Canada Gazette

The purpose of the proposed Regulations Amending the Ozone-depleting Substances Regulations (hereinafter referred to as the "proposed Regulations") is to add flexibility within the Regulations to allow transfers of methyl bromide among the companies that have been granted a critical or emergency use exemption in a given year. The proposed amendments would encourage the use of alternatives and allow industry to optimize the efficiency of the limited quantities of methyl bromide available for critical and emergency use exemptions in Canada. These principles are part of the Canadian National Management Strategy for the Phase-out of Methyl Bromide Critical Use Exemptions (the Strategy). (see footnote 1) The development and implementation of the Strategy was required by Decision Ex.I/4 of the Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol) made at the Extraordinary Meeting of the Parties of March 2004.

The proposed Regulations would also ensure that Canada remains consistent with its international obligations under the Montreal Protocol regarding critical use exemptions of methyl bromide. Overall, the proposed Regulations would encourage the development of alternatives. They would also lead to a reduction of quantities of methyl bromide imported for critical and emergency use exemptions in Canada.

Methyl bromide is an ozone-depleting substance used as a fumigant to control pests in soils, structures (such as flour mills and food-processing facilities) and commodities. Methyl bromide is not manufactured in Canada, but is registered for use under the Pest Control Products Act.

Canada's current importation of methyl bromide is approximately 60 tonnes, which represents less than 0.1% of the world consumption. The import, export and manufacture of methyl bromide are controlled under the Ozone-depleting Substances Regulations, 1998.

In 1992, Parties to the Montreal Protocol agreed to add methyl bromide to the list of ozone-depleting substances subject to control. In 1997, they agreed to phase out the production and consumption of methyl bromide by January 1, 2005, with possible exemptions for critical uses in order to meet the marketplace demand.

Canada, as a signatory and Party to the Montreal Protocol, must ensure that the requirements of the Montreal Protocol are implemented at the domestic level. To achieve this goal, methyl bromide was included as a controlled substance in the Ozone-depleting Substances Regulations, 1998, and has been controlled since January 1, 1995. Under the current Regulations, quantities of methyl bromide authorized under the Montreal Protocol, prior to the phase-out, were distributed to users by a system of allowances and permits.

Since January 1, 2005, it has been prohibited to manufacture or import methyl bromide, except for purposes listed in Schedule 3 to the current Regulations. These exemptions include quarantine and pre-shipment applications, as well as critical and emergency uses. In order to import methyl bromide for one of these purposes, a person must make a request for a permit to the Minister.

Under Decision IX/6, the Parties to the Montreal Protocol decided on which criteria would be used to assess nominations for critical use exemptions. The Parties also agreed (Decision IX/7) to allow the use, in response to an emergency event, of quantities not exceeding 20 tonnes of methyl bromide. Domestic and international procedures were established to assess nominations for critical use exemptions, following the international phase-out of production and consumption of methyl bromide adopted by the Parties to the Montreal Protocol.

The critical use exemption process occurs yearly. Applicants may apply two years prior to the calendar year in which the methyl bromide will be used, in order to receive a decision by the Parties one year prior to the year of need. Applicants are also given the chance to apply one year in advance. In such cases, however, a decision by the Parties as to whether the exemption is granted will only be received in the last few months before the substance is needed for use.

Every year since 2002, under the domestic process, Environment Canada publishes a Notice to anyone engaged in the use of methyl bromide in the Canada Gazette. The notice describes the criteria, process and schedule that Environment Canada will use to determine the relevance of nominations received for an exemption for a critical use of methyl bromide, as agreed to under the Montreal Protocol, after the phase-out. A Methyl Bromide Advisory Committee has been established to evaluate the nominations against the set criteria and to forward to Environment Canada its recommendations concerning the nominations. Environment Canada makes the final decision on whether or not to forward the nomination to the Ozone Secretariat of the United Nations Environment Programmes for further review.

