ARCHIVED — Vol. 150, No. 45 — November 5, 2016

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Regulations Amending the Prohibition of Certain Toxic Substances Regulations, 2012

Statutory authority

Canadian Environmental Protection Act, 1999

Sponsoring departments

Department of the Environment and Department of Health

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The substance “benzenamine, N-phenyl-, reaction products with styrene and 2,4,4-trimethylpentene” (BNST) was assessed as toxic under the Canadian Environmental Protection Act, 1999, and subsequently added to the Prohibition of Certain Toxic Substances Regulations, 2012 (Prohibition Regulations, 2012), in 2013. Under the Prohibition Regulations, 2012, the use of BNST as an additive in lubricants was temporarily allowed until 2015, with continued use until March 14, 2018, on a permitted basis.

All uses of BNST as an additive in lubricants were expected to be phased out by 2018. However, BNST continues to be used in replacement parts and legacy equipment in the automotive sector (e.g. hydraulic brake system lubricant), as well as the electrical and electronic equipment sector (e.g. motor fan lubricant). As of March 14, 2018, permits will no longer be renewed and all uses of BNST as an additive in lubricants will be prohibited. Information from industry shows that this could lead to a shortage and the premature end-of-life of replacement parts and legacy equipment, in cases where it is not technically or economically feasible to replace such parts and equipment with BNST-free alternatives.

Background

The substance BNST was included in the Challenge initiative under the Chemicals Management Plan, as one of approximately 200 substances identified as high priorities for action. The final screening assessment report for BNST concluded that BNST is potentially harmful to the environment, and meets the criterion set out under paragraph 64(a) of the Canadian Environmental Protection Act, 1999 (CEPA) and the criteria for persistence and bioaccumulation potential. (see footnote 1) A notice summarizing the scientific considerations of the final screening assessment report for BNST was published in the Canada Gazette, Part I, on August 1, 2009. (see footnote 2) BNST also met the criteria for virtual elimination as set out under subsection 77(4) of CEPA. The substance BNST was added to the List of Toxic Substances in Schedule 1 of CEPA on March 2, 2011, which enabled its addition to the Prohibition Regulations, 2012.

The Prohibition Regulations, 2012 prohibit the manufacture, use, sale, offer for sale and import of BNST and products containing BNST with the following exemptions that allow

  • the ongoing use, sale and offer for sale of BNST and products containing BNST that were manufactured or imported before the Prohibition Regulations, 2012 came into force on March 13, 2013;
  • the manufacture, use, sale, offer for sale and import of BNST, or a product that contains BNST, as an additive in rubber (except in tires); and
  • the manufacture, use, sale, offer for sale and import of BNST, or a product that contains BNST, as an additive in lubricants until March 13, 2015. After this deadline, permits were available for the continued use of BNST, and products containing BNST, as an additive in lubricants. Permits are valid for one year and can be renewed twice for a total of three years ending March 14, 2018.

In 2011, during the public comment period on the proposed addition of BNST to the Prohibition Regulations, 2012, the automotive sector identified concerns regarding the phase-out of BNST in replacement parts. At that time, the sector indicated that replacement parts containing BNST were required to service and maintain existing vehicles for the duration of their service life. Furthermore, the sector indicated it may require additional time to redesign and test BNST-free replacement parts. As a result, permits were made available to manufacturers and importers of BNST and products containing BNST to continue their activities after the coming into force of the Prohibition Regulations, 2012 to accommodate unforeseen circumstances in the phase-out of BNST.

Leading up to, and following the expiry of, the temporary exemption for BNST as an additive in lubricants on March 13, 2015, industry stakeholders in the automotive as well as the electrical and electronic equipment sectors submitted information to the Department of the Environment (the Department) through permit applications. These permit applications indicated that it may not be technically or economically feasible to completely phase out the use of BNST as an additive in lubricants in replacement parts and legacy equipment by the March 14, 2018, regulatory deadline.

In 2015, over 50 permit applications were received by the Department for the use of BNST in replacement parts and legacy equipment. Stakeholders have indicated that it may be difficult to phase out the use of BNST in replacement parts and legacy equipment by 2018. As a result, the Department conducted further consultations between November 2015 and February 2016. These consultations confirmed that the Prohibition Regulations, 2012 could lead to a shortage and the premature end-of-life of replacement parts and legacy equipment containing BNST in cases where it is not technically or economically feasible to replace such parts and equipment with BNST-free alternatives.

