Vol. 136, No. 13 — March 30, 2002

On-Road Vehicle and Engine Emission Regulations

Statutory Authority

Canadian Environmental Protection Act, 1999

Sponsoring Department

Department of the Environment

REGULATORY IMPACT ANALYSIS STATEMENT

Description

The proposed On-Road Vehicle and Engine Emission Regulations (hereinafter referred to as "the proposed Regulations") introduce more stringent national emission standards for on-road vehicles and engines and a new regulatory framework under the Canadian Environmental Protection Act, 1999 (CEPA, 1999). The proposed Regulations for controlling emissions from on-road vehicles and engines will come into effect on September 1, 2003.

Since 1971, progressively more stringent emission standards have been promulgated for on-road vehicles under the Motor Vehicle Safety Act, which is administered by Transport Canada. On March 31, 2000, the legislative authority for controlling on-road vehicle emissions was transferred from the Motor Vehicle Safety Act to Environment Canada under the provisions of Part 7, Division 5, of CEPA, 1999. The proposed Regulations will therefore replace the emission Regulations previously adopted under the Motor Vehicle Safety Act.

The proposed Regulations continue the past approach of aligning with the federal emission standards of the U.S. Environmental Protection Agency (EPA), which are generally recognized as the most stringent national emission standards in the world. This approach provides Canadians with significant emission reductions from on-road vehicles and engines at a low additional cost. For most vehicle classes and on a per-vehicle basis, the targeted standards represent an average reduction in the allowable levels of smog-forming emissions of about 90 percent relative to current regulated limits.

The combustion of fuels to power vehicles and engines contributes significantly to air pollution, which has major adverse impacts on the environment and on the health of Canadians. The proposed Regulations will reduce emissions of volatile organic compounds (VOCs), carbon monoxide (CO), oxides of nitrogen (NOx), particulate matter (PM) and of certain air pollutants that have been listed as "toxic substances" in Schedule 1 to CEPA, 1999 (i.e., benzene, 1,3-butadiene, acetaldehyde, acrolein and respirable particulate matter less than or equal to 10 micrometers or "PM₁₀") from on-road vehicles and engines and will thereby protect our environment and health. The proposed Regulations will also reduce emission of formaldehyde, a substance proposed for addition to that Schedule.

The proposed Regulations apply to persons in the business of manufacturing, distributing or importing on-road vehicles and engines for sale in Canada. They also set requirements for on-road vehicles and engines being imported by individuals.

Contribution of On-Road Vehicles to Air Pollution in Canada

The use of on-road vehicles is a large contributor of various air pollutants, including VOCs, NOx, PM, CO and sulphur oxides (SOx), which are collectively referred to as Criteria Air Contaminants (CACs). Table 1 summarizes the mass and percentage contribution of on-road vehicles to the 1995 national emissions inventory of those pollutants.

Table 1 — On-Road Vehicle Contribution of Criteria Air Contaminants (1995)

Criteria Air Contaminants	Mass Contribution (kilotonnes)	Percentage Contribution to National Inventory 1
NOx	787	35.0
VOCs	564	21.4
CO	5 427	54.1
PM	42	4.3
SOx	51	1.9

¹ Relative to all sources excluding open sources (e.g., prescribed burning, dust from paved/unpaved roads).

As the table indicates, on-road vehicles are major contributors of NOx and VOC emissions into the ambient air. Both NOx and VOCs are involved in a series of complex reactions that result in the formation of ground-level ozone, which is a respiratory irritant and one of the major components of smog. Smog is a noxious mixture of air pollutants, consisting primarily of ground-level ozone and PM, that can often be seen as a haze over urban centres. While on-road vehicles remain major contributors of CO on a percentage basis (i.e., 54 percent), their overall emissions have been considerably reduced as a result of progressively more stringent emission standards such that ambient concentrations of CO are generally well below applicable air quality objectives.

On-road vehicles also emit substances that have been determined to be toxic under CEPA, 1999. Respirable particulate matter less than or equal to 10 micrometers (PM₁₀), benzene, 1,3-butadiene, acetaldehyde and acrolein are on CEPA's List of Toxic Substances (i.e., Schedule 1), and it has been proposed that formaldehyde be added to the list. These compounds, with the exception of PM₁₀, are species of hydrocarbons that are emitted as a result of incomplete combustion and on-road vehicles have been identified as large contributors to their release into the ambient air. Formaldehyde, acetaldehyde and 1,3-butadiene, in addition to their direct harmful effects on human health, play a role along with other reactive VOCs in the formation of ground-level ozone.

Policy Framework

Health studies estimate that air pollution contributes to more than 5 000 premature deaths in Canada each year, as well as to numerous health-related problems, including cardio-vascular ailments and respiratory distress, which result in increased emergency hospital visits and hospital admissions for Canadians. The effects of vehicle emissions and its contribution to smog is of particular concern in urban areas, since these areas have the highest population of both vehicles and persons exposed to air pollution.

In recent years, in co-operation with provincial governments, the federal government has been putting in place a comprehensive program to reduce emissions from vehicle and engines. Federal actions to date include the current vehicle emission standards, the existing Diesel Fuel Regulations, benzene in gasoline and sulphur in gasoline regulations. Provincial initiatives include: gasoline and diesel fuel Regulations in British Columbia; requirements to reduce Reid vapour pressure during summer months in Ontario, Quebec and the Lower Fraser Mainland (British Columbia); and inspection and maintenance programs in areas of British Columbia and Ontario. While these actions have resulted in significant improvements to the emission performance of on-road vehicles, there is a need to continue taking strong actions to provide a healthier environment.

In the spring of 2000, the Minister of the Environment announced the federal government's integrated clean air strategy and reaffirmed the strategy, on February 19, 2001, by announcing that the Government will invest $120 million in new measures to accelerate action on clean air. A key component of this strategy is the Federal Agenda on Cleaner Vehicles, Engines and Fuels, which was published by the Minister on the February 17, 2001, in the Canada Gazette, Part I. The Agenda sets out a series of measures and actions to be developed and implemented over the next decade to reduce emissions from a broad range of vehicles and engines. The proposed Regulations are an important element of the agenda.

The proposed Regulations will fulfill one of Canada's commitments under the Ozone Annex to the 1991 Canada-United States Air Quality Agreement (December 7, 2000) to "develop and implement... emission regulations under the Canadian Environmental Protection Act, 1999 for new on-road vehicles and engines to align with future U.S. national standards beginning with the 2004 model year, including the U.S. Tier 2 program for new light-duty vehicles, light-duty trucks and medium-duty passenger vehicles and Phase 1 and Phase 2 programs for new heavy-duty vehicles and engines." Actions under the Ozone Annex will reduce the transboundary flow of ground-level ozone and its precursors (NOx and VOCs) between the United States and Canada and result in health and environmental benefits in both countries.

In June 2000, the Government of Canada, the provinces and the territories, except Quebec, adopted the Canada-Wide Standards for Particulate Matter and Ozone. The Canada-Wide Standards set ambient air quality concentration targets for ground-level ozone and fine particulate matter for the year 2010. The proposed Regulations will contribute to meeting the established targets.

The Federal Agenda on Cleaner Vehicles, Engines and Fuels recognizes that vehicles, engines and fuels must be considered as an integrated system in order to effectively reduce emissions. Low levels of sulphur in both gasoline and diesel fuels are necessary to ensure the effective operation of advanced emission control technologies that will be used to meet the more stringent exhaust emission standards in the proposed Regulations. The Sulphur in Gasoline Regulations, published in the Canada Gazette, Part II, on June 23, 1999, require sulphur levels in Canadian gasoline to average no more than 30 parts per million (p.p.m.) with a maximum of 80 p.p.m. beginning in 2005. The proposed Sulphur in Diesel Fuel Regulations published in the Canada Gazette, Part I, on December 22, 2001, will require that sulphur levels in Canadian on-road diesel fuel be reduced to a maximum of 15 p.p.m. by June 2006. Those Regulations will ensure that sulphur levels in Canadian on-road fuels will be consistent with future U.S. levels.

The Canadian Motor Vehicle Industry

The automotive industry is a key sector of the Canadian economy. It is the biggest contributor to Canada's manufacturing Gross Domestic Product (GDP) and the largest manufacturing employer. In 1999, it accounted for 15 percent of Canadian manufacturing GDP and directly employed 178 000 people. The industry produces light vehicles (including cars, vans, sport utility vehicles and pickup trucks); heavy-duty vehicles (including trucks, transit buses, school buses, intercity buses and military vehicles); and a wide range of parts and systems used in the assembly of such vehicles.

The Canadian light vehicle assembly sector has 14 high-volume assembly plants and in 1999 produced three million vehicles or 19.7 percent of total NAFTA production of such vehicles. It has shipments of $70.3 billion annually (1999) and exports about 90 percent of production. The light vehicle systems and parts manufacturing industry has more than 550 establishments with shipments of $33.3 billion and exports about 70 percent of production.

The heavy-duty vehicle sector has 13 relatively low-volume assembly plants producing buses, commercial trucks and truck conversions and produces 61 000 vehicles annually (1999). It has shipments of $2.9 billion annually (not including bus shipments) and exports 80 to 90 percent of its production. There are no plants in Canada manufacturing heavy-duty engines. All engines for heavy-duty vehicles are imported and the majority are from the United States.

Taken as a whole, including manufacturing plants, vehicle dealerships and aftermarket retailing, the sector employs about 500 000 Canadians. The industry is also the largest in Canada in terms of investment, with new capital expenditures of $3.2 billion in 1999.

The Canadian automotive manufacturing sector is part of an integrated North American industry, nurtured by the 1965 Canada-United States Auto Pact and now under NAFTA. In 1996, 90 percent of Canadian automotive imports came from either the United States or Mexico while 97 percent of Canadian exports were directed to those two countries. Canada's automotive-related trade has steadily increased largely as a result of this continued integration.

The industry is globally competitive and in 1999 Canada ranked fourth in world vehicle production by volume. Canada maintains an overall automotive trade surplus with the rest of the world. In 1999, Canada exported $92.8 billion to the United States, the European Union, Mexico and Japan, and imported $72.1 billion from the same countries. Exports to other countries are increasing.

There are approximately 30 000 new on-road motorcycles sold annually in Canada, all manufactured in other countries. Some are manufactured in the United States, and large numbers are imported from Japan and Europe. Most motorcycle models are marketed in both Canada and the United States.

Canadian automotive production plays a major role in North American production. The Canadian vehicle market is similar to but separate from that of the United States and represents 8 percent of new vehicle sales in the two markets.

Harmonization

The EPA has led the world in establishing stringent national programs to control emissions from on-road vehicles and engines. Since 1988, Canada has aligned its national vehicle emission requirements with the EPA. This has been accomplished through a combination of regulations and memoranda of understanding with vehicle and engine manufacturers. Since Canadian/U.S. automotive manufacturing is highly integrated, harmonized vehicle emission standards have provided Canadians with major improvements in emission control at a low additional cost.

The emission certification process for on-road vehicles and engines is complex and requires significant resources on the part of manufacturers and the Government. Aligning Canada's emission standards and test procedures with those of the United States allows Canada to benefit from the EPA's emission certification program and results in significant cost savings for Canadian companies, the federal government and Canadian consumers.

In 1996, Industry Canada prepared a report entitled "The Socio-Economic Impacts of Adopting Tighter Motor Vehicle Emission Standards and Fuel Requirements" for the Canadian Council of Ministers of the Environment's Task Force on Cleaner Vehicles and Fuels. This report states:

"It is extremely important to understand the relationship between a "harmonization with the U.S." scenario and a "disharmony" scenario. As a result of tighter requirements for enhanced vehicle emissions equipment in the United States, the costs of manufacturing new vehicles and their market price will increase in Canada. The production cost and price increase could be expected to be proportional on both sides of the border and will occur irrespective of actions taken in Canada. Harmonization with U.S. standards represents the least-cost alternative for Canada. If standards are established in Canada independent of changes in the United States, automobile manufacturers would be faced with relatively higher manufacturing costs to produce unique vehicles for the Canadian market. The costs of disharmony would arise from the disintegration of the North American automotive market that has developed since the signing of the Canada/U.S. Auto Pact 30 years ago. These costs fall into four categories: design and testing of specific models; plant logistics and scheduling; marketing and sales; and servicing. The higher costs would likely be passed on to consumers in the form of higher prices."

A New Regulatory Framework under CEPA, 1999

As noted earlier, the legislative authority for controlling on-road vehicle emissions was transferred from the Motor Vehicle Safety Act to CEPA, 1999 effective March 31, 2000. Part 7, Division 5 of CEPA, 1999 is based on the legislative scheme set out in the Motor Vehicle Safety Act. The proposed Regulations establish a regulatory framework for on-road vehicle and engine emissions standards under CEPA, 1999 that have administrative provisions similar to those of the Motor Vehicle Safety Regulations. This is designed to make the transition straightforward for the regulated industry. The following sections summarize the proposed new regulatory framework under CEPA, 1999.

