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Vol. 137, No. 18 — August 27, 2003 Registration CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999 Federal Halocarbon Regulations, 2003P.C. 2003-1203 13 August, 2003 Whereas, pursuant to subsection 332(1) of the Canadian Environmental Protection Act, 1999 (see footnote a) , the Minister of the Environment published in the Canada Gazette, Part I, on December 7, 2002, a copy of the proposed Regulations under the title Federal Halocarbon Regulations, 2002, substantially in the form set out in the annexed Regulations, and persons were given an opportunity to file comments with respect to the Regulations or a notice of objection requesting that a board of review be established and stating the reasons for the objection; Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of the Environment, pursuant to subsection 209(1) of the Canadian Environmental Protection Act, 1999 (see footnote b) , hereby makes the annexed Federal Halocarbon Regulations, 2003. FEDERAL HALOCARBON REGULATIONS, 2003 INTERPRETATION 1. The definitions in this section apply in these Regulations. "Act" means the Canadian Environmental Protection Act, 1999. (Loi) "air-conditioning system" means an air-conditioning system, including any associated equipment, that contains or is designed to contain a halocarbon refrigerant. (système de climatisation) "bromofluorocarbon" means a fully halogenated bromofluorocarbon each molecule of which contains one, two or three carbon atoms and at least one atom of bromine and one atom of fluorine. (bromofluorocarbure) "certificate" means a certificate recognized by three or more provinces, or by the province in which the work of the service technician who holds the certificate is being done, indicating successful completion of an environmental awareness course in recycling, recovery and handling procedures in respect of halocarbon refrigerants as outlined in the Refrigerant Code of Practice. (certificat) "certified person", in respect of a refrigeration system or an air-conditioning system, means a service technician who holds a certificate. (personne accréditée) "charging" means to add a halocarbon to a system. (charger) "chiller" means an air-conditioning system or refrigeration system that has a compressor, an evaporator and a secondary refrigerant. (refroidisseur) "chlorofluorocarbon" means a fully halogenated chlorofluorocarbon each molecule of which contains one, two or three carbon atoms and at least one atom of chlorine and one atom of fluorine. (chlorofluorocarbure) "fire-extinguishing system" means fire-extinguishing equipment, including portable or fixed equipment and any associated equipment, that contains or is designed to contain a halocarbon fire-extinguishing agent. (système d'extinction d'incendie) "halocarbon" means a substance set out in Schedule 1, whether existing alone or in a mixture, and includes isomers of any such substance. (halocarbure) "hydrobromofluorocarbon" means a hydrobromofluorocarbon each molecule of which contains one, two or three carbon atoms and at least one atom of hydrogen, one atom of bromine and one atom of fluorine. (hydrobromofluorocarbure) "hydrochlorofluorocarbon" means a hydrochlorofluorocarbon each molecule of which contains one, two or three carbon atoms and at least one atom of hydrogen, one atom of chlorine and one atom of fluorine. (hydrochlorofluorocarbure) "hydrofluorocarbon" means a hydrofluorocarbon each molecule of which contains only carbon, hydrogen and fluorine atoms. (hydrofluorocarbure) "installation" does not include the reactivation of a system by the same owner at the same site. (installation) "leak" means a release of a halocarbon from a system. (fuite) "military vehicle" means a vehicle that is designed to be used in combat, or in a combat support role, but does not include an administrative vehicle. (véhicule militaire) "owner" means to hold a right in or to have possession, control or custody of, to be responsible for the maintenance, operation or management of, or to have the power to dispose of, a system. (propriétaire) "perfluorocarbon" means a fully fluorinated fluorocarbon each molecule of which contains only carbon and fluorine atoms. (perfluorocarbure) "portable fire extinguisher" means a cylinder or cartridge containing a halocarbon that is used for extinguishing fires, that has a charging capacity of 25 kg or less and that can be carried or wheeled to the site of a fire. (extincteur portatif) "purge system" means a purge unit on a refrigeration system or an air-conditioning system, including any associated recovery equipment. (système à vidange) "reclamation", in respect of a halocarbon, means the recovery, re-processing and upgrading through processes such as filtering, drying, distilling and treating chemically in order to restore the halocarbon to industry-accepted reuse standards. (régénération) "recovery", in respect of a halocarbon, means (a) collection after it has been used; or (b) collection from machinery, equipment, a system or a container during servicing or before dismantling, decommissioning or destruction of the machinery, equipment, system or container. (récupération) "recycling", in respect of a halocarbon, means recovery and, if needed, cleaning by a process such as filtering or drying, and re-using to charge a system. (recyclage) "Refrigerant Code of Practice" means the Environmental Code of Practice for Elimination of Fluorocarbon Emissions from Refrigeration and Air-Conditioning Systems, published by the Department of the Environment in March, 1996, as amended from time to time. (Code de pratique en réfrigération) "refrigeration system" means a refrigeration system, including any associated equipment, that contains or is designed to contain a halocarbon refrigerant. (système de réfrigération) "service" includes any modification, charging, maintenance, repair, moving, dismantling, decommissioning, destruction, start-up and testing of a system, but does not include testing related to the manufacture and production of the system. (entretien) "ship" has the same meaning as in subsection 122(1) of the Act. (navire) "small air-conditioning system" means an air-conditioning system that is not contained in a motor vehicle and that has a refrigeration capacity of less than 19 kW as rated by the manufacturer. (petit système de climatisation) "small refrigeration system" means a refrigeration system, other than one that normally operates in, on or in conjunction with a means of transportation, that has a refrigeration capacity of less than 19 kW as rated by the manufacturer. (petit système de réfrigération) "solvent system" means an application or system that uses halocarbons as solvents, including cleaning applications and associated equipment containing or designed to contain a halocarbon solvent. It does not include those applications or systems that use halocarbons as laboratory analytical standards or laboratory reagents or in a process in which they are converted to another substance or are generated but ultimately converted to a different substance. (système de solvants) "system", unless the context requires otherwise, means an air-conditioning system, a fire-extinguishing system, a refrigeration system or a solvent system. (système) APPLICATION 2. (1) These Regulations apply in respect of systems located in Canada that are (a) owned by Her Majesty in right of Canada, a board or an agency of the Government of Canada, a Crown corporation, as defined in subsection 83(1) of the Financial Administration Act, or a federal work or undertaking; or (b) located on aboriginal lands or federal lands. (2) These Regulations do not apply to foam products. PROHIBITIONS 3. No person shall release, or allow or cause the release of, a halocarbon that is contained in (a) a refrigeration system or an air-conditioning system, or any associated container or device, unless the release results from a purge system that emits less than 0.1 kg of halocarbons per kilogram of air purged to the environment; (b) a fire-extinguishing system or any associated container or device, except to fight a fire that is not set for training purposes, or unless the release occurs during the recovery of halocarbons under section 7; or (c) a container or equipment used in the reuse, recycling, reclamation or storage of a halocarbon. 