Vol. 135, No. 6 — February 10, 2001

Regulations Amending the Income Tax Regulations

Statutory Authority

Income Tax Act

Sponsoring Agency

Canada Customs and Revenue Agency

REGULATORY IMPACT ANALYSIS STATEMENT

Description

Part I of the Income Tax Regulations contains the rules concerning deductions at source by an employer from amounts paid to an employee. Subsection 100(3) of the Regulations provides for a reduction of the gross amount on which source deductions are calculated by allowing certain deductions to be taken into account. This ensures that the amount of tax withheld approximates the employee's tax liability.

Part I of the Regulations is being amended to take into account the fact that some provincial governments are now responsible for the collection and distribution of support payments. In these provinces, the employer receives instructions from the province to withhold the support payments from the employee's salary, and to forward them to the province. Since provincial instructions are not considered either a garnishee or a similar court order, as currently contemplated by paragraph 100(3)(d) of the Regulations, the employer must withhold taxes on an employee's remuneration without taking the support payments into consideration, thereby causing undue hardship for the individual. The proposed amendment to paragraph 100(3)(d) addresses this disparity by ensuring that tax deductible support payments are taken into consideration when determining tax withholdings from an employee's remuneration.

Part I of the Regulations is further amended to allow a reduction of the remuneration on which source deductions are calculated, in certain circumstances, to take into consideration the employee's RRSP deduction limit. Currently, under subsection 100(3.2), where a payment to an employee exceeds $10,000, the entire amount is subject to withholding, rather than only the portion that exceeds $10,000. Under the proposed amendment to subsection 100(3.2), the dollar amount is raised to the maximum amount that the employee can deduct as an RRSP contribution.

Alternatives

Currently, to alleviate any undue hardship in either of the situations described above, the employee must obtain from the Canada Customs and Revenue Agency (CCRA) a letter authorizing the employer to reduce tax withholdings. In light of current practices, this requirement creates an unnecessary paper burden on employees and employers, as well as on the CCRA. An amendment to the Income Tax Regulations is the only alternative available to remove that burden and bring the rules governing tax deductions at source in line with current practices.

Benefits and Costs

These amendments update, clarify and streamline the rules under which source deductions are made by employers. There is no impact on federal revenues, nor is there any negative impact on employers or employees.

Consultation

This initiative has been discussed, in part, with the Tax Executive Institute and various payroll agencies. It is expected that any additional representations received in response to this pre-publication will be in favour of the amendments.

Compliance and Enforcement

The CCRA administers the collection of source deductions and ensures that they are made in accordance with tables prepared according to the rules set out in the Regulations. The Income Tax Act contains penalty provisions if source deductions are not made as required. Compliance with these amendments will be ensured through the mechanisms currently in place.

Contact

Richard Montroy, Chief, Regulations and Remissions Section, Legislative Policy Division, Policy and Legislation Branch, Canada Customs and Revenue Agency, Place de Ville, Tower A, 22nd Floor, 320 Queen Street, Ottawa, Ontario K1A 0L5, (613) 957-2083 (Telephone).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to section 221 (see footnote a) of the Income Tax Act (see footnote b), proposes to make the annexed Regulations Amending the Income Tax Regulations.

Interested persons may make representations with respect to 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 Richard Montroy, Chief, Regulations and Remissions Section, Legislative Policy Division, Policy and Legislation Branch, Canada Customs and Revenue Agency, 320 Queen Street, 22nd Floor, Tower A, Place de Ville, Ottawa, Ontario, K1A 0L5.

Each representation should stipulate those parts of it that should not be disclosed pursuant to the Access to Information Act, in particular pursuant to sections 19 and 20 of that Act, the reason why those parts should not be disclosed and the period during which they should remain undisclosed. The representations should also stipulate the parts of the representations for which there is consent to disclosure pursuant to the Access to Information Act.

Ottawa, January 30, 2001

MARC O'SULLIVAN
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE INCOME TAX REGULATIONS

AMENDMENTS

1. (1) Paragraph 100(3)(d) of the Income Tax Regulations (see footnote 1) is replaced by the following:

(d) an amount that is deductible under paragraph 60(b) of the Act,

(2) Subsection 100(3.2) of the Regulations is replaced by the following:

(3.2) Subsection (3) does not apply to a payment of remuneration that is

(a) the amount by which the employee's retiring allowance exceeds the sum of

(i) the total determined under subparagraph 60(j.1)(ii) of the Act in respect of the retiring allowance, and
(ii) the employee's RRSP deduction limit, as defined by subsection 146(1) of the Act; or

(b) the amount by which a lump sum payment (other than a retiring allowance), within the meaning assigned by subsection 103(6), or a bonus or retroactive payment, exceeds the employee's RRSP deduction limit, as defined by subsection 146(1) of the Act.

COMING INTO FORCE

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

[6-1-o]

Order Amending Schedule 2 to the Canadian Environmental Protection Act, 1999, No. 1

Statutory Authority

Canadian Environmental Protection Act, 1999

Sponsoring Department

Department of the Environment

REGULATORY IMPACT ANALYSIS STATEMENT

Description

This Regulatory Impact Analysis Statement (RIAS) describes the listing of the Pest Control Products Act (PCPA) in Schedule 2 of the Canadian Environmental Protection Act, 1999 (CEPA 99). Listing the PCPA in Schedule 2 of the CEPA 99 exempts pest control products that are new chemicals and polymers regulated under the PCPA from additional notification and assessment for toxicity under the CEPA 99.