National Emissions Mark

The legislative scheme for establishing emission standards for vehicles and engines under Part 7, Division 5 of CEPA, 1999 is largely based on the use and conditions for use of a national emissions mark. CEPA, 1999 prohibits a company from applying a national emissions mark to a vehicle or engine unless it complies with the applicable standards set out in the Regulations. The proposed Regulations establish the national emissions mark and set out the manner of obtaining the Minister's authorization to use it. Companies are given the flexibility of affixing the mark on or adjacent to either the U.S. emission control information label or the statement of compliance label required under the Motor Vehicle Safety Regulations.

Prescribed Classes of Vehicles and Engines

The proposed Regulations specify the classes of on-road vehicles and engines that are subject to the emission requirements. These classes are aligned with corresponding EPA rules. The prescribed classes are "light-duty vehicles," "light-duty trucks," "heavy-duty vehicles" and "motorcycles," as in the past. Two new classes, "medium-duty passenger vehicles" and "complete heavy-duty vehicles," are added as part of the proposed regulatory framework. Under the proposed Regulations, heavy-duty engines will be directly regulated for the first time whereas under the Motor Vehicle Safety Act these engines were regulated only when installed in heavy-duty vehicles.

The prescribed classes of vehicles and engines are summarized in Table 2. In the proposed Regulations, vehicle classes are defined based on a number of characteristic features, with the primary one being "gross vehicle weight rating" (GVWR), which is the maximum design loaded weight of the vehicle.

Table 2 — Prescribed Classes of Vehicles and Engines

Class	GVWR, kg (lb.)
Motorcycle	793 kg (1 749)
Light-Duty Vehicle	3 856 (8 500)
Light-Duty Truck	3 856 (8 500)
light light-duty truck	2 722 (6 000)
heavy light-duty truck	2 722-3 856 (6 000-8 500)
Medium-Duty Passenger Vehicle	3 856-4 536 (8 500-10 000)
Complete Heavy-Duty Vehicle (Otto-cycle1 Only)	3 856-6 350 (8 500-14 000)
Heavy-Duty Vehicle/Heavy-Duty Engine	> 3 856 (8 500)
light heavy-duty engine	< 8 847 (19 500)
medium heavy-duty engine	8 847-14 971 (19 500-33 000)
heavy heavy-duty engine	> 14 971 (33 000)

¹ Otto cycle (i.e., spark ignition) engines are typically powered by gasoline, but other fuels may be used.

The new "medium-duty passenger vehicle" class is designed to subject larger passenger vans and sport utility vehicles (SUVs) to the same set of emission standards as light-duty vehicles instead of the heavy-duty vehicle emission standards. "Complete heavy-duty vehicle" is similarly a new subclass of heavy-duty vehicle that will be subject to standards and testing procedures resembling those for light-duty vehicles. These types of vehicles are newly subjected to chassis-based standards defined in terms of emissions per unit distance (g/km) while heavy-duty engine-based standards are expressed in terms of emissions per unit of work (g/MJ).

The proposed Regulations do not apply to on-road vehicles and engines that are being exported outside of Canada; those that are solely for purposes of exhibition, demonstration, evaluation or testing; or those that are 15 years old or older.

Technical Emission Standards

Canada's current regulated emission standards are specified in the Regulations Amending the Motor Vehicle Safety Regulations (Vehicle Emissions) published in the Canada Gazette, Part II, Vol. 131, No. 17, August 20, 1997. The following sections summarize the proposed new technical standards for the various classes of vehicles and engines that will be implemented through the proposed Regulations by aligning with updated U.S. emission standards for the 2004 and later model years.

The proposed Regulations set out technical standards for vehicles and engines respecting exhaust, evaporative and crankcase emissions, on-board diagnostics systems and other specifications related to emission control systems. The technical standards correspond to those of the EPA and sections of the U.S. Code of Federal Regulations (see footnote 1)  are incorporated by reference to ensure that the specified standards are identical in both countries. This continues the past approach under the Motor Vehicle Safety Act.

The proposed Regulations ensure that vehicles and engines meeting new more stringent exhaust emission standards will begin entering the Canadian market in the 2004 model year and will be phased-in over the 2004 to 2010 model year period. The phase-in schedules vary by standard and by vehicle class and can be summarized as follows: Tier 2 standards for light-duty vehicles and light light-duty trucks (2004-2007); Tier 2 standards for heavy light-duty trucks and medium duty passenger vehicles (2004-2009); Phase 1 standards for heavy-duty engines (2004-2006); and Phase 2 standards for heavy-duty engines (2007-2010).

During any phase-in period, every model of vehicle or engine that is certified by the EPA and that is sold concurrently in Canada and the United States is required to meet the same standard in Canada as it does in the United States. Canadian vehicles will therefore have progressively improved emission performance without specifying interim phase-in percentages in the proposed Regulations. The final phased-in standards apply to all vehicles and engines sold in Canada in the model year that they apply to 100 percent of a class of vehicles or engines in the United States.

Vehicles and engines are required to comply with emission standards for a defined "full useful life." The full useful life is specified in years and as accumulated mileage, whichever comes first, and varies depending on the class or subclass of vehicles or engines. Under the proposed Regulations, the full useful life for light-duty vehicles and light light-duty trucks is extended from the current 10 years/160 000 km to 10 years/192 000 km. The full useful life for the new classes of medium-duty passenger vehicles and complete heavy-duty vehicles is established to be 11 years/192 000 km, equivalent to the current requirement for heavy light-duty trucks. The distance component of the full useful life remains the same for heavy-duty vehicles and engines, except for heavy heavy-duty diesel engines where it is extended from 467 000 km to 700 000 km. The time component for all heavy-duty emission standards will remain the same at ten years or be increased from eight years to ten years. In the case of motorcycles, the full useful life remains at up to 5 years/30 000 km.

1. Exhaust Emission Standards

(a) Light-Duty Vehicles, Light-Duty Trucks and Medium-Duty Passenger Vehicles

The new exhaust emission standards using the conventional Federal Test Procedure align with the future U.S. standards, commonly referred to as the U.S. Tier 2 emission standards. Manufacturers certify every vehicle to one of 11 "bins," each of which contains standards for NOx, non-methane organic gases (NMOG), CO, formaldehyde and PM as presented in Table 3. Formaldehyde and NMOG are newly regulated under the proposed Regulations, although NMOG limits effectively replace previous non-methane hydrocarbon (NMHC) standards. The manufacturers' choices of bin within which to certify each vehicle is limited by the obligation to comply with the fleet average NOx emissions standards described in the following section.

Table 3 — Light-Duty Vehicle, Light-Duty Truck and Medium-Duty Passenger Vehicle Full Useful Life Exhaust Emission Standards, g/km (g/mile)

Bin	NOx	NMOG	CO	Formaldehyde	PM
11	0.6 (0.9)	0.174 (0.280)	4.5 (7.3)	0.020 (0.032)	0.075 (0.12)
10	0.4 (0.6)	0.097/0.143 (0.156/0.230)	2.6/4.0 (4.2/6.4)	0.011/0.017 (0.018/0.027)	0.05 (0.08)
9	0.2 (0.3)	0.056/0.112 (0.090/0.180)	2.6 (4.2)	0.011 (0.018)	0.04 (0.06)
8	0.12 (0.20)	0.078/0.097 (0.125/0.156)	2.6 (4.2)	0.011 (0.018)	0.01 (0.02)
7	0.093 (0.15)	0.056 (0.090)	2.6 (4.2)	0.011 (0.018)	0.012 (0.02)
6	0.062 (0.10)	0.056 (0.090)	2.6 (4.2)	0.011 (0.018)	0.006 (0.01)
5	0.04 (0.07)	0.056 (0.090)	2.6 (4.2)	0.011 (0.018)	0.006 (0.01)
4	0.02 (0.04)	0.043 (0.070)	1.3 (2.1)	0.0068 (0.011)	0.006 (0.01)
3	0.02 (0.03)	0.034 (0.055)	1.3 (2.1)	0.0068 (0.011)	0.006 (0.01)
2	0.01 (0.02)	0.0062 (0.010)	1.3 (2.1)	0.002 (0.004)	0.006 (0.01)
1	0.00 (0.00)	0.000 (0.000)	0.0 (0.0)	0.000 (0.000)	0.00 (0.00)

Bins 9 and 10 are only available during the 2004 to 2006 model years for light-duty vehicles and light light-duty trucks and up to and including 2008 for heavy light-duty trucks and medium-duty passenger vehicles. Bins 8 through 10 contain additional temporary, less stringent standards for certain pollutants and for certain vehicles. Bin 11 is only for medium-duty passenger vehicles and is available up to and including the 2008 model year. Beginning in the 2009 model year, applicable standards are limited to bins 1 to 8 for all light-duty vehicles, light-duty trucks and medium-duty passenger vehicles.

Fleet Average NOx Emission Standards

The proposed Regulations establish fleet average NOx emission standards for the 2004 and later model years. Each new light-duty vehicle, light-duty truck and medium-duty passenger vehicle is required to be certified to a specific "bin" and vehicle sales from each "bin" are summed to establish a company "fleet average NOx value." A company's fleet average NOx value is determined for each model year.

When the standards are fully phased in in the 2009 model year, there are two compliance options related to a company's fleet average NOx emissions. The first one is the same as in the United States and the second is unique to these proposed Regulations.

Option 1 — A company's combined fleet of light-duty vehicles, light-duty trucks and medium-duty passenger vehicles will be subject to a single fleet average NOx emission standard of 0.04 g/km (0.07 g/mile), corresponding to the NOx standard in bin 5. A company can, in any model year, generate NOx emission credits by achieving a fleet average that is better than the standard. These credits can be used in a subsequent model year to offset a fleet average deficit (the fleet average NOx value exceeds the standard). A deficit must be offset no later than the third model year following the year in which it is incurred. NOx emission credits may also be transferred to another company.

The first option contains provisions identical with the United States to promote early introduction of cleaner vehicles or more durable emission control systems. Additional NOx credits can be earned by, for example, certifying vehicles to bins 1 or 2 during the model years 2004 through 2005 or by certifying vehicles to an extended useful life of 15 years/240 000 km.

Option 2 — Unique to the proposed Regulations, reflecting the fact that Canada is a separate and slightly different market relative to the United States, a company may choose to meet a restricted fleet average NOx standard of 0.062 g/km (0.10 g/mile), corresponding to the NOx standard in bin 6. The restricted standard must be met in a model year without the flexibility for a company to generate or use NOx credits.

During the phase-in period leading up to the final NOx fleet average standard in the 2009 model year, the proposed Regulations specify:

(a) for light-duty vehicles and light light-duty trucks, a progressively tightening fleet average NOx standard based on the U.S. phase-in for model years 2004 to 2006 culminating in 2007 in the final fleet average standard specified above for 2009 (i.e., 0.04 g/km or 0.07 g/mile);

(b) for heavy light-duty trucks and medium-duty passenger vehicles, a progressively tightening fleet average NOx standard based on the U.S. phase-in for model years 2004 to 2008 culminating in the final fleet average in 2009 (i.e. 0.04 g/km or 0.07 g/mile); and

(c) for any company that sells only the same range of vehicles in Canada and the United States, the company may choose not to meet the specified interim fleet averages standards and thereby not to generate credits for later model years. Nonetheless, each vehicle sold by the company in Canada must comply with the same emission standards as in the United States.

In all cases, the proposed Regulations require companies to report their fleet averages and any emission credits or deficits at the end of each model year.

Other Exhaust Emission Standards

The proposed standards include additional standards designed to control exhaust emissions from light-duty vehicles, light-duty trucks and medium-duty passenger vehicles under modes of operation that are not covered by the conventional Federal Test Procedure, such as:

— aggressive driving (high rates of speed or acceleration) and the use of air conditioning during high ambient temperatures through the supplemental Federal Test Procedures;

— cold weather operation through the cold temperature carbon monoxide emission standard applicable to gasoline-fuelled vehicles;

— highway driving conditions through the Highway NOx emissions standards for light-duty vehicles and light-duty trucks as measured over the Federal Highway Fuel Economy Test; and

— conditions that may be encountered during the types of tests used in inspection and maintenance programs through the Certification Short Test exhaust emission standards for gasoline-fuelled light-duty vehicles, light-duty trucks and medium-duty passenger vehicles — this standard addresses the compatibility of emission control systems with the types of emission tests used in state or provincial vehicle Inspection and Maintenance programs.

(b) Complete Heavy-Duty Vehicles

The new chassis-based exhaust emission standards and phase-in schedules for complete heavy-duty vehicles are summarized in Table 4.

Table 4 — Complete Heavy-Duty Vehicle Exhaust Emission Standards, g/km (g/mile)

Phase	GVWR kg (lb.)	NOx	NMOG/ NMHC	Formaldehyde	CO	PM
Phase 1 (2005)	3 856-4 536 (8 500-10 000)	0.6 (0.9)	0.174 (0.280)a	----	4.5 (7.3)	----
	4 536-6 350 (10 000-14 000)	0.62 (1.0)	0.205 (0.330)a	----	5.0 (8.1)	----
Phase 2 (2008-2009)	3 856-4 536 (8 500-10 000)	0.1 (0.2)	0.121 (0.195)b	0.020 (0.032)	4.5 (7.3)	0.012 (0.02)
	4 536-6 350 (10 000-14 000)	0.2 (0.4)	0.143 (0.230)b	0.025 (0.040)	5.0 (8.1)	0.012 (0.02)

^a Emission standard specified as NMOG. "Non-methane hydrocarbons" (NMHC) or "total hydrocarbons" (THC) measurements are also accepted.

