Operating Context and Key Risks

From: Transport Canada

Operating Context

This subsection describes the context within which our department operated and how we delivered our Programs. It identifies both external and internal influences and factors, and summarized the conditions that existed for us throughout 2016-17.

At Transport Canada (TC), we have begun an ambitious journey of transformation with the Minister announcing Transportation 2030: A Strategic Plan for the Future of Transportation in Canada, which is centred on the five themes of:

  • The traveller;
  • Safer transportation;
  • Green and innovative transportation;
  • Trade corridors to global markets; and
  • Waterways, coasts and the North.

Our transformation also includes:

We launched OPP activities, a government priority focussed on creating a world-leading marine safety system that includes plans for:

We are one of six government entities responsible for administering the OPP. We are working in partnership with:

The OPP and all of its initiatives are closely aligned with the government’s Indigenous reconciliation objectives. TC’s approach continues to evolve, and includes:

  • Making specific efforts to co-develop key initiatives with Indigenous communities;
  • Having our employees go well beyond historical consultation approaches; and
  • Building on community expertise and knowledge to introduce more innovative and efficient approaches to marine safety and environmental protection.

The Trade and Transportation Corridors Initiative

In 2016-17, we also started advancing the newly launched Trade and Transportation Corridors Initiative. This program will invest in three areas, specifically:

  • $2 billion for the National Trade Corridors Fund, to fund key projects that will strengthen our national trade corridors’ efficiency and reliability;
  • $50 million to:
    • Stimulate innovation and foster use of new transportation technologies;
    • Safely deploy connected and automated vehicles; and
    • Help integrate unmanned air systems into our transportation system; and
  • $50 million to launch a new Trade and Transportation Information System, which will invest in information, data and analytical efforts to build the evidence-base for addressing gaps in the transportation system. It will also strengthen collaboration and dialogue with transportation stakeholders.

We are also rolling out six modernization initiatives over the coming years. These will put TC on a solid footing to deliver more effectively on our mandate and be more financially sustainable for the future, and consist of:

  • Modernizing outdated legislation and regulations, so regulatory and enforcement approaches will be more consistent across modes and in line with modern regulatory and operational practices;
  • Modernizing our oversight regimes, so our inspectors focus on higher-risk operators;
  • Modernizing our cost-recovery regime so that we can provide better and timelier services to our clients. We will:
    • Update user fees for services such as registering domestic vessels and certifying new aircraft; and
    • Introduce new fees for other business lines that are directly benefitting users.
  • Modernizing the marine and aviation safety regulatory frameworks to address longstanding issues the Transportation Safety BoardFootnote has identified. Marine regulations, especially those related to vessel construction and equipment, are out of date with new and evolving technologies used in modern ships. We also need to update aviation safety regulations to align with International Civil Aviation OrganizationFootnote standards and to address irritants stakeholders and inspectors have identified;
  • Strengthening Canada’s engagement with international partners by investing in new resources to ensure that:
    • International aviation standards reflect Canadian objectives;
    • We can establish or expand technical bilateral agreements that allow Canadian products and services to be sold in global markets; and
    • Canadian pilots are permitted to work around the world; and
  • Strengthening the economic competitiveness of Canada’s aerospace sector by strengthening our capacity to certify aerospace products to create new jobs and increase exports.

Key Risks

Risk refers to the likelihood and impact of an event that has the potential to prevent an organization from achieving its goals. Risks are driven by factors both internal and external to the organization. This subsection describes the key risks we faced in implementing and/or initiating:

  • Our Programs’ commitments;
  • The commitments in the minister’s mandate letter; and
  • Key government wide or departmental priorities in 2016-17.

Risk also includes those factors that are outside the control of the department and that carry the highest risks both in terms of likelihood and impact.

Management of Key Risks

Organizations adopt risk management systems to manage risk and control activities across all of their activities. This approach includes developing plans to manage and/or mitigate risk to an acceptable level while supporting the organization's objectives. In 2016-17, we adopted a number of actionable plans to reduce our key risks, support decision making and improve business practices, including how we:

  • Develop policy;
  • Set priorities;
  • Allocate resources; and
  • Deliver on our core activities and transformation initiatives.

The assessment level of four key corporate risks Transport Canada (TC) managed over the last year is set in the matrix below. These risks are:

  1. Canada’s transportation legislative, regulatory and oversight regimes may not effectively address emerging safety and security issues, industry practices and increasing demands;
  2. Federal transportation policies and regulations may not effectively contribute to reducing the environmental impacts of transportation-related activities and their adverse effects on Coastal and Northern communities and Indigenous groupsFootnote 1;
  3. Federal transportation policies, programs and infrastructure investments may not sufficiently support the efficient transportation of goods and people, and the adoption of new technologies; and
  4. Transportation-related security incidents may not be effectively addressed due to communication gaps at critical points.

Figure 1: Risk Matrix

 

The risk table below describes the actions taken surrounding each of the four risks listed above.