The CEPA 99 allows for substances regulated for uses under other Acts of Parliament and Regulations to be exempt from the CEPA 99 notification and toxicity assessment requirements if those Acts and Regulations provide for notification and assessment of "toxicity." More specifically, the other Acts and Regulations must provide for "notice to be given before manufacture, import or sale of the substance and for an assessment of whether it is toxic or capable of becoming toxic" (subsections 81(6) and 106(6) CEPA 99). The CEPA 99 differs from its predecessor (CEPA, 1988) in subsections 81(7) and 106(7). These subsections grant the Governor in Council with exclusive responsibility to determine whether the CEPA 99 criteria (subsections 81(6) and 106(6)) are met. If the other Act and Regulations meet these criteria to the satisfaction of the Governor in Council, they can be added to Schedule 2 or 4 of the Act. The listing of an Act and Regulations in Schedule 2 or 4 of the CEPA 99 is considered proof that the criteria have been met.

The listing of the Pest Control Products Act (PCPA) under the CEPA 99 Schedule 2 will avoid a potential regulatory redundancy since both the CEPA 99 and the PCPA carry out assessments of new substances for risks to human and environmental health. The listing of the PCPA under the CEPA 99 Schedule 2 means the pest control products sector will continue to interact with the Pest Management Regulatory Agency (PMRA) in Health Canada and will not require a second assessment by Environment Canada and Health Canada. The following discussion shows that environmental and health protection dimensions of the PCPA are consistent with the CEPA 99 criteria in subsection 81(6).

Notification Requirements under the CEPA 99 and the PCPA

The New Substances Notification Regulations (NSNR) of the CEPA are an integral part of the federal government's national pollution prevention strategy. The notification regime serves to ensure that no new substances are introduced into the Canadian environment before an assessment of whether they are potentially toxic has been completed, and any appropriate or required control measures have been taken.

The CEPA 99 approach to the control of new substances is both proactive and preventative, employing a pre-import or pre-manufacture notification and assessment process that considers the manufacture, use and disposal of the substance. When this process identifies a new substance that may pose a risk to health or the environment, the Act empowers the Minister of the Environment to intervene prior to or during the earliest stages of its introduction into Canada. This ability to act early makes the new substances program an essential component of the federal Government's approach to the management of toxic substances.

Part I (Chemicals) and Part II (Polymers) of the New Substances Notification Regulations implement sections 80 to 89 of the CEPA 99. The Regulations require notification and assessment of new substances prior to their manufacture in or import into Canada in order to determine whether the substance when entering into the environment would be "toxic" or be capable of becoming "toxic." This assessment considers all stages in the development of the substance from manufacture/import to disposal. This approach is consistent with the Government of Canada's Toxic Substances Management Policy (TSMP).

Under the CEPA 99, a "substance" means any distinguishable kind of organic or inorganic matter, whether animate or inanimate. The definition of a control product in the PCPA includes any product, device, organism, substance, or thing that is manufactured, represented, sold or used as a means for directly or indirectly controlling, preventing, destroying, mitigating, attracting or repelling any pest. Hence, substances are covered by both the CEPA 99 and the PCPA.

Under the PCPA, pre-market notification is imposed by means of the requirement that only those pest control products which satisfy the registration requirements are permitted to be imported, sold or used in the country. The PCPA also prohibits a control product from being manufactured, stored, displayed, distributed or used under unsafe conditions. A person wishing to obtain approval to market a control product in Canada must submit to the Minister of Health an application for registration. The application must include the information required to permit the health and environmental risks, merit and value of the product to be assessed, and their acceptability to be determined, in accordance with scientific methods and standards. The Act and Regulations apply to all pest control products, whether chemical or biological.

Risk Assessment under the CEPA 99 and the PCPA

The CEPA 99 defines "toxic" as follows:

"64. For the purposes of this Part and Part 6, except where the expression "inherently toxic" appears, a substance is toxic if it is entering or may enter the environment in a quantity or concentration or under conditions that

(a) have or may have an immediate or long-term harmful effect on the environment or its biological diversity;

(b) constitute or may constitute a danger to the environment on which life depends; or

(c) constitute or may constitute a danger in Canada to human life or health."

The New Substances assessment conducted under the CEPA 99 takes into account:

— the identity of the substance,

— manufacture, importation, use and disposal information,

— environmental fate information, including data to determine persistence and bioaccumulation,

— ecological effects information, and

— human health effects information.

The data requirements prescribed by the PMRA to assess risks to health and the environment are specifically tailored to account for properties associated with pest control products and are designed to generate a comprehensive set of information on the potential hazards of a pest control product. This information provides for the assessment of exposure through various routes (including ingestion, skin absorption, and inhalation) for potentially exposed subgroups and components of the environment, and to assess the risks to determine if there are adequate margins of safety.

Evaluation of extensive environmental fate data, specific data on use patterns and data on human exposure makes it possible to determine the behaviour of a pest control product in soil, water and air, the potential for its uptake by plants, animals or humans, and the potential for bioaccumulation in organisms. Hazard information includes acute and chronic toxicity, carcinogenicity, and reproductive and developmental toxicity.

A product will be registered only if there is sufficient scientific evidence to show that a product does not pose unacceptable health or environmental risks and that it serves a useful purpose. Conditions of registration are specified for every product, including detailed use instructions, and a product can only be used according to label directions. If the proposed use represents an unacceptable risk, either additional conditions or restrictions are imposed so that the risks are reduced and are brought into an acceptable range, or the registration is denied.

An assessment under the PCPA is sufficient to make a determination of whether a substance is toxic as defined in section 64 of the CEPA 99. The listing of the PCPA under Schedule 2 of the CEPA 99 is appropriate and will prevent duplication between the two Acts.

