Vol. 151, No. 20 — October 4, 2017

Registration

SOR/2017-196 September 22, 2017

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

Regulations Amending the Off-Road Small Spark-Ignition Engine Emission Regulations and Making a Consequential Amendment to Another Regulation

P.C. 2017-1172 September 22, 2017

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 June 11, 2016, a copy of the proposed Regulations Amending the Off-Road Small Spark-Ignition Engine Emission Regulations and Making a Consequential Amendment to Another Regulation, and persons were given an opportunity to file comments with respect to the Regulations or to file a notice of objection requesting that a board of review be established and stating the reasons for the objection;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of the Environment, pursuant to section 160 (see footnote c) of the Canadian Environmental Protection Act, 1999 (see footnote d), makes the annexed Regulations Amending the Off-Road Small Spark-Ignition Engine Emission Regulations and Making a Consequential Amendment to Another Regulation.

Regulations Amending the Off-Road Small Spark-Ignition Engine Emission Regulations and Making a Consequential Amendment to Another Regulation

Amendments

1 (1) The definitions CFR, emission control system and engine in subsection 1(1) of the Off-Road Small Spark-Ignition Engine Emission Regulations (see footnote 1) are replaced by the following:

CFR means Title 40, chapter I of the Code of Federal Regulations of the United States, as amended from time to time. (CFR)

emission control system means any device, system or element of design that controls or reduces the emissions from an engine. (système antipollution)

engine means an off-road engine that is prescribed under subsections 5(1) and (1.1). (moteur)

(2) Subsection 1(1) of the Regulations is amended by adding the following in alphabetical order:

bicycle engine means an engine that is designed to be installed on a bicycle. (moteur de bicyclette)

complete fuel system means a fuel system that is attached to an engine and that consists of fuel lines and at least one fuel tank. (système complet d’alimentation en carburant)

CFR 90 means subchapter C, part 90, of the CFR. (CFR 90)

CFR 1051 means subchapter U, part 1051, of the CFR. (CFR 1051)

CFR 1054 means subchapter U, part 1054, of the CFR. (CFR 1054)

CFR 1060 means subchapter U, part 1060, of the CFR. (CFR 1060)

CFR 1068 means subchapter U, part 1068, of the CFR. (CFR 1068)

crankcase emissions means substances that cause air pollution and that are emitted into the atmosphere from any portion of the crankcase ventilation or lubrication systems of an engine. (émissions du carter)

diurnal emissions means evaporative emissions that occur as a result of the venting of fuel tank vapours during daily temperature changes while the engine is not operating. (émissions diurnes)

emission family means, for the 2019 and later model years,

• (a) in respect of any engine of a company that is covered by an EPA certificate or the fuel lines and fuel tanks of a complete fuel system for an engine of a company that are covered by an EPA certificate, the classification units for which the certificate was issued; and
• (b) in respect of any other engine of a company or other fuel lines and fuel tanks of a complete fuel system for an engine of a company, the classification units determined in accordance with
  • (i) in the case of an engine, other than a bicycle engine, section 230 of subpart C of CFR 1054,
  • (ii) in the case of fuel lines or fuel tanks that form part of a complete fuel system for an engine other than those that form part of a complete fuel system for a bicycle engine, section 230 of subpart C of CFR 1060, and
  • (iii) in the case of a bicycle engine or the fuel lines or fuel tanks that form part of a complete fuel system for that engine, section 230 of subpart C of CFR 1051. (famille d’émissions)

engine kit means an engine with hardware, fuel lines and fuel tanks that are designed to be assembled. (moteur prêt à assembler)

evaporative emissions means fuel compounds that are emitted into the atmosphere from an engine fuelled with volatile liquid fuel, other than exhaust emissions and crankcase emissions. (émissions de gaz d’évaporation)

fuel line means hose, tubing and primer bulbs containing or exposed to liquid fuel, including molded hose, tubing and primer bulbs that transport fuel to or from an engine, but does not include

• (a) fuel tank vent lines;
• (b) segments of hose or tubing in which the external surface is normally exposed to liquid fuel inside the fuel tank;
• (c) hose or tubing that is designed to return unused fuel from the carburetor to the fuel tank for engines designed to be used in a handheld machine; or
• (d) primer bulbs that contain liquid fuel only for priming the engine before starting. (conduite d’alimentation en carburant)

fuel tank means a tank equipped with its cap and designed to hold fuel. (réservoir de carburant)

handheld machine means a machine, other than a bicycle powered by a bicycle engine, that

• (a) is designed to be carried by the operator during its use;
• (b) is designed to operate in more than one position during its use;
• (c) has a dry weight of less than 16 kg, has no more than two wheels, and is designed to be carried or supported by the operator during its use;
• (d) in the case of a vehicle, is designed to be used for recreational purposes and has a dry weight of less than 20 kg;
• (e) is powered by an engine that has a total displacement equal to or less than 80 cm³;
• (f) is an auger that has a dry weight of less than 22 kg; or
• (g) is a jackhammer or compactor that is designed to be supported by the operator. (machine portative)

non-handheld machine means a machine other than a handheld machine but does not include a bicycle powered by a bicycle engine. (machine non portative)

permeation emissions means evaporative emissions resulting from the permeation of fuel through fuel line or fuel tank materials. (émissions par perméation)

running loss emissions means evaporative emissions that escape from a complete fuel system while the engine is operating but does not include permeation emissions or diurnal emissions. (émissions de pertes en marche)

unique identification number means a number, consisting of Arabic numerals, Roman letters or both, that the manufacturer assigns to the engine for identification purposes. (numéro d’identification unique)

useful life means the period of time or use in respect of which an emission standard applies to an engine, attached fuel line or attached fuel tank as set out in section 12.5 and subsections 12.7(1) and 12.8(3). (durée de vie utile)

volatile liquid fuel means any fuel that is a liquid at atmospheric pressure and has a Reid vapour pressure, as determined by the American Society for Testing and Materials method D5191-15, Standard Test Method for Vapor Pressure of Petroleum Products (Mini Method), greater than 13.79 kPa. (carburant liquide volatil)

wintertime engine means an engine used to power a machine that is designed exclusively to be used in snow or on ice. (moteur hivernal)

(3) Paragraph 1(2)(c) of the Regulations is replaced by the following:

• (c) standards or evidence of conformity of any jurisdiction or authority other than the EPA and, in the case of the standards referred to in subsection 12.5(2) and subparagraphs 12.7(1)(a)(iv) and (v), the California Air Resources Board.

(4) Paragraph 1(3)(a) of the Regulations is replaced by the following:

• (a) “nonroad vehicle” and “nonroad equipment” shall be read as machine; and

2 The Regulations are amended by adding the following after section 2:

Background

2.1 These Regulations set out

• (a) prescribed engines for the purposes of section 149 of the Act;
• (b) requirements respecting the conformity of prescribed engines with emission-related standards for the purposes of sections 153 and 154 of the Act; and
• (c) other requirements for carrying out the purposes of Division 5 of Part 7 of the Act.

3 Paragraph 4(1)(a) of the Regulations is replaced by the following:

• (a) if the period of production of a model of engine does not include January 1 of a calendar year, correspond to the calendar year during which the period of production falls or the calendar year following that calendar year, at the manufacturer’s choice; or

4 (1) The portion of subsection 5(1) of the Regulations before paragraph (a) is replaced by the following:

5 (1) The off-road engines that are prescribed for the purposes of the definition engine in section 149 of the Act are those that

(2) Subsections 5(2) and (3) of the Regulations are replaced by the following:

(1.1) In addition, the off-road engines referred to in subsection (1) of the 2019 and later model years with a complete fuel system are prescribed for the purposes of the definition engine in section 149 of the Act.

(1.2) For the purposes of these Regulations, an engine kit is considered to be an engine that is referred to in subsection (1.1).

(2) The engines referred to in subsections (1) and (1.1) do not include an engine that is

• (a) designed exclusively for competition, namely one that has the following characteristics, and bears a label that meets the requirements of subsections 17.2(3) and (4) and indicates that the engine is a competition engine:
  • (i) its performance characteristics are substantially superior to non-competition engines, and
  • (ii) it is not displayed for sale in any public dealership or otherwise offered for sale to the general public;
• (b) regulated by the On-Road Vehicle and Engine Emission Regulations;
• (c) regulated by the Marine Spark-Ignition Engine, Vessel and Off-Road Recreational Vehicle Emission Regulations;
• (d) designed to be used in reduced-scale models of vehicles that are not capable of transporting a person;
• (e) designed to be used exclusively in emergency and rescue machines and that bears either a label to that effect and that meets the requirements set out in subsections 17.2(3) and (4) or the U.S. label referred to in paragraph 660(c) of subpart G of CFR 1054;
• (f) designed to be used exclusively in military machines that are used only in combat or combat support during military activities, including reconnaissance missions, rescue missions and training missions and that bears either a label to that effect and that meets the requirements set out in subsections 17.2(3) and (4) or the U.S. emission control information label referred to in paragraph 225(e) of subpart C of CFR 1068;
• (g) being exported and that is accompanied by a written statement establishing that it will not be used or sold for use in Canada; or
• (h) covered by the EPA certificate referred to in section 615 of subpart G of CFR 1054 and that bears the U.S. emission control information label that is set out in subchapter U, part 1048, subpart B, section 135 of the CFR.

(3) For the purpose of section 152 of the Act, the prescribed engines are those referred to in subsections (1) and (1.1) that are manufactured in Canada, except any engine that will be used in Canada solely for purposes of exhibition, demonstration, evaluation or testing.

5 Sections 7 and 8 of the Regulations are repealed.

6 The heading before section 9 of the Regulations is replaced by the following:

Standards

Emission Control Systems

7 Subsection 9(2) of the Regulations is replaced by the following:

(2) An engine shall not be equipped with a defeat device.

(3) Subject to subsection (4), a defeat device is an auxiliary emission control device that reduces the effectiveness of the emission control system under conditions that may reasonably be expected to be encountered under normal operation of the engine.

(4) An auxiliary emission control device is not a defeat device if

• (a) the conditions referred to in subsection (3) are substantially included in the test procedures referred to in section 13.1;
• (b) it is needed to protect the engine against damage or accident; or
• (c) its use does not go beyond the needs of engine starting.

8 Section 10 of the Regulations is repealed.

9 Paragraph 11(2)(b) of the Regulations is replaced by the following:

• (b) meets the exhaust emission standards prescribed by these Regulations if crankcase emissions are considered to be exhaust emissions.

10 The Regulations are amended by adding the following before section 12:

Adjustable Parameters and Altitude Kits

11 Subsection 12(2) of the English version of the Regulations is replaced by the following:

(2) Engines that are equipped with adjustable parameters shall comply with the applicable standards under these Regulations for any specification within the physically adjustable range.

12 The Regulations are amended by adding the following after section 12:

12.1 For engines of the 2019 and later model years, a company may rely on an altitude kit as specified in paragraph 115(c) of subpart B of CFR 1054 to demonstrate compliance with exhaust emission standards.

Emission Standards

General

12.2 An engine of a given model year, except a replacement engine as defined in section 13, shall

• (a) conform to the applicable emission standards set out in sections 12.4 to 12.8; or
• (b) in the case of an engine that is covered by an EPA certificate and that is sold concurrently in Canada and the United States, conform to the following emission standards:
  • (i) for an engine of the 2019 or later model year that has a complete fuel system and whose fuel lines or fuel tanks are covered by one or more EPA certificates, those referred to in each of the EPA certificates, and
  • (ii) in any other case, those referred to in the EPA certificate.
    

EPA Certificates

12.3 For the purposes of subsection 153(3) of the Act,

• (a) the EPA is the prescribed agency; and
• (b) the provisions of the CFR that are applicable under an EPA certificate to an engine set out in paragraph 12.2(b), correspond to the standards referred to in sections 9 to 12.1 and paragraph 12.2(a).