^b Emission standard specified as NMHC.

(c) Heavy-Duty Engines

The new exhaust emission standards and phase-in schedules for diesel heavy-duty engines, other than those used in medium-duty passenger vehicles, are summarized in Table 5.

Table 5 — Exhaust Emission Standards for Diesel Heavy-Duty Engines, g/MJ (g/bhp-hr)

Phase	NOx	NMHC	NOx+ NMHC	CO	PM
Phase 1 (2004)	-----	-----	0.89 (2.4)a	5.77 (15.5)	0.037 (0.10)b
Phase 2 (2007-2010)	0.075 (0.2)	0.052 (0.14)	-----	5.77 (15.5)	0.0037 (0.01)

^a Emission standard can increase to 0.93 g/MJ (2.5 g/bhp-hr), if NMHC >= 0.19 g/MJ (0.5 g/bhp-hr).

^b For urban buses, the standard is 0.019 g/MJ (0.05 g/bhp-hr) for certification testing and 0.026 g/MJ (0.07 g/bhp-hr) for in-use testing.

The new exhaust emission standards and phase-in schedules for Otto-cycle heavy-duty engines, other than those used in medium-duty passenger vehicles or complete heavy-duty vehicles, are summarized in Table 6.

Table 6 — Exhaust Emission Standards for Otto-Cycle Heavy-Duty Engines, g/MJ (g/bhp-hr)

Current	GVWR, kg (lb.)	NOx	NMHC	NOx+NMHC	CO	PM
Current (2004)	6 350 (14 000)	1.49 (4.0)	0.41 (1.1)a	------	5.36 (14.4)	------
	> 6 350 (14 000)	1.49 (4.0)	0.71 (1.9)a	------	13.8 (37.1)
Phase 1 (2005-2006)	6 350 (14 000)	-----	-----	0.37 (1.0)	5.36 (14.4)	------
	> 6 350 (14 000)	-----		0.37 (1.0)	13.8 (37.1)	------
Phase 2 (2008-2009)	> 3 856 (8 500)	0.075 (0.2)	0.052 (0.14)	-----	5.36 (14.4)	0.0037 (0.01)

^a Emission standard specified in total hydrocarbons and is for engines fuelled with gasoline or liquefied petroleum gas.

The Phase 1 and 2 programs will retain an engine-based approach for incomplete Otto-cycle vehicles with a GVWR of up to 6 350 kg (14 000 lb.) and all Otto-cycle vehicles with a GVWR above 6 350 kg (14 000 lb.). The Phase 2 Otto-cycle standards for NOx, NMHC and PM are identical to the standards for diesel-fuelled vehicles and engines shown in Table 5.

Other Exhaust Emission Standards for Heavy-Duty Engines

The proposed Regulations include additional standards designed to control exhaust emissions under modes of operation not covered by the Federal Test Procedure for heavy-duty engines, such as:

— for the opacity of smoke emitted from diesel heavy-duty engines during engine acceleration and lugging modes of operation; and

— beginning in the 2007 model year, a steady-state "Supplemental Emission Test" and, for in-use engines, a "Not-to-Exceed" test procedure both designed to more closely represent the range of real-world driving conditions of diesel heavy-duty vehicles.

(d) Motorcycles

The exhaust emission limits for total hydrocarbons and CO from motorcycles are 5.0 g/km (8.0 g/mile) and 12 g/km (19 g/mile), respectively. The proposed Regulations effectively roll these standards over from the Motor Vehicle Safety Act to the new regulatory framework under CEPA, 1999. The EPA has initiated a process to develop more stringent emission standards for on-road motorcycles and is considering harmonizing with California standards being brought into force in 2004 and 2008. Environment Canada intends to continue alignment with U.S. federal standards as such changes occur.

2. Evaporative Emission Standards

Evaporative emissions are hydrocarbon emissions resulting from the evaporation of fuel and consist of the following main elements: "resting losses," which are the combination of diurnal emissions that occur as the fuel is heated with the temperature change that occurs over the course of a day and hot soak emissions that occur after a vehicle trip while the vehicle is still warm; "running losses," which occur while the vehicle is running and result from the heating of fuel; "refuelling losses," which occur as the fuel vapour in the fuel tank is displaced by the inflow of liquid fuel during the refuelling process; and "fuel spitback," which occurs when liquid fuel spills from the filler inlet during the refuelling process.

Under the proposed Regulations, vehicles other than diesel heavy-duty vehicles will be required to meet more stringent standards for controlling diurnal and hot soak evaporative emissions after a vehicle trip. These new standards generally represent a 50 percent improvement in the control of these emissions relative to current standards and will be phased in over the 2004 to 2007 model years for light-duty vehicles and light light-duty trucks and over the 2008 to 2009 model years for heavy light-duty trucks, medium-duty passenger vehicles and Otto-cycle heavy-duty vehicles.

The proposed Regulations will introduce new refuelling emission standards for medium-duty passenger vehicles and complete heavy-duty vehicles that are the same as those applicable to heavy light-duty trucks and which require a capture efficiency of about 95 percent. In the case of medium-duty passenger vehicles, the refuelling emission standards will be phased in beginning in the 2004 model year with full compliance in the 2006 model year. For complete heavy-duty vehicles, the phase-in of refuelling emission standards begins in the 2005 model year with full compliance in 2006.

3. Crankcase Emission Standards

No crankcase emissions may be discharged from any prescribed class of vehicle or engine as prohibited under the current Regulations. Beginning in the 2007 model year, a long-standing exception applying to turbocharged heavy-duty diesel engines will be effectively removed.

4. Standards for On-Board Diagnostic Systems

On-board diagnostic (OBD) systems are designed to monitor emission-related components for deterioration or malfunction that would cause emissions to increase beyond specified thresholds. They incorporate indicator lights to alert vehicle operators of deterioration or malfunction. The systems are required to store fault codes to assist service technicians in diagnosis and repair.

All light-duty vehicles and light-duty trucks are currently required to be equipped with OBD systems. The proposed Regulations will phase in new OBD requirements for medium-duty passenger vehicles, complete heavy-duty vehicles and heavy-duty engines intended for use in vehicles with a GVWR of up to 6 350 kg (14 000 lb.). The implementation schedule for the new OBD requirements depends on the class of vehicle and engine and covers the 2004 to 2008 model year period.

5. Standards for Emission Control Systems

There are general provisions in the proposed Regulations concerning the performance of emission control systems, including a prohibition on the use of defeat devices. A defeat device is any element of design that reduces the effectiveness of the emission control system under conditions of normal vehicle operation that are not substantially covered by the certification tests. Strategies necessary to protect the vehicle against damage or to start the engine are not considered to be defeat devices.

Administrative Provisions of the New Regulatory Framework

In addition to the technical standards described in the previous section, the proposed Regulations include several administrative-type provisions that are necessary to operate and enforce the legislative scheme that is set out under Part 7, Division 5 of CEPA, 1999. These include provisions that specify:

— the form of the records and evidence of conformity that companies must maintain, the time the records must be retained and the deadlines for their submission if requested by the Minister;

— the reporting requirements related to the fleet-average NOx emission standards;

— the information to be submitted by a company in support of an application for exemption pursuant to section 156 of CEPA, 1999;

— the information to be included in a notice of defect issued by a company pursuant to section 157 of CEPA, 1999 and in related reports to the Minister;

— the written instructions respecting emission-related maintenance that must be furnished to the first retail purchaser of every vehicle;

— the emission-related information that must be included on labels on vehicles or engines;

— the information that must be provided when a person imports a prescribed vehicle or engine into Canada; and

— the rental rate paid by the Minister to a company that makes available a test vehicle or engine in accordance with section 159 of CEPA, 1999.

Alternatives

Status Quo

On-road vehicles and engines continue to be major contributors to air pollution despite the reductions in vehicle emissions achieved over the last three decades. Many Canadians live in areas where air pollution from vehicle use has an adverse impact on their health. The technology to make further gains in emission control exists or is in the final stages of development. The option of retaining the current standards does not take advantage of the opportunity for continued reductions in vehicle emissions aligned with the already announced U.S. programs.

Voluntary Emission Standards vs Regulatory Approach

Non-regulatory emission control measures have been successfully used in the past in conjunction with a regulatory framework and in harmony with U.S. federal emission programs. Environment Canada has a Memorandum of Understanding in place with the Canadian Vehicle Manufacturers' Association (CVMA), the Association of International Automobile Manufacturers of Canada (AIAMC) and their member companies to provide for the sale of low-emission light-duty vehicles and light-duty trucks in the 2001 to 2003 model years. The vehicle industry supports voluntary compliance with U.S. federal emission standards through Memoranda of Understanding with the Canadian government.

Past and current memoranda of understanding were implemented as interim measures to expedite compliance with updated U.S. emission standards pending the development of appropriate Canadian legislation or regulations. Environment Canada believes these voluntary programs to be successful and expects that they may continue to play an important role as a complement to the proposed regulatory framework.

Canada has had emission regulations since 1971 and most industrialized countries now have similar regulations. The existing regulations under the Motor Vehicle Safety Act need to be updated. Given the importance of environmental protection, Environment Canada believes that a regulatory framework continues to be appropriate for controlling emissions from on-road vehicles and engines.

The proposed regulatory program provides the flexibility necessary for manufacturers to operate in a competitive North American market together with enforceability that offers a high level of environmental protection for Canadians. The proposed Regulations ensure that no single company is allowed to deviate from established standards and put other companies under competitive pressure to do likewise. Finally, the proposed approach is more in line with the expectations of Canadians. A survey of public opinion on the environment indicated that 62 percent of Canadians have a high level of concern with air quality and that Canadians are more inclined to favour a regulatory approach to reducing pollution over other alternatives (Environics International Ltd., 2001).

Regulations with Unique Canadian Standards

In 1995, the Canadian Council of Ministers of the Environment (CCME) Task Force on Cleaner Vehicles and Fuels reviewed various options for a national approach to new vehicle emission standards in Canada, including the adoption of California emission standards. In its evaluation of possible control options for new vehicles, the Task Force found that continuing to align Canada's national vehicle emission standards with U.S. federal standards represented the preferred approach as it would provide Canada with the most effective available emission control technology to reduce emissions in a cost-effective way.

As noted above in the section "Harmonization," there is a strong rationale for Canada to continue aligning its emission standards for on-road vehicles and engines with those of the United States. Accordingly, the option of adopting standards that are different from U.S. federal emission standards was rejected.

Regulations Aligned with the United States with Variations in Implementation

It is recognized that implementing a complex U.S regulatory scheme in an identical manner for the smaller Canadian market could result in unnecessary restrictions for the Canadian industry. Accordingly, alternative approaches are proposed for elements of the U.S. phase-in and fleet averaging standards.

Environment Canada believes that there is limited value in requiring compliance with all parts of the U.S. regulatory scheme that are designed to provide short-term flexibility during transition to compliance with tighter standards. The proposed Regulations avoid prescribing exact phase-in percentages or optional averaging standards where they would have little effect on emission performance in Canada. The proposed Regulations continue the current approach of requiring vehicles to meet the same emission standards to which they are certified for sale in the United States. This will result, during transition periods, in comparable emission performance on both sides of the border.

Light-duty vehicles, light-duty trucks and medium-duty passenger vehicles make up the majority of vehicles sold and used in Canada and are supplied by global companies from plants all over the world. The U.S. Tier 2 program for these vehicles creates eight long-term and three temporary optional standards ("bins") that are controlled by a requirement for companies to meet an annual fleet-average NOx emission standard. Given the very large numbers of light vehicles in Canada and that on-road vehicles are major contributors to air pollution, Environment Canada believes that a similar fleet average standard is necessary to provide assurance that the long-term environmental performance of the Canadian fleet will be comparable with that of the United States.

Without a fleet average standard being applied in Canada the de-facto Canadian standard becomes the highest bin. For example, when the final standards are in effect in 2009 the Canadian NOx standard would be 0.12 g/km (0.20 g/mile) compared with the 0.04 g/km (0.07 g/mile) fleet average applied in the United States. While there is a good chance that the Canadian fleet emission performance would be close to that of the United States, a Canadian fleet average standard removes the opportunity for individual companies to systematically sell a significant number of higher emitting vehicles in Canada than would be allowed in the United States.

The proposed Regulations incorporate the U.S. NOx fleet averaging standards, including associated provisions for the banking and trading of emission credits. Environment Canada recognizes, however, that the Canadian market is not identical to the U.S. market and that a Canadian fleet average standard identical with the U.S. fleet average could present a more restrictive standard when applied to our smaller market. The proposed Regulations therefore include an option for companies to meet a Canadian fleet average NOx emission standard set at bin 6, rather than the U.S. bin 5 but without any banking or trading of emission credits and without the opportunity to carry forward an emissions deficit. When the final standards are in effect in 2009 this will result in a regulated maximum Canadian fleet average NOx emission standard of 0.062 g/km (0.10 g/mile) compared with the U.S. standard of 0.04 g/km (0.07 g/mile). All other emission standards (CO, NMOG, PM and formaldehyde) are the same in bins 5 and 6. Environment Canada believes that this option provides sufficient flexibility to provide for legitimate market differences without compromising the overall emission performance of the Canadian fleet.

