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Vol. 137, No. 24 — June 14, 2003 Regulations Amending the National Parks of Canada Water and Sewer RegulationsStatutory Authority Canada National Parks Act Sponsoring Department Department of Canadian Heritage REGULATORY IMPACT ANALYSIS STATEMENT Description Parks Canada provides water and sewer services for residences and businesses located within the national parks. Under the authority of the Canada National Parks Act, the rates for the provision of water and sewer services are set out in the National Parks of Canada Water and Sewer Regulations. The current rates for the provision of water and sewer services to the residences and businesses in the community of Wasagaming in Riding Mountain National Park of Canada are fixed in Schedule VII of the Regulations. Under that Schedule, rates are set out for annual quantity charges for water and annual special charges for sewerage. An annual connection charge is also included for seasonally occupied buildings. Rates are proportioned depending on categories of dwelling units or businesses receiving the services but do not actually take water consumption for individual properties into consideration. The rates were fixed in the Regulations in 1999 and took into account the costs associated with providing the services in the previous fiscal year. The rates were intended to recover costs for the 1999-2000 fiscal year. Because the rates are fixed, the Regulations must be amended to adjust to fluctuations in operating, maintenance and capital costs for the provision of water and sewer services in the community of Wasagaming. The costs are affected by such things as annual wage increases for labour, increased costs of treatment supplies and ongoing capital improvements for water and sewer infrastructure. Given that these costs are often not known until the end of a fiscal year and that the amendments to the Regulations subsequently take several months to bring into effect, it is very difficult to keep the rates in the Regulations in line with projected costs for the following fiscal year. The method of rate calculation has made cost recovery for provision of these services in the community of Wasagaming very inconsistent. These amendments would introduce a formula for calculating water and sewer rates for properties in the community which allows for flexibility in reflecting annual changes in operating, maintenance and capital costs. The formulas would allow for yearly adjustments to be made without periodical adjustments to the Regulations. The rates would be established by way of a formula early in the fiscal year and consumers would subsequently be billed to recover the costs for the provision of the services. Rate formulas for water and sewage are provided within the National Parks of Canada Water and Sewer Regulations for properties connected to the Parks Canada system in other national parks such as Prince Albert National Park of Canada and Waterton Lakes National Park of Canada. The following formula will be used for calculating water and sewer rates in the community of Wasagaming: (A ื B/12 ื C/D) + (E ื F/G) where A is the aggregate of the volume values of the units on the lot, B is the number of months of the year during which the owner is permitted to occupy the lot under a lease, permit or licence of occupation, C is the total operating and maintenance costs of the water or sewer system, D is the aggregate of the lot volume values for all lots in the community that are connected to the water or sewer system, E is the aggregate of the base factors of the units on the lot, F is the total capital costs of the water or sewer system, and G is the aggregate of the base factors for all units in the park that are connected to the water or sewer system. The formula provides a method of evaluating water and sewage volumes of individual properties in the community relative to one another. The formula is based on the relationship among all costs incurred to provide water and sewer services and the estimated amounts of water consumed or sewerage generated by each individual lot in the community. A single family-dwelling located on one lot would form the basis of the comparative analysis. This type of building would be taken as one "unit" consuming one "volume" in terms of the water it consumed or the sewage it generated. The two variables would then be multiplied together with the resulting product of one "volume value" being established as the comparative benchmark (1 unit ื 1 volume = 1 volume value). Each residence or business would then be evaluated in terms of its comparability to the single-family dwelling benchmark and would be assigned its own individual volume value. For example, a hotel would be assigned one unit for every room with full amenities. However, the volume value for each room or unit would be estimated at approximately 50 percent of what a single-family dwelling would consume in water and produce in sewage. If the hotel has 50 units, each representing one room, and the volume value for each is 0.5, the lot-volume value for the hotel would be 25 (50 units ื 0.5 volume value). If