ARCHIVED — Vol. 148, No. 39 — September 27, 2014

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Regulations Amending the On-Road Vehicle and Engine Emission Regulations and Other Regulations Made Under the Canadian Environmental Protection Act, 1999

Statutory authority

Canadian Environmental Protection Act, 1999

Sponsoring department

Department of the Environment

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: The operation of vehicles is a major source of smog-forming air pollutants, which are linked to premature deaths as well as other important adverse health and environmental effects. The Government of Canada is proposing to take further steps to address the sulphur content of gasoline and air pollutant emissions from cars and trucks to help ensure cleaner air for Canadians.

Description: The proposed Regulations Amending the Sulphur in Gasoline Regulations (the proposed SiGR Amendments) and the proposed Regulations Amending the On-Road Vehicle and Engine Emission Regulations and Other Regulations Made Under the Canadian Environmental Protection Act, 1999 (the proposed ORVEER Amendments) would align with the United States Environmental Protection Agency (U.S. EPA) Tier 3 standards, which include lower limits on the sulphur content of gasoline and stricter limits on air pollutant emissions from new passenger cars, light-duty trucks and certain heavy-duty vehicles beginning with the 2017 model year. Consequential amendments are also proposed to two other vehicle emission regulations made under the Canadian Environmental Protection Act, 1999 (CEPA 1999) to simplify the requirements regarding information to be submitted for vehicle importation into Canada in order to ensure consistency with proposed amendments to the On-Road Vehicle and Engine Emission Regulations (ORVEER).

Cost-benefit statement: By 2030, the proposed SiGR and ORVEER Amendments (collectively referred to as the proposed Amendments) are expected to result in cumulative health and environmental benefits of $7.3 billion, fuel and vehicle costs of $2.6 billion, and net benefits for Canadians of $4.7 billion, representing a benefit-to-cost ratio of almost 3:1. The proposed Amendments would add production costs to the Canadian fuel refining and vehicle manufacturing and importing sectors. The average gasoline production costs would be expected to increase by about 0.2 cents per litre, while the average vehicle production costs would be expected to increase by about $70 per new vehicle when the proposed emission standards reach full stringency. Some of these costs are expected to be passed on to consumers. Between 2017 and 2030, air quality improvements resulting from the proposed Amendments are expected to prevent about 1 400 premature deaths, nearly 200 000 days of asthma symptoms and 2.8 million days of acute respiratory problems related to air pollution.

“One-for-One” Rule and small business lens: The proposed SiGR Amendments would introduce annualized average administrative costs to the gasoline producing and importing sector of about $5,700, or $350 per business, while the proposed ORVEER Amendments would introduce annualized average administrative costs to the vehicle manufacturing and importing sector of about $68,000, or $1,500 per business. The small business lens would not apply to the proposed Amendments as the impacted communities would consist of medium and large businesses only.

Domestic and international coordination and cooperation: Maintaining alignment with U.S. fuel quality standards and air pollutant emission standards for vehicles and engines is consistent with the objectives of the Canada–U.S. Air Quality Agreement (AQA), the Government of Canada’s Clean Air Regulatory Agenda and the Canada–United States Regulatory Cooperation Council (RCC).

Background

Under the Canada–U.S. Air Quality Agreement (AQA), there is a history of aligning air pollutant emission standards for vehicles and fuels as a means of reducing trans-boundary air pollution. The 2000 Ozone Annex to the AQA included specific obligations for Canada to align with U.S. emission standards for on-road vehicles and engines. (see footnote 1) Since 2003, Environment Canada has introduced a range of vehicle, engine and fuel regulations in alignment with corresponding U.S. Environmental Protection Agency (EPA) standards. In addition, in 2011, Prime Minister Harper and President Obama announced the establishment of the Canada–United States Regulatory Cooperation Council (RCC) to work towards better alignment of regulatory approaches between the two countries in a broad range of sectors, including vehicle emissions.

The Sulphur in Gasoline Regulations (see footnote 2) (SiGR) published in the Canada Gazette, Part II, on June 23, 1999, limited sulphur in gasoline to an annual average level of 30 milligrams per kilogram (mg/kg), or 30 parts per million (ppm), with a never-to-be-exceeded limit of 80 ppm, beginning in 2005. The SiGR also included a simpler default option of a 40 ppm batch limit, with minimal administrative requirements. The On-Road Vehicle and Engine Emission Regulations (see footnote 3) (ORVEER) published in the Canada Gazette, Part II, on January 1, 2003, established more stringent national emission standards for on-road vehicles and engines beginning with the 2004 model year. The emission standards applicable to light-duty vehicles and trucks are commonly known as the “Tier 2” standards. The sulphur levels and emission standards established under these two regulations are aligned with those in effect in the United States until 2017.

In March 2013, the U.S. EPA announced the proposed Tier 3 rule that would reduce air pollution from passenger cars and trucks by lowering the level of sulphur in gasoline and setting stricter emission standards for new vehicles. Subsequently, on March 3, 2014, the United States released its Tier 3 Final Rule. (see footnote 4) Once fully phased in, the Tier 3 exhaust emission standards for non-methane organic gases (NMOGs) and nitrogen oxides (NOx), and for particulate matter (PM), will be about 80% and 70% lower, respectively, than the current Tier 2 emission standards for light-duty vehicles. Similarly, the new sulphur standard would be about 65% lower than the current maximum allowable limit.

Maintaining alignment with U.S. air pollutant emission standards for vehicles, engines and fuels is consistent with the objectives of the AQA, the Government of Canada’s Clean Air Regulatory Agenda and the RCC. In keeping with this approach, the Government of Canada is proposing to amend both the SiGR and ORVEER to align with the final U.S. Tier 3 standards for stricter limits on air pollutant emissions from new passenger cars, light-duty trucks and certain heavy-duty vehicles of the 2017 and later model years, and standards to reduce the amount of sulphur in gasoline for 2017 and beyond.

Issues

Smog caused by air pollutants has a significant adverse impact on the health of Canadians, the Canadian economy, and the environment. Smog is a noxious mixture of gases and particles, primarily ground-level ozone (O3) and particulate matter (PM). It has been identified as a contributing factor in thousands of premature deaths across the country each year, as well as in increased hospital and doctor visits and hundreds of thousands of lost days at work and school. Environmental problems attributed to smog include effects on vegetation, buildings and visibility.

The operation of motor vehicles is a major source of smog-forming air pollutants. In 2012, on-road vehicle emissions accounted for about 17%, 10% and 2% of national emissions of NOx, volatile organic compounds (VOCs) and fine particulate matter (PM2.5), respectively, excluding open and natural sources. (see footnote 5) The Canadian vehicle manufacturing and fuel refining industries have made significant investments in new technologies and upgrades for new vehicles and refineries in order to comply with existing regulations. These efforts have resulted in important reductions in smog-forming emissions from the fleet of vehicles operated in Canada. Nonetheless, continued advances in vehicle engine and emission control technologies provide the opportunity to build on past successes and introduce a new generation of vehicles with even better emission performance.

Sulphur in gasoline impairs the performance of catalytic converters in vehicles. Accordingly, continuing to take an integrated systems approach to vehicles and fuels is critical to maximizing future reductions in air pollutant emissions resulting from the use of vehicles.

Objectives

The objective of the proposed SiGR and ORVEER Amendments (collectively referred to as the proposed Amendments) is to reduce smog caused by air pollutants, which has a significant adverse impact on the health of Canadians, the Canadian economy and the environment. In addition to providing important benefits to the health and environment of Canadians, the proposed Amendments aim to maintain common Canada–U.S. standards for vehicles and fuels, which contribute to minimizing the overall compliance burden for companies operating in the North American market.

The proposed Amendments would align with the U.S. EPA Tier 3 standards, which include lower limits on the sulphur content of gasoline and stricter limits on air pollutant emissions from new passenger cars, light-duty trucks and certain heavy-duty vehicles. Consequential amendments are also proposed to certain requirements regarding the information to be submitted for vehicle importation into Canada in two other vehicle emission regulations made under CEPA 1999 in order to ensure consistency with proposed amendments to the ORVEER.

Lowering the allowable sulphur content in gasoline would enhance the performance of emission control systems from the in-use vehicle fleet and would enable the effective operation of advanced emission control technologies required to comply with the proposed more stringent vehicle emission standards for the 2017 and later model years. This measure would deliver increased health benefits to Canadians through reductions in air pollutant emissions. Lower sulphur content in gasoline would also enable new technologies or strategies to improve the greenhouse gas (GHG) emission performance of new vehicles.

Description

Proposed SiGR Amendments

The proposed SiGR Amendments would update the current Sulphur in Gasoline Regulations (SiGR). The proposed SiGR Amendments would require refiners and importers to provide lower sulphur gasoline to the Canadian market.

In order to facilitate compliance with the lower sulphur limits, the proposed SiGR Amendments would continue to provide two exclusive regulatory compliance options that exist within SiGR: a default batch limit with minimal administrative requirements, or an annual gasoline pool average. An additional flexibility would also be made available on an interim basis (2014 to 2019) to refiners and importers that elect for the annual pool average.

Under the proposed SiGR Amendments, the default batch limit would remain at the current sulphur level of 40 parts per million (ppm or mg/kg) until the end of 2016, and be reduced to 14 ppm for 2017, 2018 and 2019. For 2020 onwards, the flat limit would be set at 12 ppm.

The elective annual gasoline pool average compliance option would remain at 30 ppm until the end of 2016, when it would be reduced to 10 ppm for the years 2017 onward. This option would retain the current reporting, record-keeping, sample retention, and audit requirements.

It is proposed that SiGR retain the current never-to-be-exceeded batch limit of 80 ppm sulphur concentration in gasoline, applicable to gasoline imports and production using the annual pool average compliance option. The limit would apply as well to all gasoline sales.

It is also proposed that the elective annual pool average compliance option would allow for an additional option to participate in the proposed temporary sulphur compliance unit trading system (“temporary compliance provisions”), applicable for the 2014 to 2019 period. During this period, volume-based sulphur compliance units could be generated from the production and import of gasoline where the annual average sulphur concentrations are under 30 ppm during the years 2014 to 2016, and under 10 ppm during the years 2017 to 2019. These banked or traded sulphur compliance units could be used towards meeting regulatory compliance with the 10 ppm standard for the years 2017, 2018 and 2019.

Other proposed SiGR Amendments

Changes are being proposed which would simplify or eliminate reporting requirements for primary suppliers importing or producing volumes of gasoline less than 400 cubic meters (m3) annually. Other proposed changes include updating references to standards, making adjustments to provide clarity, and removing elements of SiGR that no longer apply.

Proposed ORVEER Amendments
Tier 3 exhaust and evaporative emission standards

The proposed ORVEER Amendments would update the On-Road Vehicle and Engine Emission Regulations (ORVEER) and would apply to passenger cars, light-duty trucks and certain heavy-duty vehicles of the 2017 and later model years. Further, the proposed ORVEER Amendments would continue to apply to companies that manufacture or import on-road vehicles in Canada.

The proposed ORVEER Amendments would establish progressively more stringent vehicle and fleet average standards over the 2017 to 2025 model years for combined emissions of non-methane organic gases (NMOG) and nitrogen oxides (NOx) and would establish a phase-in schedule for more stringent particulate matter (PM) and evaporative emission standards, in alignment with the U.S. Tier 3 program. (see footnote 6), (see footnote 7) As a result, the proposed ORVEER Amendments are expected to lead to reductions in emissions from on-road vehicles of NOx, NMOG, carbon monoxide (CO), fine PM (PM2.5) and other toxic substances listed on the List of Toxic Substances in Schedule 1 to CEPA 1999, including benzene, acetaldehyde, formaldehyde, acrolein and 1,3-butadiene. (see footnote 8)

Increasingly stringent combined NMOG and NOx (NMOG+NOx) fleet average standards would be adopted in Canada by means of the proposed ORVEER Amendments over the period from 2017 to 2025. A company’s fleets of light-duty vehicles, light-duty trucks and medium-duty passenger vehicles would have to comply with progressively more stringent exhaust emission standards, reaching a fleet average standard for emissions of NMOG+NOx of 30 milligrams per mile (mg/mi) in model year 2025. Similarly, heavy-duty vehicle weight classes 2B and 3 (e.g. delivery vans and heavy-duty pick-up trucks) would be required to comply with progressively more stringent fleet average standards for emissions of NMOG+NOx, reaching fleet average standards of 178 mg/mi and 247 mg/mi, respectively, in model year 2022.

Also, starting in model year 2017, new PM exhaust emissions standards would be introduced by means of a phase-in percentages approach with full implementation in model year 2021. An alternative phase-in compliance approach for these standards is being proposed by Environment Canada to allow companies to conform to the standards by averaging the total percentage of vehicles that conform to the standards over the consecutive model years included in the phase-in period. For vehicles with a gross vehicle weight rating (GVWR) up to 6 000 lb, the new PM certification standard would be 3 mg/mi. For vehicles with a GVWR above 6 000 lb and up to 14 000 lb, this certification standard would be 3 mg/mi for the applicable light-duty trucks and medium-duty passenger vehicles, and 8 mg/mi and 10 mg/mi for heavy-duty vehicle weight classes 2B and 3, respectively.

Starting in model year 2017, new evaporative emission standards would be introduced by means of a phase-in percentages approach with full implementation in model year 2022. An alternative phase-in compliance approach for these standards is also being proposed by Environment Canada to allow companies to conform to the standards by averaging the total percentage of vehicles that conform to the standards over the model years included in the phase-in period.

Finally, flexibility provisions for vehicles sold concurrently in Canada and the United States. would be included for compliance with Tier 3 fleet average emission standards as well as the phase-in emission standards. This flexibility is consistent with flexibility in the current Tier 2 fleet average emission standards and recognizes that the performance of the vehicle fleet concurrently sold is effectively anchored by the U.S. regulatory program.

Other proposed ORVEER Amendments

The proposed ORVEER Amendments would introduce new fleet average standards in Canada for cold temperature exhaust emissions of non-methane hydrocarbons (NMHCs). For fleets consisting of vehicles with a GVWR up to 6 000 lb, the cold temperature NMHC fleet average standard would be fixed at 0.3 grams per mile (g/mi), starting in model year 2017. For fleets consisting of vehicles with a GVWR above 6 000 lb and up to 14 000 lb, the cold temperature NMHC fleet average standard would be fixed at 0.5 g/mi, starting in model year 2017.

The proposed ORVEER Amendments would incorporate new on-board diagnostic (OBD) requirements in alignment with those of the U.S. EPA. The EPA has incorporated into its own regulations, starting in model year 2017, the OBD requirements of the California Air Resources Board, plus provisions to enable OBD-based leak detection to be used in emissions testing.

Further, the proposed ORVEER Amendments would include an exemption to allow emergency vehicles such as ambulances and fire trucks to have a defeat device that would override the “limp-home” function if it becomes activated during emergency situations. This exemption would ensure that emergency vehicles would have full engine power when required in emergency situations.

Other notable proposed changes to ORVEER include compliance flexibility and changes to vehicle importation, notices of defect and reporting. Compliance flexibility, in the form of credits, is proposed in line with the U.S. Tier 3 regulatory program and would be available for early adoption of the program standards; certifying vehicles to extended emission warranties; and installing ozone-reducing technologies in vehicles. In addition, the proposed Amendments would simplify the requirements regarding the information to be submitted for vehicle importation into Canada. The proposed ORVEER Amendments would also specify that existing notice-of-defect information would have to be available to owners of affected vehicles in both official languages. Lastly, to facilitate the reporting process, regulated parties would be required to submit reports electronically once Environment Canada’s reporting database is updated to include the data reporting requirements of the Tier 3 vehicle program.

Finally, consequential amendments are proposed to ensure consistency with Environment Canada’s suite of on-road vehicle and engine emission regulations for vehicle importation. These consequential amendments would modify the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations and the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations to simplify the requirements regarding information to be submitted for vehicle importation into Canada to be consistent with the proposed amendments to the On-Road Vehicle and Engine Emission Regulations.

Regulatory and non-regulatory options considered

The Government of Canada currently regulates vehicle air pollutant emissions and sulphur in gasoline under CEPA 1999. Other major industrialized countries have also enacted regulations to establish mandatory limits for sulphur in gasoline and vehicle air pollutant emissions to improve air quality. Therefore, the Government of Canada considered two options: maintaining the regulatory status quo or updating the regulatory requirements to achieve stringent aligned Canada–U.S. standards.