Under the international process, the Methyl Bromide Technical Options Committee, comprising experts from 21 countries, reviews each country's nominations and provides recommendations to the Meeting of the Parties. The latter ultimately decides which critical use exemptions are accepted and what quantities are granted.

Under the current Regulations, problems could arise for methyl bromide users starting January 1, 2007, given that the current system of distribution of available quantities of methyl bromide, after the date of prohibition, lacks flexibility. Changes are therefore required for two of the six exempted uses of methyl bromide, namely critical and emergency uses. The provision for these two exemptions came into force on January 1, 2005. The system in place significantly inhibits the buying and selling or offering for sale of the unused quantities of methyl bromide imported between users who have been granted critical or emergency use exemptions.

Accordingly, the proposed changes would give more flexibility to methyl bromide users and would only allow users who have been granted a critical or emergency use exemption to exchange unused quantities of methyl bromide for these uses. In other words, if a quantity is imported by a user but is no longer needed, other users who have also been granted an exemption could use the excess quantity for their own critical or emergency use. This would ensure that the Montreal Protocol requirements regarding critical and emergency use exemptions are met, according to the domestic and international processes. As a result, the proposed Regulations would ensure proper distribution of the quantities of methyl bromide authorized by the Parties to the Montreal Protocol.

The proposed Regulations would also include the requirement for an authorization from the Minister prior to using methyl bromide for a critical or emergency use. The Minister would only issue such a permit to persons who had submitted a nomination for a critical or emergency use exemption. Such measures would enable Environment Canada to monitor the use of methyl bromide in Canada, as well as the phase-in of methyl bromide alternatives.

Given that it is possible that the total quantity of methyl bromide requested by a user for a critical use may not match the quantities authorized by the Parties to the Protocol to that respective user, the proposed Regulations would clarify the advent of this situation.

The proposed Regulations would therefore prohibit the selling or supplying of methyl bromide imported for a critical or an emergency use for any other purpose and to a user who has not been informed by the Minister of a critical or emergency use exemption. In addition, allowing methyl bromide to be exchanged between persons with authorizations for these two exempted uses will assist Canada in reducing total quantities of methyl bromide imported for these exemptions.

The Montreal Protocol, under Decision IX/7, allows a party to use methyl bromide in response to an emergency event. The proposed Regulations would therefore include provisions and criteria for the Minister to issue a permit to import methyl bromide for an emergency use. The Minister would issue a permit to the applicant only in the event that

(1) The applicant has provided evidence that the proposed use meets the criteria established by the Parties to the Protocol (Decision IX/6).

(2) The applicant has provided evidence that the request for emergency use of methyl bromide is made in response to an emergency situation.

(3) The request was made following the procedures in the document entitled Canada's Process and Criteria for the Evaluation of Exemptions for Critical and Emergency Uses of Methyl Bromide. (see footnote 2)

The current Regulations only require methyl bromide importers to submit annual reports to Environment Canada. With new reporting requirements under the Montreal Protocol, the current Regulations must be amended to ensure that Canada complies with these new requirements.

These proposed Regulations require both methyl bromide importers and users of critical and emergency uses to report their quantities of the substance to Environment Canada. Such a proposed measure would reinforce the monitoring of methyl bromide being used in Canada.

Maintaining the current Regulations would lead to difficulties for the methyl bromide users by January 1, 2007, due to the lack of flexibility of the system and a lack of approved alternatives to methyl bromide in Canada. Currently, an unused quantity of methyl bromide imported for critical and emergency uses cannot be exchanged between users who have been granted a critical or emergency use exemption by the Parties to the Montreal Protocol.

Moreover, there is currently an inefficient and ineffective management of the unused quantity of the dangerous substance by the importers and users.

The status quo would not ensure that the Montreal Protocol requirements regarding critical and emergency use exemptions are met. The status quo was therefore rejected.

