Vol. 135, No. 1 — January 3, 2001

Registration
SOR/2001-1 13 December, 2000

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

Order Adding a Toxic Substance to Schedule 1 to the Canadian Environmental Protection Act, 1999

P.C. 2000-1762 13 December, 2000

Whereas, pursuant to subsection 332(1) of the Canadian Environmental Protection Act, 1999 (see footnote a), the Minister of the Environment published in the Canada Gazette, Part I, on September 2, 2000, a copy of the proposed Order Adding a Toxic Substance to Schedule 1 to the Canadian Environmental Protection Act, 1999, substantially in the annexed form, and persons were given an opportunity to file comments with respect to the Order or to file a notice of objection requesting that a board of review be established and stating the reasons for the objection;

And whereas, pursuant to subsection 90(1) of that Act, the Governor in Council is satisfied that the substance set out in the annexed Order is a toxic substance;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of the Environment and the Minister of Health, pursuant to subsection 90(1) of the Canadian Environmental Protection Act, 1999 (see footnote b), hereby makes the annexed Order Adding a Toxic Substance to Schedule 1 to the Canadian Environmental Protection Act, 1999.

ORDER ADDING A TOXIC SUBSTANCE TO SCHEDULE 1 TO THE CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

AMENDMENT

1. Schedule 1 to the Canadian Environmental Protection Act, 1999 (see footnote 1) is amended by adding the following after item 46:

47. Bromochloromethane, that has the molecular formula CH₂BrCl

COMING INTO FORCE

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

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order nor of the Regulations.)

Description

Recognizing that chlorofluorocarbons (CFCs) and halons deplete the ozone layer and have adverse effects on the environment, Canada, along with 23 other nations, signed the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol) on September 16, 1987. This treaty is designed to prevent a global environmental and health problem from reaching the crisis stage.

Parties to the Protocol, now totaling 175, have implemented control measures to achieve emissions reductions of ozone-depleting substances (ODSs). These reductions are intended to prevent damages resulting from gradual destruction of the ozone layer and thus contribute to protecting the environment, health and human life.

Since 1987, Canada has adopted regulations to meet its Montreal Protocol commitments. The Ozone-depleting Substances Regulations, 1998 (ODS Regulations) control the import, manufacture, use, sale and export of ODSs as well as products containing ODSs.

The purpose of these amendments is to clarify the Regulations and to reflect Canada's international commitments. These amendments will:

• ensure that Environment Canada is advised of the location of any imported recovered, recycled, reclaimed or previously used controlled substances, by requiring that the importer of these controlled substances remains responsible for their re-exportation;
• require that additional information be provided for the request of permits in the Schedules of the Regulations;
• remove the requirement to submit an annual report for recovered, recycled, reclaimed or used controlled substances. Quarterly reports will still be required;
• require holders of permits for the import and/or export of used, recovered, recycled or reclaimed HCFCs to provide quarterly reports. Annual reports will no longer be required.
• require that notification of transit shipments of controlled substances be made prior to their entry into Canada;
• clarify that the sale of controlled substances to foreign flag ships shall be treated as domestic sales;
• prohibit the reuse of controlled substances recovered from metered-dose inhalers, except for essential purposes;
• modify the reduction schedule for methyl bromide to reflect our international commitments;
• add bromochloromethane (Halon 1011) to the list of controlled substances and prohibit its production and consumption as of January 1, 2002; and
• prohibit the trade of HCFCs with non-Parties to the Montreal Protocol as of January 1, 2004.

These amendments will come into effect on January 1, 2001.

Alternatives

No other alternatives to amending the existing Regulations have been judged appropriate to ensure that the private sector will comply with the amendments. Other measures such as voluntary approaches would not ensure that the objectives of the amendments will be fulfilled.

Anticipated Impacts

Administrative Amendments

Costs

Compliance with these amendments will result in additional administrative costs because the schedules of the Regulations will require the private sector to provide more information. It is, however, expected that these additional costs will be somewhat offset by the reduced expenses related to not requiring annual reports on recovered, recycled, reclaimed or used ODSs.

The requirement to notify of the transit shipment of controlled substances is new in the Regulations. This requirement is expected to add minor additional administrative costs to those involved in the transit shipment of controlled substances.

Consequently, the additional administrative costs are expected to be minimal further to the implementation of these amendments.

Benefits

The administrative amendments will improve the tracking and accounting of controlled substances. These improved administrative controls will reduce the risk of releases of controlled substances into the atmosphere. Benefits of the improved administrative controls will therefore stem from the damages avoided due to a reduction in the release of ozone-depleting substance.

A quantitative comparison of the costs and benefits was not possible.

Metered-dose Inhalers

The recovery of material from metered-dose inhalers for other uses is a new activity in Canada. The metered-dose inhalers amendment is targeted at banning this activity before it becomes widespread. Given that the recovery of material from metered-dose inhalers is on a small-scale, the anticipated impact on business activity of the amendment is anticipated to be negligible.

Methyl Bromide

Benefits

Benefits of methyl bromide (MBR) elimination stem from future costs avoided. One important category of avoided costs is avoided health damages. Essentially, reduced emissions of ozone-depleting substances reduce the incidence of skin cancers, cataracts and other effects. This reduction in health effects can translate into monetary benefits.

