Canada Gazette, Part I, Volume 151, Number 42: Regulations Amending the Hazardous Products Regulations

October 21, 2017

Statutory authority

Hazardous Products Act

Sponsoring department

Department of Health

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

Health Canada is responsible for the administration and enforcement of the Hazardous Products Act (HPA) and its regulations. The purpose of the HPA is to protect the health and safety of Canadians by regulating the sale and import of hazardous products for use in the workplace.

Safety data sheets (SDSs), which accompany hazardous products sold or imported for use in Canadian workplaces, must disclose the concentrations or concentration ranges of the ingredients in a product that present health hazards in accordance with the Hazardous Products Regulations (HPR). This information could be considered confidential business information (CBI) to industry. CBI for workplace hazardous products can be protected by filing an application with Health Canada under the Hazardous Materials Information Review Act (HMIRA) and paying the associated fee.

Regulated parties have proposed that they should have a means to protect the concentrations or concentration ranges of ingredients without having the burden and cost of the HMIRA application process. The proposal from industry has been discussed with other stakeholders and has received some support. Further feedback is sought through this publication.

Background

The Workplace Hazardous Materials Information System (WHMIS), Canada's national hazard communication standard, came into effect on October 31, 1988. It represents tripartite consensus between regulators, industry and organized labour. It is implemented through coordinated federal, provincial and territorial (FPT) legislation using an integrated approach that avoids duplication, inefficiency, and the potential for interprovincial trade barriers by allowing the application of a single consistent hazard communication system nationwide. WHMIS is supported by the Current Issues Committee (CIC), which includes representatives of FPT regulators, suppliers, employers and organized labour. The HPA requires consultation with these representatives prior to making or amending regulations under the HPA; therefore, the CIC is the mechanism by which discussions on industry's proposal on prescribed concentration ranges have been undertaken thus far.

On February 11, 2015, the HPR came into force and the Controlled Products Regulations (CPR) were repealed. This fulfilled a commitment under the Canada–United States Regulatory Cooperation Council (RCC) to implement the Globally Harmonized System (GHS) for the classification and labelling of chemicals in Canada without reducing the level of safety or protection for workers. This modified WHMIS is referred to as WHMIS 2015.

Regulated parties are currently in transition from the old WHMIS to WHMIS 2015. The phases of transition were set up in such a way as to allow three steps to occur in sequence. Currently, all suppliers have the option of complying with the repealed CPR or the HPR. Manufacturers and importers (those responsible for bringing products to the Canadian market) must comply with the HPR by June 1, 2018, then distributors (those responsible for reselling products on the Canadian market) must comply with the HPR by September 1, 2018. Following this, there was national agreement among all FPT jurisdictions that the final stage of transition, which allows for updating of existing information in the workplace by employers, would be completed by December 1, 2018. This final transition deadline is set by the FPT jurisdictions responsible for occupational health and safety, not by Health Canada.

Industry representatives informed Health Canada officials that under the old CPR, some companies protected their CBI ingredient concentrations by disclosing prescribed concentration ranges rather than using the CBI protection mechanism provided by the HMIRA. Prescribed concentration ranges were generic ranges set out in the repealed CPR that companies could use when the concentration of an ingredient varied from batch to batch in the manufacturing of a product. The concentration ranges prescribed in the CPR were not retained in the HPR. Instead, the HPR require the actual concentrations or concentration ranges of ingredients that present health hazards to be disclosed. In order to protect the concentrations or concentration ranges of ingredients, industry must use the CBI protection mechanism provided by the HMIRA. Therefore, the protection of actual concentrations of ingredients that used to be possible by using the prescribed ranges in the CPR is now only possible by submitting an application and fee under the HMIRA. This means that the number of filings Health Canada receives will increase.

Industry representatives have estimated that thousands of claims will need to be filed under the HMIRA in order to protect the concentrations or concentration ranges of ingredients as CBI when they transition to HPR compliance, and that these filings would cost millions of dollars. They have stated that the HMIRA requirements for CBI protection in Canada would result in increased compliance costs compared to the United States.

