FEDERAL REG

SOR/2016-289: Farm Debt Mediation Regulations — Regulations Amending Farm Debt Mediation Act

REGISTRATION OF FEDERAL REGULATION - VIA PART II OF THE GAZETTE

Registered
November 19, 2016


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues The current Farm Debt Mediation Regulations (FDMR) contain overly complex administrative procedures and unclear and outdated definitions. As it was announced in the Government of Canada’s Budget 2012, the internal management structure of the Farm Debt Mediation Service (FDMS), the program enabled by the F... (Click for more)


Published on November 19, 2016

Bill Summary

SOR/2016-289: Farm Debt Mediation Regulations — Regulations Amending Farm Debt Mediation Act

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues The current Farm Debt Mediation Regulations (FDMR) contain overly complex administrative procedures and unclear and outdated definitions. As it was announced in the Government of Canada’s Budget 2012, the internal management structure of the Farm Debt Mediation Service (FDMS), the program enabled by the Farm Debt Mediation Act (FDMA), was streamlined. As a result, the FDMR need to be updated to align with this new management structure. The FDMR also require consequential amendments as a result of changes to the Farm Debt Mediation Act (FDMA) contained in the Agricultural Growth Act, which received royal assent on February 25, 2015. These consequential amendments clarify FDMS processes and facilitate the participation of the Minister of Agriculture and Agri-Food (the Minister) in the mediation process when the Minister is a guarantor of a farmer’s debt and not a creditor. Background The FDMA enables the FDMS, which offers financial counselling and mediation services to farmers who are having difficulties meeting their financial obligations. It is a free and voluntary service for both farmers and creditors. The service helps bring farmers and their creditor(s) together with a mediator in a neutral forum to reach a mutually acceptable solution. Participation of the Minister in FDMS processes Under Agriculture and Agri-Food Canada’s (AAFC) Advance Payments Program (APP) and other programs, the Minister can be a guarantor of a farmer’s debt when the farmer has received an advance. Previously, the Minister could only participate in mediation under the FDMA when he/she was a creditor of a farmer and not when he/she was a guarantor. Amendments to the FDMA contained in the Agricultural Growth Act now permit the Minister to also participate in a mediation when he/she is a guarantor of a debt owed by a farmer and not yet a creditor of the farmer. As a result of these changes to the FDMA, the FDMR need to be amended to extend the notice provisions contained therein to the Minister and to facilitate the Minister’s participation in FDMS when he/she is a guarantor of a debt owed by a farmer. Definitions The Modernization of Benefits and Obligations Act (MBOA), which received royal assent on June 29, 2000, was enacted to ensure that benefits and obligations under federal legislation apply equally to all common-law relationships whether of opposite or same sex. The definitions in the FDMR are not clearly aligned with the spirit of the MBOA. Notices by secured creditors Under section 21 of the FDMA, secured creditors must provide notice to a farmer if they intend to take action to recover the debt, at least 15 business days before taking any action. Pursuant to the amendment to section 21 of the FDMA contained in the Agricultural Growth Act, secured creditors are required to provide a copy of this notice to the FDMS. The notice by secured creditors allows the FDMS to identify farmers in financial difficulties and inform them of the services offered under the program. Therefore, the FDMR need to be amended to clarify how this notice is to be given to the FDMS. Restructuring of the FDMS Streamlining of the FDMS was announced under Budget 2012 in order to decrease redundancies and costs while offering more efficient services. Prior to Budget 2012, the FDMS was managed out of five regional offices and there was one appeal board per region. The Budget 2012 announcement resulted in the consolidation of the FDMS regional offices into two — FDMS East and FDMS West. The current structure of the FDMS appeal boards is based on a five-region structure. These amendments will also respond to an identified need to provide more flexibility and options by allowing the chairperson to appoint him or herself as a member of the other appeal board to ensure there is a quorum to hear appeals. Objectives The objectives of the Regulations Amending the Farm Debt Mediation Regulations (the amendments) are to improve the clarity and the administration of the FDMR and to ensure the alignment of the FDMR with the amendments to the FDMA contained in the Agricultural Growth Act. Description These amendments relate to internal government administrative or housekeeping changes such as correcting translation errors in the definitions, improving clarity as well as consequential changes as a result of amendments to the FDMA. Details of the changes contained in the amendments are described below. Participation of the Minister in FDMS processes The amendments clarify the processes, including notification and appeals, related to the FDMS and facilitate the participation of the Minister in the FDMS process when the Minister is a guarantor of a farmer’s debt by plainly