Risks Mitigating Strategy and Effectiveness (Results)Footnote 2 Link to the Department’s Programs (or Core Responsibilities) Link to mandate letter commitments or to government-wide and departmental priorities (as applicable)
Federal transportation policies, programs and infrastructure investments may not sufficiently support the efficient transportation of goods and people, and the adoption of new technologies.

TC has identified “Innovation” as one of our key programs, with oversight by our Strategic Policy and Innovation Directorate. Work on this initiative involves continued engagement/collaboration on ongoing transportation innovation policies, programs and technology with Canadian and international jurisdictions; industry; and academic/research organizations. However, budget constraints limited our Civil AviationFootnote team’s involvement in international activities (e.g., they postponed some harmonization activities).

Specific 2016-17 progress included, but was not limited to TC:

  • Making ongoing efforts to identify innovation as a core TC responsibility, with oversight by the Strategic Policy and Innovation Directorate;
  • Developing a more balanced, efficient and transparent freight rail transportation system;
  • Developing the proposed Transportation Modernization Act, with the Minister introducing the bill in Parliament in spring 2017. The legislation includes measures to:
    • Promote system transparency, efficiency and investment;
    • Provide fair access for shippers;
    • Establish new rules for air passenger rights; and
    • Introduce new provisions for international ownership of the voting interests of Canadian air carriers, going from 25 to 49 percent;
  • Working with the Department of Finance CanadaFootnote to assess VIA Rail’s High Frequency Rail proposalFootnote ; and
  • Developing regulations and standards for connected and automated vehicles (CV/AVs) and Unmanned Aerial Systems (UAS). We are also working with industry, the provinces, territories and municipalities to identify and address critical technical, regulatory or policy barriers, and to establish pilot projects.

This risk is linked to the following Programs under “An Efficient Transportation System”:

  • Marketplace Programs
  • Analysis and Innovation Program
  • Gateways, Corridors and Border Crossing Programs

Priority 1:
Facilitate movement of goods to market and support supply chain reliability

Priority: 2
Provide for better choice and services, and new rights for consumers

Priority 3:
Strengthen marine safety and responsible shipping and enhance Northern transportation infrastructure

Priority 6:
Modernize TC’s Legislative, Regulatory and Oversight regimes and develop a new asset stewardship strategy

Transportation-related security incidents may not be effectively addressed due to communication gaps at critical points.

At TC, we are constantly reviewing and improving incident management structures and procedures. We are currently working with industry to develop a national Threat-Risk Assessment Protocol to improve national coordination and define the lead agency during an incident. We prepared a significant amount of industry guidance material, which we published in fall 2016. However, the 2015-16 budgetary challenges affected the next fiscal cycle, so the air cargo security outreach and information sessions were more limited than originally planned for 2016-17.

Specific 2016-17 progress included, but was not limited to:

  • Regulated Air Cargo Security ProgramFootnote participants providing security awareness training to their employees who handle secure cargo. Since budgetary challenges limited the number of air cargo security outreach and information sessions we originally planned for 2016-17, we have not yet reached all Program participants‎; and
  • Designated airports under Airport Security Programs providing security awareness training. We published industry guidance material and delivered it to airport operators.

This risk is linked to the following Programs under ”A Safe and Secure Transportation System”:

  • Multimodal, Emergency and Training Programs
  • Air, Marine and Surface Support Programs
  • Aviation Security
  • Marine Safety & Security

Priority 4:
Strengthen the safety and security of Canada’s transportation system

Federal transportation programs and regulations may not effectively contribute to reducing the environmental impacts of transportation-related activities and their adverse effects on Coastal and Northern communities and Indigenous groups.

The development of complementary measures to reduce greenhouse gas (GHG) emissions from transportation were announced as part of the Pan-Canadian Framework on Clean Growth and Climate ChangeFootnote (PCF) in December 2016. Our contributions included commencing activities that will contribute to improving efficiency and supporting fuel switching in the rail, aviation, marine and off-road sectors.

In conjunction with Fisheries and Oceans Canada (DFO) and the Canadian Coast Guard (CCG), we launched the Oceans Protection Plan, which received $1.5 billion in funding over five years through Budget 2017. This strategy includes legislative, program and funding measures.

Specific 2016-17 progress included, but was not limited to:

  • Supporting the development of the Pan-Canadian Framework on Clean Growth and Climate Change with research, analysis and policy development work;
  • Starting to develop requirements for retrofitting in-use heavy duty vehicles with fuel saving technologies;
  • Making plans to develop a Zero-Emission Vehicles (ZEV) strategy, in collaboration with provinces and territories and other stakeholders;
  • Taking actions to improve efficiency and support fuel switching in the rail, aviation, marine and off-road sectors;
  • Responding to the energy audit report, conducted in February-March 2016 at one of our hangars, by choosing and planning how best to improve energy efficiency;
  • Collecting GHG emissions from TC’s owned and operated sites, and commencing planning for the next steps, namely to establish an action plan and create a working group;
  • Starting a two year research project with the National Research CouncilFootnote (NRC) to study motor vehicle battery safety. This project will directly help develop international and Canadian electric vehicle safety standards and increase understanding of battery safety across all modes of transportation.
  • Finalizing the first phase of the United Nations Global Technical Regulation for Electric Vehicle SafetyFootnote ;
  • Working with the DFO and the CCG, to develop a comprehensive marine strategy, which culminated in the Oceans Protection Plan announced in November 2016. This strategy includes legislative, program and funding measures;
  • Starting to draft new legislation that will prohibit vessel abandonment and strengthen vessel owner responsibility and liability for vessel clean up and disposal; and
  • Creating a dedicated Underwater Vessel Noise Unit to lead policy development, collaboration and stakeholder engagement.

