ARCHIVED — Customs Controlled Areas Regulations

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Vol. 144, No. 46 — November 13, 2010

Statutory authority

Customs Act

Sponsoring agency

Canada Border Services Agency

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue: In June 2009, amendments were made to the Customs Act in support of the Government of Canada’s strategy to strengthen security and facilitate trade. The amendments to the Customs Act providing for the creation of customs controlled areas (CCAs) came into force on June 11, 2009. One of the purposes of those amendments was to enhance the ability of the Canada Border Services Agency (CBSA) to combat organized crime and internal conspiracies at ports of entry, and interdict contraband and other illegal items before they reach Canadian communities. With these amendments, border services officers (BSOs) have the authority to examine goods and to question and search people within areas designated as CCAs. The locations designated as CCAs are intended to be areas where travellers of Canadian origin departing Canada and domestic workers may come into contact with persons who have not been cleared by the CBSA or with international goods that have not been released by the CBSA. The proposed Customs Controlled Areas Regulations would establish the regulatory requirements necessary for implementing CCAs.

Description: The proposed Regulations will set in regulation (1) the classes of persons who may be granted access to a CCA and who may be searched in a CCA or at exit points, (2) the requirements respecting the presentation of persons and reporting of goods inside a CCA or upon exit, (3) the circumstances and manner in which searches are to be conducted and the type of searches that may be carried out, and (4) the manner in which the non-intrusive examination of goods is to be conducted inside a CCA or upon exit and the type of tools that may be used to conduct such examinations.

Cost-benefit statement: The potential costs of the Regulations over the 10-year period from 2010 to 2019 were estimated for both the CBSA and the business community operating at Canada’s major air and marine ports. The costs to the CBSA are estimated to average approximately $214,900 (2010 dollars) per year over the 10-year period from 2010 to 2019. The costs to the business community were estimated to average approximately $11,800 (2010 dollars) per year in increased salary costs. The potential benefits of the Regulations to Canadians and their business (i.e. improvements in health, safety and security) are expected to outweigh the potential costs.

Business and consumer impacts: The impacts of the proposed Regulations include increased security for businesses operating at Canada’s major air and marine ports, as well as for travellers transiting through these ports of entry. The economic impact on businesses is included in the cost-benefit statement mentioned above.

Domestic and international coordination and cooperation: The proposed Regulations will benefit the CBSA and other domestic law enforcement and security-related agencies. The proposal will also support the Government of Canada in its objective of improving security at airports, and in meeting its international commitment of strengthening security at the border.

Performance measurement and evaluation plan: The Customs Controlled Areas Program that the proposed Regulations will enable is expected to be evaluated by the CBSA’s Program Evaluation Division before the year 2015 as part of its upcoming five-year evaluation plan and in accordance with the April 2009 Treasury Board Evaluation Policy.

Issue

In Canada, some individuals with unrestricted access to secure areas of airports and marine terminals, such as mechanics, baggage handlers and longshoremen, have been and are suspected to be involved in internal conspiracies. As a means of smuggling, internal conspiracies consist of collusion between criminal elements and persons employed in an official capacity within the border context, such as airline or airport personnel, brokers, cargo handlers and stevedores, who facilitate the entry of contraband into Canada.

Authorities responsible for addressing the problem of contraband smuggling have identified organized crime groups and their involvement in internal conspiracies as responsible for the unlawful entry into Canada of considerable amounts of illicit drugs and other contraband. On April 15, 2005, for example, officers of the Canada Border Services Agency (CBSA) at Pearson International Airport seized 329.2 kg of cocaine, with an approximate street value of $41.2 million, from the avionics section of an aircraft arriving from Venezuela. Since it is mainly ramp workers who have access to the avionics or navigational controls sections of aircraft, the authorities believe the culprits were involved in an internal conspiracy. On July 19, 2007, the Toronto Airport Drug Enforcement Unit arrested and charged eight people with drug related offences in relation to the trafficking of approximately 39 kg of ecstasy tablets, 3 kg of cocaine, 8 lbs of marijuana and $106,000 in currency. This group had members of their criminal network operating within the airport who were able to use their positions to move drugs and money to and from Canada. Between January 2006 and December 2008, 74 seizures at Pearson International Airport are reported to have involved internal conspiracies, and since May 2006, 4 seizures of marijuana and cocaine at Vancouver International Airport are suspected to have been linked to internal conspiracies. (see footnote 1)