Engines of 2005 to 2018 Model Years

12.4 An engine of a model year before the 2019 model year shall conform to the exhaust emission standards set out in

• (a) sections 103 to 105 of subpart B of CFR 90 that are applicable to engines of that model year and of the same engine class described in paragraph 116(b) of that subpart; or
• (b) sections 103 to 107 of subpart B of CFR 1054 that are applicable to engines of that model year and of the same engine class described in section 801 of subpart I of CFR 1054.
  

Engines of 2019 and Later Model Years

Engines

12.5 (1) Subject to subsection (2), the following standards set out in subpart B of CFR 1054 apply to engines of the 2019 and later model years:

• (a) for engines that are designed to be used in a non-handheld machine, the applicable exhaust emission standards for HC + NO_x and CO set out in paragraphs 105(a) and (c) of that subpart that are applicable to engines of the same engine class and for the useful life of an engine set out in paragraph 105(d);
• (b) for engines that are designed to be used in a handheld machine, the applicable exhaust emission standards for HC + NO_x and CO set out in paragraphs 103(a) and (c) of that subpart that are applicable to engines of the same engine class and for the useful life of an engine set out in paragraph 103(d); and
• (c) for engines with a total engine displacement greater than 80 cm³ that are designed to be used in a handheld machine but are used in a non-handheld machine, the standards set out in paragraph (a).

(2) In the case of the engines referred to in paragraphs (1)(a) and (b), if the engines are tested with a fuel that meets the standards of the California Air Resources Board for Phase 3 test fuel found in the California Code of Regulations, Title 13, Division 3, Chapter 5, Article 1, Subarticle 2, Section 2262, the company may choose to apply the CO exhaust emission standards set out in paragraph 145(n)(2) of subpart B of CFR 1054.

(3) In the case of a two-stroke engine that is designed to be used in a snowblower, the company may choose to apply to that engine the standards referred to in paragraph (1)(b) applicable to an engine of the same total engine displacement instead of those referred to in paragraph (1)(a).

Wintertime Engines

12.6 Any wintertime engine of the 2019 and later model years is exempted from the applicable exhaust emission standards for HC + NO_x set out in section 12.5, unless the company chooses to apply those standards.

Engines with Complete Fuel System

12.7 (1) Engines of the 2019 and later model years with a complete fuel system shall conform to the following standards:

• (a) for engines that are designed to be used in a non-handheld machine for the useful life set out in section 112 of subpart B of CFR 1054,
  • (i) for non-metallic fuel lines, the permeation emission standards set out in paragraph 102(d)(2) of subpart B of CFR 1060,
  • (ii) for non-metallic fuel tanks, the permeation emission standards set out in paragraph 103(b) of subpart B of CFR 1060,
  • (iii) for metal fuel tanks, the standards set out in paragraph 103(f) of subpart B of CFR 1060,
  • (iv) except for a wintertime engine, the running loss emission standards set out in the following paragraphs of subpart B of CFR 1060:
    • (A) paragraph 104(b)(1),
    • (B) paragraph 104(b)(2), or
    • (C) paragraph 104(b)(3), if an approved Executive Order of the California Air Resources Board in respect of the engine’s running loss emissions has been included in the evidence of conformity,
  • (v) at the company’s choice, instead of the standards described in subparagraphs (i) and (ii), the diurnal emission standards set out in paragraph 105(e) of subpart B of CFR 1060, and
  • (vi) the evaporative emission standards set out in paragraphs 101(f)(1) and (3)(i) of subpart B of CFR 1060;
• (b) for engines that are designed to be used in a handheld machine for the useful life set out in section 110 of subpart B of CFR 1054,
  • (i) for non-metallic fuel lines, the permeation emission standards set out in paragraph 102(d)(2) of subpart B of CFR 1060,
  • (ii) for non-metallic fuel tanks, the permeation emission standards set out in paragraph 103(b) of subpart B of CFR 1060,
  • (iii) for metal fuel tanks, the standards set out in paragraph 103(f) of subpart B of CFR 1060, and
  • (iv) the evaporative emission standards set out in paragraph 101(f)(3)(i) of subpart B of CFR 1060; and
• (c) for engines that are designed to be used in a handheld cold weather machine for the useful life set out in section 110 of subpart B of CFR 1054,
  • (i) for non-metallic fuel lines, the permeation emission standards set out in paragraph 102(d)(3) of subpart B of CFR 1060,
  • (ii) for non-metallic fuel tanks, the permeation emission standards set out in paragraph 103(b) of subpart B of CFR 1060,
  • (iii) for metal fuel tanks, the standards set out in paragraph 103(f) of subpart B of CFR 1060, and
  • (iv) the evaporative emission standards set out in paragraph 101(f)(3)(i) of subpart B of CFR 1060.

(2) For the purposes of paragraph 1(c), a handheld cold weather machine means any of the following handheld machines: a chainsaw, cut-off saw, clearing saw, brush cutter in which an engine with a total engine displacement that is greater than or equal to 40 cm³ is installed, commercial drill, ice auger and earth auger that is also designed to be used as an ice auger.

Bicycle Engines

12.8 (1) Bicycle engines of the 2019 and later model years shall conform to the following standards:

• (a) in the case of a bicycle engine with a complete fuel system,
  • (i) the exhaust emission standards for HC + NO_x and CO set out in paragraphs 105(a)(1) and 105(b) set out in subpart B of CFR 1051, and
  • (ii) the permeation emission standards set out in paragraph 110(a) and (b) of that subpart; and
• (b) in any other case, the standards set out in subparagraph (a)(i).

(2) Despite paragraph (1)(a), a bicycle engine that has a total engine displacement of 70 cm³ or less may conform to the exhaust emission standards set out in paragraph 615(b) of subpart G of CFR 1051.

(3) The standards referred to in subsections (1) and (2) apply for the useful life set out in paragraph 105(c) of subpart B of CFR 1051 as if a bicycle were an off-highway motorcycle referred to in that paragraph.

13 The heading before section 13 of the Regulations is replaced by the following:

Replacement Engines

14 (1) Subsection 13(2) of the Regulations is replaced by the following:

(2) A replacement engine may conform to, instead of the standards set out in sections 9 to 12.1 and paragraph 12.2(a),

• (a) in the case where there exists a replacement engine manufactured to the specifications of a model year later than the model year of the original engine and with the physical or performance characteristics necessary for the operation of the machine,
  • (i) the standards referred to in sections 9 to 12.1 and paragraph 12.2(a) applicable to an engine manufactured to the specification of the model year of the replacement engine, or
  • (ii) if none of the standards referred to in sections 9 to 12.1 and paragraph 12.2(a) applies, the manufacturer’s specifications; and
• (b) in any other case,
  • (i) the standards referred to in sections 9 to 12.1 and paragraph 12.2(a) applicable to the original engine, or
  • (ii) if none of those standards applies, the manufacturer’s specifications.

(2) Paragraphs 13(3)(a) and (b) of the Regulations are replaced by the following:

• (a) subsections 17.2(3) and (4) and that sets out, in both official languages, that the engine is a replacement engine; or
• (b) as the case may be,
  • (i) paragraph 1003(b)(5) of subpart K of CFR 90 for engines of a model year before the 2019 model year, or
  • (ii) paragraph 240(b)(5) of subpart C of CFR 1068 for engines of the 2019 and later model years.

15 The Regulations are amended by adding the following after section 13:

Interpretation of Standards

13.1 (1) For greater certainty, the standards in these Regulations that refer to the CFR include all of the test procedures, fuels and calculation methods specified for those standards in CFR 90, CFR 1051, CFR 1054 or CFR 1060, as the case may be.

(2) In the case of a standard set out in the CFR that is to be phased in over a period of time for a class of engine, or fuel line or fuel tank attached to an engine, the standard comes into effect, for the purposes of these Regulations, in the model year for which the CFR specifies that the standard applies to 100% of that class of engine, or fuel line or fuel tank attached to an engine and continues to apply until another standard that applies comes into effect.

16 Section 14 of the Regulations and the heading before it are repealed.

17 The heading before section 15 of the Regulations is replaced by the following:

Instructions

Emission-related Maintenance Instructions

18 Subsection 15(1) of the Regulations is replaced by the following:

15 (1) Every company shall ensure that written instructions respecting emission-related maintenance are provided to the first retail purchaser of an engine or machine. Those instructions shall be consistent with the maintenance instructions set out in paragraphs 1104(a) and (b) of subpart L of CFR 90, section 125 of subpart B of CFR 1051, section 125 of subpart B of CFR 1054, or section 125 of subpart B of CFR 1060, as the case may be, for the applicable model year.

19 The heading before section 16 and sections 16 to 19 of the Regulations are replaced by the following:

Engine Kit Assembly Instructions

15.1 Every company shall ensure that each engine kit is accompanied by written instructions in English and French for the engine’s assembly — or the address of the place or the website where those instructions may be obtained — that will illustrate how to assemble the engine to conform to the standards prescribed under these Regulations.

Evidence of Conformity

16 In the case of an engine referred to in paragraph 12.2(b), evidence of conformity required under paragraph 153(1)(b) of the Act in respect of a company consists of

• (a) a copy of each EPA certificate covering the engine and, if applicable, any attached fuel line or attached fuel tank for an engine of the 2019 and later model years;
• (b) a document demonstrating that
  • (i) for an engine of a model year before the 2019 model year or for an engine of the 2019 and later model years without a complete fuel system, it is sold concurrently in Canada and in the United States, or
  • (ii) for an engine of the 2019 and later model years with a complete fuel system, it is sold concurrently with the same complete fuel system in Canada and in the United States;
• (c) a copy of the records submitted to the EPA in support of each application for an EPA certificate and any amended application in respect of an engine, fuel lines or fuel tanks that form part of a complete fuel system for an engine of the 2019 and later model years; and
• (d) a U.S. emission control information label that is permanently affixed in the form and location set out in
  • (i) section 114 of subpart B of CFR 90 or, if applicable, paragraphs 135(b) to (h) of subpart B of CFR 1054, for engines before the 2019 model year,
  • (ii) paragraphs 135(b) to (h) of subpart B of CFR 1054 for engines of the 2019 and later model years,
  • (iii) paragraphs 135(a) to (e) of subpart B of CFR 1060 for engines, other than bicycle engines, of the 2019 and later model years with a complete fuel system, and
  • (iv) paragraphs 135(b) to (e) of subpart B of CFR 1051 for bicycle engines of the 2019 and later model years.

17 (1) In the case of an engine other than one referred to in paragraph 12.2(b), the evidence of conformity required under paragraph 153(1)(b) of the Act shall be obtained and produced by the company in a form and manner that is satisfactory to the Minister.

(2) The company shall submit the evidence of conformity to the Minister before importing the engine or applying a national emissions mark to it.

17.1 For the purpose of testing any engine for conformity with exhaust emission standards, if requested by the Minister, the company shall supply the Minister with all information required to reproduce the emissions tests that generated the results contained in the evidence of conformity.

National Emissions Mark and Label Requirements

17.2 (1) The national emissions mark is the mark set out in the schedule.

(2) The national emissions mark shall be at least 7 mm in height and 10 mm in width.

(3) The national emissions mark and any label required by these Regulations, except for a label referred to in paragraph 16(d), subsection 17.4(6) or section 17.5, shall be located

• (a) on or immediately next to the label referred to in paragraph 16(d); or
• (b) if there is no label as referred to in paragraph 16(d), in a visible or readily accessible location.