Status quo approach

Two current regulations are in force under CEPA 1999 to limit smog-forming emissions from vehicles. The SiGR establish a limit to the sulphur content in gasoline and ORVEER establishes national emission standards for on-road vehicles and engines. Without the proposed Amendments, Canadians would not fully realize the health and environmental benefits associated with maintaining alignment with the stringent U.S. EPA Tier 3 standards, and vehicle manufacturers and importers would not fully benefit from a harmonized regulatory environment for the North American market for vehicles. The vehicle manufacturing and fuel refining sectors in Canada and the United States are highly integrated. Regulatory misalignment could negatively impact investment decisions and increase regulatory costs for companies that need to meet different standards in each country. This option was therefore rejected.

Regulatory approach — Maintaining Canada–U.S. alignment

The Government of Canada is committed to providing cleaner air for Canadians. Maintaining regulatory alignment with the U.S. vehicle emission and fuel standards is the proposed approach as it would deliver important health and environmental benefits to Canadians while preserving the competitiveness of the Canadian vehicle manufacturing and fuel refining sectors. A parallel path of implementation for the proposed Amendments is necessary to fully achieve the benefits of regulatory alignment and to implement an integrated systems approach on fuels and vehicles to effectively reduce smog-forming emissions resulting from the use of vehicles. The proposed approach of establishing common Canada–U.S. standards is consistent with the policy objectives of the Canada–U.S. RCC of aligning regulatory approaches between the two countries, where possible.

Benefits and costs

The impacts of the proposed Amendments have been assessed in accordance with the Treasury Board Secretariat (TBS) Canadian Cost-Benefit Analysis Guide (www.tbs-sct.gc.ca/rtrap-parfa/analys/analystb-eng.asp).

The analysis compares the incremental impacts of two scenarios: a base-case scenario that assumes both the SiGR and ORVEER are not amended, and a policy-case scenario that assumes the proposed Amendments are implemented concurrently. The expected impacts of the proposed Amendments are illustrated below: compliance with stricter proposed limits for sulphur content in gasoline and stricter proposed limits for new vehicle exhaust and evaporative emissions are expected to work together to reduce emissions and improve overall air quality, which would result in both health and environmental benefits for Canadians.

Figure 1: Logic model for the analysis of the proposed amendments

Figure - Detailed information can be found in the surrounding text

The proposed SiGR Amendments have new gasoline sulphur limits beginning in 2017 and, by 2020, all primary suppliers (refineries and importers) must meet the proposed lower (10 ppm average or 12 ppm batch) sulphur limits for gasoline, which will provide reductions in emissions from all vehicles powered by gasoline engines. The proposed ORVEER Amendments have new standards (“Tier 3 standards”) for new vehicles beginning in model year 2017 and increasing in stringency to model year 2025. Overall emission reductions would increase over time as these newer vehicles become a larger percentage of the in-use fleet. It is projected that by 2030, most on-road light-duty vehicles and trucks in Canada would be compliant with the proposed ORVEER Amendments. There would also be some administrative costs beginning in 2014.

Therefore, the time frame for assessing impacts in this analysis is the 2014 to 2030 period, which is sufficient to demonstrate whether or not the benefits of the proposed Amendments are likely to exceed the associated costs. Costs and benefits have been quantified and monetized (denominated in 2013 Canadian dollars), wherever possible, and discounted at 3% per year according to TBS guidance for environmental and health regulatory analyses. Other identified impacts have been described qualitatively. Key data sources used to inform the analysis are outlined in Table 1.

Table 1: Key data sources used in this analysis

Data Key sources
Vehicle technology costs U.S. EPA — Regulatory Impact Analysis for Tier 3 Motor Vehicle Emission and Fuel Standards: www.epa.gov/otaq/tier3.htm
Vehicle sales Environment Canada — vehicle projections as reported under the following regulations:
  • Regulations Amending the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations (2012): www.gazette.gc.ca/rp-pr/p1/2012/2012-12-08/html/reg1-eng.html
  • Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations (2013): www.gazette.gc.ca/rp-pr/p2/2013/2013-03-13/html/sor-dors24-eng.html
Environment Canada — purchased Canadian vehicle datasets:
  • DesRosiers Automotive Consultants: light-duty fleet (1998 to 2011)
  • R.L. Polk & Co.: heavy-duty fleet (2005 to 2013)
Fuel costs Environment Canada — costing data compiled in 2013 by Baker & O’Brien
Environment Canada — one-on-one refinery surveys conducted in 2013 and 2014
U.S. EPA — Regulatory Impact Analysis for Tier 3 Motor Vehicle Emission and Fuel Standards: www.epa.gov/otaq/tier3.htm
Gasoline data Environment Canada — fuel quality data as reported by regulatees under these regulations:
  • Fuels Information Regulations, No. 1
  • Sulphur in Gasoline Regulations
  • Benzene in Gasoline Regulations
  • Renewable Fuels Regulations
Statistics Canada — Supply and disposition of refined petroleum products: www5.statcan.gc.ca/cansim/a26?id=1340004
Statistics Canada — Report on Energy Supply and Demand in Canada: www5.statcan.gc.ca/olc-cel/olc.action?ObjId=57-003-X&ObjType=2&lang=en&limit=0
Costs

There would be fuel refining costs, vehicle technology costs, and various administrative costs for Canadian businesses and the federal government expected as a result of the proposed Amendments. These costs were estimated for this analysis.

Fuel costs

Currently, there are 14 refineries in Canada that produce gasoline, as shown in the figure below.

Figure 2: Locations of Canadian gasoline-producing refineries

Figure - Detailed information can be found in the surrounding text.

Source: Environment Canada (2014)

In 2012, Canadian refineries produced roughly 40 billion litres of gasoline. In the same year, Canada exported roughly 8 billion litres and imported roughly 4 billion litres of gasoline, primarily to and from the United States. (see footnote 9) The national volume-weighted sulphur concentration in gasoline in Canada for 2009 was 17 ppm (i.e. including domestically produced and imported gasoline), and the volume-weighted average sulphur concentration by currently operating Canadian refineries ranged from 3 ppm to 23 ppm. (see footnote 10) Preliminary data for 2012 shows that the national volume-weighted sulphur concentration of Canadian gasoline produced and imported was 21 ppm, and the volume-weighted average sulphur concentration by currently operating refineries ranged from 4 ppm to 29 ppm. (see footnote 11) Two refineries currently produce gasoline below the proposed 10 ppm sulphur standard and would not be expected to bear any costs. For the other 12 refineries, the proposed SiGR Amendments would require additional gasoline desulphurization, which may be achieved by capital investments, operational changes, or both.

Environment Canada commissioned the collection of costing data to estimate the cost impacts on the Canadian refining industry of the proposed SiGR Amendments. Based on this data, it is expected that 10 refineries would make capital investments and 2 refineries would make only operational changes in order to comply with the proposed SiGR Amendments. Capital investment and related costs are expected to include one new gasoline hydrotreater ($165.6 million), eight gasoline hydrotreater revamps (average cost of $78.4 million), and one other new desulphurization unit ($3.7 million) totalling just under $800 million, or $706.4 million in present value terms. For the operational changes, one refinery would be expected to increase the intensity of its current desulphurization technology, and one refinery would be expected to sell some high-sulphur gasoline blendstock as a diluent for bitumen blending; this is not expected to affect total Canadian gasoline supply since there is excess refining capacity in Canada.

Operation of the new hydrotreating unit is expected to require additional hydrogen, natural gas, and electricity. As well, some refineries would be expected to require additional liquid fuel and electricity to further desulphurize their gasoline. Additional hydrogen, natural gas, liquid fuel, and energy demands were extracted from the costing study and adjusted to provincial gasoline production forecasts. (see footnote 12) The present value of costs associated with incremental fuel and energy demand was estimated by Environment Canada to total $77.6 million over 2017 to 2030, averaging $5.5 million per year.

Variable operating costs, including additional water and chemical demand, were also scaled with gasoline production. Other incremental costs, such as labour, maintenance and operating materials and supplies, and waste and environmental costs, were fixed annual costs. The present value of these operating costs was similarly estimated to total $78.6 million over 2017 to 2030, averaging $5.6 million per year. (see footnote 13)

Reducing gasoline sulphur levels can also result in gasoline octane loss. Some refiners may face additional costs if they add more high-octane gasoline blendstocks to their gasoline pool to compensate. Potential octane costs were estimated by applying the octane loss and recovery cost estimates in the U.S. EPA Regulatory Impact Analysis of its Tier 3 Final Rule, scaled based on feed sulphur level estimates and expected production for Canadian gasoline-producing refiners. The present value of costs to recover octane losses was estimated to be $165.7 million over 2017 to 2030, averaging $11.8 million per year. Refiners may choose not to compensate for octane losses, as there is evidence that the current Canadian gasoline pool is octane-rich, likely due to required ethanol blending under renewable fuel mandates. (see footnote 14) This estimate can therefore be considered an upper-bound cost estimate for octane losses.

Total operating costs were calculated as the sum of the additional estimated energy and fuel requirements, other fixed and variable operating costs, and estimated octane loss recovery costs as detailed above. The present value of total operating costs was estimated at $322 million over the 2017 to 2030 period, averaging $23 million per year.

Estimates of total incremental capital and operating costs are shown in Table 2.

Table 2: Total capital and operating costs (millions of 2013 $; discounted to present value using a 3% discount rate in the specified column and row only)

  2017–2020 2021–2025 2026–2030 2017–2030 2017–2030 (discounted)
Capital costs* 798 5 7 810 716
Operating costs 96 166 170 431 322
Total (undiscounted) 894 170 177 1,241 (not applicable)
Total (discounted) 791 131 117 1,038 1,038

Note: Totals may not sum due to rounding.

* Estimated capital costs include incremental catalyst replacement costs.

It is expected that the compliance costs would initially be experienced over the 2017 to 2020 period, as each refinery makes the necessary production changes and investments to reduce the concentration of sulphur in gasoline. The present value of total costs was estimated at $791 million over the 2017 to 2020 period and $247 million over the 2021 to 2030 period. Over the 2017 to 2030 period, the present value of total costs resulting from the proposed SiGR Amendments is estimated to be about $1.04 billion. As shown in Table 3, the average present value of incremental production costs per litre of gasoline produced over the 2017 to 2030 period was estimated to be roughly 0.2 cents per litre. This estimate of cost per litre is based on a simple ratio of present value of costs and litres of gasoline production over the 2017 to 2030 period and may differ from other estimates of cost per litre that are based on different assumptions and methodologies.

Table 3: Average fuel costs per litre of gasoline

Fuel costs (billions of 2013 $ discounted to present value using a 3% discount rate) 1.04
Domestic gasoline production for the 2017 to 2030 period (billions of litres) 540.2

Average cost (cents per litre)

0.19

Canada imported roughly 4 billion litres of gasoline in 2012, primarily from U.S. suppliers. Fuel importers may pay an increased price for gasoline that meets the more stringent sulphur standards due to increased production costs, some of which are expected to be passed on to consumers. This analysis focused on costs to Canadian refiners and it therefore did not assess costs to importers. Since Canada is a net exporter of gasoline, this approach is considered more than sufficient to estimate the expected costs of supplying lower sulphur gasoline in Canada.

Additional compliance costs could include necessary transaction costs related to legal and accounting fees that would be assumed by those primary suppliers that choose to opt into the temporary compliance provisions applicable over the 2014 to 2019 period. These costs were estimated to be roughly $152,000 in present value dollars. Refiners that opt into the temporary compliance provisions would be able to delay operating costs and better align capital upgrades with regular maintenance shutdown cycles.

Vehicle technology costs

The proposed ORVEER Amendments would apply to all new manufactured or imported on-road vehicles categorized as “Tier 3 vehicles,” which consist of light-duty passenger vehicles and trucks (LDVs and LDTs), medium-duty passenger vehicles (MDPVs), and heavy-duty vehicle (HDV) weight classes 2B and 3 (e.g. delivery vans and heavy-duty pick-up trucks), of model years 2017 and beyond. (see footnote 15) Tier 3 vehicles can be powered by gasoline, diesel, electricity, compressed natural gas, liquefied petroleum gas, or a combination of energy sources. Nevertheless, it is anticipated that Tier 3 vehicles would be predominantly powered by gasoline and diesel engines. Consequently, this analysis assumes that all Tier 3 vehicles are powered by gasoline or diesel engines (including hybrid electric engine types).

Multiple sources of information on historical vehicle sales and registration, and vehicle sales forecasts, were used as inputs into the Motor Vehicle Emissions Simulator (MOVES) and processed for further forecasting, generating projected Canadian sales for LDVs, LDTs and HDVs for each required vehicle class and model year. These projections are summarized in Table 4 in the form of average sales for three periods covering model years 2017 to 2030.

Table 4: Average sales of new vehicles per year by engine fuel type and vehicle class

Period (model years) Gasoline Engines Diesel Engines
LDVs LDTs HDVs LDVs, LDTs and HDVs
2017 to 2020 959 143 636 296 72 211 51 607
2021 to 2025 1 014 494 608 412 69 238 51 290
2026 to 2030 1 082 003 628 783 71 720 53 690

Tier 3 vehicles would be required to comply with exhaust and evaporative emission standards that increase in stringency from model years 2017 to 2025. Vehicle manufacturers and importers would be able to choose how to comply with the proposed standards, but the primary method of compliance would involve installing more efficient exhaust catalytic systems, which are anticipated to exhibit increased performance due to the lower sulphur content in gasoline. The new exhaust standards for cold temperature emissions of non-methane hydrocarbons (NMHCs) are not expected to result in any notable costs to manufacturers and importers, as Tier 3 vehicles would already be equipped with very sophisticated emissions control systems, which are calibrated to minimize emissions at cold temperatures. Thus, the U.S. EPA’s estimates of technology package costs, which are summarized in the EPA’s Regulatory Impact Analysis of the Tier 3 Final Rule, for each vehicle class, model year, and engine fuel type and size (i.e. the number of cylinders in the engine), have been converted to 2013 Canadian dollars and adopted in this analysis.

There may be some minor fuel savings associated with the new evaporative emission standards, as fuel that would have evaporated in the absence of these standards would instead be used to power vehicles. The evaporative emission standards would come into full effect for all Tier 3 vehicles in model year 2022; starting with this model year, the lifetime fuel savings for each vehicle powered by a gasoline engine is projected to be around three litres. Consumer fuel savings have not been taken into account in this analysis since they would be negligible.

Overall, the total costs of the new exhaust and evaporative emission standards were calculated by multiplying the projected sales for each vehicle class and model year by the compliance technology package costs per vehicle for the corresponding vehicle class, model year, and engine fuel type and size. (see footnote 16) The main results of the total cost calculations are presented in Table 5 for three periods covering model years 2017 to 2030.

Table 5: Costs of the Tier 3 emission standards in Canada by engine fuel type and vehicle class (millions of 2013 $; discounted to present value using a 3% discount rate in the specified column and row only)

Period (model years) Gasoline Engines Diesel Engines Total Costs (Gasoline and Diesel Engines)
LDVs LDTs HDVs LDVs, LDTs and HDVs Undiscounted Discounted
2017 to 2020 233 201 11 8 453 393
2021 to 2025 382 372 25 15 794 607
2026 to 2030 438 408 25 16 887 587
2017 to 2030 1 053 981 61 39 2,134 1,587
2017 to 2030 (discounted) 785 728 45 29 (not applicable) 1,587

Note: Totals may not sum due to rounding.

Discounting the above-mentioned technology costs at 3% per year yields present value costs to vehicle manufacturers and importers of about $393 million for model years 2017 to 2020, and about $1,194 million for model years 2021 to 2030. These results yield a total present value of approximately $1,587 million in vehicle program costs for model years 2017 to 2030. (see footnote 17)

Estimates of the average compliance costs per vehicle for the combined exhaust and evaporative emission standards were produced by weighting the present value costs by sales for each combination of engine fuel type and vehicle class. As shown in Table 6, the average costs per Tier 3 vehicle in present value terms were estimated to be about $57 for model years 2017 to 2020, $70 for model years 2021 to 2025, and $64 for model years 2026 to 2030.

Table 6: Average costs per vehicle by engine fuel type and vehicle class (2013 dollars discounted to present value using a 3% discount rate)

Period (Model Years) Gasoline Engines Diesel Engines Gasoline and Diesel Engines
LDVs LDTs HDVs LDVs, LDTs and HDVs LDVs, LDTs and HDVs
2017 to 2020 53 69 33 32 57
2021 to 2025 58 94 54 46 70
2026 to 2030 54 86 46 41 64

For model year 2025 in particular, when the proposed emission standards would come into full effect across all Tier 3 vehicle classes, the average present value cost per vehicle was projected to be around $70. The estimated aggregate sales and costs used to calculate the average cost per model year 2025 vehicle due to the proposed ORVEER Amendments are presented in Table 7.