Alignment of the mechanisms to protect CBI in Canada and the United States was outside the scope of the RCC commitment. In the United States, as in Canada, companies are required to identify on product labels and SDSs when information is withheld due to a CBI claim. However, unlike in Canada, the United States approach allows suppliers to self-declare information as CBI, with no application or verification process by the United States Occupational Health and Safety Administration. There is no fee related to verification of CBI claims in the United States. In Canada, there is a fee associated with the Health Canada review of CBI applications.

Currently, all suppliers have the option of complying with either the CPR or the HPR. However, in order to protect ingredient concentrations or concentration ranges as CBI once suppliers transition to compliance with the HPR, they would have to use the mechanism provided by the HMIRA. Since manufacturers and importers of hazardous products are required to comply with the HPR by June 1, 2018, they would have to submit any CBI claims before that date.

In order to avoid the burden of protecting CBI under the HMIRA, industry stakeholders have proposed that prescribed concentration ranges could be permitted in the HPR and used to replace the actual concentrations and concentration ranges of ingredients rather than having to use the HMIRA to protect CBI. Their proposal would allow the supplier to choose whether to disclose the actual concentration or concentration range of the ingredient or to make use of the prescribed concentration ranges. As under the old WHMIS, suppliers would continue to have the option to submit HMIRA claims to protect ingredient names or concentrations but, given this option of using prescribed concentrations, it is not expected that the number of filings Health Canada receives under the HMIRA would increase.

Objectives

The objective of this amendment of the HPR is to provide industry with the option to use prescribed concentration ranges rather than actual chemical ingredient concentrations or concentration ranges on SDSs for hazardous workplace products in Canada rather than requiring CBI applications under the HMIRA.

Description

The amendment allows the use of prescribed concentration ranges to protect ingredient concentrations and concentration ranges that are considered CBI without having to submit claims for exemption under the HMIRA. These prescribed concentration ranges will be spelled out directly in the HPR. The concentrations and concentration ranges of ingredients in the product that present a health hazard could be disclosed on the SDS as either

the actual concentration or actual concentration range of the material or substance in the hazardous product; or
one of the following prescribed concentration ranges within which the actual concentration or actual concentration range of the material or substance in the hazardous product falls:
- (a) from 0.1 to 1%;
- (b) from 0.5 to 1.5%;
- (c) from 1 to 5%;
- (d) from 3 to 7%;
- (e) from 5 to 10%;
- (f) from 7 to 13%;
- (g) from 10 to 30%;
- (h) from 15 to 40%;
- (i) from 30 to 60%;
- (j) from 45 to 70%;
- (k) from 60 to 80%;
- (l) from 65 to 85%; and
- (m) from 80 to 100%.

In addition, if the actual concentration range falls between 0.1 and 30% and does not fit entirely into one of the prescribed concentration ranges of (a) to (g), a single range created by the combination of up to three applicable consecutive ranges between (a) and (g) could be disclosed instead, provided that the combined concentration range does not include any range that falls entirely outside the actual concentration range in which the ingredient is present in the hazardous product.

The amendment would also require any supplier who uses a prescribed concentration range to protect from disclosure the actual concentration or concentration range to provide immediately following that prescribed range a statement to the effect that the actual concentration or concentration range is withheld as a trade secret.

“One-for-One” Rule

The “One-for-One” Rule does not apply, as the amendment does not contain requirements that would place an administrative burden on industry.

Small business lens

The small business lens does not apply, as there are no costs to small business.

Consultation

The proposal to use prescribed concentration ranges was discussed by CIC representatives in late 2016 and early 2017. There was general agreement that the use of prescribed concentration ranges might be acceptable to all parties. However, additional issues raised by labour representatives relating to the protection of ingredients that are carcinogens, mutagens, reproductive toxins and respiratory sensitizers (CMRs) as CBI and to the protection of product sectors excluded from WHMIS (e.g. consumer products and manufactured articles) remain under discussion.