the hotel's lot-volume value was 25 and the community operating and maintenance costs were $100 per lot-volume, then the hotel's annual fee would be $2,500. By comparison, the single-family dwelling rate would be $100 (1 lot-volume value ื $100). The formula accommodates the situation where residents or businesses occupy their properties only during a certain number of months during the year. If a resident or business operator occupies the property for seven months, for example, the lot-volume value would further be multiplied by seven-twelfths. To calculate the distribution of operating costs, the next step in the formula involves adding all lot-volume values in the community to derive aggregate lot-volume value for the community. Total water and sewer operating and maintenance costs for the community are then divided by their respective aggregate lot-volume value to determine the costs incurred by the community to deliver water and sewer services on a per lot-volume basis. Each property's assigned lot-volume value would then be multiplied by the cost per lot-volume to derive the rate for its share of these costs. To calculate capital costs, each unit on a lot would be assigned a base factor which reflects the fixed cost of bringing the services to the users, independent of the volume of water consumed or sewage generated. To calculate the distribution of capital costs, the next step in the formula adds all the base factors in the community together to derive the aggregate base factor. Total water and sewer capital costs are then divided by its aggregate base factor to determine the capital costs to deliver water and sewer services on a per base factor basis. Each lot's assigned base factor would then be multiplied by the community's cost per base factor to derive the rate for its share of capital costs. To determine the rate for capital costs, using the 50 room hotel as an example, the base factor would be 50 as each room is considered to be one unit with one base factor per unit. If the annual capital costs for the services are $100 on a per base factor, the hotel's rate for capital costs recovery would be $5,000 (50 base factors ื $100). This amount would then be added to the hotel's share of operating and maintenance costs to derive the total rate for provision of water and sewer services. The rates applicable to various categories of properties would depend on how the community representatives and Parks Canada choose to assign volume values and base factors to distribute costs to users of the water and sewer systems. Users will be protected from large increases in rates by the equitable distribution of debt on capital costs which is a typical municipal practice. These amendments better reflect Treasury Board's Cost Recovery and Charging Policy. This pricing strategy has been articulated through the Parks Canada Revenue Policy (1998). The fundamental premise of both policies is that users should pay for services which provide them with a personal benefit. Treasury Board's policy further stipulates that the approach to regulated pricing for provision of services should be cost-based and Parks Canada's policy interprets this further by establishing full cost recovery as the appropriate pricing strategy for its municipal services, such as the provision of water and sewer services. The amendments, therefore, fulfil the requirements of these policies respecting the recovery of costs for the provision of services. Alternatives Three options were considered. These were the status quo, increases in current rates in the Regulations and the proposed formula for rate calculation. The status quo is considered unacceptable in view of the current inflexible structure and the federal government's policy on cost recovery and charging, which stipulates that there must be a relationship between the rates charged and the cost of providing the services. The status quo does not reflect the objective of the policy to promote an approach which fairly charges clients or persons who benefit from services beyond those enjoyed by the general public. Setting new rates based on current year data would not effectively meet Treasury Board policy. Since 1999, there has been ample evidence that rates need to be adjusted regularly in order to permit cost recovery. The lengthy process of amending Regulations does not allow rates to be adjusted quickly which means that billing does not keep pace with changes in operating, maintenance and capital costs. Adopting the proposed formula is the most flexible solution for the community in question. Besides being more equitable for consumers, the formula will allow Parks Canada to adjust the rates each operating year, taking into account planned expenditures and water consumption patterns in the community of Wasagaming. Any surplus or deficit resulting from projecting costs will be reflected in the rates established for the subsequent year. This is standard practice in other park communities as well as in municipalities located outside national parks. Costs and Benefits Over the next three to four years, Parks Canada will spend approximately $3.9 million on a new water