Table 7: Average cost per model year 2025 vehicle

Estimated vehicle technology costs: model year 2025 Tier 3 vehicles (millions of 2013 dollars discounted to present value using a 3% discount rate) 125.6
Estimated sales of model year 2025 Tier 3 vehicles (millions of vehicles) 1.8

Average cost (per vehicle)

69.78

Business administrative costs and government costs

The proposed Amendments would introduce incremental administrative costs for each respective regulated community. Business administrative costs are discussed in further detail in the “‘One-for-One’ Rule” section of this Regulatory Impact Analysis Statement (RIAS). The total present value of administrative costs to business was estimated to be $0.06 million for the proposed SiGR Amendments and $1.01 million for the proposed ORVEER Amendments.

In support of the proposed SiGR Amendments, there would be federal government costs for incremental regulatory compliance promotion and administration over the 2014 to 2019 period. These costs were estimated at $20,000 per year. Additional federal government costs incurred for incremental enforcement and field sampling over the 2015 to 2023 period were estimated at $10,000 per year. The present value of these Government costs for the 2014 to 2030 period was thus estimated at $0.19 million.

There are not expected to be any incremental Government costs related to on-going administration, enforcement or emissions verification operations for the proposed ORVEER Amendments. The existing implementation strategy for implementing the air pollutant regulatory program for vehicles of model years 2004 to 2016 would be extended to vehicles of the 2017 and later model years. Additional upfront costs of approximately $1.8 million would be required to expand the Vehicle and Engine Emissions Reporting Registry (VEERR) database in order to render it compatible with the Tier 3 vehicle program. Also, an amount of up to $180,000 would be needed from 2017 to 2019 to prepare and deliver compliance promotion, and $110,000 would be required to support emission verification activities. The present value of these Government costs is estimated to be around $1.9 million.

Table 8: Summary of new administrative costs for businesses and the federal government (millions of 2013 dollars discounted to present value using a 3% discount rate)

Monetized impacts 2014 to 2020 2021 to 2025 2026 to 2030 Total
Business costs 0.39 0.37 0.32 1.07
Government costs 2.08 0.02 0 2.10
Note: Totals may not add up due to rounding.

Table 8 shows the total estimated business administrative costs and federal government costs due to the proposed Amendments. Business administrative costs are also reported in the “‘One-for-One’ Rule” section of this RIAS.

Benefits

The fuels and vehicles subject to the proposed Amendments are significant sources of air pollutants, such as fine particulate matter (PM2.5), nitrogen oxides (NOx), sulphur oxides (SOx), volatile organic compounds (VOCs) and other toxic substances. These pollutants can affect ambient levels of secondarily formed PM2.5 and ozone (O3). Exposure to ozone and PM2.5 (two principal components of smog) is linked to adverse health impacts, such as premature deaths, as well as other important health and environmental effects.

The proposed Amendments would affect emissions of NOx (a precursor to ozone formation and secondarily formed PM2.5), SOx (a precursor to secondarily formed PM2.5), VOCs (a precursor to ozone formation and, to a lesser degree, secondarily formed PM2.5) and directly emitted PM2.5, which contribute to ambient concentrations of PM2.5 and ozone. Estimating the impacts of the proposed Amendments on air pollutant emissions from vehicles and on air quality, and the subsequent impacts of air quality changes on health and the environment, required four models, as shown below.

Table 9: Models for estimating emissions and their impacts on air quality, health and the environment

Key impacts Models used to estimate and value key impacts
Vehicle emissions Motor Vehicle Emission Simulator (MOVES): the U.S. EPA’s vehicle emissions model used for its Tier 3 analysis.
Air quality A Unified Regional Air-Quality Modelling System (AURAMS): an Environment Canada model that estimates how emission changes impact local air quality.
Health benefits Air Quality Benefits Assessment Tool (AQBAT): a Health Canada model that estimates the health impacts of changes in local air quality.
Environmental benefits Air Quality Valuation Model 2 (AQVM2): an Environment Canada model that estimates the environmental impacts of changes in local air quality.

Given the resource-intensive and time-consuming nature of this detailed modelling, Environment Canada chose two representative years to conduct full emissions, air quality, and benefits modelling: 2020 and 2030. To estimate cumulative benefits, annual vehicle emission trends were also modelled and used to project linear trends for health and environmental benefits for the 2017 to 2030 period. Qualitative health, environmental, and economic benefits were also identified. A sensitivity analysis was done to assess the impact of uncertainty on the monetized benefit estimates.

Vehicle emissions modelling

Environment Canada adapted the U.S. EPA’s MOVES model to estimate the expected primary emission reductions attributable to the proposed Amendments. Key data for Canadian vehicle operating conditions, fuel properties and vehicle characteristics were incorporated into the MOVES model. Emission estimates were modelled for the base and policy cases in MOVES for the years 2020 and 2030 at the provincial/territorial level and annually for the years 2017 to 2030 at the national level.

For the base case, vehicle emission rates were assumed to continue to meet the existing ORVEER (Tier 2) standards or previous applicable standards, and gasoline in Canada was assumed to have the same sulphur concentrations as over the most recent three years of available data (2010 to 2012). Gasoline fuel quality parameters were estimated from reporting data collected annually from refiners and importers under several Environment Canada regulations (see Table 1). Historical vehicle sales and registration data and vehicle sales forecasts used for recent regulatory analyses were complemented by two key datasets purchased in 2013 by Environment Canada from DesRosiers Automotive Consultants and R.L. Polk & Co. covering the Canadian light-duty and heavy-duty vehicle fleets, respectively.

For the policy case, the sulphur levels in gasoline and emission rates for vehicles of the 2017 and later model years were assumed to comply with the proposed Amendments. Refiners and importers of gasoline were assumed to produce and import 10 ppm sulphur gasoline by 2020; those that have historically produced or imported gasoline with a sulphur content of 10 ppm or less were assumed to continue to maintain these levels. Vehicle emission rates were assumed to meet the proposed Tier 3 emission standards for model years 2017 and beyond, with increasing stringency over model years 2017 to 2025. Vehicle fleet composition, size, and activity were assumed to be the same in the base and policy cases.

Detailed primary emissions at the provincial/territorial level were estimated for the base and policy cases using MOVES for the years 2020 and 2030. The estimated incremental emission reductions resulting from the proposed Amendments are presented in Table 10 for key air pollutants and other toxic substances. Reductions in NOx, VOC, PM2.5 and CO emissions would increase from 2020 to 2030, as vehicle emission standards become increasingly stringent over the 2017 to 2025 period. As a result of fleet turnover, vehicles meeting the Tier 2 or previous emission standards (pre-Tier 3 vehicles) would gradually be replaced by vehicles meeting the Tier 3 emission standards.

It is estimated that NOx emissions would be reduced by over 27 000 tonnes in 2030, which represents a 13% reduction in total emissions from all on-road vehicles under the base case. Similarly, it is estimated that VOC emissions would be reduced by over 15 000 tonnes in 2030, which represents a 15% reduction in total emissions from all on-road vehicles under the base case. Estimated reductions in sulphur dioxide (SO2) emissions are based on the regulatory change in the sulphur content in gasoline, which should be fully implemented by 2020, and total gasoline consumption. The estimated SO2 reduction decreases slightly from 2020 to 2030, as total gasoline consumed in 2030 is projected to be slightly lower than in 2020 due to increasingly stringent vehicle fuel efficiency regulations. (see footnote 18)

Table 10: Total reductions in primary emissions of key air pollutants and other toxic substances from all on-road vehicles in Canada due to the proposed Amendments relative to the base case

  2020 2030

Air pollutant / toxic substance

Reduction (tonnes)

Reduction (percentage)

Reduction (tonnes)

Reduction (percentage)

NOx 10 234 4 27 743 13
VOCs 3 450 3 15 800 15
PM2.5 99 1 721 8
SO2 448 41 404 43
CO 58 328 3 398 751 22
1,3-butadiene 17 3 94 21
Acetaldehyde 45 2 224 14
Acrolein 3 2 16 9
Benzene 146 4 704 23
Formaldehyde 42 2 169 6

Note: These results include estimated emission reductions from the entire Canadian fleet of on-road vehicles, including motorcycles and all heavy-duty vehicles.

The results in Table 10 can also be disaggregated to show the impacts on new vehicles, which would be subject to the proposed ORVEER Amendments (Tier 3 vehicles), and on older vehicles, which would not be subject to the proposed ORVEER Amendments (pre-Tier 3 vehicles). The disaggregated emission reduction results are shown in Table 11 for two key pollutants: NOx and VOCs.

Table 11: Total reductions in primary NOx and VOC emissions from all on-road vehicles in Canada due to the proposed Amendments relative to the base case, disaggregated by fleet (tonnes)

NOx VOCs

2020

2030

2020

2030

Emission reductions from pre-Tier 3 vehicles due to new sulphur standard 7 590 2 958 1 977 952
Emission reductions from Tier 3 vehicles due to new sulphur and vehicle standards 2 644 24 785 1 473 14 848
Total emission reductions
(pre-Tier 3 and Tier 3 vehicles)
10 234 27 743 3 450 15 800

Given the temporary flexibilities in the proposed SiGR Amendments over the 2017 to 2019 period, gasoline producers and importers are expected to ramp up towards full compliance with proposed lower sulphur limits for gasoline by 2020. Given that the reduced sulphur content of gasoline would yield emission reductions from all on-road gasoline-powered vehicles and engines, and that the Tier 3 emission standards would apply to all engine fuel types, emissions from the entire Canadian fleet of on-road vehicles were modelled in MOVES, including emissions from motorcycles and all heavy-duty vehicles.

The projected NOx and VOC emission reductions from pre-Tier 3 vehicles would be the result of the lower sulphur content in gasoline. Emission reductions resulting from the combination of the proposed SiGR and ORVEER standards would increase over time as Tier 3 vehicles become a larger percentage of the on-road vehicle fleet. By 2030, it is projected that Tier 3 light-duty vehicles would represent over 70% of the total Canadian in-use light-duty fleet of on-road vehicles. As a result of turnover of the on-road vehicle fleet, the NOx and VOC emission reductions from Tier 3 vehicles were estimated to be considerably larger in 2030 than in 2020, since a larger portion of the fleet would meet the Tier 3 emission standards in this later year. Similarly, estimated emission reductions from pre-Tier 3 vehicles as a result of the lower sulphur content in gasoline are expected to be lower in 2030 as pre-Tier 3 vehicles come to represent a smaller portion of the on-road vehicle fleet.

National-level emissions were estimated using MOVES for the years 2017 to 2030 to show trends in primary annual emission reductions from on-road vehicles in Canada due to the proposed Amendments relative to the base case. The annual trends in NOx, VOC, PM2.5 and SO2 emission reductions are shown in Figure 3. Emission reductions of NOx, VOCs and PM2.5 are expected to increase beyond 2030 until Tier 3 vehicles make up roughly 100% of the on-road vehicle fleet, after which point emission reductions are expected to stabilize.

Figure 3: National-level reductions in primary annual emissions of key air pollutants from on-road vehicles in Canada due to the proposed Amendments relative to the base case

Graphic - Detailed information can be found in the surrounding text.

Note: The emission reduction estimates illustrated in this figure are based on national-level modelling and thus do not correspond exactly to the estimates presented in Table 10, which are based on more detailed modelling at the provincial/territorial level.

In the figure above, the effect of reducing sulphur in gasoline can be most clearly seen in the reductions in SO2 emissions over the 2017 to 2020 period. Vehicle fleet turnover from 2017 to 2030 is expected to result in increasing reductions in NOx, VOC, and PM2.5 emissions over this period, as an increasing portion of the fleet would meet more stringent emission standards. Reductions in SO2 emissions are not expected to follow the same trend since they are directly related to the amount of fuel combusted and the level of sulphur in the fuel.

Over the 2017 to 2020 and 2020 to 2030 periods, there are relatively linear trends in emission reduction estimates for NOx, VOCs, and PM2.5. These trends support the assumption of linearity employed to estimate cumulative health and environmental benefits over the 2017 to 2030 period using the provincial/territorial-level modelling results for the years 2020 and 2030.

Air quality modelling

The detailed emission results from MOVES for 2020 and 2030 were used as inputs for ambient air quality modelling within AURAMS. To reflect the expected location of vehicles, Canadian population densities and road class type information were used to geographically allocate the MOVES results. AURAMS was then used to estimate the impacts on ambient air quality resulting from the interaction of vehicle emission reductions with existing ambient air quality, daily weather and wind patterns. The relationship between air pollutant emissions and ambient air quality is complex and non-linear. This is particularly true for the formation of ground-level ozone (O3) through the interaction of NOx and VOCs. Key outputs from AURAMS used in the benefits analysis include different metrics, such as hourly and daily ambient concentrations of PM2.5, nitrogen dioxide (NO2) and ground-level ozone, reported by census division and statistically aggregated annually for the years 2020 and 2030.

Health benefits modelling and valuation

Health Canada applied the Air Quality Benefits Assessment Tool (AQBAT) to estimate the health impacts of the proposed Amendments. Using the air quality projections generated by AURAMS, changes in ambient air quality levels were allocated to each Canadian census division and used as inputs for AQBAT. Based on changes in local ambient air quality, AQBAT estimated the likely reductions in average per capita risks for a range of health impacts known to be associated with air pollution exposure. These changes in per capita risks were then multiplied by the affected populations in order to estimate the reduction in the number of health problems experienced by Canadians. AQBAT also applied economic values drawn from the available literature to estimate the average per capita economic benefits of lowered health risks. AQBAT estimated the health and associated economic benefits from the proposed Amendments for the years 2020 and 2030. Benefits for the entire 2017 to 2030 period were estimated assuming that benefits would follow a linear trend from 2017 to 2020 and from 2021 to 2030, based on the estimated emissions of key pollutants.

It was estimated that, from 2017 to 2030, air quality improvements resulting from the proposed Amendments would prevent about 1 400 premature deaths related to air pollution. The proposed Amendments were also estimated to prevent nearly 200 000 days of asthma symptoms, 910 000 days of limited activity due to breathing problems, and 2.8 million days of acute respiratory problems.

Table 12: Health impacts attributable to the proposed Amendments

Heath impacts as avoided adverse events In 2020 In 2030 Cumulative: 2017 to 2030 Cumulative Health Benefits ($ millions*)
Short-term respiratory problems        
Episodes of acute childhood bronchitis 115 500 3 500 $1
Days of asthma symptoms experienced 6 600 28 000 200 000 $10
Days of limited activity due to breathing problems 30 000 86 000 910 000 $35
Days of acute respiratory problems  91 000   380 000 2 800 000 $24
Adult chronic respiratory problems (chronic bronchitis) 18 80 560 $170
Premature death associated with air pollution 40 200 1 400 $7,000
All health end points $7,200

Note: Cumulative health benefits do not add up due to rounding.

* (millions of 2013 dollars discounted to present value using a 3% discount rate)

It was estimated that, from 2017 to 2030, air quality improvements resulting from the proposed Amendments would generate cumulative health benefits valued at $7.2 billion, in present value terms. These benefits were calculated by multiplying the health impacts in Table 12 by the corresponding economic values linked with the health risk decreases. The majority of the projected economic benefits ($7.0 billion) are a result of estimated reductions in the risk of premature death multiplied by an estimate of the average willingness-to-pay for small reductions in the risk of premature death. These health benefits are associated primarily with reductions in ambient levels of PM2.5, ground-level ozone and NO2. Nationally, reductions in PM2.5 accounted for the largest share of the benefits, but there is considerable regional variability, with ozone and NO2 reductions contributing significant benefits in many parts of the country.

Table 13: Health benefits attributable to the proposed Amendments (millions of 2013 dollars; only discounted to present value using a 3% discount rate in the specified column)

Year(s) PM2.5 Ozone (O3) NO2 Total Health Benefits (Undiscounted) Total Health Benefits (Discounted)
2020 140 70 81 300 250
2030 720 410 300 1,500 920
2017 to 2030 4,900 2,800 2,200 10,000 7,200
Environmental benefits modelling and valuation

Similarly, air quality modelling results for 2020 and 2030 from AURAMS were used as an input for AQVM2 to model environmental impacts, and these results were assumed to extend in linear trends over the periods 2017 to 2020 and 2021 to 2030. The present value of the cumulative benefits over the 2017 to 2030 period is estimated to be about $90 million, which accounts for the increase in sales revenue associated with enhanced crop productivity due to lower O3 levels, avoided cleaning costs for residential households due to reduced soiling from PM deposition, and households’ willingness-to-pay for visibility improvement associated with lower PM levels, as shown in Table 14.