Alternatives

The Minister of Health is mandated under the PCPA to assess pest control products for risks to health and the environment and for value, ie. whether the product makes an effective contribution to pest management. If the PCPA were not listed in the CEPA 99 Schedule 2, there would be a duplication of effort because pest control products that are new substances would be subject to notice and assessment of "toxicity" under the CEPA 99 in addition to being assessed and registered under the PCPA.

Benefits and Costs

The proposed amendment to the CEPA 99 Schedule 2 is not anticipated to incur any additional costs to industry.

The benefits of the proposed amendment to industry, the public and the environment is that clarity is provided and the Government demonstrates that the federal regulatory regime for new substances with respect to environmental and human health assessment is consistently applied, without duplication.

Consultation

Consultation of the relationship of the CEPA 99 to other Acts with respect to the assessment of new substances did not commence with the coming into force of the CEPA 99. However, it does mark the beginning of a more public and open process to explain and analyse how other Acts and Regulations meet the CEPA 99 criteria for exemption.

In 1986, the Environmental Contaminants Act Amendments Consultative Committee (ECAACC) was the stakeholder forum for consultation on designing the program for notification and assessment of "new substances" that would later be incorporated into the CEPA, 1988. In their final report, the Committee recommended that substances regulated under other Acts, including the PCPA, that were subject to environmental and/or health hazard assessment be exempt from the CEPA notification requirements.

The Regulatory Impact Analysis Statement (RIAS) for the New Substances Notification Regulations (NSN Regulations) in Canada Gazette, Part I (May, 1993) and Part II (March, 1994), which implemented the chemicals and polymers portion of the NSN Regulations, indicated that pest control products were exempt from the CEPA notification and assessment on the assumption that the PCPA provided for a comparable assessment to that provided for under the CEPA (at that time CEPA 88 was in force).

Furthermore, it was indicated in Guidelines for the Notification and Testing of New Substances: Chemicals and Polymers (1993) that:

"all components of a pesticide formulation (e.g., active ingredients, emulsifiers, carriers, and solvents) are subject to the PCPA and its Regulations. These substances are exempt for the NSN Regulations regardless of whether the component is imported in a pesticide formulation or imported or manufactured as a single substance, provided that its use in a pesticide formulation is the only use for that substance in Canada.

A constituent used solely to control the growth of unwanted organisms in an imported non-pesticidal formulation does not meet the definition of a "pest control product" and is subject to the New Substances provisions of the CEPA".

In 1997, the New Substances Notification Regulations were amended. As part of the amendment, subsection 3(1), which applies to chemicals, polymers and products of biotechnology, was added to clarify that duplication of regulatory efforts should be avoided when possible, specifically:

3. (1) For greater certainty, these Regulations do not apply in respect of a substance that is manufactured or imported for a use that is regulated under any other Act of Parliament that provides for notice to be given prior to the manufacture, import or sale of the substance and for an assessment of whether it is toxic, including, without limiting the generality of the foregoing, the Feeds Act, Fertilizers Act, Health of Animals Act, Pest Control Products Act and Seeds Act.

These Regulations were pre-published for public comment in the Canada Gazette, Part I (August 17, 1996). Final regulations appeared in the Canada Gazette, Part II, in March 1997, and included the following text in the RIAS for that amendment:

"Following pre-publication, various stakeholders submitted comments to the Department of the Environment. The main issue that emerged from the comments was an interpretation of subsection 3(1) of the amendment, that products regulated under the Seeds Act, Fertilizers Act, Feeds Act, Health of Animals Act, and Pest Control Products Act are exempted from notification under the NSN Regulations. Stakeholders were concerned that this subsection could be misinterpreted as an exemption provision in and of itself and could undermine the legal test for equivalency established by the CEPA. After consideration and discussion with other federal government departments, the Department of the Environment decided to retain this subsection of the Regulations because

(a) subsection 3(1) is only meant to clarify, not to determine an exemption;

(b) the exemption is determined only by paragraph 26(3)(a) of CEPA [1988]; and

(c) the determination of exemption is the sole responsibility of the Minister responsible for the other Act."

The provisions provided in CEPA 99 for listing other Acts in Schedule 2, which is the purpose of this Order, are intended to provide clarity to the application of the exemption clause which will aid in addressing the above concerns.

Compliance and Enforcement

There are no compliance and enforcement actions relevant to the CEPA 99 resulting from the listing of the Pest Control Products Act and Regulations on Schedule 2 of the CEPA 99. Compliance with the Acts that are listed will continue to be conducted by the responsible departments.

Contacts

Cynthia Wright, Director General, Strategic Priorities Directorate, Environment Canada, Place Vincent Massey, 16th Floor, 351 Saint-Joseph Boulevard, Hull, Quebec K1A 0H3, (819) 953-6830; and Arthur Sheffield, Team Leader, Regulatory and Economic Analysis Branch, Policy and Communications, Environment Canada, Les Terrasses de la Chaudière, 22nd Floor, 10 Wellington Street, Hull, Quebec K1A 0H3, (819) 953-1172.

PROPOSED REGULATORY TEXT

Notice is hereby given, pursuant to subsection 332(1) of the Canadian Environmental Protection Act, 1999 (see footnote c), that the Governor in Council proposes, pursuant to paragraph 81(7)(a) of that Act, to make the annexed Order Amending Schedule 2 to the Canadian Environmental Protection Act, 1999, No. 1.

Any person may, within 60 days after the publication of this notice, file with the Minister of the Environment comments with respect to the proposed Order or a notice of objection requesting that a board of review be established under section 333 of that Act and stating the reasons for the objection. All comments and notices must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to the Director General of Strategic Priorities, Environmental Protection Service, Department of the Environment, Ottawa, Ontario K1A 0H3.

