ARCHIVED — Volatile Organic Compound (VOC) Concentration Limits for Architectural Coatings Regulations

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Vol. 143, No. 20 — September 30, 2009

Registration

SOR/2009-264 September 9, 2009

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

P.C. 2009-1535 September 9, 2009

Whereas, pursuant to subsection 332(1) (see footnote a) of the Canadian Environmental Protection Act, 1999 (see footnote b), the Minister of the Environment published in the Canada Gazette, Part I, on April 26, 2008, a copy of the proposed Volatile Organic Compound (VOC) Concentration Limits for Architectural Coatings Regulations, substantially in the annexed form, and persons were given an opportunity to file comments with respect to the proposed Regulations or to file a notice of objection requesting that a board of review be established and stating the reasons for the objection;

Whereas, pursuant to subsection 93(3) of that Act, the National Advisory Committee has been given an opportunity to provide its advice under section 6 (see footnote c) of that Act;

And whereas, in the opinion of the Governor in Council, pursuant to subsection 93(4) of that Act, the proposed Regulations do not regulate an aspect of a substance that is regulated by or under any other Act of Parliament in a manner that provides, in the opinion of the Governor in Council, sufficient protection to the environment and human health;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of the Environment and the Minister of Health, pursuant to subsection 93(1) of the Canadian Environmental Protection Act, 1999 (see footnote d), hereby makes the annexed Volatile Organic Compound (VOC) Concentration Limits for Architectural Coatings Regulations.

VOLATILE ORGANIC COMPOUND (VOC) CONCENTRATION LIMITS
FOR ARCHITECTURAL COATINGS REGULATIONS

INTERPRETATION

Definitions

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

“architectural coating” « revêtement architectural »

“architectural coating” means a product to be applied onto or impregnated into a substrate, for use on traffic surfaces such as streets and highways, curbs, berms, driveways, parking lots, sidewalks and airport runways, or stationary structures, including temporary buildings and their appurtenances, whether installed or detached.

“excluded compounds” « composés exclus »

“excluded compounds” means the compounds that are excluded under item 65 of Schedule 1 of the Canadian Environmental Protection Act, 1999 and includes acetic acid, 1,1–dimethylethyl ester (C6H1202).

“pigment” « pigment »

“pigment” means finely ground insoluble powder that provides an architectural coating with any of the following properties: colour, corrosion inhibition, conductivity, opacity, sheen, gloss or improved mechanical properties.

“volatile organic compounds” or “VOC” « composés organiques volatils » ou « COV »

“volatile organic compounds” or “VOC” means volatile organic compounds that participate in atmospheric photochemical reactions and that are not excluded compounds.

Incorporation by reference

(2) Any standard or method that is incorporated by reference in these Regulations is incorporated as amended from time to time.

APPLICATION

Application

2. (1) These Regulations apply in respect of the architectural coatings set out in the schedule, except if they are

(a) for application to a product or a component of a product, in or on the premises of a factory or a shop, as part of a manufacturing, processing or repairing activity;

(b) manufactured, imported, offered for sale or sold to be used in scientific research;

(c) manufactured, imported, offered for sale or sold to be used as a laboratory sample or analytical standard; or

(d) manufactured, imported or sold for export or for shipment to other persons for processing or repackaging.

Non-application

(2) These Regulations do not apply in respect of the following coatings:

(a) adhesives;

(b) aerosol coatings — pressurized coatings, containing pigments or resins, whose ingredients are dispensed by means of a propellant and are packaged in a disposable can for either

(i) hand-held application, or

(ii) use in specialized equipment for the marking of streets, highways or other traffic surfaces including curbs, berms, driveways, parking lots, sidewalks and airport runways;

(c) antifouling coatings — coatings for application to submerged stationary structures and their appurtenances, whether installed or detached, to prevent or reduce the attachment of marine or freshwater biological organisms, registered under the Pest Control Products Act; and

(d) wood preservatives — coatings to protect exposed wood from decay or insect attack, registered under the Pest Control Products Act.

Non-application — 1 L or less

(3) These Regulations, except for sections 17 and 19, do not apply in respect of the following architectural coatings set out in the schedule if their container has a capacity of one litre or less:

(a) faux finish;

(b) any other high-temperature coating;

(c) any other lacquer, including lacquer sanding sealers;

(d) any other varnish;

(e) low solids coating;

(f) quick-dry enamel;

(g) interior wiping stain;

(h) exterior wood stain;

(i) any other stain; and

(j) rust preventive coating.

PROHIBITIONS

Manufacture or import

3. (1) A person must not manufacture or import any architectural coating set out in column 1 of the schedule if its concentration of volatile organic compounds exceeds the limit set out in column 2 for that architectural coating unless

(a) dilution of the architectural coating before its use is required and in accordance with the written instructions of the manufacturer, importer or seller, to a VOC concentration equal to or less than that limit set out in column 2 and that coating is either labelled with or accompanied by those instructions in both official languages; or

(b) the person has been issued a permit for that architectural coating under section 10.

Effective date

(2) The prohibition takes effect in respect of each architectural coating set out in column 1 of the schedule beginning on the corresponding anniversary of the day on which these Regulations come into force as set out in column 3.

Use of traffic marking coating

4. (1) A person must not use, during the period beginning on May 1 and ending on October 15, any traffic marking coating set out in column 1 of the schedule in which the VOC concentration exceeds 150 g/L.

Effective date

(2) The prohibition takes effect in respect of the traffic marking coating beginning three years after the day on which these Regulations come into force.

Sale or offer for sale

5. (1) A person must not sell or offer for sale any architectural coating set out in column 1 of the schedule if its VOC concentration exceeds the limit set out in column 2 for that product unless

(a) dilution of the coating before its use is required and in accordance with the written instructions of the manufacturer, importer or seller, to a VOC concentration equal to or less than that limit set out in column 2 and that coating is either labelled with or accompanied by those instructions in both official languages; or

(b) the coating was manufactured or imported under a permit issued under section 10 and the sale or offer for sale occurs no later than two years after the day on which the permit expires.

Effective date

(2) The prohibition takes effect in respect of each architectural coating set out in column 1 of the schedule beginning two years after the corresponding anniversary of the day on which these Regulations come into force as set out in column 3.

Dilution instructions

6. For greater certainty, the instructions referred to in sections 3 and 5 cannot provide for any dilution of the architectural coating before its use to a VOC concentration greater than the limit set out in column 2 of the schedule for that coating.

Combination of multiple components

7. (1) For greater certainty, if the written instructions of the manufacturer, importer or seller require the combination of multiple components before an architectural coating is to be used, the VOC concentration in the architectural coating resulting from the combination of the multiple components must not exceed the VOC concentration limit set out in column 2 of the schedule for that architectural coating.

Combination instructions

(2) If an architectural coating requires that components be combined, the manufacturer, importer or seller must set out on the architectural coating’s label or in accompanying documentation the recommended combination instructions in both official languages.

Most restrictive VOC concentration limit

8. (1) If anywhere on the container of an architectural coating set out in the schedule, or in any documentation relating to the architectural coating supplied by the architectural coating’s manufacturer, importer, seller or their duly authorized representative, it is indicated that the architectural coating may be used for the purpose of a different coating category set out in column 1 of the schedule, then the most restrictive VOC concentration limit applies.

Non-application

(2) Subsection (1) does not apply to the following architectural coatings set out in column 1 of the schedule:

(a) antenna coating;

(b) bituminous roof primer;

(c) calcimine recoater;

(d) conjugated oil varnish;

(e) fire retardant coating;

(f) flow coating;

(g) any other high-temperature coating;

(h) impacted immersion coating;

(i) any other industrial maintenance coating;

(j) any other lacquer, including lacquer sanding sealers;

(k) low solids coating;

(l) metallic pigmented coating;

(m) nuclear coating;

(n) pre-treatment wash primer;

(o) shellac;

(p) specialty primer, sealer and undercoater;

(q) temperature-indicator safety coating; and

(r) thermoplastic rubber coating and mastic.

PERMITS

APPLICATION

Requirement for permit

9. (1) Any person that manufactures or imports an architectural coating set out in column 1 of the schedule, other than an architectural coating referred to in paragraph 3(1)(a), or the components of an architectural coating that must be combined together before their use in which the VOC concentration exceeds the limit set out in column 2 of the schedule, must hold a permit issued under section 10.

Required information

(2) An application for a permit must be submitted to the Minister and contain the following information:

(a) respecting the applicant,

(i) their name, civic and postal addresses, telephone number and, if any, fax number and e-mail address,

(ii) the name, title, civic and postal addresses, telephone number and, if any, fax number and e-mail address of their duly authorized representative, if applicable;

(b) respecting the architectural coating,

(i) its trade mark and trade name, if any,

(ii) its VOC concentration,

(iii) the estimated quantity to be manufactured, sold, offered for sale or imported in a calendar year and the unit of measurement,

(iv) its category as set out in the schedule and the information on which the selection of the product category was made, and

(v) in the case of an application for renewal of a permit under subsection 10(3), the number of the existing permit that was issued under section 10;

(c) evidence that it is not technically or economically feasible for the applicant at the time of the application to reduce the VOC concentration in the architectural coating to the limit set out in column 2 of the schedule for that coating;

(d) a description of the plan prepared identifying the measures that will be taken so that the VOC concentration in the architectural coating to be manufactured or imported will be within the limit set out in column 2 of the schedule for that coating;

(e) identification of the period within which the plan is to be fully implemented; and

(f) the civic and postal addresses of the location where information, supporting documents and certification, as set out in subsection (3), are kept.

Certification

(3) The application must be accompanied by a certification dated and signed by the applicant or by their duly authorized representative stating that the information contained in the application is accurate and complete.

Format for submission

(4) The application and certification may be submitted either in writing or in an electronic format that is compatible with the format that is used by the Minister, and the documents must bear the written or electronic signature, as the case may be, of the applicant or their duly authorized representative.

Additional information

(5) The Minister may, on receiving an application made under this section, require further details that pertain to the information contained in the application and that are necessary for the application to be processed.

CONDITIONS OF ISSUANCE

Conditions for issuing permit

10. (1) Subject to subsection (2), the Minister must issue the permit if the following conditions are met:

(a) the applicant has provided evidence that it is not technically or economically feasible at the time of the application to reduce the VOC concentration in the architectural coating to the limit set out in column 2 of the schedule for that coating;

(b) the applicant has prepared a plan to identify the measures that will be taken by the applicant such that the VOC concentration in the architectural coating for manufacture or import is within the limit set out in column 2 of the schedule for that coating; and

(c) the period within which the plan is to be fully implemented does not exceed four years after the day on which the first permit is issued to the applicant.

Grounds for refusing permit

(2) The Minister must refuse to issue a permit if

(a) the Minister has reasonable grounds to believe that the applicant has provided false or misleading information in support of their application; or

(b) information required under subsections 9(2) or (5) has not been provided or is insufficient to enable the Minister to process the application.

Expiry and permit renewal

(3) A permit expires 24 months after the day on which it is issued unless, within the period of 30 days before the day on which the permit expires, the applicant submits a new application in accordance with section 9. The validity of the first permit may only be extended once for an additional 24 months for a given architectural coating and the same use.

REVOCATION

Grounds for revocation

11. (1) The Minister must revoke a permit if the Minister has reasonable grounds to believe that the implementation of the plan set out in paragraph 10(1)(b) will not be completed within the specified period or that the permit holder has provided false or misleading information.

Conditions for revocation

(2) The Minister must not revoke a permit unless the Minister has provided the permit holder with

(a) a written reason for the revocation; and

(b) an opportunity to be heard, by written representation, in respect of the revocation.

DETERMINATION OF VOC CONCENTRATION

General formula

12. (1) Subject to subsection (2), the VOC concentration of an architectural coating set out in the schedule, diluted to the maximum recommendation of the manufacturer, importer or seller, excluding the volume of any water and excluded compounds, must be determined using the following equation:

Equation

where

VOC concentration is the VOC concentration of an architectural coating, in grams of VOC per litre of coating;

Ws is the weight of volatiles, in grams;

Ww is the weight of water, in grams;

Wec is the weight of excluded compounds, in grams;

Vm is the volume of architectural coating, in litres;

Vw is the volume of water, in litres; and

Vec is the volume of excluded compounds, in litres.

Low solids coating

(2) The VOC concentration of a low solids coating set out in the schedule, diluted to the maximum recommendation of the manufacturer, importer or seller, including the volume of any water and excluded compounds, must be determined using the following equation:

Equation

where

VOCls concentration is the VOC concentration of a low solids (ls) coating, in grams of VOC per litre of coating,

Ws is the weight of volatiles, in grams,

Ww is the weight of water, in grams,

Wec is the weight of excluded compounds, in grams, and

Vm is the volume of architectural coating, in litres.

Colourant

(3) The VOC concentration of an architectural coating must be determined excluding any colourant that is added after the tint base is manufactured or imported, as the case may be, and packaged for sale.

TEST METHODS

DRYING TIMES

Quick-dry enamel

13. (1) The set-to-touch, tack-free and dry-hard times of a quick-dry enamel set out in the schedule must be determined in accordance with ASTM D 1640–03, entitled Standard Test Methods for Drying, Curing, or Film Formation of Organic Coatings at Room Temperature, except that the standard must be read as excluding references to any agreement between the purchaser and the seller as well as the following:

(a) sections 2, 2.1, 4 and 4.1 with the exception of Table 1 of section 4.1;

(b) sections 7.3, 7.3.1, 7.5, 7.5.1, 7.5.2, 7.7, 7.7.1, 7.8 and 7.8.1;

(c) sections 10, 10.1, except the expression “duplicate determinations should agree within 10% of the time of drying”, and 10.2.

Excluded methods

(2) For the purpose of these Regulations, standard ASTM D 1640–03 must be read as excluding the following referenced standards:

(a) ASTM D 823; and

(b) ASTM D 1005.

SURFACE CHALKINESS

Specialty primer, sealer or undercoater

14. (1) The chalkiness of a surface to be conditioned by the application of a specialty primer, sealer or undercoater set out in the schedule must be determined in accordance with ASTM D 4214–07, entitled Standard Test Methods for Evaluating the Degree of Chalking of Exterior Paint Films, except that the expression “as agreed upon between the producer, user, or other interested parties” must be excluded as well as the following:

(a) sections 2, 2.1 and 2.2;

(b) sections 6.2.3 and 6.4; and

(c) sections 8, 8.1 and 8.2.

Excluded methods

(2) For the purpose of these Regulations, standard ASTM D 4214–07 must be read as excluding the following referenced standards:

(a) ASTM D 622; and

(b) ASTM E 1347.

Interpretation

(3) Wherever the expression “degree of chalking” appears in ASTM D 4214–07, it must be read to mean “chalkiness” as set out in these Regulations.

Documents incorporated by reference — interpretation

15. For the purposes of interpreting the documents incorporated by reference into these Regulations, “should” must be read to mean “must” and any recommendation and suggestions must be read as an obligation.

ACCREDITED LABORATORY

Accredited laboratory

16. Any laboratory that performs an analysis for the purposes of these Regulations must be accredited under the International Organization for Standardization standard ISO/IEC 17025:2005, entitled General requirements for the competence of testing and calibration laboratories and its accreditation must include the analysis in question within its scope of testing.