Table 14: Environmental benefits related to air quality improvements (millions of 2013 dollars; only discounted to present value using a 3% discount rate in the specified column)

Year(s) Agriculture Soiling Visibility Total Environmental Benefits (Undiscounted) Total Environmental Benefits (Discounted)
2020 1.9 0.6 1.9 4.5 3.8
2030 6.4 2.8 8.1 17.3 10.8
2017 to 2030 48.8 19.8 58.3 126.9 90.1
Non-monetized benefits

Other reductions: This analysis has not taken into consideration the reductions in air pollutant emissions from off-road gasoline-powered engines, equipment, and vessels that would occur as a result of the proposed SiGR Amendments. Although the impacts of reducing air pollutant emissions from off-road sources powered by gasoline engines have not been quantified or monetized, these impacts would be expected to increase the overall health and environmental benefits estimated above.

Health: In addition to the impact that reductions in air pollutant emissions would have on the formation of smog, the proposed Amendments are also expected to reduce exposure to a number of other toxic substances, such as benzene, acetaldehyde, formaldehyde, acrolein and 1,3-butadiene. These substances are known to pose a wide range of health risks, from respiratory tract infections to increased cancer risk. Although the impacts of reducing emissions of these substances have not been quantified or monetized in this analysis, these impacts would be expected to increase the overall health benefits estimated above.

Environment: The proposed Amendments may also lead to some changes in greenhouse gas (GHG) emissions. It is expected that more energy would be required by refineries to reduce the amount of sulphur in gasoline. This increased energy consumption would lead to minor increases in GHGs over the 2017 to 2030 period. Due to improved vehicle emission control technologies and reduced sulphur in gasoline, vehicles would emit fewer GHGs in the form of methane (CH4) and nitrous oxide (N2O). There is some uncertainty regarding the exact relationship between the proposed vehicle emission standards and reductions in CH4 and N2O emissions, which makes it difficult to quantify these GHG impacts with a high level of precision. Nevertheless, as of 2020, increases in GHG emissions from refineries are estimated to be offset by reductions in GHG emissions from vehicles. Net GHG emission reductions were estimated to be at least 0.05 megatonnes per year, expressed in carbon dioxide (CO2) equivalent terms. The net impact on GHG emissions was not monetized due to the uncertainty associated with the estimates, but the impact of the GHG emission changes is expected to be small relative to the other impacts of the proposed Amendments.

Business: The vehicle manufacturing sectors in Canada and the United States are highly integrated, and there is a long history of collaboration in working towards the alignment of emission standards. The implementation of common Canada–U.S. standards for gasoline refiners and importers and vehicle manufacturers and importers would provide regulatory certainty to facilitate investment decisions and minimize reporting burden by allowing the use of common information, data and emission testing results to demonstrate compliance.

Summary of benefits and costs

By 2030, the proposed Amendments are estimated to result in cumulative health and environmental benefits of $7.3 billion; fuel, vehicle and other costs of $2.6 billion; and net benefits for Canadians of $4.7 billion, representing a benefit-to-cost ratio of almost 3:1.

Table 15: Statement of benefits and costs (millions of 2013 dollars discounted to present value using a 3% discount rate)

Monetized impacts 2014 to 2020 2021 to 2025 2026 to 2030

Total

Health benefits 600 2,500 4,100 7,200
Environmental benefits 10 32 49 90
Total benefits 610 2,532 4,149 7,290
Fuel costs 791 131 117 1,038
Vehicle technology costs 393 607 587 1,587
Government costs 2 0 0 2
Total costs 1,186 738 704 2,628
Net benefits (costs) (576) 1,793 3,444 4,662
Non-monetized impacts:
  • additional reductions in air pollutant emissions from off-road gasoline-powered engines
  • anticipated health improvements due to reductions in exposure to other toxic substances
  • environmental benefits due to expected net reductions in GHG emissions
  • benefits to businesses due to regulatory alignment with the U.S. Tier 3 standards

Notes: The fuel and vehicle technology costs include the respective business administrative costs. Totals may not add up due to rounding.

This summary presents the discounted benefits and costs to show the estimated present value to Canadian society of monetized impacts expected to occur from 2014 to 2030. Using a 3% discount rate over this period, the estimated annualized average benefits are $554 million, annualized average costs are $200 million, and annualized average net benefits are $354 million. There are other anticipated health, environmental and business benefits that were not monetized for this analysis, as shown in Table 15.

The time frame for this analysis was 2014 to 2030. After 2030, there would be some ongoing additional gasoline desulphurization costs as well as additional vehicle technology costs as Tier 3 vehicles continue to replace pre-Tier 3 vehicles. Additional health and environmental benefits would be expected over the lifetime of these Tier 3 vehicles and would be expected to outweigh the associated costs. In addition, the emission reductions and related health and environmental benefits resulting from 2017 to 2030 Tier 3 vehicles operating on 10 ppm sulphur gasoline during the portion of their lifetime operation that occurs after 2030 are not accounted for in the analysis.

This analysis assumed that both the proposed SiGR and ORVEER Amendments would be implemented together. An analysis of the impacts if either the proposed SiGR or ORVEER Amendments were implemented alone was not considered, because the current regulatory approach introduces the proposed SiGR and ORVEER Amendments together in order to achieve the full benefits of regulatory alignment and to implement an integrated systems approach with respect to fuels and vehicles to reduce smog-forming emissions resulting from the use of on-road vehicles.

The base case assumes that there would be no reductions in gasoline sulphur concentrations and no improvement in on-road vehicle emission control technologies. There could, however, be some sulphur reductions or technology improvements in the base case, particularly if Canadian refineries and vehicle manufacturers respond directly to the U.S. EPA Tier 3 Final Rule. Under such circumstances, the incremental costs and benefits attributable to the proposed Amendments would be proportionately reduced, but net benefits for Canadians would still be expected.

Sensitivity analysis

The results of this analysis are based on key parameter estimates, which could be higher or lower than indicated by available evidence. Given this uncertainty, alternate estimates of the benefits, costs, and discount rate have been considered to assess their impacts on expected net benefit results. A wider range of uncertainty was considered for alternate benefit estimates, since there is a higher degree of uncertainty around the benefit modelling and cumulative valuation estimates than there is about the cost estimates. A worst-case scenario of both higher costs and lower benefits was also considered. An alternate discount rate of 7% was also considered, as per TBS guidance. As shown in Table 16, there are expected net benefits over a range of alternate impact estimates and under an alternate discount rate, which is evidence that the net benefit results are likely robust.

Table 16: Sensitivity analysis for alternate estimates of costs, benefits and discount rate (millions of 2013 dollars discounted to present value using a 3% discount rate, except in the case in which a 7% rate is used)

Alternate impact analysis estimates

Alternate net benefits

Central case 4,662
Costs 25% higher than estimated 4,004
Benefits 50% lower than estimated 1,016
Costs 25% higher and benefits 50% lower 359
Costs and benefits discounted at 7% per year 2,722
Distributional impacts

Vehicle sector impacts: The proposed ORVEER Amendments would introduce regulatory provisions harmonized with those of the U.S. EPA, thus maintaining common North American standards. As a result, the proposed Amendments are expected to preserve the competitiveness of the Canadian vehicle manufacturing industry and minimize the compliance burden for vehicle manufacturers and importers by allowing companies to benefit from harmonized compliance, data and testing requirements. The proposed ORVEER Amendments would also increase production costs for the Canadian vehicle manufacturing and importing sectors. Similarly to the United States, the average vehicle production costs would increase starting with the 2017 model year and are expected to be about $70 per 2025 model year when the proposed emission standards reach full stringency. Some of these costs are expected to be passed on to consumers. Potential vehicle price increases resulting from the proposed ORVEER Amendments are likely to be small relative to total vehicle production costs. Considering that the potential price increases are likely to be small, it is expected that any subsequent decrease in vehicle sales would be negligible. A complete analysis of price impacts is beyond the scope of this analysis.

Refinery sector impacts: The proposed SiGR Amendments would ensure the supply of lower sulphur gasoline across Canada. The major export market for Canadian gasoline-producing refineries is the United States, which has published its Final Rule to reduce the sulphur levels in gasoline. Canadian refineries are well positioned to supply the North American gasoline market with lower sulphur gasoline, since Canadian gasoline is currently well below the existing SiGR sulphur standard of 30 ppm. The proposed SiGR Amendments would increase production costs for the Canadian fuel refining sector, and fuel importers may pay an increased price for gasoline that meets the more stringent sulphur standards. The average gasoline production costs would be expected to increase by about 0.2 cents per litre. Some of these costs are expected to be passed on to consumers. The degree to which gasoline production cost increases may be passed on to consumers would depend on several market factors, including gasoline distribution constraints, market share competition, refinery capacity and production, and gasoline demand. Any potential gasoline price increase resulting from the proposed SiGR Amendments would likely be small relative to the price of gasoline and normal day-to-day price volatility. A complete analysis of price impacts is beyond the scope of this analysis.

Regional impacts: Assuming that the costs of the proposed ORVEER Amendments would be distributed across Canada according to the distribution of sales of new vehicles, and that the costs of the proposed SiGR Amendments would be distributed based on refinery locations and their expected capital and operating investments, the costs would be relatively evenly distributed across Canada. Areas of Canada with the greatest population densities and vehicle use would see the greatest health and environmental benefits as a result of the proposed Amendments. Net benefits are expected across Canada, as shown in Table 17.

Table 17: Regional distribution of impacts of the proposed Amendments (millions of 2013 dollars discounted to present value using a 3% discount rate)

Impacts by region West Ontario East Canada
Health and environmental benefits 2,060 3,540 1,690 7,290
Fuel costs 432 221 385 1,038
Vehicle technology costs 463 584 540 1,587
Net benefits 1,165 2,735 765 4,665

Notes: 1. The net benefit estimates presented here do not exactly correspond to those in the benefit and cost summary table due to rounding and because they do not include business administrative and government costs.

2. The West region includes Yukon, the Northwest Territories, Nunavut, British Columbia, Alberta, Saskatchewan and Manitoba. The East region includes Quebec, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador.

“One-for-One” Rule (see footnote 19)

Net increases in administrative burden costs under the proposed SiGR Amendments are associated with learning about the new administrative obligations, the temporary compliance provisions, completing applications, and additional record-keeping and reporting requirements. The temporary compliance provisions expire at the end of 2019, after which there are expected to be no incremental business administrative costs. Assuming that all parties elect to participate in the temporary compliance option, the new administrative burden was estimated at about $5,700 in annualized average costs to the gasoline-producing and -importing sector. Net administrative impacts per business for 16 impacted stakeholders (14 refiners and 2 importers) were estimated to be on average 13 hours per year, which corresponds to approximately $350 in annualized average costs per business when allocated over the first 10 years of administrative cost impacts (2014–2023).

The proposed ORVEER Amendments would also be expected to result in increases in administrative burden costs due to learning about the new administrative obligations and additional record-keeping and reporting requirements. There would be minor decreases in administrative burden costs due to streamlined requirements related to the importation of vehicles into Canada. Overall, the proposed ORVEER Amendments would introduce a new net administrative burden of about $68,000 in annualized average costs to the vehicle-manufacturing and -importing sector. (see footnote 20) Net administrative impacts per business for 45 impacted stakeholders were estimated to be on average 57 hours per year, corresponding to about $1,500 in annualized average costs per business when allocated over the first 10 years of administrative cost impacts (2017–2026).

Given the estimated increases in administrative burden, the proposed SiGR Amendments and proposed ORVEER Amendments are both considered an “IN” under the “One-for-One” Rule; therefore, they would each require equal and off-setting reductions in administrative costs imposed by other federal regulations. As the proposed Amendments would not create new regulatory titles, there would be no requirement to repeal existing regulations.

Small business lens

The small business lens would not apply to the proposed Amendments as the impacted communities would consist of medium and large businesses only. There are currently no small business producers or importers of gasoline that report under SiGR, and the proposed SiGR Amendments would remove all current reporting requirements for producers or importers of less than 400 m3 of gasoline annually. The small business lens would not apply to the proposed ORVEER Amendments as the impacted regulatory community consists exclusively of Canadian subsidiaries of multinational vehicle corporations.

Consultation

On June 7, 2013, the Minister of the Environment announced the intent to further regulate air pollutant emissions from passenger cars and light-duty trucks of model years 2017 and beyond and to lower the level of sulphur in gasoline. On June 8, 2013, the Government of Canada published, in Part I of the Canada Gazette, the Notice of intent to develop regulations to further limit emissions of smog-forming air pollutants from new cars and light trucks and to reduce the sulphur content of gasoline. (see footnote 21) The Minister’s announcement specified that Canada’s proposed regulatory actions would build upon current regulations and would be aligned with the U.S. EPA Tier 3 standards. The publication of the notice of intent provided an opportunity to initiate early consultations with provincial and territorial governments as well as stakeholders and seek input on the development of the proposed Amendments. This announcement was followed by stakeholder consultations in the summer of 2013 to further clarify the announcement, initiate discussions on a preliminary regulatory approach and provide background to support formal comments on the notice of intent.

Ten submissions were received during the 30-day public comment period after the publication of the notice of intent: five from fuel stakeholders, four from vehicle stakeholders and one from a municipality. Environment Canada considered each of these comments, which were further discussed through informal technical working groups. These working groups, consisting of representatives from vehicle manufacturers and importers and gasoline producers and importers, met on several occasions in the summer and fall of 2013 with the goal of further discussing issues relevant to the notice of intent and to review key policy objectives, guiding principles and vehicle and fuel linkages. Discussions centered on issues affecting the potential design of the proposed Amendments and a preliminary framework for aligning with the U.S. Tier 3 standards.

As a complement to the meetings of the informal technical working groups, Environment Canada undertook a series of individual meetings with primary suppliers (refiners and importers) of gasoline. The goal of these meetings was to reach out to primary suppliers to gather or validate individual information to inform the regulatory analysis. Comments from these discussions were consistent with those from earlier meetings.

Generally, comments from stakeholders included

  • support for alignment with the U.S. EPA Tier 3 Final Rule from key vehicle and fuel stakeholders, such as the Canadian Fuels Association (CFA), Canadian Vehicle Manufacturers’ Association (CVMA), Global Automakers of Canada (GAC) and Truck and Engine Manufacturers Association (EMA);
  • highlighting by vehicle manufacturers and importers of the importance of the concurrent introduction of lower sulphur gasoline and advanced emission control technologies to meet Tier 3 emission standards and deliver the intended emission reductions;
  • requests for adequate lead time before the final coming into force of a 10 ppm annual average for sulphur content in gasoline (many stakeholders mentioned that five years would be sufficient);
  • support for temporary provisions from 2014 to 2019 of either an interim average of 20 ppm sulphur in gasoline or alternative temporary compliance provisions; and
  • requests to retain the current never-to-be-exceeded 80 ppm batch maximum.

While there was some support for an interim average, the majority of support was for a temporary compliance system for sulphur in gasoline. Consequently, the proposed SiGR Amendments include the option of participating in a temporary compliance system during the 2014 to 2019 period. This system also aims to provide flexibility and lead time as requested by refiners. Environment Canada has also maintained the current never-to-be-exceeded 80 ppm batch maximum as part of the proposed Amendments.

Environment Canada specifically raised the question of the default batch limit with working group members. While there was support for retaining the option of a default batch limit, recommendations on specific levels were limited.

Administrative requirements

Stakeholders were also consulted on the administrative requirements that are included in the proposed Amendments in order to inform estimates on administrative burden, as required under the “One-for-One” Rule. The specific estimates of administrative burden costs resulting from the proposed Amendments are contained within the “‘One-for-One’ Rule” section of this RIAS.

CEPA National Advisory Committee (CEPA NAC)

Environment Canada offered to consult representatives from provincial, territorial and aboriginal governments through CEPA NAC in conjunction with the release of the notice of intent when CEPA NAC members were informed of this release via a letter dated June 12, 2013. In accordance with section 140 of the Canadian Environmental Protection Act, 1999 (CEPA 1999), Environment Canada is also offering to consult with CEPA NAC members on the subject of the proposed Amendments.

Regulatory cooperation

Maintaining alignment with U.S. fuel quality standards and air pollutant emission standards for vehicles and engines is consistent with the objectives of the AQA, the Government of Canada’s Clean Air Regulatory Agenda and the RCC. Consistent with this objective of maintaining alignment, the notice of intent released by Environment Canada on June 8, 2013, included the intent to align both SiGR and ORVEER with the U.S. EPA’s proposed Tier 3 rule in order to further limit emissions of smog-forming air pollutants from new cars and light trucks and to reduce the sulphur content of gasoline.

Rationale

Smog has a significant negative impact on the environment and health of Canadians. The proposed Amendments represent an integrated strategy to reduce smog caused by the emission of air pollutants from vehicles and would help ensure cleaner air for Canadians. The proposed SiGR Amendments would reduce the limit of sulphur in gasoline from a 30 ppm to a 10 ppm annual average. In combination with the requirement for less sulphur in gasoline, the Tier 3 emission standards included in the proposed ORVEER Amendments would lead to significant reductions in emissions of smog-forming air pollutants from new on-road vehicles, compared to the current Tier 2 emission standards. Thus, implementing the proposed Amendments would result in important health and environmental benefits for Canadians, and would maintain regulatory alignment between Canada and the United States.