(4) Except for the label referred to in paragraph 16(d), any label required by these Regulations, including the label on which the national emissions mark appears, shall

• (a) be permanently affixed;
• (b) be resistant to or protected against any weather condition; and
• (c) bear inscriptions that are legible and indelible and that are indented, embossed or in a colour that contrasts with the background of the label.

(5) A company that has been authorized to apply the national emissions mark shall display the authorization number assigned by the Minister in figures that are at least 2 mm in height, immediately below or to the right of the national emissions mark.

17.3 A company may apply the national emissions mark to an engine that is manufactured before January 1, 2005, if

• (a) the engine conforms to the standards set out in these Regulations for engines of the 2005 model year; and
• (b) the company meets the requirements of these Regulations in respect of that engine.

17.4 (1) Subject to subsection (6), an engine of the 2019 and later model years with a complete fuel system — other than an engine and its complete fuel system that are covered by EPA certificates or an engine set out in section 13 — shall bear a label that sets out

• (a) the statement “THIS ENGINE AND THE COMPLETE FUEL SYSTEM CONFORM TO ALL APPLICABLE CANADIAN STANDARDS PRESCRIBED BY THE OFF-ROAD SMALL SPARK-IGNITION ENGINE EMISSION REGULATIONS IN EFFECT FOR MODEL YEAR [MODEL YEAR] / CE MOTEUR ET LE SYSTÈME COMPLET D’ALIMENTATION EN CARBURANT SONT CONFORMES À TOUTES LES NORMES CANADIENNES QUI LUI SONT APPLICABLES EN VERTU DU RÈGLEMENT SUR LES ÉMISSIONS DES PETITS MOTEURS HORS ROUTE À ALLUMAGE COMMANDÉ EN VIGUEUR POUR L’ANNÉE DE MODÈLE [ANNÉE DE MODÈLE]”;
• (b) the month and year of manufacture of the engine, unless this information is permanently identified elsewhere on the engine;
• (c) the useful life of the engine;
• (d) an identification of the emission control system, as specified in paragraph 45(f) of subpart A of CFR 1068;
• (e) the name of the engine manufacturer or, if provided in the evidence of conformity, a name and logo other than that of the manufacturer if the manufacturer has a contractual agreement with the business entity represented by that other name and logo;
• (f) the applicable emission family in respect of exhaust emissions;
• (g) the total engine displacement, unless all the engines in the emission family have the same total displacement and per-cylinder displacement;
• (h) the name of the company that installed the complete fuel system; and
• (i) the applicable emission family or families in respect of evaporative emissions.

(2) The information required under paragraph (1)(d) may be omitted from the label if there is insufficient space for it and if it is in the emissions-related maintenance instructions instead.

(3) An engine — other than an engine referred to in subsection (1), an engine covered by an EPA certificate or an engine set out in section 13 — shall bear a label that sets out

• (a) the statement “THIS ENGINE CONFORMS TO ALL APPLICABLE CANADIAN STANDARDS PRESCRIBED BY THE OFF-ROAD SMALL SPARKIGNITION ENGINE EMISSION REGULATIONS IN EFFECT FOR MODEL YEAR [MODEL YEAR] / CE MOTEUR EST CONFORME À TOUTES LES NORMES CANADIENNES QUI LUI SONT APPLICABLES EN VERTU DU RÈGLEMENT SUR LES ÉMISSIONS DES PETITS MOTEURS HORS ROUTE À ALLUMAGE COMMANDÉ EN VIGUEUR POUR L’ANNÉE DE MODÈLE [ANNÉE DE MODÈLE]”; and
• (b) the information set out in paragraphs (1)(b) to (g).

(4) Subject to subsection (6), an engine that bears the label set out in subsection (3) or referred to in paragraph 16(d) and becomes subject to the evaporative emission standards by the addition of a complete fuel system in Canada, shall bear a label

• (a) placed immediately next to the label set out in subsection (3) or referred to in paragraph 16(d) that contains the information set out in paragraphs (1)(a), (h) and (i); or
• (b) that contains the information set out in subsection (1).

(5) Paragraphs (1)(a) and (h) and (3)(a) do not apply when a national emissions mark is affixed to the engine or the machine in which that engine is installed.

(6) In the case of an engine with a complete fuel system referred to in subsection (1) or (4) that is installed in a machine, a label that is referred to in those subsections and that meets the requirements of subsection 17.2(4) may be affixed on that machine instead of on the engine.

Unique Identification Number

17.5 A unique identification number shall be legible and affixed to every engine by being engraved on, stamped on or molded into the engine or displayed on a label that meets the requirements of subsection 17.2(4).

Maintenance, Retention and Submission of Records

18 (1) A company shall maintain a record in writing, or in a readily readable electronic or optical form, of the following information and retain the record for the following periods:

• (a) a copy of any declaration set out in section 19, for a period of eight years after the year of the importation;
• (b) the evidence of conformity set out in sections 16 or 17, as the case may be, for a period of eight years after the date of manufacture of the engine;
• (c) for a company that imported less than 50 engines during a given calendar year, the number of engines imported, for a period of eight years after the calendar year in question; and
• (d) if applicable, a copy of the declaration set out in section 20, and information demonstrating that the company has disposed of the engine in accordance with that declaration, for a period of eight years after the day of the disposal.

(2) If the record is retained by another person on a company’s behalf, the company shall keep a record of that other person’s name, telephone number and civic address and, if different, their mailing address.

(3) If the Minister makes a written request for a record referred to in subsection (1) or (2), the company shall submit it to the Minister in either official language

• (a) within 40 days after the day on which the request is made to the company; or
• (b) within 60 days after the day on which the request is made to the company, if the record is to be translated from a language other than French or English.
  

Information Regarding Suspension or Revocation of EPA Certificate

18.1 If an EPA certificate referred to in section 12.2 is suspended or revoked, the company shall submit the following information to the Minister within 60 days after the day on which the certificate is suspended or revoked:

• (a) its name, address and telephone number;
• (b) a copy of the EPA certificate that was suspended or revoked;
• (c) a copy of the EPA decision to suspend or revoke the certificate;
• (d) in the case of a suspended or revoked EPA certificate covering engines,
  • (i) for each engine, the make, model and model year, and
  • (ii) for each engine installed in a machine, the make, model and type of machine; and
• (e) in the case of a suspended or revoked EPA certificate covering fuel lines, fuel tanks, or complete fuel systems, installed in machines, the make, model and type of each machine.

19 (1) Any company that imports 50 or more engines into Canada in a calendar year shall submit a declaration to the Minister, signed by the company’s duly authorized representative, that contains the following information:

• (a) the importer’s name, telephone number and civic address and, if different, their mailing address and, if any, email address;
• (b) the business number assigned to the company by the Minister of National Revenue;
• (c) for every engine,
  • (i) the name of the manufacturer, the number of engines imported, the make, the model and model year of the engine and all applicable emission families, and
  • (ii) one of the following:
    • (A) a statement that each of the engines bears the national emissions mark, or
    • (B) a statement that the company is able to produce the evidence of conformity in accordance with section 16 or has produced it in accordance with section 17; and
• (d) for every engine that is installed in a machine, the number of machines imported, the name of the manufacturer of the machine and its make, model and type.
  

(2) The declaration shall be submitted to the Minister on or before February 1 of the calendar year following the calendar year during which the importation occurred.

20 (1) The portion of section 20 of the Regulations before paragraph (b) is replaced by the following:

20 The declaration referred to in paragraph 155(1)(a) of the Act shall be submitted to the Minister before the importation, signed by the person referred to in that paragraph or their duly authorized representative and shall contain

• (a) the following information:
  • (i) the importer’s name, telephone number and civic address and, if different, their mailing address and, if any, email address,
  • (ii) if applicable, the business number assigned to the company by the Minister of National Revenue,
  • (iii) in the case of an engine, the name of the manufacturer, the make, the model, model year and unique identification number of the engine, and
  • (iv) in the case of an engine that is installed in a machine, the name of the manufacturer of the machine and its make, model and type;

(2) Paragraph 20(c) of the Regulations is replaced by the following:

• (c) the date on which the engine will be imported and the date by which the engine will be exported or destroyed.

21 (1) Paragraph 21(b) of the Regulations is replaced by the following:

• (b) the U.S. emission control information label referred to in paragraph 16(d) showing that the engine conformed to the emission standards of the EPA in effect at the time of its manufacture;

(2) Section 21 of the Regulations is amended by adding “or” at the end of paragraph (c) and by adding the following after that paragraph:

• (d) the label referred to in subsection 17.4(1) or (3).

22 Section 22 of the Regulations is replaced by the following:

22 A company that imports an engine into Canada in reliance on subsection 153(2) of the Act shall, before the importation, submit a declaration to the Minister, signed by its duly authorized representative, that contains the information described in paragraphs 19(1)(a) and (b) and

• (a) the name of the manufacturer, the number of engines that will be imported in a calendar year, the make, the model and model year of the engine and any applicable emission family;
• (b) for an engine that is installed in a machine, the number of machines that will be imported in a calendar year, the name of the manufacturer of the machine and its make, model and type;
• (c) a statement from the manufacturer of the engine that the engine will, when completed in accordance with instructions provided by the manufacturer, conform to the standards prescribed under these Regulations; and
• (d) a statement from the company that the engine will be completed in accordance with the instructions referred to in paragraph (c).

23 The portion of section 24 of the Regulations before paragraph (a) is replaced by the following:

24 A company applying under section 156 of the Act for an exemption from conformity with any standard prescribed under these Regulations shall, before the importation or manufacture of an engine, submit in writing to the Minister

24 Subsection 25(1) of the Regulations is replaced by the following:

25 (1) In the case of a model of engine in respect of which the Governor in Council has, by order, granted an exemption under section 156 of the Act, the engine shall bear a label that meets the requirements set out in subsections 17.2(3) and (4).

25 Section 26 of the Regulations is replaced by the following:

26 (1) The notice of defect referred to in subsections 157(1) and (4) of the Act shall contain

• (a) the name of the company giving the notice and its street address and, if different, mailing address, and the name, email address and phone number of the contact person;
• (b) for each engine in respect of which the notice is given, its make, model, model year and the period during which the engine was manufactured, any applicable emission family and the range or ranges of unique identification numbers, if known;
• (c) the total number of engines in respect of which the notice is given or, if the total number is not known, the estimated number;
• (d) a description of the machine or type of machine in or on which the engine is installed or is likely to be installed;
• (e) the estimated percentage of the potentially affected engines that contain the defect;
• (f) a description of the defect;
• (g) an evaluation of the pollution risk arising from the defect;
• (h) a statement of the measures to be taken to correct the defect;
• (i) a chronology of the principal events that led to the determination of the existence of the defect, if known; and
• (j) a description of the means available to the company to contact the current owner of each affected engine.

(2) The notice of defect shall be given in writing and, in the case of notices given to a person other than the Minister, shall be

• (a) in both official languages; or
• (b) in the person’s official language of choice, if it is known.

(3) A company shall, within 60 days after giving a notice of defect, submit to the Minister the initial report referred to in subsection 157(7) of the Act containing

• (a) an update of the information required by subsection (1) if there has been any change to the information;
• (b) if not already provided in the notice,
  • (i) the range or ranges of unique identification numbers,
  • (ii) the total number of engines in respect of which the notice of defect was given, and
  • (iii) a chronology of the principal events that led to the determination of the existence of the defect; and
• (c) copies of all notices, bulletins and other circulars issued by the company in respect of the defect, including a detailed description of the nature and physical location of the defect with diagrams and other illustrations as necessary.
  

(4) If a company submits an initial report, it shall submit a quarterly report, within 45 days after the end of each of the following six quarters, to the Minister respecting the defect and its correction containing the following information:

• (a) the number, title or other identification assigned by the company to the notice of defect;
• (b) if applicable, the revised number of engines in respect of which the notice of defect was given;
• (c) the date on which the notice of defect was given to the current owners of the affected engines and the dates of any follow-up communications with those owners in respect of the notice; and
• (d) the total number, or percentage, of engines repaired by or on behalf of the company, including engines requiring inspection only.