4. (1) No person shall install a system that operates or is intended to operate with a halocarbon listed in any of items 1 to 9 of Schedule 1 unless authorized to do so by a permit issued under these Regulations. (2) Effective January 1, 2005, no person shall install a solvent system that operates or is intended to operate with a halocarbon listed in item 11 or 12 of Schedule 1 unless authorized to do so by a permit issued under these Regulations. 5. (1) No person shall use a halocarbon listed in any of items 1 to 9 of Schedule 1 as a solvent in a solvent system. (2) Effective January 1, 2005, no person shall use a halocarbon listed in item 11 or 12 of Schedule 1 as a solvent in a solvent system unless authorized to do so by a permit issued under these Regulations. 6. (1) No person shall store, transport or purchase a halocarbon unless it is in a container designed and manufactured to be refilled and to contain that specific type of halocarbon. (2) Subsection (1) does not apply in respect of halocarbons used as laboratory analytical standards or laboratory reagents. RECOVERY 7. (1) Subject to subsection (2), a person that installs, services, leak tests or charges a refrigeration system, an air-conditioning system or a fire-extinguishing system, or that does any other work on any of those systems that may result in the release of a halocarbon, shall recover, into a container designed and manufactured to be refilled and to contain that specific type of halocarbon, any halocarbon that would otherwise be released during those procedures. (2) A person that recovers halocarbons from a fire-extinguishing system shall use recovery equipment with a transfer efficiency of at least 99% as referred to in the publication ULC/ORD-C1058.5-1993, of the Underwriters' Laboratories of Canada, entitled Halon Recovery and Reconditioning Equipment. (3) The reference to the publication in subsection (2) shall be read as excluding its preface. 8. (1) Before dismantling, decommissioning or destroying any system, a person shall recover all halocarbons contained in the system into a container designed and manufactured to be refilled and to contain that specific type of halocarbon. (2) Before dismantling, decommissioning or destroying a system, a person shall affix a notice to the system containing the information set out in column 3 item 1 of Schedule 2. (3) No person shall remove a notice referred to in subsection (2) except to replace it with another such notice. (4) In case of the dismantling, decommissioning or destruction of any system, the owner shall keep a record of the information contained in the notice referred to in subsection (2). INSTALLATION, SERVICING, LEAK TESTING AND CHARGING Refrigeration Systems and Air-Conditioning Systems 9. (1) Only a certified person may install, service, leak test or charge a refrigeration system or an air-conditioning system or do any other work on the system that may result in the release of a halocarbon. (2) A person who does any of the work referred to in subsection (1) shall do so in accordance with the Refrigerant Code of Practice. (3) No person shall charge a refrigeration system or an air-conditioning system with a halocarbon listed in any of items 1 to 9 of Schedule 1 for the purpose of leak testing the system, except when recommended in the Refrigerant Code of Practice. 10. (1) A certified person who conducts a leak test on a refrigeration system or an air-conditioning system shall affix a notice to the system containing the information set out in column 3 of item 2 of Schedule 2. (2) No person shall remove a notice referred to in subsection (1) except to replace it with another such notice. (3) The owner shall keep a record of the information contained in the notice referred to in subsection (1). 11. (1) The owner shall conduct a leak test, at least once every 12 months, of all of the components of a refrigeration system or an air-conditioning system that come into contact with a halocarbon. (2) Subsection (1) does not apply to small refrigeration systems or small air-conditioning systems, or to air-conditioning systems that are designed for occupants in motor vehicles. 12. Subject to section 14, no person shall charge a refrigeration system or an air-conditioning system unless, before charging it, (a) a certified person leak-tests the system; and (b) if a leak is detected, the certified person notifies the owner and the owner repairs the leak. 13. As soon as possible after a leak from a refrigeration system or an air-conditioning system is detected, and in any case within seven days after the day on which the leak is detected, the owner of the system shall (a) repair the leak; (b) isolate the leaking portion of the system and recover the halocarbon from that portion; or (c) recover the halocarbon from the system. 14. (1) If a leak is detected from a refrigeration system or an air-conditioning system and it is necessary to charge the system to prevent an immediate danger to human life or health, section 12 does not apply to the system during the period in which the danger persists, up to a maximum of seven days after the day on which the leak is detected. (2) If a refrigeration system or an air-conditioning system is charged under the circumstances described in subsection (1), (a) the person who charged the system shall immediately notify its owner of the charge; and (b) the owner shall, within seven days after receiving notice under paragraph (a), submit a written record to the Minister describing
(ii) the amount of halocarbon charged to the system, and (iii) the date of repair of the leak or recovery of the remaining halocarbon from the system. 15. No person shall charge an air-conditioning system that is designed for occupants in motor vehicles with a halocarbon listed in any of items 1 to 9 of Schedule 1. 16. Effective 90 days after the coming into force of these Regulations, no person shall charge a refrigeration system that is installed in, attached to, or that normally operates in, on or in conjunction with a means of transportation, other than a chiller or a refrigeration system for use on a military ship, with a halocarbon listed in any of items 1 to 9 of Schedule 1. 17. Effective January 1, 2005, no person shall charge a system listed below with a halocarbon listed in any of items 1 to 9 of Schedule 1: (a) a refrigeration system, other than a chiller, a small refrigeration system or a refrigeration system for use on a military ship; and (b) an air-conditioning system, other than a chiller, a small air-conditioning system or an air-conditioning system for use on a military ship. 18. (1) Subject to subsection (2), effective January 1, 2005, no person shall charge a chiller, other than one for use on a military ship, that has undergone an overhaul that includes the following procedure or repair with a halocarbon listed in any of items 1 to 9 of Schedule 1: (a) the replacement or modification of an internal sealing device; (b) the replacement or modification of an internal mechanical part other than
