Vol. 139, No. 11 — June 1, 2005

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

P.C. 2005-930 May 17, 2005

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 March 20, 2004 a copy of the proposed Export and Import of Hazardous Waste and Hazardous Recyclable Material Regulations, substantially in the annexed form, and persons were given an opportunity to file comments with respect to the proposed Regulations or to file a notice of objection requesting that a board of review be established and stating the reasons for the objection;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of the Environment, pursuant to section 191 of the Canadian Environmental Protection Act, 1999 (see footnote c), hereby makes the annexed Export and Import of Hazardous Waste and Hazardous Recyclable Material Regulations.

EXPORT AND IMPORT OF HAZARDOUS WASTE AND HAZARDOUS RECYCLABLE MATERIAL REGULATIONS

TABLE OF CONTENTS

Interpretation

PART 1

PART 2

PART 3

PART 4

PART 5

PART 6

SCHEDULE 1
(Subsection 1(1), section 4, subparagraphs 8(j)(i) and (viii) and 9(f)(iv), paragraphs 9(n) and (o), subparagraph 16(e)(iv), paragraphs 16(m) and (n) and subparagraph 38(1)(a)(i))

DISPOSAL OPERATIONS FOR HAZARDOUS WASTE

SCHEDULE 2
(Subsection 2(1), subparagraph 2(2)(e)(iii), section 4, subparagraphs 8(j)(i) and (viii) and 9(f)(iv), paragraphs 9(n) and (o), subparagraph 16(e)(iv) and paragraphs 16(m) and (n))

RECYCLING OPERATIONS FOR HAZARDOUS RECYCLABLE MATERIAL

SCHEDULE 3
(Paragraphs 1(1)(a) and 2(1)(a), subparagraph 8(j)(v), paragraphs 9(c) and 16(b) and subparagraph 38(1)(a)(iii))

HAZARDOUS WASTES AND HAZARDOUS RECYCLABLE MATERIALS

SCHEDULE 4
(Paragraphs 1(1)(c) and 2(1)(c) and subparagraphs 8(j)(v) and 38(1)(a)(iii))

PART 1

HAZARDOUS WASTES AND HAZARDOUS RECYCLABLE MATERIALS FROM NON-SPECIFIC SOURCES

PART 2

HAZARDOUS WASTES AND HAZARDOUS RECYCLABLE MATERIALS FROM SPECIFIC SOURCES

SCHEDULE 5
(Paragraphs 1(1)(d) and 2(1)(d))

ENVIRONMENTALLY HAZARDOUS SUBSTANCES

SCHEDULE 6
(Paragraphs 1(1)(e) and 2(1)(e) and subparagraphs 2(2)(e)(ii) and 8(j)(v))

HAZARDOUS CONSTITUENTS CONTROLLED UNDER LEACHATE TEST AND REGULATED LIMITS

SCHEDULE 7
(Paragraphs 1(1)(f) and 2(1)(f), subparagraphs 8(j)(v)and 38(1)(a)(iii) and Schedule 4)

PART 1

ACUTE HAZARDOUS WASTE AND HAZARDOUS RECYCLABLE MATERIAL CHEMICALS

PART 2

HAZARDOUS WASTE AND HAZARDOUS RECYCLABLE MATERIAL CHEMICALS

SCHEDULE 8
(Subparagraph 2(2)(e)(i))

EXCLUDED MATERIALS

SCHEDULE 9
(Section 4)

MOVEMENT DOCUMENT

(INSERT GRAPHICS HERE)

SCHEDULE 10
(Paragraphs 8(k) and 38(1)(b))

PERSISTENT ORGANIC POLLUTANTS

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

The purpose of the Export and Import of Hazardous Waste and Hazardous Recyclable Material Regulations (hereafter referred to as the Regulations) to be adopted under section 191 of the Canadian Environmental Protection Act, 1999 (CEPA 1999) is to protect Canada's environment and the health of Canadians from the risks posed by the transboundary movement of hazardous wastes and hazardous recyclable materials through exports from and imports into Canada and to implement Canada's international obligations. The Regulations will revoke and replace the former Export and Import of Hazardous Wastes Regulations (EIHWR) adopted in 1992 under the authority of the former Canadian Environmental Protection Act.