This risk is linked to the following Programs under “A Clean Transportation System”, “A Safe and Secure Transportation System” and “An Efficient Transportation System”:

  • Clean Air Programs
  • Clean Water Programs
  • Asset Stewardship Programs
  • Environmental Stewardship Program

Priority 3:
Strengthen marine safety and responsible shipping and enhance Northern transportation infrastructure

Priority 5:
Reduce air pollution and embrace new technologies to improve greenhouse gas emissions from the transportation sector

Canada’s transportation legislative, regulatory and oversight regimes may not effectively address emerging safety and security issues, industry practices and increasing demands.

Transport Canada has established a strong foundation for legislative and regulatory renewal, and for integrating risk-based oversight into its activities. We are working towards developing new and enhanced program, legislative and regulatory documents, including those related to oversight policy. We also continue to work on strengthening the Regulatory Framework to support innovation. TC received $50 million in new funding to support the innovation agenda, including for Unmanned Aerial Systems (UAS).

Specific 2016-17 progress included, but was not limited to:

  • Developing a performance scorecard with key metrics (indicators) to assess the health of the rail industry;
  • Introducing Bill S-2 (the proposed Strengthening Motor Vehicle Safety for Canadians ActFootnote ) in the Senate. The Bill is designed to make vehicle exemptions easier to understand and to address gaps within the Motor Vehicle Safety Act. Risk-based oversight was integrated into the proposed legislation;
  • Conducting an environmental scan on autonomous and connected vehicle issues, which will help us develop program requirements;
  • Advancing work within Civil Aviation to establish the “National Oversight Office and Project Management Office”, which aims to deliver nationally consistent approaches to problem areas and facilitate communications amongst all involved parties (e.g., from inspectors to senior Departmental Executives);
  • Modifying the Transportation of Dangerous Goods (TDG) inspection cycle to a maximum two year inspection cycle for high risk sites;
  • Creating a classification-targeted inspection regime for crude oil inspections, so we now take enforcement actions, where warranted, following the analysis of lab test results;
  • Developing a follow-up policy for our TDG inspectors to provide them with a standard that determines when follow-up inspections are required, as well as the need for non-compliant sites to provide proof of compliance;
  • Developing regulations for UAS weighing 25 kilograms or less and operating in visual-line-of sight conditions. We also:
    • Completed a Regulatory Report for beyond-visual-line-of-sight operations, to inform the development of future regulations;
    • Published an Interim Order Respecting the Use of Model AircraftFootnote to deal with the increasing risk of recreational drone use; and
    • Updated the UAS Regulatory Exemptions;
  • Starting to work with the Royal Canadian Mounted PoliceFootnote to develop a UAS Enforcement Strategy and creating the non-profit UAS Centre of ExcellenceFootnote in Alma, Québec. We also established a UAS Steering Committee to guide and advise program staff in order to improve the UAS regulatory program’s efficiency;
  • Being on track to bring into force Phase I of the Fishing Vessel Safety RegulationsFootnote in 2017-18. We undertook four months of extensive stakeholder consultations to prepare industry. TC also published a brochure and circulated it amongst industry and other government partners to increase awareness;
  • Finalizing the proposed Arctic Shipping Safety and Pollution Prevention Regulations;
  • Drafting amendments to the Railway Safety ActFootnote that mandate the installation of Locomotive Video and Voice Recorders in locomotive cabs. The amendments are included in the “Transportation Modernization Act” bill, which was tabled in Parliament in spring 2017;
  • Identifying research and knowledge gaps with respect to fatigue management in the rail industry. This allowed us to formulate an immediate, short- and long-term strategy to address fatigue. TC also completed an analysis on critical gaps in the existing “Work/Rest” rule regime (e.g., for rest periods and maximum work hours). We met with industry and union stakeholders to identify their concerns with existing rules and challenges moving forward; and
  • Supporting the Emergency Response Task ForceFootnote (ERTF) in making a total of 40 recommendations related to the transportation of dangerous goods. The ERTF published its Final Report on our website in December 2016.

This risk is linked to the following Programs under “A Safe and Secure Transportation System”:

  • Oversight Programs for each transportation modeFootnote 3
  • Legislative and Regulatory Framework for each transportation mode
  • Air, Marine and Surface Support Programs
  • Aviation Safety
  • Service to the Aviation Industry
  • Transportation of Dangerous Goods

Priority 4:
Strengthen the safety and security of Canada’s transportation system

Priority 6:
Modernize TC’s Legislative, Regulatory and Oversight regimes and develop a new asset stewardship strategy

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