The need for vigilance in monitoring domestic employees in restricted areas of airports was highlighted by the Royal Canadian Mounted Police (RCMP) in a strategic assessment released in 2008 that focused on the problem of organized crime infiltration at Canada’s major airports. (see footnote 2) In this assessment, which is based on law enforcement files dated between January 2005 and August 2007, the RCMP reveals that 58 organized crime groups have been utilizing Canada’s major airports to conduct their illegal activities. Over half of these groups were known to have facilitated the movement of contraband through the airports by corrupting existing employees or by placing criminal associates into the airport workforce.

In the marine mode, suspected or confirmed cases of internal conspiracies have also been reported. In May 2004, for example, CBSA officers at the Port of Vancouver seized a total of 45 kg of narcotics with a value of $5.6 million in a container of coffee beans originating in Columbia. Among the coffee bags, officers found three sports bags within 10 ft of the container’s entrance. The ease with which dockside employees could retrieve the narcotics indicates why internal conspiracy is a favoured approach to smuggling.

The purpose of the proposed Regulations is to enhance CBSA’s ability to respond effectively to internal conspiracies and organized crime at ports of entry once Customs Controlled Areas (CCAs) are established. Designated under the legislative authority of the Minister of Public Safety and Emergency Preparedness, CCAs will be areas close to or associated with Canada’s border, where access will be restricted to specified groups of individuals, such as travellers and employees, and in areas where individuals entering will be subject to certain presentation and reporting requirements. The locations to be designated as CCAs are intended to be areas where travellers of Canadian origin departing Canada and domestic workers may come into contact with persons who have not been cleared by the CBSA or with international goods that have not been released by the CBSA.

Objectives

The proposed Regulations will provide BSOs in certain circumstances with the authorized method to question, examine and conduct searches of domestic workers and travellers of Canadian origin departing Canada within, or at the exit of, areas of ports of entry designated as CCAs. Such measures would permit the CBSA to become more effective at detecting suspicious or illegal activity occurring in these areas and in deterring and preventing occurrences of contraband smuggling and internal conspiracies at Canada’s major air and marine ports.

In terms of public safety and security, the Regulations will be particularly beneficial to employees, businesses and enterprises whose interests are tied directly to airports and marine ports.

Description

The Regulations are being made pursuant to the regulation-making authority found in sections 11.5 and 99.4 of the Customs Act. The regulatory proposal would establish in regulations the following:

  • the classes of persons who may be granted access to a CCA and who may be searched inside a CCA or at exit points;
  • the requirements respecting the presentation of persons and reporting of goods inside a CCA or at exit points;
  • the circumstances and manner in which searches are to be conducted and the type of searches that may be conducted; and
  • the manner in which the non-intrusive examinations of goods are to be conducted inside a CCA or at exit points and the type of tools that may be used to conduct such examinations.

The individuals who may be granted access to CCAs in the proposed Regulations include international travellers, arriving or departing, and persons who require access to the designated areas for purposes related to their employment (e.g. dockyard and airport employees). Other persons who may be allowed access to CCAs include persons who require access to the CCA for the purpose of administering or enforcing an Act of Parliament (e.g. BSOs and police officers) and other individuals who require access to CCAs for the purpose of responding to an emergency situation or for purposes related to the health and safety of a person (e.g. ambulance attendants). The Regulations will thus allow CCAs to continue to be used by travellers, employees and businesses for legitimate purposes while enabling BSOs to monitor the people and activities occurring within CCAs.

The presentation of persons and reporting of goods requirements in the Customs Act and Regulations specify that persons must present themselves to a BSO upon request and report orally any goods that have been acquired while in a CCA. The obligation to present oneself and report goods acquired in a CCA at the request of a BSO applies to all individuals who are in or leaving a CCA. Travellers arriving in Canada are already subject to a different set of presentation of persons and reporting of goods requirements provided for by border services legislation (e.g. Customs Act, Immigration and Refugee Protection Act). The presentation and reporting of goods requirements pertaining to CCAs are important for the effective implementation of these designated areas since they enable BSOs to question individuals within CCAs regarding their identity and the goods in their custody.

