Canada Gazette, Part I, Volume 148, Number 39: Regulations Amending the Sulphur in Gasoline Regulations

September 27, 2014

Statutory authority

Canadian Environmental Protection Act, 1999

Sponsoring department

Department of the Environment

REGULATORY IMPACT ANALYSIS STATEMENT

For the Regulatory Impact Analysis Statement, see Regulations Amending the On-Road Vehicle and Engine Emission Regulations and Other Regulations Made Under the Canadian Environmental Protection Act, 1999.

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 140 (see footnote c), 326 and 330 (see footnote d) of that Act, proposes to make the annexed Regulations Amending the Sulphur in Gasoline Regulations.

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 sent by mail to Steve McCauley, Director General, Energy and Transportation Directorate, Environmental Stewardship Branch, Department of the Environment, Gatineau, Quebec K1A 0H3, by fax to 819-938-4197 or by email to 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 SULPHUR IN GASOLINE REGULATIONS

AMENDMENTS

1. (1) The definitions “auditor” and “California gasoline” in subsection 1(1) of the Sulphur in Gasoline Regulations (see footnote 1) are repealed.

(2) The definitions “blend”, “pool average”, “sulphurlimited butane”, “sulphur-limited oxygenate” and “year” in subsection 1(1) of the Regulations are replaced by the following:

“blend” means the production of a batch by mixing gasoline or gasoline components, including oxygenates. It does not include

• (a) the mixing of only low-sulphur gasolines; or
• (b) the adding of only additives, sulphur-limited butane or sulphur-limited oxygenates to low-sulphur gasoline. (mélange)

“pool average” means the volume-weighted average concentration of sulphur in gasoline that is produced during a year at a refinery or blending facility or imported into a province, as calculated in accordance with section 10. (moyenne de l'ensemble des lots)

“sulphur-limited butane” means butane with a sulphur concentration that does not exceed the applicable limit set out in paragraph 2(1)(b). (butane à concentration limitée en soufre)

“sulphur-limited oxygenate” means an oxygenate with a sulphur concentration that does not exceed the applicable limit set out in paragraph 2(1)(b). (produit oxygéné à concentration limitée en soufre)

“year” means a calendar year. (année)

(3) The portion of paragraph (b) before subparagraph (i) of the definition “gasoline” in subsection 1(1) of the Regulations is replaced by the following:

• (b) a petroleum distillate, or a mixture of petroleum distillates, oxygenates or additives, that is suitable for use in a spark ignition engine and that has the following characteristics, as determined by the applicable test method listed in the National Standard of Canada CAN/CGSB-3.5-2011, entitled Automotive Gasoline,

2. Section 1.1 of the Regulations is amended by adding “or” at the end of paragraph (b) and by repealing paragraph (c).

3. (1) Subsections 2(1) to (3) of the Regulations are replaced by the following:

2. (1) For the purpose of section 139 of the Act, the concentration of sulphur in each batch of gasoline produced or imported by a primary supplier shall not exceed

• (a) in the case where the primary supplier has elected under section 9 to calculate the concentration of sulphur in that gasoline on the basis of a pool average, 80 mg/kg; and
• (b) in any other case,
  • (i) until December 31, 2016, 40 mg/kg,
  • (ii) for the period beginning on January 1, 2017 and ending on December 31, 2019, 14 mg/kg, and
  • (iii) on or after January 1, 2020, 12 mg/kg.

(2) For the purpose of section 139 of the Act, the pool average of a pool in respect of which a primary supplier has made an election under section 9 shall not exceed

• (a) until December 31, 2016, 30 mg/kg; and
• (b) on or after January 1, 2017, 10 mg/kg.

(3) For the purpose of section 139 of the Act, the concentration of sulphur in gasoline that is sold shall not exceed 80 mg/kg.

(2) Paragraph 2(4)(a) of the Regulations is replaced by the following:

• (a) gasoline for use in aircraft, if the gasoline has an octane number of at least 99.5 or contains at least 5 mg/L of lead;

(3) Subsection 2(5) of the Regulations is repealed.