To meet the requirements of the proposed Amendments, petroleum refineries and vehicle and engine manufacturers and importers would have to make investments of approximately $2.6 billion to reduce the sulphur content of gasoline and install advanced emission control technologies over the 2017 to 2030 period. During this period, these investments would generate health and environmental benefits for Canadians of approximately $7.3 billion, with a net benefit of $4.7 billion for Canadian society. The proposed Amendments would also be expected to have minimal impacts on the prices of gasoline and vehicles. The average gasoline production costs would be expected to increase by about 0.2 cents per litre, while the average vehicle production costs would be expected to increase by about $70 per new vehicle when the proposed emission standards reach full stringency. Some of these costs are expected to be passed on to consumers.

The proposed Amendments would align Canadian regulations with the U.S. EPA Tier 3 standards, ensuring common requirements in both jurisdictions and preserving the competitiveness of Canadian vehicle manufacturing and gasoline producing industries. The U.S. EPA Tier 3 emission standards represent the most stringent national air pollutant standards in the world. Additionally, the U.S. EPA Tier 3 gasoline sulphur standards are achieving low levels similar to the levels being achieved in California and in Europe, as well as in Japan, South Korea, and several other countries. The proposed Amendments were developed in consultation with key stakeholders who broadly support alignment with the U.S. EPA standards.

Implementation, enforcement and service standards

Environment Canada administers a comprehensive program to implement, enforce and verify compliance with SiGR and ORVEER. Members of the regulated community would be responsible for ensuring that they are in compliance with the proposed Amendments and would continue to be required to produce and maintain evidence of compliance. To assist ORVEER implementation, existing guidance materials would be updated to contain reference to certain heavy-duty vehicles. These guidance materials would present new “evidence of conformity” requirements and what procedures should be followed when submitting required documentation. With respect to SiGR, guidance material would be updated to include requirements for the temporary compliance option for the 2014 to 2019 period, along with the 10 ppm standard for sulphur in gasoline starting in 2017.

The proposed Amendments would not impact the manner in which SiGR or ORVEER are enforced. Since the proposed Amendments would be made under CEPA 1999, enforcement officers would, when verifying compliance with the proposed Amendments, apply the Compliance and Enforcement Policy implemented under CEPA 1999. Regarding the proposed Amendments, Environment Canada would continue to respect the same service standards in terms of reviewing and responding to regulatory documents in a timely manner. Environment Canada would strive to respond to submissions according to the timelines published in the Submission Requirements for Evidence of Conformity for Light-Duty Vehicles, Light-Duty Trucks and Medium-Duty Passenger Vehicles Guidance Document.

Performance measurement and evaluation

The expected outcome of the proposed Amendments is in alignment with departmental priorities to reduce emissions of criteria air pollutants and GHGs from transportation sources (vehicles, engines and fuels). The performance of the proposed Amendments in achieving these outcomes would be measured and evaluated.

Clear and quantified performance indicators would be defined for each outcome and would be tracked annually through yearly reporting and testing requirements. For fuel producers and importers, these indicators include annual reporting by all regulatees of sulphur content by volume of gasoline produced or imported by batch maximum and annual average. For on-road vehicle manufacturers and importers, performance indicators include importation declarations, emissions verification testing of vehicles by Environment Canada, evidence of conformity documentation and the end-of-model-year reports that companies would submit to Environment Canada.

Regular review and evaluation of these performance indicators would allow Environment Canada to detail the impacts of the proposed Amendments on the gasoline production and importation sector and on the on-road vehicle sector, as more low-emitting vehicles enter the Canadian market, and to evaluate the performance of the proposed Amendments in reaching the intended targets.

Contacts

Leif Stephanson
Manager
Fuel Quality
Oil, Gas and Alternative Energy Division
Energy and Transportation Directorate
Environmental Stewardship Branch
Environment Canada
351 Saint-Joseph Boulevard, 12th Floor
Gatineau, Quebec
K1A 0H3
Telephone: 819-420-7969
Fax: 819-420-7410
Email: fuels-carburants@ec.gc.ca

Yves Bourassa
Director
Regulatory Analysis and Valuation Division
Economic Analysis Directorate
Strategic Policy Branch
Environment Canada
10 Wellington Street, 25th Floor
Gatineau, Quebec
K1A 0H3
Telephone: 819-953-7651
Fax: 819-953-3241
Email: ravd.darv@ec.gc.ca

Josée Lavergne
Manager
Air Pollutant Regulatory Development Section
Transportation Division
Energy and Transportation Directorate
Environmental Stewardship Branch
Environment Canada
351 Saint-Joseph Boulevard, 13th Floor
Gatineau, Quebec
K1A 0H3
Telephone: 819-420-8034
Email: josee.lavergne@ec.gc.ca

PROPOSED REGULATORY TEXT

Notice is given, pursuant to subsection 332(1) (see footnote a) of the Canadian Environmental Protection Act, 1999 (see footnote b), that the Governor in Council, pursuant to sections 160 and 162 of that Act, proposes to make the annexed Regulations Amending the On-Road Vehicle and Engine Emission Regulations and Other Regulations Made Under the Canadian Environmental Protection Act, 1999.

Any person may, within 75 days after the date of publication of this notice, file with the Minister of the Environment comments with respect to the proposed Regulations or, within 60 days after the date of publication of this notice, file with that Minister a notice of objection requesting that a board of review be established under section 333 of that Act and stating the reasons for the objection. All comments and notices must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Steve McCauley, Director General, Energy and Transportation Directorate, Environmental Stewardship Branch, Department of the Environment, Gatineau, Quebec K1A 0H3 (fax: 819-938-4197; email: Steve.McCauley@ec.gc.ca).

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

Ottawa, September 18, 2014

JURICA ČAPKUN
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE ON-ROAD VEHICLE AND ENGINE EMISSION REGULATIONS AND OTHER REGULATIONS MADE UNDER THE CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

ON-ROAD VEHICLE AND ENGINE EMISSION REGULATIONS

1. (1) The definitions “CFR”, “complete heavy-duty vehicle”, “Federal Test Procedure”, “full useful life emission bin”, “HC + NOX”, “heavy-duty vehicle”, “heavy light-duty truck”, “light-duty truck”, “light light-duty truck”, “medium-duty passenger vehicle” and “motorcycle” in subsection 1(1) of the On-Road Vehicle and Engine Emission Regulations (see footnote 22) are replaced by the following:

“CFR” means 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 6 350 kg (14,000 lb) 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)

“Federal Test Procedure” means the test procedure described in sections 130(a) to (d) and (f) of Title 40, chapter I, subchapter C, part 86, subpart B, of the CFR, which is designed to measure urban driving exhaust and evaporative emissions over the EPA Light-duty Urban Dynamometer Driving Schedule set out in Appendix I to part 86 of Title 40, chapter I, subchapter C, of the CFR. (Federal Test Procedure)

“full useful life emission bin” means the set of exhaust emission standards, measured using the Federal Test Procedure, that is set out in a horizontal row in the following tables and that is chosen by a company in respect of a test group, taking into account any compliance credits used by the company in accordance with section 1811 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, if applicable:

  • (a) in the case of light-duty vehicles, light-duty trucks and medium-duty passenger vehicles of the 2016 or earlier model year, in Table S04-1 in section 1811 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR;
  • (b) in the case of light-duty vehicles, light-duty trucks and medium-duty passenger vehicles of the 2017 or later model year, in Table 2 in section 1811 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR; or
  • (c) in the case of the following vehicles of the 2018 or later model year:
    • (i) Class 2B vehicles, in Tables 2 and 5 in section 1816 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, or
    • (ii) Class 3 vehicles, in Tables 3 and 5 in section 1816 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR. (série d’émissions de durée de vie totale)

“HC + NOX” means the sum of the hydrocarbon and NOX exhaust emissions. (HC + NOX)

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

“heavy light-duty truck” means a light-duty truck 3 or a light-duty truck 4 that has a GVWR of more than 2 722 kg (6,000 lb). (camionnette lourde)

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

  • (a) is designed primarily for the transportation of property or that is a derivative of a vehicle that is designed for that purpose;
  • (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, that are calculated when the vehicle is at curb weight and 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°,
    • (ii) a break-over angle of not less than 14°,
    • (iii) a departure angle of not less than 20°,
    • (iv) ground clearances of not less than 17.8 cm (7 in) under the front and rear axles, and
    • (v) a ground clearance of not less than 20.3 cm (8 in) under any point other than the front or rear axle. (camionnette)

“light light-duty truck” means a light-duty truck 1 or a light-duty truck 2 that has a GVWR of 2 722 kg (6,000 lb) 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 lb) 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 in) in interior length or more or with a covered box not readily accessible from the passenger compartment. (véhicule moyen à passagers)

“motorcycle” means an on-road vehicle with a headlight, tail light and stop light that has two or three wheels and a curb weight of 793 kg (1,749 lb) or less. (motocyclette)

(2) Paragraph (a) of the definition “on-road vehicle” in subsection 1(1) of the English version of the Regulations is replaced by the following:

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

(3) Subsection 1(1) of the Regulations is amended by adding the following in alphabetical order:

“adjusted loaded vehicle weight” means the numerical average of a vehicle’s curb weight and its GVWR. (poids ajusté du véhicule chargé)

“Class 2B vehicle” means a complete heavy-duty vehicle that has a GVWR of more than 3 856 kg (8,500 lb) but not more than 4 536 kg (10,000 lb). (véhicule de classe 2B)

“Class 3 vehicle” means a complete heavy-duty vehicle that has a GVWR of more than 4 536 kg (10,000 lb) but less than or equal to 6 350 kg (14,000 lb). (véhicule de classe 3)

“engine family” means

  • (a) in respect of a company’s motorcycles that are covered by an EPA certificate, the classification unit for which the EPA certificate was issued; and
  • (b) in respect of any other of the company’s motorcycles, the classification unit determined in accordance with section 420 of Title 40, chapter I, subchapter C, part 86, subpart E, of the CFR. (famille de moteurs)

“family emission limit” means, as applicable, the maximum emission level established by a company for a test group or engine family. (limite d’émissions de la famille)

“fire fighting vehicle” means a vehicle that is designed to be used under emergency conditions to transport personnel and equipment and to support the suppression of fires and the mitigation of other emergency situations. (véhicule d’incendie)

“light-duty truck 1” means a light light-duty truck that has a loaded vehicle weight of 1 701 kg (3,750 lb) or less. (camionnette de type 1)

“light-duty truck 2” means a light light-duty truck that has a loaded vehicle weight of more than 1 701 kg (3,750 lb). (camionnette de type 2)

“light-duty truck 3” means a heavy light-duty truck that has an adjusted loaded vehicle weight of 2 608 kg (5,750 lb) or less. (camionnette de type 3)

“light-duty truck 4” means a heavy light-duty truck that has an adjusted loaded vehicle weight of more than 2 608 kg (5,750 lb). (camionnette de type 4)

“loaded vehicle weight” means the sum of the vehicle’s curb weight and 136 kg (300 lb). (poids du véhicule chargé)

“NMHC” means non-methane hydrocarbon exhaust emissions. (HCNM)

“NMOG + NOX” means the sum of the non-methane organic gas exhaust emissions and the NOX exhaust emissions. (GONM + NOX)

“test group” means

  • (a) in respect of a company’s vehicles that are covered by an EPA certificate, the classification unit for which the EPA certificate was issued; and
  • (b) in respect of any other of the company’s vehicles, the classification unit determined in accordance with section 1827 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR. (groupe d’essais)

2. Section 2.1 of the Regulations is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c):

  • (d) a system of credits for the purposes of section 162 of the Act.

3. Paragraph 6(1)(b) of the Regulations is replaced by the following:

  • (b) light light-duty trucks and heavy light-duty trucks;

4. Section 11 of the Regulations is amended by adding the following after subsection (2):

(2.1) Despite subsection (2), an ambulance or a fire fighting vehicle may be equipped with a defeat device if the device is one that is automatically activated during emergency response operations to maintain speed, torque or power in either of the following circumstances:

  • (a) the emission control system is in an abnormal state, or
  • (b) the device acts to maintain the emission control system in a normal state.

5. The Regulations are amended by adding the following after section 11:

ADJUSTABLE PARAMETERS

11.1 (1) In this section, “adjustable parameter” means a device, system or element of design that is capable of being physically adjusted and as a result can affect emissions or the performance of a vehicle or an engine during emission testing or normal in-use operation, but does not include a device, system or element of design that is permanently sealed by the vehicle or engine manufacturer or that is inaccessible with the use of ordinary tools.

(2) A vehicle or engine that is equipped with adjustable parameters shall comply with the applicable standards under these Regulations for any specification within the physically adjustable range.

6. The heading before section 12 of the Regulations is replaced by the following:

LIGHT-DUTY VEHICLES, LIGHT LIGHT-DUTY TRUCKS, HEAVY LIGHT-DUTY TRUCKS AND MEDIUM-DUTY PASSENGER VEHICLES

7. The portion of section 12 of the Regulations before paragraph (c) is replaced by the following:

12. Subject to sections 17.2, 19 and 19.1, a light-duty vehicle, light light-duty truck, heavy light-duty truck or medium-duty passenger vehicle of a specific model year shall

  • (a) for the 2016 and earlier model years, conform to the exhaust and evaporative emission standards applicable to vehicles of the model year in question set out in section 1811 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR;
  • (a.1) for the 2017 and later model years, conform to
    • (i) the exhaust emission standards applicable to vehicles of the model year in question set out in section 1811 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR,
    • (ii) the evaporative emission standards set out in section 1813 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, and
    • (iii) the evaporative emission family emission limit established by the company for the test group to which the vehicle belongs, which shall not exceed the applicable evaporative emission family emission limit cap set out in section 1813 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR;
  • (b) be equipped with an on-board diagnostic system that conforms to the standards applicable to vehicles of the model year in question set out in section 1806 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR; and

8. The portion of section 13 of the Regulations before paragraph (c) is replaced by the following:

13. Subject to sections 17.2, 19 and 19.1, a Class 2B vehicle, other than a medium-duty passenger vehicle, and Class 3 vehicle of a specific model year shall

  • (a) for the 2005 to 2017 model years, conform to the exhaust and evaporative emission standards applicable to vehicles of the model year in question set out in section 1816 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR;
  • (a.1) for the 2018 and later model years, conform to
    • (i) the exhaust emission standards applicable to vehicles of the model year in question set out in section 1816 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR,
    • (ii) the evaporative emission standards set out in section 1813 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, and
    • (iii) the evaporative emission family emission limit established by the company for the test group to which the vehicle belongs, which shall not exceed the applicable evaporative emission family emission limit cap set out in section 1813 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, applied in accordance with section 103 of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR;
  • (b) be equipped with an on-board diagnostic system that conforms to the standards applicable to vehicles of the model year in question set out in section 1806 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR; and

9. Paragraph 14(b) of the Regulations is replaced by the following:

  • (b) conform to the evaporative emission standards applicable to Otto-cycle heavy-duty vehicles of the model year in question,
    • (i) for the 2017 and earlier model years, the evaporative emission standards set out in section 10 of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR, or
    • (ii) for the 2018 and later model years, the evaporative emission standards set out in section 103 of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR.

10. (1) Paragraph 15(1)(b) of the Regulations is replaced by the following:

  • (b) conform to the evaporative emission standards applicable to diesel heavy-duty vehicles of the model year in question set out in section 11 of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR.

(2) Subsection 15(2) of the Regulations is replaced by the following:

(2) A vehicle referred to in subsection (1) that has a GVWR of 6 350 kg (14,000 lb) or less may conform to the standards applicable to vehicles of the model year in question referred to in section 1863 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR instead of the standards described in subsection (1).

11. Section 16 of the Regulations is replaced by the following:

16. (1) Subject to sections 19 and 19.1, Otto-cycle heavy-duty engines of a specific model year shall conform to the exhaust emission and crankcase emission standards applicable to Otto-cycle heavy-duty engines of the model year in question set out in section 10 of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR.

(2) Subject to sections 19 and 19.1, diesel heavy-duty engines of a specific model year shall conform to the exhaust and crankcase emission standards applicable to diesel heavy-duty engines of the model year in question set out in section 11 of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR.

(3) Subject to sections 19 and 19.1, heavy-duty engines of a specific model year used or intended for use in heavy-duty vehicles that have a GVWR of 6 350 kg (14,000 lb) or less shall be equipped with an on-board diagnostic system that conforms to the standards applicable to engines of the model year in question set out in section 17 of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR.