Benefits and Costs

Benefits

Emission Reductions

The proposed Regulations introduce significantly more stringent emission standards for on-road vehicles and engines. For example, on a per-vehicle basis the allowable levels of smog-forming emissions such as NOx, VOCs and PM from new large sport utility vehicles will on average be reduced by 95, 84 and 92 percent, respectively, relative to current regulated limits. On the same basis, emissions from heavy-duty diesel engines will be reduced by 95, 89 and 90 percent, respectively.

As the new cleaner vehicles and engines enter the Canadian market, the proposed Regulations will result in considerable reductions of air pollutants emitted from the in-use fleet of on-road vehicles. The reductions in emissions of Criteria Air Contaminants were estimated in a study conducted for Environment Canada by SENES Consultants Limited and Air Improvement Resource, Inc. The study, entitled "Updated Estimate of Canadian On-Road Vehicle Emissions for the Years 1995-2020 (revised December, 2001)" forecasts emissions of VOCs, NOx, CO, PM₁₀ and SO₂ from on-road vehicles over the years 2000 to 2020. Emission forecasts were completed using modified versions of the EPA models, MOBILE 5C for VOC and NOx, PART5C for PM and SO₂ and the "Serious Area CO Model," all with Canadian data.

The emission reductions forecast are relative to a "base case" which reflects existing regulations and voluntary agreements. The main elements of the base case are:

— past and current motor vehicle emission regulations under the Motor Vehicle Safety Act;

— interim low-emission vehicle memorandum of understanding for 2001 to 2003 model year light-duty vehicles and light-duty trucks;

— memorandum of understanding and Regulations that limit the sulphur content of on-road diesel fuel to 500 p.p.m.;

— Regulations to limit the average level of sulphur in Canadian gasoline to 30 p.p.m. in 2005, with an interim level of 150 p.p.m. beginning in 2002;

— Regulations to control the benzene content of gasoline to less than 1 percent;

— provincial Regulations and standards that limit Reid Vapour Pressure in gasoline; and

— inspection and maintenance programs in effect in the Lower Fraser Valley of British Columbia and the Ontario portion of Windsor-Quebec City Corridor.

The base case provides ongoing emission reductions as new vehicles replace older, more polluting ones through to the 2010 to 2015 time frame. However, the projected increase in vehicle use (i.e. total distance travelled) opposes the benefits such that further gains in the longer term are only possible with new emission standards.

The SENES study indicates that the proposed Regulations combined with the technology-enabling proposed Sulphur in Diesel Fuel Regulations will result in progressively greater annual emission reductions in the 2004 to 2020 period. For the year 2020, the associated emission reductions in NOx, VOCs, CO and PM₁₀, relative to the base case, are summarized in Table 7:

Table 7 — Emission Reductions of NOx, VOCs, CO and PM₁₀ in 2020

Pollutant	Base Case Emissions in 2020 (tonnes)	Emissions in 2020 with proposed Regulations (tonnes)	Percentage Reduction in 2020 (with proposed Regulations vs Base Case)
NOx	493 636	130 458	74
VOCs	169 679	146 469	14
CO	1 909 649	1 465 916	23
PM10	11 526	4 129	64

The proposed Regulations will also result in reductions of the following toxic hydrocarbons emissions from motor vehicles: acrolein, acetaldehyde, benzene, 1,3-butadiene and formaldehyde. Although specific limits are not included for most of these substances, the standards will have the effect of reducing their emissions through the application of improved emission control technologies. The EPA indicates that "technologies used to reduce exhaust hydrocarbons also reduce the hydrocarbon species listed as MSATs [Mobile Source Air Toxics]. This is true whether control is achieved through engine or component modifications, add-on devices, or the use of aftertreatment devices such as oxidation or three-way catalysts. We are not aware of vehicle or engine technologies that selectively reduce MSATs without reducing other hydrocarbons to a similar degree." (see footnote 2) 

In a separate study conducted for Environment Canada, SENES Consultants Limited and Air Improvement Resource, Inc. used the EPA MOBTOX model to estimate the emission reductions of toxic hydrocarbons. Based on the results of the study, the proposed Regulations combined with the technology-enabling proposed Sulphur in Diesel Fuel Regulations will result in progressively greater annual emission reductions in the 2004 to 2020 period. For the year 2020, the estimated emission reductions relative to the base case are summarized in Table 8:

Table 8 — Emission Reductions of Toxic Hydrocarbons in 2020

Pollutant	Base Case Emissions in 2020 (tonnes)	Emissions in 2020 with proposed Regulations (tonnes)	Percentage Reduction in 2020 (with proposed Regulations vs Base Case)
acrolein	175	125	29
acetaldehyde	906	546	40
benzene	3 771	3 256	14
1,3-butadiene	688	568	17
formaldehyde	2 338	1 374	41

Health and Environmental Benefits

The emission reductions described in the previous sections will generate multiple health and environmental benefits. Health benefits can be described in terms of damages or health effects avoided. Table 9 summarizes a selection of health effects and their associated pollutants. (see footnote 3) 

Table 9 — Selected Health Effects and Their Associated Air Pollutants

Health Effects	Pollutant
Premature mortality	PM
Hospital admissions	PM, VOCs + NOx
Emergency room visits	PM, VOCs + NOx
New cases of chronic bronchitis	PM
Respiratory illness in children	PM
Asthma symptom days	PM
Restricted activity days	PM, VOCs + NOx
Acute respiratory symptoms	PM, VOCs + NOx

The above list is not exhaustive. There are adverse health effects resulting from the combination of PM, VOCs, NOx and CO. However, the valuation of the benefits from reducing these pollutants in combination is very difficult. There are also direct health effects from reductions in toxic substances.

In its regulatory impact analysis, (see footnote 4)  the EPA estimates the total annual U.S. benefits for the year 2030 resulting from the Final Tier 2/Gasoline Sulphur Rule to be US$25.2 billion (in 1997 dollars), 93 percent of which relate to avoided premature mortality. The environmental benefits that could be estimated are in the areas of recreational visibility and agricultural crop damages, which accounted for about 2 percent (or US$590 million) of the total benefits.

The EPA estimates total U.S. annual benefits of the Final Heavy-Duty Engine/Diesel Fuel Rule (see footnote 5)  at US$70.4 billion (in 1999 dollars), of which the benefits from avoided premature mortality accounted for 83 percent. Environmental benefits in recreational visibility and avoided agricultural crop damages account for about 6 percent (or US$4.4 billion) of the total benefits. These benefits are thought to be underestimated because of the extreme difficulty of valuating potentially significant health and environmental benefits. (see footnote 6) 

Although the magnitude of the benefits attributable to the proposed Regulations in Canada would vary proportionately with those of the United States as a result of differences in population, the types of benefits for Canada would be similar in nature to those mentioned above for the United States. The proposed Regulations will ensure that Canada achieves significant emission reductions, and associated reductions in health and environmental impacts.

Other Benefits

The proposed fleet average NOx standards for light-duty vehicles, light-duty trucks and medium-duty passenger vehicles provide other benefits. They will set a level playing field for all manufacturers in the competitive Canadian market and provide the same incentives as in the United States to market vehicles with advanced emission control technology. The Canadian optional fleet average avoids unnecessarily restricting sales of vehicles that are relatively more popular in Canada and will facilitate the marketing of high efficiency engines, such as direct injection gasoline and diesel engines. Vehicles equipped with these types of engines emit lower levels of CO₂, a key greenhouse gas, but will likely be certified in higher bins pending development of appropriate NOx control technologies for those engines.

Costs

The increased costs to manufacturers to meet future U.S. emission standards have been estimated by the EPA in their regulatory impact analyses associated with the various rules. In order to meet the more stringent Tier 2 exhaust and evaporative emission standards, the EPA estimates that the longer term incremental costs to manufacturers, converted to 1999 Canadian dollars, will be $63 for light-duty vehicles, $58 to $119 for light light-duty trucks, and $239 to $251 for heavy light-duty trucks and medium-duty passenger vehicles. An additional incremental cost of $134 is estimated for medium-duty passenger vehicles to comply with new on-board diagnostic and on-board refuelling vapour recovery standards.

In the case of the Phase I emission standards for heavy-duty vehicles and engines, the EPA estimates that the longer term incremental costs to manufacturers, converted to 1999 Canadian dollars, will be $358 for light heavy-duty diesel engines, $409 for medium heavy-duty diesel engines, $547 for heavy heavy-duty diesel engines and $380 to $406 for Otto-cycle heavy-duty engines.

In the case of the Phase 2 emission standards for heavy-duty vehicles and engines, the EPA estimates that the longer term incremental costs to manufacturers, converted to 1999 Canadian dollars, will be $1,743 for light heavy-duty diesel engines, $2,098 for medium heavy-duty diesel engines, $2,773 for heavy heavy-duty diesel engines and $248 for Otto-cycle heavy-duty engines. For vehicles equipped with a heavy-duty diesel engine meeting the Phase 2 emission standards, the EPA estimates an increase in the life-cycle operating cost ranging from $756 for vehicles with light heavy-duty diesel engines to $7,128 for urban buses, most of which results from the additional cost of purchasing the technology-enabling low sulphur diesel fuel. In the case of Otto-cycle heavy-duty vehicles, there are no identified changes in operating costs.

With the integration of the North American vehicle manufacturing industry, it is clear that most of the technology development and manufacturing changes needed to meet the new more stringent technical standards being proposed will be made by manufacturers to comply with the EPA rules, including for vehicles destined for the Canadian market. Therefore, the actual incremental cost due to these proposed Regulations is expected to be very low. There will, however, be some incremental administrative costs for industry, notably in label design to accommodate the national emissions mark and in reporting related to the fleet average NOx emissions standards. New data requirements will be minimized by aligning base data formats with existing reporting of fuel consumption information.

Incremental costs to Government associated with the development and administration of the proposed Regulations are part of a number of integrated initiatives to reduce emissions from vehicles, engines and fuels, totalling $48.4 million over a four-year period starting in the 2001/2002 fiscal year. It is estimated that about one half of this total will be spent in support of the proposed Regulations and companion regulations that will require low sulphur gasoline and diesel fuel. Major components of the costs include laboratory upgrades to account for the need for more precise testing to audit against the new more stringent standards and the regulatory development, administration and compliance verification activities. Funding to support the proposed Regulations was announced by the Minister of the Environment in February 2001, as part of resources to support the fulfillment of the Ozone Annex to the 1991 Canada-United States Air Quality Agreement.

Benefits and Costs

The EPA concluded that, for the United States, the annual benefits from Final Tier 2/Gasoline Sulphur Rule outweighed costs by a ratio of 4.8 to 1. For the Final Heavy-Duty Engine/ Diesel Fuel Rule, this ratio is 16.8 to 1. It should be noted that such results are due to the combination of new vehicle emission standards and the two fuel regulations (i.e., low sulphur gasoline and low sulphur diesel). However, given the similar characteristics of the Canadian vehicle fleet, a Canadian vehicle and fuels program that aligns with that of the United States, and the fact that the actual incremental costs of the proposed Regulations in Canada is expected to be considerably lower than in the United States, it is clear that the benefits of the proposed Canadian Regulations outweigh the associated costs.

Competitiveness Implications

The automotive industry is a key sector of the Canadian economy and is in an extremely competitive situation. Since 1989, the industry has experienced a growth in productivity to the point that it is now among the few industries with higher productivity than its U.S. counterpart. Referring to the Harbour and Associates Inc. 2000 report, Industry Canada indicates "that Canada is 11% more productive than the United States in terms of labour hours per vehicle. On average, Canada uses only 24.4 labour hours per vehicle, whereas the United States uses 27.1 labour hours per vehicle." (see footnote 7)  Of the ten top most productive plants in North America, four are in Canada.

In 1999, direct labour cost was 38 percent lower in Canada than in the United States. Industry Canada adds that "Canadian plants have won 5 out of the 15 J.D. Power Plant Quality Awards for North America." The automotive industry is export-oriented with less than 20 percent of production consumed in Canada. (see footnote 8) 

As a result of being competitive, the Canadian automotive industry enjoys a large share of investment relative to its size. Harmonized regulations can be seen in this context as a critical factor in maintaining the benefits of industry integration and supporting the competitiveness of the Canadian automotive industry.

Consultation

The proposed Regulations have been developed in a process that builds on a long history of consultation on motor vehicle emissions, i.e., most recently, the 1995 CCME Task Force on Cleaner Vehicles and Fuels, the 1998 promulgation of new Regulations under the Motor Vehicle Safety Act, and the passage of CEPA, 1999 with its Part 7, Division 5 addressing vehicle and engine emissions. Consultations on the proposed Regulations began through the extensive consultation process to develop the Federal Agenda on Cleaner Vehicles, Engines and Fuels that was published in the Canada Gazette, Part I, on February 17, 2001.