LABELLING

Required information

17. (1) Any person that manufactures, imports, sells or offers for sale an architectural coating set out in the schedule must indicate, on the container in which the architectural coating is to be sold, the following information:

(a) on the container’s label, lid or bottom, the date on which the architectural coating was manufactured or a code representing that date;

(b) on the container’s label or lid, the instructions regarding dilution of the architectural coating with solvents other than water or, if dilution or thinning of the architectural coating prior to use is not necessary, a statement that the coating is to be applied without dilution or thinning;

(c) in the case of an industrial maintenance coating, on the container’s label or lid, one or more of the following statements:

(i) “For industrial use only”,

(ii) “For professional use only”,

(iii) “Not for residential use”, or

(iv) “Not intended for residential use”;

(d) in the case of a clear brushing lacquer, on the container’s label or lid, the statement “For brush application only” and either

(i) “This product must not be diluted or sprayed”, or

(ii) “This product must not be thinned or sprayed”;

(e) in the case of a rust preventive coating, on the container’s label or lid, one of the following statements:

(i) “For metal surfaces only”, or

(ii) “For metal substrates only”;

(f) in the case of a specialty primer, sealer or undercoater, on the container’s label or lid, one or more of the following statements:

(i) “For blocking stains”,

(ii) “For fire-damaged surfaces” or “For fire-damaged substrates”,

(iii) “For smoke-damaged surfaces” or “For smoke-damaged substrates”,

(iv) “For water-damaged surfaces” or “For water-damaged substrates”, or

(v) “For excessively chalky surfaces” or “For excessively chalky substrates”;

(g) in the case of a quick-dry enamel, on the container’s label or lid, the dry-hard time and the words “Quick dry”;

(h) in the case of a high-gloss coating, on the container’s label, the words “High gloss”; and

(i) in the case of a traffic marking coating with a VOC concentration greater than 150 g/L, on the container’s label or lid, the statement “Not for application for the period beginning on May 1 and ending on Oct 15”.

Effective date

(2) Subject to subsection 4(2), subsection (1) takes effect in respect of each architectural coating set out in the schedule

(a) for the manufacturer or the importer, on the corresponding anniversary of the day on which these Regulations come into force as set out in column 3; or

(b) for the seller or the person offering for sale, two years after the corresponding anniversary of the day on which these Regulations come into force as set out in column 3.

Readability

(3) The information must be displayed legibly and conspicuously and in the same manner in both official languages.

Date code

(4) Every manufacturer or importer of an architectural coating set out in the schedule must provide the Minister, on request, with an explanation of any date code indicated on the coating’s container to represent the date of manufacture.

Information concerning VOC concentration

18. If a person manufactures, imports, sells or offers for sale an architectural coating set out in the schedule and indicates the VOC concentration on the container in which the architectural coating is to be sold, then the VOC concentration of the coating must be calculated in accordance with section 12.

RECORD KEEPING

Required information

19. (1) Any person that manufactures, imports or sells an architectural coating set out in the schedule must maintain records containing the following information:

(a) in the case of a person that manufactures,

(i) the quantity of the architectural coating manufactured at each manufacturing plant,

(ii) the trade mark and trade name of the architectural coating manufactured, and

(iii) the date of the architectural coating’s manufacture;

(b) in the case of a person that imports,

(i) the quantity of the architectural coating imported,

(ii) the trade mark and trade name of the architectural coating imported,

(iii) the port of entry where the architectural coating was imported,

(iv) the name, civic or postal address, telephone number, and, if any, the fax number and e-mail address of the principal place of business of the sender of the architectural coating,

(v) the date of import of the architectural coating,

(vi) the Harmonized Commodity Description and Coding System number for the architectural coating,

(vii) the importer number for the architectural coating shipped, and

(viii) the copies of the bill of lading, invoice and all documents submitted to the Canada Border Services Agency for the architectural coating shipped;

(c) in the case of a person that sells to a supplier, wholesaler or retailer,

(i) the quantity of the architectural coating sold,

(ii) the trade mark and trade name of the architectural coating sold,

(iii) the date of the sale of the architectural coating,

(iv) the delivery date of the architectural coating, and

(v) the name, civic or postal address of each supplier, wholesaler and retailer to whom the architectural coating was sold.

Record keeping information concerning permits

(2) Any person that submits the information set out in subsection 9(2) must keep a record of that information, supporting documents and the certification referred to in subsection 9(3) for a period of at least five years after the day on which they are submitted.

Location and time limits of records

(3) The records, supporting documents and the certification referred to in subsection 9(3) must be kept, for a period of at least five years after the day on which they are made, at the person’s principal place of business in Canada or at any other place in Canada where they can be inspected. If the records are kept at any place other than the person’s principal place of business, the person must provide the Minister with the civic address of the place where they are kept.

COMING INTO FORCE

Registration

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

SCHEDULE
(Subsections 2(1) and (3), sections 3 to 6, subsection 7(1), section 8, subsections 9(1) and (2), 10(1), 12(2), 13(1), 14(1) and 17(1), (2) and (4), section 18 and subsection 19(1))

ARCHITECTURAL COATINGS AND THEIR VOC CONCENTRATION LIMITS

INTERPRETATION

Definitions

1. (1) The following definitions apply in this schedule.

“high-temperature coating” « revêtement haute température »

“high-temperature coating” means an architectural coating for application to surfaces exposed continuously or intermittently to temperatures above 204°C.

“industrial maintenance coating” « revêtement d’entretien industriel »

“industrial maintenance coating” means an architectural coating for application to substrates exposed to any of the following conditions:

(a) immersion in water, wastewater or chemical solutions or chronic exposure of interior surfaces to moisture condensation;

(b) acute or chronic exposure to corrosive, caustic or acidic agents or to chemicals, chemical fumes or chemical mixtures or solutions;

(c) repeated exposure to temperatures above 121°C;

(d) repeated, frequent, heavy abrasion, including mechanical wear and scrubbing with industrial solvents, cleansers or scouring agents; or

(e) exterior exposure of metal structures and structural components.

“primer” « apprêt »

“primer” means an architectural coating to be applied to a substrate to provide a firm bond between the substrate and architectural coatings subsequently applied.

“sanding sealer” « enduit à poncer »

“sanding sealer” means a clear or semi-transparent architectural coating for application to bare wood to seal the wood and to provide a coat that can be sanded to create a smooth surface for architectural coatings subsequently applied.

“sealer” « produit de scellement »

“sealer” means an architectural coating to be applied to a substrate to prevent architectural coatings subsequently applied from being absorbed by the substrate or to prevent them from being harmed by materials in the substrate.

“shellac” « gomme-laque »

“shellac” means an architectural coating formulated solely with the resinous secretions of the lac beetle (Laccifer lacca), diluted with alcohol and formulated to dry by evaporation without a chemical reaction.

“stain” « teinture »

“stain” means an architectural coating formulated to change the colour of a surface but not to conceal its grain pattern or texture.

“undercoater” « sous-couche »

“undercoater” means an architectural coating used to provide a smooth surface for architectural coatings subsequently applied.

“varnish” « vernis »

“varnish” means a clear or semi-transparent architectural coating, excluding lacquers, formulated to dry by chemical reaction. Varnishes may contain small amounts of pigment to colour a surface or to control the final sheen or gloss of the finish.

Overview

(2) The table to this subsection sets out architectural coatings and their applicable VOC concentration limit. The table is divided into three columns. The first sets out the architectural coating subject to the VOC concentration limit, the second sets out the VOC concentration limit applicable to that architectural coating and the third sets out the anniversary of the day on which these Regulations come into force, from which the effective dates of the prohibitions set out in sections 3 and 5 of these Regulations are determined.

TABLE

Item

Column 1






Architectural Coating Category

Column 2




VOC Concentration Limit (g/L)

Column 3

Anniversary
of the Day on which these Regulations Come into Force

 1.

Antenna coating, including coatings for an antenna’s associated structural appurtenances

530

1st

 2.

Thermoplastic rubber coating and mastic, incorporating no less than 40% by weight of thermoplastic rubbers in its total resin solids, for application to roofing or other structural surfaces

550

1st

 3.

Metallic pigmented coating, containing at least 48 g of elemental metallic pigment per litre of coating as applied

500

1st

 4.

Bituminous roof primer

350

3rd

 5.

Any other bituminous roof coating

300

3rd

 6.

Non-bituminous roof coating, for application to roofs to prevent penetration of the substrate by water or to reflect heat and ultraviolet radiation

250

1st

 7.

Calcimine recoater, flat solvent-borne coating for re-coating calcimine-painted surfaces

475

1st

 8.

Bond breaker, for application between layers of concrete

350

1st

 9.

Concrete curing compound, for application to freshly poured concrete to retard the evaporation of water

350

1st

10.

Concrete surface retarder, mixture of retarding ingredients that interact chemically with the cement to prevent hardening on the surface where the retarder is applied, allowing the retarded mix of cement and sand at the surface to be washed away in order to create an exposed aggregate finish

780

1st

11.

Form release compound, for application to concrete formwork

250

3rd

12.

Dry fog coating, for spray application such that overspray droplets dry before subsequent contact with surfaces in the vicinity of the coating activity

400

1st

13.

Extreme high durability coating, an air dry coating, including fluoropolymer-based coatings, for touch-up of precoated architectural aluminium extrusions and panels

800

1st

14.

Faux finish, for use as a stain or glaze to create artistic effects including dirt, old age, smoke damage and simulated marble and wood grain

350

1st

15.

Fire resistant coating, opaque, for protecting the structural integrity by increasing the fire endurance of interior or exterior steel and other structural materials

350

1st

16.

Fire retardant coating, clear

650

1st

17.

Fire retardant coating, opaque

350

1st

18.

Floor enamel, a high-gloss opaque floor coating for application to surfaces that may be subject to foot traffic

250

3rd

19.

Any other opaque floor coating for application to surfaces that may be subject to foot traffic

250

1st

20.

Flow coating, for maintaining the protective coating on utility transformer units

650

1st

21.

Graphic arts coating, for application with a brush or roller to signs, excluding their structural components, and murals including lettering enamels, poster colours, copy blockers, and bulletin enamels

500

1st

22.

Temperature-indicator safety coating, a high-temperature coating that changes colour to indicate a change in temperature

550

1st

23.

Any other high-temperature coating

420

1st

24.

Impacted immersion coating, for application to steel structures subject to immersion in turbulent or ice or debris-laden water

780

1st

25.

Any other industrial maintenance coating

340

1st

26.

Shellac, clear

730

1st

27.

Shellac, opaque

550

1st

28.

Clear brushing lacquer, a wood coating formulated with cellulosic or synthetic resins to dry by evaporation without a chemical reaction and to provide a solid, protective film, excluding clear lacquer sanding sealers and lacquer stains

680

1st

29.

Any other lacquer, including lacquer sanding sealers

550

1st

30.

Any other sanding sealer

350

1st

31.

Conversion varnish, clear acid curing coating with an alkyd or other resin blended with amino resins and supplied as a single component or two-component product, for application to wood flooring

725

1st

32.

Conjugated oil varnish for sealing wood with a film formation due to the polymerization of naturally occurring conjugated vegetable oil, modified with other natural or synthetic resins of which a minimum of 50% of the resin solids consist of conjugated oils, and that is supplied as a single component product, excluding shellacs

450

1st

33.

Any other varnish

350

1st

34.

Low solids coating, containing 0.12 kg or less of solids per litre of coating

120

1st

35.

Mastic texture coating, to be applied in a single coat of at least 0.254 mm dry film thickness to cover holes and minor cracks and to conceal surface irregularities

300

1st

36.

Multi-coloured coating, packaged in a single container and exhibiting more than one colour when applied in a single coat

250

1st

37.

Nuclear coating, a protective coating to seal porous surfaces subject to intrusion by radioactive materials and resistant to chemicals and long-term, cumulative radiation exposure and easy to decontaminate

450

1st

38.

Pre-treatment wash primer, a primer that contains a minimum of 0.5% acid by weight, and that is to be applied directly to bare metal substrates to provide corrosion resistance

420

1st

39.

Specialty primer, sealer or undercoater, a coating to be applied to a substrate to

(a) seal fire, smoke or water damage;

(b) condition a surface having a chalk rating of 4 or less as determined in accordance with the test method referred to in section 14 of these Regulations; or

(c) block stains.

350

1st

40.

Waterproofing sealer for concrete or masonry, a clear or pigmented, film-forming coating that provides resistance against water, alkalis, acids, ultraviolet light and staining

400

1st

41.

Any other waterproofing sealer

250

1st

42.

Any other primer, sealer or undercoater

200

1st

43.

Quick-dry enamel, a high-gloss coating that has the following characteristics:

(a) it is able to be applied directly from the container with ambient temperatures between 16 and 27°C;

(b) it sets to touch in two hours or less, is tack free in four hours or less, and dries hard in eight hours or less by the test method referred in section 13 of these Regulations; and

(c) it has a dried film gloss of 70 or above on a 60° meter.

250

1st

44.

Recycled coating, the total weight of which consists of not less than 50% of secondary and post-consumer coating and not less than 10% of the total weight consisting of post-consumer coating. A secondary coating is a finished coating originating from a manufacturing process.

350

5th

45.

Rust preventive coating, exclusively for non-industrial use and does not include those for use in the construction or maintenance of

(a) facilities used in the manufacturing of goods;

(b) transportation infrastructure, including highways, bridges, airports and railroads;

(c) facilities used in mining activities and petroleum extraction; or

(d) utilities infrastructure, including power generation and distribution and water treatment and distribution systems.

400

1st

46.

Interior wiping stain

250

3rd

47.

Exterior wood stain, clear or semi-transparent

250

3rd

48.

Any other stain, including lacquer stains

250

1st

49.

Swimming pool coating, for application to the interior surfaces of a swimming pool and resistant to swimming pool chemicals

340

1st

50.

Traffic marking coating, for marking and striping streets, highways or other traffic surfaces including curbs, berms, driveways, parking lots, sidewalks and airport runways

450

1st

51.

Any flat coating, other than one set out in items 1 to 50, that registers a gloss of less than 15 on an 85° meter or less than 5 on a 60° meter

100

1st

52.

Any non-flat coating, other than one set out in items 1 to 50, that registers a gloss of 15 or greater on an 85° meter and 5 or greater and less than 70 on a 60° meter

150

1st

53.

Any high-gloss coating, other than one set out in items 1 to 50, that registers a gloss of 70 or above on a 60° meter

250

1st

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue: Volatile organic compounds (VOCs) constitute one of the main ingredients in the formation of ground-level ozone, which contributes to the formation of smog. Recent studies confirm the environmental and human health impacts of smog and show that air pollution increases the risk of lung cancer and heart disease. Consumer and commercial use of architectural coatings (paints, stains, lacquers, etc.) result in the emission of VOCs by evaporation during the drying process, following application of the coating to a surface.

Voluntary measures taken in the past have reduced VOC content in architectural coatings. However, significant additional reductions have been shown to be technologically and economically feasible. Given the environmental and human health concerns, additional action is required to achieve further reductions in emissions from these products.

Description: The Volatile Organic Compound (VOC) Concentration Limits for Architectural Coatings Regulations (the Regulations) deliver on the Government of Canada’s commitment to improve air quality for Canadians. The Regulations reduce VOC emissions from consumer and commercial products as outlined in the Regulatory Framework for Air Emissions (see footnote 1) (the Regulatory Framework) and also fulfill Canada’s international commitment to reduce VOC emissions under the Ozone Annex to the 1991 Canada-United States Air Quality Agreement.

The objective of the Regulations is to protect the environment and health of Canadians from the effects of air pollution. The Regulations set mandatory VOC concentration limits for 53 categories of architectural coatings. Products in these categories, imported or manufactured for use in Canada, will be subject to the provisions of the Regulations. The Regulations come into force on the day on which they are registered. Prohibitions applicable to the manufacture and import take effect over a period of five years, beginning one year after the Regulations are registered, with a subsequent two-year sell-through period for each coating category.