Specifically, labour representatives expressed concerns that CMRs should not be eligible for CBI protection because the risks associated with these substances are too great to have their identities concealed. However, it is important to note that under WHMIS 2015, all health hazards will still be indicated on the label (and this includes CMRs) and labels will also have updated pictograms, which are expected to improve hazard communication. With respect to the excluded product sectors, there are 12 product sectors that have always been excluded from WHMIS requirements in the HPA, the majority of which are already regulated under other acts. However, labour representatives are continuing to call for the removal of all exclusions in the HPA because of the risk that they potentially present to workers, who view these exclusions as undermining their right to know.

Given that both of these concerns are outside the scope of the issue addressed by this regulatory amendment, they are not discussed further in this document. Health Canada has, however, committed to working with stakeholders going forward to examine these additional concerns in more detail.

Labour representatives have expressed concerns that if the use of prescribed concentration ranges is allowed, the level of worker protection may be reduced because, unlike the HMIRA application process, there would be no independent review by Health Canada of the SDSs and labels. Health Canada is of the opinion that the use of prescribed concentration ranges would offer the same level of protection as under the former CPR and that a risk-based compliance and enforcement program is a more strategic approach to identifying and correcting non-compliant SDSs and labels. Furthermore, actual concentrations or concentration ranges of ingredients are unlikely to have been provided on the SDSs of products where companies wanted to protect this information from disclosure, as either the companies did not make the change to the new requirement under the HPR or they filed applications under the HMIRA. Therefore, there is unlikely to be any change in precision of the information being provided with respect to concentrations for products for which the concentration is protected. It was also suggested that the use of prescribed concentration ranges for CBI purposes should be identified through a statement on the SDS; this was supported by all stakeholders.

Industry stakeholders strongly support the proposal, since implementing the use of prescribed concentration ranges would offer significant cost savings. Industry has actively sought support for the amendment from Health Canada, Innovation, Science and Economic Development Canada, and the Canada–United States RCC Secretariat.

Representatives from provincial and territorial governments responsible for the regulation of occupational health and safety, as well as the federal Labour Program at Employment and Social Development Canada, elected not to participate in the detailed discussions because they were all in agreement with the proposal. Employers also elected not to participate, as they are not directly subject to the requirements of the HPR and must instead meet the regulatory requirements set out by the provincial or territorial governments or by Employment and Social Development Canada in the case of federally regulated workplaces.

To provide sufficient time to work with stakeholders to address the issue of CBI protection identified by industry, while taking into consideration possible ways to address the concerns raised by labour representatives relating to excluded product sectors and CMRs, an order in council has granted an extended deadline of June 1, 2018, to manufacturers and importers to finalize their transition to the HPR. (see footnote 1)

Rationale

Regulated parties have proposed that they should have a means to protect the concentration or concentration range of ingredients without having to carry the burden and cost of the application process under the HMIRA. Health Canada agrees that enabling the use of prescribed concentration ranges would improve alignment with the United States and would offer the same level of protection as under the former CPR while reducing the potential administrative burden on both industry and the Department.

Benefits

By combining reports from several industry associations, Health Canada has estimated that thousands of new products will require a trade secret exemption prior to the transition to the HPR to protect ingredient concentrations and concentration ranges previously protected by prescribed concentration ranges under the CPR.

In Canada, the filing fee associated with applications for CBI exemption is between Can$200 and Can$1,800 depending on volume discounts. This fee schedule is detailed in sections 4, 5, and 7 to the Hazardous Materials Information Review Regulations (HMIRR). The American Coatings Association and the Canadian Paint and Coatings Association have reported that to comply with the concentration disclosure requirement of the HPR, their members project application costs of between US$2 million and US$6 million. The American Chemistry Council (ACC) has reported that one of their members requires 2 800 new claims, which will cost over US$5 million, while another member requires 1 000 new claims totalling US$6 million. Based on estimates from 7 of their 35 member companies, the Canadian Consumer Specialty Products Association (CCSPA) has reported an impact exceeding Can$12 million for application fees for over 6 000 products alone. These estimates suggest that 10 000 new claims could be submitted. Health Canada has no way of verifying this information, but assumes that there is the possibility for duplication among companies that are represented by multiple associations and that the estimate is likely high for this reason.