The Regulations revise the existing obligations under the former EIHWR and introduce new elements. These revisions and new elements are necessary to further contribute to the protection of the environment and human health, to adapt to evolving international obligations, to incorporate new authorities under CEPA 1999, and to modernize the EIHWR control regime established over a decade ago. The most significant revisions and new elements include:

• definitions for "hazardous waste" and "hazardous recyclable material" that will enable:

• specific time periods for completing the disposal or recycling operations once the hazardous wastes or hazardous recyclable materials are accepted at the authorized facilities;
• criteria that the Minister will take into account, prior to refusing to issue an export, import and transit permit, to form an opinion as to whether the hazardous waste or hazardous recyclable material will be managed in a manner that will protect the environment and human health;
• elements to be contained in the plans for reduction or phase out of exports of hazardous wastes destined for disposal;
• facilitation of recycling, by excluding from the definition of hazardous recyclable material certain low-risk recyclable materials, and by extending the $1 million liability insurance requirement for Canadian importers and Canadian exporters to movements of hazardous recyclable materials (in the former Regulations, the requirements were $1 million for movement of hazardous recyclable materials within the Organisation for Economic Co-operation and Development (OECD), and $5 million for movements of hazardous recyclable materials to non-OECD countries, in contrast with the $5 million required for movements of hazardous wastes); and
• A movement document harmonized with that used by the provinces that will meet international movements as well as provincial requirements.

The Regulations maintain the following requirements of the former EIHWR:

• the prior informed consent mechanism where the receiving country agrees in advance to any shipments;
• the tracking of all transboundary movements of hazardous wastes and hazardous recyclable materials from the facility from which it is shipped to final destinations, and the written confirmation of disposal or recycling when completed;
• the prohibitions on exports of hazardous wastes and hazardous recyclable materials to Antarctica or countries that prohibit their imports;
• conditions governing who is permitted to import or export;
• the recycling of hazardous material and disposal of hazardous waste only at authorized facilities;
• the requirements for contracts between importers and foreign exporters, and between exporters and foreign receivers;
• the requirements for liability insurance and what insurance coverage is required;
• the obligations to make alternative arrangements or arrange for returns when shipments are not accepted at the intended authorized facility in the country of import. The exporter may dispose of the hazardous waste or recycle the hazardous material at an authorized facility other than the one named in the permit, in the country of import or arrange for the return of the waste or the recyclable material to the facility in Canada from which it was shipped; and
• the requirement that imports, exports and transits are only allowed with countries that are parties to one of the three agreements (see footnote 3).

Although the Regulations maintain the core framework of the former EIHWR, the structure and the language of the Regulations is substantially changed from the former EIHWR, which provides for a greater clarity of the legal requirements.

Environment Canada still intends to issue a 30-day tacit consent for hazardous recyclable materials, and allow for the application for pre-approved recycling facilities for hazardous recyclable materials that are exported to, or imported from, a country that is Party to the OECD Decision C(2001)107/Final, in addition to the 30-day tacit consent for hazardous wastes and hazardous recyclable materials under the Canada-U.S.A. Agreement. Provisions have not been included in the Regulations, as it has been determined that they can be best addressed administratively.

Under the former EIHWR, following notification from the person intending to export, import or convey in transit the hazardous waste or hazardous recyclable material, Environment Canada provided this person with an acknowledgement that the notification was complete. In accordance with the OECD Decision and the Canada-U.S.A. Agreement, Environment Canada was sending this notification for consent to foreign country counterpart, in the case of an export, or to the provincial/territorial authority, in the case of an import. Environment Canada must receive acknowledgement from the authority of the jurisdiction to whom has been sent the notification. If no objection was provided to Environment Canada by the jurisdiction within 30 days after this acknowledgement, a permit may be issued. The same mechanism will be used under the Regulations.

A pre-approved recycling facility is a facility that has been approved in advance by the competent governmental authority in that country to receive shipment of certain types of waste destined for recycling. In the case of a Canadian facility, the Canadian recycler may apply to have his/her facility pre-approved by submitting the relevant information outlined by the OECD Decision C(2001)107/Final including name and address of the facility, the intended recycling operation and the type of recyclable material to which the pre-approval applies, and the period covered. This information was forwarded to the province in question, in addition to any additional information they may require, after which they may grant approval for the facility to receive a certain quantity of a specific recyclable material over a given period of time. The same mechanism will be used under the Regulations.

Background

Canada's International Obligations

Over the last decade, various modifications to Canada's international obligations on transboundary movements of hazardous wastes and hazardous recyclable materials have emerged. Canada is a Party to three international agreements relating to wastes and recyclable materials, namely:

1. the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, 1989; (the Basel Convention)
2. the OECD Decision of Council Concerning the Control of Transboundary Movements of Wastes Destined for Recovery Operations, C(92)39/Final, 1992, as amended and replaced by C(2001)107/Final; and
3. the Canada-United States Agreement Concerning the Transboundary Movement of Hazardous Wastes, 1986 (as amended in 1992).