4. (1) Subsections 3(1) and (2) of the Regulations are replaced by the following:

3. (1) For the purposes of these Regulations, when a primary supplier takes samples they shall use one of the following methods:

• (a) in the case where the primary supplier is using an alternative sampling method in accordance with subsection 6(1) of the Benzene in Gasoline Regulations, by that sampling method; and
• (b) in any other case, by the sampling method described in the National Standard of Canada CAN/CGSB-3.5-2011, entitled Automotive Gasoline.

(2) For the purposes of these Regulations,

• (a) the concentration of sulphur in gasoline and the concentration of sulphur in an oxygenate shall be measured in accordance with the ASTM International test method D5453-12, entitled Standard Test Method for Determination of Total Sulfur in Light Hydrocarbons, Spark Ignition Engine Fuel, Diesel Engine Fuel, and Engine Oil by Ultraviolet Fluorescence; and
• (b) the concentration of sulphur in butane shall be measured in accordance with the ASTM International test method D6667-10, entitled Standard Test Method for Determination of Total Volatile Sulfur in Gaseous Hydrocarbons and Liquefied Petroleum Gases by Ultraviolet Fluorescence.

(2) Subsections 3(6) and (7) of the Regulations are replaced by the following:

(6) For the purposes of sections 12, 24 and 25, if a primary supplier is using an alternative method of analysis in accordance with subsection 6(2) of the Benzene in Gasoline Regulations, the primary supplier may use that method to analyze samples of gasoline.

(7) Despite subsection (6), compliance with a requirement set out in section 2 shall be determined in accordance with the test methods set out in subsection (2).

5. Section 4 of the Regulations and the heading before it are repealed.

6. (1) Subsection 5(1) of the Regulations is amended by adding “or” at the end of paragraph (f) and by repealing paragraph (g).

(2) Subsection 5(3) of the Regulations is replaced by the following:

(3) A primary supplier shall, for each batch of gasoline that is identified as a type referred to in any of paragraphs (1)(b) to (f), keep a record of its type and the use for which it was sold or delivered.

7. Subsection 6(3) of the Regulations is repealed.

8. (1) Subsection 9(1) of the Regulations is replaced by the following:

9. (1) Subject to subsection 13(3), a primary supplier may, in respect of a pool, elect to calculate the concentration of sulphur in gasoline that is in a pool on the basis of a pool average by submitting to the Minister a notice of the election within the period specified in subsection (2.1).

(1.1) A pool shall be composed of one of the following:

• (a) the gasoline produced at a particular refinery;
• (b) the gasoline produced at a particular blending facility; or
• (c) the gasoline imported into a particular province.

(2) Paragraph 9(2)(a) of the Regulations is replaced by the following:

• (a) specify the pool to which the election applies;

(3) Subsection 9(3) of the Regulations is replaced by the following:

(2.1) The notice shall be submitted to the Minister

• (a) in the case where the primary supplier is, for the first time, producing or importing gasoline, within 60 days before the day on which the gasoline is produced or imported for the first time; and
• (b) in any other case, by no later than November 1 of the year before the first year in respect of which the calculation will be made on the basis of a pool average.

(3) At least 45 days before the implementation of any change that affects information submitted under subsection (2), the primary supplier shall submit a notice containing the updated information to the Minister.

9. (1) Subsection 10(1) of the Regulations is replaced by the following:

10. (1) Subject to subsections (2) to (4.1), a primary supplier shall, for each pool in respect of which it makes an election under section 9, calculate the pool average of all gasoline in the pool that was identified as low-sulphur gasoline under section 5.

(2) Subsection 10(4) of the Regulations is replaced by the following:

(4) If a primary supplier dispatches from a refinery and delivers, or imports and delivers, gasoline-like blendstock to a blending facility where it is blended to produce a batch of low-sulphur gasoline, the primary supplier may include the volume of that gasoline-like blendstock and its concentration of sulphur in the pool average for the refinery or province of importation, as the case may be, if

• (a) the primary supplier owns the gasoline-like blendstock;
• (b) the gasoline-like blendstock is, prior to being blended, segregated from all other batches of gasoline stored at the blending facility; and
• (c) the batch of low-sulphur gasoline is excluded from the pool average for that blending facility.