A person who provides information to the Minister of the Environment may submit with the information a request for confidentiality under section 313 of that Act.

Ottawa, January 30, 2001

MARC O'SULLIVAN
Assistant Clerk of the Privy Council

ORDER AMENDING SCHEDULE 2 TO THE CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999, NO. 1

AMENDMENT

1. Schedule 2 to the Canadian Environmental Protection Act, 1999
(see footnote 2) is amended by adding the following under the heading "ACTS AND REGULATIONS":

Item	Column 1 Acts	Column 2 Regulations
1.	Pest Control Products Act	Pest Control Products Regulations

COMING INTO FORCE

2. This Order comes into force on the day on which it is registered.

[6-1-o]

Order Amending Schedule 2 to the Canadian Environmental Protection Act, 1999, No. 2

Statutory Authority

Canadian Environmental Protection Act, 1999

Sponsoring Department

Department of the Environment

REGULATORY IMPACT ANALYSIS STATEMENT

Description

This Regulatory Impact Analysis Statement (RIAS) describes the listing of the Fertilizers Act in Schedule 2 of the Canadian Environmental Protection Act, 1999 (CEPA 99). Listing the Fertilizers Act in Schedule 2 of the CEPA 99 exempts fertilizers and supplements that are new chemicals and polymers under the Fertilizers Act from additional notification and assessment for toxicity under the CEPA 99.

The CEPA 99 allows for substances regulated for uses under other Acts of Parliament and Regulations to be exempt from the CEPA 99 notification and toxicity assessment requirements if those Acts and Regulations provide for notification and assessment of "toxicity." More specifically, the other Acts and Regulations must provide for "notice to be given before manufacture, import or sale of the substance and for an assessment of whether it is toxic or capable of becoming toxic" (subsections 81(6) and 106(6) CEPA 99). The CEPA 99 differs from its predecessor (CEPA, 1988) in subsections 81(7) and 106(7). These subsections grant the Governor in Council with exclusive responsibility to determine whether the CEPA 99 criteria (subsections 81(6) and 106(6)) are met. If the other Act and Regulation meet these criteria to the satisfaction of the Governor in Council, they can be added to Schedule 2 or 4 of the Act. The listing of an Act and Regulation in Schedule 2 or 4 of the CEPA 99 is considered proof that the criteria have been met.

The listing of the Fertilizers Act under the CEPA 99 Schedule 2 will avoid a potential regulatory redundancy since both the CEPA 99 and the Fertilizers Act carry out assessments of new substances for risks to human and environmental health. The listing of the Fertilizers Act under the CEPA 99 Schedule 2 means the proponents of the fertilizers sector will continue to interact with the Canadian Food Inspection Agency (CFIA) and will not require a second assessment by Environment Canada and Health Canada. The following discussion shows that environmental and health protection dimensions of the Fertilizers Act are consistent with the CEPA 99 criteria in subsection 81(6).

Notification Requirements under the CEPA 99 and the Fertilizers Act

The New Substances Notification Regulations of the CEPA are an integral part of the federal Government's national pollution prevention strategy. The notification regime serves to ensure that no new substances are introduced into the Canadian environment before an assessment of whether they are potentially toxic has been completed, and any appropriate or required control measures have been taken.

The CEPA 99 approach to the control of new substances is both proactive and preventative, employing a pre-import or pre-manufacture notification and assessment process that considers the manufacture, use and disposal of the substance. When this process identifies a new substance that may pose a risk to health or the environment, the Act empowers the Minister of the Environment to intervene prior to or during the earliest stages of its introduction into Canada. This ability to act early makes the new substances program an essential component of the federal Government's approach to the management of toxic substances.

Part I (Chemicals) and Part II (Polymers) of the New Substances Notification Regulations implement sections 80 to 89 of the CEPA 99. The Regulations require notification and assessment of new substances prior to their manufacture in Canada or import into Canada in order to determine whether the substance when entering into the environment would be "toxic" or be capable of becoming "toxic". This assessment considers all stages in the development of the substance from manufacture/import to disposal. This approach is consistent with the Government of Canada's Toxic Substances Management Policy (TSMP).

Under the CEPA 99, a "substance" means any distinguishable kind of organic or inorganic matter, whether animate or inanimate. The definition of "fertilizer" in the Fertilizers Act includes:

"any substance or mixture of substances containing nitrogen, phosphorus, potassium or other plant food, manufactured, sold or represented for use as a plant nutrient,"

while a supplement is defined as:

"any substance or mixture of substances, other than a fertilizer, manufactured, sold or represented for use in the improvement of the physical condition of soils or to aid plant growth or crop yields."

The Fertilizers Act definitions of fertilizer and supplement encompass the active ingredients, formulants and contaminants that make up a product. Hence, substances are covered by both the CEPA 99 and the Fertilizers Act.

Under the Fertilizers Act, pre-import or pre-sale notification is imposed by means of the requirement that only those fertilizers or supplements which have been registered as prescribed, conform to prescribed standards and are packaged and labelled as prescribed, are permitted to be imported into or sold in Canada. A person wishing to obtain approval to import or sell a fertilizer or supplement in Canada must submit, to the Minister of Agriculture and Agri-Food, an application for registration or for an authorization to release the product. An application for release or for registration must include the information required to permit the safety and, as appropriate, efficacy of the fertilizer or supplement to be assessed, and its acceptability to be determined, in accordance with scientific methods and standards. The Act and Regulations apply to all fertilizers and supplements that are imported into or sold in Canada, including novel supplements (a subset of supplements that includes products of biotechnology with novel traits).