Since methyl bromide is controlled internationally under the Montreal Protocol, amending the current Regulations represents the best domestic option to ensure that the system becomes more flexible for the methyl bromide users. The proposed Regulations would also ensure that the Montreal Protocol requirements regarding critical and emergency use exemptions are met. Accordingly, amending the current Regulations was considered by Environment Canada to be the best alternative.

The proposed Regulations would primarily benefit the methyl bromide users who have been granted critical and emergency use exemptions where they would be able to exchange the unused quantities of the imported substance among themselves. The proposed Regulations could also reduce the overall quantity of methyl bromide that is imported into Canada for critical uses.

The proposed Regulations would also improve clarity for the users, while meeting the Montreal Protocol requirements regarding the critical and emergency use exemptions of methyl bromide.

The new reporting requirements would also provide for better monitoring of the exchange of the quantities of imported methyl bromide by users and importers. The additional information requested from stakeholders is necessary to meet new reporting requirements by the Montreal Protocol.

Given that the current Regulations prohibit the use, sale, offer for sale, and import of methyl bromide, there should be no significant impact on industry associated with the proposed Regulations. Incremental compliance costs are expected to be minimal. Since the annual reporting requirements for methyl bromide users imply minimal reporting and record-keeping changes, there are no additional costs involved.

Incremental costs to Government resulting from the proposed Regulations, including administrative and enforcement costs, are expected to be minimal. The proposed Regulations do not significantly alter the activities conducted by Environment Canada. Nonetheless, the incremental costs are driven primarily by the case-by-case review by the Methyl Bromide Advisory Committee and the verification of reports submitted by users of methyl bromide. These incremental costs are also difficult to quantify.

Because quantified estimates are not available for all the incremental costs and benefits, it is not possible to accurately estimate the overall net benefits of the proposed Regulations. However, on balance, it is expected that the benefits accruing from the proposed Regulations will exceed the costs.

Given that methyl bromide is not manufactured in Canada and that demand for quantities granted as critical and emergency use exemptions is entirely satisfied with imports, the net impacts on methyl bromide importers and users are expected to be limited. The proposed Regulations maintain the conditions for critical and emergency use exemptions of methyl bromide, as set out in Schedule 3 of the current Regulations. These exemptions avoid market disruption and are important when no adequate alternative or substitute is available. As a result, no significant impact is expected.

The already established Methyl Bromide Industry/Government Working Group has served as a forum for consultation with those stakeholders who may be impacted by the proposed Regulations. Members of the Working Group include end-users of the substance from a variety of implicated sectors, federal and provincial departments, alternative products companies, management consultants and environmental non-governmental organizations.

Consultations were held during regular Methyl Bromide Industry/Government Working Group meetings in June and November 2005. A discussion document containing Environment Canada's proposed Regulations was distributed to the members of the Working Group and the National Advisory Committee of the Canadian Environmental Protection Act, 1999 (CEPA 1999), for their review and comments. Comments received during these consultations and on the discussion document were taken into account in the development of the proposed Regulations. In general, stakeholders were supportive of the proposed Regulations.

Since the proposed Regulations are promulgated under CEPA 1999, enforcement officers will, when verifying compliance with the Regulations, apply the Compliance and Enforcement Policy implemented for CEPA 1999. 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 alleged 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, an enforcement officer discovers an alleged violation, the officer will choose the appropriate enforcement action based on the following factors:

Ms. Jacinthe Girard, Domestic and International Substances Programs, Industrial Sectors Division, Environment Canada, Gatineau, Quebec K1A 0H3, 819-953-4168 (telephone), jacinthe. girard@ec.gc.ca (email); and Ms. Brenda Tang, Acting Senior Economist, Impact Analysis and Instrument Choice Division, Strategic Analysis and Research Directorate, Environment Canada, Gatineau, Quebec K1A 0H3, 819-997-5755 (telephone), brenda.tang@ec.gc.ca (email).

