Word Count: 2000

Analyzing Risk for Small Business: The Impact of Canada’s

Regulatory Matrix on Inter-Provincial Trucking Owner/Operators

Jan Whyte

Thompson Rivers University OLU

Introduction

Citizens in Canada have long relied upon the trucking industry for delivery of necessities of life. In

the last ten years, this industry has received a boost from on-line consumer shopping’s home

delivery of items ranging from mascara to refrigerators. Paradoxically, the number of truck drivers

available for hire is on the decline and there are fewer owner/operators able to afford to do business

in BC.

This paper analyzes whether or not Canada’s regulations governing the inter-provincial

highway carrier industry are creating risks of loss for the small trucking business owner/operators.

The Small Business Trucking Industry

The writer’s professional experiences and education regarding truck drivers and small trucking

business owner/operators in BC (the “BC Trucker”) have informed the following economic and legal

facts:

a) BC Truckers have a low operating profit – 5 – 10%;

b) BC Truckers frequently contract for hauls from the West Coast of Canada to

Ontario and Nova Scotia (port-to-port) – a distance spanning 9300km;

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c) BC Truckers enter various municipal, provincial, territorial and international

jurisdictions;

d) Some inter-provincial trucking activities are governed by Federal

legislation, while other activities governed by Provincial by-laws,

regulations and legislation (Constitution Acts 1967-1982);

e) The Criminal Code of Canada contains provision which specifically apply to

the commercial trucking industry (dangerous goods, legal duty of care)

(Criminal Code of Canada 1985);

f) BC Truckers frequently contract for hauls crossing the US/Canada Border,

which expose the BC Trucker to over 90 acts and regulations within the

jurisdiction of the Canada Customs and Border Services Agency; and

g) The BC Trucker has a duty to make him/herself aware of the laws, and is obligated

to comply with the laws.

The Regulatory Matrix

In the mid-1980’s, the Canadian trucking industry moved from a government-controlled industry to

a free competition model. This movement was called “de-regulation” and the new economic model

was called “perfect competition”. As a result of de-regulation, policy regulation to control safety in

the industry was introduced through creation of new laws and regulations. (Monteiro, 2014)

Mr. Justice Cory, on behalf of the Supreme Court of Canada R. v. Wholesale Travel

(Supreme Court of Canada 1991), states that the number of pieces of legislation the BC Trucker is

expected to locate, understand and comply with had increased from 20,000 federal offences in 1974

to 97,000 in 1983. The 2010 report from The Law Commission of Ontario confirmed the

increased monetary consequences of regulatory offences in Canada included “substantial terms

of imprisonment and … fines in the millions of dollars”. (Libman 2010)

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Margaret Hogg and Robert Jones in their article Industry Regulations: Too Many or Too

Little (The Face 2015) explain two phenomena which are occurring in 2015 in the Canadian

trucking industry:

1. Truckers do not understand the laws; and

2. Hours of Service (HOS) Regulations are causing disrupting of business efficiency.

Jones stated “People complain about “too many regulations”, but I think it’s because they

really don’t understand them”. Jones’ view is supported by the paper Collision between Federal

and Provincial Occupational Health and Safety Regimes (Dunn, Hohman and Sidnell 2013)

which describes the conflict of laws between federal and provincial jurisdictions in Canada as

“collisions” of the laws and resulting confusion as to which circumstances in each jurisdiction

are relevant to the offences. Lessons Learned Impacts Size Articulated (Reger, Montufar and

Clayton 2009) brings us a case-specific example of a regulation that did not fit well with the

trucking industry. The authors describe the regulation for carriers which did not allow for various

types of equipment with differing dimensions and weights when drafting the specific tolerances

that would be within the law of that regulation, and how that policy drafting oversight caused

consequences of economic loss and confusion to the trucking businesses and industry.