On August 28, 1992, Canada ratified the Basel Convention. The Basel Convention controls the transboundary movements of hazardous wastes and hazardous recyclable materials, and promotes their environmentally sound management. In 1992, Canada complied with its international obligations by bringing the former EIHWR into force.

Since March 1992, the transboundary movements of hazardous wastes destined for recycling operations between Member countries of the OECD have been supervised and controlled according to Council Decision C(92)39/FINAL. The OECD Decision provides a framework to control transboundary movement of hazardous recyclable materials within the OECD area, in an environmentally sound and economically efficient manner.

The Canada-U.S.A. Agreement, which came into effect in 1986 and was later amended in 1992, is intended to ensure that hazardous waste and municipal solid waste destined for final disposal crossing the Canada-U.S. border comply with each country's domestic law and the provisions of the Agreement. It confirms basic principles recognized by both countries for the proper control of transboundary movements of hazardous wastes and other wastes, including a prior informed consent regime.

During the past 10 years, various modifications have been made to the three international agreements on transboundary movements of hazardous wastes and hazardous recyclable materials. The most significant ones are discussed below.

In February 1998, Parties to the Basel Convention adopted an amendment to add two new detailed wastes lists to the Basel Convention: the hazardous waste list (Annex VIII) and the non-hazardous waste list (Annex IX), which entered into force on February 27, 1999.

The adoption of the new waste Annexes under the Basel Convention was the driver behind the revisions to the OECD Decision C(92)39/Final. Recognizing the need to revise procedures and requirements and enhance harmonization with the Basel Convention, the Parties adopted the Council Decision C(2001)107/Final in 2001.

The revised OECD Decision modified the controls for hazardous recyclable material and reduced three levels of control down to two: controlled and not controlled. The revised OECD Decision represents a risk-based approach in determining levels of controls for hazardous recyclable materials, while the approach under the Basel Convention takes into account hazard characteristics. Therefore, Parties to the OECD Decision have determined that certain recyclable materials pose negligible risks for the environment and human health during their transboundary movement within the OECD area, and do not require controls during their transboundary movement. If, however, these recyclable materials are contaminated by other materials to an extent that increases risk to the environment or prevents the recycling of the materials in an environmentally sound manner, they must comply with the requirements for the controlled category of hazardous recyclable materials during their transboundary movement.

The revised OECD Decision does impose a general requirement that all recyclable materials, including those that are not controlled, must be recycled at an authorized facility. This is to ensure that the recycling will take place in an environmentally sound manner according to national laws, regulations and practices, in addition to other existing controls normally applied in commercial transactions.

In line with the revised OECD Decision, the definition of "hazardous recyclable material" in the Regulations excludes four streams of recyclable materials (see Schedule 8 of the Regulations) that are not controlled within the OECD. These four streams of recyclable materials are controlled, however, if they are contaminated by other materials to an extent that increases risks to the environment or prevents the recycling of the materials in an environmentally sound manner.

In 1999, the OECD started working toward the development of an international Environmentally Sound Management (ESM) guideline to improve and harmonize the environmental practices of hazardous waste management facilities in OECD countries. Workshops were held by Environment Canada in order to elaborate and develop the elements of an ESM framework. The OECD Council adopted the Council Recommendation on Environmentally Sound Management of Waste on June 9, 2004. This work was used as the basis to develop the criteria in the Regulations, through which the Minister can refuse to issue a permit if he or she is of the opinion that the hazardous waste or hazardous recyclable material will not be managed in a manner that will protect the environment and human health.

National Context

In Canada, the federal, provincial and territorial governments have the authority to set controls to manage hazardous wastes and hazardous recyclable materials. The federal government regulates the transboundary movements of hazardous wastes and hazardous recyclable materials i.e. exports from and imports into Canada as well as interprovincial/territorial movements. The provincial and territorial governments establish the controls for the licensing of hazardous wastes and hazardous recyclable material generators, carriers and treatment facilities, as well as regulating intraprovincial movements. The common objective for each government jurisdiction is to ensure that these wastes and recyclable materials are handled safely and in a manner that protects the environment and human health.

Since 1992, the volume of hazardous wastes and hazardous recyclable materials exported from Canada has slightly increased, due largely to increased recyclable materials going to the U.S. for recycling. Imports to Canada reached an all-time high in 1999. The 1999 statistics revealed that the rate of increase in imports is explained by the difference in standards for pre-treatment of waste within Canada, by differing environmental liabilities between Canada and the U.S., and by the lower Canadian dollar. In 2000, federal, territorial and provincial Ministers initiated work on implementing ESM practices for handling hazardous wastes and hazardous recyclable materials within their jurisdictions. As a result, imports have declined between 2001 and 2003.