Notice is hereby given, pursuant to subsection 332(1) (see footnote a) of the Canadian Environmental Protection Act, 1999 (see footnote b), that the Governor in Council, pursuant to subsection 93(1) of that Act, proposes to make the annexed Regulations Amending the Ozone-depleting Substances Regulations, 1998.

Any person may, within 60 days after the date of publication of this notice, file with the Minister of the Environment comments with respect to the proposed Regulations or a notice of objection requesting that a board of review be established under section 333 of that Act and stating the reasons for the objection. All comments and notices must cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to the Chief, Chemicals Control Division, Department of the Environment, Ottawa, Ontario K1A 0H3.

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

1. The definitions "baseline consumption allowance", "critical use" and "emergency use" in section 1 of the Ozone-depleting Substances Regulations, 1998 (see footnote 3) are replaced by the following:

"baseline consumption allowance", in respect of a group of controlled substances set out in column 1 of an item of Schedule 1 and any one of the years set out in column 2 of that item, means the quantity of those controlled substances that is determined in accordance with subsection 10(4) with respect to a person. (allocation de consommation de base)

"critical use" means a use of methyl bromide that conforms to the criteria established in Decision IX/6 adopted at the Ninth Meeting of the Parties to the Protocol and set out in the document entitled Report of the Ninth Meeting of the Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer, UNEP/OzL.Pro.9/12. (utilisation critique)

"emergency use" means a use of up to 20 tonnes of methyl bromide, in response to an emergency event, in accordance with Decision IX/7 adopted at the Ninth Meeting of the Parties to the Protocol and set out in the document entitled Report of the Ninth Meeting of the Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer, UNEP/OzL.Pro.9/12. (utilisation d'urgence)

5. (1) No person shall import, without a permit issued under paragraph 33(1)(a) or (a.1), a controlled substance that is recovered, recycled, reclaimed, used or for destruction.

3. (1) Subparagraph 7(2)(b)(i) of the French version of the Regulations is replaced by the following:

(2) The portion of subparagraph 7(2)(b)(ii) of the Regulations before clause (A) is replaced by the following:

(ii) a controlled substance that is set out in column 2 of an item of Schedule 3 for a purpose set out in column 3 of that item, other than for a purpose set out in paragraph 5(e) or (f) of that Schedule, if

(3) Paragraph 7(2)(b) of the Regulations is amended by striking out the word "or" at the end of subparagraph (ii) and by adding the following after subparagraph (ii):

(A) the methyl bromide was manufactured or imported under a permit issued under paragraph 33(1)(c),

(B) the methyl bromide is used in accordance with a permit issued under paragraph 33(1)(b.1) or (b.2), and

(C) the person has completed a declaration, in the form approved by the Minister, in which the person undertakes to use the methyl bromide for that purpose only and to sell or otherwise supply any of the methyl bromide only to another person to whom a permit is issued under paragraph 33(1)(b.1) or (b.2) and who has also completed such a declaration, or

(4) Section 7 of the Regulations is amended by adding the following after subsection (2):

(3) A person who receives methyl bromide from a person to whom a permit is issued under paragraph 33(1)(b.1) or (b.2) shall complete a declaration under clause (2)(b)(ii.1)(C) and shall submit the completed declaration to the Minister within 30 days after receiving the methyl bromide.

4. (1) Subsections 8(1) and (2) of the Regulations are replaced by the following:

(2) Subject to subsections (3) and (5), no person shall import HCFCs unless they are recovered, recycled, reclaimed, used or for destruction.

(2) Subsections 8(4) and (5) of the Regulations are replaced by the following:

(5) A person may manufacture or import HCFCs for a purpose set out in column 3 of item 6 of Schedule 3 if the person has been issued a permit under paragraph 33(1)(c).

