I thought the nornmal practice was to close the thru-hull and remove the lever. That has always been accepted around my area. Maybe Canada is being stricter but I would think Val and the others would know best.
That's the trouble. We don't (OK, I don't and I edit a newsletter from which I get a lot of information on regulatory and safety issues around the Great Lakes), and this sounds draconian, not to mention stupid, to me.
If by "visibly disconnected", they mean "routed obviously to a holding tank and not overboard", then I am in compliance and there is no problem. But "visibly disconnected" to me sounds like "pull the hose off the barb leading outside and put a cork in said hose to keep the whiff going out the vent and not into the boat".
It's crazy anyway, given that it is nearly impossible to keep the bilges so spotless that any bilge discharge is crystal clean. Not to mention that running a sailboat's exhaust frequently leaves traces of sheen on the water.
I don't own a car, and I guarantee my boating activities in total are less polluting than 1/10th of the annual output of any car. My wife and I are pretty strict about even the paints and cleaners we use, whereas I see boat detailers powerwashing loads of soap foam into the water every year.