The Canadian Council of Ministers of the Environment have identified numerous opportunities to move toward harmonization of the relevant federal-provincial-territorial regimes, particularly in defining what is a "hazardous waste" and "hazardous recyclable material."

On March 31, 2000, CEPA 1999 came into force. CEPA 1999 includes new authorities with respect to hazardous wastes and hazardous recyclable materials that did not exist under the former CEPA. Some of the most noteworthy are as follows:

• to prohibit exports, imports or transits of wastes and recyclable materials where required by Canada's international obligations;
• to develop criteria that the Minister will take into account, prior to refusing to issue an export, import and transit permit, as to whether the hazardous wastes and hazardous recyclable materials will be managed in a manner that will protect the environment and human health;
• to issue permits for the "equivalent level of environmental safety," allowing for variances from the regulations under specific conditions; and
• to require exporters or class of exporters to prepare and implement plans to reduce or phase out exports of wastes destined for final disposal, if requested by the Minister.

Prior to 2002, the tracking requirements for hazardous wastes and hazardous recyclable materials were under the Transportation of Dangerous Goods Regulations (TDGR), made pursuant to the Transportation of Dangerous Good Act, 1992. The introduction in CEPA 1999, of a new authority to control the movement of hazardous wastes and hazardous recyclable materials, signalled the intent of the Government of Canada to transfer this authority from the Transportation of Dangerous Goods Act. In August 2002, the movement document-tracking requirements were removed from the TDGR. Simultaneously with this repeal, amendments to the former EIHWR with respect to the tracking of exports and imports of hazardous wastes and hazardous recyclable materials through the use of a movement document system came into force.

Environment Canada considered further improvements to the former EIHWR to further protect the environment and human health, and to provide greater clarity to the regulatory regime for export, import and transit of hazardous wastes and hazardous recyclable materials. Canada's evolving international obligations, as well as the broader scope of the export, import and transit provisions of CEPA 1999, led Environment Canada to develop the Regulations.

The Regulations will come into force at the date specified in the Regulations.

Alternatives

Three major categories of alternatives were examined: (1) to maintain the status quo with the former EIHWR; (2) the use of non-regulatory instruments; and (3) to modernize the regulatory regime.

1. Maintain status quo

The option of maintaining the status quo with the former EIHWR was rejected, because the Regulations needed to be modernized in response to evolving national and international obligations, as discussed above. The regulatory regime had been in place for over a decade, and experience had shown that the administrative requirements needed to be streamlined to enhance its efficiency and effectiveness.

2. Use of non-regulatory instruments

By ratifying the Basel Convention, Canada committed to fulfill the obligations set out in this international Convention. The Basel Convention requires Parties to implement obligations on exports, imports, and transits of hazardous wastes and hazardous recyclable materials, and the only way to do so in a compulsory manner is through legislation and regulations. Hence, non-regulatory instruments were excluded from possible options by the nature of the international requirements.

3. Modernize the regulatory regime

Hazardous wastes and hazardous recyclable materials management within Canada has evolved. Progress has been made in the past 10 years with respect to pollution prevention and strengthening of legislative authorities for wastes and recyclable materials management under CEPA 1999. In addition, modifications to the international agreements on transboundary movements of hazardous wastes and hazardous recyclable materials have emerged. Action is required to strengthen the controls of the transboundary movements of wastes and recyclable materials, implement CEPA 1999 authorities that require regulations, adapt to the changes in the international agreements, and modernize a control regime that has been in place for over a decade. As previously mentioned, the Basel Convention specifies that Parties have to set conditions for exports, imports, and transits of hazardous wastes and hazardous recyclable materials through regulations. For these reasons, regulations under CEPA 1999 were determined to be the most appropriate implementation mechanism.

Benefits and Costs

The Regulations are designed to bring changes that are built around the core framework outlined in the former EIHWR, as previously outlined above.

Benefits

In the case of hazardous wastes and hazardous recyclable materials handling, damages, such as the contamination of groundwater or surrounding soil, can be generated from poor management and inappropriate practices. Setting out ESM criteria for the Minister to consider when deciding to refuse issuing a permit will strengthen the current controls to further protect the environment and human health. In addition, it is expected that prescribing the information which must be contained in plans to reduce the exports of hazardous wastes destined for final disposal will lead to better management of wastes in Canada and potentially increased recycling instead of disposal. The Regulations exclude from its definition of hazardous waste certain low-risk recyclable materials destined for recycling, if they meet certain elements set out in the definition. This will enhance the protection of the environment by promoting recycling of valuable resources. This will also result in cost savings to the industry.