(4) Subject to sections 19 and 19.1, heavy-duty engines of the 2014 and later model years used or intended for use in heavy-duty vehicles that have a GVWR of more than 6 350 kg (14,000 lb) shall be equipped with an on-board diagnostic system that conforms to the standards applicable to engines of the model year in question set out in section 18 of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR.

12. Paragraph 17(a) of the Regulations is replaced by the following:

  • (a) shall conform to the exhaust and evaporative emission standards applicable to motorcycles of the model year in question set out in section 410 of Title 40, chapter I, subchapter C, part 86, subpart E, of the CFR; and

13. The Regulations are amended by adding the following after section 17.1:

PHASE-IN STANDARDS — PARTICULATE MATTER

17.2 (1) Subject to subsection (3), for the purposes of subparagraphs 12(a.1)(i) and 13(a.1)(i), the particulate matter exhaust emissions standards set out in section 1811 or 1816 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, as the case may be, apply to a percentage of a company’s vehicles referred to in section 12 or 13 of a specific model year, in accordance with subsection (5) or (6).

(2) For the purposes of subsection (1), a company shall group its vehicles together as follows:

  • (a) in the case of the vehicles referred to in section 12
    • (i) for the 2017 model year, all of its light-duty vehicles and light light-duty trucks of that model year, and
    • (ii) for the 2018 and later model years, all of its light-duty vehicles, light-duty trucks and medium-duty passenger vehicles of the model year in question; and
  • (b) in the case of the vehicles referred to in section 13, for the 2018 and later model years, all of its Class 2B vehicles and Class 3 vehicles of the model year in question.

(3) For the 2017 to 2021 model years, a company shall calculate the percentage of its vehicles of a specific model year in a given group that conform to the standards referred to in subsection (1) unless each vehicle in the group

  • (a) is covered by an EPA certificate, conforms to the particulate matter exhaust emission standards referred to in the EPA certificate and is of a model that is sold in greater numbers in the United States than in Canada; or
  • (b) conforms to the particulate matter exhaust emissions standard set out in Table 1 in section 1811 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR or Table 1 in section 1816 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, as applicable, whether or not it is covered by an EPA certificate.

(4) In determining the number of vehicles of a given group that are to meet the particulate matter exhaust emissions standards referred to in subsection (1), in accordance with the applicable percentage, a company may exclude from the group any of its vehicles that are covered by an EPA certificate and that are of a model that is sold in greater numbers in the United States than in Canada.

(5) Subject to subsection (6), the percentage of vehicles of a specific model year in a given group that conform to the applicable particulate matter exhaust emissions standards shall be greater than or equal to the percentage set out in column 2 of the table to this subsection for the applicable model year set out in column 1.

TABLE

PHASE-IN PERCENTAGES — GENERAL APPROACH

Item Column 1

Model Year
Column 2

Percentage
1. 2017 20
2. 2018 20
3. 2019 40
4. 2020 70
5. 2021 and later 100

(6) A company may elect not to comply with subsection (5) for the 2017 to 2020, 2018 to 2020 or 2019 to 2020 model years if

  • (a) the total percentage of vehicles of the group for all of the consecutive model years referred to in column 1 of the applicable item of the table to this subsection that conform to the particulate matter exhaust emissions standards is greater than or equal to the percentage set out in column 2 for those consecutive model years; and
  • (b) the company notifies the Minister of its election by January 1 of the calendar year that corresponds to the first of the consecutive model years referred to in column 1 of the applicable item of the table to this subsection.

TABLE

PHASE-IN PERCENTAGES — ALTERNATE APPROACH

Item Column 1

Consecutive Model Years
Column 2

Percentage
1. 2017 to 2020 38
2. 2018 to 2020 44
3. 2019 to 2020 55

(7) For greater certainty, all companies shall comply with subsection (5) for the 2021 and later model years.

14. Section 18 of the Regulations is replaced by the following:

18. The standards referred to in sections 11 to 17 are the certification and in-use standards set out in the CFR for the applicable useful life and include the test procedures, fuels, calculation methods and compliance credits set out in the CFR for those standards.

15. Subsection 19(1) of the Regulations is replaced by the following:

19. (1) Every vehicle or engine of a specific model year that is covered by an EPA certificate and bears the U.S. emission control information label referred to in paragraph 35(1)(d) may, if the company so elects, conform to, instead of the standards set out in sections 11 to 17, the certification and in-use standards referred to in the EPA certificate.

16. The heading “FLEET AVERAGING REQUIREMENTS FOR LIGHT-DUTY VEHICLES, LIGHT-DUTY TRUCKS AND MEDIUM-DUTY PASSENGER VEHICLES” before section 20 of the Regulations is replaced by the following:

FLEET AVERAGE STANDARDS

17. Section 20 of the Regulations is replaced by the following:

20. In sections 21 to 32, “fleet” refers to the vehicles of a specific model year that a company manufactures in Canada, or imports into Canada, for the purpose of sale to the first retail purchaser and that are grouped for the purpose of conforming to sections 21 to 23, 24.1 to 24.4, 24.6, 24.7 and 24.10 or for the purpose of participation in the emission credit system set out in sections 26 to 31.1.

18. The heading before section 21 is replaced by the following:

FLEET AVERAGE NOX STANDARDS

19. The portion of section 21 of the Regulations before the table to that section is replaced by the following:

21. The average NOX value for a company’s fleet that is composed of all of its light-duty vehicles and light light-duty trucks of a model year set out in column 1 of the table to this section shall not exceed the applicable fleet average NOX standard set out in column 2.

20. The portion of section 22 of the Regulations before the table to that section is replaced by the following:

22. The average NOX value for a company’s fleet that is composed of all of its heavy light-duty trucks and medium-duty passenger vehicles of a model year set out in column 1 of the table to this section shall not exceed the applicable fleet average NOX standard set out in column 2.

21. Section 23 of the Regulations is replaced by the following:

23. For the 2009 to 2016 model years, the average NOX value for a company’s fleet that is composed of all of its light-duty vehicles, light-duty trucks and medium-duty passenger vehicles of a model year shall not exceed 0.07 grams per mile.

22. Subsection 24(4) of the English version of the Regulations is amended by replacing “240,000” with “240 000”.

23. The Regulations are amended by adding the following after section 24:

FLEET AVERAGE NMOG + NOX STANDARDS

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

24.1 For the 2017 to 2024 model years, the average NMOG + NOX value for a company’s fleet that is composed of the following vehicles of a specific model year shall not exceed the applicable fleet average NMOG + NOX standard set out for the model year in question in Tables 3 and 4 of section 1811 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR:

  • (a) all of its light-duty vehicles and light-duty trucks 1; or
  • (b) all of its light-duty trucks 2, heavy light-duty trucks and medium-duty passenger vehicles.

24.2 For the 2025 and later model years, the average NMOG + NOX value for a company’s fleet that is composed of the following vehicles of a specific model year shall not exceed the applicable fleet average NMOG + NOX standard set out in Table 1 of section 1811 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR:

  • (a) all of its light-duty vehicles and light-duty trucks 1; or
  • (b) all of its light-duty trucks 2, heavy light-duty trucks and medium-duty passenger vehicles.
Complete Heavy-duty Vehicles

24.3 For the 2018 to 2021 model years, the average NMOG + NOX value for a company’s fleet that is composed of all of its Class 2B vehicles or Class 3 vehicles of a specific model year shall not exceed the applicable fleet average NMOG + NOX standard set out for the model year in question in Table 4 of section 1816 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR.

24.4 For the 2022 and later model years, the average NMOG + NOX value for a company’s fleet that is composed of all of its Class 2B vehicles or Class 3 vehicles of a specific model year shall not exceed the applicable fleet average NMOG + NOX standard set out in Table 1 of section 1816 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR.

CALCULATION OF FLEET AVERAGE NMOG + NOX VALUES

24.5 (1) Subject to section 25.1, for each of its fleets referred to in sections 24.1 to 24.4, a company shall calculate the average NMOG + NOX value in accordance with the following formula:

Equation-Detailed information can be found in the surrounding text.

where

A is the NMOG + NOX emission standard for each full useful life emission bin;

B is the number of vehicles in the fleet that conform to that NMOG + NOX emission standard; and

C is the total number of vehicles in the fleet.

(2) The average NMOG + NOX value for the fleet 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.

FLEET AVERAGE COLD NMHC STANDARDS

24.6 For the 2017 and later model years, the average cold NMHC value for a company’s fleet that is composed of all of its light-duty vehicles and light light-duty trucks of a specific model year shall not exceed the applicable fleet average cold NMHC standard set out in Table 5 of section 1811 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR.

24.7 For the 2017 and later model years, the average cold NMHC value for a company’s fleet that is composed of all of its heavy light-duty trucks and medium-duty passenger vehicles of a specific model year shall not exceed the fleet average cold NMHC standard set out for heavy light-duty trucks in Table 5 of section 1811 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR.

CALCULATION OF FLEET AVERAGE COLD NMHC VALUES

24.8 (1) Subject to section 25.2, for each of its fleets referred to in sections 24.6 and 24.7, a company shall calculate the average cold NMHC value in accordance with the following formula:

Equation - Detailed information can be found in the surrounding text.

where

A is the cold NMHC family emission limit;

B is the number of vehicles in the fleet that conform to that cold NMHC family emission limit; and

C is the total number of vehicles in the fleet.

(2) The average cold NMHC value for the fleet shall be rounded to one decimal place.

FLEET AVERAGE EVAPORATIVE EMISSION STANDARDS

24.9 For the purposes of sections 24.10, 24.11, 25.3, 26.3, 27 and 28, the following groupings of vehicles of a specific model year to which a family emission limit is applied are considered to constitute separate fleets for the purpose of evaporative emission averaging:

  • (a) light-duty vehicles and light-duty trucks 1;
  • (b) light-duty trucks 2;
  • (c) heavy light-duty trucks and medium-duty passenger vehicles; and
  • (d) Class 2B vehicles and Class 3 vehicles.

24.10 (1) The average evaporative emission value for the following fleets of a model year shall not exceed the applicable fleet average evaporative emission standards set out in Table 1 of section 1813 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR for the percentage of vehicles of a model year referred to or set out in subsection (4) or (5):

  • (a) for the 2017 and later model years, a company’s fleet of light-duty vehicles and light-duty trucks 1 or light-duty trucks 2; and
  • (b) for the 2018 and later model years, a company’s fleet of heavy light-duty trucks and medium-duty passenger vehicles or Class 2B vehicles and Class 3 vehicles.

(2) For the 2017 to 2022 model years, a company shall calculate the percentage of its vehicles of the model year in question in a given fleet that conform to the applicable standards referred to in subsection (1) unless each vehicle in the fleet

  • (a) is covered by an EPA certificate, conforms to the evaporative emission standards referred to in the EPA certificate and is of a model that is sold in greater numbers in the United States than in Canada; or
  • (b) conforms to the applicable evaporative emission standards set out in Table 1 of section 1813 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, whether or not it is covered by an EPA certificate.

(3) In determining the number of vehicles of a given fleet that are to meet the evaporative emission standards referred to in subsection (1), in accordance with the applicable percentage, a company may exclude from the fleet any of its vehicles that are covered by an EPA certificate and that are of a model that is sold in greater numbers in the United States than in Canada.

(4) Subject to subsection (5), the percentage of vehicles of a specific model year in a given fleet that meet the evaporative emission standards referred to in subsection (1) shall be greater than or equal to the percentage set out in Table 3 of section 1813 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR for the model year in question and, for the 2023 and later model years, 100 percent of the vehicles of the model year in question in a fleet shall meet the applicable evaporative emission standards.

(5) A company may elect not to comply with subsection (4) for the 2017 to 2021, 2018 to 2021, 2019 to 2021 or 2020 to 2021 model years if

  • (a) the total percentage of vehicles in the fleet for all of the consecutive model years referred to in column 1 of the applicable item of the table to this subsection that conform to the evaporative emission standards is greater than or equal to the percentage set out in column 2 for those consecutive model years; and
  • (b) the company notifies the Minister of its election by January 1 of the calendar year that corresponds to the first of the consecutive model years referred to in column 1 of the applicable item of the table to this subsection.

TABLE

PHASE-IN PERCENTAGES — ALTERNATE APPROACH

Item Column 1

Consecutive Model Years
Column 2

Percentage
1. 2017 to 2021 65
2. 2018 to 2021 70
3. 2019 to 2021 74
4. 2020 and 2021 80

(6) For greater certainty, all companies shall comply with subsection (4) for the 2022 and later model years.

CALCULATION OF FLEET AVERAGE EVAPORATIVE EMISSION VALUES

24.11 (1) Subject to section 25.3, for each of its fleets referred to in section 24.10, a company shall calculate the average evaporative emission value in accordance with the following formula:

Equation - Detailed information can be found in the surrounding text.

where

A is the evaporative emission family emission limit;

B is the number of vehicles in the fleet that conform to that evaporative emission family emission limit; and

C is the total number of vehicles in the fleet.

(2) The average evaporative emission value for the fleet shall be rounded to one decimal place.

24. The Regulations are amended by adding the following before section 25:

ELECTION NOT TO CALCULATE FLEET AVERAGE

25. Subsection 25(2) of the Regulations is replaced by the following:

(2) For the purposes of section 26, subparagraph 32(2)(a)(ii) and paragraph 37(1)(c), the average NOX emission value in respect of a fleet of a model year for which a company makes an election under subsection (1) shall be the fleet average NOX standard applicable to the fleet for which the election was made.

26. The Regulations are amended by adding the following after section 25:

25.1 (1) A company may elect not to calculate an average NMOG + NOX value for a fleet of a specific model year if every vehicle in that fleet conforms to a full useful life emission bin that has a NMOG + NOX standard equal to or less than the applicable fleet average NMOG + NOX standard for the model year in question that is referred to in section 24.1 or 24.2.

(2) For the purposes of section 26.1, subparagraph 32(2)(b)(ii) and paragraph 37(1)(c), the average NMOG + NOX emission value in respect of a fleet of a model year for which a company makes an election under subsection (1) shall be the fleet average NMOG + NOX standard applicable to the fleet for which the election was made.

25.2 (1) A company may elect not to calculate an average cold NMHC value for a fleet of a specific model year if every vehicle in that fleet conforms to a cold NMHC family emission limit that is equal to or less than the applicable fleet average cold NMHC standard for the model year in question that is referred to in section 24.6 or 24.7.

(2) For the purposes of section 26.2, subparagraph 32(2)(c)(ii) and paragraph 37(1)(c), the average cold NMHC value in respect of a fleet of a model year for which a company makes an election under subsection (1) shall be the fleet average cold NMHC standard applicable to the fleet for which the election was made.

25.3 (1) A company may elect not to calculate an average evaporative emission value for a fleet of a specific model year if every vehicle in that fleet conforms to an evaporative emission family emission limit that is equal to or less than the applicable fleet average evaporative emission standard for the model year in question referred to in section 24.10.

(2) For the purposes of section 26.3, subparagraph 32(2)(d)(ii) and paragraph 37(1)(c), the average evaporative emission value in respect of a fleet of a model year for which a company makes an election under subsection (1) shall be the fleet average evaporative emission standard applicable to the fleet for which the election was made.

27. The heading before section 26 of the Regulations is replaced by the following:

EMISSION CREDITS

NOX Emission Credits

28. Subsection 26(1) of the Regulations is replaced by the following:

26. (1) For the purposes of subparagraph 162(1)(b)(i) of the Act, a company shall obtain NOX emission credits for its fleets of the 2016 and earlier model years if the average NOX value in respect of a fleet of a specific model year is lower than the fleet average NOX standard for the model year in question and the company reports the credits in its end of model year report.

29. Sections 27 and 28 of the Regulations are replaced by the following:

NMOG + NOX Emission Credits

26.1 (1) For the purposes of subparagraph 162(1)(b)(i) of the Act, a company shall obtain NMOG + NOX emission credits for its fleets of the 2017 and later model years if the average NMOG + NOX value in respect of a fleet of a specific model year is lower than the fleet average NMOG + NOX standard for the model year in question and the company reports the credits in its end of model year report.

(2) NMOG + NOX emission credits, expressed in units of vehicle-grams per mile, shall be calculated using the following formula, rounding the result to the nearest whole number:

(A − B) × C

where

A is the fleet average NMOG + NOX standard;

B is the average NMOG + NOX value in respect of the fleet; and

C is the total number of vehicles in the fleet.

(3) The NMOG + NOX emission credits for a specific model year are credited on the last day of the model year in question.

Cold NMHC Emission Credits

26.2 (1) For the purposes of subparagraph 162(1)(b)(i) of the Act, a company shall obtain cold NMHC emission credits for its fleets of the 2017 and later model years if the average cold NMHC value in respect of a fleet of a specific model year is lower than the fleet average cold NMHC standard for the model year in question and the company reports the credits in its end of model year report.