Other professional associations in Canada sought legal clarification in province-by-

province styles of regulation. In Regulating Professions in Canada: Inter-Provincial Differences

(Adams 2009) the author states the problem in Canada is “the ways in which professional

regulation varies is not well understood”. The solution set out in this article is to gain greater

knowledge of professional regulation and its variations across time and place, which will

enriched our understanding of the requirements of the profession.

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Returning back to The Face article (supra) item #2, Margaret Hogg states that she

believes the problem plaguing truckers’ profits is the regulation called “Hours of Service” or

“HOS”. The mandated hours of driving cause occasions when the trucker must mandatorily

park his rig and rest/refrain from driving once he has been on the road for a certain length of

time. This restriction causes lost profits due to idle resources (driver, truck). The idle time

manifests into less loads per month, missed opportunity for early delivery bonuses, penalties for

late delivery and extra down time should US/Canada border crossing schedules be missed due to

the mandatory shut-down regulation. The unfortunate result is that, in the BC Trucker’s

perspective, absent a reason that compliance is of more importance than serving his customers

and staying in business, the trucker may take the risk of breaching the regulation. By making the

choice to disregard the law, the trucker risks economic loss from being caught and fined with a

by-law ticket or, in the most serious consequences, incarcerated due to a breach of his legal duty

of care to others on the highway.

The trucking transportation industry is not the only transportation mode to feel the heavy

hand of mandatory safety regulation in Canada. A railway transportation example is set out in the

article on Lac Megantic railway disaster which destroyed a small town says it is a lack of

regulation in that industry that is demanding a change to the laws – a reform which is costing

railway operators and their customers billions of dollars in increased insurance and safety

regulation training. (Campbell 2013)

There was a different approach in the environmental regulatory environment when new

laws were implemented. We are informed by “Integrading Compliance and Regulatory Design in

EPA Rulemaking” that public disclosure processes during the regulatory drafting was very

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effective, as it both considered stakeholder interests in the cause as well as accomplished their

buy-in to the regulatory process (Roberts 2014).

Regardless the topic of regulation, it is reported that the regulatory compliance level in

small firms is much lower than larger entities. For example the Law Society of British Columbia

- which has an internal professional governance system - reported that the compliance rate of

small firms was far below that of larger firms, thus pointing out a need for targeted and formal

education in the small business sector of industries. (Woolley 2012)

When regulation is indeed necessary, what factors lead to successful adoption and

compliance? Energy Sector MESS sets out how four energy sector imperatives have been

included in energy policymaking. They are described to have been layered over time, giving the

stakeholders a chance to comply and adjust. (2012, Gattinger)

Finally, and because we have truckers as individuals to consider in the fairness of the

regulations, we turned to the article Ambivalence which confirms that a regulation may consider

the vulnerability and certain specific provisions for a certain class of stakeholder. Regulatory

wording need not be a one-size fits all approach. (Drummon and Cohen 2014)

Analysis

Our hypothesis is that the nature of the highway carrier business in Canada and its current

regulatory framework creates risk of loss in profits and liberty for the BC Trucker.

Issue 1: Understanding Legally Required Conduct

The full set of Canada’s laws, some of which the BC Trucker must consider in

commercial activities, may be found on the Canadian public laws site CANLII. CANLII informs

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us that Canada has a total of 35,499 individual pieces of Federal and provincial legislation

(statutes, regulations) (2015, CANLII).

Federal statutes and regulations in Canada total 4,888. In addition, there are thousands of

pieces of provincial legislation - see Figure 1.

Figure 1: CANLII Legislation Search

The internet, the most easily and economically accessed source of information, hosts the

platform for the Province of British Columbia’s site “Minister of Transport and Infrastructure’s

Mandate” (Province of British Columbia 2015). Despite its appearance of thoroughness - 21 acts

listed - this site would cause problems for the BC Trucker should he/she rely upon it as the only

information for full legal compliance. Some legislation is missing. For example, transportation

offences under the Criminal Code of Canada, (supra) and the provincial Offences Act (1996). In

addition, the site does not reference complementary regulations to the acts, which in some cases

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(such as the British Columbia Motor Vehicle Act (1996)), the content of the regulation is more

relevant to required conduct than the act itself.

