TC's new proposed fees if course providers try to offset their additional costs by increasing their course and/or card fees. However, any increase to course or card prices that could be traced to the new TC fees would be modest, since TC is proposing to charge course providers only $8.50 for each card they issue.

Overall, TC's proposed fees are not likely to result in significant economic impacts for most course providers, nor for prospective PCOC holders.

7.2 Proposed fees

TC has considered the factors described above in order to arrive at the proposed fees. The fees reflect both the level of effort required to provide the services and the benefits that accrue to the recipients. The proposed fee design includes two fees, which together will cover about 80% of the costs of providing the Program's services to course providers.

The proposed fees are:

  • a course accreditation application fee of $5,000 (payable by course providers every five years)
  • a course accreditation maintenance and test materials access fee of $8.50 (payable by course providers for each PCOC issued)

Under this fee design, the larger course providers, which draw more heavily on TC resources, will pay more than the relatively less-active course providers in order to offset their proportionate share of TC's Program administration costs.

8 Service standards

The proposed service standards and their related services are summarized below:

Services and fees Proposed service standards
1.

Course accreditation application fee

(Service standard type: timeliness standard)

TC will acknowledge receipt and communicate next steps within 10 business days of receiving a completed course accreditation application.
2.

Course accreditation maintenance and test materials access fee

(Service standard type: access standard)

TC will provide accredited course providers with 24 hour access (excluding system maintenance time) to the Databank of Boating Safety Test Questions and Answers in the Pleasure Craft Operator Competency Database System.

8.1 Effective date of proposed service standards

The proposed service standards will be implemented at the same time as the new fees come into force following Governor in Council approval, currently expected in spring/summer 2022.

8.2 Remission policy

The SFA requires government departments to remit a portion of a fee when the department considers that a service standard associated with a fee has not been met. TBS further requires that departments develop and publish a Remission Policy outlining the circumstances under which fees will be remitted. Remissions will take place in accordance with TC's Remission Policy and the TBS Directive on Charging and Special Financial Authorities.

9 Proposed regulatory amendments

In addition to the introduction of the two fees, other proposed amendments to the COPCR will be introduced to:

  • strengthen course accreditation requirements
  • remove the age restrictions from the Vessel Operation Restriction Regulations (VORR) and bring them into the COPCR
  • incorporate by reference:
    • the Boating Safety Course and Test Syllabus for Course Providers - TC Publication (TP) 14932
    • the Quality Assurance and Control Requirements for Course Providers - TP 15215
    • the Standard for Pleasure Craft Operator Card Testing Over the Internet - TP 15080
    • the list of Certificates of Competency, Training Certificates, Endorsements and Other Equivalencies
  • add provisions for:
    • cancellation of a PCOC
    • reporting
    • suspension and/or revocation of course accreditation
  • repeal provision for Rental Boat Safety Checklist as being accepted as proof of competency
  • include other minor amendments to existing provision and add new definitions

Additional details regarding the proposed COPCR amendments are provided in Annex A.

10 Implementation

TC will develop guidance and explanatory materials for both the Program and the course providers to ensure that the new fees are applied consistently across Canada, and to ensure that course providers clearly understand how and when the fees will be applied and what their responsibilities and liabilities will be under the amended regulations. These materials will be developed based in part on feedback received from stakeholders in response to this Fee Proposal as well as throughout the regulatory process necessary to amend the regulations. The guidance material will be ready before the new fees come into force. The planned coming-into-force date for all of the proposed regulatory amendments introducing fees is spring/summer 2022.

In accordance with the SFA and the Low Materiality Fees Regulations, the fees will be adjusted annually based on the Consumer Price Index published by Statistics Canada. The inflation-adjusted fee levels and the date they will come into effect will be published in TC's annual Fees Report, which is tabled in Parliament. The information will also be made available on TC's website.