Total incremental benefits to the industry were quantified, by conducting a survey of organizations involved in the export and import of hazardous wastes and hazardous recyclable materials. The survey data results were used to estimate incremental benefits accrued mainly from cost savings to the industry, by adopting a streamlined approach under the Regulations. The cost savings are in the form of:

Table 1, below, provides an estimate of cost-savings breakdown per year per firm. The survey questionnaire used to estimate the cost savings was based on 30 responses representing organizations across Canada, and in aggregate accounted for more than 42 per cent of annual shipments of hazardous wastes and hazardous recyclable materials. These cost savings vary among individual firm or region, but on average, using a 5 per cent discount rate and a 5-year time horizon, total aggregate present value of such cost savings (perceived as benefits) to the industry are estimated at about $3.07 million. Using 3 per cent and 7 per cent discount rates, the values of these direct benefits to the industry are assessed at approximately $3.19 million and $2.97, respectively. This result indicates that benefits are not significantly sensitive to a change in the discount rate.

Table 1. Estimated cost savings ($/firm/year)

Incremental environmental and human health benefits accruing from the Regulations are a significant part of the benefits. However, because it would be necessary to isolate them from the former EIHWR, their quantification is technically very difficult. On the other hand, there are established linkages between the changes made to the current Regulations and associated benefits to the environment and human health by streamlining and improving the controls of transboundary movements of hazardous wastes and hazardous recyclable materials. Reducing the risk of damage to the environment and human health are of primary importance, particularly in handling the hazardous wastes and hazardous recyclable materials. These benefits are represented not only in the reduction of monetary costs associated with the protection of the environment or human health, but also through reduction in risk of damage occurring as outlined above, and the value that can be achieved through recycling rather than export for disposal. Potential damages from the mismanagement of transboundary movements of hazardous wastes and hazardous recyclable materials include:

• groundwater contamination;
• damages to vegetation and aquatic life; and
• damages to human health.

Many of the hazardous wastes and hazardous recyclable materials can pose a threat to water, vegetation and human health if released into the environment. Impacts on human health can vary, depending on the substances that may be part of the particular type of wastes to which a person may be exposed. Exposure can be by skin contact or ingestion of contaminants. The risk to human health associated with hazardous wastes and hazardous recyclable materials depends on exposure and toxicity. Other benefits include avoidance of personal injury or death, property damage, response and clean-up costs.

In addition, there are also other unquantifiable benefits resulting from improved environmental protection related to the incorporation of the broader authorities for export, import and transit of hazardous wastes and hazardous recyclable materials under CEPA 1999, as well as meeting Canada's international obligations. These include the ESM criteria and the Minister's authority to refuse to issue a permit if he or she is of the opinion that a proposed shipment of hazardous wastes or hazardous recyclable materials will not be managed in an environmentally sound manner, and may pose an adverse effect on the environment and human health. There was no authority under the previous CEPA to create such criteria.

Costs

The Regulations contain a number of elements that may lead to increases in costs for the hazardous waste recycling and disposal industry involved in the import and export of hazardous wastes and hazardous recyclable materials. A survey questionnaire was also used to elicit the information about the potential compliance cost increases by the organizations involved in the export and import of hazardous wastes and hazardous recyclable materials. In the questionnaire, increases in costs were evaluated in the following areas:

It is important to note that the Regulations do not require exporters and importers to submit a declaration that an ESM system is in place. However, it is expected that the industry will be diligent in ensuring that facilities are operating in an ESM, and, accordingly, it may incur minor administrative costs if industry is requested to provide information specified in the Regulations to the Minister.

The respondents indicated that there were costs associated with identified new regulatory requirements. The survey data results for these compliance cost items are summarized in Table 2 below.

Table 2 - Compliance costs to industry ($/firm/year)

^*One-time cost only

The data in Table 2 show that the above new requirements generate compliance cost increases for firms. Using these data and aggregating them at the national level, the total cost increase for the industry, for the first year of the Regulations, is estimated to be about $0.93 million. The ESM costs are one-time costs only. Excluding ESM costs, other costs in subsequent years are estimated to be about $0.17 million. Using a five-year time horizon and a discount rate of 5 per cent, the discounted value of these incremental costs, following the introduction of these new regulatory requirements, is estimated at approximately $1.55 million. Using discount rates of 3 per cent and 7 per cent, the present values change to about $1.58 million and $1.52 million, respectively, indicating that the estimated costs are not significantly sensitive to variations of discount rates.