treatment plant and $2.2 million for sewage treatment upgrading in the community of Wasagaming. The water system upgrade is required because the present water source is taken from surface water and engineering studies have concluded that the current system of water treatment presents a significant public health risk. Improvements are required to meet Canadian drinking water standards and will thus ensure the health and safety of residents, business operators and visitors in the park. The use of the rate calculation formula would allow Parks Canada to recover operating and maintenance costs as well as a fair share of capital expenditures. Cottage owners, for example, in Wasagaming currently pay approximately $153 per year for water and sewer services. It is expected that water and sewer rates for cottage owners would increase over the next three years to between $310 and $325 per year as a result of increased operating costs and the recovery of a portion of the capital costs for the new water system and improvements to the sewer system. Rates for commercial operations are also expected to double. Currently, a typical restaurant is paying approximately $1,200 per year for water and sewer services. The rates are expected to increase to approximately $2,500 per year. The rate increases are mostly due to the increase in expenditures for capital improvements. The amendments to the Regulations would result in additional revenues of approximately $150,000 per year to Parks Canada and a better distribution of the burden of costs based on the actual use of the water and sewer services. From an environmental standpoint, a rate system based on consumption will encourage consumers to use water wisely. The use of the formula for rate calculation would eliminate the need for costly amendments to the Regulations. No increases in park administration costs would result from this initiative. Consultation Representatives of the community of Wasagaming were consulted several times regarding the proposed changes to the National Parks of Canada Water and Sewer Regulations. Discussion of the changes took place with the Wasagaming Community Council which represents the Chamber of Commerce, the Clear Lake Cottage Owners' Association and Clear Lake seasonal campground residents. The Council generally agreed with the proposed rate calculation formula but had concerns with the possibility of factoring in the cost of the debt associated with past capital improvements. Consultations also took place with the Wasagaming Tenants Association. The Association is an elected body that consists of representatives of the cottage owners, cabin owners and the Chamber of Commerce. Consultations with the Association were continual over the past two years and discussions revolved around two issues. These were the required capital improvements to the water and sewer systems to deal with health and safety measures and the problems associated with fixed rates in the current Regulations. At the most recent meeting of the Wasagaming Tenants Association in November 2002, Parks Canada representatives discussed the proposed formula-based amendments to the Regulations and the capital program for water and sewer infrastructure at length. While the Association is agreeable to the proposed improvements to the community water and sewer systems and to better distribution operating and maintenance costs, it is opposed to accepting responsibility for the recovery of the portion of the debt associated with past capital improvements in the community. Parks Canada has indicated that it will not pursue the recovery of past capital costs when the amendments to the Regulations come into effect. Compliance and Enforcement Residents and businesses within the national parks have 30 days following receipt of the invoices for water and sewer services to pay the appropriate charges. Where required, various recovery measures, such as written and telephone reminders are used. Occasionally, it is necessary to turn to the courts regarding the non-payment of overdue accounts. As a last resort, a charge could be laid for an offence of the National Parks of Canada Water and Sewer Regulations and a maximum fine of $2,000 could be imposed under the Canada National Parks Act. Parks Canada also has mechanisms in place to resolve disputes. When residents or businesses believe that an error has been made in their billings, for example, they are invited to discuss the matter with the community Sanitation Supervisor. If no agreement is reached, they may send a written request to the Park Community Manager and, when necessary, the case is referred to the Park Superintendent for decision. Contact Mr. Gerry Doré, Chief, Legislation and Regulations, National Parks, Parks Canada, 25 Eddy Street, 4th Floor, Hull, Quebec K1A 0M5, (819) 953-7831 (Telephone), (819) 997-0835 (Facsimile). PROPOSED REGULATORY TEXT Notice is hereby given that the Governor in Council, pursuant to subsection 16(1) of the Canada National Parks Act (see footnote a) , proposes to make the annexed Regulations Amending the National Parks of Canada Water and Sewer Regulations. Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Mr. Gerry Doré, Chief, Legislative and Regulatory Affairs, National Parks Directorate, Parks Canada, 25 Eddy Street, Hull, Quebec, K1A 0M5 (Fax: (819) 997-0835). Ottawa, June 12, 2003 EILEEN BOYD Assistant Clerk of the Privy Council REGULATIONS AMENDING THE NATIONAL PARKS OF CANADA WATER AND SEWER REGULATIONS AMENDMENTS 1. Section 15.1 of the National Parks of Canada Water and Sewer Regulations (see footnote 1) is repealed. 2. The portion of subsection 16(1) of the Regulations before paragraph (a) is replaced by the following: 16. (1) Every owner of a lot located in Prince Albert National Park of Canada, Riding Mountain National Park of Canada or Waterton Lakes National Park of Canada shall pay 3. The portion of section 21 of the Regulations before paragraph (a) is replaced by the following: 21. A person in Kootenay National Park of Canada or Fundy National Park of Canada who requires water from a park water main for construction purposes shall 4. The portion of subsection 22(1) of the Regulations before paragraph (a) is replaced by the following: 22. (1) If the water supply to a lot in Kootenay National Park of Canada or Fundy National Park of Canada is shut off or interrupted 5. Sections 23 and 24 of the Regulations are replaced by the following: 23. If a building or business in Kootenay National Park of Canada or Fundy National Park of Canada does not match any of the descriptions set out in Schedules IV and VIII, respectively, the owner shall pay the charge set out in the applicable Schedule for the closest equivalent building or business. 24. Charges under these Regulations are payable within 30 days of the date on which a statement of account is sent by the superintendent. 6. Schedule VII to the Regulations is repealed. COMING INTO FORCE 7. These Regulations come into force on the day on which they are registered. [24-1-o] Regulations Amending the Food and Drug Regulations (1339 — Spinosad)Statutory Authority Food and Drugs Act Sponsoring Department Department of Health REGULATORY IMPACT ANALYSIS STATEMENT Description Spinosad is registered under the Pest Control Products Act as an insecticide for the control of oblique banded leafroller larvae in apples. By virtue of subsection B.15.002(1) of the Food and Drug Regulations, the maximum residue limit (MRL) for residues of spinosad [consisting of spinosyn A and spinosyn D] in any food is 0.1 parts per million (p.p.m.). The Pest Management Regulatory Agency (PMRA), of Health Canada, has recently approved an application to amend the registration of spinosad in order to allow its use for the control of the Colorado potato beetle in potatoes. This proposed regulatory amendment would establish MRLs for residues of spinosad resulting from this use in potatoes, in order to permit the sale of food containing these residues. The regulatory amendment would also specifically list the MRL of 0.1 p.p.m. in apples in the Regulations. Before making a registration decision regarding a new use of a pest control product, the PMRA conducts the appropriate assessment of the risks and value of the product specific to its proposed use. The registration of the pest control product will be amended if: the data requirements for assessing value and safety have been adequately addressed; the evaluation indicates that the product has merit and value; and the human health and environmental risks associated with its proposed use are acceptable. The human health risk assessment includes an assessment of dietary risks posed by expected residues of the pest control product, as determined through extensive toxicological studies. An acceptable daily intake (ADI) and/or acute reference dose (ARD) is calculated by applying a safety factor to a no observable adverse effect level or, in appropriate cases, by applying a risk factor which is calculated based on a linear low-dose extrapolation. The potential daily intake (PDI) is calculated from the amount of residue that remains on each food when the pest control product is used according to the proposed label and the intake of that food from both domestic and imported sources in the diet. PDIs are established for various Canadian subpopulations and age groups, including infants, toddlers, children, adolescents and adults. Provided the PDI does not exceed the ADI or ARD for any subpopulation or age group, and the lifetime risk is acceptable, the expected residue levels are established as MRLs under the Food and Drugs Act to prevent the sale of food with higher residue levels. Since, in most cases, the PDI is well below the ADI and lifetime risks are very low when MRLs are originally established, additional MRLs for the pest control product may be added in the future. After the review of all available data, the PMRA has determined that MRLs for spinosad of 0.1 p.p.m. in apples and 0.02 p.p.m. in potatoes would not pose an unacceptable health risk to the public. Alternatives Under the Food and Drugs Act, the sale of food containing residues of pest control products at a level less than or equal to 0.1 p.p.m. is permitted unless a lower MRL has been established in Table II, Division 15, of the Food and Drug