(ii) an oil pump, (iii) a float assembly, and (iv) a vane assembly, in the case of a chiller with a single-stage compressor; or (c) any procedure or repair that resulted from the failure of an evaporator or a condenser heat-exchanger tube. (2) From January 1, 2005 to December 31, 2009, an owner of a chiller referred to in subsection (1) may charge the chiller with a halocarbon listed in any of items 1 to 9 of Schedule 1 but no person shall operate that chiller later than one year after the day on which it was charged, unless it no longer contains any halocarbon listed in any of those items. (3) The owner of a chiller charged under subsection (2) shall provide written notice to the Minister within 14 days after the chiller is charged, which notice shall contain the information set out in column 3 of item 3 of Schedule 2. 19. Effective January 1, 2010, no person shall charge a refrigeration or an air-conditioning system for use on a military ship with a halocarbon listed in any of items 1 to 9 of Schedule 1. 20. Effective January 1, 2015, no person shall operate or permit the operation of any chiller that contains a halocarbon listed in any of items 1 to 9 of Schedule 1. 21. No person shall install or operate or permit the operation of a purge system unless it emits less than 0.1 kg of halocarbons per kilogram of air purged to the environment. Fire-Extinguishing Systems 22. (1) Except in accordance with the standards set out in the publication ULC/ORD-C1058.18-1993, of the Underwriters' Laboratories of Canada, entitled The Servicing of Halon Extinguishing Systems, no person shall install, service, leak-test or charge a fire-extinguishing system, or do any other work on the system that may result in the release of a halocarbon. (2) The reference to the publication in subsection (1) shall be read as excluding its preface. 23. No person shall charge a fire-extinguishing system with a halocarbon listed in any of items 1 to 9 of Schedule 1 for the purpose of leak-testing the system. 24. (1) Every owner of a fire-extinguishing system shall leak-test the system at least once every 12 months in accordance with the standards set out in the publication referred to in subsection 22(1). (2) Subsection (1) does not apply to fire-extinguishing systems whose cylinder or cartridge has a charging capacity of 10 kg or less and that are located in military vehicles, military ships or military aircraft, or to portable fire extinguishers. 25. Subject to section 28, no person shall charge a fire-extinguishing system unless, before charging it, (a) the system is leak-tested; and (b) if a leak is detected, the person who conducts the test notifies the owner and the owner repairs the leak. 26. (1) Subject to subsection (2) and section 28, no person shall service a fire-extinguishing system without first (a) notifying the owner of the intended service; and (b) affixing a notice to the control panel of the system to indicate that it is out of operation during the period of service. (2) Paragraph (1)(b) does not apply to portable fire extinguishers. 27. As soon as possible after a leak from a fire-extinguishing system is detected, and in any case within seven days after the day on which the leak is detected, the owner of the system shall (a) repair the leak; (b) isolate the leaking portion of the system and recover the halocarbon from that portion; or (c) recover the halocarbon from the system. 28. (1) If a leak is detected from a fire-extinguishing system and it is necessary to charge the system to prevent an immediate danger to human life or health, sections 25 and 26 do not apply to the system during the period in which the danger persists, up to a maximum of seven days after the day on which the leak is detected. (2) If a fire-extinguishing system is charged under the circumstances described in subsection (1), (a) the person who charged the system shall immediately notify its owner of the charge; and (b) the owner shall, within seven days after receiving notice under paragraph (a), submit a written record to the Minister describing
(ii) the amount of halocarbon charged to the system, and (iii) the date of repair of the leak or recovery of the remaining halocarbon from the system. 29. No person shall charge a portable fire extinguisher, other than one for use on an aircraft, a military vehicle or a military ship, with a halocarbon listed in any of items 1 to 9 of Schedule 1, unless authorized to do so by a permit issued under these Regulations. 30. (1) Subject to subsection (2), effective January 1, 2005, no person shall charge a fire-extinguishing system, other than a portable fire extinguisher or a fire-extinguishing system for use on an aircraft, a military vehicle or a military ship, with a halocarbon listed in any of items 1 to 9 of Schedule 1, unless authorized to do so by a permit issued under these Regulations. (2) From January 1, 2005 to December 31, 2009, an owner of a system referred to in subsection (1) may charge the system with a halocarbon listed in any of items 1 to 9 of Schedule 1 but no person shall operate that system later than one year after the day on which the system is charged, unless it no longer contains any halocarbon listed in any of those items. (3) The owner of a system charged under subsection (2) shall provide written notice to the Minister within 14 days after the system is charged, which notice shall contain the information set out in column 3 of item 4 of Schedule 2. SERVICE LOGS 31. (1) The owner of a refrigeration system, an air-conditioning system or a fire-extinguishing system shall maintain a written record, or a record in an electronic format compatible with that used by the Minister, in which the information set out in column 3 of item 5 or 6, as the case may be, of Schedule 2 is entered whenever the system is installed, serviced, leak-tested or charged or if any other work is done on it that may result in the release of a halocarbon. (2) The owner of a solvent system shall maintain a written record, or a record in an electronic format compatible with that used by the Minister, in which the information set out in column 3 of item 7 of Schedule 2 is entered whenever the system is charged with more than 10 kg of a halocarbon. RELEASE REPORTS 32. In the event of a release of 100 kg or more of a halocarbon from a system, or from a container or equipment used in the reuse, recycling, reclamation or storage of a halocarbon, the owner of the system, container or equipment shall submit the following reports to the Minister, within the periods indicated: (a) within 24 hours after the release is detected, a verbal or written report, or a report in an electronic format compatible with that used by the Minister, that indicates the name of the owner, the type of halocarbon released and the type of system, container or equipment from which it was released; and (b) within 14 days after the release is detected, a written report, or a report in an electronic format compatible with that used by the Minister, containing the information set out in column 3 of item 8 of Schedule 2. 33. (1) In the event of a release of more than 10 kg but less than 100 kg of a halocarbon from a system, or from a container or equipment used in the reuse, recycling, reclamation or storage of a halocarbon, the owner of the system, container or equipment shall submit to the Minister a report in written format, or in an electronic format compatible with that used by the Minister, that contains the information set out in column 3 of item 8 of Schedule 2. (2) The owner shall submit the release report required by subsection (1) twice annually, not later than 30 days after January 1 and July 1. PERMITS 34. (1) If no technically and financially feasible alternative to the use of a halocarbon listed in any of items 1 to 9, 11 or 12 of Schedule I, as the case may be, exists that could have a less harmful impact on the environment and on health, an owner shall submit to the Minister an application for a permit on a form that the Minister provides, and that contains the information set out in column 3 of item 9 or 10, as the case may be, of Schedule 2, if the owner proposes to (a) install a fire-extinguishing system that operates or is intended to operate with a halocarbon listed in any of items 1 to 9 of Schedule 1 as a fire-extinguishing agent; (b) charge a portable fire extinguisher that is not to be used on an aircraft, military ship or military vehicle with a halocarbon listed in any of items 1 to 9 of Schedule 1; or (c) effective January 1, 2005