Cost-benefit statement: The cumulative, incremental VOC emission reductions resulting from the Regulations are estimated to be 506 kilotonnes (kt) between 2010 and 2035, with an average annual reduction of approximately 28% per year. Environment Canada estimates that the cost of the Regulations will be between $495.6 million and $680.7 million over the same period, or between $979 and $1,345 per tonne of reduced VOC emissions.

In light of the significant adverse health and environmental impacts of ground level ozone, particulate matter and smog, the benefit of meeting Canada’s international air pollution commitments, and international estimates of the benefits of VOC reductions (between $850 and $18,800 per tonne), it is anticipated that the benefits will justify the costs.

Business and consumer impacts: Impacts on industry are expected to manifest themselves largely in the operations of coating manufacturers. Although some of Canada’s architectural coatings manufacturers may need to incur some incremental costs in the short-run, the competitiveness of the Canadian architectural coatings industry as a whole is expected to benefit in the long-run. The Regulations include provisions for temporary permits, to provide flexibility to those manufacturers facing unforeseen technological or economic barriers to reformulation. The costs of the Regulations are expected to be less than 4% of industry revenue while firms absorb the one-time costs of compliance, and approximately 2% of revenue after these costs have been absorbed. The Regulations are not expected to have a significant impact on the performance of coatings available to consumers.

Domestic and international trade and cooperation: The Regulations align Canada’s VOC concentration limits, where appropriate, with those in the United States (U.S.) Ozone Transport Commission (OTC) Model Rule, with modifications to account for conditions and legislation unique to Canada, and reflect developments in low-VOC technologies since the OTC Model Rule came into effect.

Performance measurement and evaluation plan: The objectives of these Regulations are aligned with various Government of Canada regulatory initiatives under the Clean Air Regulatory Agenda (CARA), as described in the Regulatory Framework. The evaluation of the Regulations will be based, among other criteria, on compliance reporting through the associated enforcement activities. The Regulations will be evaluated as part of the program evaluation for CARA.

Issue

Volatile organic compound (VOC) emissions from architectural coating products contribute to the formation of air pollution. Consumer and commercial use of architectural coatings (paints, stains, etc.) results in the emission of VOCs by evaporation during the drying process, following application of the coating to a surface. In the atmosphere, photochemical reactions (see footnote 2) between VOCs and other common airborne pollutants such as nitrogen oxides (NOX), result in the formation of ground-level ozone (O3), a respiratory irritant and component of smog. Smog is a noxious mixture of air pollutants, consisting primarily of O3 and particulate matter (PM), that can often be seen as a haze in the air, especially over urban centres.

Air pollution has been shown to have a significant adverse impact on human health, with evidence showing an increased incidence of premature death, hospital admissions and emergency room visits. Studies (see footnote 3), (see footnote 4) indicate that air pollution is associated with increased risks of lung cancer and heart disease. Scientific evidence (see footnote 5) further indicates that O3 can have a detrimental impact on the environment. This impact can lead to reductions in agricultural crop and commercial forest yields, reduced growth and survivability of tree seedlings, and increased plant susceptibility to disease, pests and other environmental stresses (e.g. harsh weather).

To address the environmental and health concerns associated with VOCs, the Government of Canada has taken a number of actions to encourage voluntary reductions in VOC emissions. These measures have resulted in some reductions in VOC emissions from architectural coatings. However, additional reductions are still technologically and economically feasible. Given the continued contribution of VOC emissions from architectural coatings to air pollution, the impact of air pollution on the environment and human health, and Canada’s national and international commitments, additional actions are required to reduce these emissions.

Objectives

The Government of Canada made commitments under the Regulatory Framework (see footnote 6) to reduce VOC emissions from consumer and commercial products by introducing regulations to limit VOC concentrations in these products, including architectural coatings. The objective of the Regulations is to protect the environment and health of Canadians from the effects of air pollution. The Regulations will contribute to a reduction in the formation of air pollution by reducing VOC emissions from architectural coatings, with an average annual reduction in VOC emissions of over 28%, and an aggregate reduction of about 506 kt of VOC emissions over 25 years.

Description

The Regulations

The Regulations establish mandatory VOC concentration limits for 53 categories of architectural coatings. These limits were developed through stakeholder consultation, technical assessment and international benchmarking, to maximize VOC emission reductions while taking into consideration technological and economic feasibility.

Application

The Regulations apply to the 53 categories of architectural coatings identified in column 1 of the Table in subsection 1(2) of the Schedule to the Regulations (the Schedule). The coating categories and associated exemptions were chosen to align Canada’s categories, where appropriate, with those in the United States (U.S.) Ozone Transport Commission (OTC) Model Rule (described below), with modifications to account for conditions and legislation unique to Canada and reflect developments in low-VOC technologies since the OTC Model Rule came into effect.

The Regulations apply to the concentration of VOC in final architectural coating products, and not to VOC emissions resulting from the manufacture of the coatings. Exemptions have been provided for:

  • The manufacture, import and sale of architectural coatings for the purpose of export, or for shipping to other persons for processing or repackaging. Architectural coatings for export will be subject to VOC requirements in the importing country.
  • Coatings for application to a product or a component of a product, in or on the premises of a factory or a shop, as part of a repairing, manufacturing or processing activity. The control of VOC emissions from such coating applications has traditionally been undertaken by provinces/territories; and may, in addition, be controlled under future industrial initiatives of the Government of Canada’s Clean Air Regulatory Agenda (CARA).
  • Aerosol coatings and adhesives, as these VOC emission sources are expected to be addressed by separate control measures.
  • Pesticidal coatings, namely wood preservatives and antifouling coatings, which are managed by Health Canada’s Pest Management Regulatory Agency (PMRA), and are regulated under the authority of the Pest Control Products Act.
  • Specific architectural coatings, identified in subsection 2(3) of the Regulations, sold in containers with volumes of one litre or less (the “small container exemption”). These coatings are exempt from meeting VOC concentration limits, but will be subject to labelling and record keeping requirements. This exemption allows the continued manufacture of identified niche and specialty products that require higher VOC concentrations, generally by small or medium-sized enterprises.

In the absence of the small container exemption, costs of compliance for these coating products would likely be high and the corresponding emission reductions would be small. Volumes of these coating products in the Canadian market will be monitored by Environment Canada in future reports, surveys or studies, to ensure that emissions from the use of these products remain low.

  • Architectural coatings used in scientific research or as a laboratory analytical standard. In response to comments received following pre-publication, an exemption is also provided for coatings used as laboratory samples. The coating quantities used and the associated VOC emissions are very small, with little risk to the environment or human health.

Several modifications have been made to the Regulations since pre-publication, both in response to stakeholder comments and following internal review. In some cases, these have required changes to the Schedule, to include more precise coating categories and clarify the application of the provisions of the Regulations:

  • The Schedule now contains distinct items for “Floor enamel” (item 18) and “Any other opaque floor coating” (item 19), to take into account the additional time necessary to reformulate floor enamels relative to other opaque floor coatings.
  • “Conjugated oil varnish” (item 32) has been added to the Schedule. This category allows a higher VOC concentration limit for this niche coating, compared with “Any other varnish” (item 33), in response to evidence indicating that adequate reformulation is not possible at this time.
  • The Schedule now contains distinct items for “interior wiping stain” (item 46), “exterior wood stain” (item 47), and “any other stain” (item 48). These categories allow the incorporation of different effective dates given reformulation challenges identified by stakeholders.
  • “Traffic marking coating” (item 50) will have a higher concentration limit of 450 g/L that will come into effect one year after the coming-into-force of the Regulations. As indicated below, three years after the Regulations come-into-force, a more stringent concentration limit of 150 g/L will apply to the use of such coatings from May 1 to October 15 inclusive. This provides a “cold weather exemption” from the more stringent concentration limit, in response to consistent concerns expressed by traffic marking stakeholders regarding the performance and cost of low-VOC traffic marking coatings in cold weather.

Prohibition

The Regulations prohibit the manufacture, sale or offer for sale or import of architectural coatings with concentrations of VOCs in excess of the category-specific limits set out in column 2 of the Schedule, with exemptions provided in sections 3 and 5.

In response to stakeholder comments received following pre-publication, exemptions to the prohibition have been clarified and supplemented to provide additional flexibility. Paragraph 3(1)(b) now clarifies that the prohibition does not apply when the person has been issued a permit under the provisions described below, and paragraph 5(1)(b) clarifies that the prohibition on sale or offer-for-sale takes effect two years following the expiry of the permit.

Section 4 of the Regulations now states that, beginning three years after the Regulations come into force, a prohibition applies to the use of traffic marking coatings with VOC concentrations greater than 150 g/L, for application from May 1 to October 15 inclusive. This provision means that in warm weather, a more stringent concentration limit will apply, resulting in a “cold weather exemption” for the application of higher VOC concentration traffic marking coatings.

A “most-restrictive-limit provision” is included in section 8 of the Regulations to ensure that coatings with multiple uses meet the most restrictive of the applicable VOC concentration limits.

Permits

In response to comments received following pre-publication and internal review, Environment Canada has introduced permit provisions in sections 9 to 11 of the Regulations. A permit must be issued for the manufacture and import of an architectural coating product, when evidence is provided that the reduction in VOC concentration required for compliance is not technologically or economically feasible, a compliance plan has been prepared by the applicant demonstrating what steps will be taken in order to meet the prescribed limit for that coating, and the period for implementing the plan does not exceed four years after the day on which the permit is issued. Section 10 of the Regulations also sets out the conditions under which a permit must be refused, and section 11 sets out the conditions under which it must be revoked.

Other provisions

The Regulations also include test methods, labelling and record keeping provisions, to facilitate the implementation and enforcement of the Regulations.

In response to comments received from stakeholders following pre-publication, and internal review, all but two methods of analysis have been removed. The Regulations now only prescribe methods with respect to drying times and surface chalkiness. In order to be classified as “quick-dry” enamel, the drying time of these coatings must meet certain standards set out in the Schedule (item 43). Environment Canada will measure the drying time using the test method referenced in section 13. In order to be classified as “specialty” primers, sealers and undercoaters, these coatings must be able to seal fire, smoke or water damage, block stains, or condition chalky surfaces. The standard for determining the chalkiness of a surface is set out in the Schedule (item 39). When testing the ability of a coating to condition surfaces with a chalk rating of 4 or less, Environment Canada will evaluate the “chalkiness” of the test surface using the test method referenced in section 14. In both cases, while the test method is incorporated by reference, the specific standards that must be met are defined in the Regulations.

Section 17 of the Regulations includes labelling requirements for all architectural coatings. In order to accommodate the cold-weather exemption provided to traffic marking coatings, these requirements have been modified to require that traffic marking coatings with VOC concentrations greater than 150 g/L be labelled to indicate that they are not for application from May 1 to October 15 inclusive.

In response to stakeholder comments, record keeping provisions, now in section 19, have been modified. These provisions now require that the identified records of manufacture, import and sale to a supplier, wholesaler or retailer of architectural coatings for use in Canada, be maintained in Canada.

Coming into force and effective dates

The Regulations are made pursuant to subsection 93(1) of the Canadian Environmental Protection Act, 1999 (CEPA 1999), and come into force on the day on which they are registered. Prohibitions applicable to manufacture and import of architectural coatings in excess of the applicable VOC concentration limits, as set out in section 3 of the Regulations, take effect:

  • One year after the coming into force date for most coating categories.
  • Three years after the coming into force date for bituminous roof primers (item 4), any other bituminous roof coatings (item 5), form release compounds (item 11), floor enamels (item 18), interior wiping stains (item 46), exterior wood stains (item 47) and traffic marking coatings (item 50). Most of these coatings are typically used outdoors in a construction setting, and may require adaptations for cold or damp weather applications. Additional time has therefore been provided for planning, equipment retrofitting and other necessary changes. Comments received from industry following pre-publication indicated that the reformulation of compliant floor enamels, exterior wood stains and interior wiping stains would also require additional time. The effective dates for these coatings have therefore been extended to three years.
  • Five years after the coming into force date for recycled coatings (item 44), which contain waste coatings from consumers, manufacturers and retailers. Providing an extension to this coating category is expected to provide a cost-effective option for managing the disposal of older, high-VOC coatings, and reduce waste.

For each coating category, there will be a two-year sell-through period, as set out in subsection 5(2), during which coatings exceeding the applicable VOC limit, manufactured and imported prior to the effective dates, can still be sold. The sell-through period is intended to provide the sector with time to sell coating volumes manufactured or imported prior to the effective dates as set out in the Regulations. In the absence of this provision, it is expected that large volumes of coatings would need to be disposed of, with significant cost to manufacturers, importers and sellers.

Background

The use of architectural coatings contributes to Canadian urban VOC emissions. In 2005, urban VOC emissions (i.e. total emissions excluding those from upstream oil and gas, oil sands development and forest fires) in Canada were estimated to be 1,383 kt (see footnote 7). Solvent use accounted for 348 kt of these emissions, with architectural coatings accounting for 51 kt, down from 58.7 kt in 2002.

Over the past decade, the Government has taken a number of actions to reduce air pollution, to protect the environment and health of Canadians. In 1999, scientific assessments (see footnote 8), (see footnote 9) of PM and O3 found that these substances meet the criteria set out in section 64 of CEPA 1999 (see footnote 10), and were added to Schedule 1 of the Act (List of Toxic Substances). In addition, as a result of the assessment and listing of PM and O3, those VOCs contributing to the creation of these substances were also found to meet the section 64 criteria and were therefore also added to the List of Toxic Substances in 2003 (see footnote 11). This made available the full range of management instruments under CEPA 1999, including regulating VOC emissions under subsection 93(1), for controlling these emissions.

In June 2000, to address the concerns associated with smog formation, the Government of Canada and all provinces and territories except Quebec adopted the Canada Wide Standards for Particulate Matter (PM) and Ozone. To achieve these standards, a number of actions needed to be taken to reduce the emission of several air pollutants, including VOCs.

In December 2000, in order to address transboundary flows of O3, Canada and the United States (U.S.) signed the Ozone Annex to the 1991 Canada-United States Air Quality Agreement (Ozone Annex), with commitments from both countries to reduce VOC emissions from consumer and commercial products, including architectural coatings.

On March 27, 2004, the Ministers of the Environment and of Health published Canada’s Federal Agenda for Reduction of Emissions of Volatile Organic Compounds (VOCs) from Consumer and Commercial Products (see footnote 12) (the Federal Agenda). The Federal Agenda outlined the Government of Canada’s plan to develop Regulations under CEPA 1999 to set VOC emission standards for architectural coatings.

In October 2006, the Government of Canada published the Notice of intent to develop and implement regulations and other measures to reduce air emissions (see footnote 13) (the Notice of Intent). The Notice of Intent outlined the approach that would be taken to reduce the emission of air pollutants, including a specific commitment to propose regulations under CEPA 1999 to limit the concentration of VOCs in architectural coatings.

In April 2007, the Government of Canada released its Regulatory Framework, which identifies the reduction of VOC emissions from architectural coatings as part of CARA. The key components of the Regulatory Framework, as they relate to consumer and commercial products, include

  • significant reductions of VOC emissions and other smog precursors from industrial, commercial and consumer products;
  • bringing forward regulations between 2007 and 2010 to limit VOC concentration in architectural coatings, automotive refinishing products, and certain consumer products; and
  • aligning these VOC concentration limits, where appropriate, with similar requirements in the United States.

Acting on this commitment, the Government of Canada published proposed Regulations in the Canada Gazette, Part I, on April 26, 2008.

