Vol. 143, No. 23 — November 11, 2009

Registration

SOR/2009-292 October 22, 2009

AERONAUTICS ACT

Regulations Amending the Canadian Aviation Security Regulations and the Designated Provisions Regulations

P.C. 2009-1767 October 22, 2009

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, Infrastructure and Communities, pursuant to subsection 4.3(2) (see footnote a), section 4.71 (see footnote b) and subsection 7.6(1) (see footnote c) of the Aeronautics Act (see footnote d), hereby makes the annexed Regulations Amending the Canadian Aviation Security Regulations and the Designated Provisions Regulations.

REGULATIONS AMENDING THE CANADIAN AVIATION SECURITY REGULATIONS AND THE DESIGNATED PROVISIONS REGULATIONS

CANADIAN AVIATION SECURITY REGULATIONS

1. (1) The definition “screening” in section 1 of the Canadian Aviation Security Regulations (see footnote 1) is repealed.

(2) The definition “screening authority” in section 1 of the Regulations is replaced by the following:

“screening authority” means a person responsible for the screening of persons and goods. (administration de contrôle)

(3) Section 1 of the Regulations is amended by adding the following in alphabetical order:

“general list of prohibited items” means Part 1 of TP 14628, which lists or describes goods that

(a) could pose a threat to aviation security;

(b) are prohibited as carry-on baggage by the governments of other countries; or

(c) are identified by the International Civil Aviation Organization as items that must never be carried in the cabin of an aircraft or taken into a restricted area. (liste générale des articles interdits)

“restricted area identity card” means a restricted area pass issued by or under the authority of the aerodrome operator of an aerodrome listed in Schedule 2. (carte d’identité de zone réglementée)

“restricted area pass” means a pass issued by or under the authority of an aerodrome operator to a person who requires ongoing access to restricted areas as part of their employment. (laissez-passer de zone réglementée)

“screening officer” has the same meaning as in section 2 of the Canadian Air Transport Security Authority Act. (agent de contrôle)

“specific list of prohibited items” means Part 2 of TP 14628, which lists flights or classes of flights that require additional screening for reasons respecting elevated threat conditions or the harmonization of screening rules and which lists or describes, for each flight or class of flight, goods that are supplemental to the goods listed or described in the general list of prohibited items. (liste spécifique des articles interdits)

“TP 14628” means the document entitled Prohibited Items Lists, published by the Department of Transport in December 2006, as amended from time to time. (TP 14628)

2. The heading before section 3 and sections 3 to 13 of the Regulations are replaced by the following:

PART 2

AVIATION SECURITY

SCREENING OFFICERS

3. (1) A screening officer must not screen persons or goods unless the screening officer

(a) is at least 18 years of age;

(b) is a Canadian citizen or permanent resident as defined in subsection 2(1) of the Immigration and Refugee Protection Act;

(c) is able to express themselves effectively both orally and in writing in one or both official languages;

(d) has a security clearance; and

(e) meets the minimum standards set out in the Designation Standards for Screening Officers, published by the Department of Transport in January 2000, as amended from time to time.

(2) A screening authority must ensure that any person who acts or will act as a screening officer for it or on its behalf meets the requirements set out in subsection (1).

(3) A screening authority must not permit a screening officer to screen persons or goods for it or on its behalf unless the screening officer meets the requirements set out in subsection (1).

OFFICIAL LANGUAGES

4. At the airports that are listed in Schedule 1 and at all aerodromes where there is a significant demand from at least 5% of the travelling public for services in either official language within the meaning of the Official Languages (Communications with and Services to the Public) Regulations, a screening authority must

(a) carry out screening by means that allow effective communication with members of the public in the official language of their choice; and

(b) provide in both official languages any printed or pre-recorded material that is used in respect of screening.

CARRIAGE OF WEAPONS, EXPLOSIVE SUBSTANCES AND INCENDIARY DEVICES DURING SCREENING

5. (1) A person must not submit to a screening or to the screening of goods in their possession or control while they are carrying or have access to a weapon, an explosive substance or an incendiary device.

(2) A person referred to in section 25, 27 or 28 may submit to a screening or to the screening of goods in their possession or control while they are carrying or have access to a weapon, a firearm or ammunition.

(3) A person referred to in section 29 may submit to a screening or to the screening of goods in their possession or control while they are carrying or have access to an explosive substance or an incendiary device.

SCREENING FOR PROHIBITED ITEMS

6. Sections 7 to 8.2 apply in respect of aerodromes listed in the schedule to the CATSA Aerodrome Designation Regulations.

7. (1) If an aviation security regulation, a security measure, an emergency direction or an interim order requires a person to be screened, a screening authority must not permit the person to pass beyond a screening checkpoint into a sterile area unless the screening authority ensures that the person is not in possession or control of any goods that

(a) are listed or described in the general list of prohibited items; or

(b) pose an immediate threat to aviation security.

(2) If the sterile area is for passengers for a flight or class of flight that is listed in the specific list of prohibited items, the screening authority must not permit the person to pass beyond a screening checkpoint into the area unless the screening authority also ensures that the person is not in possession or control of any goods that are listed or described in that list for that flight or class of flight.

8. A screening authority may permit a person in possession or control of a weapon, an explosive substance or an incendiary device to pass beyond a screening checkpoint into a sterile area if the person is carrying or has access to the weapon, explosive substance or incendiary device in accordance with these Regulations, a security measure, an emergency direction or an interim order.

8.1 A screening authority may permit a person in possession or control of goods listed or described in the general list of prohibited items to pass beyond a screening checkpoint into a sterile area if the goods are medically necessary and the person declares them to the screening authority.