The proposed regulatory amendment would also benefit industry, as companies would no longer have to dedicate work hours to prepare the submissions, as well as respond to the proposed and final decisions. Industry submissions did mention the burden that would result from the increased work, but most did not quantify its impact. One ACC member who provided a cost impact of US$2.1 million reported that they would require an additional six full-time employees (FTEs) to comply with the HMIRA requirements. If a majority of companies require additional hires to process the new claims by the transition deadline, this cost to industry would also be significant.

Health Canada estimates that the CBI registration fees for industry to file the estimated 10 000 new claims prior to June 2018 could range from Can$2 million to Can$18 million. The large span of this estimate is due to the potential for the application of volume discounts. The fees for claim registration include a high of $1,800 per claim for the first 15 filed, drops considerably to $400 for the next 10 claims filed in the same submission, and to $200 for each claim beyond the 25th that is filed in the same submission. The $2 million estimate is based on one company submitting all 10 000 claims in a single submission, in which case most of the claims (9 975) would be registered at the lowest discount rate. The $18 million estimate is calculated based on the assumption that each claim would be submitted separately at the highest rate of $1,800 per claim.

Further, based on the Statistics Canada average labour and overhead cost estimates for natural and applied science employees of $41.59/hour and the estimate that the preparation of a single claim application requires 1 to 2 hours of work, multiplied by the industry estimate of 10 000 claims, the cost to prepare the applications can be estimated to be between $400,000 and $800,000, depending on the time required for information gathering and form completion. This estimate assumes there are no additional reductions in resource requirements for submitting claim applications in batches as opposed to individually.

The total potential cost to industry ranges therefore from $2.4 million to $18.8 million. It is important to note, however, that considering the variability of claim estimates provided by industry, which represent only a sample of regulated companies, and with no way of predicting how many new claims would need to be filed, the total financial benefit to industry arising from the avoidance of the HMIRA registration application process is difficult to quantify. It is clear, however, that these costs are significant and that avoiding them would save industry millions of dollars with no anticipated impact on worker protection.

The majority of reported estimates were based solely on the cost of new applications to protect from disclosure a concentration or concentration range; however, some stakeholders also mentioned refiling costs without quantifying them. Claims for exemption under the HMIRA expire three years after they are granted, and applications must be refiled to maintain the CBI protection. Refiling costs are discounted relative to new filings and range from Can$160 to Can$1,400. The reoccurring refiling fee for thousands of new products would therefore also represent a substantial avoided cost to industry when projected over a 10-year period.

In 2016–17, Health Canada received 1 302 claims, an almost fourfold increase over the average number of CBI registrations filed per year over each of the previous five fiscal years (average of 348 claims per year). This resulted in total revenues of $1.3 million in 2016–17. This increase in the number of claims is believed to be due to suppliers preparing for compliance with WHMIS 2015, including concentration disclosure requirements. This increase represents only part of a potential influx of thousands of new claims by the transition deadline. Assuming an estimate of 10 000 anticipated new claims, the influx would approximately equal the total number of claims filed under the HMIRA since its inception in 1988, almost 30 years ago. Even setting aside the uncertainty in industry's estimate of 10 000 new claims, the fourfold increase that was witnessed in 2016–17 is an indication of a substantial increase in the number of claims that can be expected under WHMIS 2015.

The average cost to Health Canada to process one claim has changed in recent years for two reasons. First, work output has increased as a result of improved technologies such as electronic submissions and a program restructuring. Second, claim processing times have increased due to the learning curve associated with new regulations; as staff become more familiar with the HPR, claim processing times will decrease. Nonetheless, the average cost to Health Canada to process a claim has ranged from Can$4,200 to Can$14,000 (see footnote 2) in recent years.

Multiplying the cost per claim by the number of anticipated new claims provides an estimate of cost savings to Health Canada that range between Can$4.2 million and Can$14 million. This estimate does not incorporate the substantial cost of reassessing these claims once refiled upon expiry, or any additional investments, such as overtime or additional staff that may be required by Health Canada to address a backlog resulting from a large influx of claims by the HPR transition deadline. In conclusion, the cost to Health Canada to process these claims is significant and, if avoided, would save Health Canada millions of dollars.