Actions in other jurisdictions

A number of actions have been taken in other jurisdictions to control the concentration of VOCs in architectural coatings, and are described in the following sections.

European Union

In April 2004, the European Union finalized a directive that is expected to reduce VOC emissions from certain decorative paints and varnishes. The Directive sets VOC concentration limits for twelve (12) categories of architectural paints and varnishes, effective January 1, 2007. More stringent concentration limits are scheduled to become effective on January 1, 2010.

The European Union approach includes broad coating categories that make no distinction between general use coatings, which often can be formulated with low VOC concentrations, and some niche specialty coatings which require higher VOC concentrations. Furthermore, the European Union uses total liquids (including water) in the formula for calculating VOC concentrations. Conversely, the United States approach does not include the volume of water and exempt compounds in the VOC equation, removing any incentive to use dilution as a means of achieving the required concentration.

U.S. Environmental Protection Agency

In 1998, the U.S. EPA promulgated the National Volatile Organic Compound Emission Standards for Architectural Coatings (the National Rule (see footnote 14)). The National Rule specifies VOC concentration limits for 61 architectural coating categories which are, in general, similar to categories set out in the Regulations. Recent advances in technology, however, now make it feasible to set lower VOC concentration limits in 29 categories, while maintaining levels of performance and durability similar to those of coatings with higher VOC concentrations.

California Air Resource Board

Beginning in the 1970s, the California Air Resources Board (CARB) and local California districts began developing Suggested Control Measures (SCMs) and rules for VOC emission sources like architectural coatings, in an effort to address the smog problem affecting many of its cities. The 2000 CARB SCM set VOC concentration limits that are now used by several districts in California. In 2007, CARB amended the SCM to include more stringent VOC concentration limits for certain architectural coating categories, effective beginning in 2010. One district, the South Coast Air Quality Management District (SCAQMD, which includes Los Angeles and environs), amended its Architectural Coatings Rule in 2006, with some limits that are more stringent than those of the 2000 CARB SCM already in effect.

Some of the 2007 CARB SCM and latest SCAQMD limits are considered “technology forcing” by industry representatives (in some cases, innovation and new technology may be required to achieve the required limits) and are currently suitable in the special context of California. These very stringent limits were not suitable as a basis for developing the VOC concentration limits for the Regulations, as the technology is currently not sufficiently developed or available.

Ozone Transport Commission

The Ozone Transport Commission (OTC) is a multi-state organization created under the U.S. Clean Air Act (CAA). The OTC is responsible for developing and implementing regional solutions to the ground-level ozone problem in the Northeast and Mid-Atlantic regions, including twelve states and the District of Columbia. The OTC member states together experience seasonal weather variations and extremes similar to those in many Canadian jurisdictions.

In 2001, the OTC adopted an Architectural and Industrial Maintenance (AIM) Coatings Model Rule for state regulations based on the VOC concentration limits of the 2000 CARB SCM, except for two architectural coating categories. In the context of the Regulations, adopting the CARB limit for industrial maintenance coatings would cause performance problems due to the climate (i.e. more required coats or frequent re-application). For conversion varnish, the CARB limit would not allow their continued marketing and use, as reformulation was not technologically feasible at that time. For these reasons, the Regulations contain two VOC concentration limits that are higher than those in the 2000 CARB SCM.

Implementation of the OTC Model Rule began in 2005, and has now been implemented in a majority of the OTC states, providing evidence of the economic and technical feasibility of the Model Rule concentration limits. In 2007, the U.S. EPA announced that it planned to model amendments to its National Rule on the OTC Model Rule.

Sector profile

The Canadian architectural coatings sector produces coatings for three main segments: general architectural; industrial maintenance; and traffic marking. General architectural coatings, which include architectural or decorative paint (e.g. flats, non-flats, stains, lacquers, etc.), are sold to painting contractors and to the general public through retail outlets. Industrial maintenance coatings are high performance architectural coatings for industrial or professional application to surfaces exposed to extreme conditions. Traffic marking coatings are used for marking and striping streets, highways, or other traffic surfaces.

Participants in the architectural coatings business system include upstream suppliers and distributors of raw materials (resins, solvents, additives and packaging materials), architectural coatings manufacturers, and downstream distributors, retailers, and end users (businesses, the general public and government users).

Resin suppliers typically have operations that service the entire North American market, with some having international networks of resin production, supply and research.

The manufacture of architectural coatings is largely performed by manufacturers who blend raw materials in batch processes, package the coatings (including labelling), and distribute them to retailers and/or end users. It is estimated that approximately 289 million litres of architectural coatings were sold in Canada in 2002, resulting in total revenues of $1.4 billion (see footnote 15). Of these coatings, 80% were manufactured in Canada by an estimated 120160 domestic and multinational manufacturers. The remaining 20% of coatings were imported — primarily from the United States. The table below summarizes estimates of architectural coating use in 2002 (see footnote 16).

Table 1: 2002 Architectural Coating Volumes, Sales and VOC Emissions

Coating segment

2002 Canadian Architectural Coatings

Consumption volume (millions of litres)

Sales Value ($M)

Resulting VOC Emissions (kt)

General architectural

233

1,047

39.7

Industrial maintenance

36

313

12.4

Traffic marking

20

41

6.6

Total

289

1,401

58.7

Ontario manufacturers produce an estimated 61% of Canadian-consumed coatings, while Quebec and British Columbia account for an additional 26%, with the remaining 13% distributed between Alberta, Manitoba, New Brunswick and Nova Scotia. Approximately 7 200 Canadians were employed by architectural coatings manufacturers in 2002 (see footnote 17). Between 2004 and 2006, based on the number of establishments and value of revenues reported to the Statistics Canada Survey of Manufactures and Logging, there is evidence that architectural coatings production in Ontario decreased, with the overall level of production across Canada staying constant. Relatively robust housing starts and economic activity in that period implies that overall consumption was likely increasing. Constant domestic production, coupled with an appreciating Canadian dollar in this period, indicates that the share of the Canadian market supplied by Canadian-manufactured coatings may have decreased from these 2002 estimates, and the share of imported coatings may have increased.

A majority of general architectural coatings are sold to consumers and paint contractors through traditional retail outlets. Some industrial maintenance coatings or specialty general architectural coatings are sold directly to contractors or other users, or sold through a distributor. Traffic marking coatings users typically are private, municipal and provincial marking operators and tend to be sold directly to contractors, municipalities or governments.

Regulatory and non-regulatory options considered

In order to achieve the objectives identified above, several options were considered. These include the status quo, additional voluntary action, market-based instruments, and regulation.

Status quo

Voluntary measures have been used in the architectural coatings sector for many years (see footnote 18). In 2002, the Canadian Council of Ministers of the Environment published Recommended Standards and Guidelines for the Reduction of VOC Emissions from Canadian Industrial Maintenance Coatings. These standards and guidelines were based on U.S. legislation and were developed with the participation of industry. They recommend maximum VOC concentrations applicable to manufacturers, importers and users of different industrial maintenance coatings and to users of traffic marking coatings. The standards and guidelines were implemented between January 1, 2003 (manufacturers and importers) and January 1, 2005 (users). Compliance by industry remains voluntary.

Voluntary measures, combined with a market trend toward low-VOC coatings, have reduced VOC concentration in architectural coatings to their current levels. The industry has developed lower-VOC products, but significant additional reductions are still necessary, and data indicate that VOC concentrations in architectural coatings in the Canadian market could still be appreciably reduced as there are disparities in concentration within coating categories. The data show that further reductions are technologically and economically achievable, but that there is insufficient incentive for manufacturers and importers to widely develop and market low-VOC coatings.

The status quo option was therefore rejected as an option for achieving further reductions in VOC emissions from architectural coatings, protecting human health and the environment, and meeting Canada’s international commitments under the Ozone Annex.

Additional voluntary measure

Given the large reduction in total VOC emissions that is required to meet the Government of Canada’s objectives, it is necessary to guarantee reductions in VOC emissions from many sectors, including architectural coatings. New voluntary measures do not provide this guarantee.

In addition to this lack of certainty, additional voluntary measures may yield an unfair advantage to those companies that choose not to participate in these initiatives, and continue to market their products without having to put resources towards the research and development necessary to create coatings with lower VOC concentrations. This may disadvantage those Canadian firms willing to take steps to reformulate their products and reduce VOC emissions for the benefit of Canadians.

Emissions of VOCs from architectural coatings need to be reduced beyond levels that have been realized using voluntary measures. Putting in place additional voluntary measures was therefore rejected.

Market-based instruments

Market-based instruments, including emission trading programs, deposit-refund systems, and fees and charges, were given consideration. Market-based instruments work by encouraging changes in consumer and producer behaviour. When properly designed and implemented, these instruments can promote cost-effective ways of dealing with environmental issues. In addition, they can provide long-term incentives for pollution reduction and technological innovation.

An emission trading system was considered as a means of managing emissions of VOCs from the use of architectural coatings. However, a trading system would not function at the point of use since there are a large number of widely dispersed users. There would also be significant issues around the measurement and verification of emission reductions. A trading system could be envisioned for manufacturers; however, it is unlikely that such a system would be efficient or effective. Such a system would require setting a cap on the quantity of VOCs used for each of the facilities manufacturing architectural coatings. Moreover, a mechanism would need to be introduced to ensure that VOC reductions from coatings or substances covered under other measures were not included in the cap, nor were VOCs in coatings for export or intermediate processes. This complexity would raise the administrative costs of the mechanism substantially. A firm-size threshold would also need to be introduced so that small, niche manufacturers would not bear the relatively large administrative costs of the trading system. It is expected that the remaining large manufacturers would be limited in number, and there would likely be insufficient differentiation in the marginal cost of abatement to support a trading system.

The purpose of a deposit-refund system is to recover and/or recycle a container, or a substance that remains in the container. However, it is expected that all VOCs would be emitted after application to a surface, with none remaining in the coating containers. Such an approach was therefore considered inapplicable.

For the purpose of achieving VOC emission reductions, fees and charges were considered and analyzed as potential measures. Fees and charges could be levied on products containing VOCs above the proposed concentrations. Such a system would likely require a significant amount of time to implement, and as technology evolves, it would be costly and time consuming to make changes to the fee structure and to achieve additional cost-effective reductions. This approach was therefore also rejected.

Regulatory measure aligned with OTC Model Rule

In order to protect human and environmental health, and to meet Canada’s international obligations, it is necessary to secure reductions in VOC emissions from many sources, including architectural coatings. A regulatory measure guarantees these reductions.

It is expected that Regulations aligned with the OTC Model Rule will result in an average annual reduction of 28% in VOC emissions from the use of architectural coatings, and will align Canada’s regulations pertaining to the concentration of VOCs in architectural coatings with requirements adopted in several U.S. states. The Regulations will result in the most significant reduction in VOC emissions (relative to other options considered), take into consideration technological and economic feasibility, result in a more significant contribution to the protection of human health and the environment, and help Canada deliver on its international commitments under the Ozone Annex.

Benefits and costs

An analysis of benefits and costs was conducted to assess the economic impact of the Regulations on stakeholders, including the Canadian public, industry and government.

Analytical framework

The approach to the cost-benefit analysis identifies, quantifies and monetizes where possible the incremental costs and benefits of the Regulations. The cost-benefit framework consists of the following elements:

  • Incremental impact: Incremental impacts are analyzed in terms of incremental emission reductions, costs and benefits to all interested parties as well as the economy. The incremental impacts were determined by comparing a baseline scenario without the Regulations, and the regulated scenario. The two scenarios are presented below.
  • Timeframe for analysis: The time horizon used for evaluating economic impacts is 25 years. The first year of the analysis is 2010 (see footnote 19), during which the prohibition applicable to the manufacture and import takes effect for most coating categories identified in the Schedule.
  • Data aggregation: The level of detail in the cost data does not allow a separate analysis for each coating category. In the analysis, traffic marking coatings and industrial maintenance coatings are treated separately, and the remaining coatings are aggregated as “general architectural coatings.” Using this approach, some detail may be lost given that several general architectural coating categories have different effective timelines. However, these exceptions are not expected to have a significant impact on the conclusions.
  • Approach to Cost and Benefit Estimates:
    • Costs have been estimated in monetary terms to the extent possible and are expressed in 2006 Canadian dollars.
    • Attempts were made to estimate the benefits associated with the Regulations; however, due to modelling constraints, it was not possible to quantify the impact of VOC emission reductions from architectural coatings on ambient air quality and related environmental and human health benefits. A qualitative assessment of benefits was therefore completed and is supplemented using benefit estimates from other jurisdictions.
  • Discount Rate: A discount rate of 5% was used for this analysis. Since benefits could not be estimated, only the present value of the stream of costs was calculated. Sensitivity analysis was conducted using discount rates of 3 and 7%.

The following sections provide an overview of the baseline and regulated scenarios, with the incremental costs and benefits of the Regulations described below.

Baseline scenario

The cost-benefit analysis uses forecasts of the consumption of architectural coatings, the resulting VOC emissions, and the cost of compliance with the Regulations. Under the baseline scenario, where there is no cost of compliance, the forecast demand for (and consumption of) coatings between mid-2010 and mid-2035 is expected to be influenced by a number of factors, including population growth, housing construction, home sales, total industrial output, and overall economic activity. In aggregate, these demand-side factors were used to forecast an annual growth rate in the consumption of architectural coatings of 1% between mid-2010 and mid-2035.

It is expected that emissions of VOCs would be proportional to the consumption of VOC-containing coatings, and the analysis therefore applies an annual growth rate of 1% to the total emissions of VOCs.

Regulated scenario

The estimated costs of reducing VOC concentrations are based on an economic background study (see footnote 20) conducted for Environment Canada. The underlying assumptions were communicated to stakeholders and modified to ensure consistency with expected costs. The supply-side impacts of the Regulations are discussed in detail below, and include one-time and recurring elements which increase the cost of manufacturing a given quantity of coatings. While there may be a small incremental impact on coating prices, which may result in a small incremental reduction in the quantity of coatings demanded, it is not expected that these changes would be significant given the magnitude of impacts described below. With little impact on the demand for coatings, the regulated scenario is subject to the same demand-side assumptions as the baseline scenario, and consumption under the regulated scenario is therefore expected to continue to grow at a rate of 1% per year.

On the benefit side, the regulated scenario assumes implementation of the Regulations according to the timeline set out in the Schedule. Following the effective dates, the VOC concentrations in architectural coatings would fall to the levels identified in the Schedule, with a corresponding decrease in total VOC emissions. Due to the continued growth in demand for, and consumption of, architectural coatings, it is expected that following the initial reduction, total emissions would continue to grow at 1% per year. It is assumed that the Regulations will come into force in mid-2009, with the prohibition on manufacture and import taking effect in mid-2010, 2012 and 2014, depending on the coating category, in accordance with the description of the Regulations above. The Figure shows the expected impact of the Regulations on VOC emissions.

Figure: Total Estimated VOC Emissions from Architectural Coatings (2009 to 2034)

Figure: Total Estimated VOC Emissions from Architectural Coatings

Costs

In order to comply with the requirements of the Regulations, manufacturers of non-compliant architectural coatings will have to reformulate or discontinue production of these coatings. These actions may have implications on the manufacturers’ demand for resins and solvents (upstream), on their production process (including employment and profitability) and on the quantity and properties of coatings supplied to users (downstream), including possible changes in coating prices at retail, and changes in equipment required for effective coating application. The Government of Canada will also incur costs for compliance promotion, enforcement and administration.

Impact on industry

The impacts on industry are expected to manifest themselves largely in the operations of coating manufacturers. Other impacts on industry include those on resin and solvent suppliers, and those on commercial coating users (e.g. painting contractors).