Historical uses

The substance BNST is an industrial chemical and is part of the diarylamine class of antioxidants. In many types of lubricant formulations, diarylamine antioxidants are typically used at rates up to 1.0% by weight of lubricant. The substance BNST has been used mainly as an antioxidant additive in vehicle engine oil, but has also been used in commercial and industrial lubricants. About 500 tonnes of BNST were consumed in Canada in 2006, of which over 90% was used in vehicle engine oil formulations. In 2006, sales of BNST were estimated to represent 15% to 18% of the overall market for diarylamine antioxidants.

Current uses

In 2015, the quantities of BNST used in Canada ranged between 0.66 and 2.45 tonnes for use as an additive in lubricants. It is estimated that since 2006, the use of BNST in lubricants has decreased by more than 99%. The information obtained through the permit applications submitted under the Prohibition Regulations, 2012 shows that BNST continues to be used as an additive in lubricants found in replacement parts and in legacy equipment primarily in the automotive as well as the electrical and electronic equipment sectors. No permits have been requested or granted for the use of BNST as an additive in engine oil in Canada. Available information suggests that there may also be a minor use of BNST as an additive in rubber applications for industrial equipment and machinery and in rubber parts used in vehicles. The use of BNST in rubber products, except in tires, is exempt under the Prohibition Regulations, 2012.

Legacy equipment is equipment that is still available or required for use. This equipment was manufactured or designed before the coming into force of the Prohibition Regulations, 2012 and its usage is currently authorized through permit applications until 2018. This category includes, for example, vehicles, computers, printers, electronic storage systems, electric power supplies, or heating and cooling equipment that are in consumer, commercial or industrial operation or available for sale in Canada or abroad.

Replacement parts (commonly referred to as spare parts) are required to maintain and service legacy equipment sold in Canada. Examples of replacement parts include automotive or other assemblies that require lubrication, such as hydraulic brakes, drivetrain components, motor fans and other electronic components. Replacement parts may already be available for use or may be manufactured and imported into Canada to meet warranty and contractual obligations as well as performance standards. Lubricant quantities can range from a drop to a few litres in equipment and its parts, and typically contain less than 1% of BNST by weight of lubricant.

Future uses

Stakeholders have indicated that the use of BNST as an additive in lubricants is expected to be phased out of new replacement parts and new equipment by 2018. However, for existing legacy equipment and their replacement parts, it may not be technically or economically feasible to remove the BNST-containing lubricants found in the parts or equipment and replace them with a BNST-free alternative. Furthermore, it may not be feasible to replace such parts or equipment with newer versions that may be BNST-free within warranty and contractual obligations as well as performance standards to service and maintain them.

For legacy equipment, a 3- to 10-year sale window is expected to be necessary to deplete remaining stock. Service contracts vary (typically ranging from 5 to 10 years), but the obligations to maintain and provide replacement parts can be longer depending on the operating life of the equipment used (e.g. approximately 15 to 30 years for vehicles). The use of replacement parts would, however, be expected to be phased out as the equipment reaches its end-of-life. Similarly, the remaining use of BNST in replacement parts and legacy equipment is expected to decrease over time as the remaining stocks are depleted and as equipment reaches the end of its service life.

Release profile

BNST continues to be used as an additive in lubricants found in replacement parts and in existing equipment, primarily in the automotive as well as the electrical and electronic equipment sectors. In these sectors, as BNST is used in low quantities (milligrams of BNST) and low concentrations (less than 1% by weight of lubricant) within sealed components or enclosed within equipment, releases to the environment during normal use are not expected. In addition, recycling programs are in place for end-of-life vehicles as well as electrical and electronic equipment that further prevent the potential releases of BNST associated with replacement parts and legacy equipment. Given the above, release of BNST to the environment from the extended use of replacement parts and legacy equipment is expected to be minimal.

Other risk-management activities

Industry sectors using BNST have carried out actions to phase out its use. For example, BNST is on the Global Automotive Declarable Substance List (GADSL) (see footnote 3) a voluntary agreement developed by the automotive industry sector to better track substances that are present in its products and associated supply chains. Under this agreement, BNST that is intentionally added to a product must be declared if the concentration is higher than 0.1%.

In April 2015, BNST was also added to the International Electrotechnical Commission’s declarable substance list, IEC 62474. (see footnote 4) The IEC 62474 “provides an International Standard for the exchange of material composition data and provides requirements for material declarations.” It can be used by the electric and electronic equipment sector to better track information about the material composition of products across supply chains for substances that should be declared.