We then viewed the December 31, 2014 Cumulative BC Regulations Bulletin on the

official internet site for proclaiming the laws of Canada – the Canadian Gazette (the Gazette).

There was no layman’s interpretation of the contents of the bulletin. As a result the relevant

knowledge would not be easily understood unless the reader had some legal training. (2014

Canadian Gazette)

Finally, BC Provincial site “BizPal” – a federal platform that has been rolled out to

provinces and municipalities for citizens’ use in uploading their laws – provided information that

a BC Trucker doing business in Vancouver may need 42 permits and licenses - 14 Municipal, 16

Provincial or Territorial and 12 Federal. This was helpful for BC business, but did not contain

information for all provinces and municipalities in Canada. (2015 Bizpal)

Issue #2 – Identifying Legal Risks

An analysis of the BC Trucker’s business activities was undertaken, based on facts set

out in the text Transportation Systems, a Canadian Perspective (CITT 2011) and the information

on regulatory offences contained in Criminal Law in Canada (Verdun-Jones 2015).

The activities a BC Trucker undertakes in his unique business as a highway carrier in

Canada expose him to significant risks in the following “true crimes” categories:

1. Pollution/Environmental Protection - failure to perform legal duty of care to other

users of highways to ensure the truck is in safe working order and that dangerous

contents being hauled are safely marked, stored, secured;

2. Driving - Criminal Negligence - failure to perform legal duty of care to ensure driver

is suitable condition to drive (hours of service restrictions); and

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3. Assault, Manslaughter, Sexual Assault - offences related to personal conduct while

engaging in activities involving food/drink (bar environment), exercise (casual

recreational sports) and sex (under age, unknown history, confined private sleeping

compartment) as a result of stopping in unfamiliar towns when budged driving time

expires.

Figure 2 sets out a framework for the BC Trucker’s legal risks from low (by-law) to high

(true crimes), a failure to manage which will result in loss of income, capital assets and, potentially,

his business.

Figure 2: Sample Trucking Business-Legal Risk Framework

By-Law

By-Law Infractions -no defence

(absolute liability)

Permit for Travel -Mistake of Law -Officially Induced Error (failure to

Speeding - no defence (absolute

liability)

Quasi-Criminal

Failure to Display Placard (TSA) - due

diligence

CBSA (Various) -AMPS - due

diligence, absolute liability

Breaches of the Environmental

Protection Act - due diligence

True Crime

Assault, Sex Assault - ensure consent and proof of age

inquiries (provable)

Manslaughter - thin skull, use of other body parts in bar

brawls; provocation

Criminal Negligence Causing Death -

know safety rules and legal duties of

care

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Conclusion

The hypothesis was proven. The laws governing highway carriers in Canada are voluminous and

difficult to interpret. Many users are ignorant of their legal duties. The consequences to the

owner/operator, as in the case of the Hours of Service regulation, are severe. The pressure of

economic loss provokes the driver to make a choice to breach the regulation, which expose the

highest risks of all - severe penal consequences including fines and incarceration plus

compromise of the safety of other highway users.

Absent a process to deliver the complete set of relevant laws and a process to effectively

educating the unique profile of the owner/operator, the drivers will continue to offend. As a

result the public will not be protected as was intended in the Parliamentary proclamation of the

regulations.

In summary, the survival of the small business and owner/operator sector and

maintenance of many-member perfect competition as was contemplated by the 1980’s de-

regulation (as opposed to few member dominance in oligopoly which would result from an

eclipse of the small business and owner/operator truckers), depends upon regulatory reform and

effective legal education in the trucking industry.

The onus is on Government in Canada to make an efficient circuit board out of the

complex regulatory matrix it has created.

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