Upstream, the net impact on resin and solvent suppliers is expected to be small, given that the overall quantity of manufactured coatings should not differ significantly from the baseline. Typically, more expensive resins are used in low-VOC formulations, and resin suppliers are therefore expected to experience a net gain in revenues, as the demand for low-VOC resins increases. Solvent suppliers are expected to experience an overall decline in demand for their products, as solvents are used in smaller proportions in compliant coating formulations.

Downstream, commercial end-users of architectural coatings, including commercial painting contractors, are expected to face limited cost increases, to the extent that there are incremental increases in coating prices or modifications to the application equipment. This increased cost may be offset by reduced costs of thinning and cleaning products and safety equipment, as described in the benefits section below. It is expected that commercial painters will be able to pass some of the cost increases on to their customers (institutions, businesses and households).

For manufacturers, the incremental cost of meeting the requirements of the Regulations includes the following elements:

  • One-time cost to reformulate coatings to meet the VOC concentration requirements of the Regulations;
  • One-time New Substance Notification costs for new substances in low-VOC coating formulations;
  • One-time cost to meet the labelling requirements;
  • Other one-time costs including capital expenditures for new/upgraded storage facilities necessary for low-VOC coatings;
  • Annual, recurring administration cost; and
  • Annual, recurring raw materials cost.

In the table below, estimates of present values of costs are provided for general architectural, industrial maintenance and traffic marking coatings.

Table 2: Estimated Present Value of Incremental Manufacturer
One-time and Recurring Costs, 2010 to 2034

Incremental costs

General architectural (Millions)

Industrial maintenance (Millions)

Traffic marking (Millions)

One-time

     

Reformulation

$60.7

$33.6

 

New substance notification

$3.0

$1.0

 

Labelling

$11.2

$3.2

$0.04

Other one-time costs

$4.8

$1.6

 

Recurring

     

Administration

$12.8

$4.2

 

Raw materials

$266.1

$161.6

 

Present value of costs to manufacturers

$358.6

$205.2

$0.04

If manufacturers are unable to pass increased costs on to consumers, the resulting reduction in profitability may lead to employment reductions and/or increased competitive pressures in the market. The Regulations include a number of provisions intended to minimize the likelihood of negative impacts on vulnerable manufacturers, including a two-year sell-through period and the small container exemption. The permit provisions are a key mechanism to reduce the potential impact on vulnerable manufacturers and importers in the short-term. Where VOC-compliance is not technically or economically feasible, manufacturers and importers can acquire permits for the continued manufacture of coatings with VOC concentrations higher than prescribed in the Schedule, for a maximum period of four years. By protecting vulnerable manufacturers against catastrophic impacts in the short term, the permit provisions could reduce the overall estimated cost of the Regulations over the 25-year period of analysis.

Traffic marking coatings with VOC concentrations of 150 g/L or less are already being manufactured, with no reformulation or new substance notification costs expected when the relevant prohibition takes effect for the manufacture and import of these coatings. Traffic marking coating manufacturers are expected to incur a present value of labelling costs of $41,000. The introduction of the cold weather exemption and associated labelling requirement may increase labelling costs, although the overall magnitude is expected to remain a small portion of the total cost to industry. Costs with respect to traffic marking coatings are expected to be borne largely by consumers of these coatings, including contractors, municipal, provincial and territorial governments. These impacts are discussed below in the discussion of impacts on consumers.

According to Statistics Canada’s Annual Survey of Manufactures and Logging (see footnote 21), annual revenue in the paint and coating manufacturing sector was $2.4 billion in 2006. The background economic study provides estimates that architectural coatings account for approximately 55% of this sector’s revenues. These assumptions indicate that annual costs during the first ten years, when one-time costs are being incurred in addition to recurring costs, will be approximately $46 million, or 3.5% of sector revenue. Following the one-time cost period, incremental costs are estimated to fall to approximately $30 million, and the impact of the Regulations will fall to approximately 2.3% of sector revenue.

Impact on the Federal Government

The Federal Government will incur costs of compliance promotion in the regulated community, inspection and enforcement of the provisions of the Regulations, laboratory test development, and administration of permits.

Compliance promotion

Government of Canada compliance promotion activities are intended to encourage the regulated community to achieve compliance. In the first year following the coming into force of the Regulations, compliance promotion activities are estimated to require an annual budget of $80,000. In year two and four, compliance promotion activities would require an estimated annual budget of $150,000, as activities may increase in intensity. Compliance promotion activities during these years could include mailing out the Regulations, developing and distributing promotional materials (i.e. fact sheets, Web material), advertising in trade and association magazines, attending trade association conferences and presenting workshops/information sessions to explain the Regulations. Activities might also include responding to and tracking inquiries in addition to contributing to the compliance promotion database.

In year three, compliance promotion activities would be limited to maintenance level and preparation for the next phase of intense compliance promotion activities; these are estimated to require an annual budget of $30,000. Activities may include sending reminder letters, and the publication of reminder fact sheets. Other activities may involve responding to and tracking inquiries, and contributing to the compliance promotion database.

In year five, compliance promotion activities would be limited to maintenance level and are estimated to require an annual budget of $15,000. Compliance promotion activities may be limited to responding to and tracking inquiries in addition to contributing to the compliance promotion database.

During the remainder of the 25-year period, compliance promotion costs are assumed to be incurred in conjunction with other programs’ compliance promotion. It should be noted that the required intensity and level of effort may change when compliance analyses are completed or if unforeseen challenges arise.

Enforcement

Government of Canada enforcement activities are intended to secure compliance with the Regulations. In 2010–11, an estimated one-time cost of $250,000 will be required for the training of enforcement officers, and $358,850 for inspections (including salary and benefits, operations and maintenance, transportation and sampling costs), $14,330 for investigations and $8,280 for measures to deal with alleged violations (including environmental protection compliance orders and injunctions).

In subsequent years, enforcement is estimated to require an annual budget of $687,732 for inspections, $17,196 for investigations, $15,732 for measures to deal with alleged violations and $18,096 for prosecutions.

These estimates have been revised since pre-publication to include inspections at retail establishments, resulting in an increase in expected enforcement costs.

Permit provisions

The Government of Canada will incur some administrative costs associated with the processing of permits. The cost for processing one permit application — issue and renewal — is estimated to be between $1,300 to $2,500. The incremental cost to government has not been calculated as the precise number of permit applications that will be received and processed is not known. However, it is expected that a relatively small number of permit extension applications will be received. Assuming the issue of 10 permits in 2010 and 5 permits in 2011, and the renewal of 11 permits in 2012–13, the associated costs would not have a significant impact on the overall cost to government.

In aggregate, the present value of costs to the Federal Government is estimated to be $11.2 million.

Table 3: Present Values of Incremental Costs to Federal Government

Compliance promotion

Enforcement

$0.392 million

$10.8 million

Impact on consumers

The Regulations are expected to have a limited impact on consumers, if coating manufacturers are able to “pass on” the incremental costs, estimated above, by raising prices and reducing the negative impact on manufacturers’ net income.

Architectural coating manufacturers have expressed uncertainty over the degree to which costs could be passed on to consumers. Some expect most costs to be passed on, while others indicate that some would be borne by manufacturers. In general, the market for architectural coatings is competitive, and it is not expected that manufacturers would pass significant price increases on to consumers.

Traffic marking coating consumers

Consumers of traffic marking coatings include the traffic marking operations of the provinces, territories, municipalities and contractors. It is expected that these users of traffic marking coatings will mostly shift to low-VOC coatings, with compliance costs arising from changes in the process of applying these coatings to roads and surfaces. In addition to water-based coatings, alternatives with VOC concentrations of 150 g/L or less include low- and no-VOC products such as methyl-methacrylate, polyester, epoxy and thermoplastic paints or preformed tapes, permanent markers, etc. All have application processes and equipment that differ, to some extent, from those used for the application of solvent-based coatings.

Impacts on traffic marking coating users will arise from one-time costs associated with equipment replacement, retrofitting and training, possible increased operational costs due to changes in coating and other recurring costs. Environment Canada conducted a survey of traffic marking end users in November 2005. The overall level of costs to traffic marking coating users is uncertain. However, survey results indicated that costs may accrue disproportionately to smaller municipalities.

Environment Canada has been working with traffic marking stakeholders for several years to identify and resolve any issues arising from a transition to traffic marking coatings with VOC concentrations of 150 g/L or less, or non-coating alternatives. Some jurisdictions have already completed the transition, while others have delayed, notwithstanding the existence and availability of alternatives to traditional high-VOC coatings. Environment Canada continues to work with stakeholders to identify and share information regarding the testing and availability of alternatives. This work shows that viable, cost-effective alternatives exist, that some products function well when applied in cold weather and indeed may provide superior performance to solvent-based coatings. However, the most cost effective coatings for cold weather application have not been approved in all jurisdictions. In response to stakeholder comments, Environment Canada has provided additional flexibility through the cold weather exemption described above, allowing the continued use of traffic marking coatings with VOC concentrations greater than 150 g/L and less than 450 g/L, after October 15 and before May 1 of the following year. A three-year transition period is also being provided before the VOC concentration limit of 150 g/L, for traffic marking coatings applied during the period from May 1 to October 15 inclusive, comes into effect. These provisions are expected to further reduce the cost to some traffic marking coating consumers, although estimates of these costs are currently not available.

In order to ensure that the exemption is enforceable, users of traffic marking coatings will be liable for traffic marking coatings with VOC concentrations above 150 g/L that are applied outside of the exemption period.

Other costs

Other costs may be incurred as a result of the Regulations. Preliminary estimates suggested that manufacturers may bear costs associated with disposal of non-compliant coating volumes after the sale of these coatings becomes prohibited. The Regulations include a two-year sell-through period, during which manufacturers, importers and retailers will be able to continue to market and sell non-compliant volumes produced and imported before the prohibition on manufacture and import takes effect. Notwithstanding this allowance, it is expected that negligible disposal costs may still be incurred following expiry of the sell-through period, as firms recycle or dispose of their remaining non-compliant coating volumes.

Benefits

Environment Canada has estimated that the cumulative incremental VOC emission reductions resulting from the Regulations will be 506 kt between 2010 and 2034, with an average annual reduction (see footnote 22) of approximately 28% per year. These reductions, combined with other VOC emission reduction initiatives described in the Government of Canada’s Regulatory Framework, are expected to result in an incremental reduction in human and environmental exposure to O3 and PM. These would result in benefits to

  • human health — reduced incidence of premature death, hospital admissions, doctor visits, emergency room visits, lost work and school days, etc;
  • agriculture and forestry — improved yields; and
  • environment — reduced damage to the ecosystems.

It is currently not possible to quantify and monetize with confidence the benefits directly associated with the reduction of a tonne of VOC from architectural coatings in Canada. The expected magnitude of VOC emission reductions from the Regulations alone do not allow existing models to accurately detect or measure the impact on air quality, human health and the environment. The interrelationships between different pollutants are non-linear and complex, and it is therefore not possible to isolate the impact of VOC emission reductions from specific sources, like architectural coatings, on air quality and ground-level ozone.

In the United States, the EPA and CARB have been unable to precisely isolate and assess impacts associated with reductions in VOC emissions alone, despite a consensus that these impacts exist, and some recent progress in measuring benefits at SCAQMD. Average estimates of the benefits from more broadly defined VOC sources, reported by the U.S. EPA, (see footnote 23) range from $6,800 to $18,800 per tonne (see footnote 24) of VOC emission reductions. More recently, the U.S. Office of Management and Budget (OMB) (see footnote 25) has published estimates of benefits associated with VOC reductions ranging from approximately $850 to $3,840 per tonne. The European Union (EU) has also estimated the monetized benefits of reductions for its directive to reduce VOC emissions from paints. (see footnote 26) Benefit estimates for European Union member states range from $800 to $11,600 per tonne of reduced VOC emissions. (see footnote 27) However, with significant differences in weather patterns, product use, land use, population, population density, architectural value and socio-economic conditions, caution is required in applying these estimates in the Canadian context.

The estimated low-end, high-end and average benefits from the EU and U.S. studies provide evidence of the order of magnitude of potential benefits from reducing VOC emissions.

Table 4: Estimated Benefits from VOC Emission Reductions (in 2006$/tonne)

Estimate Source

Low-end

Average

High-end

U.S. OMB

$850

$2,345

$3,840

EU

$800

$3,400

$11,600

U.S. EPA

$6,800

$12,800

$18,800

Although the quantified benefits of VOC reductions from architectural coatings alone are difficult to assess, the overall VOC emission reductions expected from all sources identified in the Regulatory Framework will contribute to health and environmental benefits. The benefits of reduced emissions of VOCs are expected to manifest themselves predominantly in urban areas, and in particular in regions with persistent low air quality issues. Reduced human health risks may also translate into lower health care costs for governments across Canada.

In addition to these direct benefits, the Regulations represent an important step by the Government of Canada towards meeting Canada’s commitments under the Ozone Annex. Meeting these commitments is critical to Canada’s long-term objective of reducing transboundary flows of air pollutants, with significant benefits to human and environmental health.

Other benefits

The application of low-VOC coatings will generally mean a transition away from the use of solvent-based architectural coatings towards the use of water-based coatings. Application of water-based coatings can yield time and budget savings due to the relative speed and ease of equipment cleaning (e.g. for paint sprayers and brushes) and coating thinning, and may reduce the need for safety equipment (masks, gloves, goggles, etc.) for some specific applications. For certain architectural coating types, low-VOC formulations may also have improved performance relative to traditional solvent-based, higher-VOC coatings. Some low-VOC coatings can contain more solid matter by volume, and provide more opaque and even coverage with fewer coats.

These benefits are expected to accrue largely to commercial painting operations, and may offset any price increases for architectural coatings.

Summary of impacts

The cost impacts presented in the preceding sections are summarized in the table below. In the absence of monetized benefit estimates, the calculation of net present value of the Regulations is not possible. It is expected, however, that in light of the significant adverse health and environmental impacts of ground level O3, PM and smog, the benefit of meeting Canada’s international commitments under the Ozone Annex, and international estimates of the benefits of VOC reductions, the benefits would justify the costs.

The table below illustrates the sensitivity of the cost estimates to different discount rates, and provides a range of estimates of cost per tonne of reduced VOC emissions.

Table 5: Present Value (PV) of Costs (in 2006 $)

PV3%

PV5%

PV7%

Costs to industry and consumers (million)

$667

$564

$486

Cost to government (million)

$13.6

$11.2

$9.5

Total cost (million)

$680.6

$575.2

$495.5

VOC reductions (kt)

506

Cost per tonne

$1,345

$1,137

$979

The table above shows that estimates of cost per tonne range between $979 and $1,345, depending on the discount rate used (3%, 5% or 7%). These estimates fall below most of the benefit per tonne estimates in other jurisdictions shown in table 4, supporting the conclusion that, overall, benefits would exceed costs.

Competitiveness

The Regulations may have competitiveness impacts for some firms in the architectural coatings sector. The analysis and consultation processes have indicated that some small and medium-sized enterprises (SMEs) may be challenged to meet the one-time costs associated with the transition to low-VOC coatings. The Regulations include a small container exemption for ten selected categories identified in subsection 2(3) of the Regulations. It is expected that this exemption will provide those small, niche coating manufacturers facing the highest one-time costs with the ability to continue to compete in the marketplace. The permit provisions will reduce compliance costs in the short-term, should individual manufacturers be able to show that reformulation is not technically or economically feasible.