(4.1) If a primary supplier dispatches from a refinery and delivers, or imports and delivers, gasoline-like blendstock to a blending facility where it is blended with low-sulphur gasoline to produce a batch of low-sulphur gasoline, the primary supplier shall include the volume of that gasoline-like blendstock and its concentration of sulphur in the pool average for the refinery or province of importation.

10. Section 11 of the Regulations and the heading before it are repealed.

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

12. A primary supplier who makes an election in respect of a pool under section 9 shall, for each batch of gasoline in the pool, keep a record in Canada, for a period of five years after the day on which the record was made, that sets out the following information:

12. The heading before section 13 and sections 13 and 14 of the Regulations are replaced by the following:

TEMPORARY SULPHUR COMPLIANCE UNIT TRADING SYSTEM

Election

13. (1) A primary supplier who makes an election under section 9 before the day on which this section comes into force may, in respect of the pool to which that election applies, elect to participate in the temporary sulphur compliance unit trading system for the years of 2014 to 2019 by submitting to the Minister a notice of the election in accordance with subsection (2).

(2) The notice shall identify the pool to which the election applies and be submitted to the Minister

• (a) in the case where the primary supplier is, for the first time, producing or importing gasoline, no later than 60 days before the day on which the gasoline is produced or imported for the first time; and
• (b) in any other case, within 60 days after the day on which this section comes into force.

(3) A primary supplier who does not make an election under section 9 before the day on which this section comes into force may make an election under section 9 and, in respect of the pool to which that election applies, elect to participate in the trading system for the years of 2014 to 2019 by submitting to the Minister a notice of the election within 60 days after the day on which this section comes into force.

Creating Sulphur Compliance Units

14. (1) Subject to subsection (2), a primary supplier who is participating in the temporary sulphur compliance unit trading system may, in respect of the pool to which the election applies, create a number of sulphur compliance units for a year that is equal to that determined in accordance with the following formula:

(A − B) × C

where

A is one of the following, namely,

• (a) if the sulphur compliance units are created for any of the years 2014 to 2016, 30 mg/kg, and
• (b) if the sulphur compliance units are created for any of the years 2017 to 2019, 10 mg/kg;

B is the pool average for the year of that pool, in mg/kg; and

C is the volume of low-sulphur gasoline that was used to calculate the pool average, in m³.

(2) In the case of a primary supplier who makes an election under subsection 13(3), B and C of the formula are the following for the year of the election:

• (a) B is the sulphur concentration that is reported by the primary supplier as the year-to-date volume-weighted average value set out in the report provided that year in accordance with section 8 of the Benzene in Gasoline Regulations; and
• (b) C is the volume of gasoline supplied as set out in that report.

(3) If the number determined in accordance with the formula is not a whole number, it shall be rounded down to the nearest whole number.

(4) Sulphur compliance units are created when the primary supplier makes an entry of their creation in the sulphur compliance unit account book maintained by the primary supplier in accordance with section 18. The entry shall be made no later than February 15 of the year after the year for which the units are being created.

Using Sulphur Compliance Units

15. (1) A primary supplier who is participating in the temporary sulphur compliance unit trading system may use a sulphur compliance unit that it holds in respect of a pool for which an election is made under section 13 to adjust the pool average of that pool for any of the years 2017 to 2019.

(2) The adjusted pool average for a year shall be determined in accordance with the following formula:

((X × Y) − Z )⁄ Y

where

X is the pool average for the year, in mg/kg;

Y is the volume of low-sulphur gasoline that was used to calculate the pool average, in m³; and

Z is the number of sulphur compliance units used for the year by the primary supplier.

(3) For the purpose of paragraph 2(2)(b), if the primary supplier uses sulphur compliance units to adjust the pool average, the reference to “pool average” in that subsection is to be read as a reference to the adjusted pool average.

(4) A sulphur compliance unit is used when the primary supplier makes an entry of its use in the sulphur compliance unit account book maintained by the primary supplier in accordance with section 18. The entry shall be made no later than March 31 of the year after the year for which the unit is used.