Based on the controls for MBR, monetized health benefits are estimated to be in the order of $9.9 million over the period 2001 to 2060 (1999 present value discounted at 5%). The breakdown of benefits is included in Table 1 below.

Table 1: Overview of Monetized Health Benefits NPV 1999$ at 5% discount rate
Non-melanoma cases avoided	$1.3 million
Melanoma cases avoided	$0.3 million
Deaths from Skin Cancer	$6.9 million
Cataract cases avoided	$1.4 million
Total	$9.9 million

Costs

The Regulations will result in the elimination of 1,712 tonnes of MBR over the time period 2001 to 2020. The average cost of replacing this eliminated quantity is in the order of $4,000 per tonne. The costs of the Regulations are therefore estimated to be in the order of $3.8 million over a 20 year period and assuming a 5% discount rate.

Net Present Value

The Regulations to phase out the use of MBR will result in a net benefit to Canadian society in the order of $6.1 million. The benefit cost ratio of 2.6 (9.9/3.8) indicates that the results are insensitive to changing the assumptions. This implies that the MBR Regulations are socially desirable.

Bromochloromethane

Costs

The compliance with these amendments will result in additional costs to the public and private sectors due to the need to replace existing bromochloromethane total flooding (fire extinguishing) systems and to dispose of the extracted material. Given the small quantity of bromochloromethane that is being banned (504 kg) the compliance costs are expected to be minimal. Costs will be in the order of $63,050 (1999 present value).

Benefits

Usual benefits related to a reduction in ODS emissions are fatal and non fatal skin cancer cases, weakening of the immune system, damages to fisheries, agriculture and material as well as damages resulting from climate change consequences. The present value of a bromochloromethane reduction as a result of the amendment is estimated to be in the order of $12,600.

Net Present Value

Although the costs of compliance associated with the amendments are greater than the benefits (net present value of -$50,450), the overall cost is minimal.

The negative result of the net present value is insensitive to changes in either the discount rate or assumptions.

Overview of Costs and Benefits

An overview of the costs and benefits of the amendments are presented in Table 2.

Table 2: Overview of Costs and Benefits NPV 1999$ at 5% discount rate
	Costs	Benefits	Net Present Value
Administrative Amendments	negligible	negligible	unknown
Metered-dose Inhalers	negligible	negligible	unknown
Methyl Bromide	$3.8 million	$9.9 million	$6.1 million
Bromochloromethane	$63,050	$12,600	-$50,450

Consultation

Due to the limited impacts of the amendments, Environment Canada did not hold a consultation meeting on the amendments. A discussion document, however, was sent to 2,500 stakeholders and posted on Environment Canada's ozone Web site.

Further to publication in the Canada Gazette, Part I on September 2, 2000, and the distribution of the Regulations to 2,500 stakeholders and the posting of the amendments on Environment Canada ozone Web site, Environment Canada received two letters from stakeholders. These comments were reviewed and considered. Information was also provided to stakeholders who had questions on the proposed amendments.

Comments were received on the proposed amendment that stated that the calculated level of consumption for a person shall never exceed that person's consumption allowance during the year. These stakeholders argued that this may complicate the management of the import, manufacture and export of controlled substances. Environment Canada recognizes that the management of the import, manufacture and export of controlled substances may be difficult to achieve. Therefore, the relevant section to the Regulations has not been amended as proposed in the pre-published Regulations.

One stakeholder argued that the 15-day period stated in the pre-published Regulations was too long to receive a permit to export controlled substances. The Regulations did not stipulate that a delay of 15 days would be applied when issuing export permits for controlled substances. The Regulations state that the Minister must be notified of shipments in transit at least 15 days prior to the entry or exit of the shipment into or from Canada. This would allow for the monitoring of the movement of shipments of controlled substances across the Canadian territory. Export or import permits are not required for transit shipments.

Compliance and Enforcement

Since the Regulations are promulgated under the Canadian Environmental Protection Act, 1999 (CEPA), the Enforcement and Compliance Policy implemented under the Act will be applied by CEPA enforcement officers. Among other things, the policy outlines measures designed to promote compliance, including education and information, and to promote technical development and consultation on the preparation of the Regulations.

In verifying compliance with these Regulations, CEPA enforcement officers will abide by the Enforcement and Compliance Policy, which sets out a range of possible responses to offenses: warnings, enforcement officers' guidelines, ticketing, ministerial orders, injunctions, prosecution, and civil suits by the Crown for the recovery of costs in specified circumstances. If, on inspection or following the report of a suspected offense, a CEPA enforcement officer confirms that an offense has been committed, the enforcement officer will select the appropriate response, based on the following criteria:

It is anticipated that the amendments will have a negligible impact on enforcement.

Contacts

Alex Cavadias
Commercial Chemicals Evaluation Branch
Toxic Pollution Prevention Directorate
Department of the Environment
Ottawa, Ontario
K1A 0H3
Tel.: (819) 953-1132
E-mail: alex.cavadias@ec.gc.ca

Arthur Sheffield
Regulatory and Economic Analysis Branch
Economic and Regulatory Affairs Directorate
Department of the Environment
Ottawa, Ontario
K1A 0H3
Tel.: (819) 953-1172
E-mail: arthur.sheffield@ec.gc.ca

Footnote a

S.C. 1999, c. 33

Footnote b

S.C. 1999, c. 33

Footnote 1

S.C. 1999, c. 33

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