In addition, costs accrued to the federal government to implement and enforce the new regulatory requirements of the Regulations were estimated. These incremental costs are related to the implementation and enforcement of the Regulations. Elements related to the implementation fall into the following categories:

• compliance promotion;
• applying the ESM criteria;
• plans for reduction or phase-out of the export of wastes for final disposal; and
• administrative streamlining and database improvement.

It was estimated that the annual costs for the implementation and enforcement of the new requirements were approximately $1.14 million the first year, $0.76 the second year, and $0.62 million in subsequent years. The annual enforcement costs were estimated at $0.98 million the first year, decreasing to $0.63 million in subsequent years. The discounted value of the implementation and enforcement costs of the new regulatory requirements of the new framework was approximately $3.74 million, of which $3.20 million are required for enforcement. The discounted value was calculated over the same five-year time horizon used for benefits. Similarly, sensitivity results (by changing the discount rate to 3 per cent and 7 per cent) showed little difference in such costs.

The new regulatory requirements of the Regulations that will require inspection and other enforcement activities are verification of the following:

• compliance with the time periods for completing disposal or recycling operations once the hazardous waste or hazardous recyclable material, as the case may be, has been accepted at the authorized facility;
• the accuracy of the information contained in the confirmation of disposal or recycling, as the case may be, that are required to be submitted to the Minister within 30 days of the completion of the disposal or recycling operation;
• compliance with the elements of the plans for reduction of export of hazardous wastes that are being shipped outside Canada for final disposal;
• the accuracy of the information provided to the Minister which take into account the ESM criteria set out in the regulations, and allow the Minister to determine whether to refuse an export, import or transit permit; and
• whether or not the insurance held by an exporter or importer, as the case may be, does meet the liability insurance requirements of the Regulations.

Section 190 of CEPA 1999 allows the Minister to grant Permits of Equivalent Level of Environmental Safety (PELES) that replace the requirements of a regulation made under section 191 with other terms and conditions, as long as the Minister is satisfied that these variances will provide a level of environmental safety that is equivalent to that which would exist under the Regulations. The authority to grant such permits was previously under the Transportation of Dangerous Goods Act. Under CEPA 1999, the Minister may receive application for such permits. Environment Canada will undertake inspections to verify compliance with the PELES and will take the required measures to deal with non-compliance identified through those inspections.

In addition, inspections may later require further follow-up for reasons such as verifying that an alleged violation has been corrected or that measures set out in an environmental protection compliance order have been complied with.

Environment Canada has been carrying out an increased level of enforcement activity with respect to the current Regulations, for which resources have been allocated. This increased level of enforcement activity will be maintained under the Regulations. This is required mostly to enhance security at the Canadian border related to the transboundary movements of wastes and recyclable materials. Enforcement costs also need to take into account investigations of alleged violations and prosecution, in addition to inspections to verify compliance with court orders that may be issued by a judge following conviction of an offender.

Based on this estimation, the aggregate cost, including the cost of compliance by the industry and the cost to federal government, was estimated at approximately $5.29 million.

Non-allocative Impacts

Non-allocative impacts of the Regulations, such as transfers within society, resulting for example from price changes; disproportionate burdens on particular groups in society, including employment impacts and other impacts differentiated by income level, region, or size of firm; changes in the degree of competition in the Canadian marketplace, and impacts on the competitiveness and trade were also considered. There may be some non-allocative impacts with the provisions of the Regulations, but an overall impact does not appear to be significant.

There appears to be no evidence of impacts on sales revenue, employment, extent of competition in Canadian marketplace and regional distribution, competitiveness and trade. Such impacts will be either minimal or negligible. However, to the extent that there are economies of scale in complying with the Regulations, smaller firms or some regions may be at somewhat of a disadvantage. Overall, there appears to be no evidence suggesting any impacts.

Conclusion

Precise estimates of the economic impacts of the Regulations are difficult to quantify, particularly the benefits of risk reduction in environment and human health (by adopting ESM criteria, export reduction plans, strengthening Canada's compliance with international obligations); and increase in efficiency (by streamlining the administrative requirements for the transboundary movement of hazardous wastes and hazardous recyclable materials). However, other quantifiable benefits in the form of cost saving to the industry are $3.07 million. These quantified benefits do not represent the entire value of benefits, as they do not take into account all unquantified benefits that would be generated. The net quantified benefits of the Regulations are estimated at about -$2.22 million. However, it is estimated that if other benefits were quantified, the Regulations would generate an overall positive net benefit to society.