8.2 A screening authority may permit a health care professional in possession or control of a medical kit that contains goods listed or described in the general list of prohibited items to pass beyond a screening checkpoint into a sterile area if the screening authority ensures that the kit does not include sharp or cutting instruments.

[9 reserved]

CIRCUMVENTING SCREENING

10. If an aviation security regulation, a security measure, an emergency direction or an interim order requires a person or any goods in their possession or control to be screened, no person may assist that person in circumventing the screening.

FALSE DECLARATIONS

11. A person who is at an aerodrome or on board an aircraft must not falsely declare that

(a) they are carrying a weapon, an explosive substance, an incendiary device or any other item that could be used to jeopardize the security of an aerodrome or aircraft or that such an item is contained in goods in their possession or control or in goods that they have tendered or are tendering for screening or transportation; or

(b) another person who is at an aerodrome or on board an aircraft is carrying a weapon, an explosive substance, an incendiary device or any other item that could be used to jeopardize the security of an aerodrome or aircraft or that such an item is contained in goods in the other person’s possession or control or in goods that the other person has tendered or is tendering for screening or transportation.

[12 and 13 reserved]

3. Subsection 25(1) of the English version of the Regulations is replaced by the following:

25. (1) A peace officer may carry or have access to a weapon at an aerodrome while in the performance of their duties.

4. (1) Paragraph 31(1)(b) of the French version of the Regulations is replaced by the following:

b) immédiatement avant de monter à bord de l’aéronef, effectuer une fouille de la personne sous garde et de ses bagages de cabine pour vérifier qu’il n’y a pas d’armes ou d’autres objets qui pourraient être utilisés pour compromettre la sécurité du vol;

(2) Subsection 31(2) of the Regulations is replaced by the following:

(2) If an escort officer who is not a peace officer escorts a person in custody, the air carrier must, immediately before the person boards the aircraft, cause the person in custody and their carry-on baggage to be screened for weapons or other items that could be used to jeopardize flight safety.

(3) The portion of paragraph 31(3)(b) of the Regulations before subparagraph (i) is replaced by the following:

(b) ensure that a screening of the person and their carry-on baggage for weapons or other items that could be used to jeopardize flight safety is conducted before the escort officer and the person

5. Section 36 of the Regulations is replaced by the following:

36. (1) This Part applies in respect of aerodromes listed in Schedule 2.

(2) Sections 51 to 51.5 and 53 also apply in respect of aerodromes listed in the schedule to the CATSA Aerodrome Designation Regulations.

6. The portion of section 41.2 of the Regulations before paragraph (a) is replaced by the following:

41.2 The Minister must ask CATSA to deactivate a restricted area identity card if

7. Subsection 47(4) of the Regulations is replaced by the following:

(4) CATSA must make its plan available to the Minister on reasonable notice given by the Minister.

8. Subsection 47.1(4) of the Regulations is replaced by the following:

(4) The aerodrome operator must make its plan available to the Minister on reasonable notice given by the Minister.

9. Subsection 48(2) of the Regulations is replaced by the following:

(2) No person other than an aerodrome operator or a person designated by the aerodrome operator may

(a) disclose a combination code or personal identification code; or

(b) use another person’s combination code or personal identification code.

10. Paragraph 50(3)(c) of the Regulations is replaced by the following:

(c) the screening officer is conducting screening at a restricted area access point or at a location in a restricted area and the person who is in possession of the card refuses to submit to a screening or to the screening of goods in his or her possession or control.

11. Subsection 52.1(1) of the French version of the Regulations is replaced by the following:

52.1 (1) L’exploitant d’un aérodrome doit veiller à ce qu’au moins une escorte soit affectée pour 10 personnes qui doivent être escortées.

12. Section 52.3 of the Regulations is replaced by the following:

52.3 An aerodrome operator must ensure that a person under escort or surveillance and any goods in their possession or control are screened at a screening checkpoint before the person enters a sterile area.

13. (1) Paragraph 56(1)(c) of the Regulations is replaced by the following:

(c) inspecting the aircraft and causing a screening of the passengers and goods on board the aircraft to be conducted, unless the inspection and screening are likely to jeopardize the safety of the passengers and crew members.

(2) Paragraph 56(2)(c) of the Regulations is replaced by the following:

(c) inspecting the aircraft and causing a search of the passengers and goods on board the aircraft to be conducted, unless the inspection and search are likely to jeopardize the safety of the passengers and crew members.

14. Paragraph 65(e) of the French version of the Regulations is replaced by the following:

e) une situation visant la sûreté aérienne qui comporte la participation d’un agent de la paix quel que soit l’endroit à l’aérodrome, sauf aux endroits dont un transporteur aérien est responsable.

15. (1) The portion of subsection 65.1(1) of the Regulations before paragraph (a) is replaced by the following:

65.1 (1) A screening authority must immediately notify the appropriate air carrier, the aerodrome operator, the appropriate police service and the Minister if any of the following is detected at a restricted area access point or any other part of an aerodrome where the screening of persons or goods is conducted:

(2) Subparagraph 65.1(1)(b)(i) of the French version of the Regulations is replaced by the following:

(i) des munitions en la possession d’une personne autorisée à avoir en sa possession une arme ou une arme à feu en vertu des articles 25, 27 ou 28, ou à y avoir accès,

16. Paragraph 66(a) of the Regulations is replaced by the following:

(a) information concerning the method of implementing the security measures, emergency directions or interim orders that apply to the air carrier; and

17. Paragraph 67(a) of the Regulations is replaced by the following:

(a) information concerning the method of implementing the security measures, emergency directions or interim orders that apply to those persons; and

18. Paragraph 67.1(a) of the Regulations is replaced by the following:

(a) information concerning the method of implementing the security measures, emergency directions or interim orders that apply to the screening authority; and

19. Section 69 of the Regulations is replaced by the following:

69. The aerodrome operator must establish an aerodrome security committee to advise on the development of security measures, emergency directions and interim orders to be carried out at the aerodrome and to coordinate their implementation.