26.1 Any report or declaration to be submitted under these Regulations shall be submitted electronically in the format provided by the Minister, but shall be submitted in writing if

• (a) a format has not been provided; or
• (b) it is, owing to circumstances beyond the control of the person required to submit the report, impracticable to submit the report electronically in the format provided.

26 The schedule to the Regulations is amended by replacing the reference after the heading “SCHEDULE” with the following:

(subsection 17.2(1))

Consequential Amendment

27 Subsection 5(4) of the Marine Spark-Ignition Engine, Vessel and Off-Road Recreational Vehicle Emission Regulations (see footnote 2) is amended by striking out “and” at the end of paragraph (i), by adding “and” at the end of paragraph (j) and by adding the following after paragraph (j):

• (k) a vehicle that has a dry weight of less than 20 kg.

Coming into Force

28 These Regulations come into force on the day that in the sixth month after the month in which they are registered has the same calendar number as the day on which they are registered or, if that sixth month has no day with that number, the last day of that sixth month.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Background

The Off-Road Small Spark-Ignition Engine Emission Regulations (the Regulations) were published in the Canada Gazette, Part II, on November 19, 2003. (see footnote 3) The Regulations aligned Canadian emission standards with the United States (U.S.) Environmental Protection Agency (EPA) Phase 2 emission standards for the 2005 and later model year off-road small spark-ignition (SSI) engines. (see footnote 4) These engines are defined as those off-road engines using a spark plug or other sparking device and producing no more than 19 kW of power. Small spark-ignition engines are typically found in lawn and garden machines (hedge trimmers, brush cutters, lawn mowers, leaf blowers, garden tractors, snowblowers, etc.), in light-duty industrial machines (generator sets, welders, pressure washers, etc.), and in light-duty logging machines (chainsaws, log splitters, shredders, etc.).

The Regulations contribute to improving air quality by reducing emissions of air pollutants and other toxic substances in Canada through the establishment of standards for emissions from off-road SSI engines and machines powered by such engines (hereinafter collectively referred to as “SSI engines”). These engine standards reduce emissions of nitrogen oxides (NO_x), hydrocarbons, carbon monoxide (CO) and other toxic substances listed in Schedule 1 to the Canadian Environmental Protection Act, 1999 (CEPA). (see footnote 5) These reductions contribute to improved human health and help to reduce negative environmental impacts. Also, the reductions in emissions due to the Regulations contribute toward meeting targets established in the Ozone Annex of the Canada–U.S. Air Quality Agreement, in which the Government of Canada and the Government of the United States agreed to reduce emissions of ozone precursors (e.g. NO_x and VOCs). (see footnote 6)

In 2008, the EPA published Phase 3 emission standards for SSI engines. (see footnote 7) These standards have been progressively introduced in the U.S., beginning in 2009. (see footnote 8) In Canada, SSI engines of the 2005 and later model years must currently comply with the Phase 2 standards. All of these engines in Canada are imported, as there is presently no domestic engine production. Around 65% of the engines are imported from the U.S. and they are expected to already be compliant with the Phase 3 standards. The next largest share of these engines in Canada comes from China and other Asian countries, excluding Japan (about 20%). An additional 15% (approximately) comes from Japan, Mexico and the European Union. Many of the imported engines that do not come from the U.S., particularly those from China and other Asian countries (excluding Japan), are not expected to be compliant with the Phase 3 standards. Overall, it is currently estimated that around 75% of the SSI engines imported into Canada on an annual basis comply with the Phase 3 standards, even though it is not mandatory to meet these standards at this time in Canada.

Issues

Emissions from mobile sources, including SSI engines designed to be used in lawn, garden and various other small machines, contribute to environmental and human health problems. Substances such as NO_x and VOCs are emitted to the surrounding air through the combustion and evaporation of the fuel that is used to power these engines. These substances are then involved in a series of complex reactions activated by sunlight that result in the formation of ground-level ozone, a respiratory irritant and component of smog. Smog is a noxious mixture of air pollutants, primarily ground-level ozone and particulate matter. It can often be seen as a haze in the air, especially over urban centres, and leads to numerous negative impacts relating to human health and the environment.

In the Ozone Annex to the Canada–U.S. Air Quality Agreement, Canada committed to developing and establishing standards for emissions from new engines that align with the corresponding U.S. standards. This commitment was reaffirmed by the mandate and principles of the Canada–U.S. Regulatory Cooperation Council. However, emission standards in Canada are not currently aligned with the U.S. EPA Phase 3 emission standards for SSI engines. Without changes to align the Regulations with these standards, there are risks that the import into Canada of SSI engines that meet the Phase 3 standards could decrease, in favour of the import of less-expensive SSI engines that only meet the Phase 2 standards and produce relatively more air pollutant emissions per engine. Such a scenario would result in incremental adverse impacts on the health of Canadians and the environment.

Objectives

The objective of the Regulations Amending the Off-Road Small Spark-Ignition Engine Emission Regulations and Making a Consequential Amendment to Another Regulation (the Amendments) is to reduce smog caused by air pollutant emissions from SSI engines, which has a significant adverse impact on the health and environment of Canadians and, as a result, on the Canadian economy. In addition to providing important health and environmental benefits, the Amendments aim to restore common Canada–U.S. standards for air pollutant emissions from SSI engines, and contribute to minimizing the administrative burden costs incurred by companies importing these engines into Canada.

Description

The Amendments come into force six months after the day on which they are registered, and the more stringent standards for air pollutant emissions will apply to the 2019 and later model year SSI engines in Canada.

Exhaust and evaporative emission standards

Emissions of NO_x, hydrocarbons and CO released to the atmosphere from the exhaust systems of engines typically result from the combustion of fuel. The Amendments incorporate into the Regulations the U.S. EPA Phase 3 exhaust emission standards for machines powered by SSI engines. (see footnote 9)

Evaporation of fuel within the fuel system of an engine can cause fuel components to permeate through or escape from fuel line or fuel tank materials. These evaporative emissions are generally composed of VOCs. The Amendments incorporate into the Regulations new evaporative emission standards for SSI engines that have complete fuel systems attached. Such engines designed to be used in handheld or non-handheld machines will have to meet emission standards for fuel line and fuel tank permeation, as well as standards for the design of the fuel tank inlet to reduce refuelling emissions. Engines designed to be used in non-handheld machines will have to meet additional evaporative emission standards for running losses caused from engine heat during operation (running loss evaporative emission standards), and additional evaporative emission standards relating to the installation of fuel caps, air vents and carbon canisters. Optional standards for evaporative emissions resulting from daily changes in temperature (i.e. diurnal emissions) could be applied by companies in lieu of the permeation standards that would otherwise apply to engines designed to be used in non-handheld machines.

The Amendments also extend existing optional standards for emissions from “wintertime” engines, that is, engines used to power machines that are designed exclusively to be used in snow or on ice, such as snowblowers and ice augers. This extension is consistent with the approach taken by the EPA.

The Amendments also include optional CO exhaust emission standards. Consistent with the approach taken by the EPA, the Amendments provide the option of using California Phase 3 test fuel and conforming to an associated more stringent standard for CO emissions.

Further, the Amendments update the emission standards for SSI engines designed to be installed on bicycles. In Canada, these engines are typically imported and supplied to consumers as kits that include the engine, fuel system, and hardware required to convert a conventional bicycle to one that is motorized. The Amendments align Canada’s standards for emissions from engines designed to be installed on bicycles with the applicable U.S. emission standards. (see footnote 10)

Submission of importation declarations

Under the Regulations, companies that import 500 or more SSI engines into Canada in a calendar year may be allowed to submit a single importation declaration to the Minister of the Environment (the Minister) for each year in which they import engines. On the other hand, companies that import fewer than 500 engines in a calendar year are currently required to submit a declaration at a customs office for each shipment of engines. To facilitate the administration of the Regulations and to reduce the administrative burden assumed by companies that import SSI engines, the Amendments modify the requirements related to the submission of declarations. Companies importing 50 or more engines in a calendar year will only be required to submit one annual declaration to the Minister. Each declaration must be submitted no later than February 1 of the calendar year following the calendar year during which the import occurred. No submission of an importation declaration will be necessary for companies importing fewer than 50 SSI engines annually.

Other changes to the Regulations

The following paragraphs summarize other changes to the Regulations that are established by the Amendments:

• Altitude adjustments: The Amendments include provisions that will allow a company to rely on an altitude adjustment kit to demonstrate compliance with exhaust emission standards. (see footnote 11)
• Rules establishing the model year: In order to accommodate seasonal production periods which may end in the calendar year preceding the year that the manufacturer will designate as the model year for an SSI engine, the Amendments modify the rules establishing the model year. The Amendments will allow the manufacturer to choose whether the model year corresponds to either the calendar year during which the period of production occurs or the calendar year immediately following the calendar year during which the period of production occurs. This change results in an approach consistent with that of the EPA.
• Engines not part of an emission family listed on a certificate of conformity to U.S. emission standards issued by the EPA (an EPA certificate of conformity): The Regulations allow for SSI engines that are not part of an emission family listed on an EPA certificate of conformity to be covered by such a certificate under certain circumstances. Consistent with similar changes made to other transportation-related regulations administered by the Department of the Environment (the Department), the Amendments remove this possibility due to difficulties encountered with respect to its administration.
• Suspension or revocation of an EPA certificate of conformity: The Amendments will require that the Minister be notified in the case of the suspension or revocation of an EPA certificate of conformity within 60 days of the certificate being suspended or revoked.
• Demonstration of conformity with running loss evaporative emission standards: SSI engines designed to be used in non-handheld machines may meet the running loss evaporative emission standards via an executive order issued by the California Air Resources Board, which states that the engines meet the applicable running loss evaporative emission standards in California.
• Engines designed for “niche” or specialized handheld applications: The Regulations allow for SSI engines designed to be used in handheld machines to meet less stringent emission standards if fewer than 2 000 engines of a given model and model year are sold in Canada. The Amendments remove this feature because it is rarely used and results in challenges with respect to compliance verification.
• Unique identification number: The Amendments introduce a requirement for a unique identification number to be present on every prescribed SSI engine. The use of a unique identification number is already a common industry practice which will facilitate the effective reporting of defects.
• Changes to labelling requirements: The Amendments modify the labelling requirements to facilitate the identification of prescribed SSI engines. Any engine that is not covered by an EPA certificate of conformity and not sold concurrently in Canada and the U.S. will require a unique Canadian label. These changes are consistent with current labelling practices in Canada, and the inclusion of text specifying details relating to labelling will help clarify the labelling requirements in the Regulations. In addition, the Amendments require that certain engines specifically excluded from the Regulations be appropriately labelled as a condition of exclusion. This label of exclusion will indicate that the engines are only to be used for the specific applications.
• Changes to defect information requirements: The Amendments modify the notice of defect provisions to make them consistent with other vehicle and engine emission regulations that the Department administers. These modifications include the requirement to provide additional company contact information, the make and unique identification numbers of the defective engines, and the chronology of events that led to the identification of the defect. Consistent with U.S. EPA requirements, the Amendments also require six quarterly follow-up reports.

Consequential amendment to other regulations under CEPA

A consequential amendment is being made to ensure consistency within the Department’s suite of off-road vehicle and engine emission regulations and to maintain alignment with U.S. regulatory provisions. In particular, the Amendments will modify the Marine Spark-Ignition Engine, Vessel and Off-Road Recreational Vehicle Emission Regulations to exclude vehicles that are propelled by SSI engines to which the Amendments apply.