(ii) install a solvent system that operates or is intended to operate with a halocarbon listed in item 11 or 12 of Schedule 1, or (iii) use a halocarbon listed in item 11 or 12 of Schedule 1 as a solvent in a solvent system. (2) Unless the Minister has received notice under subsection 30(3) in respect of the same system, the Minister shall issue the permit in respect of the system, valid for one year beginning on the date of issuance, if the owner, on the form, (a) declares that no technically and financially feasible alternative to the use of a halocarbon listed in any of items 1 to 9, 11 or 12 of Schedule 1, as the case may be, exists that could have a less harmful impact on the environment and on health; and (b) provides information in support of the declaration. 35. (1) The Minister may refuse to issue a permit under subsection 34(2) or may cancel a permit issued under that subsection if any false or misleading information has been submitted in support of the application for the permit. (2) The Minister shall not cancel a permit unless the Minister (a) has provided the permit holder with written reasons for the cancellation; and (b) has given the permit holder an opportunity to make representations, either verbally or in writing, in respect of the cancellation. LOGS, NOTICES, RECORDS AND REPORTS 36. (1) Owners shall keep all logs, notices, records and reports required by these Regulations in Canada for a period of at least five years after the date that they are prepared or submitted, respectively. (2) Subject to subsections (3) and (4), owners shall keep a copy of all logs, notices, records and reports required by these Regulations with respect to a system at the premises or site at which the system is located. (3) In the case of a system located on a means of transportation, the owner shall keep a copy of all logs, notices, records and reports required by these Regulations with respect to that system at a single location occupied by the owner. (4) In the case of a system located on unoccupied premises or an unoccupied site, the owner shall (a) keep a copy of all logs, notices, records and reports required by these Regulations in respect of that system at a single location that is occupied by the owner; (b) submit a report containing the information set out in column 3 of item 11 of Schedule 2 to the Minister no later than January 1, 2004; and (c) submit any change in the information required under paragraph (b) to the Minister within 30 days after the change. REPEAL 37. The Federal Halocarbon Regulations (see footnote 1) are repealed. COMING INTO FORCE 38. These Regulations come into force on the day on which they are registered. SCHEDULE 1 LIST OF HALOCARBONS
SCHEDULE 2 INFORMATION TO BE CONTAINED IN DOCUMENT
REGULATORY IMPACT (This statement is not part of the Regulations.) Description The Montreal Protocol Recognizing that chlorofluorocarbons (CFC) and Halons deplete the ozone layer and have adverse effects on the environment, Canada, along with 23 other nations, signed the Montreal Protocol on Substances that Deplete the Ozone Layer on September 16, 1987. Parties to the Protocol, now totaling over 180, have implemented control measures to achieve emissions reductions of Ozone Depleting Substances (ODS). These reductions are intended to prevent damage resulting from the gradual destruction of the ozone layer and thus contribute to protecting the ecosystem and human health. Since 1987, Canada has adopted regulations to meet its Montreal Protocol commitments. Former Federal Halocarbon Regulations In 1999, Environment Canada published the Federal Halocarbon Regulations under the authority of the Canadian Environmental Protection Act, now replaced with the Canadian Environmental Protection Act, 1999 (CEPA 1999). The purpose of these Regulations was to reduce and prevent emissions of ozone-depleting substances and of their halocarbon alternatives from equipment used on federal and aboriginal lands, and by federal works and undertakings. The Federal Halocarbon Regulations applied to halocarbon refrigeration, air conditioning, fire extinguishing and solvent cleaning systems, as well as any associated containers or devices located on federal land or aboriginal land, or part of a federal work or undertaking. The Federal Halocarbon Regulations addressed ODS as well as their halocarbon alternatives that have a high global warming potential, namely hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs). The Federal Halocarbon Regulations, 2003 The Federal Halocarbon Regulations, 2003 replace the Federal Halocarbon Regulations. The purpose of the regulations is to implement regulatory measures to achieve an orderly transition from CFCs and Halons to alternative substances and technologies as per Canada's Strategy to Accelerate the Phase-Out of CFC and Halon Uses and to Dispose of the Surplus Stocks and to address administrative issues that have been identified concerning the former regulations. These Regulations are essentially the same as the former Federal Halocarbon Regulations, with the exception of the implementation of new initiatives under Canada's Ozone Layer Protection Program and addressing various administrative issues, which are outlined below. Due to the substantial changes to the structure of the Federal Halocarbon Regulations and for the additional requirements, it was decided to develop the new Federal Halocarbon Regulations, 2003 to replace the former regulations. The regulations include the following new measures: Prohibit charging mobile refrigeration systems with CFCs effective three months after the coming into force of these Regulations; Prohibit charging refrigeration systems with CFCs effective January 1, 2005; Prohibit charging air conditioning systems with CFCs effective Prohibit charging chillers with CFCs at the next overhaul of the chiller effective January 1, 2005. An exemption is available between January 1, 2005 and December 31, 2009, to permit the charge of the chiller with CFCs following an overhaul and allow for the continued operation of the chiller. This exemption is available on the condition that the chiller is either converted or replaced such that it no longer contains CFCs no later than 12 months from the date of recharge. Prohibit the operation of chillers with CFCs effective January 1, 2015; Prohibit charging fixed fire extinguishing systems, hereinafter 1301 Total Flooding Systems, with Halons effective January 1, 2005. An exemption is available between January 1, 2005 and December 