20. Schedule 1 to the Regulations is amended by replacing “ (Section 9) ” after the heading “SCHEDULE 1” with “ (Section 4) ”.

21. The reference “Halifax International Airport” in Schedule 1 to the Regulations is replaced by the following:

Halifax/Robert L. Stanfield International Airport

22. The reference “Winnipeg International Airport” in Schedule 1 to the Regulations is replaced by the following:

Winnipeg/James Armstrong Richardson International Airport

23. Schedule 2 to the Regulations is amended by replacing “(Section 36)” after the heading “SCHEDULE 2” with “(Section 1 and subsection 36(1))”.

24. The reference “Fredericton Airport” in Schedule 2 to the Regulations is replaced by the following:

Fredericton International Airport

25. The reference “Halifax International Airport” in Schedule 2 to the Regulations is replaced by the following:

Halifax/Robert L. Stanfield International Airport

26. The reference “Winnipeg International Airport” in Schedule 2 to the Regulations is replaced by the following:

Winnipeg/James Armstrong Richardson International Airport

DESIGNATED PROVISIONS REGULATIONS

27. Subsection 3(1) of the Designated Provisions Regulations (see footnote 2) is replaced by the following:

3. (1) The provisions of a security measure are designated as provisions the contravention of which may be dealt with in accordance with the procedure set out in sections 7.7 to 8.2 of the Act.

28. Section 4 of the Regulations is replaced by the following:

4. A notice referred to in subsection 7.7(1) of the Act must specify

(a) the particulars of the alleged contravention;

(b) that the person on whom the notice is served or to whom it is sent has the option of paying the amount specified in the notice or filing with the Tribunal a request for a review of the alleged contravention or the amount of the penalty;

(c) that payment of the amount specified in the notice will be accepted by the Minister in satisfaction of the amount of the penalty for the alleged contravention and that no further proceedings under Part I of the Act will be taken against the person on whom the notice in respect of that contravention is served or to whom it is sent;

(d) that the person on whom the notice is served or to whom it is sent will be provided with an opportunity consistent with procedural fairness and natural justice to present evidence before the Tribunal and make representations in relation to the alleged contravention if the person files a request for a review with the Tribunal; and

(e) that the person on whom the notice is served or to whom it is sent will be deemed to have committed the contravention set out in the notice if the person fails to pay the amount specified in the notice and fails to file a request for a review with the Tribunal within the prescribed period.

29. Items 1 to 9 of Schedule 2 to the Regulations are replaced by the following:

Item	Column 1 Designated Provision	Column 2 Maximum Amount Payable ($) Individual	Column 3 Maximum Amount Payable ($) Corporation
1.	Subsection 3(1)	5,000
2.	Subsection 3(2)	5,000	25,000
3.	Subsection 3(3)	5,000	25,000
4.	Paragraph 4(a)	3,000	10,000
5.	Paragraph 4(b)	3,000	10,000
6.	Subsection 7(1)	5,000	25,000
7.	Subsection 7(2)	5,000	25,000
8.	Section 10	5,000
9. [reserved]

30. Items 74 to 77 of Schedule 2 to the Regulations are replaced by the following:

Item	Column 1 Designated Provision	Column 2 Maximum Amount Payable ($) Individual	Column 3 Maximum Amount Payable ($) Corporation
74.	Paragraph 48(2)(a)	5,000	25,000
75.	Paragraph 48(2)(b)	5,000
76. [reserved]
77. [reserved]

31. The Regulations are amended by adding, after Schedule 3, the Schedule 4 set out in the schedule to these Regulations.

COMING INTO FORCE

32. These Regulations come into force on October 31, 2009.

SCHEDULE
(Section 31)

SCHEDULE 4
(Section 2)

DESIGNATED PROVISIONS OF THE ACT

Item	Column 1 Designated Provision	Column 2 Maximum Amount Payable ($) Individual	Column 3 Maximum Amount Payable ($) Corporation
1.	Paragraph 4.85(1)(a)	5,000
2.	Paragraph 4.85(1)(b)	5,000
3.	Subsection 4.85(3)	5,000	25,000

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the regulations.)

Executive summary

Issue

In August 2006, authorities in the United Kingdom disrupted a terrorist plot to destroy civilian aircraft using commonly available liquids to construct improvised explosive devices for planned in-flight detonation in the cabin of a number of aircraft flying to the United States and Canada.

Following the disruption of this plot, aviation authorities in a number of jurisdictions, including Canada, moved quickly to impose very tight controls, including a 100% ban on LAGs, on what passengers were able to take through security screening points at airports in their respective territories. These controls were subsequently eased following a more complete assessment of the threat. However, volumetric restrictions remain in place on all but essential LAGs such as medicines and baby formula allowed through airport screening checkpoints.

The initial response to ban all LAGs going through screening points was an immediate response to prevent potential explosive ingredients from getting on an aircraft. The initial prohibition was considered necessary to mitigate the threat until it could be more thoroughly assessed.

Subject matter experts within the international aviation security community examined the physics and chemistry of the potential explosives mixes to evaluate whether the proposed materials would detonate, under what circumstances, and to establish how reliably they would detonate. They evaluated the potential effectiveness of the proposed explosives with respect to their potential to cause catastrophic damage to an aircraft in flight and reviewed what other factors might affect the speed and power of the explosives. The results found by the subject matter experts were shared with international civil aviation authorities, including Transport Canada security officials. The details of those findings are security sensitive and cannot be released publicly. Based on the resulting data, however, it was determined that limiting liquids to small bottles placed in a transparent one-litre bag significantly reduced the risk of causing damage to an aircraft in flight. A further mitigating factor is that the one-litre bag and its contents are also screened.