Transfer of Sulphur Compliance Units

16. (1) A primary supplier who is participating in the temporary sulphur compliance unit trading system may transfer any sulphur compliance units that it holds between pools for which it has made elections under section 13 or to another primary supplier who is participating in the trading system.

(2) A sulphur compliance unit may only be transferred once.

Ceasing Participation in the Trading System

17. (1) A primary supplier may, in respect of a pool, cease to participate in the temporary sulphur compliance unit trading system by submitting to the Minister a notice to that effect no later than November 1 of the last year to which the election applies.

(2) A primary supplier who withdraws its election under subsection 9(4) in respect of a pool ceases to participate in the trading system in respect of that pool as of the date of that withdrawal.

(3) If a primary supplier ceases to participate in the trading system in respect of a pool in accordance with this section, all sulphur compliance units that it holds in respect of that pool are cancelled.

Sulphur Compliance Unit Account Book

18. A primary supplier who is participating in the temporary sulphur compliance unit trading system shall, for each pool in respect of which they make an election under section 13, maintain a sulphur compliance unit account book that contains the following information:

• (a) the composition of the pool for which the book is being kept;
• (b) for each year, the number of sulphur compliance units created, the date of their creation, the calculations performed under subsection 14(1) to determine the number of sulphur compliance units created and the values used to perform those calculations;
• (c) for each year, the number of sulphur compliance units used to adjust the pool average and the dates on which they were used;
• (d) for each year, the number of sulphur compliance units transferred or received by the primary supplier in relation to the pool, the date on which each transfer or receipt occurred, the name of the primary suppliers involved and the registration number, provided under subsection 7(2) of the Benzene in Gasoline Regulations, for each pool involved in the transaction;
• (e) for each year, the number of units cancelled in relation to the pool; and
• (f) the balance of sulphur compliance units that the primary supplier holds in relation to the pool after each occasion on which a sulphur compliance unit is created, used, transferred, received or cancelled.

Other Records

19. A primary supplier who is participating in the temporary sulphur compliance unit trading system shall, for each of the years 2017 to 2019, maintain a record that contains the following information for each pool in respect of which it makes an election under section 13:

• (a) the pool average;
• (b) the number of sulphur compliance units used to adjust the pool average; and
• (c) the adjusted pool average, if any.

20. A primary supplier who is participating in the temporary sulphur compliance unit trading system shall maintain a record that contains a copy of all supporting documents for the records referred to in sections 18 and 19.

Maintaining Records

21. The primary supplier shall maintain the records referred to in sections 18 to 20 until December 31, 2025.

PART 3

REPORTS

22. This Part does not apply to a primary supplier who, in total, produces and imports less than 400 m³ of gasoline on an annual basis.

23. (1) A report that is required to be submitted to the Minister under these Regulations shall be submitted electronically in the form and format specified by the Minister and bear the electronic signature of an authorized official.

(2) If the Minister has not specified an electronic form and format or if it is impractical to submit the report electronically in accordance with subsection (1) because of circumstances beyond the person's control, the report shall be submitted on paper, signed and dated by the authorized official and in the form and format specified by the Minister. However, if no form and format have been so specified, it may be in any form and format.

24. (1) For each year in which a primary supplier produces or imports gasoline identified under subsection 5(1) or (2) as gasoline-like blendstock or low-sulphur gasoline, respectively, the primary supplier shall, for each refinery and blending facility at which it produced that gasoline and for each province into which it imported that gasoline, submit to the Minister a report that contains the information referred to in Schedule 1.

(2) Every primary supplier shall submit to the Minister, as an annex to the report and for each batch of gasoline-like blendstock that was dispatched or imported during the period covered by the report, with the information referred to in paragraphs 6(1)(a) to (e) and with the actual volume of the batch dispatched or imported.

(3) The report shall be submitted on or before February 15 of the year after that for which the report is submitted.

(4) A record of analysis referred to in subsection 8(3) of the Benzene in Gasoline Regulations may be used for the purposes of submitting the information referred to in Schedule 1.