31, 2009, to permit the charge of the 1301 total flooding system with Halons and allow for the continued operation on the condition that the system is replaced with an alternative fire extinguishing agent no later than 12 months from the date of refill. This prohibition is subject to critical use exemptions; Amend the application section to reflect Part 9 under CEPA 1999. The Regulations apply to departments, boards and agencies of the Government of Canada; federal works and undertakings; aboriginal land, federal land, persons on that land and other persons insofar as their activities involve these lands; and Crown corporations, as defined in subsection 83(1) of the Financial Administration Act, hereinafter the regulated community; and Add bromochloromethane (Halon 1011) to the list of controlled substances as per Canada's international commitments. The Regulations come into force at the date of their registration. Alternatives 1. Under a voluntary approach, the regulated community would not have been legally required to comply with specific criteria; consequently, this approach would not have ensured that the expected objectives of controlling ODS releases and their halocarbon alternatives be achieved. Therefore, this approach has been rejected. 2. An economic instrument implementing a charge (fee) would have required that equipment owners within the regulated community monitor their releases of ODSs and their halocarbon alternatives since a charge would have been expressed in dollars per kg of releases. This monitoring has been considered cost prohibitive. 3. A tradable permit system would have required equipment owners within the regulated community to monitor the volume of purchased or released ODSs and their halocarbon alternatives, since each permit issued would have corresponded to a used or released volume over one year. This annual volume would have been used as a baseline. Thus, the implementation of this economic instrument would have required users to measure and report on their ODS and halocarbon alternative uses and/or releases. In addition, implementation of an emission-trading instrument would have required the establishment of a database before its promulgation, which would have delayed the control of targeted dates and would also have involved significant administration costs. Therefore, this approach has also been rejected. 4. A regulation has been selected as the best option to achieve expected environmental goals of adding further controls on ODS releases and their halocarbon alternatives in the shortest time frame, and also in terms of minimizing effects on the regulated community. Benefits and Costs It is estimated that the regulations will reduce the release of 1146 tonnes (2464 Ozone Depleting Potential (ODP) tonnes) of CFCs and Halons into the atmosphere over the period of 2003 to 2014. Overall, there is a net benefit to Canadian society from implementing the Regulations. The net benefit (benefits minus costs) is estimated to be in the order of $88 million. Benefits stem from avoided ecosystem and human effects, whereas compliance and ODS disposal costs will be incurred. There are also costs to the government to implement and enforce the regulations. It is anticipated that the Regulations will have a small effect on the above costs. Uncertainty analysis concludes that the net benefit is always positive, indicating a low risk that the regulations will result in a negative net benefit. All figures are reported in year 2002 dollars, and estimated using a central discount rate of 5 per cent. Problem Identification The regulations will accelerate the phase-out of CFC and Halon use in the regulated community and will also require the disposal of surplus CFC and Halon stocks. By ensuring the safe recovery and disposal of surplus ODSs, the Regulations will avoid the release of a significant quantity of ODSs into the atmosphere. Only CFC and Halon uses are targeted by the Regulations, as these are the only substances for which surpluses are expected in the near future (see footnote 2) . The regulations will help avoid further depletion of the ozone layer. The avoided release of CFCs and Halons created by the accelerated phase-outs is expected to reduce the negative effects of ultra-violet radiation on humans and ecosystems. Thus, the Regulations are expected to generate societal benefits in terms of avoided effects on humans and ecosystems. These effects can be identified, and in many cases, quantified and monetized. In addition, the replacement of older refrigeration and air conditioning equipment with newer energy-efficient alternatives is expected to yield cost savings to owners as well as a reduction in emissions that contribute to air pollution and global climate change. Given the difficulty of quantifying and monetizing these benefits, they have not been accounted for in the monetized estimate of the net benefit. If these benefits were monetized, the size of the net benefit of the regulations would be larger. The regulations will cause owners within the regulated community to replace equipment and thus increase costs. Although CFC and Halon disposal costs will be incurred as a result of the Regulations, equipment owners will have access to an industry-led CFC disposal service that is funded through an existing importation levy on hydrochlorofluorocarbons (HCFCs). Thus, the equipment owners subject to the Regulations will not directly pay for the disposal costs of their surplus CFC stocks. There is no similar disposal program for Halon surplus stocks in Canada at the present time. The disposal costs for surplus CFC and Halon stocks have been accounted for in the analysis of the effect of the regulations. Analysis of the Net Benefit Regulatory policy requires the identification and monetization of costs, benefits and net benefit of regulatory proposals. In the following section, the results of the net benefit analysis of the regulations are presented. The net benefit analysis identifies, quantifies and monetizes the costs and benefits of the regulations. The results of the analysis provide assurance that the regulations provide a net benefit to Canadian society. A positive net benefit satisfies a regulatory policy requirement that states that the benefits of a Regulation must exceed the costs. In the following section, the steps taken to estimate the costs, benefits and net benefit of the regulations are presented. Step 1: Define Targeted Sectors and Phase-out Measures As a first step, the targeted sectors and the accelerated phase-out measures for the targeted equipment are identified. The Regulations target the equipment and CFC and Halon uses identified in Table 1.
* Commercial air conditioning will not be affected by the Regulations because the sector is not using CFCs. One implementation option (Measure 1 of Table 2, below) was investigated for chiller equipment (see footnote 3) . The option assumes that 120 Units that are 25 years old and younger will be required to be retrofitted over a period of 10 years starting in 2005. It is important to note that the chiller option applies to approximately 30 per cent of the current chiller population. Approximately 70 per cent of the current population will not be affected by the accelerated phase-out because the equipment is reaching the end of its effective life span. The phase-out measures (Measures 2 through 4) for commercial/industrial refrigeration, mobile refrigeration and Total Flooding Systems are presented in Table 2. The disposal of surplus stocks of CFCs and Halons will be ongoing throughout the life of the Regulations.