On April 4, 2000, the Deputy Minister of the Environment wrote to a wide range of stakeholders inviting them to participate in the development of the Federal Agenda on Cleaner Vehicles, Engines and Fuels. Environment Canada prepared a discussion paper entitled "Future Canadian Emission Standards for Vehicles and Engines and Standards for Reformulation of Petroleum-based Fuels" which was distributed to all interested parties. On May 25 and 26, 2000, Environment Canada convened a multi-stakeholder workshop in Toronto to discuss future measures to reduce air pollution from vehicles, engines and fuels. The workshop was attended by 125 representatives from federal, provincial, territorial and municipal governments, environmental and health organizations, the petroleum refining industry, automotive and engine manufacturers, and the alternative fuels sector. In July, 2000, workshop presentations and related written submissions were distributed to all stakeholders.

The consultation revealed a broad consensus that Canada's emission standards for on-road vehicles and engines should be based on alignment with corresponding U.S. federal programs. Commenters recognized that the highly integrated North American automotive manufacturing industry together with the alignment with aggressive EPA programs to reduce vehicle emissions will allow Canada to achieve significant emissions reduction in a cost-effective manner.

There were different views on the need for Canada to implement fleet-averaging emission standards as in the United States. The auto industry advocated Canada/United States product alignment with no fleet averaging while the Canadian Petroleum Products Institute (CPPI) and the Greater Vancouver Regional District (GVRD) recommended adopting a fleet average standard requiring manufacturers to consider their sales in Canada to achieving an overall emission performance comparable with the United States (Note: this topic is discussed in the "Alternatives" section).

The "Support Document to the Notice of Intent on the Federal Agenda on Cleaner Vehicles, Engines and Fuels" contains background on the issues and summarizes the input provided at the workshop and through written submission.

Additional Consultations

In November 2001, Environment Canada distributed a discussion draft of the proposed Regulations to the provinces and to a broad range of stakeholders to further focus consultations on this initiative. The discussion draft was also posted on Environment Canada's website to ensure its wide availability. There was support for many aspects of the Regulations and some additional suggestions were made. Meetings were held with industry representatives to consider practical aspects of the proposed Regulations. The following paragraphs summarize the main issues raised by stakeholders.

The Canadian Vehicle Manufacturer's Association and the Association of International Automobile Manufacturers of Canada continued to support alignment with EPA rules but favoured a voluntary approach, through memoranda of understanding and opposed a Canadian fleet average NOx emission standard. These items are discussed in the "Alternatives" section.

The vehicle manufacturers also commented on the national emissions mark. The national emissions mark is required by CEPA, 1999. Environment Canada believes that the most logical place to apply the mark is on or adjacent to the EPA compliance information label. Since standards are aligned and Canada accepts U.S. certification, a single combined label can be applied to products that are sold in both countries, consistent with the manufacturers' desire for harmonization.

The vehicle manufacturers requested an option to place the national emissions mark adjacent to the statement of compliance label required under the Motor Vehicle Safety Act — this flexibility is included in the proposed Regulations. The manufacturers also requested that a single combined mark be designed to take the place of a separate national safety mark and national emissions mark. Environment Canada and Transport Canada are examining the feasibility of providing an option that would combine the two marks or having an alternative national emissions mark that will meet the legislative requirements of CEPA, 1999 in a manner that may be more practical for the industry.

The vehicle manufacturers requested that the rental rate paid by the Minister for test vehicles be increased form the current rate of 12 percent per year of the manufacturer's suggested retail price (MSRP) to a rate of 21 percent, to be more representative of current depreciation rates of new vehicles. The proposed Regulations include a higher first year rental rate (18 percent). The proposed rate is slightly lower than that recommended by the industry to account for the fact that it is based on the MSRP and that the nature of the use/maintenance of test vehicles would tend to subject them to less depreciation than average vehicles.

The Engine Manufacturers Association supports the use of a combined Canadian/U.S. emission labels provided for in the proposed Regulations. They, along with the vehicle manufacturers requested that the burden of any administrative requirements for Canada be minimized. These include avoiding a Canadian standard involving averaging, banking and trading and making submission of compliance documentation as efficient as possible, for example by allowing electronic submission. The proposed Regulations have been designed to address these issues.

The Motorcycle and Moped Industry Council (MMIC) also supported alignment with U.S. rules. The United States is proposing to upgrade motorcycle emission standards and the industry expressed concern that the Canadian standards would automatically update to the new U.S. rules, which are anticipated to be more complex than the current ones. Environment Canada notes this concern and will consider the impact of any significant changes in U.S. emission standards on the Canadian program.

Compliance and Enforcement

Environment Canada administers a comprehensive program to audit compliance with current federal emission standards. The proposed Regulations will be enforced in the same manner. Manufacturers and importers are responsible for ensuring that their products comply with the proposed Regulations and are required to produce and maintain evidence of such conformity. The program will include:

— authorizing and monitoring use of the national emissions mark;

— reviewing company evidence of conformity;

— monitoring data submission for compliance with the corporate fleet average NOx standard and the banking or trading of emission credits;

— registering company notices of defects affecting emission controls;

— inspections of test vehicles and engines and their emission-related components;

— laboratory emissions tests of sample new vehicles and engines that are representative of products offered for sale in Canada; and

— laboratory emissions tests on typical in-use vehicles obtained from consumers.

Environment Canada plans to coordinate efforts with the EPA by sharing information to increase program efficiency and effectiveness.

If a vehicle or engine is found not to comply with the proposed Regulations, the manufacturer or importer is subject to the enforcement provisions of CEPA, 1999. In this situation, the normal course of events is to perform sufficient engineering assessment to determine if a notice of defect should be issued by the company to the owners of the particular model of vehicle or engine. In most cases, this results in a product recall to fix the defect.

In addition to the evaluation of individual vehicles and engines to confirm compliance with prescribed standards, there are a number of administrative requirements. When verifying compliance with the proposed Regulations, Environment Canada's Compliance and Enforcement Policy will be applied. Once there is a confirmation that a violation has been committed, the appropriate response will be selected, based on the following criteria:

— Nature of the alleged violation: This includes consideration of the damage, the intent of the alleged violator, whether it is a repeat violation, and whether an attempt has been made to conceal information or otherwise subvert the objectives and requirements of CEPA, 1999.

— Effectiveness in achieving the desired result with the alleged violator: The desired result is compliance within the shortest possible time and with no further repetition of the violation. Factors to be considered include the violator's history of compliance with CEPA, 1999, willingness to cooperate with enforcement officials, and evidence of corrective action already taken.

— Consistency: Enforcement officers will consider how similar situations have been handled in determining the measures to be taken to enforce CEPA, 1999.

Contacts

Ross White, Director, Transportation Systems Branch, Air Pollution Prevention Directorate, Department of the Environment, Ottawa, Ontario K1A 0H3, (819) 953-1120 (Telephone), (819) 953-7815 (Facsimile), ross.white@ec.gc.ca (Electronic mail); Arthur Sheffield, Regulatory and Economic Analysis Branch, Economic and Regulatory Affairs Directorate, Department of the Environment, Ottawa, Ontario K1A 0H3, (819) 953-1172 (Telephone), (819) 997-2769 (Facsimile), arthur.sheffield@ec.gc.ca (Electronic mail).

PROPOSED REGULATORY TEXT

Notice is hereby given, pursuant to subsection 332(1) of the Canadian Environmental Protection Act, 1999 (see footnote a) , that the Governor in Council proposes, pursuant to section 160 of that Act, to make the annexed On-Road Vehicle and Engine Emission Regulations.

Any person may, within 60 days after the date of publication of this notice, file with the Minister of the Environment comments with respect to the proposed Regulations 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 of objection must cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Ross White, Director, Transportation Systems Branch, Air Pollution Prevention Directorate, Environmental Protection Service, Department of the Environment, Ottawa, Ontario K1A 0H3.

A person who provides information to the Minister may submit with the information a request that it be treated as confidential, in accordance with section 313 of the Act.

Ottawa, March 21, 2002

EILEEN BOYD
Assistant Clerk of the Privy Council

ON-ROAD VEHICLE AND ENGINE EMISSION REGULATIONS

INTERPRETATION

1. (1) The following definitions apply in these Regulations.

"Act" means the Canadian Environmental Protection Act, 1999. (Loi)

"approach angle" means the smallest angle, in a plan side view of a vehicle, formed by the level surface on which the vehicle is standing and a line tangent to the front tire static loaded radius arc and touching the underside of the vehicle forward of the front tire. (angle d'approche)

"auxiliary emission control device" means any element of design which senses temperature, vehicle speed, engine RPM, transmission gear, manifold vacuum, or any other parameter for the purpose of activating, modulating, delaying, or deactivating the operation of any part of the emission control system. (dispositif antipollution auxiliaire)

"basic vehicle frontal area" means the area enclosed by the geometric projection of the basic vehicle, which includes tires but does not include mirrors or air deflectors, along the longitudinal axis of the vehicle onto a plane perpendicular to that axis. (surface frontale du véhicule de base)

"break-over angle" means the supplement of the largest angle, in the plan side view of a vehicle, that can be formed by two lines tangent to the front and rear static loaded radii arcs and intersecting at a point on the underside of the vehicle. (angle de rampe)

"CFR" means Title 40, chapter I, subchapter C, part 86, of the Code of Federal Regulations of the United States as amended from time to time. (CFR)

"complete heavy-duty vehicle" means a heavy-duty vehicle having a GVWR of 6350 kg (14,000 pounds) or less that is powered by an Otto-cycle engine and that has a primary load carrying device or container attached at the time the vehicle leaves the control of the manufacturer of the engine. (véhicule lourd complet)

"crankcase emissions" means substances that cause air pollution and that are emitted to the atmosphere from any portion of the engine crankcase ventilation or lubrication systems. (émissions du carter)

"curb weight" means the actual or manufacturer's estimated weight of a vehicle in operational status with all standard equipment and weight of fuel at nominal tank capacity and the weight of optional equipment. (masse en état de marche)

"departure angle" means the smallest angle, in a plan side view of a vehicle, formed by the level surface on which the vehicle is standing and a line tangent to the rear tire static loaded radius arc and touching the underside of the vehicle rearward of the rear tire. (angle de sortie)

"diesel engine" means a type of engine that has operating characteristics significantly similar to those of the theoretical Diesel combustion cycle. The non-use of a throttle during normal operation is indicative of a diesel engine. (moteur diesel)

"diesel heavy-duty vehicle" means a heavy-duty vehicle that is powered by a diesel engine. (véhicule lourd diesel)

"element of design" means

(a) any control system, including computer software, electronic control system and computer logic;

(b) any control system calibrations;

(c) the results of systems interaction; or

(d) any hardware items on a vehicle or engine. (élément de conception)

"emission control system" means a unique group of emission control devices, auxiliary emission control devices, engine modifications and strategies, and other elements of design used to control emissions from a vehicle. (système antipollution)

"EPA" means the United States Environmental Protection Agency. (EPA)

"evaporative emissions" means hydrocarbons emitted into the atmosphere from a vehicle, other than exhaust emissions and crankcase emissions. (gaz d'évaporation)

"exhaust emissions" means substances emitted to the atmosphere from any opening downstream from the exhaust port of a vehicle's engine. (émissions de gaz d'échappement)

"Federal Test Procedure" means the test procedure as described in subsections 130(a) through (d) and (f) of Subpart B of the CFR which is designed to measure urban driving exhaust and evaporative emissions over the Urban Dynamometer Driving Schedule set out in Appendix I of the CFR. (Federal Test Procedure)

"fleet" means all vehicles of a model year that a company manufactures in Canada, or imports into Canada, for the purpose of sale of those vehicles to the first retail purchaser. (parc)

"full useful life emission bin" means a set of emission standards applicable to exhaust emissions, measured using the Federal Test Procedure, that is equivalent to a horizontal row of standards in Table S04-1 in section 1811, Subpart S, of the CFR. (intervalle d'émissions de durée de vie totale)

"GVWR" means the gross vehicle weight rating specified by a manufacturer as the maximum design loaded weight of a single vehicle. (PNBV)

"heavy-duty engine" means an engine designed to be used for motive power in a heavy-duty vehicle, other than a medium-duty passenger vehicle or a complete heavy-duty vehicle. (moteur de véhicule lourd)

"heavy-duty vehicle" means an on-road vehicle that has a GVWR of more than 3,856 kg (8,500 pounds) or that has a curb weight of more than 2,722 kg (6,000 pounds) or a basic vehicle frontal area in excess of 4.2 m² (45 square feet). (véhicule lourd)

"heavy light-duty truck" means a light-duty truck having a GVWR of more than 2,722 kg (6,000 pounds). (camionnette lourde)

"light-duty truck" means an on-road vehicle that has a GVWR of 3,856 kg (8,500 pounds) or less, that has a curb weight of 2,722 kg (6,000 pounds) or less and a basic vehicle frontal area of 4.2 m² (45 square feet) or less and that

(a) is designed primarily for the transportation of property or that is a derivative of a vehicle that is so designed;

(b) is designed primarily for the transportation of persons and has a designated seating capacity of more than 12 persons; or

(c) is available with special features that enable it to be operated and used off-road, the special features being four-wheel drive and at least four of the following characteristics calculated when the vehicle is at curb weight, on a level surface with the front wheels parallel to the vehicle's longitudinal centreline, and the tires are inflated to the manufacturer's recommended pressure, namely,

(i) an approach angle of not less than 28 degrees,
(ii) a break-over angle of not less than 14 degrees,
(iii) a departure angle of not less than 20 degrees,
(iv) a running clearance of not less than 20.3 cm (8 inches), and
(v) front and rear axle clearances of not less than 17.8 cm (7 inches). (camionnette)