6. Section 32 of the Regulations is amended by adding the following after paragraph (b):

(b.1) a permit to use methyl bromide for the purpose set out in paragraph 5(e) of Schedule 3, as referred to in subparagraph 7(2)(b)(ii.1);

(b.2) a permit to use methyl bromide for the purpose set out in paragraph 5(f) of Schedule 3, as referred to in subparagraph 7(2)(b)(ii.1);

7. (1) The portion of paragraph 33(1)(a) of the Regulations before subparagraph (i) is replaced by the following:

(a) issue the permit referred to in paragraph 32(a.1) if, in the case of a recovered, recycled, reclaimed or used controlled substance, the applicant submits documentation confirming the nature of the substance and if

(2) Subsection 33(1) of the Regulations is amended by adding the following after paragraph (b):

(i) the applicant, or someone on behalf of the applicant, has submitted a nomination containing the information required in the notice published for the purposes of subparagraphs 68(a)(ix) and (xiii) of the Act for the applicable year and the nomination has been accepted by Decision of the Parties to the Protocol, and

(ii) the applicant undertakes to sell or otherwise supply the methyl bromide only to another person who has been issued a permit under this paragraph and has completed the declaration referred to in clause 7(2)(b)(ii.1)(C);

(b.2) issue the permit referred to in paragraph 32(b.2), if the applicant undertakes to sell or otherwise supply the methyl bromide only to another person who has been issued a permit under this paragraph or under paragraph (b.1) and has completed the declaration referred to in clause 7(2)(b)(ii.1)(C);

(3) Section 33 of the Regulations is amended by adding the following after subsection (2):

(2.1) The annual quantity of methyl bromide authorized by a permit issued by the Minister under paragraph 32(b.1) in respect of any given application shall be determined by the formula

A is the total quantity of methyl bromide granted to Canada by Decision of the Parties to the Protocol for the nomination,

B is the quantity requested by the applicant in the application for a permit for a critical use, or by a person in the nomination made on behalf of the applicant, whichever is the lesser amount, and

C is the total quantity requested by Canada for the nomination under the Protocol.

(2) If a person who submits an application or a report referred to in subsection (1) requests that the information contained in it be treated as confidential under section 313 of the Act, the person shall identify in the request

(b) the information the disclosure of which would likely cause material financial loss to, or prejudice to the competitive position of, the person;

(c) the information the disclosure of which would likely interfere with contractual or other negotiations being conducted by the person; and

(d) any financial, commercial, scientific or technical information that is confidential information and is treated consistently in a confidential manner by the person.

9. Schedule 3 to the Regulations is amended by adding the following after item 4:

10. Section 1 of Schedule 5 to the Regulations is amended by adding the word "and" at the end of paragraph (a.1), by striking out the word "and" at the end of paragraph (b) and by repealing paragraph (c).

11. Paragraph 2(a) of Schedule 5 to the Regulations is amended by adding the word "and" at the end of subparagraph (i.1) and by repealing subparagraph (iii).

12. Paragraph 3(a) of Schedule 5 to the Regulations is amended by adding the word "and" at the end of subparagraph (i.1) and by repealing subparagraph (ii).

13. Paragraph 3.1(a) of Schedule 5 to the Regulations is amended by adding the word "and" at the end of subparagraph (i), by striking out the word "and" at the end of subparagraph (ii) and by repealing subparagraph (iii).

14. Paragraph 4(a) of Schedule 5 to the Regulations is amended by adding the word "and" at the end of subparagraph (i), by striking out the word "and" at the end of subparagraph (i.1) and by repealing subparagraph (ii).

15. Paragraph 5(a) of Schedule 5 to the Regulations is amended by adding the word "and" at the end of subparagraph (i), by striking out the word "and" at the end of subparagraph (i.1) and by repealing subparagraph (ii).