11 Stakeholder consultation and engagement

As noted, there are currently 21 course providers offering TC-accredited courses to Canadians. The new fees will be charged to these organizations as well as any new entities who wish to begin offering TC-accredited boating safety courses. TC will use a variety of different means to consult course providers, most notably by organizing virtual face-to-face engagement sessions which will allow for two-way discussion. These sessions will enable TC to receive feedback from course providers while offering an opportunity to provide clarification and answer any questions.

TC acknowledges that stakeholder groups other than course providers may be interested in the proposed fees and the Program enhancements being undertaken. For instance, boating safety advocates and recreational boaters should welcome information about the plan to strengthen the course accreditation requirements, as these would in turn further enhance the quality of the accredited courses, education and test materials provided to Canadians. TC will make presentations at events attended by law enforcement agencies, boating safety advocates, and recreational boaters' associations, such as the National Recreational Boating Advisory Council. To enable comments from the general public, this Fee Proposal will be published on TC's Let's Talk Transportation webpage.

Comments and submissions from stakeholders will be taken into account and will be reflected in the Regulatory Impact Analysis Statement that will be published with the proposed regulatory amendments in the Canada Gazette in spring/summer 2021.

Annex A – Description of proposed regulations amending the Competency of Operators of Pleasure Craft Regulations

The Competency of Operators of Pleasure Craft Regulations (COPCR) came into force on April 1, 1999 and amendments are needed in order to enhance TC's authority and ability to improve, oversee and manage the Pleasure Craft Operator Competency Program.

Minor amendments are being proposed to:

  • change the name of the COPCR to simply Pleasure Craft Operator Regulations (PCOR)
  • add the following definitions: accreditation, agent, boating safety test, boating safety course, boating safety training, candidate, card holder, inspector, operate, online study guide, personal watercraft, pleasure craft operator competency database, power, power driven, representative and test administrator

Consequential amendments are being proposed to add age restrictions to the COPCR/PCOR, which will also involve:

  • repealing the definition of "personal watercraft" in section 1 of the Vessel Operation Restriction Regulations (VORR)
  • repealing Sections 18, 19, 20 and 21 (Age Restrictions) of the VORR
  • adding "Age Restrictions" and provisions within sections 18, 19, 20 and 21 from the VORR to the COPCR/PCOR:
    • No person who is under 12 years of age shall operate, and no person shall allow a person who is under 12 years of age to operate, a pleasure craft, other than a personal watercraft, propelled by a motor with an engine power greater than 7.5 kW, unless the person is accompanied and directly supervised in the pleasure craft by a person who is 16 years of age or older and holds proof of competency.
    • No person who is under 16 years of age shall operate, and no person shall allow a person who is under 16 years of age to operate, a pleasure craft, other than a personal watercraft, propelled by a motor with an engine power greater than 30 kW, unless the person is accompanied and directly supervised in the pleasure craft by a person who is 16 years of age or older and holds proof of competency.
    • No person who is under 16 years of age shall operate, and no person shall allow a person who is under 16 years of age to operate, a personal watercraft.

Additional regulatory amendments are also being proposed in order to strengthen the accreditation framework and address gaps and inconsistencies with program delivery practices, specifically:

  • set, by regulation, the accreditation validity period to 5 years (currently this is set only by TC policy)
  • include provisions to suspend or revoke course accreditation due to non-compliance with accreditation requirements
  • clarify and strengthen reporting requirements
  • ability to cancel a PCOC
  • repeal provision for the Rental Boat Safety Checklist as an accepted as proof of competency. When the COPCR was introduced in 1999, a Rental Boat Safety Standard was originally proposed, which required renters to possess a PCOC. Rental boat enterprises expressed concerns that this would have severe economic impacts on their industry, which in turn led to the introduction of the checklist as a stop-gap measure; it was never intended to remain as a permanent measure. Boating safety stakeholders, including enforcement partners and Port Authority representatives, have expressed significant concerns that the Rental Boat Safety Checklist should no longer be accepted as proof of competency