"light-duty vehicle" means an on-road vehicle that is designed primarily for the transportation of persons and has a designated seating capacity of not more than 12 persons. (véhicule léger)

"light light-duty truck" means a light-duty truck that has a GVWR of 2,722 kg (6,000 pounds) or less. (camionnette légère)

"medium-duty passenger vehicle" means a heavy-duty vehicle that has a GVWR of less than 4,536 kg (10,000 pounds) and that is designed primarily for the transportation of persons but does not include any vehicle that

(a) is a truck that is incomplete because it does not have a primary load carrying device or container attached;

(b) has a seating capacity of more than 12 persons;

(c) is designed to seat more than 9 persons behind the driver; or

(d) is equipped with an open cargo area (for example a pick-up truck box or bed) of 183 cm (72.0 inches) in interior length or more or with a covered box not readily accessible from the passenger compartment. (véhicule moyen à passagers)

"model year" means the year that is used by a manufacturer to designate a model of vehicle or engine, as described in section 3. (année de modèle)

"motorcycle" means an on-road vehicle with a headlight, taillight and stoplight and having two or three wheels and a curb weight of 793 kg (1,749 pounds) or less, but does not mean a vehicle that has an engine displacement of less than 50 cm³ (3.1 cubic inches), or that, with an 80 kg (176 pound) driver

(a) cannot start from a dead stop using only the engine; or

(b) cannot exceed a speed of 40 km/h (25 mph) on a level paved surface. (motocyclette)

"nominal fuel tank capacity" means the volume of the fuel tank specified by the manufacturer to the nearest three eighths of a litre (tenth of a U.S. gallon) which may be filled with fuel from the fuel tank filler inlet. (capacité nominale du réservoir à carburant)

"NOx" means oxides of nitrogen, which is the sum of nitric oxide and nitrogen dioxide contained in a gas sample as if the nitric oxide were in the form of nitrogen dioxide. (NOx)

"on-road vehicle" means a self-propelled vehicle designed for and capable of transporting persons, property, material or permanently or temporarily affixed apparatus on a highway, but does not mean a vehicle that

(a) cannot exceed a speed of 40 km/h (25 mph) on a level paved surface;

(b) lacks features customarily associated with safe and practical highway use such as a reverse gear, unless the vehicle is a motorcycle, a differential, or safety features required by Federal or Provincial laws;

(c) exhibits features that render its use on a highway unsafe, impractical, or highly unlikely, such as tracked road contact means or an inordinate size; or

(d) is a military vehicle designed for use in combat or combat support. (véhicule routier)

"Otto-cycle engine" means a type of engine that has operating characteristics significantly similar to those of the theoretical Otto combustion cycle. The use of a throttle during normal operation is indicative of an Otto-cycle engine. (moteur à cycle Otto)

"Otto-cycle heavy-duty vehicle" means a heavy-duty vehicle that is powered by an Otto-cycle engine. (véhicule lourd à cycle Otto)

"rounded" means rounded in accordance with method ASTM-E29-93a of the American Society for Testing and Materials. (arrondir)

"static loaded radius arc" means a portion of a circle whose centre is the centre of a standard tire-rim combination of a vehicle and whose radius is the distance from that centre to the level surface on which the vehicle is standing, measured with the vehicle at curb weight, the wheel parallel to the vehicle's longitudinal centreline, and the tire inflated to the manufacturer's recommended pressure. (arc du rayon sous charge)

"useful life" means the period of time or use during which an emission standard applies to a vehicle or engine, whether full or intermediate, as set out in the CFR. (durée de vie utile)

(2) Standards that are incorporated by reference from the CFR are those expressly set out in the CFR and shall be read as not including

(a) references to the EPA or the Administrator of the EPA exercising discretion in any way;

(b) alternative standards related to fleet averages, other averages, emission credits, small volume manufacturers, or financial hardship; or

(c) standards or evidence of conformity of any jurisdiction or authority other than the EPA.

(3) In these Regulations, a reference to a vehicle or engine of the 2004 model year means a vehicle or engine of that model year that is manufactured on or after September 1, 2003.

PURPOSE

2. The purposes of these Regulations are to

(a) reduce emissions of hydrocarbons, carbon monoxide, oxides of nitrogen (NOx), formaldehyde and particulate matter from on-road vehicles and engines by establishing emission limits for those substances;

(b) reduce emissions of the toxic substances 1-3 butadiene, acetaldehyde, acrolein and benzene through the establishment of emission limits for hydrocarbons from on-road vehicles and engines; and

(c) establish emission standards and test procedures for on-road vehicles and engines that are aligned with those of the United States Environmental Protection Agency.

MODEL YEAR

3. (1) A year that is used by a manufacturer as a model year shall

(a) if the period of production of a model of vehicle or engine does not include January 1 of a calendar year, correspond to the calendar year during which the period of production falls; or

(b) if the period of production of a model of vehicle or engine includes January 1 of a calendar year, correspond to that calendar year.

(2) The period of production of a model of vehicle or engine shall include only one date of January 1.

PRESCRIBED CLASSES OF VEHICLES AND ENGINES

4. (1) In these Regulations, subject to subsections (2) and (3), the following vehicles and engines are prescribed for the purposes of the definitions "vehicle" and "engine" in section 149 of the Act:

(a) light-duty vehicles;

(b) light-duty trucks, namely, light light-duty trucks and heavy light-duty trucks;

(c) medium-duty passenger vehicles;

(d) complete heavy-duty vehicles;

(e) heavy-duty vehicles;

(f) heavy-duty engines; and

(g) motorcycles.

(2) The prescribed classes referred to in subsection (1) do not include

(a) any vehicle that was manufactured 15 years or more before the date of its importation into Canada; or

(b) any vehicle or engine that is being exported and that is accompanied by written evidence establishing that it will not be sold or used in Canada.

(3) For the purpose of section 152 of the Act, the prescribed classes referred to in subsection (1) do not include

(a) any vehicle or engine that will be used in Canada solely for purposes of exhibition, demonstration, evaluation or testing;

(b) vehicles and engines of the 2003 model year and vehicles and engines that were manufactured before September 1, 2003; and

(c) any engine that is to be installed in a heavy-duty vehicle before the first retail sale of the vehicle.

NATIONAL EMISSIONS MARK

5. (1) The national emissions mark is the mark set out in Schedule 1.

(2) The national emissions mark shall be at least 20 mm in diameter and shall show an identification number, in figures at least 2 mm in height, assigned by the Minister.

(3) The national emissions mark shall be located

(a) on or immediately beside the U.S. emission control information label referred to in paragraph 32(d); or

(b) on or immediately beside the compliance label affixed in accordance with the Motor Vehicle Safety Regulations.

(4) The national emissions mark shall be

(a) permanently affixed to the vehicle or engine;

(b) resistant to or protected against any weather condition to which the label may be exposed; and

(c) legible, indelible and shall bear inscriptions that are indented, embossed or in a colour that contrasts with the background of the label.

APPLICATION FOR AUTHORIZATION TO APPLY NATIONAL EMISSIONS MARK

6. (1) Any company that intends to apply a national emissions mark to a vehicle or engine shall apply to the Minister to obtain an authorization in the form set out in Schedule 2.

(2) The application to apply a national emissions mark shall include

(a) the name and address of the head office of the company and, if different, the mailing address;

(b) the classes of vehicles or engines for which the authorization is requested;

(c) the address where the national emissions mark will be applied to the vehicles or engines;

(d) the address where records referred to in section 35 will be maintained; and

(e) information to show that the company is capable of verifying compliance with the standards set out in these Regulations.

EMISSION CONTROL SYSTEMS

7. (1) An emission control system installed in a 2004 or later model year vehicle or engine to enable it to conform to the standards set out in these Regulations shall not

(a) release, in its operation or function, a substance that causes air pollution and that would not have been released if the system were not installed; or

(b) in its operation, function or malfunction make the vehicle unsafe or endanger persons or property in or near the vehicle.

(2) No vehicle or engine shall be equipped with a defeat device.

(3) Subject to subsection (4), a defeat device is an auxiliary emission control device that reduces the effectiveness of the emission control system under conditions which may reasonably be expected to be encountered in normal vehicle operation and use.

(4) An auxiliary emission control device is not a defeat device if

(a) the conditions referred to in subsection (3) are substantially included in the emission test procedures referred to in section 15;

(b) it is needed to protect the vehicle against damage or accident; or

(c) its use does not go beyond the requirements of engine starting.

STANDARDS FOR VEHICLES AND ENGINES

Application of Former Emissions Standards

8. A vehicle or engine of the 2003 model year, or that was manufactured before September 1, 2003, shall conform to any emissions standards applicable to the model year of that vehicle or engine that were in effect at the time of its manufacture and that were set out in Schedule V to the Motor Vehicle Safety Regulations.

Light-Duty Vehicles, Light-Duty Trucks and Medium-Duty Passenger Vehicles

9. Subject to section 16, a light-duty vehicle, light-duty truck or medium-duty passenger vehicle of the 2004 or later model year shall

(a) conform to the exhaust and evaporative emission standards applicable to vehicles of that model year set out in section 1811, subpart S of the CFR;

(b) be equipped with an on-board diagnostic system that conforms to the standards applicable to vehicles of that model year set out in section 1806, subpart S, of the CFR; and

(c) not release any crankcase emissions.

Complete Heavy-Duty Vehicles

10. Subject to section 16, a complete heavy-duty vehicle of the 2005 or later model year, other than a medium-duty passenger vehicle, shall

(a) conform to the exhaust and evaporative emission standards applicable to complete heavy-duty vehicles of that model year set out in section 1816, subpart S, of the CFR;

(b) be equipped with an on-board diagnostic system that conforms to the standards applicable to vehicles of that model year set out in section 1806, subpart S, of the CFR; and

(c) not release any crankcase emissions.

Heavy-Duty Vehicles

11. Subject to section 16, an Otto-cycle heavy-duty vehicle of the 2004 or later model year, other than a medium-duty passenger vehicle or a complete heavy-duty vehicle, shall

(a) be equipped with a heavy-duty engine that meets the requirements of these Regulations; and

(b) conform to the evaporative emission standards applicable to Otto-cycle heavy-duty vehicles of that model year set out in section 10, subpart A, of the CFR.

12. (1) Subject to subsection (2) and section 16, a diesel heavy-duty vehicle of the 2004 or later model year, other than a medium-duty passenger vehicle, shall

(a) be equipped with a heavy-duty engine that meets the requirements of these Regulations; and

(b) conform to the evaporative emission standards applicable to diesel heavy-duty vehicles of that model year set out in section 11, subpart A, of the CFR.

(2) A vehicle referred to in subsection (1) that has a GVWR of 6,350 kg (14,000 pounds) or less may conform to the standards set out for that model year in section 1863, subpart S, of the CFR instead of the standards described in subsection (1).

Heavy-Duty Engines

13. (1) Subject to section 16, Otto-cycle heavy-duty engines of the 2004 or later model year shall conform to the exhaust and crankcase emission standards applicable to Otto-cycle heavy-duty engines of that model year set out in section 10, subpart A, of the CFR.

(2) Subject to section 16, diesel heavy-duty engines of the 2004 or later model year shall conform to the exhaust and crankcase emission standards applicable to diesel heavy-duty engines of that model year set out in section 11, subpart A, of the CFR.

(3) Subject to section 16, heavy-duty engines of the 2004 or later model year used or intended for use in heavy-duty vehicles that have a GVWR of 6,350 kg (14,000 pounds) or less shall be equipped with an on-board diagnostic system that conforms to the standards applicable to engines of that model year set out in section 17, subpart A, of the CFR.

Motorcycles

14. Subject to section 16, motorcycles of the 2004 or later model year shall

(a) conform to the exhaust and evaporative emissions standards applicable to motorcycles of that model year set out in section 410, subpart E, of the CFR; and

(b) not release any crankcase emissions.

Determining applicable standards

15. (1) The standards referred to in sections 9 to 14 are the certification and in-use standards set out in the CFR, at their applicable useful life, and include the test procedures and calculation methods set out in the CFR for those standards.

(2) In the case of a standard that is set out in the CFR to be phased in over a period of time for a class of vehicle or engine, the standard comes into effect for the purposes of these Regulations in the model year for which the CFR specifies that the standard applies to 100% of that class, and continues to apply until another standard comes into effect that applies to 100% of that class.

Certificate of Conformity

16. Every vehicle or engine that is of the 2004 or later model year that is covered by a certificate of conformity to U.S. federal standards issued by the EPA and that is sold concurrently in the United States and Canada shall

(a) conform to the standards referred to in the certificate of conformity instead of the standards set out in sections 9 to 14; and

(b) have permanently affixed to the vehicle or engine the evidence of such conformity in the form and manner set out in paragraph 32(d).

FLEET AVERAGE NOX STANDARDS

Light-Duty Vehicles and Light Light-Duty Trucks

17. Subject to sections 27 and 28, the average NOx value for a company's fleet of light-duty vehicles and light light-duty trucks for a model year set out in column 1 of the table in this section, calculated as set out in section 20, shall not exceed the applicable fleet average NOx standard set out in column 2.