In the short-term, Canadian firms manufacturing for the domestic and U.S. markets may be at a competitive disadvantage against U.S. firms that manufacture coatings which already meet the VOC limits. U.S. coatings imported into Canada may be available at a lower cost relative to comparable Canadian-manufactured coatings. In general however, this impact is expected to be limited. A significant portion (about 80%) of Canadian architectural coatings is produced domestically. In addition, existing formal marketing relationships between manufacturers and retailers are expected to continue in the absence of significant increases in coating prices.

The competitiveness of the Canadian architectural coatings industry as a whole is expected to benefit in the long-run. As indicated above, the costs of the Regulations are expected to be less than 4% of industry revenue while firms absorb the one-time costs of compliance, and approximately 2% of revenue thereafter. Creation of a level playing field with major U.S. markets may, following absorption of these costs, lead to increased opportunities for Canadian architectural coating manufacturers who export their coatings to the United States.

Rationale

The Government of Canada is committed to improving air quality through a number of regulatory and non-regulatory actions which target the precursors to air pollution, like VOCs, and reduce the formation of smog. Under the Regulatory Framework, the main targets for VOC emission reductions are industry, transportation, and consumer and commercial products (including architectural coatings). Together, actions in these areas are expected to yield significant reductions in VOC emissions and improvements in air quality.

The Regulations result in a reduction of approximately 506 kilotonnes of VOC emissions over 25 years. The incremental cost of achieving these reductions is estimated to be between $495.5 million and $680.6 million over the same period, or between $979 and $1,345 per tonne of reduced VOC emissions. As indicated above, it is not possible to monetize the benefits associated with the reduction of a tonne of VOC from architectural coatings in Canada. However, Environment Canada is confident that, in combination with the reductions achieved through this and other measures to improve air quality, the benefits will justify the costs. As indicated above, this expectation is supported by international benefits estimates ranging from $850 to $18,800.

The Regulations have been developed in consultation with industry, provincial and territorial governments, ENGOs and other government departments. The Regulations also incorporate revisions based on the comments received following pre-publication in the Canada Gazette, Part I, in order to reduce the burden on regulatees. These revisions, while maintaining the overall stringency of the VOC concentration limits and ultimate smog reductions, add additional flexibility and clarify the regulatory requirements to facilitate compliance.

International coordination

The Regulations have been developed in consultation and cooperation with other countries, including the United States. The experience of U.S. organizations with the implementation of VOC concentration limit regulations was taken into consideration. The applicable VOC concentration limits of the U.S. EPA, CARB, and OTC were assessed and considered.

The VOC concentration limits in the existing 1998 EPA National Rule were found to be less stringent than those that have been shown to be technically and economically feasible in the OTC states. Conversely, the more stringent standards for some coating categories offered by the latest CARB and SCAQMD models would be inappropriate in light of the high cost and the limited expected incremental benefit.

The OTC has developed a Model Rule specifically for a region of the United States that experiences weather conditions similar to those in many Canadian jurisdictions. Given the expected performance of concentration limits based on the 2001 OTC Model Rule, the economic and technical feasibility of the associated concentration limits, and the benefit of harmonizing Canada’s requirements with those in many U.S. states, the concentration limits set out in the OTC Model Rule were selected as the most appropriate basis for the Regulations, with adaptations to reflect the Canadian context and respond to specific stakeholder concerns.

Consultations

A discussion document was prepared in March 2005 for consultation with architectural coatings stakeholders. The document outlined the proposed elements for regulating the VOC concentration of architectural coatings, and communicated key results of Environment Canada’s 2003 survey of manufacturers and importers of architectural coatings in Canada and of the 2004 report entitled Technical Assessment of Categorization and VOC Content Limits for Architectural and Industrial Maintenance Coatings in Canada.

Three formal public consultation meetings were held in Toronto, in April 2005, January 2006 and September 2006. These meetings included discussion of the March 2005 discussion document and subsequent updated proposals, the health effects of PM and ground-level O3 exposure, the Canada-wide Standards (CWS) for PM and ozone, and an overview of estimated costs of compliance with VOC concentration limits then under consideration. These multi-stakeholder meetings were well attended, with representation from Canadian and U.S. associations of architectural coatings manufacturers, importers and professional applicators, and also from raw material suppliers, manufacturers, importers, retailers and sellers of architectural coatings, environmental non-governmental organizations and federal, provincial and municipal governments. In May 2005, the CEPA National Advisory Committee (CEPA NAC) and relevant federal government departments were also consulted. No major concerns were raised by CEPA NAC or the other departments.

Many stakeholders requested general information on subjects such as the rationale behind the selected approach to reduce VOC emissions from architectural coatings, jurisdictional comparison and compatibility, previous Canadian VOC initiatives, scientific foundations, policy background, etc. The architectural coatings Web site www.ec.gc.ca/nopp/voc/en/secAIM.cfm, and in particular the March 2005 Discussion Document found on the site, provide background information relating to these matters as well as definitions and details on the targeted coatings. Specific stakeholder comments and concerns are summarized below.

Sell-through period

Industry stakeholders expressed concern regarding the one year sell-through period then under consideration, and stated that this duration would not be sufficiently long to avoid the significant costs of disposal of non-compliant coating volumes.

In response to these concerns, Environment Canada proposed a two year sell-through period. This provision provides industry with a reasonable amount of time to market and sell non-compliant coating volumes manufactured prior to the prohibitions applicable to the manufacture and import, while also preserving the integrity of the Regulations through a sell-through period of limited duration and effective labelling requirements.

Implications of container labelling provisions

Stakeholders were concerned that the proposed Regulations would include labelling provisions requiring that the VOC concentration and manufacturing date be listed on the product label. Such labelling requirements could have been costly for the industry and would have left short notice, from the time when the Regulations are registered, to reformulate non-compliant coatings or develop new ones and then to adapt the labels in order for these to include the VOC concentration.

In response to these stakeholder concerns, Environment Canada simplified the labelling provisions. The proposed Regulations did not require the inclusion of the VOC concentration of the architectural coating in the labelling on the product container. The labelling of the manufacturing date was included in the proposed Regulations. However, a manufacturing date code (e.g. a batch code) was allowed in place of the manufacturing date. Certain category-specific labelling requirements were also required for proper identification of the coating category, to ensure proper representation of the coatings and allow sampling and testing to confirm compliance.

Impact on small and medium enterprises (SMEs)

Stakeholders indicated that the compliance costs associated with the proposed Regulations would constitute a significant business expense and could result in the elimination of important niche product lines, staff layoffs and/or reductions in employment benefits.

Environment Canada recognized that some companies would require assistance, including additional time, to comply with the Regulations. The proposed implementation timeline for specific categories was therefore extended relative to earlier consultation proposals. Also, a small container exemption was proposed, which would allow SME manufacturers to continue to manufacture some higher VOC niche products. A two year sell-through period is expected to further minimize disposal costs for all manufacturers, including SMEs.

Stringency of the proposed Regulations

Some stakeholders expressed concern that the regulations would not be sufficiently stringent, and claimed that Canada lags behind other industrial countries on this issue.

The proposed VOC concentration limits were modeled on some of the most stringent requirements in the United States and in the world. In the OTC Model Rule, only a few coating categories have VOC concentration limits that are more stringent than those in the proposed Regulations. Exceptions were proposed for two categories of specialty industrial maintenance coatings with low sales and emissions, and for recycled coatings.

Expansion of the small container exemption to other categories

Some stakeholders requested that the small container exemption be expanded to additional coating categories.

Environment Canada confirmed that a small container exemption would allow the continued manufacture of niche and specialty products. The proposed Regulations therefore provided a small container exemption for eight architectural coating categories. Technical information collected during the development of the proposed Regulations indicated that these categories contain niche products with low volumes of use and emissions and for which no compliant alternative formulations are believed to be available.

The OTC Model Rule includes a small container exemption that applies to all categories of architectural coatings. By limiting the proposed exemption to eight categories selected following stakeholder consultations, the proposed Regulations took into account the increased availability of low-VOC technology since the OTC limits were adopted in 2000.

Stringency of limits for solvent-based floor enamels, interior wiping stain and exterior wood stain

For specific coating sub-categories, stakeholders requested additional time for reformulation, i.e. before the VOC concentration limits become effective, and extension of the small container exemption to these sub-categories, and/or an increase in the VOC limits of these sub-categories.

Environment Canada’s 2003 survey identified many existing coatings products that meet the proposed limits indicating technical and economic feasibility as well as consumer acceptance. Reducing the stringency of requirements applicable to these coating sub-categories was therefore considered unnecessary. However, the industry agreed to provide data and further information supporting its request, for consideration prior to finalizing the Regulations.

Exemption for tertiary butyl acetate (TBAc)

Stakeholders recommended that Environment Canada incorporate an exemption for acetic acid, 1,1–dimethylethyl ester, also known as tertiary butyl acetate (TBAc), a substance that was excluded as a VOC by the U.S. EPA in November 2004 and several U.S. states thereafter, and that could be used in certain types of coatings in order to comply with the VOC concentration limits.

At the time of pre-publication, Environment Canada was evaluating the contribution of TBAc to the formation of ground-level O3. It was expected that the evaluation would be completed prior to finalization of the Regulations, and the Department would therefore be in a position to make a final decision on an exemption for TBAc prior to publication in the Canada Gazette, Part II.

Reactivity-based methods for VOC concentration determination

Some stakeholders recommended that Environment Canada develop a regulatory mechanism which builds or recognizes reactivity (see footnote 28) and, in turn, allows usage of reactivity-based methods for VOC concentration determination.

The proposed VOC concentration limits were based on the OTC Model Rule requirements which set mass-based VOC concentration limits and VOC limits based on reactivity were not considered at that time, as additional scientific development was required.

Cost of product testing

One stakeholder commented that importers would be unable to exercise “due diligence” when manufacturers claim proprietary information on their products and suggested that costs would be prohibitive for testing all products.

Environment Canada recognizes that some importers may face costs related to testing to ensure their products are in compliance. Since the proposed Regulations did not prescribe which test method to use, the magnitude of the cost cannot be estimated. It is expected that importers would use the most cost-effective method to verify that their products meet the concentration limits prescribed in the Regulations.

Low-VOC coating performance

A concern was voiced that reformulations may lead to coatings with less durability and/or poor performance, requiring more applications of the reformulated coatings in order to obtain results comparable to those using non-compliant coatings.

Environment Canada’s background economic study indicated that in 2002, for all of the proposed categories and limits, there were already compliant coatings in the market that had acceptable performance attributes. In fact, compliant coatings already represented a significant portion of the supply in many categories at that time. In some categories, low-VOC coatings may in fact have performed better than higher-VOC alternatives. Environment Canada does not expect reduced performance from compliant architectural coatings.

Traffic marking coatings

Consultations specific to the traffic marking sub-sector were held in the fall of 2005 in Calgary, Toronto and Montreal, in response to traffic safety concerns regarding the proposed VOC concentration limit and the implementation timeline for traffic marking coatings. Traffic marking coatings for cold temperature application which comply with the proposed VOC limit of 150 g/L were not commonly applied nor approved for use in Canada at that time.

In response to these concerns, Environment Canada had extended the proposed effective timeline for traffic marking coatings by two additional years, compared to most other architectural coating categories. This was meant to provide additional time to reformulate, test and approve traffic marking coatings for low temperature application.

A working group (see footnote 29) was formed with the traffic marking sub-sector in 2006 in order to develop a Strategic Plan for Implementing the Use of Low Volatile Organic Compound Traffic Marking Coatings (the Strategic Plan). The Strategic Plan outlines the timeframe and transition period to assist stakeholders (jurisdictions and application contractors) as they develop plans for the then anticipated full transition to low-VOC traffic marking products. The Strategic Plan also provides a list of alternative traffic marking coatings with VOC concentrations of 150 g/L or less, with advantages and disadvantages relative to traditional solvent-based traffic marking coatings, including availability, performance and durability, and cold weather application.

Comments received following publication of the proposed Regulations in the Canada Gazette, Part I , on April 26, 2008.

The proposed Regulations were published in the Canada Gazette, Part I, for a 60-day public comment period. During that period, comments were received from twenty stakeholders, including four associations, three coating manufacturers or importers, two chemicals manufacturers and importers, two municipalities, one Province, one Federal government department, one foreign government, four traffic marking contractors, a coating testing and approval organization, and an airport authority. A summary of these comments, and Environment Canada responses, are presented below.

Application and exemptions

  • Two chemicals and coatings manufacturers and importers indicated that a lack of specificity of some category names and descriptions would lead to confusion in the assignment of specific coatings to specific categories, namely for primers, sealers, undercoaters, intermediate coats and topcoats used for industrial maintenance purposes.

Subsection 1(1) of the Schedule to the Regulations clearly defines industrial maintenance coatings, primers, sealers and undercoaters. Section 8 also provides precisions regarding the application of the most restrictive VOC concentration limit provision. Environment Canada expects that these definitions and precisions should clarify any confusion regarding the assignment of coatings to these specific categories. Stakeholders will also have the opportunity to resolve outstanding uncertainty during and after the compliance promotion period, through direct contact with Environment Canada.

  • A number of stakeholders raised issues relating to the flexibility of the proposed Regulations, in many cases in the context of SMEs. A chemicals manufacturer and importer recommended the inclusion of short-term exemption permits or an “averaging” program, and suggested an allowance for additional time for SMEs. The same stakeholder also indicated that the small container exemption should apply to additional, if not all categories.

Environment Canada agrees that a permit program is a good mechanism to provide relief from any short-term reformulation challenges. Permit provisions have therefore been included in the Regulations.

Under an averaging program, manufacturers and importers would be required to ensure that the average VOC concentration from selected coating product lines is below a specified limit. These enterprises would therefore have the flexibility to decide which of their product lines will retain high-VOC formulations, as long as there are offsetting reductions from other products. Environment Canada recognizes that an averaging program may provide some benefits to specific stakeholders; however, there is a reasonable potential that such a program may disadvantage some enterprises that do not have diverse product lines, in particular SMEs. Given this potential, and the range of flexibility mechanisms included in the Regulations, Environment Canada has decided not to introduce such a program at this time.

Environment Canada has elected not to extend the effective dates specifically for SMEs, but anticipates that other provisions, including the new permit provisions, provide sufficient flexibility to any vulnerable enterprises that are unable to meet the timelines set out in the Regulations.

The small container exemption provided for ten architectural coating categories is expected to allow the continued manufacture, import and sale of several categories that include niche products with low volumes of use and emissions, where VOC-compliant alternative formulations may not be readily available.

  • A performance testing and approval organization expressed concern that the Regulations would prohibit part of its laboratory business, consisting of testing different coatings for its own use or for manufacturers and importers, when the coatings are not VOC-compliant.

It is not the intent of the Regulations to forbid ordinary laboratory business and the regulatory text has therefore been clarified. The Regulations do not apply in respect of architectural coatings “manufactured, imported, offered for sale or sold to be used as a laboratory sample or analytical standard.”

  • Four manufacturers and importers of chemicals and coatings, the U.S. National Paint and Coatings Association (NPCA) and the Canadian Paint and Coatings Association (CPCA) requested that tertiary butyl acetate (TBAc) be added to the list of compounds excluded from the definition of VOC in Schedule 1 of CEPA 1999. The use of TBAc will facilitate reformulation and minimize incremental compliance costs. A chemicals manufacturer also requested that Environment Canada align its list of excluded compounds with lists of excluded compounds in the United States.

Stakeholders have clearly communicated the importance of TBAc as a possible ingredient in compliant formulations. Based on a preliminary assessment, Environment Canada has determined that TBAc has negligible reactivity and would not contribute in a meaningful way to the formation of PM and O3. Environment Canada has therefore excluded TBAc by means of the definition of an “excluded compound” in subsection 1(1) of the Regulations, and not yet by means of an amendment to Schedule 1 of CEPA 1999. A decision to exclude by means of an amendment to Schedule 1 would depend on the results of a full risk assessment, which is currently ongoing.