Risk Assessment under the CEPA 99 and the Fertilizers Act

The CEPA 99 defines "toxic" as follows:

"64. For the purposes of this Part and Part 6, except where the expression "inherently toxic" appears, a substance is toxic if it is entering or may enter the environment in a quantity or concentration or under conditions that

(a) have or may have an immediate or long-term harmful effect on the environment or its biological diversity;

(b) constitute or may constitute a danger to the environment on which life depends; or

(c) constitute or may constitute a danger in Canada to human life or health."

The New Substances assessment conducted under the CEPA 99 takes into account:

— the identity of the substance,

— manufacture, importation, use and disposal information,

— environmental fate information, including data to determine persistence and bioaccumulation,

— ecological effects information, and

— human health effects information.

The prohibitions and information requirements prescribed by the Fertilizers Act and Regulations in an assessment routinely conducted by the Fertilizers Act for a fertilizer are specifically tailored to account for fertilizer and supplement properties and covers the point of import, and sale to the point of disposal. Assessments under the Fertilizers Act and Regulations are designed to determine risks to plant, animal and human health and the environment posed by fertilizers and supplements. Proponents are required to generate a comprehensive set of information on the use patterns and potential hazards of a fertilizer or supplement. This enables the Canadian Food Inspection Agency to conduct an assessment of the hazards, as well as various routes of exposure (including ingestion, skin absorption, and inhalation) for all potentially exposed population sub-groups. The risks associated with the use of the product are assessed to determine if there are adequate margins of safety.

Evaluation of extensive identification, toxicity and environmental fate data makes it possible to determine the behaviour of a fertilizer or supplement in soil, water and air; the potential for its uptake by plants, animals and humans; and the potential for bioaccumulation in organisms. Data requirements include analysis of physical and chemical properties to indicate the mobility of the fertilizer or supplement and/or its components or breakdown products in the environment; its metabolic and environmental fate, and its propensity to bioaccumulate or persist.

A fertilizer or supplement will be accepted, registered or authorized for release only if there is sufficient scientific evidence to show that it does not pose unacceptable risk and, as appropriate, that it is efficacious. Conditions of acceptance or release are specified for every product. If the proposed use represents an unacceptable risk, either additional conditions or restrictions are imposed so that the risks are reduced and are brought into an acceptable range, or the registration or authorization is denied.

An assessment under the Fertilizers Act is sufficient to make a determination of whether a substance is toxic as defined in section 64 of the CEPA 99. The listing of the Fertilizers Act under Schedule 2 of the CEPA 99 is appropriate and will prevent duplication between the two Acts.

Alternatives

The Minister of Agriculture and Agri-Food, under the Fertilizers Act, has the responsibility to assess fertilizers and supplements to verify that they do not pose unacceptable risk to human, plant and animal health, environmental safety, that they are efficacious and that they are properly labelled. If the Fertilizers Act were not listed in the CEPA 99 Schedule 2, there would be a duplication of effort because fertilizers and supplements that are new substances would be subject to notice and assessment of "toxicity" under the CEPA 99 in addition to being assessed and registered under the Fertilizers Act. Therefore, it is proposed that the Fertilizers Act be listed under Schedule 2 of the CEPA 99.

Benefits and Costs

The proposed amendment to the CEPA 99 Schedule 2 is not anticipated to incur any additional costs to industry.

The benefits of the proposed amendment to industry, the public and the environment is that clarity is provided and the Government demonstrates that the federal regulatory regime for new substances with respect to environmental and human health assessment is consistently applied, without duplication.

Consultation

Consultation of the relationship of the CEPA 99 to other Acts with respect to the assessment of new substances did not commence with the coming into force of the CEPA 99. However, it does mark the beginning of a more public and open process to explain and analyse how other Acts and Regulations meet the CEPA 99 criteria for exemption.

In 1986, the Environmental Contaminants Act Amendments Consultative Committee (ECAACC) was the stakeholder forum for consultation on designing the program for notification and assessment of "new substances" that would later be incorporated into the CEPA, 1988. In their final report, the Committee recommended that substances regulated under other Acts that were subject to environmental and/or health hazard assessment be exempt from the CEPA notification requirements.

The Regulatory Impact Analysis Statement (RIAS) for the New Substances Notification Regulations (NSN Regulations) in the Canada Gazette, Part I (May, 1993) and Part II (March, 1994), which implemented the chemicals and polymers portion of the NSN Regulations, indicated that fertilizers and supplements were exempt from the CEPA 1988 notification and assessment on the basis that the Fertilizers Act provided for a comparable assessment to that provided for under the CEPA (at that time CEPA, 88 was in force).

Furthermore, it was indicated in Guidelines for the Notification and Testing of New Substances: Chemicals and Polymers (1993) that:

"substances imported into, sold, offered, exposed or possessed for sale or distributed in Canada and represented as fertilizers or supplements to promote plant growth are subject to the registration provisions of the Fertilizers Act and its Regulations."

In 1997, the New Substances Notification Regulations were amended. As part of the amendment, subsection 3(1), which applies to chemicals, polymers and products of biotechnology, was added to clarify that duplication of regulatory efforts should be avoided when possible, specifically:

3. (1) For greater certainty, these Regulations do not apply in respect of a substance that is manufactured or imported for a use that is regulated under any other Act of Parliament that provides for notice to be given prior to the manufacture, import or sale of the substance and for an assessment of whether it is toxic, including, without limiting the generality of the foregoing, the Feeds Act, Fertilizers Act, Health of Animals Act, Pest Control Products Act and Seeds Act.