(5) Despite subsection (4), compliance with a requirement under section 2 shall be determined in accordance with the test methods referred to in subsection 3(2).

25. (1) For each year in which a primary supplier participates in the temporary sulphur compliance unit trading system, it shall, for each pool in respect of which it makes an election under section 13, submit to the Minister a report, by no later than April 30 of the year after the year for which the report is submitted, that contains the information referred to in Schedule 2.

(2) A record of analysis referred to in subsection 8(3) of the Benzene in Gasoline Regulations may be used for the purposes of submitting the information referred to in Schedule 2.

(3) Despite subsection (2), compliance with a requirement under section 2 shall be determined in accordance with the test methods referred to in subsection 3(2).

26. (1) A primary supplier shall, for each pool in respect of which it makes an election under section 9, have the records required under sections 5, 6, 12, 18 and 19, and the reports required under subsections 24(1) and 25(1), audited by an auditor who is independent of the primary supplier and submit to the Minister a report that is signed and dated by the auditor and that contains the following information:

• (a) the name and address of the primary supplier and the registration number, provided under subsection 7(2) of the Benzene in Gasoline Regulations, for the pool;
• (b) the name, address and qualifications of the auditor;
• (c) for each type of gasoline identified under section 5, the total volume of the gasoline and the number of batches dispatched or imported by the primary supplier;
• (d) the procedures followed by the auditor to assess the validity of the information required under these Regulations;
• (e) an assessment by the auditor of the extent to which the primary supplier has complied with these Regulations throughout the year of the audit; and
• (f) a description of the nature and date of any inaccuracies in the records and any other deviations by the primary supplier from the requirements under these Regulations.

(2) The primary supplier shall submit the report

• (a) in the case where the primary supplier is not participating in the trading system in respect of the pool for which the report is prepared, on or before May 31 of the year after the year in respect of which the audit is carried out; and
• (b) in any other case, on or before June 30 of the year after the year in respect of which the audit is carried out.

(3) In this section, “auditor” means an individual or a firm that is certified, for the purposes of carrying out International Organization for Standardization quality assurance (ISO 9000 or 14000 series) assessments, by the International Register of Certificated Auditors or any other nationally or internationally recognized accreditation organization.

13. The Regulations are amended by adding, after section 26, the Schedules 1 and 2 set out in the schedule to these Regulations.

COMING INTO FORCE

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

SCHEDULE
(Section 13)

SCHEDULE 1
(Subsections 24(1) and (4))

ANNUAL REPORT OF SULPHUR CONCENTRATION IN GASOLINE

1. The year for which the report is submitted.
2. The following information respecting the primary supplier:
   • (a) name and civic and postal addresses;
   • (b) the name, title, civic and postal addresses, telephone number and, if any, email address and fax number of their authorized official;
   • (c) the name, title, civic and postal addresses, telephone number and, if any, email address and fax number of a contact person, if different from that of the authorized official;
   • (d) a statement indicating whether the report is prepared in respect of a refinery, blending facility or province of importation, and the name of that refinery, blending facility or province; and
   • (e) the registration number provided to the primary supplier under subsection 7(2) of the Benzene in Gasoline Regulations in respect of the refinery, blending facility or province of importation.
3. The following information respecting gasoline, other than that produced for export, that was produced by the primary supplier and identified under section 5 of the Regulations as low-sulphur gasoline:
   • (a) the number of batches produced;
   • (b) the total volume, in m³;
   • (c) the volume-weighted average sulphur concentration, in mg/kg, or, if the primary supplier made an election under section 9 of the Regulations in respect of the refinery, blending facility or province of importation for which the report was made, the pool average, in mg/kg;
   • (d) the sulphur concentration, in mg/kg, of the batch that has the highest sulphur concentration;
   • (e) the sulphur concentration, in mg/kg, of the batch that has the lowest sulphur concentration; and
   • (f) the method used to measure the sulphur concentration.
4. The following information respecting gasoline, other than that which was in transit through Canada, that was imported by the primary supplier and identified under section 5 of the Regulations as low-sulphur gasoline:
   • (a) the number of batches imported;
   • (b) the total volume imported, in m³;
   • (c) the volume-weighted average sulphur concentration, in mg/kg, or if the primary supplier made an election under section 9 of the Regulations in respect of the refinery, blending facility or province of importation for which the report was made, the pool average, in mg/kg;
   • (d) the sulphur concentration, in mg/kg, of the batch that has the highest sulphur concentration;
   • (e) the sulphur concentration, in mg/kg, of the batch that has the lowest sulphur concentration; and
   • (f) the method used to measure the sulphur concentration.
5. The following information regarding gasoline that was produced by the primary supplier and identified under section 5 of the Regulations as gasoline-like blendstock, other than that produced for export:
   • (a) the number of batches produced; and
   • (b) the total volume produced, in m³.
6. The following information regarding gasoline that was imported by the primary supplier and identified under section 5 of the Regulations as gasoline-like blendstock, other than that which was in transit through Canada:
   • (a) the number of batches imported; and
   • (b) the total volume imported, in m³.