TABLE

Item	Column 1 Model Year	Column 2 Fleet Average NOx Standard in g/km
1.	2004	0.15 (0.24 g/mile)
2.	2005	0.11 (0.18 g/mile)
3.	2006	0.081 (0.13 g/mile)
4.	2007	0.04 (0.07 g/mile)
5.	2008	0.04 (0.07 g/mile)

Heavy Light-Duty Trucks and Medium-Duty Passenger Vehicles

18. Subject to sections 27 and 28, the average NOx value for a company's fleet of heavy light-duty trucks and medium-duty passenger vehicles of a model year set out in column 1 of the table in this section, calculated as set out in section 20, shall not exceed the applicable fleet average NOx standard set out in column 2.

TABLE

Item	Column 1 Model Year	Column 2 Fleet Average NOx Standard in g/km
1.	2004	0.34 (0.54 g/mile)
2.	2005	0.28 (0.43 g/mile)
3.	2006	0.20 (0.33 g/mile)
4.	2007	0.12 (0.20 g/mile)
5.	2008	0.087 (0.14 g/mile)

Vehicles of the 2009 and Later Model Years

19. Subject to sections 27 and 28, the average NOx value for a company's fleet of light-duty vehicles, light-duty trucks and medium-duty passenger vehicles of the 2009 and later model years, calculated as set out in section 20 or 21, shall not exceed 0.04 g/km (0.07 g/mile).

CALCULATION OF FLEET AVERAGE NOX VALUES

20. (1) Subject to section 21, a company shall calculate a fleet average NOx value for a fleet referred to in section 17 to 19 as follows:

Σ(B x N)
A = ________

C

where

A   is the fleet average NOx value,

B   is the NOx emission standard for each full useful life emission bin,

N   is the number of vehicles in the fleet that conform to that NOx emission standard, and

C   is the total number of vehicles in the fleet.

(2) The fleet average NOx value shall be rounded to the same number of significant figures that are contained in the total number of vehicles in the fleet in the denominator in subsection (1), but to at least three decimal places.

(3) Subject to subsection (4), for any of its vehicles that conforms to a NOx emission standard for an extended useful life of 15 years or 240,000 km (150,000 miles), a company may, in the equation in subsection (1), replace that standard, for each of those vehicles, with that standard multiplied by 0.85, rounded to at least three decimal places.

(4) A company may only replace a NOx emission standard as described in subsection (3) if the vehicle complies with any intermediate useful life standards that may be applicable to that vehicle.

(5) For the model years 2004 or 2005, a company may multiply the number of vehicles that conform to standards set out in full useful life emission bin 1 by 2, and multiply the number of vehicles that conform to standards set out in full useful life emission bin 2 by 1.5, when calculating one of the following:

(a) the denominator in subsection (1); or

(b) "total number of vehicles in the fleet" in the equation for calculating credits in subsection 22(2).

(6) For the 2004 model year, a company may take into account, when calculating the fleet average NOx value referred to in subsection (1), all vehicles of that model year, including those manufactured before September 1, 2003.

21. (1) A company may elect not to calculate an average NOx value for a fleet of a model year if every vehicle in that fleet conforms to a full useful life emission bin that has a NOx standard equal to or less than the applicable fleet average NOx standard for that model year that is set out in section 17, 18 or 19.

(2) For the purposes of paragraphs 34(1)(c) and 36(2)(b), the fleet average NOx emission value in a model year when a company makes the election under subsection (1) shall be deemed to be the fleet average NOx standard applicable to the fleet for which the election was made.

NOX EMISSION CREDITS

22. (1) A company may obtain NOx emission credits if the fleet average NOx value for a model year, determined in accordance with section 20, is lower than the applicable fleet average NOx standard.

(2) NOx emission credits are units of vehicle-g/km that are calculated using the following formula and rounding the result to the nearest whole number:

A = (B - C) x D

where

A   is the NOx emission credits

B   is the fleet average NOx standard

C   is the fleet average NOx value, and

D   is the total number of vehicles in the fleet.

(3) The NOx emission credits for a model year are obtained on the last day of that model year.

23. NOx emission credits obtained in a model year shall be used by the company to offset any outstanding NOx emission deficit described in section 24, and any remaining credits may be used to offset a future deficit or may be transferred to another company.

NOX EMISSION DEFICITS

24. If a company's fleet average NOx value for a model year, determined in accordance with section 20, is higher than the applicable fleet average NOx standard, the company shall calculate the negative number that is the value of a NOx emission deficit incurred in that model year using the formula set out in subsection 22(2).

25. (1) A company shall offset a NOx emission deficit for a given model year no later than the date on which the company submits the end of model year report under section 36 for the third model year after the model year in which the deficit was incurred.

(2) Subject to subsection (3), a company may offset a NOx emission deficit with an equivalent number of NOx emission credits obtained in accordance with section 22 or obtained from another company.

(3) If any part of a NOx emission deficit for a given model year is outstanding following the submission of the end of model year report for the second model year after the model year in which the deficit was incurred, the number of NOx emission credits required to offset that outstanding deficit in the next end of model year report is 120% of the deficit.

26. (1) A company that purchases another company or that results from the merger of companies is responsible for offsetting, in accordance with section 25, any outstanding NOx emission deficits of the purchased or merged companies.

(2) In the case of a company that ceases to manufacture, import or sell light-duty vehicles, light-duty trucks and medium-duty passenger vehicles, the company shall, no later than three calendar years after submitting its last end of model year report, offset all NOx emission deficits outstanding at the time that it ceases those activities.

OPTIONAL FLEET AVERAGE NOX STANDARD WITH RESTRICTIONS

27. (1) A company may elect in any model year to meet a fleet average NOx standard set out in subsections (2) to (4) instead of a standard for that fleet set out in sections 17 to 19 but the company may not, in that model year and in respect of that fleet,

(a) use any NOx emission credits to meet the standard;

(b) obtain any NOx emission credits; or

(c) have any NOx emission deficit.

(2) If a company makes the election under subsection (1) for its fleet of light-duty vehicles and light light-duty trucks of a model year set out in column 1 of the table in this subsection, the average NOx value for that fleet in that model year, calculated as set out in section 20, shall not exceed the applicable standard set out in column 2.

TABLE

Item	Column 1 Model Year	Column 2 Optional Fleet Average NOx Standard in g/km
1.	2004	0.19 (0.30 g/mile)
2.	2005	0.15 (0.24 g/mile)
3.	2006	0.11 (0.18 g/mile)
4.	2007	0.062 (0.10 g/mile)
5.	2008	0.062 (0.10 g/mile)

(3) If a company makes the election under subsection (1) for its fleet of heavy light-duty trucks and medium-duty passenger vehicles of a model year set out in column 1 of the table in this subsection, the average NOx value for that fleet in that model year, calculated as set out in section 20, shall not exceed the applicable standard set out in column 2.

TABLE

Item	Column 1 Model Year	Column 2 Optional Fleet Average NOx Standard in g/km
1.	2004	0.37 (0.60 g/mile)
2.	2005	0.34 (0.54 g/mile)
3.	2006	0.28 (0.43 g/mile)
4.	2007	0.20 (0.33 g/mile)
5.	2008	0.12 (0.20 g/mile)

(4) For the 2009 and later model years, if a company makes the election under subsection (1) for its fleet of light-duty vehicles, light-duty trucks and medium-duty passenger vehicles of a particular model year, the average NOx value for that fleet in that model year, calculated as set out in section 20, shall not exceed 0.062 g/km (0.10 g/mile).

FLEETS OF EPA CERTIFIED VEHICLES

28. (1) In any of the 2004 to 2006 model years, if every model of light-duty vehicle and light light-duty truck in a company's fleet is covered by a certificate of conformity to U.S. federal standards issued by the EPA and is sold concurrently in the United States and Canada, the company is not required to meet the fleet average NOx standards set out in sections 17 and 27 for that fleet.

(2) In any of the 2004 to 2008 model years, if every model of heavy light-duty truck and medium-duty passenger vehicle in a company's fleet is covered by a certificate of conformity to U.S. federal standards issued by the EPA and is sold concurrently in the United States and Canada, the company is not required to meet the fleet average NOx standards set out in sections 18 and 27 for that fleet.

EMISSION-RELATED MAINTENANCE INSTRUCTIONS

29. (1) Every company shall ensure that written instructions respecting emission-related maintenance are provided to the first retail purchaser of every vehicle and that the instructions are consistent with the maintenance instructions set out for

(a) light-duty vehicles, light-duty trucks, medium-duty passenger vehicles and complete heavy-duty vehicles in section 1808, subpart S, of the CFR for the applicable model year;

(b) motorcycles in section 411, subpart E of the CFR for the applicable model year; and

(c) heavy-duty vehicles, in section 38, subpart A of the CFR for the applicable model year.

(2) The instructions referred to in this section shall be provided in English, French or both official languages, as requested by the purchaser.

EMISSION-RELATED INFORMATION LABELS

30. Every diesel-fuelled vehicle of the 2007 and later model years shall have a legible, permanent label, resistant to or protected against any weather condition to which the label may be exposed, affixed in a readily visible location near all fuel inlets that states "Use Low-Sulphur Diesel Fuel Only - Utiliser le diesel à faible teneur en soufre seulement" or "Low Sulphur Diesel Only — Diesel à faible teneur en soufre seulement".

31. In the case of a model of vehicle or engine for which the Governor in Council has made an exemption order under section 156 of the Act, a label setting out in English and French the standard for which the exemption has been granted and the title and date of the exemption order shall be

(a) securely affixed to the windshield or side window of every vehicle of that model or vehicle equipped with the engine of that model; and

(b) permanently affixed immediately beside the national emissions mark, and resistant to or protected against any weather condition to which the label may be exposed.

RECORDS

Evidence of Conformity

32. In the case of a vehicle or engine that is of a model of a model year covered by an EPA certificate of conformity to U.S. federal standards and sold concurrently in the United States and Canada, evidence of conformity for the purpose of paragraph 153(1)(b) of the Act in respect of a company shall consist of

(a) a copy of the certificate of conformity covering the vehicle or engine issued by the EPA;

(b) a document demonstrating that vehicles or engines of the same model and model year are sold concurrently in the United States and Canada;

(c) a copy of the records submitted to the EPA in support of the application for the issuance of the certificate of conformity in respect of the vehicle or engine; and

(d) a U.S. emission control information label, or in the case of a heavy-duty engine a U.S. engine information label, that is permanently affixed to the vehicle or engine in the form and location set out in

(i) section 1807, subpart S, of the CFR, for the applicable model year of light-duty vehicle, light-duty truck, medium-duty passenger vehicle or complete heavy-duty vehicle,
(ii) section 413, subpart E, of the CFR for the applicable model year of the motorcycle,
(iii) section 35, subpart A, of the CFR for the applicable model year of heavy-duty vehicle, and
(iv) section 35, subpart A, of the CFR for the applicable model year of heavy-duty engine.

33. In the case of a vehicle or engine other than those referred to in section 32, evidence of conformity required under paragraph 153(1)(b) of the Act shall be obtained and produced by a company in a form and manner satisfactory to the Minister.

Fleet Average NOx Records

34. (1) A company shall maintain records containing the following information for each of its fleets described in sections 17 to 19:

(a) the model year;

(b) the applicable fleet average NOx standard;

(c) the fleet average NOx value achieved as described in section 20 or 21; and

(d) all values used in calculating the fleet average NOx values achieved.

(2) For each vehicle in a fleet described in subsection (1), the company shall maintain records containing the following information:

(a) the model and model year;

(b) the applicable fleet average NOx standard;

(c) in the case of a vehicle covered by an EPA certificate of conformity, the applicable test group described in subpart S of the CFR;

(d) the name and address of the plant where the vehicle was assembled;

(e) the vehicle identification number;

(f) the NOx emission standard to which the vehicle is certified; and

(g) the name and address of the first purchaser of the vehicle in Canada.

Maintenance and Submission of Records

35. (1) A company shall maintain, in writing or in readily readable electronic or optical form

(a) the evidence of conformity referred to in paragraphs 32(a) to (c) and section 33 and records referred to in paragraph 153(1)(g) of the Act for a period of

(i) at least eight years after the date of manufacture, for engines and vehicles, other than motorcycles, and
(ii) at least six years after the date of manufacture, for motorcycles; and

(b) the records referred to in section 34, for a period of eight years after the date that the end of model year report is required to be submitted under subsection 36(1).

(2) If the Minister makes a written request for the evidence of conformity or the records referred to in subsection (1), or a summary of them, the company shall provide the Minister with the evidence of conformity, records or summary, in either official language, within

(a) 40 days after the request is delivered to the company; or

(b) if the evidence of conformity or records referred to in section 32 or 33 must be translated from a language other than French or English, 60 days after the request is delivered to the company.

End of Model Year Reports for Fleet Average NOx Emissions

36. (1) A company shall submit to the Minister an end of model year report, signed by a person who is authorized to act on behalf of the company, no later than May 1 following the end of each model year.

(2) The end of model year report shall contain the following information for each of its fleets described in sections 17 to 19:

(a) the applicable fleet average NOx standard;

(b) the fleet average NOx value achieved as described in section 20 or 21;

(c) for each model of vehicle, the values used in calculating the fleet average NOx values achieved;

(d) the total number of vehicles in the fleet;

(e) the NOx emission credits obtained or deficits incurred in that model year; and

(f) the balance of credits or deficits at the end of the model year.