Costs

The cost to industry of the proposed amendment is expected to be zero, because this is a relieving amendment that adds an option to use a prescribed concentration range rather than imposing any new regulatory requirements.

Contact

Ms. Julie Calendino
Manager
Regulatory and Compliance and Enforcement Division
Health Canada
269 Laurier Avenue West, 8th Floor
Ottawa, Ontario
K1A 0K9
Email: julie.calendino@hc-sc.gc.ca
Telephone: 613-952-5208
Fax: 613-952-2551

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council, pursuant to subsection 15(1) (see footnote a) of the Hazardous Products Act (see footnote b), proposes to make the annexed Regulations Amending the Hazardous Products Regulations.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Julie Calendino, Workplace Hazardous Materials Bureau, Consumer Product Safety Directorate, Department of Health, Address Locator 4908B, 269 Laurier Ave. West, 8th Floor, Ottawa, Ontario K1A 0K9 (tel.: 1-855-407-2665; fax: 613-993-5016; email: whmis_ simdut@hc-sc.gc.ca).

Ottawa, October 5, 2017

Jurica Čapkun
Assistant Clerk of the Privy Council

Regulations Amending the Hazardous Products Regulations

Amendment

1 Section 4.5 of the Hazardous Products Regulations (see footnote 3) is replaced by the following:

Concentration range — material or substance always present at the same concentration

4.4.1 (1) If the concentration of a material or substance in a hazardous product is required to be provided on a safety data sheet and the material or substance is always present at the same concentration, the safety data sheet must provide

(a) the actual concentration of the material or substance in the hazardous product; or
(b) one of the concentration ranges set out in subsection (3) within which the actual concentration of the material or substance in the hazardous product falls.

Actual concentration within more than one concentration range

(2) For the purpose of paragraph (1)(b), if the actual concentration of a material or substance in a hazardous product falls within more than one of the concentration ranges set out in subsection (3), any one of those ranges may be provided on the safety data sheet.

Concentration ranges

(3) For the purposes of paragraph (1)(b) and subsection (2), the concentration ranges are the following:

(a) from 0.1 to 1%;
(b) from 0.5 to 1.5%;
(c) from 1 to 5%;
(d) from 3 to 7%;
(e) from 5 to 10%;
(f) from 7 to 13%;
(g) from 10 to 30%;
(h) from 15 to 40%;
(i) from 30 to 60%;
(j) from 45 to 70%;
(k) from 60 to 80%;
(l) from 65 to 85%; and
(m) from 80 to 100%.

Statement — trade secret

(4) If the safety data sheet provides a concentration range further to paragraph (1)(b), it must also provide, immediately following the concentration range, a statement to the effect that the actual concentration is withheld as a trade secret.

Concentration range — material or substance not always present at the same concentration

4.5 (1) If the concentration of a material or substance in a hazardous product is required to be provided on a safety data sheet and the material or substance is not always present at the same concentration, the safety data sheet must provide

(a) the actual concentration range of the material or substance in the hazardous product;
(b) one of the concentration ranges set out in subsection (3) within which the actual concentration range of the material or substance in the hazardous product falls entirely; or
(c) if the actual concentration range of the material or substance in the hazardous product is equal to or greater than 0.1% but less than or equal to 30%, and the actual concentration range does not fall entirely within any of the concentration ranges set out in subsection (3), a concentration range that is created by combining up to three consecutive ranges from those set out in paragraphs (3)(a) to (g), provided that the combined concentration range does not include any range that falls entirely outside the actual concentration range in which the material or substance is present in the hazardous product.

Actual concentration range within more than one concentration range

(2) For the purposes of paragraph (1)(b), if the actual concentration range of a material or substance in a hazardous product falls entirely within more than one of the concentration ranges set out in subsection (3), any one of those ranges may be provided on the safety data sheet.