Canada Gazette, Part I, Volume 152, Number 13: Regulations Amending the Contaminated Fuel Regulations

March 31, 2018

Statutory authority

Canadian Environmental Protection Act, 1999

Sponsoring departments

Department of the Environment
Department of Health

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

Canada is bound by the World Trade Organization (WTO) Agreement on Trade Facilitation (the Agreement), which modernizes and simplifies customs and border procedures for all WTO members. Legislative amendments were made to the Canadian Environmental Protection Act, 1999 (CEPA) under Bill C-13 in December 2016 to enable Canada to ratify the Agreement. The proposed Regulations Amending the Contaminated Fuel Regulations (the proposed amendments) would be consistent with Canada's international obligations under the Agreement.

Background

The Agreement came into force on February 22, 2017. The Agreement is the first multilateral treaty to emerge from the WTO since its creation, reinforcing the important role of the WTO as a negotiating forum for global trade rules. The Agreement limits the ability of a WTO member to apply technical regulations to goods moving through its territory from a point outside its territory to another foreign point (i.e. goods in transit).

The Contaminated Fuel Regulations (the Regulations) prohibit the import and export of fuels mixed with toxic substances, with exemptions to imports for the purpose of destruction, disposal and recycling.^{footnote 1} The Regulations also exempt exports to countries that have authorized or permitted the importation of the fuel. These Regulations would likely constitute a "technical regulation" as defined under the WTO Agreement on Technical Barriers to Trade, because they apply to an identifiable product and they clearly outline the product's characteristics. Unlike other fuel quality regulations under CEPA, the Regulations do not have an exemption for contaminated fuel in transit.^{footnote 2}

The import and export of contaminated fuels have been prohibited in Canada since 1991 under the Regulations. The initial action to prohibit the import and export of contaminated fuels was in response to a select few cases in the late 1990s where fuel containing hazardous waste, such as polychlorinated biphenyls, heavy metals, sulphur, and phosphate, was imported into Canada.^{footnote 3} These shipments were bought at relatively cheap prices and resold to Canadians at market price. The objective of the Regulations was to prevent the sale or illegal disposal of contaminated fuels in Canada. This activity ceased after the Regulations came into force.

Objectives

The objective of the proposed amendments is to ensure that Canada is consistent in its international obligations under the Agreement.

Description

The proposed amendments would exempt contaminated fuels in transit from the prohibition on imports and exports of contaminated fuels. The proposed amendments would add subsection (3) to section 4 of the Regulations stating that "A person does not contravene section 3 if the contaminated fuel is in transit through Canada, from a place outside Canada to another place outside Canada, and there is written evidence establishing that the fuel is in transit."

"One-for-One" Rule

The "One-for-One" Rule would not apply to the proposed amendments as they are not expected to impact any stakeholders.

Small business lens

The small business lens would not apply to the proposed amendments as they are not expected to impact any stakeholders.

Consultation

The Department of the Environment surveyed potential stakeholders in March 2017. As a result, eight stakeholders from the hazardous waste handling sector in Canada reported handling contaminated fuels. Stakeholders did not note any uses for contaminated fuels outside of disposal, destruction or recycling. Seven of the eight stakeholders who reported handling contaminated fuels as hazardous waste in Canada stated that the proposed amendments would not impact their businesses. The remaining stakeholder was unsure whether the proposed amendments would increase the volume of contaminated fuels transported by the company.

A 75-day public comment period will follow the publication of the proposed amendments in the Canada Gazette, Part I. All comments will be taken into consideration before the proposed amendments are finalized.

Rationale

The Agreement, ratified by Canada in 2016, limits the ability of WTO members to apply technical regulations to goods in transit. The Agreement is intended to benefit Canada and other signatories by lowering trade costs and increasing exports. The proposed amendments would exempt contaminated fuels in transit through Canada from the prohibition under the Regulations, which would ensure that Canada is consistent in its international obligations under the Agreement.

By exempting contaminated fuels in transit from the prohibition on imports and exports of contaminated fuels, the proposed amendments would increase Canada's regulatory compatibility with the United States and the European Union. Fuels contaminated with hazardous substances are subject to separate regulations made by the United States and the European Union regarding transboundary movements of hazardous waste. These regulations allow for the transit of fuels contaminated with hazardous substances across the United States and European Union territories.