The Regulations stipulate that a BSO may also conduct searches of individuals who have access to CCAs for employment purposes or for the purpose of administering or enforcing an Act of Parliament. Also, the Regulations prescribe that a BSO may conduct searches of individuals who have access to CCAs to respond to an emergency situation or to attend to the health and safety of a person.

The Regulations also stipulate that a frisk search may be conducted if the BSO has reasonable grounds to suspect that a person has on his or her person anything which would provide evidence of illegal activity. A strip search may be conducted if the BSO has reasonable grounds to believe the above. This authority to conduct a search will enable BSOs to determine whether an individual in a CCA is involved in an attempt to smuggle goods across Canada’s border.

The Customs Act specifies that a BSO can conduct a non-intrusive examination of goods in the custody of individuals who are in or who are leaving a CCA. The proposed Regulations authorize the use of imaging tools, trace particle or vapour detection tools or nuclear or radiation detection tools to carry out a non-intrusive examination. The use of such detection technology is essential for effectively determining whether persons are attempting to move goods or substances across Canada’s border contrary to an Act of Parliament.

Regulatory and non-regulatory options considered

The Regulations are being made pursuant to the regulation-making authority found in sections 11.5 and 99.4 of the Customs Act. Since the Customs Act requires that regulations be developed in order for CCAs to be implemented, putting forward these proposed Regulations is the only viable option. Without the proposed Regulations, the CBSA would be unable to effectively implement the CCA regime and reduce the risks associated with internal conspiracies, and airports and marine ports would continue to be exploited by organized crime groups that succeed at corrupting existing airports and marine port workers or positioning criminal associates within their workforce.

Benefits and costs

The benefits and costs of the proposed Regulations were identified through a review of the literature, an analysis of border-related enforcement data and discussions with CBSA officials. The benefits of the Regulations have been determined using a combination of quantitative and qualitative methodologies, and the costs have been monetized over a 10-year time horizon, from 2010 to 2019.

Starting with the benefit dimension, three stakeholder groups are expected to be impacted by the Regulations: (1) businesses and employees present at air and marine ports, (2) the CBSA and other Canadian law enforcement authorities involved in border enforcement, and (3) Canadians and the federal government. The benefits for businesses and employees present at airports and marine ports are the increased security due to the CBSA’s improved capacity to detect and disrupt smuggling operations and other forms of criminal activity at air and marine ports. The benefits for the CBSA and Canada’s law enforcement community are similar to those for businesses and employees, but include the added benefits of enabling the CBSA and the relevant law enforcement authorities to better monitor activities and gather information pertaining to suspicious and criminal activity occurring at major air and marine ports. The benefits for Canadians and the federal government are safer and more secure air and marine ports for travellers and employees working at these locations. In addition, the CBSA’s enhanced ability to prevent harmful contraband such as narcotics from entering into Canada is also expected to result in positive health impacts for Canadians.

There are also economic benefits. Overall, the key economic benefits are the human and economic costs avoided through the disruption of smuggling operations involving narcotics at air and marine ports. The rationale for the Regulations is to prevent contraband and other unlawful goods from entering Canada and to minimize their impact on people and the economy. The major benefits of the Regulations are therefore the potential costs avoided as a result of preventing narcotics and other harmful goods from negatively impacting the health and safety of Canadians. In total, illicit drugs are responsible for over 900 deaths each year and represent a social cost of approximately $8 billion annually to government and society in terms of health care costs, enforcement costs and productivity losses. While it is difficult to estimate the full extent of the cost savings associated with the Regulations, it is reasonable to expect that the Regulations will contribute to reducing some of the social costs associated with illicit drugs.

On the costs side, three stakeholder groups are expected to be affected by the Regulations: the business community present at Canada’s major airports and marine ports, their employees and the CBSA. Costs borne by the business community are the slight losses in revenue due to questioning by CBSA officers of employees during work hours. The costs to the business community were estimated to average approximately $11,800 (2010 dollars) per year over the 10-year period from 2010 to 2019. The impact on employees consists of the potential loss of privacy and inconvenience that may result from the CBSA questioning or conducting searches of employees suspected of being involved in illegal activities in a CCA. The cost to the CBSA is estimated to average approximately $214,900 (2010 dollars) per year over the 10-year period from 2010 to 2019. This amount is based on cost estimates associated with training CBSA officers to enforce the Regulations and purchasing material to implement and enforce the proposal.