Based on the above, accepted international limitations currently in place, including in Canada and the United States, allow for passengers to bring LAGs through passenger pre-board screening checkpoints provided that the items are in containers with a capacity of 100 millilitres in volume or less and that all the containers fit comfortably in one clear, closed and re-sealable plastic bag with a capacity of no more than one litre.

Recognizing the need for a coordinated approach to the matter, ICAO studied the issue and subsequently produced detailed guidance material regarding the operational aspects of security controls for LAGs, which became the de facto international standard. Canada participated in this study and supported a coordinated approach.

Two years after the events of August 2006, the risk of LAGs being used to create improvised explosive devices continues to present a serious threat to the security of civil aviation. Although volumetric restrictions on the carriage of LAGs remain necessary, they present operational and economic challenges to the airline industry. A long-term alternative to current screening procedures lies in the development and deployment of enhanced screening technologies capable of analyzing and detecting LAGs of concern.

Objectives

Canadian Aviation Security Regulations (CASR)

The amendments to the CASR will codify in regulation the Interim Order Respecting Prohibited Items (Interim Order) approved by the Governor in Council on December 14, 2008. The Interim Order will expire in one year unless permanent regulations are made. If regulations are not in place by December 2009, a subsequent Interim Order would again have to be approved by the Governor in Council until these Regulations are finalized and also approved by the Governor in Council.

The amendments to the CASR will also add clarity by organizing the Regulations in a manner that is consistent with the 2004 amendments to the Aeronautics Act; by removing obsolete definitions and terminology and by making minor editorial changes.

Designated Provision Regulations (DPR)

As a result of the numerous changes to the CASR (identified above) consequential amendments to the DPR are also required.

CATSA Aerodrome Designation Regulations

The amendments to these Regulations update references to aerodromes that have changed their names. For example, the reference to the Winnipeg International Airport has been changed to reflect its new name — the Winnipeg/James Armstrong Richardson International Airport.

Description

Canadian Aviation Security Regulations (CASR)

These amendments will require CATSA to screen passengers and other persons who access sterile areas at airports where CATSA screening takes place. These amendments are necessary to prevent the introduction of items that could pose a threat to aviation security (e.g. knives, guns, explosives, etc.) on board aircraft or in airports’ restricted areas.

The regulatory amendments also incorporate, by reference, the Prohibited Items Lists (TP 14628E/F available at www.tc.gc.ca), although the content of the lists does not form part of this proposal. The regulatory amendments bring greater structure to how the lists may be amended by the Minister of Transport — for example, the new item would pose a threat to aviation security, it is also prohibited by a country on flights to that country, or it is identified by ICAO as an item that must never be carried in the cabin of an aircraft or taken into a restricted area. Changes to the lists will continue to be made using risk assessment methods, and internal and external consultation, subject to the aforementioned conditions, except in exigent circumstances. The rationale to have the lists of prohibited items incorporated by reference and not part of the Regulation is to allow Transport Canada, under these specific conditions, the flexibility to add an item to the lists quickly, or remove an item if it is determined that it no longer presents a risk. Changes could be influenced by an incident, intelligence, a change in international standards or enhancements to screening equipment or procedures.

The appropriateness of the lists is maintained through an on-going review of risk, intelligence, technology, international standards and practices, and stakeholder input. For example, a departmental/industry working group was created to assess the current lists and to develop recommendations for departmental consideration. In addition, as a member of the ICAO and the Security and Prosperity Partnership, Canada is encouraged to harmonize its rules with those of other countries and with international standards to the extent possible to maintain equivalency and to acknowledge passengers’ desire for a seamless travel experience. Public opinion polls are also conducted to obtain passengers’ perspective on aviation security issues such as prohibited items. The results of these opinion polls are reviewed and considered when making decisions.

Although the lists of prohibited items are separate from the Regulations, the public should be aware that the Department continues to revisit the lists and to consider additional factors such as reducing costs, enhancing screening consistency and increasing passenger convenience in this area while maintaining appropriate aviation security levels.

The following editorial amendments are also being made to the CASR:

1. Removing definitions and terminology from the CASR that now, as a result of the 2004 legislative amendments, appear in the Aeronautics Act such as removing the definition of “screening” from the CASR because it is defined in the Act.

2. Transferring certain substantive minimum hiring requirements for screening officers, currently found in an incorporated document to the CASR titled “Designation Standards for Screening Officers” (DSSO), to the CASR. These amendments do not change the existing minimum standards, which include: minimum age, Canadian citizenship, official language, transportation security clearance, etc. ; it moves them into a more transparent legal instrument.

3. Reinstating the requirement for lessees at all aerodromes listed in the schedule to the CATSA Aerodrome Designation Regulations to restrict access to airport restricted areas from their buildings. This requirement was inadvertently removed in December 2006 with the introduction of the CASR amendments respecting restricted area identity cards.

4. Including editorial amendments recommended by the Standing Joint Committee for the Scrutiny of Regulations. The role of this Committee is to review regulations and other statutory instruments on behalf of Parliament and to recommend changes if necessary. The changes recommended by the Committee in this case clarify but do not change the intent of the affected provisions.

5. Including a definition of a “restricted area identity card” (RAIC) and “restricted area pass” (RAP) in the Regulations. When the department introduced the RAIC program in December 2006, the definition of RAP was removed. However, in order to clarify the relationship between a RAIC and the need for RAIC holders to have security clearances, a definition of RAIC and RAP is necessary. The Standing Joint Committee for the Scrutiny of Regulations also identified the need for these definitions.