Alternatives

The substance BNST is part of a larger class of chemical substances called substituted diphenylamines (SDPAs). SDPAs are known or potential alternatives to each other and to BNST. The ecological and human health risks of SDPAs are currently being assessed by the Government of Canada as part of the Chemicals Management Plan and to help inform the replacement of BNST. The draft screening assessment report for SDPAs is expected to be published in the fall of 2016. The Department may consider the outcome of the final screening assessment report for SDPAs, as appropriate, in finalizing the regulatory requirements for BNST under the Prohibition Regulations, 2012.

Objectives

The objective of the proposed Regulations Amending the Prohibition of Certain Toxic Substances Regulations, 2012 (the proposed amendments) is to prevent a shortage and the premature end-of-life of replacement parts and legacy equipment where it is not technically or economically feasible to replace such parts and equipment with BNST-free alternatives, without compromising the environmental objective of gradually eliminating the releases of BNST in Canada.

Description

The proposed amendments would add an exemption to Part 1 of Schedule 2 of the Prohibition Regulations, 2012 which would allow the manufacture, import, use, sale and offer for sale of BNST used as an additive in lubricants found in replacement parts.

In addition, the proposed amendments would extend the temporary exemption for BNST used as an additive in lubricants in Part 2 of Schedule 2 of the Prohibition Regulations, 2012, and would thereby allow the manufacture, import, use, sale and offer for sale of BNST used as an additive in lubricants until March 14, 2025.

In 2025, the proposed amendments would allow manufacturers and importers of BNST and products containing BNST to apply for a permit to continue their activities after the expiry of the temporary exemption for additives in lubricants. Permits would be valid for one year and could be renewed twice for a total of three years ending March 14, 2028.

“One-for-One” Rule

The “One-for-One” Rule applies to the proposed amendments, as there are incremental administrative cost savings (“OUTs”) for businesses. Fifty-seven stakeholders that are currently permit holders for the use of BNST as an additive in lubricants would no longer have to apply for a permit in 2017 under the proposed amendments. However, up to eight permit applications per year could be expected between 2025 and 2028, when the temporary exemption for the use of BNST as an additive in lubricants would expire in 2025. Permit applications are estimated to take four hours to complete.

Following the Treasury Board Secretariat’s guidance on standard costing and using a 7% discount rate and 2012 dollars, it is estimated that overall, the total annualized administrative cost savings over a 10-year time frame would be approximately $850 for all stakeholders (or about $10 in savings per stakeholder). (see footnote 5) The average wage rate used for the calculations is about $50.

Small business lens

The small business lens does not apply to the proposed amendments since the cost impact of the amendments is below $1,000,000 annually, and the cost impact per small business is negligible and is not considered disproportionate.

Of the 57 BNST permit holders in 2017, it is expected that nine small companies would be affected and have administrative savings. No small businesses are expected to apply for permits upon the expiry of the temporary exemption for the use of BNST as an additive in lubricants on March 14, 2025. No additional cost to small businesses would be carried as a result of the proposed amendments.

Consultation

In order to seek comments from a wide range of interested parties, the Department conducted outreach between November 2015 and February 2016. All industry stakeholders that were granted permits for the continued use of BNST, as well as stakeholders who submitted comments in 2011 to the Department during the public consultation period on the proposed addition of BNST to the Prohibition Regulations, 2012, were consulted. These stakeholders included two environmental non-governmental organizations (ENGOs). The outreach activities solicited feedback from stakeholders on changes to BNST controls under the Prohibition Regulations, 2012 to address the issues raised by current permit holders. Twelve comments were received and are summarized below.

Overall, industry stakeholders were very supportive of the proposed amendments. Ten industry stakeholders and associations have commented that there are technical and economic difficulties in phasing out all uses of BNST as an additive in lubricants by March 14, 2018, in replacement parts used to service and maintain equipment manufactured or imported prior to the coming into force of the BNST provisions. Seven industry stakeholders and associations have also commented that there are technical and economic difficulties in phasing out all uses of BNST as an additive in lubricants by March 14, 2018, in legacy equipment used to service and maintain equipment in the electrical and electronic sectors.