16. (1) The portion of section 6 of Schedule 5 to the Regulations before paragraph (a) is replaced by the following:

6. Application for a permit to manufacture or import a controlled substance for a purpose other than a purpose set out in paragraph 5(e) or (f) of Schedule 3:

(2) Paragraph 6(a) of Schedule 5 to the Regulations is amended by adding the word "and" at the end of subparagraph (i), by striking out the word "and" at the end of subparagraph (i.1) and by repealing subparagraph (ii).

17. Schedule 5 to the Regulations is amended by adding the following after section 6:

6.1 Application for a permit to manufacture or import methyl bromide for a purpose set out in paragraph 5(e) or (f) of Schedule 3:

(i) name, address and telephone and fax numbers, and

(ii) name, address and telephone and fax numbers in Canada of the person authorized to act on behalf of the applicant;

(i) quantity in stock,

(ii) annual quantity to be manufactured or imported, taking into account the quantity in stock, and

(iii) purpose for which the methyl bromide is required;

(i) name, address and telephone and fax numbers,

(ii) quantity supplied to each recipient in Canada, and

(iii) declaration for use referred to in clause 7(2)(b)(ii.1)(C) of these Regulations.

6.2 Application for a permit to use methyl bromide for a purpose set out in paragraph 5(e) or (f) of Schedule 3:

(i) name, address and telephone and fax numbers, and

(ii) name, address and telephone and fax numbers in Canada of the person authorized to act on behalf of the applicant; and

(i) how the lack of its availability for the use would result in a significant market disruption,

(ii) possible alternatives to using it,

(iii) steps to be taken to minimize its use,

(iv) steps to be taken to minimize its emissions,

(v) recycled and stockpiled quantities,

(vi) research efforts to find alternative solutions or to minimize its use or emissions,

(vii) quantities used for a purpose set out in paragraph 5(e) or (f) of Schedule 3 in each of the last two years, and

(viii) annual quantity necessary for a critical use or quantity necessary for an emergency use.

18. The portion of section 7 of Schedule 5 to the Regulations before paragraph (a) is replaced by the following:

7. Declaration for use for a purpose set out in Schedule 3, other than a purpose set out in paragraph 5(e) or (f) of that Schedule:

19. Schedule 5 to the Regulations is amended by adding the following after section 7:

7.1 Declaration for use of methyl bromide for a purpose set out in paragraph 5(e) or (f) of Schedule 3:

(i) name, address and telephone and fax numbers, and

(ii) name, address and telephone and fax numbers in Canada of the person authorized to act on behalf of the recipient;

(i) name and address of the recipient,

(ii) quantity of the methyl bromide to be sold or otherwise supplied to the recipient, and

(iii) undertaking to complete the declaration referred to in clause 7(2)(b)(ii.1)(C) of these Regulations.

20. Paragraph 8(a) of Schedule 5 to the Regulations is amended by adding the word "and" at the end of subparagraph (i), by striking out the word "and" at the end of subparagraph (i.1) and by repealing subparagraph (ii).

21. Paragraph 9(a) of Schedule 5 to the Regulations is amended by adding the word "and" at the end of subparagraph (i), by striking out the word "and" at the end of subparagraph (i.1) and by repealing subparagraph (ii).

22. Paragraph 10(a) of Schedule 5 to the Regulations is amended by adding the word "and" at the end of subparagraph (i), by striking out the word "and" at the end of subparagraph (i.1) and by repealing subparagraph (ii).

23. (1) Subparagraph 11(a)(ii) of Schedule 5 to the Regulations is repealed.

(2) Section 11 of Schedule 5 to the Regulations is amended by striking out the word "and" at the end of paragraph (e), by adding the word "and" at the end of paragraph (f) and by adding the following after paragraph (f):

(g) in the case of methyl bromide, information respecting the quantity used for a purpose set out in paragraph 5(e) or (f) of Schedule 3.

24. Paragraph 12(a) of Schedule 5 to the Regulations is amended by adding the word "and" at the end of subparagraph (i), by striking out the word "and" at the end of subparagraph (i.1) and by repealing subparagraph (ii).

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