Designated Provision Regulations (DPR)

Making consequential amendments to the DPR, as required, is a result of the above-mentioned amendments to the CASR, such as the re-numbering of the designated regulations. The DPR are made pursuant to subsection 7.6(1) of the Aeronautics Act and identify regulations and orders that may be enforced by the government by means of an administrative monetary penalty, instead of the court system.

CATSA Aerodrome Designation Regulations

The amendments include references to airports that have changed their names to the CATSAAerodrome Designation Regulations. For example, the reference to the Winnipeg International Airport is changed to reflect its new name — the Winnipeg/James Armstrong Richardson International Airport. These Regulations are made pursuant to paragraph 34(a) of the CATSA Act.

Regulatory and non-regulatory options considered

Regulations to permanently codify the Interim Order

Section 6 of the CATSA Act gives CATSA a mandate “to take actions, either directly or through a screening contractor, for the effective and efficient screening of persons who access aircraft or restricted areas through screening points, the property in their possession or control and the belongings or baggage that they give to an air carrier for transport.” In order to comply with the constitutional requirement that all searches be authorized and required in law, CATSA’s mandate is engaged through aviation security regulations, security measures, emergency directions and interim orders. Given the ongoing need for pre-board screening and the public nature of this type of screening, amendments to the CASR are the only regulatory option available to Transport Canada.

Editorial amendments to the CASR

The amendments are required to clarify the CASR as a result of the (1) amendments made to the Aeronautics Act in 2004, (2) recommendations from the Standing Joint Committee for the Scrutiny of Regulations, and (3) other minor, but necessary editorial corrections that were not included during the original drafting of the CASR such as minor inconsistencies in the French version of the CASR. Amendments to the CASR are the only regulatory option available to Transport Canada.

Designated Provision Regulations (DPR)

The DPR are made pursuant to subsection 7.6(1) of the Aeronautics Act and identify regulations and orders that may be enforced by the government by means of an administrative monetary penalty. This route of enforcement is preferable to both the government and to the industry, as it ensures that non-compliance with security requirements is dealt with at a lesser cost for both the industry and the government. It gives the government more flexibility over enforcement to encourage voluntary compliance and is a more expeditious means of enforcing certain provisions of the CASR than if violations were prosecuted through the court system. Amendments to the DPR are the preferred option of Transport Canada and are consequential in nature.

CATSA Aerodrome Designation Regulations

The amendments correct references to aerodromes that have changed their names. For example, the reference to the Winnipeg International Airport is changed to reflect their new name — the Winnipeg/James Armstrong Richardson International Airport. The CATSA Aerodrome Designation Regulations are made pursuant to paragraph 34(a) of the CATSA Act. The amendments are the only regulatory option available to Transport Canada.

Benefits and costs

The potential costs and benefits of the restrictions on screening of LAGs were identified through a review of the literature, some primary research, and discussions with CATSA, and the Canadian Airport Council (CAC) officials. The following sections describe the potential costs and benefits for each stakeholder group significantly affected by the LAGs restrictions. Where possible, quantified estimates of costs and benefits are provided over a 10-year-time horizon from 2006 to 2015. All dollar values are expressed in constant 2006 dollars. Below is an overview of the cost-benefit analysis that was prepared for this regulatory submission. A copy of the full report is available upon request.

Costs

Five stakeholder groups were identified as being the most affected by the LAGs restrictions since August 2006: duty-free stores and other airport concessions (food, beverage and retail stores), airlines, airports, passengers and the federal government.

Duty-free stores and airport concessions

Duty-free stores and airport concessions have experienced declines in sales since the LAGs restrictions came into effect in August 2006. Volumetric restrictions in place since August 2006 limit the amount of liquids, aerosols and gels passengers can take through pre-board security screening to individual containers of no more than 100 millilitres that can fit in a one litre plastic bag. This has affected the sale of LAGs at airports, both at shops located before pre-board security screening, and shops located after security (e.g. duty free). For example, passengers can no longer purchase beverages and carry them through pre-board screening, and passengers purchasing LAGs in stores located post-security (e.g. duty free) must ensure that their purchases remain within the volumetric limitations (if they are connecting to flights at other airports en route to their ultimate destination). Failure to do so results in the necessity to surrender those purchases when undergoing security screening at a connecting airport.

Even though passengers have the option of placing items in excess of the allowed limits into their checked baggage, this option is often impractical, as passengers typically check their hold baggage as soon as they enter the airport. If the purchases made exceed the limits allowed, passengers may have no other choice but to consume them on the spot or surrender them to the screening officers. To alleviate this dilemma, passengers have simply cut down on their purchases of liquids, aerosols and gels. Even when passengers can access their checked baggage, some still refrain from buying LAGs as, due to their fragility, they could break during the flight or when checked baggage is transported to and from the aircraft. Sales have not returned to their pre-August 2006 levels.

Overall losses in sales for airport concessions due to LAGs restrictions are difficult to estimate. Products not purchased in airports prior to boarding may be offset by purchases made post-security, and/or upon arrival at destination airports. For domestic air travel, this would represent a transfer of sales within Canada from one retailer to another, with no overall loss in sales to Canadian businesses.

Losses to airport duty free were estimated to average $10.76 million (2006 dollars) over the 10-year period from 2006 to 2015. This estimate was based on available data on annual duty free sales for 2005 to 2007, and assumes that the observed difference in sales in 2006 and 2007 compared to 2005 can be attributed to LAGs. This may result in a significant overestimate of lost sales, since it does not isolate LAGs effects from other influences such as exchange rates.