Step 2: Identify Inventories and Forecast Baseline In this step, the baseline CFC and Halon quantities and equipment inventory for the starting years of the regulatory measures are estimated. CFC and Halon starting equipment and standing stock inventories were obtained from Smale, 1999 (see footnote 4) and Shapiro, 1998 (see footnote 5) respectively. It was estimated that the regulated community account for 10 per cent of the national CFC and Halon inventory presented in the Smale and Shapiro reports, with the exception of the mobile refrigeration sector, which accounts for 50 per cent. For the chillers sector, the Chemicals Control Division at Environment Canada provided estimates of the starting equipment inventory. The CFC chiller inventory is based on information obtained from industry. CFC and Halon emission reductions attributable to the Regulations are provided in Table 3.
* It is important to note that these values are not adjusted to ODP values and are scaled in the net benefit analysis based on the ODP value of the CFCs and Halons controlled. For example, the ODP value for Halons is 10, indicating that the ODP inventory in the Total Flooding Systems is 660 ODP tonnes. It is estimated that 46 per cent of the CFCs in commercial/industrial equipment has an ODP value of 0.334 (R-502), while 64 per cent of the standing stock is R-502 with the same ODP value of 0.334. ** CFC operating losses from chiller equipment have been accounted for in the estimate of emission reductions attributable to the Regulations. For the 1301 Total Flooding Systems, it was assumed that 40 per cent of the Halon inventory is in bulk storage and will be subject to the disposal measure. This assumption implies that 60 per cent of the total inventory would be subject to the Regulations through equipment replacement or retrofitting. However, due to critical use exceptions, 10 per cent of the equipment inventory is not subject to the regulations. Therefore, 54 per cent of the total inventory is subject to Measure 4. To estimate the number of retrofits and equipment replacements that will result from the Regulations, the total ODS tonnes in Table 3 are divided by the amount of CFCs and Halons in the equipment. The number of retrofits and replacements are then multiplied by the cost of retrofits and replacements to estimate the compliance costs of the Regulations. The average ODS in a single piece of equipment was assumed to be: (see footnote 6) Chillers — 500 kg Commercial/Industrial refrigeration — 121 kg Mobile Refrigeration — 15 kg Total Flooding Systems — 46 kg The average ODS in mobile refrigeration equipment is based on a weighted estimate of the varying types of equipment covered in this sector. Step 3: Estimation of Costs and Benefits The following section provides the assumptions used to estimate the monetized costs and benefits of the Regulations. Estimation of Costs The costs of the Regulations stem from an accelerated phase-out of equipment using CFCs and Halons. Incremental compliance costs will be incurred due to acceleration in the number of equipment retrofits and replacements, plus the disposal of surplus stocks. Government enforcement costs will also result from the Regulations. Compliance costs are the costs to replace or retrofit equipment in order to comply with the Regulations. Data on compliance costs for equipment retrofits and replacements was obtained from ARC, 1997 (see footnote 7) . Subsequent to the report, Environment Canada supplemented and verified the cost estimates. For example, compliance costs for the mobile refrigeration measure are based on a weighted estimate of the varying equipment covered in this sector. Also, discussions with industry identified recent estimates of the cost of disposing of CFCs and Halons. The equipment compliance cost assumptions used to estimate the compliance costs of the Regulations are presented in Table 4, items 1 to 4. Low, central and high costs identify a range where the actual compliance costs are most likely to fall within. These ranges are used in the uncertainty analysis, which is discussed below.
* It is assumed that the replacement life of retrofitted chillers will be extended by 10 years beyond the normal capital life. As mentioned earlier, the equipment owners will not directly pay for the costs of disposing their surplus stocks of CFCs. Instead, an industry led initiative (financed through an import levy on HCFCs) will collect and dispose of the surplus stock of CFCs. Thus, the costs to dispose of CFC stocks will not burden the equipment owners, but instead importers of HCFCs and ultimately various users of HCFCs. As mentioned earlier, there is no similar disposal program for Halon surplus stocks in Canada at the present time. Government Enforcement Costs: It is estimated that an additional two employees working full-time (EWFT) will be required per year as a result of the Regulations. The additional enforcement resource requirements are based on estimates of the increased scope of application of the regulated community and on the current rates of non-compliance. The cost for each additional EWFT is valued at $62,000, to which are added benefits of $12,400, costs of office accommodation of $8,060, and Core support services costs of $9,300 (including as pay and administration, equipment, planning and reporting). In addition, costs of $30,000, referred to as overhead and management costs, are likely to be incurred for travel and accommodation and rental/contracting of special services that are related to on-site inspections for each of the additional EWFT (e.g., specialized testing equipment; charter of an aircraft to reach a remote site). Thus, the incremental government enforcement costs resulting from the Regulations are estimated to be $243,520 per year. It should be noted that these enforcement costs do not take into consideration expenses associated with legal fees if non-compliance results in injunction and/or prosecution. Government Compliance Promotion Costs: No additional costs for compliance promotion are expected. Summary of Compliance Costs The total compliance costs are presented in Table 5, and estimated to be in the order of $31 million.