Comment: Two ENGOs provided comments expressing concern regarding the addition of an exemption for replacement parts containing BNST without an expiry date. Furthermore, they suggested that a five-year extension to the temporary exemption for BNST used as an additive in lubricants would be adequate to allow for the phase-out of the substance in all uses, including replacement parts. The ENGOs also suggested that broader consultation be undertaken to solicit feedback from stakeholders on the changes under consideration.

Response: The intent of the proposed amendments is to prevent a shortage and the premature end-of-life of replacement parts and legacy equipment where it is not technically or economically feasible to replace such parts and equipment with BNST-free alternatives. Key factors considered for the proposed amendments included the following:

  • the significant progress made by industry towards the phase-out of BNST;
  • the technical and economic challenges in replacing BNST found in replacement parts for existing equipment as well as legacy equipment;
  • the very low volumes in remaining uses and the minimal risk to the environment expected; and
  • the regulatory certainty required prior to March 18, 2018, for industry stakeholders so that they may continue, as per warranty and contractual obligations and performance standards, to provide consumers with replacement parts and legacy equipment.

For legacy equipment, a 3- to 10-year sale window is expected to be necessary to deplete remaining stock. Service contracts vary (typically ranging from 5 to 10 years) but the obligations to maintain and provide replacement parts can be much longer depending on the operating life of the equipment used (e.g. approximately 15 to 30 years for vehicles). Therefore, a 5-year temporary exemption would be insufficient to prevent a shortage and the premature end-of-life of replacement parts and legacy equipment where it is not technically or economically feasible to replace such parts and equipment with BNST-free alternatives.

For these reasons, the proposed amendments would extend the temporary exemption for BNST as an additive used in lubricants to allow for the phase-out of remaining legacy equipment, and adds an exemption for BNST in replacement parts to service and maintain the legacy equipment to the end of their service life.

The Department agrees that broader consultations should be undertaken. Feedback solicited from stakeholders after the publication of the proposed amendments in the Canada Gazette, Part I, will be considered for the final amendments.

Comment: Ten industry stakeholders and associations have commented that there are technical and economic difficulties in phasing out all uses of BNST as an additive in lubricants by March 14, 2018, in replacement parts used to service and maintain equipment manufactured or imported prior to the coming into force of the BNST provisions. Seven industry stakeholders and associations have also commented that there are technical and economic difficulties in phasing out all uses of BNST as an additive in lubricants by March 14, 2018, in legacy equipment used to service and maintain equipment in the electrical and electronic sectors.

Response: Based on information submitted through the BNST permit applications and outreach activities, the Department agrees that there is a need for the ongoing use of BNST as an additive in lubricants. The Department understands that the use of BNST in replacement parts and legacy equipment will be phased out over time as existing stocks are depleted and equipment reaches the end of its service life. Furthermore, these ongoing uses are not expected to result in environmental releases during normal use. The proposed amendments would include an exemption for BNST in replacement parts and a temporary exemption for BNST as an additive used in lubricants to allow for the phase-out of remaining uses in replacement parts and legacy equipment.

Comment: One industry stakeholder also confirmed that it has phased out the use of BNST by reformulating its lubricants with an alternate substance to BNST.

Response: The Department acknowledges that the phase-out of BNST has been completed in the majority of applications in Canada, but that there are remaining uses in replacement parts and legacy equipment.

Rationale

The temporary exemption for the use of BNST as an additive in lubricants under the Prohibition Regulations, 2012 expires on March 14, 2018, which could cause a shortage and the premature end-of-life of replacement parts and legacy equipment in the automotive as well as the electrical and electronic equipment sectors.

The proposed amendments would allow industry to service and maintain existing vehicles and equipment with replacement parts and legacy equipment containing BNST. In some cases, redesigning or using an alternative replacement part is not technically or economically feasible. The proposed amendments would also prevent a shortage as well as avert the premature end-of-life of replacement parts and legacy equipment where it is not technically or economically feasible to replace such parts and equipment with BNST-free alternatives.

Industry has made significant progress in phasing out BNST in new replacement parts and equipment. The current remaining uses of BNST, as demonstrated by the permit applications, represent very low volumes. Furthermore, BNST is enclosed within replacement parts and legacy equipment, with no expected risk of release during normal use. The use of BNST is expected to decrease over time as the remaining stocks are depleted and equipment reaches the end of its service life. Releases of BNST to the environment during normal use are therefore not expected, and the proposed amendments are expected to result in minimal environmental impacts.