Regulatory and non-regulatory options considered

Several regulatory and non-regulatory measures have been considered, and descriptions of each are provided below.

Status quo

Under the status quo, all SSI engines entering the Canadian market — estimated to be around 1.5 to 2 million per year — must comply with the U.S. EPA Phase 2 emission standards. It is estimated that around 75% of these engines already comply with the Phase 3 standards, which are not presently mandatory in Canada. The option of retaining the current standards does not take full advantage of the opportunity for continued reductions in emissions from SSI engines. The import of engines that meet the Phase 3 standards could decrease in Canada, in favour of less expensive engines that only meet the Phase 2 standards and produce relatively more emissions per engine. Maintaining the status quo would also be inconsistent with Canada’s commitment to align its emission standards with those of the U.S., as specified in the Ozone Annex to the Canada–U.S. Air Quality Agreement and in the mandate and principles of the Canada–U.S. Regulatory Cooperation Council. Therefore, this option was rejected.

Regulatory approach unique to Canada

If Canada adopted regulatory standards that were different from those introduced by the U.S., product availability would potentially be reduced in the Canadian marketplace, and the average costs of engines designed to meet unique Canadian standards would likely be greater than the average costs of the analogous engines meeting the Phase 3 standards. Unique Canadian standards would require additional design and manufacturing costs and also require extensive development of testing and certification procedures. The higher costs would be partly passed on to consumers. Adopting unique Canadian standards would conflict with Canada’s policy of alignment with U.S. air pollutant emission standards and the trend towards global harmonization of emission standards. Also, if Canada adopted less stringent emission standards than those introduced by the EPA, environmental and health benefits would not be secured.

Harmonized regulatory approach

The Amendments are consistent with the Government of Canada’s commitments to align its emission standards with those of the federal emissions program of the U.S. EPA, as set out in the Ozone Annex to the Canada–U.S. Air Quality Agreement. The Department is working closely with the EPA to maintain a common Canada–U.S. approach to regulating emissions from vehicles and engines. Under the Canada–U.S. Regulatory Cooperation Council, the Department and the EPA reaffirmed their commitment to continue collaborating under the Canada–U.S. Air Quality Committee towards the development of aligned vehicle and engine emission regulations and their coordinated implementation.

The alignment of emission standards in Canada with those of the U.S. will create a level Canada–U.S. market, allowing for incremental reductions in emissions by means of preventing the import of SSI engines into Canada that do not meet the EPA Phase 3 emission standards. Alignment with EPA standards could thus represent a cost-effective method for Canada to achieve important reductions in emissions from SSI engines. (see footnote 12) For these reasons, a harmonized regulatory approach was selected.

Benefits and costs

Analytical approach and summary of impacts

An analysis of the incremental impacts (benefits and costs) was conducted using business-as-usual (BAU) and regulatory scenarios. To the extent possible, benefits and costs are quantified, monetized and expressed in 2015 Canadian dollars. Calendar years 2017 to 2032 are used as the time frame for this analysis, with 2017 being the present value base year, and the more stringent standards for air pollutant emissions applying to the 2019 and later model year SSI engines. Further, the analysis employs a 3% annual discount rate when values are expressed in present value terms, in accordance with the Canadian Cost-Benefit Analysis Guide: Regulatory Proposals. (see footnote 13) When restricted by a lack of appropriate data, the impacts have been described in qualitative terms.

From 2019 to 2032, the Amendments are projected to reduce air pollutant emissions from SSI engines, including reductions of about 20 000 tonnes of NO_x emissions and 58 000 tonnes of VOC emissions. An analysis of the expected health benefits to Canadians resulting from these emission reductions provides a projected range of net present values between $140 million and $240 million. Other estimated benefits of the Amendments include pre-tax fuel savings for consumers of SSI engines in the order of $10 million, and reductions in administrative costs for companies that import such engines in the order of $3 million. The total benefits of the Amendments are thus projected to be about $153 million to $253 million.

The total costs of the Amendments are projected to be around $91 million, including about $90 million to domestic importers of SSI engines, $550,000 to domestic machine manufacturers for the testing of evaporative emissions, and $160,000 to the federal government for compliance promotion and enforcement activities. The net benefits of the Amendments are hence estimated to be between $63 million and $163 million in present value terms.

Benefits

Emission reductions

It is anticipated that the Amendments will reduce emissions of smog-forming air pollutants in Canada from SSI engines. Engines compliant with the Phase 3 emission standards will gradually replace existing higher-emitting engines as these older engines are removed from service, allowing for progressively greater emission reductions of air pollutants in Canada from the stock of SSI engines.

To provide an indication of the possible emission reductions that may be achieved, the following two emission scenarios were modelled: (1) a BAU scenario in which it is assumed that, in the absence of the Amendments, around 75% of the SSI engines entering the Canadian market would continue to comply with the EPA Phase 3 standards; and (2) a regulatory scenario in which 100% compliance with these standards is assumed. The analysis only considers the incremental emission reductions projected to result from the Amendments. Thus, the estimated total emission reductions incorporate the assumption that the following portions of SSI engines entering the Canadian marketplace are not compliant with the Phase 3 standards under the BAU scenario: 20% of the imported engines designed to be used in non-handheld machines; and 34% of the imported engines designed to be used in handheld machines. (see footnote 14)

The Department forecasted emissions from SSI engines for four reference years – years 1, 4, 9 and 14 of implementation of the Phase 3 standards – using the peer-reviewed EPA NONROAD model with Canadian baseline data for the 2010 calendar year. (see footnote 15) Despite the fact that the absence of a comprehensive data set which accurately captures the stock and flow of the SSI engine population in Canada increases uncertainty in forecasting, the forecast depicts an emissions trend that is reasonable and directionally representative based on existing information.

In order to estimate cumulative emissions in the BAU and regulatory scenarios, linear growth rates between the four reference years were first applied. The Amendments come into effect starting with model year 2019, thus it was assumed that the projected emission impacts derived from the four reference years begin in 2019. Given the limitations of available data, time and other resources, this approach is considered to be a reasonable method to project cumulative emissions in the BAU and regulatory scenarios, and overall emission reductions, from 2019 to 2032. The annual trends in estimated emission reductions for key air pollutants are shown in Figure 1.

Figure 1: Estimated annual incremental reductions in emissions of certain air pollutants from SSI engines in Canada under a harmonized regulatory approach

The more stringent Phase 3 standards for SSI engines will result in emission reductions of certain air pollutants, namely, NO_x, VOCs, fine particulate matter (PM_2.5) and CO. In particular, the Amendments are projected to reduce NO_x emissions from SSI engines by approximately 350 tonnes in 2019 to about 2 000 tonnes in 2032; VOC emissions are expected to decrease by about 1 200 tonnes in 2019 to approximately 5 700 tonnes in 2032. In total, the Amendments are expected to reduce NO_x emissions by about 20 000 tonnes and VOC emissions by approximately 58 000 tonnes from 2019 to 2032, as shown in Table 1 below.

Table 1: Estimated reductions in emissions of certain air pollutants from SSI engines in Canada under a harmonized regulatory approach

Air pollutant	Estimated emission reductions in tonnes for the four reference years				Estimated emission reductions in tonnes (cumulative)
	2019	2022	2027	2032	2019–2032
NOx	336	1 163	1 723	2 013	19 977
VOCs	1 196	3 503	4 873	5 655	57 735
PM2.5	6	17	23	26	277
CO	4 888	14 439	20 489	23 921	241 740

Source: Department of the Environment (2014)

Health benefits

SSI engines contribute to emissions of air pollutants such as NO_x, VOCs, PM_2.5 and CO. These air pollutants are known to cause adverse human health impacts, through inhalation of directly emitted pollutants or via their transformation in the atmosphere to secondary PM_2.5 and ground-level ozone. The health impacts of these pollutants are well documented in the scientific literature and include an increased risk of various cardiovascular and respiratory outcomes, including an increased risk of premature mortality, as well as other welfare effects. In addition, it is recognized that there is no exposure threshold for many of these effects.

The Amendments will lead to reductions in emissions of air pollutants from SSI engines, and these reductions are expected to have meaningful benefits for human health, particularly through the reductions in NO_x and VOC emissions. The emission reductions resulting from the Amendments are small relative to overall anthropogenic emissions. As a result, detailed photochemical modelling of the impact of these emission changes on Canadian air quality was not conducted. However, the Department of Health and the Department of the Environment have analyzed numerous air quality scenarios conducted in the past and used these results as a proxy method to assess the benefits of the Amendments. Several air quality analyses have been published concerning regulations related to fuels and transportation, and other scenarios have been examined internally as part of the planning and development activities for different air quality programs. By comparing these air quality analyses with emission reductions that are predicted to result from the Amendments, the Department of Health has developed an estimate of the likely health impacts of the Amendments. Based on this analysis, emission reduction benefits could have a value of up to $10 million per year by 2032 for NO_x (undiscounted). Annual benefits from VOC reductions, while less certain given the complex photochemical interactions VOCs undergo in the atmosphere, could result in health benefits of up to about $20 million per year by 2032 (undiscounted). Overall, the Amendments are estimated to result in total benefits ranging from $200 million to $300 million, undiscounted, between 2019 and 2032. The present value of these benefits is between $140 million and $240 million using a 3% annual discount rate. (see footnote 16)

The above discussion of potential health benefits relates to the impact of the Amendments on general air quality in Canada. In addition, during the normal use of SSI engines in machines such as lawn mowers, chainsaws and snowblowers, machine operators can be exposed to locally elevated levels of air pollutants and toxic substances. While personal exposure to exhaust and evaporative emissions can vary considerably depending on the orientation of the operator to the engine, the prevalent wind direction and activities being conducted during engine use, reductions in emissions from SSI engines are expected to result in decreases in the level of personal exposure to exhaust and evaporative pollutants for the operators of machines powered by these engines.

Fuel savings

In addition to the projected emission reductions and health benefits, the Amendments will provide consumers with fuel savings from the increased fuel efficiency of SSI engines resulting from the adoption of the Phase 3 standards in Canada. It is assumed that these standards will be met with technology improvements resulting in improved fuel efficiency. Specifically, since evaporative emissions are primarily fuel that is lost to the atmosphere, fuel savings are estimated based on the VOC emission reductions attributable to the new evaporative emission standards.

From 2019 to 2032, the Amendments are expected to decrease gasoline use by around 14 million litres. To arrive at an approximation of pre-tax fuel savings for consumers, the valuation of this decrease employs pre-tax gasoline prices that were obtained in 2016 from the Department’s integrated Energy, Emissions and Economy Model for Canada (E3MC). The E3MC model is an end-use model that incorporates current Canadian projections of energy supply, and of petroleum and natural gas prices, from the National Energy Board. (see footnote 17) It uses these data to generate energy demand forecasts, which are primarily based on consumer-choice modelling and historical relationships between macroeconomic and fuel price variables. The present value of benefits to consumers resulting from pre-tax fuel (gasoline) savings is projected to be about $10 million.

Reductions in administrative costs

The Amendments are projected to result in a net decrease in administrative costs by reducing the submission frequency of importation declarations for most Canadian companies that import SSI engines. (see footnote 18) The present value of the administrative cost savings due to the Amendments is estimated to be around $3 million.

Environmental benefits

Air pollutants such as NO_x, VOCs, PM_2.5 and CO are precursors to the formation of secondary particulate matter and ground-level ozone, which impact air quality and the environment by damaging forest ecosystems, crops and wildlife. Deposition of excess nitrogen on surface waters may also lead to lake and stream eutrophication, which poses a threat to aquatic life. Finally, smog and deposition of suspended particles may impair visibility and result in the soiling of surfaces, respectively, thereby reducing the welfare of residents and recreationists, and potentially increasing cleaning expenditures.