The benefit-cost statement below provides a summary of the estimated benefits and costs of the regulatory proposal. Considering that the Regulations are expected to save lives, increase security at air and marine ports, enhance border enforcement, reduce costs associated with illicit drugs and improve the health, security and safety of Canadians, it is suggested that, overall, the regulatory proposal will result in a positive net benefit to Canadians.

Benefit-cost statement

Base year (2010)

Final year (2019)

Total
(PV)

Average annual

A. Quantified impact ($)
Costs CBSA 440,700 176,200  1,654,800  214,900

 

Business community at air and marine ports

  7,200

  12,300

84,200

 11,800

B. Quantified impacts in non-$ (e.g. risk assessment)

Positive impacts

N/A

Negative impacts

N/A

C. Qualitative impacts
Positive impacts Canadians and Government of Canada
  • Improved health, safety and security of Canadians
  • Increased security at major air and marine ports
  • Avoidance of social costs associated with contraband (e.g. narcotics)
Businesses and employees at air and marine ports
  • Increased workplace security
CBSA and other law enforcement authorities
  • Increased security at major air and marine ports
  • Enhanced border enforcement
Negative impacts Employees working at air and marine ports
  • Increase in inconvenience and potential loss of privacy resulting from questioning and searching by border services officers
  Business community at air and marine ports
  • Slight loss in productivity as a result of questioning of employees by border services officers during work hours
  CBSA
  • Implementation costs

Rationale

The risks and social costs of internal conspiracies are considerable. Internal conspiracies represent a risk to Canadians since they are used by criminal organizations to smuggle contraband that negatively impacts the social well-being of Canadians. Included among these impacts are the associated public health impacts stemming from illicit drug use and the safety and security impacts resulting from drug-related crime and organized crime presence at Canadian ports of entry. Also, the intimidation tactics used by organized crime groups at ports of entry to conduct criminal activity represent a significant threat to the workforce and businesses present at these locations. Finally, internal conspiracies are also a drain on the economy in terms of the social costs they impose on government and society.

According to estimates by the Canadian Centre on Substance Abuse (CCSA), the social costs of illicit drugs on Canadian society are approximately $8.2 billion per year, of which over half is attributed to lost productivity due to illness and premature death resulting from substance abuse. Specifically, the total costs of illicit drug abuse in 2002 consisted of $1.1 billion in health care costs, $2.3 billion in law enforcement costs and over $4.5 billion in productivity losses and other costs. (see footnote 3) The CCSA also estimates that 1 695 Canadians died in 2002 as a result of illicit drug use. This number accounts for 0.8% of all deaths in Canada during that year. The leading causes of death linked to illicit drug use in 2002 were overdoses (958), drug-attributable suicide (295) and drug-attributable infections (252).

Since many of the illicit drugs used in Canada are smuggled from foreign countries, the CBSA expects that the designation of CCAs and the Customs Controlled Areas Regulations will have beneficial impacts on the health and security of Canadians. The CCAs will assist the CBSA in disrupting smuggling operations at the border and will contribute to reducing the availability of illicit drugs and the social costs associated with drug abuse.

Consultation

In developing this regulatory proposal, the CBSA consulted with stakeholders from the air and marine sectors as well as with relevant government departments in the summer of 2009. Key participants in the consultative process included Canada’s major air and marine port authorities, as well as trade and employee associations from the transportation industry.

In July 2009, the CBSA consulted stakeholders external to government, including organizations representing airport authorities, businesses and employees. The CBSA developed a fact sheet that was provided to stakeholders to respond to general questions from stakeholders on how CCAs will be implemented and the effect they will have on travellers and employees.

The following other federal government departments were consulted and no objections to the proposed regulations were received:

  • The RCMP;
  • Transport Canada;
  • Citizenship and Immigration Canada;
  • The Canadian Air Transport Security Authority;
  • Public Safety Canada;
  • The Canadian Security Intelligence Service; and
  • The Department of Foreign Affairs and International Trade.