Environment Canada must carry out its own procedure for adding substances to the list of VOC exclusions, in Schedule 1 of CEPA 1999, and this list is therefore not always aligned with that in the United States. This process is carried out on a substance-by-substance basis, following a formal request from a stakeholder, and a thorough risk assessment by the Government of Canada. Environment Canada will therefore not be systematically aligning all exclusions with those in the United States at this time.

  • A coating importer asked that Environment Canada use the definition of “faux finish” incorporated into the 2007 CARB SCM, for uniformity.

As indicated above, the Regulations are aligned with the U.S. OTC Model Rule, with modifications to account for conditions and legislation unique to Canada. Alignment of a single definition, in this case for faux finish, with a different standard, may have cost and competitiveness issues for stakeholders, who have not had the opportunity to provide comment on this proposal. Given these considerations, and that such a change would not have a significant impact on VOC emissions, Environment Canada has not changed the description of faux finish in the Regulations, maintaining alignment with the description and labelling requirements in the OTC Model Rule.

  • A coating importer and the NPCA asked that “conjugated oil varnish” be included as a distinct category in the Regulations.

Conjugated oil varnish is a niche coating used to finish or restore wood surfaces, often in historic buildings. The volumes sold annually are small and it cannot be reformulated to achieve compliance with the limit for other varnishes (i.e. 350 g/L). For these reasons, the Regulations include a separate category for conjugated oil varnish, with a VOC concentration limit of 450 g/L.

  • The CPCA asked Environment Canada to provide three years for reformulating wiping stains, exterior deck stains and floor coatings.

The information gathered by Environment Canada indicates more precisely that reformulation can be a challenge for interior wiping stain, clear or semi-transparent exterior wood stain, and floor enamel (high gloss). Separate categories are now included for three types of architectural coatings, previously part of the “stain” and “floor coating” categories. The prohibition on manufacture and import takes effect three years after the Regulations are registered for interior wiping stain, for clear or semi-transparent exterior wood stain and for floor enamels that exceed a VOC concentration limit of 250 g/L. Since two of these new categories were previously included in the “stain” category, and were thus subject to the small container exemption, the Regulations have been clarified to indicate that the interior wiping stain and exterior wood stain categories retain this exemption.

Prohibition

  • Stakeholders provided a number of comments regarding the timeline of effective dates set out in the proposed Regulations. A chemicals manufacturer and importer recommended that Environment Canada review the timeline of effective dates, and that a three-year sell-through period be considered. The NPCA asked that Environment Canada clarify whether products can be stored in manufacturing facilities or warehouses after the prohibition on manufacture and import takes effect.

The timelines for the prohibitions on manufacture and import, and on sale, were developed through consultation with a range of stakeholders, including the regulated community. The timelines are a compromise between the government’s goal of obtaining timely emission reductions and the industry’s need for a transition period. The prohibition on manufacture and import takes effect in phases, according to the readiness of different coating reformulations and the conversion rate of professional applicators. Environment Canada has provided a number of flexibility mechanisms, including a two-year sell-through period, permit provisions, and the small container exemption, to facilitate compliance by regulatees, and protect against unforeseen constraints.

Given that the vast majority of architectural coatings are distributed and sold to users in less than six months, Environment Canada has concluded, after consultation with several manufacturers, that a two-year sell-through period is sufficient. This period should ensure a complete turnaround of all coatings, including seasonal and niche products. This time limit is also expected to avoid any stock-piling of coating products prior to the prohibition on manufacture and import. Given these expectations, the request for a three-year sell-through period was rejected.

Environment Canada clarifies that after the prohibition on manufacture and import takes effect, architectural coatings that exceed their respective VOC limit and that have been stored in manufacturing facilities or warehouses in Canada can then be distributed from these Canadian premises to the domestic market during the sell-through period.

  • Two municipalities, the Transportation Association of Canada, one province, four traffic marking application contractors, and an airport authority expressed a strong interest in an exemption for cold-weather application of traffic marking coatings.

The evidence available to Environment Canada indicates that the performance of low-VOC traffic marking coatings following cold weather application does not differ significantly from the performance of high-VOC, solvent-based traffic marking coatings. Evidence from Sweden and the northern U.S. indicates that traffic marking coatings with VOC concentrations of 150 grams per litre or less can be effective. However, some parts of Canada can be colder than these two countries, which may reduce their effectiveness. As well, with a more extensive road network to maintain, the cost of winter alternatives (marking tape, plastic methyl methacrylate coatings, etc.) may be prohibitive at this time.

In recognition of the strong concern expressed by stakeholders and the reduced impact of VOCs on smog during cold weather, Environment Canada has modified the prohibition provisions in the Regulations to clarify that a VOC concentration limit of 150 g/L would take effect three years after the Regulations come into force, and only applies to traffic marking coatings for application from May 1 to October 15. Until then, and for traffic marking coatings for application between October 15 and May 1, a less stringent 450 g/L VOC concentration limits applies.

Historically, most traffic marking coatings have been applied between May and October, and would therefore be subject to the more stringent limit. Consequently, this exemption is not expected to have a significant impact on anticipated VOC emission reductions, or on the estimated costs and benefits.

  • A coatings manufacturer and importer raised a concern that, as set out, the proposed prohibition of the sale or offer for sale could prevent manufacturers and importers from: buying back from their distributors the unused architectural coatings that exceed the relevant concentration limits; exporting these coatings; or selling them for a use otherwise exempted from the proposed Regulations.

Architectural coatings that do not sell in time for the prohibition on sale or offer for sale can be moved off the distribution chain into the other markets and uses, for example if they are for export or for application to a product, in a factory or a shop, as part of a manufacturing activity. The record keeping provisions ensure that manufacturers and importers of architectural coatings, and persons that sell to a supplier, wholesaler or retailer of architectural coatings, keep the information on these exempted activities, including quantities supplied and buyer coordinates.

  • A chemicals manufacturer and importer expressed concern that the wording “anyone acting on their behalf,” in section 7 of the proposed Regulations (and now in section 8 of the Regulations), could make them responsible for activities of downstream individuals with whom they have no direct relationship.

It is not the intent of the Regulations to extend responsibility of manufacturers, importers and sellers to any downstream activities. The regulatory text has therefore been clarified and the phrase of concern now extends liability only to “their duly authorized representative.”

Test methods

  • Three manufacturers and importers of chemicals and coatings indicated that the requirements regarding test methods were unclear. A chemicals manufacturer and importer, the CPCA, and NPCA specifically indicated that it was unclear whether companies would be required to test all products or batches using the identified test methods.

The provisions on the accredited laboratory and test methods are for enforcement purposes only, and are included as guidance for the regulated community. These provisions indicate that, when an investigation is conducted, the standards and methods incorporated by reference will be used to determine compliance.

  • A chemicals manufacturer and importer raised a concern that incorporation by reference may result in Canadian regulatory requirements being changed by a non-governmental body, possibly without input from the Canadian public, and that these changes may not be in the best interests of Canadians. A foreign government stakeholder challenged the choice of standards organizations, preferring to see alternative standards recognized.

The proposed Regulations incorporated 13 different test methods by reference. Following stakeholder comment and internal review, Environment Canada has only incorporated two test methods by reference, used in the determination of parameters that do not have generally accepted units or scales. As indicated above, these methods pertain to drying times and surface chalkiness. The test methods incorporated by reference in the Regulations define the protocol to be used to determine these parameters, not the results that must be achieved. The required drying times and level of chalkiness are clearly prescribed in items 43 and 39 of the Schedule to the Regulations, and cannot be changed without an amendment to the Regulations.

Environment Canada has reviewed the standards for these methods, and has chosen standards by ASTM International, an international standards organization that uses an accessible, consultative approach to standards-setting.

Labelling

  • A coating importer suggested that the Regulations include requirements for VOC concentrations or compliance to be marked on the container. This would allow consumers to select products with lower VOC concentrations, foster competition to produce low-VOC products and align Canadian labelling requirements with those in the United States. A chemicals manufacturer and importer questioned the relevance of the inclusion of information such as “For metal surfaces only” or “high gloss” on the labels.

Prior to pre-publication, a consistent request by industry was to keep labelling provisions simple. In addition, a consensus was reached between stakeholders and Environment Canada that the display of the VOC concentration would remain voluntary (see footnote 30). Consequently, the Regulations do not require that the VOC concentration be displayed on a coating’s container.

Category-specific labelling requirements (e.g. “For metal surfaces only” for rust preventive coatings) are consistent with U.S. requirement and are necessary to clearly justify the use of the category and discourage the marketing, sale and use of high-VOC coatings when a low-VOC coating category actually applies.

As a result, the labelling of the VOC concentration remains voluntary and the category-specific labelling provisions are retained in the Regulations. However, if a company voluntarily indicates the VOC concentration on the container (section 18), then the displayed VOC concentration must be calculated in accordance with section 12 of the Regulations.

Record keeping

  • Comments were received from two manufacturers and importers of coatings and chemicals, the CPCA, and NPCA, regarding the requirement to maintain all records in Canada. Companies claimed that, given the number of products that they import and the distribution of their places of business throughout the world, it would be too complicated to maintain all these records in Canada.

The record keeping provisions that were included in the proposed Regulations were aimed at achieving these purposes: specifying what the Enforcement Services of Environment Canada may require from the regulated companies, defining which records are most relevant for the regulated companies to maintain, and ensuring that should an investigation be necessary, Environment Canada’s enforcement officers have access to the necessary records within their jurisdiction.

Record keeping provisions have therefore been retained in the Regulations, but have been modified to specify the manufacture, import or sales data that must be kept, in Canada, for enforcement purposes. Given that the activities in question take place in Canada, Environment Canada expects that the associated information can be made available in Canada.

Other comments

  • A chemicals manufacturer and importer indicated that, in assessing the impact of the Regulations on air pollution, Environment Canada must take into consideration the scale of emission reductions expected from the Regulations, in comparison to the large naturally-occurring sources of VOC emissions.

The Government of Canada is taking action in a number of areas to reduce human-induced emissions of harmful air pollutants. In urban areas, the best way to reduce the formation of ground-level ozone is often through reductions in VOCs. Although VOC emission reductions expected from the Regulations represent about 1% of total VOC emissions, these reductions likely represent a higher portion in urban areas, and are therefore expected to have a more significant impact on ground-level ozone.

  • A chemicals manufacturer and importer recommended that Environment Canada review the interrelationships between its initiatives affecting coatings, e.g. the Regulations and the Chemicals Management Plan (CMP), in order to ensure that there are no conflicts between the different requirements facing industry.

Environment Canada already has internal mechanisms to track programs and their interrelationships, and avoid conflicts. Environment Canada makes an effort to maintain transparency on all initiatives and programs that can impact the public and industry.

Under CMP, a Paints and Coatings Working Group was formed, in collaboration with the CPCA, to allow an open and transparent dialogue between the paints and coatings sector and Government. This forum provides Environment Canada and Health Canada the opportunity to obtain additional information on CMP substances that are used in paints and coatings, beyond the information already provided in response to mandatory CEPA 1999 s.71 questionnaires released as part of CMP. The Paints and Coatings Working Group also provides a forum, enabling industry stakeholders to stay informed on issues and developments related to the CMP.

  • A chemicals manufacturer and importer recommended that Environment Canada review the overall impacts of these Regulations from a sustainability or life cycle perspective, to ensure that the use of compliant coatings does not result in more frequent re-coating, or reduced lifespan of the coated article, causing more VOC emissions and environmental damage in the longterm.

Several technical studies have been performed or contracted by CARB (see footnote 31), (see footnote 32), (see footnote 33) and SCAQMD (see footnote 34) for testing performance characteristics of major architectural coatings categories. All specifications defined by the industry in relation to the expected performance of each coating category were tested. Performance testing was carried out in laboratory-simulated accelerated weathering, as well as in ambient weathering conditions and covered diverse harsh climates. Studies found that the performance of VOC-compliant coatings did not vary significantly from the performance of non-compliant coatings.

Solvent and resin suppliers, and coating manufacturers, also regularly provide information indicating that the latest developments in VOC-compliant coatings often provide superior performance at decreased costs to end users because of their increased durability.

  • A coatings manufacturer and importer indicated that Environment Canada’s New Substance Notification process appears considerably more expensive and lengthy than its U.S. counterpart.

Environment Canada recognizes that Canadian and U.S. delivery times and fees for new substances notification differ according to the type of substance, the quantity to be imported or manufactured, intended use and other factors, but the order of magnitude of these differences is not large.

When a notification package is provided to the authorities, the assessment and addition of a substance to the Domestic Substances List (assuming the substance is not suspected of being toxic under CEPA, 1999) takes approximately six to seven months in Canada, while the equivalent process takes four to five months in the United States. The fees levied under the New Substances Fees Regulations (see footnote 35) (NSFR) may recover up to 22% of government costs. By comparison, the U.S. fees recover an estimated 25% of costs. When a new substance is to be imported or manufactured in Canada for research and development purposes, the notification is simplified and the fees do not apply.

  • Two coatings and chemicals manufacturers and importers, a federal department and a foreign government recommended that Environment Canada develop a working list of VOCs for architectural coatings, with associated CAS numbers.

Any list of VOCs would need to be referred to with caution — with thousands of VOC species in existence; any such list is unlikely to be comprehensive. Existing lists can include VOC species, but also different distillates, mixes and blends composed of several VOCs. Given this complexity, and the limited value of a non-comprehensive list, Environment Canada will not be creating a VOC list at this time.

A number of lists of VOCs are currently available. CARB provides a table with VOC ingredients in architectural coatings marketed in California and their associated CAS numbers in Chapter 10 of its 2005 Architectural Coatings Survey (see footnote 36).

  • The American Chemistry Council and a chemicals manufacturer and importer claimed that Canada could more effectively and efficiently reduce smog using a reactivity approach (i.e. based on the ozone-forming potential of each VOC), rather than by limiting the total VOC concentration of regulated coatings according to a mass-based approach.

As indicated in the Regulatory Impact Analysis Statement (RIAS) accompanying the proposed Regulations, and in the summary of consultations above, the VOC concentration limits were based on the OTC Model Rule requirements which set mass-based VOC concentration limits. VOC limits based on reactivity are not under consideration at this time for several reasons:

1. Not all industry representatives have been supportive of a reactivity-based approach, and no consensus yet exists among coating manufacturers;

2. More research needs to be done in developing a Canadian ozone-forming potential approach; and

3. A mass-based approach can achieve results now, while a reactivity-based approach would require significant additional research and analysis.

Environment Canada intends to follow the development of reactivity as a basis for setting limits on the ozone-forming potential of VOCs in architectural coatings, in the United States and in other parts of the world, and may give consideration to reactivity-based control measures in the future.

  • The NPCA claimed that prohibiting the manufacture and import on the same date gives an advantage to Canadian manufacturers, and is inconsistent with the goals of cooperative programs between Canada and the United States, namely Chapter 9 of NAFTA.

The timing of the prohibitions on manufacture and import is not expected to give an advantage to Canadian manufacturers. The schedule of effective dates was developed to enable all stakeholders, including manufacturers and importers, to make a full and cost-effective transition to compliant coating formulations. Where such a transition is not possible within the scheduled timeframe, due to technical or economic constraints, compliance mechanisms are available to manufacturers and importers alike.

With respect to consistency with international agreements, the Government of Canada takes into consideration all obligations during the development of regulatory instruments, and has done so for these Regulations.