The environmental benefits associated with the Amendments were not monetized, as a precise modelling of the air quality impacts has not been undertaken. Nonetheless, the environmental benefits associated with the Amendments, due to reductions in air pollutant emissions, are expected to be positive but of low magnitude compared to the human health benefits estimated in this analysis.

The Amendments may also lead to some emission reductions of carbon dioxide equivalent (CO₂e). However, the relative magnitudes of these potential reductions are projected to be small, averaging about 2 500 tonnes per year from 2019 to 2032, which amounts to a cumulative reduction of less than 0.1% of the total emissions of CO₂e from SSI engines in the BAU scenario during this period. Given these small magnitudes, the potential decreases in CO₂e emissions have not been monetized. This approach is expected to underestimate the total monetized benefits in this analysis by a small amount.

Costs

Cost to importers, manufacturers and consumers

There are no companies operating domestically that can be classified as manufacturers of SSI engines, therefore all of the engines distributed, sold or used in Canada are assumed to be imported from abroad. By introducing evaporative emission standards, the Amendments will affect an estimated four to five domestic manufacturers of machines powered by SSI engines that currently do not meet U.S. EPA evaporative emission standards. It is projected that these companies will incur additional annual costs of about $9,000 for the testing of evaporative emissions. The present value of these costs to Canadian manufacturers is estimated to be approximately $550,000.

Currently, around 25% of the SSI engines imported into Canada are not compliant with the Phase 3 standards. (see footnote 19) The increased engine costs resulting from the Amendments will hence be carried by engine importers and machine manufacturers, as regulated parties will be required to import engines and manufacture machines powered by engines meeting the Phase 3 standards. The present analysis adopts the following estimates of the EPA for the increases in engine costs due to this upgrade:

• In 2019, the weighted average cost increases will be about 3% ($16) and 8% ($22) for machines powered by SSI engines and “loose” engines, respectively.
• From 2020 to 2032, the weighted average cost increases will be about 2% ($13) and 7% ($19) for machines powered by SSI engines and “loose” engines, respectively. (see footnote 20)

Using import data from the Canadian Border Services Agency as input, it is estimated that engine importers and machine manufacturers will incur increased engine costs of about $8 million in present value terms in 2019. The total present value of increased engine costs to these importers and manufacturers from 2019 to 2032 is projected to be approximately $90 million. (see footnote 21) These incremental costs are assumed to be partly passed on to consumers. (see footnote 22)

Government costs

No additional costs are projected to be carried by the federal government due to regulatory administration, compliance verification or laboratory upgrades. Such initiatives undertaken for the purposes of the Amendments will be incorporated into the existing suite of the Department’s initiatives relating to regulatory administration. However, the federal government is anticipated to incur the following incremental costs for compliance promotion and enforcement activities: a one-time amount of about $110,000 in 2018; and annual amounts of approximately $5,000 from 2019 to 2032. The present value of the government costs related to compliance promotion and enforcement is expected to be up to $160,000.

Competitiveness implications

Given that around 75% of SSI engines sold in Canada are currently designed for both the Canadian and American markets, implementing regulatory provisions harmonized with those of the EPA will create a level playing field for Canadian and American companies marketing these engines and will support the competitiveness of the Canadian machine manufacturing industry.

Statement of benefits and costs

The monetized benefits and costs, and the quantified and qualitative benefits, associated with the Amendments are summarized in Table 2.

Table 2: Statement of benefits and costs (values discounted to present value using a 3% discount rate)

A. Estimated monetized benefits	Annualized value	Present value
Health benefits (avoided health issues) due to reductions in air pollutant emissions	$11,100,000 to $19,100,000	$140,000,000 to $240,000,000
Fuel savings due to decrease in gasoline use	$820,000	$10,300,000
Reductions in administrative costs	$240,000	$3,000,000
Total estimated monetized benefits	$12,160,000 to $20,160,000	$153,300,000 to $253,300,000
B. Estimated monetized costs	Annualized value	Present value
Increased costs of SSI engines faced by importers and consumers (compliance cost)	$7,150,000	$89,900,000
Incremental compliance costs to manufacturers for the testing of evaporative emissions	$44,000	$550,000
Incremental government costs for compliance promotion and enforcement activities	$13,000	$160,000
Total estimated monetized costs	$7,207,000	$90,610,000
C. Estimated monetized net benefits (rounded to the nearest million)	Annualized value	Present value
	$4,953,000 to $12,953,000	$62,690,000 to $162,690,000
D. Estimated quantified benefits (cumulative)	Amount
NOx emission reductions		20 000 tonnes
VOC emission reductions		58 000 tonnes
Decrease in gasoline use		14 million litres
E. Qualitative benefits	Description
Environmental benefits	The Amendments will indirectly reduce the formation of secondary particulate matter and ground-level ozone, which negatively impact forest ecosystems, crops and wildlife, impair visibility, and result in the soiling of surfaces.

Notes: In this analysis, costs are assumed to be incurred starting in 2018, while benefits are assumed to be realized starting in 2019. Totals may not sum due to rounding.

The values in Table 2 are calculated using 2015 dollars and an analytical time frame of 2017 to 2032. After 2032, there will be some ongoing incremental costs for new SSI engines complying with the Phase 3 emission standards. Additional health and environmental benefits stemming from reductions in air pollutant emissions are expected over the lifetime operation of these engines, and it is anticipated that the benefits will continue to outweigh the associated compliance costs. In addition, this analysis does not account for the emission reductions and related health and environmental benefits delivered from 2019 to 2032 model year SSI engines during the portion of their lifetime operation that occurs after 2032.

“One-for-One” Rule

The Amendments are projected to result in an overall reduction in the administrative burden costs imposed by the Regulations by reducing the submission frequency of importation declarations, from once per shipment to once per year, for companies importing fewer than 500 SSI engines into Canada in a calendar year, thereby generating an “OUT” under Canada’s “One-for-One” Rule. In addition, companies that import fewer than 50 SSI engines will no longer be required to submit an importation declaration. (see footnote 23) The estimated savings are calculated by employing the following assumptions:

• (1) In 2019, all engine importers (approximately 1 120) will each need an average of one hour to become familiar with the administrative requirements of the Amendments, and companies that manufacture machines powered by SSI engines (approximately 20) will each need an average of one hour to submit a one-time application for authorization to apply the national emissions mark.
• (2) Companies that import fewer than 50 engines in a calendar year (approximately 900) will be exempted from submitting declarations. Therefore, these importers are expected to each save an average of about 5.5 hours per year.
• (3) Companies that import at least 50 engines in a calendar year (approximately 220) will be required to submit a single declaration to the Minister for each calendar year in which they import engines. About two thirds of these importers are expected to each save an average of about 10 hours per year. The Amendments are not expected to introduce time savings for importers of 500 or more engines in a calendar year (approximately 75). Under the Regulations, these importers may already be allowed to submit a single declaration to the Minister for each calendar year in which they import engines.
• (4) Each company that manufactures machines powered by SSI engines will need an average of one hour per year to apply the national emissions mark to all of its applicable engines or machines.
• (5) Every year, approximately two companies will each need an average of four hours to submit four follow-up reports (one every three months) relating to a notice of defect.

Altogether, it is projected that the reduction in total annualized administrative costs over a 10-year period beginning in 2019 is approximately $170,000 for companies that import SSI engines, or $150 per importer. (see footnote 24), (see footnote 25)

Small business lens

For the purposes of the small business lens analysis, a proxy value was generated to estimate the number of small businesses that import SSI engines into Canada. (see footnote 26) By analyzing information on imports into Canada for the 2010 calendar year, it was established that, in general, companies that import fewer than 750 engines in a calendar year could be classified as small businesses or “small business importers,” based on the declared values of their imports made under several transportation-related regulations administered by the Department. As a result, it is estimated that the Amendments will have an impact on up to 1 062 small business importers.

Also, a small number of machine manufacturing companies that install or modify fuel systems on SSI engines in Canada will be considered engine manufacturers under the Amendments, with the introduction of the new evaporative emission standards, and they will consequently be required to demonstrate compliance with these standards. It is assumed that, in order to demonstrate compliance with the evaporative emission standards, all of the small Canadian manufacturers will opt to use engine components that have already been certified by the U.S. EPA to avoid incurring the costs associated with independently conducting emission test procedures.

Regulatory flexibility analysis statement

An initial option was established for the purposes of analyzing possible avenues through which the projected costs to small business importers due to the Amendments could be reduced. Under this initial option, the status quo would be maintained with respect to the submission of importation declarations (i.e. all companies that import SSI engines would be required to comply with the existing reporting requirements), and all Canadian importers would be required to import SSI engines meeting the EPA Phase 3 exhaust and evaporative emission standards. As described in the section concerning benefits and costs, regulatory compliance will result in increases in the costs of engines imported into Canada that will be incurred by domestic importers of all sizes.

The Amendments do not introduce a flexible option that would allow small businesses to avoid the additional compliance costs by marketing engines in Canada that do not comply with the Phase 3 standards. Such an option would expose engine users and bystanders to relatively higher levels of harmful emissions and would be contrary to Canada’s policy of alignment with U.S. air pollutant emission standards. Nonetheless, a flexible option is being introduced for small businesses that import SSI engines regarding administrative requirements. Under this flexible administrative option, companies importing fewer than 50 engines in a calendar year will be exempted from submitting declarations to the Minister, while companies importing at least 50 engines in a calendar year will be required to submit a single declaration to the Minister for each calendar year in which they import engines. (see footnote 27) Table 3 below describes the three categories of small business importers used in this flexibility analysis, as well as the options considered for these importers with respect to the submission of declarations.

Table 3: Description of options considered for small business importers regarding administrative requirements

Category of small business importers	Status quo	Initial option	Flexible option
Importers of fewer than 50 engines in a calendar year	Importers are required to submit an importation declaration for each shipment.	The status quo with respect to administrative requirements would be maintained.	These importers will not be required to submit importation declarations.
Importers of at least 50 but fewer than 500 engines in a calendar year	Importers are required to submit an importation declaration for each shipment.	The status quo with respect to administrative requirements would be maintained.	These importers will be required to submit a single importation declaration to the Minister for each calendar year in which they import engines.
Importers of at least 500 but fewer than 750 engines in a calendar year	Importers may be allowed to submit a single importation declaration to the Minister for each calendar year in which they import engines.	The status quo with respect to administrative requirements would be maintained.	These importers will be required to submit a single importation declaration to the Minister for each calendar year in which they import engines.

Under the flexible option, a decrease in the number of declarations is anticipated, given the reductions in the required submission frequencies of declarations from companies that import fewer than 500 engines per year. However, based on import information for the 2010 calendar year, these small businesses are estimated to import only 2% of the total annual number of SSI engines imported into Canada. In addition, through the use of import data from the Canada Border Services Agency, it will still be possible under the flexible option to identify companies that import engines, even though these importers will not be required to submit declarations. Therefore, the flexible option will still allow for effective compliance monitoring and enforcement of the regulatory requirements. The flexible option is not expected to introduce any additional risks to human health or the environment as a result.

Table 4: Regulatory flexibility analysis (values discounted to present value using a 3% discount rate)

	Initial option (status quo — the submission of importation declarations is maintained)		Flexible option (the submission frequency of importation declarations is reduced for small businesses)
Number of small businesses impacted	1 062		1 062
	Annualized value	Present value	Annualized value	Present value
Engine compliance costs	$180,000	$2,270,000	$180,000	$2,270,000
Administrative costs	$0	$0	–$240,000	–$3,020,000
Total costs	$180,000	$2,270,000	–$60,000	–$750,000
Total cost per importer	$170	$2,100	–$60	–$700
Risk considerations	No incremental risks exist under the initial option.		There will be a minor loss of information due to the lack of declarations submitted to the federal government by companies importing fewer than 50 SSI engines into Canada per year.