(2) Cold NMHC emission credits, expressed in units of vehicle-grams per mile, shall be calculated using the following formula, rounding the result to the nearest whole number:

(A − B) × C

where

A is the fleet average cold NMHC standard;

B is the average cold NMHC value in respect of the fleet; and

C is the total number of vehicles in the fleet.

(3) The cold NMHC emission credits for a specific model year are credited on the last day of the model year in question.

Evaporative Emission Credits

26.3 (1) For the purposes of subparagraph 162(1)(b)(i) of the Act, a company shall obtain evaporative emission credits for its fleets of the 2017 and later model years if the average evaporative emission value in respect of a fleet of a specific model year is lower than the fleet average evaporative emission standard for the model year in question and the company reports the credits in its end of model year report.

(2) Evaporative emission credits, expressed in units of vehicle-grams per mile, shall be calculated using the following formula, rounding the result to the nearest whole number:

(A − B) × C

where

A is the fleet average evaporative emission standard;

B is the average evaporative emission value in respect of the fleet; and

C is the total number of vehicles in the fleet.

(3) The evaporative emission credits for a specific model year are credited on the last day of the model year in question.

Early Action NMOG + NOX Credits

26.4 (1) A company may obtain early action credits in respect of its fleet that is composed of all of its light-duty vehicles and light-duty trucks 1 of the 2015 or 2016 model year if the average NMOG + NOX value in respect of the fleet of the model year in question is lower than 0.16 grams per mile and the company reports the credits in its 2017 end of model year report.

(2) Early action credits obtained in respect of the fleet are calculated in accordance with subsection 26.1(2), except that the fleet average NMOG + NOX standard in the description of A is 0.16 grams per mile.

(3) Early action credits obtained for the 2015 and 2016 model years are credited on the last day of the 2017 model year.

(4) Early action credits obtained for the 2015 and 2016 model years may be used as of the 2017 model year but only in respect of a fleet that is composed of all of the company’s light-duty vehicles and light-duty trucks 1 of any of the five model years after the model year in respect of which the credits were credited, after which the credits are no longer valid.

26.5 (1) A company may obtain early action credits in respect of its fleet that is composed of all of its light-duty trucks 2, heavy light-duty trucks and medium-duty passenger vehicles of the 2016 or 2017 model year if the average NMOG + NOX value in respect of the fleet of the model year in question is lower than 0.16 grams per mile and the company reports the credits in its 2018 end of model year report.

(2) Early action credits obtained in respect of the fleet are calculated in accordance with subsection 26.1(2), except that the fleet average NMOG + NOX standard in the description of A is 0.16 grams per mile.

(3) Early action credits obtained for the 2016 and 2017 model years are credited on the last day of the 2018 model year.

(4) Early action credits obtained for the 2016 and 2017 model years may be used as of the 2018 model year but only in respect of a fleet that is composed of all of the company’s light-duty trucks 2, heavy light-duty trucks and medium-duty passenger vehicles of any of the five model years after the model year in respect of which the credits were credited, after which the credits are no longer valid.

26.6 (1) A company may obtain early action credits in respect of its fleet that is composed of all of its Class 2B vehicles or Class 3 vehicles of the 2016 or 2017 model year if the average NMOG + NOX value in respect of a fleet of the model year in question is lower than the applicable fleet average NMOG + NOX standard for the model year in question set out in Table 4 of section 1816 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR and the company reports the credits in its 2018 end of model year report.

(2) Early action credits obtained in respect of the fleet are calculated in accordance with subsection 26.1(2).

(3) Early action credits obtained for the 2016 and 2017 model years are credited on the last day of the 2018 model year.

(4) Early action credits obtained for the 2016 and 2017 model years may be used as of the 2018 model year but only in respect of a fleet that is composed of all of the company’s Class 2B vehicles or Class 3 vehicles of any of the five model years after the model year in respect of which the credits were credited, after which the credits are no longer valid.

EMISSION DEFICIT

27. (1) Subject to subsection (2), NOX, NMOG + NOX, cold NMHC or evaporative emission credits, as the case may be, obtained in respect of a fleet of a specific model year shall be used by the company to offset any outstanding NOX, NMOG + NOX, evaporative or cold NMHC emission deficit, as the case may be, described in section 28, and any remaining credits may be used to offset a future deficit or, except in the case of early action credits, may be transferred to another company.

(2) NOX emission credits obtained in respect of a fleet of a specific model year may only be used to offset a NOX deficit for the 2016 or earlier model year.

28. Subject to section 31 or 31.1, if a company’s average NOX, NMOG + NOX, evaporative emission or cold NMHC value, as the case may be, in respect of a fleet of a specific model year is higher than the fleet average NOX, NMOG + NOX, evaporative emission or cold NMHC standard for the model year in question, the company shall calculate the value of the NOX, NMOG + NOX, evaporative emission or cold NMHC emission deficit incurred in that model year using the formula set out in subsection 26(2), 26.1(2), 26.2(2) or 26.3(2), as the case may be.

30. Subsection 29(1) of the Regulations is replaced by the following:

29. (1) Subject to subsection 27(2), a company shall offset a NOX emission deficit no later than the date on which the company submits the end of model year report for the third model year after the model year in which the deficit was incurred.

31. Section 30 of the Regulations is replaced by the following:

29.1 (1) A company shall offset a NMOG + NOX, cold NMHC or evaporative emission deficit no later than the date on which the company submits the end of model year report 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 NMOG + NOX, cold NMHC or evaporative emission deficit with an equivalent number of NMOG + NOX, cold NMHC or evaporative emission credits, as the case may be, obtained in accordance with section 26.1, 26.2 or 26.3 or obtained from another company.

(3) If any part of a NMOG + NOX, cold NMHC or evaporative emission deficit for a specific 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 NMOG + NOX, cold NMHC or evaporative emission credits, as the case may be, required to offset that outstanding deficit in the next model year is 120% of the outstanding deficit.

30. (1) A company that acquires another company or that results from the merger of companies is responsible for offsetting, in accordance with section 29 or 29.1, any outstanding emission deficits of the acquired company or merged companies.

(2) In the case of a company that ceases to manufacture, import or sell light-duty vehicles, light-duty trucks, medium-duty passenger vehicles, Class 2B vehicles or Class 3 vehicles, the company shall, no later than three calendar years after submitting its last end of model year report, offset all emission deficits that are outstanding at the time that it ceases those activities.

32. Subsections 31(1) and (2) of the Regulations are replaced by the following:

31. (1) Subject to subsection (8), a company may elect to exclude the group of vehicles in a fleet that are covered by an EPA certificate and that are sold concurrently in Canada and the United States from the requirement to meet the standards set out in section 21, 22 or 23, as the case may be, and from the NOx emission deficit calculations in respect of a fleet under section 28.

(2) Subject to subsection (3), a company shall include in the group referred to in subsection (1) all of the vehicles of a fleet that are covered by an EPA certificate and that are sold concurrently in Canada and the United States.

33. Subsection 31(8) of the English version of the Regulations is replaced by the following:

(8) A company shall not make the election referred to in subsection (1) in respect of a model year in which it has transferred NOX emission credits to another company if the average NOX value calculated under paragraph (4)(a) for the group that is subject to the election exceeds the fleet average NOX standard that would otherwise apply under section 21, 22 or 23, as the case may be.

34. The Regulations are amended by adding the following after section 31:

31.1 (1) Subject to subsection (8), a company may elect to exclude the group of vehicles in a fleet that are covered by an EPA certificate and that are sold concurrently in Canada and the United States from the requirement to meet the standards set out in sections 24.1 to 24.4, 24.6, 24.7 and 24.10, as applicable, and from the NMOG + NOX, cold NMHC or evaporative emission deficit calculations, as the case may be, in respect of a fleet under section 28.

(2) Subject to subsection (3), a company shall include in the group referred to in subsection (1) all of the vehicles of a fleet that are covered by an EPA certificate and that are sold concurrently in Canada and the United States.

(3) A company shall not include in the group referred to in subsection (1) any vehicle that is covered by an EPA certificate and

  • (a) in respect of which the total number of units sold in Canada exceeds the total number of units sold in the United States that are covered by the same EPA certificate; and
  • (b) that conforms, as applicable, to
    • (i) a full useful life emission bin having a NMOG + NOX standard that is greater than the applicable fleet average NMOG + NOX standard for the model year in respect of which the election is made, or
    • (ii) a family emission limit for cold NMHC or evaporative emissions, as the case may be, that is greater than the applicable fleet average cold NMHC or evaporative standard for the model year in respect of which the election is made.

(4) Subject to subsection (5), if a company makes an election under subsection (1), it shall calculate an average NMOG + NOX, cold NMHC or evaporative emission value in accordance with section 24.5, 24.8 or 24.11, as the case may be, with the necessary modifications, in respect of

  • (a) the group that is subject to the election; and
  • (b) the vehicles in the fleet that are not part of the group referred to in paragraph (a), if any.

(5) A company may elect not to make the calculations referred to in subsection (4) for a group of vehicles described in paragraph (4)(a) or (b) if every vehicle in the group conforms to

  • (a) a full useful life emission bin having a NMOG + NOX standard that is equal to or less than the fleet average NMOG + NOX standard that would otherwise apply under sections 24.1 to 24.4; or
  • (b) a family emission limit for cold NMHC or evaporative emissions, as the case may be, that is equal to or less than the fleet average cold NMHC or evaporative emission standard that would otherwise apply under sections 24.6 and 24.7 or section 24.10.

(6) If a company makes an election under subsection (5), the average NMOG + NOX, cold NMHC or evaporative emission value, as the case may be, for the group of vehicles of a fleet for which the election was made shall be the applicable fleet average NMOG + NOX, cold NMHC or evaporative standard.

(7) If a company makes the election referred to in subsection (1) and the average NMOG + NOX, cold NMHC or evaporative emission value, as the case may be, for the group that is subject to the election, calculated under paragraph (4)(a), exceeds the fleet average NMOG + NOX, cold NMHC or evaporative standard that would otherwise apply under sections 24.1 to 24.4, 24.6 and 24.7 or section 24.10, the company shall

  • (a) forfeit any NMOG + NOX, cold NMHC or evaporative emission credits, as the case may be, obtained for previous model years; and
  • (b) not obtain any NMOG + NOX, cold NMHC or evaporative emission credits, as the case may be, for the model year in respect of which the election was made.

(8) A company shall not make the election referred to in subsection (1) in respect of a model year for which it has transferred NMOG + NOX, cold NMHC or evaporative emission credits to another company if the average NMOG + NOX, cold NMHC or evaporative value, as the case may be, calculated under paragraph (4)(a) for the group that is subject to the election exceeds the fleet average NMOG + NOX, cold NMHC or evaporative emission standard that would otherwise apply under sections 24.1 to 24.4, 24.6 and 24.7 or section 24.10.

35. The heading before section 32 of the Regulations is replaced by the following:

END OF MODEL YEAR REPORTS

36. (1) Subsection 32(2) of the Regulations is replaced by the following:

(2) The end of model year report shall contain the following information:

  • (a) for each of a company’s fleets described in sections 21 to 23
    • (i) the applicable fleet average NOX standard,
    • (ii) the average NOX value achieved under section 24 or 25,
    • (iii) for each model of vehicle, the values used in calculating the average NOX value achieved in respect of the fleet,
    • (iv) the total number of vehicles in the fleet,
    • (v) the NOX emission credits calculated in accordance with subsection 26(2) for the model year, if any,
    • (vi) the NOX emission deficits incurred for the model year, if any, and
    • (vii) the balance of credits or deficits at the end of the model year;
  • (b) for each of its fleets described in sections 24.1 to 24.4
    • (i) the applicable fleet average NMOG + NOX standard,
    • (ii) the average NMOG + NOX value achieved under section 24.5 or 25.1,
    • (iii) for each model of vehicle, the values used in calculating the average NMOG + NOX value achieved in respect of the fleet, including any compliance credits taken into account by the company in choosing the full useful life emission bin applicable to the vehicles,
    • (iv) the total number of vehicles in the fleet,
    • (v) the NMOG + NOX emission credits calculated in accordance with subsection 26.1(2) for the model year, if any,
    • (vi) the NMOG + NOX emission deficit incurred for the model year, if any, and
    • (vii) the balance of credits or deficits at the end of the model year;
  • (c) for each of its fleets described in sections 24.6 and 24.7
    • (i) the applicable fleet average cold NMHC standard,
    • (ii) the average cold NMHC value achieved under section 24.8 or 25.2,
    • (iii) for each model of vehicle, the values used in calculating the average cold NMHC value achieved in respect of the fleet,
    • (iv) the total number of vehicles in the fleet,
    • (v) the cold NMHC emission credits calculated in accordance with subsection 26.2(2) for the model year, if any,
    • (vi) the cold NMHC emission deficits incurred for the model year, if any, and
    • (vii) the balance of credits or deficits at the end of the model year;
  • (d) for each of its fleets described in section 24.10
    • (i) the applicable fleet average evaporative emission standard,
    • (ii) the average evaporative emission value achieved under section 24.11 or 25.3 and the percentage of vehicles in that fleet that conform to the applicable fleet average evaporative emission standard,
    • (iii) for each model of vehicle, the values used in calculating the average evaporative emission value achieved in respect of the fleet,
    • (iv) the total number of vehicles in the fleet,
    • (v) the evaporative emission credits calculated in accordance with subsection 26.3(2) for the model year, if any,
    • (vi) the evaporative emission deficits incurred for the model year, if any, and
    • (vii) the balance of credits or deficits at the end of the model year; and
  • (e) for each of its fleets described in sections 26.4 to 26.6, the early action credits obtained for the model year in question, if any.

(2.1) The end of model year report for the 2017 to 2021 model years shall also contain the percentage of vehicles in a company’s groups of vehicles that conform to the applicable particulate matter exhaust emissions standards referred to in subsection 17.2(1).

(2) The portion of subsection 32(3) of the French version of the Regulations before paragraph (a) is replaced by the following:

(3) Le rapport de fin d’année de modèle contient, pour tout transfert, par l’entreprise ou à celle-ci, de points relatifs aux émissions effectué depuis le rapport de fin d’année de modèle précédent, les renseignements suivants :

(3) Subsections 32(4) and (5) of the Regulations are replaced by the following:

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

  • (a) for any of its fleets described in sections 21 to 23, a statement that
    • (i) it has made the election under section 25, or
    • (ii) it has made the election under subsection 31(1) and, if applicable, it has made an election under subsection 31(5) in respect of a group of vehicles described in paragraph 31(4)(a) or (b);
  • (b) for any of its fleets described in sections 24.1 to 24.4, a statement that
    • (i) it has made the election under section 25.1, or
    • (ii) it has made the election under subsection 31.1(1) and, if applicable, it has made an election under subsection 31.1(5) in respect of a group of vehicles described in paragraph 31.1(4)(a) or (b);
  • (c) for any of its fleets described in sections 24.6 and 24.7, a statement that
    • (i) it has made the election under section 25.2, or
    • (ii) it has made the election under subsection 31.1(1) and, if applicable, it has made an election under subsection 31.1(5) in respect of a group of vehicles described in paragraph 31.1(4)(a) or (b);
  • (d) for any of its fleets described in section 24.10, a statement that
    • (i) it has made the election under section 25.3, or
    • (ii) it has made the election under subsection 31.1(1) and, if applicable, it has made an election under subsection 31.1(5) in respect of a group of vehicles described in paragraph 31.1(4)(a) or (b).

(5) A company that makes an election under subsection 31(1) or 31.1(1) in respect of a group of vehicles in a fleet shall include in the end of model year report

  • (a) the following average values:
    • (i) for the 2016 and earlier model years, the average NOX value, determined under subsection 31(4) or (6), as the case may be, or
    • (ii) for the 2017 and later model years, the average NMOG + NOX, cold NMHC or evaporative emission value, as the case may be, determined under subsection 31.1(4) or (6), as the case may be; or
  • (b) the values used in calculating the average values referred to in subparagraph (a)(i) or (ii), as applicable; and
  • (c) information demonstrating compliance with subsection 31(3) or 31.1(3), as the case may be.

37. The definitions “engine family” and “family emission limit” in section 32.1 of the Regulations are repealed.

38. Subsection 32.2(2) of the Regulations is replaced by the following:

(2) In any model year, the HC + NOX family emission limit applicable to a motorcycle shall not exceed the applicable family emission limit cap set out in section 449 of Title 40, chapter I, subchapter C, part 86, subpart E, of the CFR.