In Canada, while there is no general prohibition against the use of contaminated fuels, the Department of the Environment regulates the levels of certain contaminants such as sulphur, phosphorus, and lead that may be legally present in some fuels. The manufacture, export, import, sale, processing and use of fuels contaminated with polychlorinated biphenyls are prohibited under the PCB Regulations. Many other international jurisdictions actively regulate fuel quality standards as well, so the likelihood of contaminated fuels being valuable, usable fuels is expected to be very low.

Although the proposed amendments could theoretically increase the traffic of contaminated fuels, which could increase the risk of spills, such an increase in traffic is not expected. Stakeholders have noted the high cost of transporting contaminated fuels in Canada, and under the proposed amendments, the transit of contaminated fuels would likely only occur if Canada were along the shortest route to the final destination for the contaminated fuels. Thus, the risk of increased traffic and any associated increased risk of spills are expected to be minimal. The proposed amendments are not expected to impact stakeholders, and additional costs to businesses or government are not expected.

Existing regulations address risks associated with the transport of flammable liquids, toxic substances, and hazardous wastes and recyclable materials. These regulations would apply to contaminated fuels in transit and serve to mitigate environmental risks associated with transport.

Federally, contaminated fuels being transported in Canada, including those in transit, are captured under the Transportation of Dangerous Goods Act, 1992 (TDGA) under the classes of flammable liquids or toxic substances. Some requirements of the Transportation of Dangerous Goods Regulations under the TDGA for flammable liquids and toxic substances include that the materials in transit be properly labelled for their hazards and class, abide by containment standards, not exceed applicable limits of maximum quantity transported, and have an approved emergency response assistance plan.^{footnote 4} The TDGA classes for flammable liquids and toxic substances that are wastes or recyclable material are also regulated under the Export and Import of Hazardous Waste and Hazardous Recyclable Material Regulations under CEPA. These Regulations require that the carriers have a transit permit and liability insurance during the transit in Canada that includes the cost of environmental cleanups in case any materials are released. The Regulations also require carriers to have movement documents detailing the types and amounts of materials being shipped as well as the disposal or recycling plan for the waste materials.

The transportation, disposal, destruction and recycling of contaminated fuels are also managed under provincial regulations. Therefore, the negative environmental risks of the proposed amendments are expected to be low.

Contacts

PROPOSED REGULATORY TEXT

Notice is given, pursuant to subsection 332(1)^{footnote a} of the Canadian Environmental Protection Act, 1999^{footnote b}, that the Governor in Council, on the recommendation of the Minister of the Environment and the Minister of Health, pursuant to subsection 93(1) of that Act, proposes to make the annexed Regulations Amending the Contaminated Fuel Regulations.

Any person may, within 75 days after the date of publication of this notice, file with the Minister of the Environment comments with respect to the proposed Regulations or, within 60 days after the date of publication of this notice, file with that Minister a notice of objection requesting that a board of review be established under section 333 of that Act and stating the reasons for the objection. All comments and notices must cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to the Executive Director, Oil, Gas and Alternative Energy Division, Environmental Protection Branch, Department of the Environment, 351 Saint-Joseph Blvd, Gatineau, Quebec K1A 0H3 (email: ec.carburants-fuels.ec@canada.ca).

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

Ottawa, March 22, 2018

Jurica Čapkun
Assistant Clerk of the Privy Council

Regulations Amending the Contaminated Fuel Regulations

Amendments

1 The long title of the Contaminated Fuel Regulations ^{footnote 5} is replaced by the following:

Contaminated Fuel Regulations

2 Section 1 of the Regulations and the heading before it are repealed.

3 Section 3 of the Regulations is replaced by the following:

3 (1) Subject to subsections 4(1) and (3) and section 5, it is prohibited for any person to import contaminated fuel.

(2) Subject to subsections 4(2) and (3), it is prohibited for any person to export contaminated fuel.

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

(3) A person does not contravene section 3 if the contaminated fuel is in transit through Canada, from a place outside Canada to another place outside Canada, and there is written evidence establishing that the fuel is in transit.

Coming into Force

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