Note: The values in this table are calculated using 2015 Canadian dollars and an analytical time frame of 2017 to 2032.

Table 4 above provides the expected costs to small businesses under the initial and flexible options. Under both of these options, the annualized compliance costs to small business importers are expected to be around $180,000. The initial option would not result in any change in administrative costs incurred by these importers, while the flexible option is estimated to result in annualized savings in administrative costs of about $240,000. Therefore, the increase in total annualized costs to small business importers under the initial option is approximately $180,000, whereas the total annualized cost savings to these importers under the flexible option are around $60,000. For the reasons mentioned above in this section, the flexible option is incorporated into the Amendments.

Consultation

Consultation prior to publication of the proposed Amendments in the Canada Gazette, Part I

In recent years, regulatory standards under CEPA concerning air pollutant emissions from on-road and off-road vehicles and engines have been aligned with the corresponding U.S. EPA standards. (see footnote 28) The consultations associated with the development of each regulatory proposal revealed a broad consensus that Canada’s regulatory emission standards for vehicles and engines should be based on such alignment. Most stakeholders have generally identified that the integrated nature of the Canadian and American economies, and the implementation of aggressive national programs for vehicles and engines by the EPA, are two key elements supporting the argument that aligning with EPA air pollutant emission reduction programs is a logical approach for Canada to achieve important emission reductions in a cost-effective manner.

In August 2012, the Department signalled its intent to propose changes to the Regulations to further reduce smog-forming emissions of air pollutants from SSI engines by incorporating the current EPA Phase 3 exhaust and evaporative emission standards. Therefore, a consultation package was sent to more than 1 600 stakeholders and made available to the general public through the CEPA Environmental Registry. (see footnote 29) The general list of stakeholders and other key partners who were consulted includes the provincial and territorial governments, other federal government departments, environmental non-governmental organizations, manufacturers and importers of SSI engines and machines (including small businesses), as well as the industry associations representing these manufacturers and importers. In the consultation package issued in 2012, these stakeholders and other key partners were provided an outline of the regulatory changes under consideration.

The Department received comments from the two large industry associations representing engine manufacturers and the outdoor power equipment industry in Canada, as well as from four companies, two of which were classified as small businesses. Subsequent discussions with these industry associations and companies were held in March 2013 to clarify specific technical elements outlined in the August 2012 consultation package. In general, the responses received from these stakeholders indicated that there was broad support for the proposed Amendments, for the following reasons:

• the proposed Amendments would align Canadian emission standards with the EPA Phase 3 standards;
• the proposed Amendments would reduce the administrative burden incurred by the majority of regulated parties by changing the submission process relating to importation declarations;
• the proposed Amendments would extend the special provisions in the Regulations regarding snowblowers powered by SSI engines; and
• the proposed Amendments would help clarify the current labelling provisions of the Regulations.

Various other comments related to the wording of specific provisions were also submitted by these stakeholders. In general, stakeholders requested that the wording of the provisions in the proposed Amendments be aligned as closely as possible with the wording of the corresponding provisions of the EPA rules. To the extent possible, these requests were accommodated by the Department during the drafting of the proposed Amendments.

In October 2013, the Department held discussions with the two large industry associations representing engine manufacturers and the outdoor power equipment industry in Canada, as well as with one large and two small businesses subject to the Regulations, in order to discuss the proposed measures to reduce administrative burden under the proposed Amendments. During these discussions, the Department explained the assumptions associated with the proposed initial and flexible options for submitting importation declarations, as well as the rationale for proposing to proceed with the flexible option. In general, the stakeholders who were contacted were supportive of the proposed regulatory flexibility of reducing the submission frequency of declarations for companies that import fewer than 500 SSI engines into Canada in a calendar year.

In January and February 2016, the Department conducted a follow-up consultation with the stakeholders who were involved in the development of the proposed Amendments or who had inquired about its status. The follow-up consultation sought stakeholder confirmation of continued support for realigning Canadian emission standards with EPA standards and publishing the proposed Amendments. The Department received comments from two large industry associations representing engine manufacturers and the Canadian outdoor power equipment industry, as well as from two companies. The comments received indicated continued support for the proposed Amendments and for realignment of Canadian emission standards for SSI engines with those of the U.S. EPA. One commenter also reiterated the importance of sufficient lead time for industry between the publication of the final Amendments and the coming-into-force date.

Consultation following the publication of the proposed Amendments in the Canada Gazette, Part I

The publication of the proposed Amendments in the Canada Gazette, Part I, on June 11, 2016, initiated a 75-day public comment period during which interested parties were invited to submit their written comments. The proposed Amendments were also posted on the CEPA Environmental Registry to make them broadly available to interested parties. Further, the Department distributed an email or letter to all known interested parties to inform them of the proposed Amendments and the formal consultation process.

The Department received 14 written submissions concerning the proposed Amendments from 7 companies, 2 municipal government departments, 2 industry associations, and 3 members of the general public. The Department held conference calls with the two large industry associations representing engine manufacturers and the outdoor power equipment industry in Canada, and with member companies. The goal of these discussions was to consider the proposed Amendments and the written submissions received. In addition, modifications that would better align the regulatory text with the corresponding U.S. EPA rules and the other vehicle and engine emission regulations that the Department administers were discussed, including the introduction of a requirement to provide notification of the suspension or revocation of an EPA certificate of conformity, and changes to the defect information requirements of the Regulations.

The Department also sent letters to the Assembly of First Nations, the Métis National Council and the CEPA National Advisory Committee (NAC) to inform the members of these groups of the release of the proposed Amendments and the opportunity to be consulted and submit written comments. No comments were received from those Indigenous groups or from CEPA NAC members.

All comments were taken into consideration during the development of the Amendments. The following paragraphs summarize the key comments raised by interested parties and the Department’s analysis of these comments. Overall, Canadian stakeholders, including interested companies, municipal government departments and industry associations, expressed support for the Department’s initiative to align with the latest U.S. federal emission standards and further reduce air pollutant emissions from SSI engines in Canada.

Coming into force and lead time

Comment: A company requested additional lead time to redesign plastic fuel tanks that will be required to comply with the new evaporative emission standards under the Amendments, as well as with the existing and independent standards of the Canadian Standards Association (CSA). Specifically, this company requested that the 2019 model year be the first model year of SSI engines to which the more stringent standards for air pollutant emissions apply.

Response: The proposed Amendments indicated that the Phase 3 exhaust and evaporative emission standards would apply to the 2018 and later model year SSI engines in Canada. However, the Department agrees that additional lead time is needed in order for manufacturers to be able to obtain all necessary product certifications. The Phase 3 standards will therefore apply to the 2019 and later model year SSI engines in Canada.

Labelling requirements

Comment: One industry association requested several adjustments to the labelling requirements, in alignment with U.S. EPA provisions, including that the indication of the model year of the engine not be required; that stating the date of manufacture on the label be optional, if it is located elsewhere on the engine; that abbreviations be accepted to identify the exhaust emission control system; and that the total engine displacement not be required to be stated on the label if all of the engines in the emission family have the same displacement. It was also requested that the Amendments include an allowance for conformity with other emission standards to be stated on the label.

In addition, a company and an industry association requested a provision to allow another company’s name or logo to be placed on the label, in alignment with U.S. EPA provisions.

Response: The Department revised the labelling requirements in the Amendments to better align with the corresponding U.S. EPA labelling provisions. The requirement for indicating the model year of the engine on the label has been removed, given that the model year of an engine can be determined from the emission family number which is located on the engine label. Labelling provisions related to the identification of the manufacture date, exhaust emission control system and engine displacement have been modified to be better aligned with the corresponding EPA requirements. The labelling provisions do not prohibit other information from being on the label; thus, it is possible for a company to include information concerning conformity with other standards on the label.

Further, the Amendments have been modified to provide better alignment with EPA labelling provisions by allowing for the name and logo of another business to be placed on the label, other than the name and logo of the engine manufacturer, on the condition that there is a contractual agreement between the engine manufacturer and that other business named on the label, and that the evidence of conformity includes the name of that other business.

Running loss evaporative emission standards

Comment: One company requested that an executive order (i.e. a certification of conformity) issued by the California Air Resources Board be an acceptable method under the Amendments for demonstrating compliance with the running loss evaporative emission standards (caused from engine heat during operation).

Response: The Department agrees that the option of using an executive order issued by the California Air Resources Board is an acceptable method for demonstrating compliance with the running loss evaporative emission standards. This option is consistent with flexibility offered by the U.S. EPA. Use of this option is accepted on the condition that a copy of the executive order is included in the evidence of conformity.

Evidence of conformity

Comment: Two industry associations expressed concern with the requirement for SSI engine importers operating in Canada to retain certain evidence of conformity documents, specifically, a copy of the records submitted to the U.S. EPA in support of each application for an EPA certificate covering an engine, fuel line or fuel tank. Typically, only manufacturers who certify engines possess these documents, and given that the documents contain confidential business information, they are seldom released to third parties, such as engine importers operating in Canada.

Response: The requirement for evidence of conformity documents to be retained and submitted to the Department is a very important element for verifying compliance with the Regulations, and it is consistent with the other vehicle and engine emission regulations that the Department administers. The Department recognizes that it may not always be possible for the regulated party to obtain evidence of conformity documents from the manufacturers who certify engines. Therefore, the Department accepts evidence of conformity documents from third parties, typically the manufacturers certifying vehicles or engines, on behalf of the regulated party. The Amendments allow for a record to be kept of the contact information of the person who is retaining the evidence of conformity documents on behalf of the regulated party, in lieu of the regulated party retaining these documents. Further, for EPA-certified engines sold concurrently in Canada and the U.S., evidence of conformity is only required to be submitted for review upon request by the Minister.

Enforcement of the Amendments

Comment: Two companies encouraged the Department to have a high level of enforcement in place for bicycle engine kits, alleging that many non-compliant engines can easily be acquired by purchasing them via the Internet.

Response: The Department will enforce the Amendments in accordance with the Compliance and Enforcement Policy for CEPA, and in a manner that is consistent with the enforcement of the other vehicle and engine emission regulations that the Department administers, for all models of SSI engines. Incidents of non-compliance within the Department’s jurisdiction (i.e. contravention of federal environmental legislation) may be reported at any time to the Department by email (ec.enviroinfo.ec@canada.ca).

Regulatory cooperation

As set out in the Ozone Annex to the Canada–U.S. Air Quality Agreement, and in compliance with the mandate and principles of the Canada–U.S. Regulatory Cooperation Council, Canada has committed to develop and implement emission regulations under the CEPA for new off-road engines that are aligned with the federal emissions program of the U.S. EPA. The Amendments are consistent with this commitment and are a cost-effective alternative for Canada to achieve its chosen environmental objectives.

Since the Amendments will align Canadian emission standards for SSI engines with the standards in force in the U.S., some exchange of compliance verification and testing information between the governments of Canada and the U.S. is expected. This regulatory alignment and cooperation are consistent with Canada’s responsibilities established under the Canada–U.S. Regulatory Cooperation Council. Notably, as a member of this council, Canada has committed to more effective approaches to regulation that enhance the economic competitiveness and well-being of the two countries, while maintaining high standards with respect to public health and safety and environmental protection.

Rationale

Under the status quo, it is assumed that around 25% of SSI engines would not be compliant with the U.S. EPA Phase 3 emission standards, and that Canada would be vulnerable to increasing imports of non-compliant engines with corresponding impacts on the health and environment of Canadians. The Amendments are considered to be the best option to address this risk and further reduce the impacts of emissions from these engines in Canada. The regulatory framework will provide a level playing field for Canadian and American engine and machine manufacturing industries because it will prevent any one company from placing other companies under competitive pressure to import or manufacture less expensive engines that do not meet the Phase 3 standards.