These Regulations were pre-published for public comment in the Canada Gazette, Part I (August 17, 1996). Final regulations appeared in the Canada Gazette, Part II, in March 1997, and included the following text in the RIAS for that amendment:

"Following pre-publication, various stakeholders submitted comments to the Department of the Environment. The main issue that emerged from the comments was an interpretation of subsection 3(1) of the amendment, that products regulated under the Seeds Act, Fertilizers Act, Feeds Act, Health of Animals Act, and Pest Control Products Act are exempted from notification under the NSN Regulations. Stakeholders were concerned that this subsection could be misinterpreted as an exemption provision in and of itself and could undermine the legal test for equivalency established by the CEPA. After consideration and discussion with other federal government departments, the Department of the Environment decided to retain this subsection of the Regulations because

(a) subsection 3(1) is only meant to clarify, not to determine an exemption;

(b) the exemption is determined only by paragraph 26(3)(a) of CEPA [1988]; and

(c) the determination of exemption is the sole responsibility of the Minister responsible for the other Act."

The provisions provided in the CEPA 99 for listing other Acts in Schedule 2, which is the purpose of this Order, are intended to provide clarity to the application of the exemption clause which will aid in addressing the above concerns.

Compliance and Enforcement

There are no compliance and enforcement actions relevant to the CEPA 99 resulting from the listing of the Fertilizers Act and Regulations on Schedule 2 of the CEPA 99. Compliance with the Acts that are listed will continue to be assessed by the responsible departments.

Contacts

Cynthia Wright, Director General, Strategic Priorities Directorate, Environment Canada, Place Vincent Massey, 16th Floor, 351 Saint-Joseph Boulevard, Hull, Quebec K1A 0H3, (819) 953-6830; and Arthur Sheffield, Team Leader, Regulatory and Economic Analysis Branch, Policy and Communications, Environment Canada, Les Terrasses de la Chaudière, 22nd Floor, 10 Wellington Street, Hull, Quebec K1A 0H3, (819) 953-1172.

PROPOSED REGULATORY TEXT

Notice is hereby given, pursuant to subsection 332(1) of the Canadian Environmental Protection Act, 1999 (see footnote d), that the Governor in Council proposes, pursuant to paragraph 81(7)(a) of that Act, to make the annexed Order Amending Schedule 2 to the Canadian Environmental Protection Act, 1999, No. 2.

Any person may, within 60 days after the publication of this notice, file with the Minister of the Environment comments with respect to the proposed Order or a notice of objection requesting that a board of review be established under section 333 of that Act and stating the reasons for the objection. All comments and notices must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to the Director General of Strategic Priorities, Environmental Protection Service, Department of the Environment, Ottawa, Ontario K1A 0H3.

A person who provides information to the Minister of the Environment may submit with the information a request for confidentiality under section 313 of that Act.

Ottawa, January 30, 2001

MARC O'SULLIVAN
Assistant Clerk of the Privy Council

ORDER AMENDING SCHEDULE 2 TO THE CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999, NO. 2

AMENDMENT

1. Schedule 2 to the Canadian Environmental Protection Act, 1999
(see footnote 3) is amended by adding the following after item 1:

Item	Column 1 Acts	Column 2 Regulations
2.	Fertilizers Act	Fertilizers Regulations

COMING INTO FORCE

2. This Order comes into force on the day on which it is registered.

[6-1-o]

Order Amending Schedule 2 to the Canadian Environmental Protection Act, 1999, No. 3

Statutory Authority

Canadian Environmental Protection Act, 1999

Sponsoring Department

Department of the Environment

REGULATORY IMPACT ANALYSIS STATEMENT

Description

This Regulatory Impact Analysis Statement (RIAS) describes the listing of the Feeds Act (FA) in Schedule 2 of the Canadian Environmental Protection Act, 1999 (CEPA 99). Listing the FA in Schedule 2 of the CEPA 99 exempts feeds that are new chemicals and polymers regulated under the FA from additional notification and assessment for toxicity under the CEPA 99.

The CEPA 99, allows for substances regulated for uses under other Acts of Parliament and Regulations to be exempt from the CEPA 99 notification and toxicity assessment requirements if those Acts and Regulations provide for notification and assessment of "toxicity." More specifically, the other Acts and Regulations must provide for "notice to be given before manufacture, import or sale of the substance and for an assessment of whether it is toxic or capable of becoming toxic" (subsections 81(6) and 106(6) CEPA 99). The CEPA 99 differs from its predecessor (CEPA, 1988) in subsections 81(7) and 106(7). These subsections grant the Governor in Council with exclusive responsibility to determine whether the CEPA 99 criteria [subsections 81(6) and 106(6)] are met. If the other Act and Regulations meet these criteria to the satisfaction of the Governors in Council, they can be added to Schedule 2 or 4 of the Act. The listing of an Act and Regulations in Schedule 2 or 4 of CEPA 99 is considered proof that the criteria have been met.

The listing of the Feeds Act (FA) under the CEPA 99 Schedule 2 will avoid a potential regulatory redundancy since both the CEPA 99 and the FA carry out assessments of new substances for risks to animals, human and environmental health. The listing of the FA under the CEPA 99 Schedule 2 means the proponents of livestock feed will continue to interact with the Feed Section of the Canadian Food Inspection Agency (CFIA) and will not require a second assessment by Environment Canada and Health Canada. The following discussion shows that environmental and health protection dimensions of the FA are consistent with the CEPA 99 criteria in subsection 81(6).

Notification Requirements under the CEPA 99 and the FA

The New Substances Notification Regulations of the CEPA are an integral part of the federal Government's national pollution prevention strategy. The notification regime serves to ensure that no new substances are introduced into the Canadian environment before an assessment of whether they are potentially toxic has been completed, and any appropriate or required control measures have been taken.