Estimation of Benefits Since the early 1990's, Environment Canada has been conducting studies that estimate the monetized benefits of banning the production, importation and uses of ODSs. These studies estimate the benefits created by reduced ODS emissions, the subsequent avoidance of a thinning ozone layer and the resulting changes in the exposure of humans and ecosystems to ultra-violet radiation. The benefits of Regulations that reduce the release of ODSs are avoided future damages to humans and ecosystems. Environment Canada uses a method developed by ARC to estimate the monetary value of reducing the release of one tonne of an ODS. The monetized estimate can also be used on an ozone depleting potential (ODP) basis and applied or scaled to a class of chemicals with an ODP value. The types of benefits that are monetized include: Health — avoided skin cancers, cataracts and cancer fatalities; Materials — avoided damages to synthetic polymers in the commercial sector; Fisheries — avoided damages of ultra-violet radiation on aquatic ecosystems; and Agricultural — avoided damages of ultra-violet radiation on crops. The ARC method uses an ultra-violet radiation exposure model developed by the United States Environmental Protection Agency to estimate health benefits and also transfers non-health benefits (materials, fisheries and agricultural) to the Canadian context. There has been a wide range of health and non-health benefit values reported by ARC. The low-end estimate for health and non-health benefits from regulatory programs (bans), if Canada acts alone, is $11,000 to $45,000, with a central value of $22,000 per tonne of ODP removed. This low value benefit assumes that Canada will act alone and will not receive a portion of the larger global benefit created if all countries act to reduce ODS emissions. The high-end benefit estimate is in the order of $700,000 if Canada acts within the context of the Montreal Protocol (joint action of signatories). That is, a global reduction in ODS emissions would produce global benefits from which Canada benefits more than if Canada acts alone. Phase-out strategies for the CFC and Halon uses are also being implemented by a number of signatories to the Montreal Protocol. Therefore, some combination of global and Canada-alone benefits must be factored into the analysis. To be conservative (underestimate the benefits) the analysis assumes a benefit range produced by ARC (i.e., more weight is placed on the lower benefit when Canada acts alone). The range used in the analysis includes a low ($11,025), central ($22,050) and high ($234,000) benefit value per tonne of ODP removed. The high value reflects the fact that one third of signatories are taking action to accelerate the phase-out of CFCs and Halons uses ($700,000/tonnex0.33=$231,000/tonne). This range produces a mean for health and non-health benefit value in the order of $88,000 per tonne of ODP removed. It is recognized that the uncertainty inherent in this monetized benefit is significant. Consequently, uncertainty testing (discussed below) has been conducted to identify the effect of the uncertainty in the benefits estimate on the net benefit (present value of benefits minus costs) of the Regulations. Summary of Benefits The estimated benefits are presented in Table 6, and are predicted to be in the order of $119 million.
Step 4: Calculate the Net Benefit and Present the Results Chillers. The results of net benefit analysis [Net Present Value (NPV) estimate] for the chillers sector are presented in Table 7, below. As can be seen, the option produces a positive NPV. The range of the NPV is always positive, indicating a high probability that the option will yield a positive benefit to society. Other Measures. Table 7 also provides an overview of the analysis results for the other measures. All measures produce significant benefits (i.e., NPVs are always positive). The benefits for Measure 4 and the disposal of surplus stocks are high, given the ODP value for Halon 1311 is 10. These ODP factors are used to scale the ODS tonnes removed by the Regulations to benefit estimates generated for ODP values (i.e., given that the benefits are reported per tonne of ODS).
The Net Benefit of the Regulations The net benefit of the regulations, including enforcement costs, is estimated to be in the order of $87 million. The net benefit is significantly positive, indicating that the regulations are desirable from a societal perspective. Step 5: Uncertainty Analysis Uncertainty is factored into the analysis through the definition of uncertainty ranges around key variables, such as those contained in Table 4. The statistical software @Risk was used to factor uncertainties into the estimate of the net benefit. @Risk uses Monte Carlo sampling techniques to determine an expected value and confidence intervals for each of the regulatory measures. Consequently, the estimated net benefit is really a mean value, or central estimate, of a probability distribution of likely net benefit outcomes. This distribution of possible outcomes also provides insight on if and when the net benefit is negative, given the uncertainty assumptions built into the analysis. The likelihood of a negative net benefit estimate provides a notion of the level of risk in the regulatory proposal. Variables used in the uncertainty testing include: All costs are assumed to be +/- 30 per cent; Benefits fall in the range $11,025, $22,050 and $234,000; The number of retrofits per year are +/- 20 per cent; and The ODS change in the equipment is +/- 20 per cent. In total, about 25 variables were sampled and subject to uncertainty testing. Given this rigor, the results of the analysis can be considered to be reliable from a statistical perspective. Discount rate sensitivity testing was completed at 1 and 9 per cent. Alternative discount rates have no effect on the outcome: at a high discount rate, the net benefit is significantly positive. The uncertainty testing indicates that the net benefit estimate is always positive, which means that even with the most conservative assumptions (high costs and low benefits), the net benefit of the Regulations is positive. A conclusion from the uncertainty testing is that there is a low risk that the regulations will result in a negative net benefit. Consultation Consultations with affected stakeholders were held by Environment Canada between November 2001 and February 2002, which included the distribution of information and a series of meetings. Information with respect to the proposed Regulations was also available on Environment Canada's Stratospheric Ozone Web site. Stakeholders included representatives from Federal Departments, the Assembly of First Nations, Indian Bands, Crown corporations, Boards, Agencies, federal works and undertakings, industry groups/associations, provincial/territorial authorities and service providers, environmental groups and equipment manufacturers. The objective of the consultations was to solicit comments on the proposed Federal Halocarbon Regulations, 2002. The results of the consultations were summarized in a Summary of Comments document prepared and circulated by Environment Canada and a subsequent document presented the responses to the comments from Environment Canada. Changes were made to the proposed regulations prior to publication in the Canada Gazette, Part I, to address some of the concerns raised from stakeholders. For example, comments were also raised with respect to the proposed January 1, 2004 CFC refill prohibition for air conditioning and refrigeration systems. Environment Canada subsequently proposed that the CFC refill prohibition for air conditioning and refrigeration equipment (excluding chillers) be effective January 1, 2005. Comments further to the pre-publication of the proposed regulations in the Canada Gazette, Part I The proposed Federal Halocarbon Regulations, 2002 were pre-published in the Canada Gazette, Part I, on December 7, 2002. The 60-day comment period for the proposed regulations closed on February 5, 2003. During the 60-day comment period, 10 comments were received from stakeholders. These comments suggested improvements to the proposed regulations, and were from: Departments of the Government of Canada (2); An agency of the Government of Canada (1); A provincial government (1); An industry association (1); Federal Works and