39. The Regulations are amended by adding the following after section 32.7:

FORMAT OF REPORTS

32.8 Any report that is required under these Regulations shall be submitted electronically in the format provided by the Minister, but the report shall be submitted in writing if

  • (a) no format has been provided; or
  • (b) it is, owing to circumstances beyond the control of the person required to submit the report, impracticable to submit the report electronically in the format provided.

40. Paragraphs 33(1)(a) to (c) of the Regulations are replaced by the following:

  • (a) light-duty vehicles, light-duty trucks, medium-duty passenger vehicles and complete heavy-duty vehicles in section 1808 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR for the applicable model year;
  • (b) motorcycles in section 411 of Title 40, chapter I, subchapter C, part 86, subpart E, of the CFR for the applicable model year; and
  • (c) heavy-duty vehicles other than complete heavy-duty vehicles in section 38 of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR for the applicable model year.

41. (1) The portion of subsection 35(1) of the Regulations before paragraph (a) is replaced by the following:

35. (1) In the case of a vehicle or engine that is covered by an EPA certificate and in respect of which a company has made an election under subsection 19(1), evidence of conformity for the purpose of paragraph 153(1)(b) of the Act in respect of a company shall consist of

(2) Paragraphs 35(1)(b) and (c) of the Regulations are replaced by the following:

  • (b) if applicable, a document demonstrating that vehicles or engines covered by the EPA certificate
    • (i) are sold concurrently in Canada and the United States, or
    • (ii) bear a national emissions mark that conforms to the requirements set out in section 8;
  • (c) a copy of the records submitted to the EPA in support of the application for the EPA certificate in respect of the vehicle or the engine and any application for an amendment to that EPA certificate and any records submitted to the EPA to maintain that EPA certificate; and

(3) Subparagraphs 35(1)(d)(i) to (iv) of the Regulations are replaced by the following:

  • (i) section 1807 of Title 40, chapter I, subchapter C, part 86, 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 of Title 40, chapter I, subchapter C, part 86, subpart E, of the CFR for the applicable model year of motorcycle,
  • (iii) section 35 of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR for the applicable model year of heavy-duty vehicle, and
  • (iv) section 35 of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR for the applicable model year of heavy-duty engine.

(4) Section 35 of the Regulations is amended by adding the following after subsection (1):

(1.1) In the case of a vehicle or engine referred to in subsection (1) that is not sold in the United States or that does not have a national emission mark applied to it, a company shall submit the evidence of conformity to the Minister before importing the vehicle or engine or applying a national emissions mark to it.

42. Paragraphs 35.1(1)(c) and (d) of the Regulations are replaced by the following:

  • (c) a copy of the records submitted to the EPA in support of the application for the EPA certificate in respect of the vehicle to which it is equivalent and any application for an amendment to that EPA certificate and any records submitted to the EPA to maintain that EPA certificate;
  • (d) an emission control information label that is permanently affixed to the vehicle in a readily accessible location and that contains the statement “THIS VEHICLE IS EQUIVALENT TO A VEHICLE COVERED BY AN EPA CERTIFICATE FOR MODEL YEAR [MODEL YEAR] / CE VÉHICULE EST ÉQUIVALENT À UN VÉHICULE VISÉ PAR UN CERTIFICAT DE L’EPA POUR L’ANNÉE DE MODÈLE [ANNÉE DE MODÈLE]” and information that is equivalent to the information required under
    • (i) section 1807(a) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR for the applicable model year of the light-duty vehicle, light-duty truck, medium-duty passenger vehicle or complete heavy-duty vehicle, other than the statement of compliance referred to in section 1807(a)(3)(v) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR,
    • (ii) section 413 of Title 40, chapter I, subchapter C, part 86, subpart E, of the CFR for the applicable model year of the motorcycle, other than the statement of compliance referred to in section 413(a)(4)(viii) of Title 40, chapter I, subchapter C, part 86, subpart E, of the CFR, or
    • (iii) section 35 of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR for the applicable model year of the heavy-duty vehicle, other than the statements of compliance referred to in sections 35(a)(2)(iii)(E)(2), 35(a)(3)(iii)(H), 35(a)(4)(iii)(E) and 35(d)(2) of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR; and

43. The heading before section 37 of the Regulations is replaced by the following:

FLEET AVERAGE RECORDS

44. Subsection 37(1) of the Regulations is replaced by the following:

37. (1) A company shall maintain records containing the following information for each of its fleets described in sections 21 to 23, 24.1 to 24.4, 24.6, 24.7 and 24.10:

  • (a) the model year;
  • (b) the applicable fleet average standard;
  • (c) the average value achieved
    • (i) in the case of NOX emissions, under section 24 or 25,
    • (ii) in the case of NMOG + NOX emissions, under section 24.5 or 25.1,
    • (iii) in the case of cold NMHC emissions, under section 24.8 or 25.2, and
    • (iv) in the case of evaporative emissions, under section 24.11 or 25.3; and
  • (d) all values used in calculating the average emission values referred to in subparagraphs (c)(i) to (iv).

45. (1) Paragraphs 37(2)(b) and (c) of the Regulations are replaced by the following:

  • (b) the applicable fleet average standard;
  • (c) in the case of a vehicle covered by an EPA certificate, the applicable test group described in Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR;

(2) Paragraph 37(2)(f) of the Regulations is replaced by the following:

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

46. The Regulations are amended by adding the following after section 38:

INFORMATION REGARDING SUSPENSION OR REVOCATION OF EPA CERTIFICATE

38.1 If an EPA certificate referred to in section 19 or 19.1 is suspended or revoked, the company shall submit the following information to the Minister as soon as feasible:

  • (a) its name, address and telephone number;
  • (b) a copy of the EPA certificate that was suspended or revoked;
  • (c) a copy of the EPA decision to suspend or revoke the certificate; and
  • (d) the make, model and model year of the vehicles and engines that are covered by the EPA certificate or of the vehicles that are equivalent to a vehicle that is covered by the EPA certificate, as the case may be.

47. Subsection 44(2) of the Regulations is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):

  • (e) 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 statement of the reasons why not conforming to the prescribed standards does not substantially diminish the control of emissions of the vehicle or engine, and
    • (ii) a description of other means of achieving conformity that were considered and the reasons for rejecting each of them.

48. The portion of paragraph 44(4)(a) of the French version of the Regulations before subparagraph (i) is replaced by the following:

  • a) une copie des documents de recherche, de mise au point et d’essai qui démontrent que la dispense ne porterait pas atteinte de façon considérable au contrôle des émissions du véhicule ou du moteur, y compris :

49. (1) The portion of subsection 45(1) of the Regulations before paragraph (c) is replaced by the following:

45. (1) The notice of defect referred to in subsections 157(1) and (4) of the Act shall contain the following information:

  • (a) the name of the company giving the notice and its street address and, if different, mailing address, and the name, email address, phone number and, if any, facsimile number of the appropriate contact person;
  • (b) for each vehicle and engine in respect of which the notice is given, its make, model, model year and the period during which it was manufactured and, in the case of vehicles, the range of vehicle identification numbers, if known;
  • (b.1) the total number of vehicles or engines in respect of which the notice is given or, if the total number is not known, the estimated number, and the number or estimated number of vehicles or engines in each identifying classification;

(2) Subsection 45(1) of the Regulations is amended by striking out “and” at the end of paragraph (e), by adding “and” at the end of paragraph (f) and by adding the following after paragraph (f):

  • (g) a chronology of the principal events that led to the determination of the existence of the defect, if known.

(3) Section 45 of the Regulations is amended by adding the following after subsection (1):

(1.1) The notice of defect shall be given in writing and, when given to a person other than the Minister, shall be

  • (a) in both official languages; or
  • (b) in the person’s official language of choice, if it is known.

(4) Paragraphs 45(2)(a) to (c) of the Regulations are replaced by the following:

  • (a) any changes to the information referred to in subsection (1);
  • (a.1) if not already provided in the notice, the range of vehicle identification numbers;
  • (b) if not already provided in the notice, the total number of vehicles or engines in respect of which the notice was given and the number of vehicles or engines in each identifying classification;
  • (c) if not already provided in the notice, a chronology of all principal events that led to the determination of the existence of the defect; and

(5) Paragraphs 45(3)(b) and (c) of the Regulations are replaced by the following:

  • (b) if applicable, the revised number of vehicles or engines in respect of which the notice of defect was given;
  • (c) the dates on which the notice of defect and any follow-up notices were given to the current owners of the affected vehicles or engines; and

PASSENGER AUTOMOBILE AND LIGHT TRUCK GREENHOUSE GAS EMISSION REGULATIONS

50. Subsection 12(1) of the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations (see footnote 23) is replaced by the following:

EPA certificate

12. (1) Every vehicle of a specific model year that is covered by an EPA certificate and that bears the label referred to in paragraph 36(1)(d) must conform to, instead of the standards set out in sections 9 and 10, the certification and in-use standards referred to in the EPA certificate.

51. (1) The portion of subsection 36(1) of the Regulations before paragraph (a) is replaced by the following:

Evidence of conformity

36. (1) In the case of a vehicle that is covered by an EPA certificate and that is sold concurrently in Canada and the United States or has a national emissions mark applied to it, evidence of conformity for the purpose of paragraph 153(1)(b) of the Act in respect of a company must consist of

(2) Paragraph 36(1)(b) of the Regulations is replaced by the following:

  • (b) a document demonstrating that the vehicles covered by the EPA certificate
    • (i) are sold concurrently in Canada and the United States, or
    • (ii) bear a national emissions mark that conforms to the requirements set out in section 7;

HEAVY-DUTY VEHICLE AND ENGINE GREENHOUSE GAS EMISSION REGULATIONS

52. The portion of subsection 8(1) of the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations (see footnote 24) before paragraph (a) is replaced by the following:

Non EPA-certified engines

8. (1) Heavy-duty engines and the engines referred to in section 25 that are imported or manufactured in Canada — other than EPA-certified engines that bear the label referred to in subparagraph 53(d)(ii) — must bear a compliance label that sets out the following information:

53. The portion of subsection 9(1) of the Regulations before paragraph (a) is replaced by the following:

Non EPA-certified vehicles

9. (1) Heavy-duty vehicles that are imported or manufactured in Canada — other than EPA-certified heavy-duty vehicles that bear the label referred to in subparagraph 53(d)(i) — must bear a compliance label that sets out the following information:

54. The portion of subsection 13(1) of the Regulations before paragraph (a) is replaced by the following:

Conforming to EPA certificate

13. (1) Subject to subsections (4) and (8), a heavy-duty vehicle or heavy-duty engine of a given model year that is covered by an EPA certificate and bears the label referred to in paragraph 53(d) must conform to the certification and in-use standards referred to in the EPA certificate instead of to the following standards, whichever apply:

55. (1) Clause 48(2)(a)(ii)(B) of the Regulations is replaced by the following:

  • (B) are covered by an EPA certificate and conform either to the emission standards referred to in the EPA certificate or to a N2O or CH4 family emission limit, as the case may be, that is lower than the N2O or CH4 emission standard applicable to the model year of the vehicles under these Regulations, or

(2) Subparagraphs 48(2)(b)(ii) and (iii) of the Regulations are replaced by the following:

  • (ii) are covered by an EPA certificate and conform either to the emission standard referred to in the EPA certificate or to a CO2 family emission limit that is lower than the CO2 emission standard applicable to the model year of the vehicles under these Regulations,
  • (iii) are covered by an EPA certificate, conform to a CO2 family emission limit that exceeds the CO2 emission standard applicable to the model year of the vehicles under these Regulations and are not grouped into one or more fleets in accordance with subsection 13(4),

(3) Clauses 48(2)(c)(i)(B) and (C) of the Regulations are replaced by the following:

  • (B) are covered by an EPA certificate and conform either to the emission standard referred to in the EPA certificate or to a CO2 family certification level that is lower than the CO2 emission standard applicable to the model year of the engines under these Regulations,
  • (C) are covered by an EPA certificate, conform to a CO2 family certification level that exceeds the CO2 emission standard applicable to the model year of the engines under these Regulations and are not grouped into one or more fleets in accordance with subsection 13(8), or

(4) Clause 48(2)(c)(ii)(B) of the Regulations is replaced by the following:

  • (B) are covered by an EPA certificate and conform either to the emission standards referred to in the EPA certificate or to a N2O or CH4 family emission limit, as the case may be, that is lower than the N2O or CH4 emission standard applicable to the model year of the engines under these Regulations, or

(5) The marginal note to subsection 48(4) of the Regulations is replaced by “Statement when covered by EPA certificate”.

56. (1) The portion of section 53 of the Regulations before paragraph (a) is replaced by the following:

Vehicle or engine covered by EPA certificate

53. For a heavy-duty vehicle or heavy-duty engine that is covered by an EPA certificate and that is sold concurrently in Canada and the United States or has a national emissions mark applied to it, evidence of conformity in respect of a company for the purposes of paragraph 153(1)(b) of the Act consists of

(2) Paragraph 53(b) of the Regulations is replaced by the following:

  • (b) a document demonstrating that the vehicle or engine that is covered by the EPA certificate
    • (i) is sold concurrently in Canada and the United States, or
    • (ii) bears a national emissions mark that conforms to the requirements set out in section 7;

COMING INTO FORCE

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

[39-1-o]

  • Footnote 1
    Canada–U.S. Air Quality Agreement — Ozone Annex (2000). Available at www.ec.gc.ca/air/default.asp?lang=En&n=FA26FE79-1.
  • Footnote 2
    Available at http://laws-lois.justice.gc.ca/eng/regulations/SOR-99-236.
  • Footnote 3
    Available at http://laws-lois.justice.gc.ca/eng/regulations/SOR-2003-2.
  • Footnote 4
    “Control of Air Pollution From Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards” (www.epa.gov/otaq/tier3.htm).
  • Footnote 5
    Air Pollutant Emissions Data (excluding open and natural sources). Available at www.ec.gc.ca/inrp-npri/donnees-data/ap/index.cfm?lang=En.
  • Footnote 6
    These emission standards are presented in the U.S. EPA Tier 3 Final Rule, “Control of Air Pollution From Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards” (www.epa.gov/otaq/tier3.htm).
  • Footnote 7
    Evaporation within the fuel system of an engine can cause unburned fuel to permeate through or escape from fuel line or fuel tank materials. These evaporative emissions are generally composed of volatile organic compounds (VOCs).
  • Footnote 8
    Compliance with the combined NMOG and NOx emission standards would reduce emissions of hydrocarbons, including VOCs, and other toxic substances.
  • Footnote 9
    Statistics Canada: Supply and disposition of refined petroleum products (Table 134-004). Available at www5.statcan.gc.ca/cansim/a26?id=1340004.
  • Footnote 10
    Sulphur in Liquid Fuels 2009. Environment Canada. Available at www.ec.gc.ca/energie-energy/default.asp?lang=En&n=AEDFD28D-1.
  • Footnote 11
    This preliminary data will be published once finalized.
  • Footnote 12
    Forecasts were provided by Environment Canada’s Energy-Emissions-Economy Model for Canada (E3MC), which incorporates historic gasoline production provided by Statistics Canada’s Report on Energy Supply and Demand.
  • Footnote 13
    Average values in this fuel cost section were calculated based on a simple average of the present value of costs over the 2017 to 2030 period.
  • Footnote 14
    2010 retail gasoline sample data purchased in 2013 from Alberta Innovates Technology Futures.
  • Footnote 15
    In this analysis, MDPVs were categorized as either LDTs or HDVs, depending on the gross vehicle weight rating (GVWR).
  • Footnote 16
    In the total cost calculations, all heavy-duty vehicles (HDVs) powered by gasoline engines were included in the HDV class because, as of model year 2022, new refuelling (evaporative) emission control requirements would come into effect for HDVs with a GVWR above 14 000 lb (i.e. above heavy-duty weight class 3).
  • Footnote 17
    The impacts associated with a given model year are assumed to occur in the corresponding calendar year.
  • Footnote 18
    SO2 emissions depend on the quantity and sulphur content of fuel consumed.
  • Footnote 19
    All cost estimates presented in this section are provided in 2012 Canadian dollars using a 7% discount rate over 10 years and represent administrative burden costs related to activities such as learning about new administrative regulatory obligations and meeting new record-keeping and information-reporting requirements. This approach follows TBS guidance on administrative burden calculations under the “One-for-One” Rule.
  • Footnote 20
    The proposed administrative amendments to other CEPA 1999 regulations are not expected to result in any impacts on stakeholders, including administrative burden impacts.
  • Footnote 21
    Available at www.gazette.gc.ca/rp-pr/p1/2013/2013-06-08/html/notice-avis-eng.html.
  • Footnote 22
    SOR/2003-2
  • Footnote 23
    SOR/2010-201
  • Footnote 24
    SOR/2013-24
  • Footnote a
    S.C. 2004, c. 15, s. 31
  • Footnote b
    S.C. 1999, c. 33