identifying steps and time lines for the farm debt mediation process. Definitions The definition of a person related to a farmer will be amended to include common-law partners to align better with the spirit of the MBOA. Notices by secured creditors The amendments will prescribe the manner by which secured creditors give notice under section 21 of the FDMA to the FDMS. This improves the clarity of the process for secured creditors and will allow for improved communications between the FDMS and the farmers. Restructuring of the FDMS These amendments restructure the FDMS appeal boards into a two-region (East, West) structure in order to align with the Government of Canada’s streamlined management of the FDMS. Implementation of the new structure will begin upon approval of the amendments. Additionally, these amendments will now allow the chairperson of each of the two appeal boards to not only appoint a member of his/her appeal board to serve as a temporary member of the other appeal board in order to meet quorum (as provided for under the existing Regulations), but to also enable the chairperson to appoint him or herself as a member of the other appeal board. “One-for-One” Rule The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business. Small business lens The small business lens does not apply to this proposal, as there are no costs on small business. Consultation Given that all but one of the changes will not affect the public nor the service provided under the FDMS, public consultations have not been conducted. As the changes are internal or administrative in nature, farmers applying to the FDMS will not notice a change other than improved service delivery. The one change that will affect creditors, the method by which the notice under section 21 of the FDMA is to be given to the FDMS, has already been communicated to the stakeholder group. As the majority of secured creditors already use the form, impacts are expected to be negligible and no negative feedback has been received on the proposed process. Rationale The consequential changes stemming from the changes made to the FDMA will address technical housekeeping issues, improve interactions between the APP and the FDMS and facilitate AAFC’s participation in the farm debt mediation process, when the Minister is a guarantor of a farmer’s debt and not yet a creditor. These amendments will allow the Minister, as a guarantor of a farmer’s debt, to participate in the mediation process when farmers apply for protection under the FDMS. For farmers, this means it will be easier, with the right people at the table, to negotiate repayment arrangements and to reach agreements with their creditors during mediation. The remaining changes will increase the clarity and understanding of the FDMR and will streamline the procedures and processes for those using the FDMS. Some of the changes are housekeeping in nature, such as correcting translation errors in definitions, and broadening the definition of “a person related to a farmer” to include common-law partners and changing the terminology used from person to farmer or creditor to ensure that the regulations apply to farmers and creditors that are not persons, such as partnerships and cooperatives. The amendments will change the number of appeal board regions to match the current management structure which resulted from Budget 2012. Since the appeal board members meet by teleconference call, having a regional structure that mirrors the management structure of the FDMS will simplify the coordination of appeals by FDMS administrators. The change in structure is not expected to have an impact on the service or the appeal process since the total number of appeal board members will remain the same. Currently, there are five appeal boards with two members each and the change will allow for two appeal boards with up to five members each. Additionally, allowing the chairperson to appoint themselves as a member of the other appeal board will provide greater flexibility and more options to ensure that quorum can be met and appeal decisions can be made in a more timely fashion. There will also be cost savings as a result of this initiative for the Government that came from collapsing five regional government support offices to two, as identified in the background section. Pursuant to the amendment to section 21 of the FDMA contained in the Agricultural Growth Act, secured creditors are required to provide a copy of their notice of intent to realize on security to the FDMS. The regulatory amendments will describe the manner in which secured creditors are to provide the notice of intent to realize on security to the FDMS. This will not lead to an increase in administrative cost as the majority of secured creditors already provide the notice to the FDMS. For the remaining creditors, the incremental administrative burden would be negligible given that notice can be provided electronically and will only require copying the FDMS on the notice to the farmer. Requiring all secured creditors to use a single, consistent form for providing notice will result in a more streamlined and predictable notification process. Contact Caroline St-Pierre Regional Manager Farm Debt Mediation Service East Agriculture and Agri-Food Canada Email: [email protected] Footnote a S.C. 1997, c. 21 Footnote 1 SOR/98-168 Footnote 2 SOR/86-814

This Bill does not amend any statutes.

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