In addition, the CBSA consulted the following organizations that may be impacted by the proposed regulations and no objections were received:

  • The Canadian Airports Council, representing Canadian airport authorities;
  • The Aéroports de Montréal;
  • Pearson International Airport, in Toronto;
  • Vancouver International Airport;
  • InterVISTAS Consulting Inc., representing numerous Canadian airports;
  • The International Air Transport Association, representing the passenger and cargo airline industry;
  • The Air Transportation Association of Canada, representing flight training organizations, and the commercial airline and aviation industry;
  • The Canadian Business Aviation Association, representing the Canadian business aviation industry
  • The International Civil Aviation Organization, a United Nations specialized agency that is the global forum for civil aviation;
  • The Canadian Owners and Pilots Association, representing the interests of aircraft pilots and private owners of hangars in Canada;
  • The Canadian Labour Congress, representing the International Association of Machinists and Aerospace Workers, the Canadian Union of Public Employees, the Canadian Auto Workers, Teamsters Canada, the Union of Canadian Transportation Employees, the International Longshore and Warehouse Union – Canada, the International Longshoremen’s Association, and dockworkers unions;
  • The Capital Hill Group, representing the cruise ship industry;
  • The Association of Canadian Port Authorities, representing port authorities across Canada;
  • The Shipping Federation of Canada, representing East Coast ship owners/operators;
  • The Chamber of Shipping of British Columbia, representing West Coast ship owners/operators;
  • The Halifax Employers Association, representing all of the employers of labour engaged in work in the longshoring industry in the Port of Halifax;
  • The Port of Saint John Employers Association, representing all of the employers of labour engaged in work in the longshoring industry in the Port of Saint John, New Brunswick;
  • The Maritime Employers Association, representing all of the employers of labour engaged in work in the longshoring industry in Hamilton, Trois-Rivières/Bécancour, Montréal and Toronto;
  • The British Columbia Maritime Employers Association, representing all of the employers of labour engaged in work in the longshoring industry in British Columbia;
  • The Port of Corner Brook;
  • The Customs Excise Unions Douanes Accise (CEUDA)/ Customs and Immigration Union (CIU);
  • The Canadian Association of Chiefs of Police;
  • The Canadian Association of Importers and Exporters, representing importers and exporters;
  • The Canadian International Freight Forwarders Association, representing the Canadian international freight forwarding industry; and
  • The Canadian Society of Customs Brokers.

Implementation, enforcement and service standards

The implementation of CCAs will be phased in over three years. In Year I, the CBSA plans on implementing CCAs at Canada’s three largest airports, namely, Lester B. Pearson International Airport, Pierre Elliott Trudeau International Airport and Vancouver International Airport. In Year II, CCAs will be implemented at six other airports and three marine ports. In Year III, the CBSA intends to implement CCAs at other ports of entry in the highway, rail and postal modes, and in certain duty free shops and sufferance warehouses across Canada. The enforcement of these Regulations will be performed by CBSA officers at these ports of entry and will be based on the needs and requirements of each port of entry where CCAs are present.

The CCAs will address the potential problems resulting from internal conspiracies where domestic employees, who come into contact with domestic and international travellers, may misuse their positions to engage in criminal activity.

The CCAs will not to diminish current authorities over international travellers and imported goods.

Performance measurement and evaluation

The Customs Controlled Areas Regulations will support the CBSA’s first Strategic Outcome, that is, Canada’s population is safe and secure from border-related risks, as identified in the CBSA’s Program Activity Architecture (PAA) for the fiscal year 2010–2011. In this context, the regulatory proposal supports the CBSA’s Enforcement Program (PAA 1.2), as well as the CBSA’s dual mandate of securing the border and facilitating travel and trade. The Customs Controlled Areas Program, which the proposed regulations support, is expected to be evaluated by the CBSA’s Program Evaluation Division before 2015 as part of its upcoming five-year Evaluation Plan and in accordance with the April 2009 Treasury Board Evaluation Policy. Key indicators monitored to measure the effectiveness of CCAs will be changes in trends and patterns of criminal activity and internal conspiracies.