Consultation

Three rounds of consultations were held, in 2001, 2002 and 2003, respectively. During each round, a series of multi-stakeholder sessions were held at different locations across the country (in 2001: Moncton, Montréal, Edmonton, Vancouver; and in 2002 and 2003: Halifax, Calgary, Toronto, Montréal, Vancouver). In each round, the attendees included representatives from environmental non-governmental organizations (ENGOs), industry, carriers, hazardous wastes management companies and other government departments (including Transport Canada, Natural Resources Canada, Industry Canada, Health Canada, and the Department of Foreign Affairs and International Trade). Throughout the consultations, a number of common themes emerged. These included harmonization, linkages to other federal policies, the recyclable dynamics, usability and simplicity of regulations, community right to know and focus on enforcement activities.

The consultations process, which began in 2001, was designed to take place prior to Environment Canada having formulated its own policy choices on the key elements surrounding the revisions to the former EIHWR. The main objectives of the first round of consultations were to inform stakeholders and interested groups of the key issues being addressed in the EIHWR amendments, in addition to seeking and collecting their input on these issues and any additional concerns.

The main objectives of the second round of consultations were to review and solicit feedback on the direction of the Regulations, and to generate consensus on major issues. There were a numbers of common issues that the majority of participants expressed including the need:

• to better facilitate and promote recycling through the Regulations;
• to differentiate the regulatory regimes for hazardous waste and hazardous recyclable material;
• to revisit liability and insurance levels;
• to further develop issues concerning export reduction plans; and
• to clarify ESM and its potential application to the Regulations.

The purpose of the third round of consultations, in early 2003, was two fold:

• to present and obtain feedback on a fairly comprehensive set of revisions to the existing regulatory regime; and
• to discuss and refine options to address a small number of outstanding issues related to the Regulations.

The following were the major aspects of discussions during these consultations with general feedback from the participants:

• definition of issues and scope of proposals;
• balancing privacy of corporate information with the public right to know;
• ESM;
• controls on low-risk recyclables; and
• plans for the reduction or phase out of the export of hazardous wastes destined for disposal.

Some stakeholders expressed concern over the use of lists to identify hazardous wastes and hazardous recyclable materials. Environment Canada indicated that small- and medium-sized enterprises are often not able to afford the cost of testing for hazardous properties. The new definitions of "hazardous waste" and "hazardous recyclable material" use both a listing approach and hazardous-property criteria. The Regulations use lists preferentially, followed by hazardous property testing. This approach is consistent with both the Basel Convention and the OECD Decision C(2001)107/Final. In addition, the list of hazardous wastes and hazardous recyclable materials was reviewed to ensure compatibility to the greatest extent possible with the controls in the U.S., since more than 95 per cent of the trade in hazardous wastes and hazardous recyclable materials is with the U.S.

The purpose of ESM is to ensure that hazardous wastes and hazardous recyclable materials are managed in a manner that will protect the environment and human health against adverse effects that may result from such wastes and recyclable materials. There was general agreement on the concept of ESM, but there were concerns that the requirements in the Regulations, which were presented at the consultations, would represent an important administrative burden to stakeholders for minimal environmental benefit, given that most movements already meet the criteria of ESM. The provinces and territories are also in agreement with the general concept and need for ESM, but expressed concern about how the criteria would be applied given the shared jurisdiction of the provinces and territories in the management of wastes and recyclable materials and their authority over facilities. The Regulations do take into account this shared jurisdiction, and require as a condition that is separate from the ESM criteria, that facilities must be authorized by the jurisdiction in which they are located. ENGOs expressed concern that the ESM criteria were process-oriented rather than performance-based, and were therefore not likely to result in any real changes in industrial practices. The Regulations list the various criteria the Minister may consider when deciding upon refusing issuance of a permit under subsection 185(2) of CEPA 1999. These criteria are based on the work being done internationally by the OECD and comments from public consultations. However, the main purpose of the Regulations is to control the transboundary movements of hazardous wastes and hazardous recyclable materials, and, as such, the ESM criteria do not set performance standards for facilities.

ENGOs also indicated that Canadians ought to have prior knowledge of hazardous wastes and hazardous recyclable materials movements through their communities. They indicated that this would need to be true of returns and re-routing as well. Industry representatives, while not opposed to some form of prior publication, expressed concerns that the information requested may be confidential in nature. Environment Canada will further examine what information can be made publicly available.

Some stakeholders indicated that they would like to see exemptions directly in the Regulations for certain categories of low-risk recyclable materials that are valuable secondary feedstocks for the recycling industry. Environment Canada reviewed their proposal and the fact that some of these low-risk recyclable materials are not controlled as hazardous under the revised OECD Decision, unless they are contaminated by other materials to an extent which increases the risk associated with the waste or prevents the recovery of the waste in an environmentally sound manner. In the U.S., these materials are exempt when they are destined for recycling. The definition of "hazardous recyclable material" in the Regulations effectively excludes certain low-risk recyclable materials from being regulated if they meet the elements set out in the definition. The nature of the definition, together with certain other provisions, is expected to promote sustainable recycling, thereby enhancing the protection of the environment by promoting recycling of valuable materials.