SCHEDULE 2
(Subsections 25(1) and (2))

TEMPORARY SULPHUR COMPLIANCE UNIT TRADING SYSTEM ANNUAL REPORT

1. The year for which the report is submitted.
2. The following information respecting the primary supplier:
   • (a) name and civic and postal addresses;
   • (b) the name, title, civic and postal addresses, telephone number and, if any, email address and fax number of their authorized official;
   • (c) the name, title, civic and postal addresses, telephone number and, if any, email address and fax number of a contact person, if different from of the authorized official;
   • (d) the composition of the pool to which the report applies; and
   • (e) the registration number provided to the primary supplier under subsection 7(2) of the Benzene in Gasoline Regulations in respect of the refinery, blending facility or province of importation.
3. For a report that is submitted for any of the years 2014, 2015 or 2016, the following information regarding the gasoline, other than that produced for export or that was in transit through Canada, that was produced or imported by the primary supplier in that year and identified under section 5 of the Regulations as low-sulphur gasoline, with separate entries for gasoline with a sulphur concentration of less than or equal to 30 mg/kg and greater than 30 mg/kg:
   • (a) the number of batches produced or imported;
   • (b) the total volume produced or imported, in m³;
   • (c) the pool average, in mg/kg;
   • (d) the sulphur concentration, in mg/kg, of the batch that has the highest sulphur concentration; and
   • (e) the sulphur concentration, in mg/kg, of the batch that has the lowest sulphur concentration.
4. For a report that is submitted for any of the years 2017, 2018 or 2019, the following information regarding the gasoline, other than that produced for export or that was in transit through Canada, that was produced or imported by the primary supplier in that year and identified under section 5 of the Regulations as low-sulphur gasoline, with separate entries for gasoline with a sulphur concentration of less than or equal to 10 mg/kg and greater than 10 mg/kg:
   • (a) the number of batches produced or imported;
   • (b) the total volume produced or imported, in m³;
   • (c) the pool average, in mg/kg;
   • (d) the sulphur concentration, in mg/kg, of the batch that has the highest sulphur concentration; and
   • (e) the sulphur concentration, in mg/kg, of the batch that has the lowest sulphur concentration.
5. The following information respecting sulphur compliance units:
   • (a) the balance of sulphur compliance units held by the primary supplier on March 31;
   • (b) the number of units created by the primary supplier for the year;
   • (c) the number of units transferred by the primary supplier in the year;
   • (d) the number of units received by the primary supplier in the year; and
   • (e) the number of units used by the primary supplier in the year to adjust the pool average.
6. The following information respecting gasoline, other than that produced for export, that was produced by the primary supplier:
   • (a) the pool average, in mg/kg;
   • (b) the number of sulphur compliance units used to adjust the pool average;
   • (c) the adjusted pool average, in mg/kg, if any.
7. The following information respecting the trading of sulphur compliance units in the year:
   • (a) the number of units traded by the primary supplier to another pool or to another primary supplier;
   • (b) the number of units received by the primary supplier; and
   • (c) for each trade or receipt of a unit, the date on which it occurred, the names of all primary suppliers involved and the composition of the pools involved.

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