Contact

Kym Martin
Director
Horizontal Border Policies Division
Programs Branch
Canada Border Services Agency
150 Isabella Street, 7th Floor
Ottawa, Ontario
K1A 0L8
Fax: 613-941-9600
Email: Kym.Martin@cbsa-asfc.gc.ca

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to sections 11.5 (see footnote a) and 99.4 (see footnote b) of the Customs Act (see footnote c), proposes to make the annexed Customs Controlled Areas Regulations.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Kym Martin, Director, Horizontal Border Policies Division, Programs Branch, Canada Border Services Agency, 7th Floor, 150 Isabella Street, Ottawa, Ontario K1A 0L8 (fax: 613-941-9600; email: Kym.Martin@cbsa-asfc.gc.ca).

Ottawa, November 4, 2010

JURICA ČAPKUN
Assistant Clerk of the Privy Council

CUSTOMS CONTROLLED AREAS REGULATIONS

INTERPRETATION

1. The following definitions apply in these Regulations.

“Act” means the Customs Act. (Loi)

“customs controlled area” means an area designated as a customs controlled area by the Minister under subsection 11.2(1) of the Act. (zone de contrôle des douanes)

ACCESS TO CUSTOMS CONTROLLED AREAS

2. For the purposes of paragraph 11.3(1)(b) of the Act, the following persons are prescribed as persons to whom access may be granted:

(a) any person who is arriving in Canada;

(b) any person who is about to leave Canada;

(c) any person who requires access to the customs controlled area for the purpose of administering or enforcing an Act of Parliament or responding to an emergency or for a purpose relating to the health or safety of a person; and

(d) any person who requires access to the customs controlled area for a purpose relating to their business or employment.

PRESENTATION AND REPORTING

3. (1) For the purposes of paragraphs 11.4(1)(a) and (1.1)(a) of the Act, the prescribed manner of presentation is presentation in person.

(2) For the purposes of paragraph 11.4(1)(b) of the Act, the prescribed manner of report is an oral report.

SEARCH OF PERSONS

4. For the purposes of subsection 99.2(2) of the Act, the prescribed persons are the persons set out in paragraphs 2(c) and (d).

5. (1) For the purposes of subsection 99.2(2) of the Act, an officer may conduct a frisk search — a search of a person’s clothed body by manual or technical means — of a person prescribed under section 4 if the officer suspects on reasonable grounds that the person has secreted on or about their person anything in respect of which the Act has been or might be contravened, anything that would afford evidence with respect to a contravention of the Act or any goods the importation or exportation of which is prohibited, controlled or regulated under the Act or any other Act of Parliament.

(2) For the purposes of subsection 99.2(2) of the Act, an officer may conduct a strip search — a visual inspection of a person’s naked body during which the person may be required to open his or her mouth — of a person prescribed under section 4 if the officer believes on reasonable grounds that the person has secreted on or about their person anything in respect of which the Act has been or might be contravened, anything that would afford evidence with respect to a contravention of the Act or any goods the importation or exportation of which is prohibited, controlled or regulated under the Act or any other Act of Parliament.

(3) A strip search must be conducted in a private area.

NON-INTRUSIVE EXAMINATION OF GOODS

6. For the purposes of subsection 99.3(1) of the Act, a non-intrusive examination of goods may be conducted using an imaging tool, trace particle or vapour detection tool, nuclear or radiation detection tool or other detection tool that permits the examination of goods without opening them.

COMING INTO FORCE

7. These Regulations come into force on the day on which they are registered.

[46-1-o]

Footnote 1
Internal CBSA report (January 2010).

Footnote 2
RCMP, Project SPAWN: A Strategic Assessment of Criminal Activity and Organized Crime Infiltration at Canada’s Class 1 Airports, Ottawa, Ontario: RCMP, 2008.

Footnote 3
Canadian Centre for Substance Abuse (CCSA), The Costs of Substance Abuse in Canada 2002: Highlights, March 2006.

Footnote a
S.C. 2009, c. 10, s. 4

Footnote b
S.C. 2001, c. 25, s. 60

Footnote c
R.S., c. 1 (2nd Supp.)