Undertakings (3); The private sector (2). All comments received have been considered and responded to by Environment Canada. To reflect stakeholders' comments and concerns, changes to some of the provisions of the proposed Regulations were made and some new provisions were added. Stakeholders who provided comments are satisfied with Environment Canada's response to their concerns. There was a concern that the proposed definition of "certificate" for environmental awareness training in the air conditioning and refrigeration sector was not consistent with some provincial requirements. To address this, Environment Canada has amended the definition of "certificate" such that an environmental training course will be accepted if it is recognized in three or more provinces, or if it is recognized in the province in which the work is being done. This change will ensure that provincially accepted courses that are not necessarily recognized in three or more provinces are accepted by Environment Canada, which will then ensure consistency with provincial and territorial requirements for environmental awareness training. Comments were also received indicating that the CFC phase-out approach for the chiller sector may significantly effect building operations in the event of an in-service failure of chiller equipment. In many cases, requiring the conversion or replacement of chillers effective upon major in-service failures would cause prolonged downtime of air conditioning capabilities during the cooling season. Also, comments were submitted indicating that the proposed concept of an "overhaul" as it related to the phase-out of CFC-containing chillers included minor procedures and repairs that would restrict the ability to perform normal preventative maintenance activities on chiller equipment. To address these comments, the CFC phase-out approach for the chiller sector has been revised to provide some operational flexibility in the event of an in-service failure and to exclude specific minor procedures or repairs from the concept of an "overhaul". The proposed Regulations have been revised such that between January 1, 2005 and December 31, 2009, following an overhaul of a CFC-containing chiller, the recharge of a chiller with CFCs and continued operation would be permitted on the condition that the system is either converted or replaced such that it no longer contains CFCs no later than 12 months from the date of recharge. This provision also requires notification to Environment Canada of the recharge following an overhaul. The concept of an "overhaul" has also been amended such that the following procedures or repairs related to internal mechanical parts will be excluded: the replacement or modification of any vane assembly for chillers with single-stage compressors, oil heater, oil pump or float assembly. The structure of the exemption to the recharge prohibition with Items 1 to 9 of Schedule 1 for fire extinguishing systems has been amended to be consistent with the exemption to the recharge prohibition for the chiller sector. The proposed exemption for the fire extinguishing system, as published in the Canada Gazette, Part I, was implemented by issuance of a permit from the Minister. This exemption has been modified such that notification of the recharge of the system to Environment Canada is required as opposed to requiring the issuance of a permit. The recharge prohibition for fire extinguishing systems or the exemption to allow for the refill and continued operation of the system for 12 months has not been changed. A comment was also received arguing that restrictions on the use of HFCs in the solvent industry is inconsistent with a Ministerial Condition issued under the New Substances Notification Regulations which limited the use of certain HFCs to foam blowing agents, aerosols and solvents in circumstances where it is replacing ODS. After assessing this comment, Environment Canada is satisfied that restricting the use of HFCs in the solvent industry effective January 1, 2005 is consistent with the objective of the Federal Halocarbon Regulations, 2003 to prevent and reduce halocarbon emissions in air conditioning, refrigeration, fire extinguishing and solvent cleaning applications. The objective of addressing the use of HFCs in the solvent industry is to encourage the use of non-halocarbon alternatives where feasible. The regulations provide for the continued use of HFCs in circumstances where there are no technically or financially feasible alternatives to HFCs by issuance of a permit from the Minister. Change in the denomination of the Regulations Because they come into force in 2003, the denomination of the proposed regulations has been changed from Federal Halocarbon Regulations, 2002 to Federal Halocarbon Regulations, 2003. Changes in the Regulatory Impact Analysis Statement In order to be in line with the Environment Canada Costing Approach Policy for New or Enhanced Departmental Programs and Initiatives, adjustments were made to the Benefits and Costs section of the Regulatory Impact Analysis Statement. Changes affected the Government enforcement costs of the Regulations. The following formula is now used to calculate the total actual cost of a new additional employee: Actual cost = [(BS) + (20 per cent BS) + (13 per cent BS) + 15 per cent BS)] , where BS stands for base-salary, 20 per cent accounts for benefits, 13 per cent accounts for accommodation and 15 per cent accounts for Core support services. Compliance and Enforcement Since the regulations are promulgated under CEPA 1999, CEPA enforcement officers will apply the Compliance and Enforcement Policy implemented under the Act. The policy outlines measures designed to promote compliance, including education, information, promoting of technology development and consultation on the development of regulations. When verifying compliance with the Regulations, CEPA enforcement officers will abide by the CEPA Compliance and Enforcement Policy. This policy sets out the range of possible responses to violations: warnings, directions, environmental protection compliance orders, ticketing, ministerial orders, injunctions, prosecution, and environmental protection alternative measures (which are an alternative to a court trial after the laying of charges for a CEPA 1999 violation). In addition, the policy explains when Environment Canada will resort to civil suits by the Crown for costs recovery. When, following an inspection or an investigation, a CEPA enforcement officer discovers an alleged violation, the officer will choose the appropriate enforcement action based on the following factors: — Nature of the alleged violation: This includes consideration of the damage, the intent of the alleged violator, whether it is a repeat violation, and whether an attempt has been made to conceal information or otherwise subvert the objectives and requirements of the Act. — Effectiveness in achieving the desired result with the alleged violator: The desired result is compliance within the shortest possible time and with no further repetition of the violation. Factors to be considered include the violator's history of compliance with the Act, willingness to cooperate with enforcement officials, and evidence of corrective action already taken. — Consistency: Enforcement officers will consider how similar situations have been handled in determining the measures to be taken to enforce the Act. Contacts
Josée Trudel
Céline Labossière
S.C. 1999, c. 33 S.C. 1999, c. 33 SOR/99-255 Federal-Provincial Working Group on Ozone-depleting Substances and their Halocarbon Alternatives, May 2001. Canada's Strategy to Accelerate the Phase-Out of CFC and Halons Uses and to Dispose of the Surplus Stocks Eight other phase-out options were considered but the costs of the options were considered prohibitive and the options were therefore dropped. That is, the other options were not economically feasible Smale 1999, ODS INVENTORY UPDATE and PREDICTIVE INVENTORY MODEL VALIDATION. Prepared for Environment Canada Shapiro 1998. Options for the Management Surplus Ozone Depleting Substances in Canada Source: ARC 1997 and subsequent updating by Enviornment Canada ARC 1997. Socio-economic Assessment of a ban on the Use of existing Products and Equipment Containing CFC's and Halons. Prepared by Environment Canada |
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