  • A federal department user of architectural coatings requested that manufacturers and importers be required to report the VOC concentration on the material safety data sheet (MSDS) or on a supplementary technical sheet. Without this reporting, prior to the coming-into-force of the Regulations, this user may have difficulties searching for compliant alternatives when planning long-term orders.

Several studies have demonstrated that the performance of VOC-compliant coatings does not differ significantly from the performance of non-compliant coatings. As a result, users who contract their purchases of architectural coatings several years in advance can reasonably expect that their suppliers will continue to meet their durability and performance criteria and will notify them of any significant change in the coating’s characteristics that could impact the user. In addition, detailed VOC concentration labelling may have a more significant cost impact on manufacturers and importers. For these reasons, the Regulations do not require the reporting of VOC concentration on that MSDS or a supplementary technical sheet.

  • The CPCA and NPCA indicated that there was overlap in the descriptions of flat and non-flat coatings, and recommended that additional clarity be provided through changes to the description of non-flat coating.

Environment Canada agrees that additional clarity is necessary, and the description of a non-flat coating in the Regulations (item 52 in the Schedule) has therefore been revised, to clearly differentiate this category from the flat coating category (item 51).

Comments specific to the RIAS

One chemicals manufacturer and importer provided a number of comments pertaining specifically to the content of the RIAS.

  • The stakeholder indicated that the analysis should better reflect the evolution of the sector over the past few years, and questioned the volume of domestic manufacturing referred to in the RIAS.

The study, conducted using 2002 data, indicates that a significant volume of coatings used in Canada are manufactured in Canada. Using data between 2004 and 2006, there is evidence that domestic manufacturing has slowed, at least in Ontario, while manufacturing outside Ontario has been stable. Between 2002 and mid-2008, housing starts and economic growth in Canada have been robust, growth that would likely be reflected in increasing overall demand for architectural coatings (whether manufactured or imported). In the same period, the Canadian dollar appreciated substantially, making imported coatings relatively less expensive to Canadians. Taking all these factors into account, it is reasonable to assume that the Canadian share of domestic consumption has decreased, although data to specifically describe this transition is currently not available.

Environment Canada acknowledges that recent economic conditions have had — and continue to have — a significant impact on many Canadian businesses. Although the economic data pertaining to these conditions cannot be incorporated into the analysis above, Environment Canada has considered possible implications for regulatees. Given the broad range of flexibility mechanisms included with the Regulations, it is not expected that the Regulations will have a significant impact on the industry in the context of current economic conditions.

  • The stakeholder expressed concern that the full cost to consumers is not adequately reflected in the analysis.

As indicated in the RIAS, it was not possible to fully quantify the impact of the Regulations on consumers, due to uncertainty surrounding the ability of manufacturers to pass on incremental costs through higher prices. In addition, the RIAS acknowledges the potential for non-monetary impacts, although a full analysis of these was not possible. Given the increasing availability of compliant products in Canada and other jurisdictions, it is expected that, on balance, the impact on consumers will be limited to possible price changes. Performance impacts are expected to be minimal, given the proven performance of compliant coatings, and the changes to category-specific requirements that have been included in response to comments received following pre-publication.

  • The stakeholder expressed concern that the costs associated with traffic marking coatings are underestimated.

Environment Canada acknowledges that the full cost associated with the provisions for traffic market coatings have not been quantified and monetized in the analysis above. Environment Canada continues to work with traffic marking stakeholders to ensure that the Regulations do not result in undue impacts on this group. The published proposed Regulations included a prohibition date for the manufacture and import of these coatings three years following the coming-into-force date. The comments received from traffic marking stakeholders mainly requested an exemption for cold weather application which, as indicated above, has been introduced in the Regulations.

  • The stakeholder asked that an analysis be conducted to determine if the Regulations would result in some coatings being unavailable in the Canadian market.

Through extensive stakeholder consultations before and after the publication of the proposed Regulations, Environment Canada has worked to set concentration limits for each category that are technologically and economically feasible. Where stakeholder comments or other data showed feasibility issues with specific concentration limits, Environment Canada has sought to resolve these issues in consultation with industry. In addition, to address unforeseen reformulation problems, the Regulations introduce permit provisions so that, where there are technological or economic feasibility concerns, additional transition time can be provided by the Minister. Environment Canada expects that this approach is sufficiently flexible to both achieve significant reductions in VOC emissions from architectural coatings, while protecting manufacturers and consumers from unforeseen impacts.

  • The stakeholder stressed the importance of Canadian benefits data to a cost-benefit analysis.

Environment Canada agrees that fully quantified and monetized benefits data are an important component of a formal cost-benefit analysis. In the absence of such data, Environment Canada has used the best available data in Canada and internationally, to provide an assessment of benefits, as described in the analysis above.

Implementation, enforcement and service standards

Implementation

An intensive approach will be adopted by Environment Canada to ensure the effective and efficient implementation of the Regulations, following their publication in the Canada Gazette, Part II.

In the first six months after the coming into force of the Regulations, Environment Canada will organize internal/external Web posting, media advertisements, mail outs, and will attend industry meetings/conferences, in order to announce the Regulations and circulate compliance promotion information, to ensure that the regulated community is aware of the requirements of the Regulations. Working relationships have been established with industry and industry associations involved in the manufacture and import of architectural coatings. Environment Canada will work with these organizations to ensure that the appropriate information is available to the regulated community. As the regulated community becomes more familiar with the requirements of the Regulations, these activities are expected to decline to a maintenance level.

Enforcement

Since the Regulations would be made under CEPA 1999, enforcement officers will, when verifying compliance with the Regulations, apply the Compliance and Enforcement Policy for CEPA 1999. The policy sets out the range of possible responses to alleged violations: warnings, directions, environmental protection compliance orders, ticketing, ministerial orders, injunctions, prosecution, and environmental protection alternative measures (which are an alternative to a court trial after the laying of charges for a CEPA 1999 violation). In addition, the Policy explains when Environment Canada will resort to civil suits by the Crown for costs recovery.

When, following an inspection or an investigation, an enforcement officer discovers an alleged violation, the officer will choose the appropriate enforcement action based on the following factors:

  • Nature of the alleged violation: This includes consideration of the damage, the intent of the alleged violator, whether it is a repeat violation, and whether an attempt has been made to conceal information or otherwise subvert the objectives and requirements of the Act.
  • Effectiveness in achieving the desired result with the alleged violator: The desired result is compliance within the shortest possible time and with no further repetition of the violation. Factors to be considered include the alleged violator’s history of compliance with the Act, willingness to cooperate with enforcement officers, and evidence of corrective action already taken.
  • Consistency: Enforcement officers will consider how similar situations have been handled in determining the measures to be taken to enforce the Act.

Service Standards

The Regulations include provisions to allow the manufacture and import of coatings that exceed the applicable VOC limit through permits. Environment Canada will not be charging application fees to the applicants. Permit applications will be reviewed by Environment Canada, and the administrative procedure (including issuance of the permit) will take up to 30 working days. Environment Canada will make every effort to process the permit applications quickly. The administrative process will include the following:

  • permit applications are stamped with the date on which they are received;
  • applications are reviewed to ensure all necessary and required information has been provided; and
  • follow-up with the companies to inform them that permit applications have been received and to request additional information if needed.

Compliance with the service standards for processing permit applications will be monitored and evaluated as part of the regulatory evaluation.

Implementation, compliance promotion, enforcement, performance measurement and evaluation activities will be resourced under existing resource capacity and allocated accordingly within the existing departmental reference level.

Performance measurement and evaluation plan

The Regulations have been developed to improve air quality, and protect the environment and human health from the risks posed by air pollution. After all elements of the Regulations come into effect, it is expected that annual VOC emissions from architectural coatings will be 28% lower than they would be without the Regulations. In the longer term and in combination with other consumer and commercial product regulatory programs, the Regulations will result in reductions of VOC emissions and the consequent environmental and health benefits. In addition to meeting Canadian environment and health objectives, the Regulations also contribute towards Canada’s international commitments under the Ozone Annex.

The reduction in VOC emissions contributes directly to Environment Canada’s strategic objective and is aligned with various Government of Canada regulatory initiatives under CARA, as described in the Regulatory Framework. Development of the Regulations will therefore be evaluated as part of the evaluation of CARA. An evaluation plan for CARA was developed in fiscal year 2008–2009, with the evaluation scheduled for completion in 2009–2010. Follow-up evaluations for the regulatory initiatives within the consumer and commercial products program, including the Regulations, will be considered as part of the department’s risk-based evaluation planning cycle.

Through its enforcement activities, Environment Canada will be in a position to assess the extent to which VOC emission reductions from architectural coatings have been achieved after the coming into force of the Regulations. Information gathered from sources, including regulatory reporting and permits, as well as the results of monitoring or sampling, will provide the performance information necessary to measure progress towards the objectives, and the effectiveness of the Regulations. The performance information collected for the Regulations will be summarized and reported within three years of the effective dates of the Regulations.

The progress, performance and overall effectiveness of individual regulatory initiatives under the consumer and commercial products program will be reported on through a variety of means, including the annual report for CEPA 1999 and Departmental Performance Reports.

Contacts

Martin Jeanson
Senior Program Engineer
Products Division
Environment Canada
Gatineau, Quebec
K1A 0H3
Telephone: 819-997-7935
Fax: 819-953-3132
Email: martin.jeanson@ec.gc.ca

Markes Cormier
Senior Economist
Regulatory Analysis & Instrument Choice Division
Environment Canada
Gatineau, Quebec
K1A 0H3
Telephone: 819-953-5236
Fax: 819-997-2769
Email: markes.cormier@ec.gc.ca

Footnote a
S.C. 2004, c. 15, s. 31

Footnote b
S.C. 1999, c. 33

Footnote c
S.C. 2002, c. 7, s. 124

Footnote d
S.C. 1999, c. 33

Footnote 1
www.ec.gc.ca/doc/media/m_124/report_eng.pdf

Footnote 2
Chemical reaction activated by sunlight.

Footnote 3
Krewski, D.; Burnett, R.; Jerrett, M.; Pope, C. A.; Rainham, D.; Calle, E.; Thurston, G., and Thun, M. “Mortality and long-term exposure to ambient air pollution: ongoing analyses based on the American Cancer Society cohort.” J Toxicol Environ Health A. 2005 Jul 9-2005 Jul 23; 68(13-14):1093-109 and emergency room visits.

Footnote 4
Krewski, D.; Burnett, R. T.; Goldberg, M.; Hoover, K.; Siemiatycki, J.; Abrahamowicz, M.; Villeneuve, P. J., and White, W. “Reanalysis of the Harvard Six Cities Study, part II: sensitivity analysis.” Inhal Toxicol. 2005 Jun-2005 Jul 31; 17(7-8):343-53

Footnote 5
U.S. Environmental Protection Agency, Fact Sheet, EPA’s Revised Ozone Standard, July 17, 1997 (http://www.epa.gov/ttn/oarpg/naaqsfin/o3fact.html)

Footnote 6
www.ec.gc.ca/doc/media/m_124/report_eng.pdf

Footnote 7
www.ec.gc.ca/pdb/cac/Emissions1990-2015/EmissionsSummaries/VOC_e.cfm.

Footnote 8
Environment Canada and Health Canada (2000), Priority Substances List Assessment Report: Respirable Particulate Matter Less than or Equal to 10 Microns (www.ec.gc.ca/substances/ese/eng/psap/final/PM-10.cfm).

Footnote 9
Health Canada and Environment Canada (1999), National Ambient Air Quality Objectives for Ground-Level Ozone — Summary: Science Assessment Document (www.hc-sc.gc.ca/ewh-semt/pubs/air/naaqo-onqaa/ground_level_ozone_tropospherique/index-eng.php).

Footnote 10
As per section 64 of CEPA, VOCs were found to be toxic as they were entering the environment in a quantity or concentration, or under conditions that (a) have or may have an immediate or long-term harmful effect on the environment or its biological diversity, and (c) constitute a danger in Canada to human life or health.

Footnote 11
www.canadagazette.gc.ca/partII/2003/20030702/html/sor229-e.html

Footnote 12
www.ec.gc.ca/nopp/DOCS/notices/voc/en/index.cfm

Footnote 13
www.ec.gc.ca/Ceparegistry/documents/notices/g1-14042_n1.pdf

Footnote 14
http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=
6a92a7c05f08fae1c5d0fda4bb8e3570&rgn=div5&view=text&node=40:5.0.1.1.7&idno=40

Footnote 15
In 2003, Environment Canada commissioned a study of the paint and coating sector using 2002 data. This analysis has been supplemented with a cost study and economic study conducted in 2005. Cheminfo Services Inc., “Background Economic Study of the Architectural and Industrial Maintenance (AIM) Coatings Sector”, February 2005.

Footnote 16
Ibid.

Footnote 17
Ibid.

Footnote 18
See background on Environment Canada’s web pages on related VOC initiatives at www.ec.gc.ca/nopp/voc/en/secAIM.cfm.

Footnote 19
Since the Regulations are expected to come into force in mid-2009, the period of analysis begins in mid-2010. The 25-year period therefore concludes mid-2035.

Footnote 20
Cheminfo Services Inc., “Background Economic Study of the Architectural and Industrial Maintenance (AIM) Coatings Sector”, February 2005

Footnote 21
Statistics Canada, CANSIM Table 301-0006

Footnote 22
For each year analysed, dividing the projected total emissions under the proposed Regulations by the projected baseline emissions yields the annual reduction in emissions.

Footnote 23
U.S. EPA, “Marginal Damage Estimates for Air Pollutants,” original source: Federal Purchasing Categories Ranked by Upstream Environmental Burden: An Input/Output Screening Analysis of Federal Purchasing, 1998.

Footnote 24
All values in 2006 Canadian dollars per metric tonne.

Footnote 25
U.S. Office of Management and Budget: “Informing Regulatory Decisions: 2004 Draft Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities,” December 2004, p. 34.

Footnote 26
European Union, “The Costs and Benefits of the Reduction of Volatile Organic Compounds from Paints, Final Draft,” 2 May 2002.

Footnote 27
All values in 2006 Canadian dollars per metric tonne.

Footnote 28
Currently, volatile organic compounds that participate in atmospheric photochemical reactions are considered VOCs, with the exception of compounds listed in item 65 of Schedule 1 of CEPA 1999. Therefore, compounds are not rated by their potential for ground level O3 formation. Reactivity-based methods theoretically could allow the replacement of high-reactivity index VOCs with low-reactivity index VOCs and still obtain significant reductions of ground level O3 and smog.

Footnote 29
The working group members include representatives from the paint and coatings sector, provinces, municipalities, private application contractors, the Transportation Association of Canada and environmental non-governmental organizations.

Footnote 30
See the rationale for simplified labelling requirements provided under Implications of container labelling provisions in the summary of stakeholder comments and concerns received prior to the pre-publication of the proposed Regulations in the Canada Gazette, Part I.

Footnote 31
www.arb.ca.gov/coatings/arch/sreport/vol2-6a.htm

Footnote 32
www.arb.ca.gov/research/apr/past/statnry.htm#Coatings

Footnote 33
www.arb.ca.gov/coatings/arch/NTS_Summary.pdf

Footnote 34
www.aqmd.gov/hb/2002/020723a.html

Footnote 35
More information on the NSFR and related information are available on the Internet, including information on the New Substance Notification process, the associated benefits and costs, and the supporting rationale. www.ec.gc.ca/substances/nsb/eng/cp_acts_regs_e.shtml.

Footnote 36
www.arb.ca.gov/coatings/arch/survey/2005/2005survey.htm