The costs of these potential lost sales to the airport retailers of duty-free stores, calculated as lost profits, were estimated to be $726,000 per year. The direct and indirect impact of these potential lost sales on employment, taxes and economic output are discussed below under Other Potential Impacts.

Airlines

Similarly to duty-free stores and concessions, airlines may have also lost sales due to the LAGs restrictions, as several of them offer duty-free items for sale onboard during flights. LAGs bought onboard can be placed in passengers’ carry-on baggage, but those may need to be surrendered should they transit through another country enforcing the LAGs restrictions. This would occur if the passenger were required to leave the secure area and then be required to re-enter through a screening checkpoint to continue the next leg of the trip. This situation has had a negative impact on onboard passenger flight sales. The particulars of airport connections are sometimes such that even if LAGs do not have to be surrendered, some passengers are unsure of the situation and refrain from making any purchases. This potential cost was not estimated.

Airports

There are two types of costs borne by airports: the first is the revenue loss linked to decreased sales at duty-free stores and concessions, as airport authorities often reap a percentage of sales. The second is an increase in operating costs associated with the disposal of LAGs that are surrendered at the security checkpoint.

Lost revenues at airports were estimated to average $1.72 million per year, based on the assumption that Canadian airport revenues from duty free and concession tenants are 16% of total airport revenues, and that airport revenues would be directly affected by lost revenues estimated for duty-free stores and concessions. The cost of these lost revenues was estimated to be just over $100,000 per year in lost profits for Canadian airports. Increased operating costs due to LAGs were estimated to be over $332,000 per year over the 10-year period from 2006 to 2015.

The direct and indirect impact of these potential lost revenues on employment, taxes and economic output are included in “Other Potential Impacts” below.

Passengers

This stakeholder group includes all Canadian passengers, as well as airlines crews and other personnel. The main costs are the costs of replacing surrendered items and delays due to the extra screening for LAGs. To estimate the cost of surrendered items to passengers, a count of LAGs surrendered at the Ottawa, Toronto (Pearson) and Montréal (Dorval-Trudeau) airports was undertaken, and results were then scaled to a national total per year. The value of surrendered items was estimated at $9.3 million per year on average. The cost of additional delays for passengers due to LAGs was estimated at $4.9 million over the first two years, based on CATSA estimates of the average time spent in queues and Transport Canada estimates of the value of time for business and non-business passengers.

Canadian Air Transport Security Authority (CATSA)

The additional costs to CATSA to address the requirements of the new Regulations fall into three broad categories:

(1) Additional resources for the performance of random full physical searches (regulatory requirement) at domestic and international passenger Pre-Board Screening (PBS) checkpoints. This is a new activity for CATSA, since random full physical searches had not previously been required. Additional resources are needed to prepare passengers for ban/size and quantity limitations on LAGs. While this is not a requirement under the enhanced measures, this activity is clearly a direct consequence of the LAGs Regulations.

(2) Additional resources required to conduct secondary searches (a regulatory requirement) as a result of the enhanced measures.

Other costs to CATSA included training costs and travel for training, training materials, uniforms, overtime, personnel attrition costs, communication costs and additional equipment costs.

Total additional costs to CATSA to enforce the LAGs restrictions were estimated to average $31.4 million (2006 dollars) per year over the period 2006 to 2015.

Benefits

Two stakeholder groups were identified during consultation sessions with CATSA, CAC and Transport Canada as benefiting the most from the LAGs Regulations. The first group are passengers, which include all Canadian business and non-business air travellers, airline crew and personnel and airport personnel. The second group are airlines.

Passengers

The benefits of the LAG restrictions for passengers is both the increased safety and security due to the lower risk of a terrorist attack on an aircraft involving liquids, gels or aerosols and the facilitation for persons travelling to other countries (such as the United States and the European Union) that currently have similar restrictions in place. Without the LAGs restrictions that allow Canada to meet obligations of the International Civil Aviation Organization (ICAO), international air travel from Canada could possibly be prohibited by both overflight and destination countries. The benefits of uninterrupted international and domestic air travel for Canadian business and non-business air travellers, tourism, and overall economic activity have not been quantified, but are obviously very significant to Canada (see also Macroeconomic benefits below).

One of the most challenging aspects of cost-benefit analysis of security regulations is the lack of unclassified first hand data to measure the value to individuals of regulations that decrease the probability of terrorist attacks. However, it is documented in the literature that terrorism has profound negative effects on general well-being because of the potential loss of life and the climate of fear that arise from the perceived threat of terrorist acts. Accordingly, individuals appear to be willing to pay high costs to avoid terrorism incidents. Frey, Luechinger, and Stutzer (see footnote 4) studied subjective well-being in the case of the Northern Ireland conflict and found that individuals would be willing to pay 41% of their annual income for a reduction in terrorist activity to a level comparable to that in unaffected parts of the country. Viscusi and Zeckhauser (see footnote 5) estimate that individuals are willing to pay 50% or 70% more for an airplane ticket if the risk of a terrorist act were reduced by 25% and 100% respectively. These estimates are not specific to Canada, but they clearly show the value that individuals place on reducing the risk of terrorism.

Airlines

The benefits for airlines are similar to those for passengers: increased in-flight security for passengers, crew and aircrafts. Also, harmonization and reciprocal access to countries that also have LAGs restrictions.

Other potential impacts

Macroeconomic benefits

Broadly speaking, the key benefits from the security regulations are the human and economic costs avoided through the reduction in the probability of terrorist attacks. The raison d’être of the LAGs restriction is to reduce the probability of a successful terrorist attack using LAGs and to minimize the negative impact of the threat of such terrorist attacks on Canadians and the economy. The major benefits of the Regulations are therefore the cost potentially avoided — in areas that are vulnerable to terrorist threats — because of the security regulations. Trade, tourism and insurance sectors are particularly affected by terrorism or terrorism threats. The shocks to these sectors are transmitted to other important economic variables such as productivity.