The CEPA 99 approach to the control of new substances is both proactive and preventative, employing a pre-import or pre-manufacture notification and assessment process that considers the manufacture, use and disposal of the substance. When this process identifies a new substance that may pose a risk to health or the environment, the Act empowers the Minister of the Environment to intervene prior to or during the earliest stages of its introduction into Canada. This ability to act early makes the new substances program an essential component of the federal Government's approach to the management of toxic substances.

Part I (Chemicals) and Part II (Polymers) of the New Substances Notification Regulations implement sections 80 to 89 of the CEPA 99. The Regulations require notification and assessment of new substances prior to their manufacture in Canada or import into Canada in order to determine whether the substance when entering into the environment would be "toxic" or be capable of becoming "toxic." This assessment considers all stages in the development of the substance from manufacture/import to disposal. This approach is consistent with the Government of Canada's Toxic Substances Management Policy (TSMP).

Under the CEPA 99, a "substance" means any distinguishable kind of organic or inorganic matter, whether animate or inanimate. The definition of "feed" in the FA includes:

"any substance or mixture of substances containing amino acids, anti-oxidants, carbohydrates, condiments, enzymes, fats, minerals, non-protein nitrogen products, proteins or vitamins, or pelletizing, colouring, foaming or flavouring agents and any other substance manufactured, sold or represented for use

(a) for consumption by livestock,

(b) for providing the nutritional requirements of livestock, or

(c) for the purpose of preventing or correcting nutritional disorders of livestock."

Prohibitions in section 3 of the FA apply to the manufacture, sale or importation of feeds. Hence, substances are covered by both the CEPA 99 and the FA.

Under the FA, pre-import, manufacture or sale notification is imposed by means of the requirement that only those feeds which have been registered as prescribed, conform to prescribed standards and are packaged and labelled as prescribed, are permitted to be imported, manufactured or sold in Canada. A person wishing to obtain approval to import, manufacture or sell a feed in Canada must submit to the Minister of Agriculture and Agri-Food an application for registration or for an exemption to registration. The application must include the information required to permit the safety and efficacy of the product to be assessed, and its acceptability to be determined, in accordance with scientific methods and standards.

Risk Assessment under the CEPA 99 and the FA

The CEPA 99 defines "toxic" as follows:

"64. For the purposes of this Part and Part 6, except where the expression "inherently toxic" appears, a substance is toxic if it is entering or may enter the environment in a quantity or concentration or under conditions that

(a) have or may have an immediate or long-term harmful effect on the environment or its biological diversity;

(b) constitute or may constitute a danger to the environment on which life depends; or

(c) constitute or may constitute a danger in Canada to human life or health."

The new substances assessment conducted under the CEPA 99 takes into account:

— the identity of the substance;

— manufacture, importation, use and disposal information;

— environmental fate information, including data to determine persistence and bioaccumulation;

— ecological effects information; and

— human health effects information.

The prohibitions and information requirements prescribed by the FA and Regulations in an assessment routinely conducted by the FA for a feed are specifically tailored to account for feed properties associated with a feed and cover from the point of import, manufacture and sale to the point of disposal. Feed are assessed for risks to human and animal health and the environment and assessments are designed to generate a comprehensive set of information on potential hazards of a feed, to provide for the assessment through various routes of exposure. This information provides for the assessment of exposure through various routes (including ingestion, skin absorption, and inhalation) for all potentially exposed population sub-groups, and to assess the risks to determine if there are adequate margins of safety.

Evaluation of extensive identification, toxicity and environmental fate data makes it possible to determine the behaviour of a feed in soil, water and air, the potential for its uptake by animals and humans, and the potential for bioaccumulation in organisms. Data requirements include analysis of physical and chemical properties to indicate the mobility of the feed and/or its ingredients in the environment; its metabolic and environmental fate; and its propensity to bioaccumulate, persist, or degrade.

A novel feed will be approved or registered only if there is sufficient scientific evidence to show that the novel feed does not pose unacceptable health or environmental risks and that it is efficacious. Conditions of authorization or registration are specified for every product, including detailed use instructions, and a product can only be used according to label directions. If the proposed use represents an unacceptable risk, either additional conditions or restrictions are imposed so that the risks are reduced and are brought into an acceptable range, or the approval or registration is denied.

An assessment under the FA is sufficient to make a determination of whether a substance is toxic as defined in section 64 of the CEPA 99. The listing of the FA under Schedule 2 of the CEPA 99 is appropriate and will maintain a good working order between the two Acts.

Alternatives

The Minister of Agriculture and Agri-Food under the Feeds Act has the responsibility for assessing the release of feeds for environmental safety including risks to animal and human health. If the FA were not listed in the CEPA 99 Schedule 2, there would be a duplication of effort because feeds that are new substances would be subject to notice and assessment of "toxicity" under CEPA 99 in addition to being assessed and registered under the FA. Therefore, it is proposed that the Feeds Act be listed under Schedule 2 of the CEPA 99.

Benefits and Costs

The proposed amendment to the CEPA 99 Schedule 2 is not anticipated to incur any additional costs to industry.

The benefits of the proposed amendment to industry, the public and the environment is that clarity is provided and the Government demonstrates that the federal regulatory regime for new substances with respect to environmental and human health assessment is consistently applied, without duplication.

Consultation

Consultation of the relationship of the CEPA 99 to other Acts with respect to the assessment of new substances did not commence with the coming into force of the CEPA 99. However, it does mark the beginning of a more public and open process to explain and analyse how other Acts and Regulations meet the CEPA 99 criteria for exemption.