Administratively, industry would avoid having to submit permit applications for the continued use of BNST for the March 15, 2017, to March 14, 2018, permitting period (avoided costs of $8,000), but would have to submit permit applications for the continued use of BNST upon the expiry of the temporary exemption for BNST as an additive in lubricants on March 14, 2025, and for two subsequent years, if required, until March 14, 2028 ($2,000). Overall, these administrative costs are expected to save industry $6,000. (see footnote 6)

Similarly, there would be a net government savings of $6,000 as there would be avoided permit reviews between March 15, 2017, and March 14, 2018, and permit reviews between March 15, 2025, and March 14, 2028.

To ensure that BNST continues to be phased out, consideration will be given to tracking BNST via mandatory inventory updates. These updates are regularly performed by the Department to seek information on the status of substances in the Canadian market. Inventory updates may be used by the Department to monitor progress in the phase-out of BNST in replacement parts and in legacy equipment in advance of the temporary exemption expiry date in 2025, and following the regulatory deadline of 2028. Progress towards the phase-out of BNST would also be tracked via permit applications for the continued use of BNST as an additive in lubricants between 2025 and 2028, if required.

The proposed amendments were developed based on information submitted by industry stakeholders through permit applications and outreach to regulatees and ENGOs conducted by the Department from November 2015 to February 2016.

Strategic environmental assessment

As required by the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan was conducted, and it concluded that there were no expected important environmental effects, either positive or negative; accordingly, a strategic environmental assessment is not required. (see footnote 7)

Contacts

Lucie Desforges
Executive Director
Chemicals Management Division
Department of the Environment
Gatineau, Quebec
K1A 0H3
Telephone: 819-938-4320
Fax: 819-938-4300
Email: ec.interdiction-prohibition.ec@canada.ca

Yves Bourassa
Director
Regulatory Analysis and Valuation Division
Department of the Environment
Gatineau, Quebec
K1A 0H3
Email: ec.darv-ravd.ec@canada.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 proposes, pursuant to subsection 93(1) of that Act, to make the annexed Regulations Amending the Prohibition of Certain Toxic Substances Regulations, 2012.

Interested persons 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 such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to the Executive Director, Chemicals Management Division, Department of the Environment, Gatineau, Quebec K1A 0H3 (fax: 819-938-4300; email: ec.interdiction-prohibition.ec@canada.ca).

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

Ottawa, October 27, 2016

Jurica Čapkun
Assistant Clerk of the Privy Council

Regulations Amending the Prohibition of Certain Toxic Substances Regulations, 2012

Amendments

1 The portion of item 3 of Part 1 of Schedule 2 to the Prohibition of Certain Toxic Substances Regulations, 2012 (see footnote 8) in column 2 is replaced by the following:

Item

Column 2

Permitted Uses

3

(a) Additive in rubber, except in tires;

(b) Additive in lubricants used in replacement parts.

2 The portion of item 1 of Part 2 of Schedule 2 to the Regulations in column 3 is replaced by the following:

Item

Column 3

Date

1

March 14, 2025

Coming into Force

3 These Regulations come into force on the 90th day after the day on which they are published in the Canada Gazette, Part II.

[45-1-o]

  • Footnote 1
    The persistence and bioaccumulation criteria are set out in the Persistence and Bioaccumulation Regulations pursuant to CEPA, available at http://www.ec.gc.ca/lcpe-cepa/eng/regulations/detailReg.cfm?intReg=35.
  • Footnote 2
    The notice summarizing the scientific considerations of the final screening assessment report for BNST is available at http://publications.gc.ca/gazette/archives/p1/2009/2009-08-01/pdf/g1-14331.pdf.
  • Footnote 3
    More details on the GADSL are available at http://www.gadsl.org/.
  • Footnote 4
    More details on the IEC 62474 are available at http://std.iec.ch/iec62474.
  • Footnote 5
    The non-rounded decrease in annualized average administrative burden cost savings was estimated to be $843, or $13 per business.
  • Footnote 6
    Costs are estimated in present value in 2012 dollars between the years 2017 and 2028 discounted to 2012 using a 7% discount rate.
  • Footnote 7
    Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals. Canadian Environmental Assessment Agency: www.ceaa.gc.ca/default.asp?lang=En&n=B3186435-1.
  • Footnote a
    S.C. 2004, c. 15, s. 31
  • Footnote b
    S.C. 1999, c. 33
  • Footnote 8
    SOR/2012-285