Research on the macroeconomic effects of terrorism reveals that the impact on economic growth is negative, statistically significant, but small. Countries with ongoing and sustained terrorist threats stand to loose up to 10% of their gross domestic product (GDP). Another finding is that terrorism has a significant negative impact on per capita GDP, investment and exports. (see footnote 6) Terrorism tends to have a relatively small impact in more diversified economies with strong democratic governance.

Terrorism threats have an immediate impact on trade flows between the country affected and the rest of the world. For example, using data from 200 countries from 1968 to 1979, Nitsch and Schumacher (see footnote 7) find that a doubling of the number of terrorist incidents decreases bilateral trade between targeted economies by about 4%. Trade-based economies are even more affected by terrorist events that result in the shutdown of major ports or airports. Extra trade security measures taken in response to the 9/11 attacks cost from 1 to 3% of North American trade flows, equivalent to increasing traders’ annual costs from between US$5.6 and US$15.8 billion (Organisation for Economic Co-operation and Development, 2002).

The tourism sector is one sector that is significantly affected by terrorism or the threat of terrorism. Following the 9/11 terrorist attacks, total tourism expenditures in Canada in the fourth quarter of 2002 were $201 million lower than in the second quarter of 2001; in the sixth quarter following 9/11, total tourism expenditures fell by 1.7%, while Canadian GDP increased by 4.1% (see footnote 8).

Macroeconomic costs

Potential lost sales due to LAGs for duty-free shops and airports could impact on employment, wages, taxes and overall economic output. Using input-output multipliers for the air transportation industry, the direct and indirect impact of lost sales were estimated to

• result in 198 fewer jobs per year;
• reduce wages paid by about $6.7 million per year;
• result in $1.34 million less income tax paid to the federal government per year;
• reduce collection of sales tax by $300,000 per year; and
• reduce overall economic output in the Canadian economy by $24.4 million per year.

Cost-benefit summary statement

The table below provides a summary of the estimated benefits and costs of the LAGs regulatory proposal. Due to the uncertainty in quantifying the potential benefits in terms of lives saved, the Net Benefits are shown as the number of lives that would have to be saved over the period 2006 to 2015 for the regulation to be cost-effective — in other words, the number of lives saved to realize a net present value of at least $0. While the cost-benefit analysis concludes that at least 47 lives would have to be saved over a 10-year time period to justify the costs of the LAGs restrictions, the August 2006 terrorist plot alone, if successful, could have destroyed two Canadian aircraft carrying at least 400 people.

Cost-Benefit Statement		Base Year (2006)	Final Year (2015)	Total (PV)	Average Annual
A. Quantified Impacts $M
Benefits	Canadians	$35.4	$48.9	$299.5	$43.5
Costs	Private sector	$0.6	$0.3	$6.6	$1.0
	CATSA	$26.5	$38.5	$221.6	$31.4
	Passengers	$8.3	$10.0	$71.4	$11.2
Net Benefits (number of lives saved to be cost effective)				47	6.8
B. Quantified Impacts — non $
No other impacts were quantified
C. Qualitative Impacts
Significant positive impacts on Canadians’ ability to travel to other countries (such as the United States and countries within the European Union) that currently have similar regulations in place. If Canada did not maintain LAGs security measures, international air travel from Canada could possibly be prohibited by both overflight and destination countries. Significant positive benefits: tourism, investment, insurance costs, and passenger confidence.

Rationale

Screening for prohibited items at airports is an obligation of the International Civil Aviation Organization (ICAO), which as a member state, Canada is expected to meet. These amendments make permanent CATSA’s requirement to screen for prohibited items and meet the ICAO standard. The current restrictions on LAGs were developed in cooperation with the United States and the European Union. The Canadian regulations are crucial to not only mitigate the threat and risk of a liquid explosive being used on board an aircraft departing a Canadian airport but to maintain uninterrupted domestic and international air operations.

Consultation

Consultation with aviation security stakeholders

All the regulatory amendments were developed using feedback obtained through consultations with approximately 800 aviation security stakeholders. Key participants in the consultation process included the CATSA, aerodrome operators, air carriers, industry associations, and labour groups. All stakeholders agreed that it was necessary to permanently embed CATSA’s requirement to screen for prohibited items, which is currently located in the Interim Order, into regulations; and that the terminology in the Regulations should be clarified.

Comments received from Pre-Publication

These amendments were pre-published in the Canada Gazette, Part I, on July 4, 2009, for a 30-day comment period. The department received two letters with comments: one from CATSA and the other from a private citizen. Both stakeholders indicated support of the draft Regulations; however, the private citizen suggested that airports should relocate or install additional water fountains in suitable locations post screening. This suggestion has been forwarded to the Canadian Airports Council to disseminate to their members for their consideration.

EKOS Public Opinion Research on LAGs

According to the June 2008 EKOS Public Opinion Research Poll, Public Awareness and Understanding of the Policy on LAGs, 9 out of 10 travellers were aware of the LAGs restrictions at airports and 7 out of 10 travellers supported these restrictions. The EKOS Poll was conducted to obtain Canadians’ perceptions on security issues and to examine the public’s view of government responses to these issues. These results are a clear indicator of travellers’ continued support.

Implementation, enforcement and service standards

The amendments also include consequential amendments to the Designated Provision Regulations. Individuals, including the general public and companies, are subject to these Regulations, where applicable. These are monetary penalties that Transport Canada could issue as a means to enforce the Regulations.