(3) The end of model year report must also contain the following information on each credit transfer to or from the company since the submission of the previous end of model year report

(a) the name, address and, if different, the mailing address of the company that transferred the credits and the model year in which that company obtained those credits;

(b) the name, address and, if different, the mailing address of the company that received the credits;

(c) the date of the transfer; and

(d) the quantity of credits transferred.

(4) The company shall include in the end of model year report, if applicable

(a) a statement that it has elected under section 21 not to calculate a fleet average NOx standard;

(b) a statement that it has elected under section 27 to meet an optional fleet average NOx standard; and

(c) a statement that every model of vehicle in its fleet is covered by an EPA certificate of conformity and is sold concurrently in the United States and Canada as described in section 28.

IMPORTATION REQUIREMENTS AND DOCUMENTS

General Provisions

37. (1) Subject to subsection (2), any person importing into Canada a vehicle or engine shall submit a declaration at a customs office, signed by that person or their duly authorized representative, that contains

(a) the name and address of the importer;

(b) the name of the manufacturer of the vehicle or engine;

(c) the date on which the vehicle or engine is imported;

(d) the class, make, model, and model year of the vehicle or engine and

(i) in the case of a vehicle, the vehicle identification number, and
(ii) in the case of an engine, the serial number of the engine;

(e) in the case of a company, a statement that the vehicle or engine bears the national emissions mark or that the company has the evidence of conformity referred to in section 32 or 33; and

(f) in the case of a person that is not a company,

(i) a statement from the person that the vehicle or engine bears

(A) the national emissions mark,

(B) the U.S. emission control information label referred to in paragraph 32(d) showing that the vehicle conformed to the EPA emission standards in effect at the time of its manufacture, or

(C) an emission control label showing that the vehicle conformed to the emission standards of the California Air Resources Board in effect at the time of its manufacture, or

(ii) a statement from the manufacturer or its duly authorized representative that the vehicle or engine conformed to the standards set out in these Regulations, or to the standards referred to in clause (i)(B) or (C), at the time of the main assembly of the vehicle or engine.

(2) For the purposes of paragraph 153(1)(b) of the Act, any company that imports in a calendar year more than 2,500 vehicles or 1,000 engines into Canada may provide the information referred to in subsection (1) in a form and manner that is satisfactory to the Minister.

38. (1) The declaration that a person is required to make under paragraph 155(1)(a) of the Act shall contain

(a) the information described in paragraphs 37(1)(a) to (d);

(b) a statement that the vehicle or engine will be used in Canada solely for purposes of exhibition, demonstration, evaluation or testing; and

(c) the date the vehicle will be removed from Canada or destroyed.

(2) The declaration shall be filed with the Minister

(a) prior to the import of the vehicle or engine; or

(b) in the case of a company whose world production of vehicles or engines is 2,500 or more a year, as described in paragraph (a) or quarterly.

39. A company that imports a vehicle or engine as described in subsection 153(2) of the Act shall make a declaration at a customs office, signed by its duly authorized representative, that contains the information described in paragraphs 37(1)(a) to (e) and, in addition,

(a) a statement from the manufacturer of the vehicle or engine that the vehicle or engine will, when completed in accordance with instructions provided by the manufacturer, conform to the standards prescribed under these Regulations; and (b) a statement that the vehicle or engine will be completed in accordance with the instructions provided under paragraph (a).

RENTAL RATE

40. The rental rate to be paid to a company by the Minister under subsection 159(1) of the Act, prorated on a daily basis for each day that a vehicle or engine is made available, is

(a) 18 per cent of the manufacturer's suggested retail price of the vehicle or engine, for the first year; and

(b) 12 per cent per year for any subsequent period.

APPLICATION FOR EXEMPTION

41. (1) A company applying under section 156 of the Act for an exemption from conformity with any standard prescribed under these Regulations shall submit in writing to the Minister

(a) its name, address and, if different, mailing address;

(b) the province or country under the laws of which it is established;

(c) the section number, title and text or substance of the standards from which an exemption is sought;

(d) the duration requested for the exemption;

(e) the reason for requesting an exemption;

(f) if the company is requesting that the information submitted be treated as confidential under section 313 of the Act, the reasons for the request; and

(g) the reasons why the granting of the exemption by the Governor in Council would be in the public interest and consistent with the objectives of the Act.

(2) Where the basis of an application for an exemption is substantial financial hardship, the company shall include in the submission to the Minister

(a) the world production of vehicles or engines manufactured by the company or by the manufacturer of the model that is the subject of the application in the 12 month period beginning two years before the beginning of the period in respect of which the exemption is applied for;

(b) the total number of vehicles or engines manufactured for, or imported into, the Canadian market in the 12 month period beginning two years before the beginning of the period in respect of which the exemption is applied for;

(c) technical and financial information demonstrating in detail why conformity to the standards referred to in paragraph (1)(c) would create substantial financial hardship, including

(i) a list of each of the items that would have to be altered in order to achieve conformity,
(ii) an itemized and detailed description of the estimated cost to make the alterations referred to in subparagraph (i)

(A) at the end of one year after the day on which the application is submitted, if the duration of the requested exemption is for a period of one year or more but less than two years,

(B) at the end of two years after the day on which the application is submitted, if the duration of the requested exemption is for a period of two years or more but less than three years, or

(C) at the end of three years after the day on which the application is submitted, if the duration of the requested exemption is for a period of three years,

(iii) the estimated price increase per vehicle or engine to counter the total costs incurred pursuant to subparagraph (ii) and a statement of the anticipated effect of each such price increase,
(iv) corporate balance sheets and income statements for the three fiscal years immediately preceding the filing of the application, and
(v) any other relevant information; and

(d) a description of the company's efforts to conform to the standards from which the exemption is sought, including

(i) a description of any other means of achieving conformity that were considered and the reasons for rejecting each of them, and
(ii) a description of the steps to be taken while the exemption is in effect and the estimated date by which conformity will be achieved through design changes or the termination of the production of non-conforming vehicles or engines.

(3) Where the basis of an application for exemption is the development of new emission monitoring or emission control features that are equivalent or superior to those that conform to the prescribed standards, the company shall include in the submission to the Minister

(a) a description of the new features;

(b) a copy of the research, development and testing documentation establishing the innovative nature of the new features;

(c) an analysis of how the level of performance of the new features is equivalent or superior to the level of performance established by the prescribed standards, including

(i) a detailed description of how a vehicle or engine equipped with the new features would, if exempted, differ from a vehicle or engine that conforms to the prescribed standards, and
(ii) the results of tests conducted on the new features that demonstrate a level of performance that is equivalent or superior to that required by the prescribed standards;

(d) evidence that an exemption would facilitate the development or the field evaluation of the vehicle or engine; and

(e) a statement as to whether the company intends, at the end of the exemption period,

(i) to conform to the prescribed standards,
(ii) to apply for a further exemption, or
(iii) to request that the prescribed standards be amended to incorporate the new features.

(4) Where the basis of an application for exemption is the development of new kinds of vehicles, engines or vehicle or engine systems or components, the company shall include in the submission to the Minister

(a) a copy of the research, development and testing documentation establishing that an exemption would not substantially diminish the control of emissions of the vehicle or engine, including

(i) a detailed description of how the vehicle or engine equipped with the new kinds of vehicle systems or components would, if exempted, differ from one that conforms to the prescribed standards,
(ii) the reasons why not conforming to the prescribed standards does not substantially diminish the control of emissions of the vehicle or engine, and
(iii) a description of other means of achieving conformity that were considered and the reasons for rejecting each of them;

(b) evidence that an exemption would facilitate the development or the field evaluation of the vehicle or engine; and

(c) a statement as to whether the company intends, at the end of the exemption period, to conform to the prescribed standards.

(5) Where a company wishes to obtain a new exemption to take effect after the expiration of an exemption referred to in subsections (3) or (4), the company shall submit, in writing, to the Minister

(a) the information required under subsection (3) or (4), as the case may be; and

(b) a statement of the total number of vehicles or engines sold in Canada under the expiring exemption.

DEFECT INFORMATION

42. (1) The notice of defect referred to in subsections 157(1) and (4) of the Act shall be given in writing and shall indicate

(a) the name of the company giving the notice;

(b) the identifying classification of each vehicle and engine in respect of which the notice is given, including in the case of a vehicle its make, model, model year, vehicle identification number and the period during which it was manufactured;

(c) the estimated percentage of the potentially affected vehicles or engines that contain the defect;

(d) a description of the defect;

(e) an evaluation of the pollution risk arising from the defect; and

(f) a statement of the measures to be taken to correct the defect.

(2) A company shall, within 60 days after giving a notice of defect, submit to the Minister the initial report referred to in subsection 157(7) of the Act containing

(a) the information referred to in subsection (1);

(b) the total number of vehicles or engines in respect of which the notice of defect has been issued and the number of vehicles or engines in each identifying classification;

(c) a chronology of all principal events that led to the determination of the existence of the defect; and

(d) copies of all notices, bulletins and other circulars issued by the company in respect of the defect, including a detailed description of the nature and physical location of the defect with diagrams and other illustrations as necessary.

(3) The company shall submit quarterly reports to the Minister respecting the defect and its correction commencing three months after the initial report that contain the following information:

(a) the number, title or other identification assigned by the company to the notice of defect;

(b) the number of vehicles or engines in respect of which the notice of defect has been issued;

(c) the date that notices of defect were given to the current owners of the affected vehicles or engines; and

(d) the total number or percentage of vehicles or engines repaired, including vehicles or engines requiring inspection only.

CONSEQUENTIAL AMENDMENTS

Motor Vehicle Safety Regulations

43. (1) Paragraph 5(2)(b) (see footnote 9)  of the Motor Vehicle Safety Regulations (see footnote 10)  is repealed.

(2) Subsection 5(2.1) (see footnote 11)  of the Regulations is repealed.

44. Paragraph 11(1)(f.1) (see footnote 12)  of the Regulations is repealed.

45. Schedule V (see footnote 13)  to the Regulations is repealed.

COMING INTO FORCE

46. These Regulations come into force on September 1, 2003.

SCHEDULE 1 (Subsection 5(1))

NATIONAL EMISSIONS MARK

SCHEDULE 2 (Subsection 6(1))

MINISTERIAL AUTHORIZATION

Department of the Environment

Canadian Environmental Protection Act, 1999

On-Road Vehicle and Engine Emission Regulations

Identification Number _____________

Pursuant to the Canadian Environmental Protection Act, 1999, I,_________, the Minister of the Environment, hereby authorize (name and address) to use and apply at its premises located at (location) the national emissions mark and this identification number on the following classes of prescribed vehicles or engines, provided that the vehicles or engines conform to all applicable emission standards: (list classes)

This authorization expires on ______________,____.

Issued on _____________

______________________

for the Minister of the Environment

[13-1-o]  

Footnote 1 

The U.S. Code of Federal Regulations is available at: www.access.gpo.gov/nara/cfr/waisidx_00/40cfr86_00.html.

Footnote 2 

U.S. EPA, Control of Emissions of Hazardous Air Pollutants from Mobile Sources, Final Rule, Federal Register of March 29, 2001.

Footnote 3 

The section of health effects is similar to the categories of health effects used by the 1998 Government Working Group on Setting a Sulphur Level for Sulphur in Gasoline and Diesel. The combination of VOCs and NOx in the table is a proxy for ozone.

Footnote 4 

U.S. EPA, Regulatory Impact Analysis — Control of Air Pollution from New Motor Vehicles: Tier 2 Motor Vehicle Emissions Standards and Gasoline Sulfur Control Requirements, EPA420-R-99-023, December 1999 (Chapter VII: Benefit-Cost Analysis). The document is available electronically at http://www.epa.gov/otaq/tr2home.htm#ria.

Footnote 5 

U.S. EPA, Regulatory Impact Analysis: Heavy-Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control Requirements, EPA420-R-00-026, December 2000 (Chapter VII: Benefit-Cost Analysis). The document is available electronically at http://www.epa.gov/otaq/diesel.htm#hd2007.

Footnote 6 

Because of uncertainties, the impact of the avoidance of the combination of the various pollutants is not possible to evaluate. The other categories of benefits not evaluated but that should be taken into account are residential visibility, household soiling damage, materials damage, nitrogen deposition to estuaries, and commercial forest damage.

Footnote 7 

Industry Canada, Canada's Automotive Industry 2000. The report is available at the following Web site: http://strategis.ic.gc.ca. The Harbour and Associates report is the most authoritative reference for productivity on the automotive sector.

Footnote 8 

Industry Canada, The Competitiveness of the Canadian Automotive Sector (February 1998, also available at the following Web site: http://strategis.ic.gc.ca). The relative high ratio of production relative to Canadian sales is an indication that the industry is export-oriented. For example, the Big Three car manufacturers produce twice as many vehicles in Canada than they sell.

Footnote a 

S.C. 1999, c. 33

Footnote 9 

SOR/97-376

Footnote 10 

C.R.C., c. 1038

Footnote 11 

SOR/97-376

Footnote 12 

SOR/97-376

Footnote 13 

SOR/2000-182

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