With respect to export-reduction plans, some stakeholders expressed doubt over the ability of the requirements to impact behaviour and result in export reductions. Some stakeholders suggested that the export-reduction requirements would increase the overall administrative burden and would provide minimal environmental benefits. The export-reduction-plan provisions of the Regulations have been modelled on provisions related to disposal at sea, and contain elements from the pollution-prevention-planning provisions in Part 4 of CEPA 1999. The provisions seek to have export for final disposal to be considered as a last resort, rather than the first option. The Department is taking into account the burden on industry; hence, the information required in an export-reduction plan are the minimum necessary to secure a genuine reduction, while still allowing for consideration by exporters of the benefits of the most appropriate disposal facility, even if outside Canadian boundaries.

Over the summer and fall 2003, further discussions took place with the provinces and territories via the CEPA National Advisory Committee and the Canadian Council of Ministers of the Environment. Discussions addressed the definitions for hazardous waste and hazardous recyclable material, criteria for ESM, and the management of low-risk recyclable materials. The input from the provinces and territories was taken into account in the development of the Regulations, to ensure harmonization to the extent possible with the provinces and territories' approach for the management of hazardous wastes and hazardous recyclable materials.

In summary, prior to pre-publication in the Canada Gazette, Part I, the Regulations were developed with input from extensive consultations with stakeholders. Overall, there was a good level of support for this initiative. The majority of industry stakeholders supported the Regulations, as it exempts certain low-risk recyclable materials and streamlines the administrative requirements. The provinces and territories were in agreement that the new definition for hazardous waste and hazardous recyclable material would enable progress toward a federal-provincial-territorial harmonized approach to the management of wastes and recyclable materials. The provinces and territories also supported the concept of ESM; however, they were concerned with its implementation. ENGOs had concerns with some elements of the Regulations, namely the ESM criteria. They were also of the view that Canadians should be informed of recyclable shipments prior to the occurrence of these shipments.

Comments Received following the Pre-Publication of the Regulations in the Canada Gazette, Part I, on March 20, 2004

The Regulations were pre-published in the Canada Gazette, Part I, on March 20, 2004. The pre-publication was followed by the 60-day public review period during which comments were received from environmental groups, an international organization, one law firm, provincial governments, industry associations, industry, and a member of the public. The comments were mainly supportive of the proposed revisions and suggested some changes. All the comments received during the public review period were considered and taken into account during the development of the final regulatory text. A detailed report on the comments received and Environment Canada's responses to these comments is available on EC's web site "CEPA Environmental Registry". Following the publication of the Regulations in Part II of the Canada Gazette, and prior to their coming into force, information sessions are planned for interested parties to ensure that new requirements are well understood, thus promoting their compliance.

The following comments were received:

Compliance and Enforcement

As the Regulations are promulgated under CEPA 1999, enforcement officers will, when verifying compliance with the Regulations, 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 the Regulations. The Policy also sets out the range of possible responses to violations, including: warnings, directions, 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 inspection or an investigation, an enforcement officer discovers an alleged violation, the officer will choose the appropriate enforcement action based on the following factors:

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

Contacts

Ms. Lyne Monastesse
Transboundary Movement Branch
Environmental Protection Service
Environment Canada
Place Vincent Massey
351 St. Joseph Boulevard
Gatineau, Quebec
K1A 0H3
Telephone: (819) 953-1121
FAX: (819) 997-3068
E-mail: Lyne.Monastesse@ec.gc.ca

Ms. Céline Labossière
Regulatory and Economic Analysis Branch
Policy and Communications
Environment Canada
TLC – 10 Wellington Street
Gatineau, Quebec
K1A 0H3
Telephone: (819) 997-2377
FAX: (819) 997-2769
E-mail: Celine.Labossiere@ec.gc.ca

Footnote a

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

Footnote b

S.C. 1999, c. 33

Footnote c

S.C. 1999, c. 33

Footnote 1

SOR/2002-317

Footnote 2

SOR/92-637

Footnote 3

The three international agreements are the Basel Convention: http://www.basel.int/text/documents.html; the OECD Decision: http://www.olis.oecd.org/olis/2001doc.nsf/linkto/c(2001)107 and the Canada / U.S.A. Agreement: http://www.ec.gc.ca/tmb/eng/tmbcanusaag_e.html

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