In all cases, the enforcement response by Transport Canada’s aviation security inspectors is tailored to achieve both compliance and deterrence. Administrative monetary penalties are generally imposed as a last recourse if other enforcement tools cannot achieve that objective. Other enforcement options include warnings (oral and written), seeking assurances of compliance, and the suspending or cancelling of Canadian aviation documents such as an Air Operator Certificate.

The tool to be used in any particular instance will depend upon the following:

(a) seriousness of the contravention;

(b) circumstances when it was committed (e.g. whether it was committed willfully or deliberately);

(c) seriousness of any consequences;

(d) compliance record of the offender; and

(e) willingness of the offender to take measures to ensure compliance in the future.

Under the Aeronautics Act, the maximum monetary penalty that can be assessed for the contravention of a regulation is $5,000 for individuals and $25,000 for corporations.

It is worthwhile to note that administrative monetary penalty schemes established under the Aeronautics Act for aviation security are similar to those under this Act for aviation safety as well as those contained in the Marine Transportation Security Act and the Canada Shipping Act, 2001, all of which are administered by Transport Canada. Other federal departments and agencies, including Health Canada and Agriculture and Agri-Food Canada, also rely on administrative monetary penalty schemes as an alternative to enforcing regulatory offences in the criminal courts.

By way of comparison, the United States imposes a maximum penalty of $10,000 for individuals and a maximum of $25,000 for corporations per violation of its aviation security regulations. Similar to the enforcement philosophy used by Transport Canada, the U.S. Transportation Security Administration uses the Sanction Guideline Table to determine appropriate monetary penalty for contraventions. A range of factors, including prior violations and mitigating circumstances, is also considered in determining an appropriate penalty.

Performance measurement and evaluation

The LAGs regulatory amendments are part of Transport Canada’s fourth Strategic Outcome: A Secure Transportation System, as noted in the Department’s Program Activity Architecture. In this context, the regulatory amendments support the Aviation Security Program under the sub-activity of Aviation Security Regulatory Framework (4.1.1).

These Regulations make permanent the authority for Canadian Air Transport Security personnel to screen and restrict the amount of liquids, gels and aerosols that are brought on board by passengers. The restrictions were developed in cooperation with the United States and the European Union and are consistent with international standards. Canadian regulations are crucial for mitigating the risk of a liquid explosive being used successfully on board an aircraft departing a Canadian airport and for maintaining uninterrupted air operations to the countries of Canada’s international trading partners. Increased awareness of the restrictions of LAGs on aircraft and closer collaboration with CATSA personnel will ensure that passengers and their belongings move quickly through screening checkpoints, thus enabling CATSA to focus on areas of higher risk to the security of passengers. The amendments contribute to several key aviation security outcomes, including

1. increased alignment of aviation security with risk;

2. increased capability with international trading partners; and

3. increased compliance with the Regulations.

Performance measurement and reporting

Indicators which would be used to measure the performance of the key aviation security outcomes include

• consistency of Canada’s security regulations with ICAO standards and those from other countries;

• an increase in public awareness of restrictions of LAGs and reduction in the types and volumes of LAGs collected by CATSA personnel; and
• the alignment of the aviation security with actual threat and risk assessments.

Performance information on performance achieved will be reported annually to the Government Committee on Aviation Security as well as to the general public in Transport Canada’s Report on Plans and Priorities and the Departmental Performance Report.

Evaluation strategy

The Aviation Security Regulatory Framework (of which these Regulations form part), Oversight and the Airport Policing Contribution programs are to be evaluated by Transport Canada’s Evaluation Services over the 2011-12 to 2012-13 period and are referenced in Transport Canada’s Evaluation Plan dated April 2009. The LAGs component of the regulatory amendments forms one element of the broader program evaluation. The issues, questions and methodological approach to evaluating the performance of the LAGs regulatory amendments will be determined in the plan for the broader evaluation.

A copy of the Performance Measurement and Evaluation Plan is available upon request.

Contact

Sandra Miller
Chief
Regulatory Planning and Services
Aviation Security Regulatory Affairs
Transport Canada
330 Sparks Street
Place de Ville, Tower C, 13th Floor
Ottawa, Ontario
K1A 0N5
Telephone: 613-998-9605
Fax: 613-990-5046
Email: Sandra.Miller@tc.gc.ca

Footnote a
R.S., c. 33 (1st Supp.), s. 1

Footnote b
S.C. 2004, c. 15, s. 5

Footnote c
S.C. 2004, c. 15, s. 18

Footnote d
R.S., c. A-2

Footnote 1
SOR/2000-111

Footnote 2
SOR/2000-112

Footnote 3
NOTE: For the purpose of this RIAS, the cost-benefit statement and the performance measurement and evaluation plan will focus on the proposed amendment to make permanent the requirement for CATSA to screen for prohibited items and, specifically, on the impact of volumetric restrictions placed on LAGs, which was introduced through the Interim Order.

Footnote 4
Frey, Bruno S., Simon Leuchinger et al. “Calculating Tragedy: Assessing the Costs of Terrorism.” CESifo Working paper No. 1314. Category 1: Public Finance. November 2004.

Footnote 5
Viscusi and Zeckhauser. “Sacrificing Civil Liberties to Reduce Terrorist Risks.” The Journal of Risk and Uncertainty, 26:2/3; pp. 99–120, 2003.

Footnote 6
Todd Sandler and Walter Enders. “Economic Consequences of Terrorism in Developed and Developing Countries” 2005.

Footnote 7
Nitsch, Volker and Dieter Schumacher. “Terrorism and international trade: An empirical investigation.” European Journal of Political Economy, Vol. 20, 2004, pp. 432-433.

Footnote 8
David Wilton. “Long Term Trends and Cycles in Canadian Tourism.” A Research Report Prepared for the Canadian Tourism Commission. Ottawa, August 2004.

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