In 1986, the Environmental Contaminants Act Amendments Consultative Committee (ECAACC) was the stakeholder forum for consultation on designing the program for notification and assessment of "new substances" that would later be incorporated into the CEPA, 1988. In their final report, the Committee recommended that substances regulated under other Acts that were subject to environmental and/or health hazard assessment be exempt from the CEPA notification requirements.

The Regulatory Impact Analysis Statement (RIAS) for the New Substances Notification Regulations (NSN Regulations) in Canada Gazette, Part I (May, 1993) and Part II (March, 1994), which implemented the chemicals and polymers portion of the NSN Regulations, indicated that feeds were exempt from the CEPA notification and assessment on the basis that the FA provided for a comparable assessment to that provided for under the CEPA (at that time CEPA, 1988 was in force).

Furthermore, it was indicated in Guidelines for the Notification and Testing of New Substances: Chemicals and Polymers (1993) that:

"Substances imported into, manufactured, sold, offered, exposed or possessed for sale, or distributed in Canada and represented as feeds for consumption by livestock, for providing the nutritional requirements of livestock, and for preventing or correcting nutritional disorders in livestock are subject to the registration provisions of the Feeds Act and its Regulations."

In 1997, the New Substance Notification Regulations were amended. As part of the amendment, subsection 3(1), which applies to chemicals, polymers and products of biotechnology, was added to clarify that duplication of regulatory efforts should be avoided when possible, specifically:

3. (1) For greater certainty, these Regulations do not apply in respect of a substance that is manufactured or imported for a use that is regulated under any other Act of Parliament that provides for notice to be given prior to the manufacture, import or sale of the substance and for an assessment of whether it is toxic, including, without limiting the generality of the foregoing, the Feeds Act, Fertilizers Act, Health of Animals Act, Pest Control Products Act and Seeds Act.

These Regulations were pre-published for public comment in the Canada Gazette, Part I (August 17, 1996). Final regulations appeared in Canada Gazette, Part II, in March 1997, and included the following text in the RIAS for that amendment:

"Following pre-publication, various stakeholders submitted comments to the Department of the Environment. The main issue that emerged from the comments was an interpretation of subsection 3(1) of the amendment, that products regulated under the Seeds Act, Fertilizers Act, Feeds Act, Health of Animals Act, and Pest Control Products Act are exempted from notification under the NSN Regulations. Stakeholders were concerned that this subsection could be misinterpreted as an exemption provision in and of itself and could undermine the legal test for equivalency established by the CEPA. After consideration and discussion with other federal government departments, the Department of the Environment decided to retain this subsection of the Regulations because

(a) subsection 3(1) is only meant to clarify, not to determine an exemption;

(b) the exemption is determined only by paragraph 26(3)(a) of CEPA [1988]; and

(c) the determination of exemption is the sole responsibility of the Minister responsible for the other Act."

The provisions provided in CEPA 99 for listing other Acts in Schedule 2, which is the purpose of this Order, are intended to provide clarity to the application of the exemption clause which will aid in addressing the above concerns.

Compliance and Enforcement

There are no compliance and enforcement actions relevant to the CEPA 99 resulting from listing of the Feeds Act and Regulations on Schedule 2 of the CEPA 99. Compliance with the Acts that are listed will continue to be conducted by the responsible departments.

Contacts

Cynthia Wright, Director General, Strategic Priorities Directorate, Environment Canada, Place Vincent Massey, 16th Floor, 351 Saint-Joseph Boulevard, Hull, Quebec K1A 0H3, (819) 953-6830; and Arthur Sheffield, Team Leader, Regulatory and Economic Analysis Branch, Policy and Communications, Environment Canada, Les Terrasses de la Chaudière, 22nd Floor, 10 Wellington Street, Hull, Quebec K1A 0H3, (819) 953-1172.

PROPOSED REGULATORY TEXT

Notice is hereby given, pursuant to subsection 332(1) of the Canadian Environmental Protection Act, 1999 (see footnote e), that the Governor in Council proposes, pursuant to paragraph 81(7)(a) of that Act, to make the annexed Order Amending Schedule 2 to the Canadian Environmental Protection Act, 1999, No. 3.

Any person may, within 60 days after the publication of this notice, file with the Minister of the Environment comments with respect to the proposed Order or a notice of objection requesting that a board of review be established under section 333 of that Act and stating the reasons for the objection. All comments and notices must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to the Director General of Strategic Priorities, Environmental Protection Service, Department of the Environment, Ottawa, Ontario K1A 0H3.

A person who provides information to the Minister of the Environment may submit with the information a request for confidentiality under section 313 of that Act.

Ottawa, January 30, 2001

MARC O'SULLIVAN
Assistant Clerk of the Privy Council

ORDER AMENDING SCHEDULE 2 TO THE CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999, NO. 3

AMENDMENT

1. Schedule 2 to the Canadian Environmental Protection Act, 1999
(see footnote 4) is amended by adding the following after item 2:

Item	Column 1 Acts	Column 2 Regulations
3.	Feeds Act	Feeds Regulations, 1983

COMING INTO FORCE

2. This Order comes into force on the day on which it is registered.

[6-1-o]

Footnote a

S.C. 1998, c. 19, s. 222

Footnote b

R.S., c. 1 (5th Supp.)

Footnote 1

C.R.C., c. 945

Footnote c

S.C. 1999, c. 33

Footnote 2

S.C. 1999, c. 33

Footnote d

S.C. 1999. c. 33

Footnote 3

S.C. 1999, c. 33

Footnote e

S.C. 1999, c. 33

Footnote 4

S.C. 1999, c. 33

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