Using the analytical assumptions previously discussed in this statement, it is projected that there will be quantified emission reductions over the first 14 years of implementation of the more stringent standards for air pollutant emissions from SSI engines (2019–2032), including about 20 000 fewer tonnes of NO_x emissions and 58 000 fewer tonnes of VOC emissions being released to the environment. Compared to the BAU scenario, the present value benefit of NO_x and VOC emissions avoided under the regulatory scenario is estimated to be between $140 million and $240 million. Also, it is estimated that companies importing SSI engines will realize reductions in administrative costs ($3 million), while consumers of such engines will realize pre-tax fuel savings ($10 million). The sum of these positive impacts yields a total present value benefit of approximately $153 million to $253 million. Incremental costs will be incurred by domestic importers and consumers of SSI engines that are not presently compliant with the Phase 3 standards. The increases in the costs of these engines are expected to result in a present value cost to importers and consumers of about $90 million (2015 Canadian dollars; 3% annual discount rate). The Amendments will also impose comparatively minor costs on domestic manufacturers ($550,000) and the federal government ($160,000), yielding a total present value cost of approximately $91 million. Altogether, the net benefits of the Amendments are estimated to be between $63 million and $163 million in present value terms.

The Amendments are structured in a manner that will deliver on the objectives of reducing air pollutant emissions from SSI engines by aligning Canadian standards and test procedures with those of the EPA and of minimizing regulatory administrative burden on companies. The Amendments were developed in consultation with stakeholders from industry, including engine and machine manufacturers, importers and industry associations, as well as with the provincial and territorial governments, environmental non-government organizations, and other federal government departments. Lastly, the Amendments are consistent with Canada’s commitment to align its regulatory standards for vehicle and engine emissions with those of the U.S., as set out in the Ozone Annex to the Canada–U.S. Air Quality Agreement, and in accordance with the mandate and principles of the Canada–U.S. Regulatory Cooperation Council.

Strategic environmental assessment

The Amendments have been developed under Canada’s Clean Air Regulatory Agenda (CARA). A strategic environmental assessment was completed for CARA and a public statement was issued in 2013. (see footnote 30) The assessment concluded that activities under CARA support the Federal Sustainable Development Strategy’s goal of minimizing the threats to air quality so that the air Canadians breathe is clean and supports healthy ecosystems.

Implementation, enforcement and service standards

The Amendments come into force six months after the day on which they are registered, while the more stringent standards for air pollutant emissions will apply to the 2019 and later model year SSI engines in Canada. The compliance promotion activities associated with the Amendments will be similar to those associated with the Regulations, which include providing information to regulated parties concerning the requirements of the Amendments, maintaining a website related to the Amendments on the CEPA Environmental Registry, distributing advisory emails and letters to stakeholders, and responding to inquiries, as required. A guidance document will also be updated and published on the Department’s website to describe the Phase 3 standards, the requirements concerning evidence of conformity, and the procedures that should be followed when submitting required documentation to the Minister.

Implementation and enforcement actions will be undertaken by the Department in accordance with the Compliance and Enforcement Policy for CEPA (the Policy), in the same manner as it is applied to the Regulations. (see footnote 31) As the Amendments will be made under CEPA, enforcement officers will apply the Policy when verifying compliance with the regulatory requirements. The Policy sets out the range of possible enforcement responses to alleged violations. Following an inspection or investigation, when an enforcement officer discovers an alleged violation, the officer will choose the appropriate enforcement action based on the Policy. The Amendments will not introduce any new service standard.

Performance measurement and evaluation

The expected outcome of the Amendments is the reduction of smog caused by air pollutant emissions from SSI engines. Clear and quantified performance indicators will be defined to measure the progress towards this outcome. For example, these indicators will include measurements of incidences of non-compliance reported by enforcement officers, compliance with requirements for records that regulated parties must submit to the Minister and emissions testing of samples of SSI engines. Compliance verification will be largely based on current programs that are carried out to verify compliance with the Regulations and other regulations related to emissions from transportation sources. Follow-up assessments will be scheduled in accordance with the Department’s regulatory planning cycle.

Contacts

Stéphane Couroux
Director
Transportation Division
Energy and Transportation Directorate
Environmental Stewardship Branch
Department of the Environment
351 Saint-Joseph Boulevard, 13th Floor
Gatineau, Quebec
K1A 0H3
Email: EC.APRegDevInfo-InfoDevRegPA.EC@ canada.ca

Matthew Watkinson
Director
Regulatory Analysis and Valuation Division
Economic Analysis Directorate
Strategic Policy Branch
Department of the Environment
200 Sacré-Cœur Boulevard, 10th Floor
Gatineau, Quebec
K1A 0H3
Email: ec.darv-ravd.ec@canada.ca

• Footnote a
  S.C. 2004, c. 15, s. 31
• Footnote b
  S.C. 1999, c. 33
• Footnote c
  S.C. 2011, c. 1, s. 5
• Footnote d
  S.C. 1999, c. 33
• Footnote 1
  SOR/2003-355
• Footnote 2
  SOR/2011-10
• Footnote 3
  Off-Road Small Spark-Ignition Engine Emission Regulations (http://www.ec.gc.ca/lcpe-cepa/eng/regulations/detailReg.cfm?intReg=81).
• Footnote 4
  The Phase 2 standards are described in part 90 of title 40 of the U.S. Code of Federal Regulations. “Electronic Code of Federal Regulations”. U.S. Government Printing Office (http://www.ecfr.gov/cgi-bin/ECFR?page=browse).
• Footnote 5
  Compliance with the hydrocarbon emission standards is expected to reduce emissions of hydrocarbons, volatile organic compounds (VOCs) and other toxic substances, including benzene, 1,3 butadiene, formaldehyde, acetaldehyde and acrolein.
• Footnote 6
  “Canada-U.S. Air Quality Agreement — Ozone Annex (2000)”. Department of the Environment (http://www.ec.gc.ca/air/default.asp?lang=En&n=Fa26FE79-1).
• Footnote 7
  The Phase 3 standards for exhaust and evaporative emissions are described in parts 1054 and 1060, respectively, of title 40 of the U.S. Code of Federal Regulations. “Electronic Code of Federal Regulations”. U.S. Government Printing Office (http://www.ecfr.gov/cgi-bin/ECFR?page=browse).
• Footnote 8
  “Final Rule for Control of Emissions From Nonroad Spark-Ignition Engines and Equipment”. U.S. EPA: (http://www.epa.gov/regulations-emissions-vehicles-and-engines/final-rule-control-emissions-nonroad-spark-ignition).
• Footnote 9
  The Phase 3 exhaust emission standards will remain the same as the Phase 2 standards for handheld machines powered by SSI engines, while the Phase 3 exhaust emission standards will increase in stringency relative to the Phase 2 standards for non-handheld machines powered by SSI engines.
• Footnote 10
  The emission standards in the U.S. that apply to this category of engine and associated fuel system can be found in part 1051 of title 40 of the U.S. Code of Federal Regulations. “Electronic Code of Federal Regulations”. U.S. Government Printing Office (www.ecfr.gov/cgi-bin/ECFR?page=browse).
• Footnote 11
  An altitude adjustment kit refers to components, such as additional jets for a carburetor, that can be added to an engine in order to comply with emission standards at high altitudes.
• Footnote 12
  For example, an emissions certification process for engines is complex and costly for governments, manufacturers and consumers. Aligning domestic emission standards and test procedures with those of the U.S., and accepting EPA certification as a means of demonstrating compliance with the Amendments (at least for engines sold concurrently in Canada and the U.S.), will allow Canada to benefit from the EPA’s emissions certification program.
• Footnote 13
  Canadian Cost-Benefit Analysis Guide: Regulatory Proposals. Treasury Board of Canada Secretariat (www.tbs-sct.gc.ca/rtrap-parfa/analys/analystb-eng.asp).
• Footnote 14
  The average of these portions, weighted by the respective engine populations, indicates that around 25% of all SSI engines imported into Canada are not compliant with the Phase 3 standards under the BAU scenario.
• Footnote 15
  “NONROAD Model (Nonroad Engines, Equipment, and Vehicles)”. U.S. EPA (www.epa.gov/moves/nonroad-model-nonroad-engines-equipment-and-vehicles).
• Footnote 16
  The present value of these benefits is between $90 million and $160 million using a 7% annual discount rate.
• Footnote 17
  “Canada’s Energy Future 2016: Energy Supply and Demand Projections to 2040”. National Energy Board (www.neb-one.gc.ca/nrg/ntgrtd/ftr/2016/index-eng.html).
• Footnote 18
  The regulatory changes relating to administrative requirements are described in more detail in the ‘“One-for-One” Rule’ and “Small business lens” sections.
• Footnote 19
  Under the BAU scenario, the following portions of SSI engines imported into Canada are assumed to be non-compliant with the Phase 3 standards: 20% of imported engines designed to be used in non-handheld machines; 34% of imported engines designed to be used in handheld machines; and 62% of imported “loose” engines (i.e. those engines not yet integrated into handheld or non-handheld machines).
• Footnote 20
  “Control of Emissions from Marine SI and Small SI Engines, Vessels, and Equipment: Final Regulatory Impact Analysis” (2008). U.S. EPA (www.epa.gov/nscep/index.html).
• Footnote 21
  Using a 7% annual discount rate, the present value of increased engine costs is estimated to be about $67 million.
• Footnote 22
  Canadian engine import data for the 2010 calendar year from the Canadian Border Services Agency indicate that the most common types of off-road machines powered by SSI engines are lawn mowers, trimmers, edgers, leaf blowers, brush cutters, chainsaws, and light commercial generator sets.
• Footnote 23
  There will be no change in administrative burden costs for individuals importing SSI engines for their own use, as they are not currently required to submit an importation declaration.
• Footnote 24
  In accordance with Canada’s Red Tape Reduction Regulations, all cost estimates in this section are presented in 2012 Canadian dollars using a 7% discount rate and a discounting base year of 2012.
• Footnote 25
  The non-rounded decrease in annualized average administrative burden costs was estimated to be $169,541, or $151 per business. For these calculations, the wage rate was assumed to be around $45 per hour (weighted hourly average).
• Footnote 26
  A small business is typically defined as any business, including its affiliates, that has fewer than 100 employees or between $30,000 and $5,000,000 in annual gross revenues. “Guide for the Small Business Lens”. Treasury Board of Canada Secretariat (www.tbs-sct.gc.ca/rtrap-parfa/hssbir-tcirpese/hssbirtcirpese00-eng.asp).
• Footnote 27
  This flexible option is already defined in the section concerning the “One-for-One” Rule, as the administrative provisions of the Regulations will only be changed for small businesses that import fewer than 500 engines in a calendar year.
• Footnote 28
  Examples of such regulations are the On-Road Vehicle and Engine Emission Regulations; the Marine Spark-Ignition Engine, Vessel and Off-Road Recreational Vehicle Emission Regulations; the Off-Road Compression-Ignition Engine Emission Regulations; and the Regulations.
• Footnote 29
  “Discussion Document: New standards for off-road small spark-ignition engines under consideration”. Department of the Environment (www.ec.gc.ca/lcpe-cepa/default.asp?lang=En&n=FB004F2D-1).
• Footnote 30
  The public statement regarding the strategic environmental assessment for CARA is available at the following address: www.ec.gc.ca/ee-ea/default.asp?lang=en&n=4F7D3B45-1.
• Footnote 31
  “Compliance and Enforcement Policy for CEPA (1999) — March 2001”. Department of the Environment: www.ec.gc.ca/lcpe-cepa/default.asp?lang=En&n=5082BFBE-1.