Regulations. In the case of spinosad, establishment of an MRL for potatoes is necessary to support the additional use of a pest control product which has been shown to be both safe and effective, while at the same time preventing the sale of food with unacceptable residues. Even though the sale of food containing residues of pest control products at a level greater than 0.1 p.p.m. would already be prohibited by virtue of subsection B.15.002(1) of the Food and Drug Regulations, the establishment of an MRL of 0.1 p.p.m. in Table II, Division 15, of the Regulations, for residues of spinosad in apples would provide more clarity regarding the applicable MRL and would clearly indicate that the appropriate risk assessment has been completed. This is in keeping with current trends towards increased openness and transparency of regulatory processes and is consistent with current practices of most pesticide regulatory agencies throughout the world. Benefits and Costs The use of spinosad on potatoes will provide joint benefits to consumers and the agricultural industry as a result of improved management of pests. In addition, this proposed regulatory amendment will contribute to a safe, abundant and affordable food supply by allowing the importation and sale of food commodities containing acceptable levels of pesticide residues. Some costs may be incurred related to the implementation of analytical methods for analysis of spinosad in the foods mentioned above. Resources required are not expected to result in significant costs to the Government. Consultation Registration decisions, including dietary risk assessments, made by the PMRA are based on internationally recognized risk management principles, which are largely harmonized among member countries of the Organization for Economic Cooperation and Development. Individual safety evaluations conducted by the PMRA include a review of the assessments conducted at the international level as part of the Joint Food and Agriculture Organization of the United Nations/World Health Organization Food Standards Programme in support of the Codex Alimentarius Commission, as well as MRLs adopted by other national health/ regulatory agencies. Compliance and Enforcement Compliance will be monitored through ongoing domestic and/or import inspection programs conducted by the Canadian Food Inspection Agency when the proposed MRLs for spinosad are adopted. Contact Geraldine Graham, Alternative Strategies and Regulatory Affairs Division, Pest Management Regulatory Agency, Health Canada, Address Locator 6607D1, 2720 Riverside Drive, Ottawa, Ontario K1A 0K9, (613) 736-3692 (Telephone), (613) 736-3659 (Facsimile), geraldine_graham@hc-sc.gc.ca (Electronic mail). PROPOSED REGULATORY TEXT Notice is hereby given that the Governor in Council, pursuant to subsection 30(1) (see footnote b) of the Food and Drugs Act, proposes to make the annexed Regulations Amending the Food and Drug Regulations (1339 — Spinosad). Interested persons may make representations with respect to the proposed Regulations within 75 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Geraldine Graham, Alternative Strategies and Regulatory Affairs Division, Pest Management Regulatory Agency, Department of Health, Address Locator 6607D1, 2720 Riverside Drive, Ottawa, Ontario K1A 0K9 (tel.: (613) 736-3692; fax: (613) 736-3659; e-mail: geraldine_graham@hc-sc.gc.ca). Persons making representations should identify any of those representations the disclosure of which should be refused under the Access to Information Act, in particular under sections 19 and 20 of that Act, and should indicate the reasons why and the period during which the representations should not be disclosed. They should also identify any representations for which there is consent to disclosure for the purposes of that Act. Ottawa, June 12, 2003 EILEEN BOYD Assistant Clerk of the Privy Council REGULATIONS AMENDING THE FOOD AND DRUG REGULATIONS (1339 — SPINOSAD) AMENDMENT 1. Table II to Division 15 of Part B of the Food and Drug Regulations (see footnote 2) is amended by adding the following after item S.3:
COMING INTO FORCE 2. These Regulations come into force on the day on which they are registered. [24-1-o] Surface Coating Materials RegulationsStatutory Authority Hazardous Products Act Sponsoring Department Department of Health REGULATORY IMPACT ANALYSIS STATEMENT Description The purpose of this regulatory initiative is to improve the protection of the health and safety of Canadians when exposed to surface coating materials. This is accomplished by replacing the current Hazardous Products (Liquid Coating Materials) Regulations with the Surface Coating Materials Regulations (the Regulations), which apply to all forms of coating materials. The Regulations further restrict the maximum allowable lead level and set a restriction on the maximum allowable mercury level of paints and other surface coating materials. The lead and mercury levels in the Regulations are the accepted background levels or unintentional levels which cannot be eliminated completely from the surface coating materials, and are expressed in the internationally recognized SI units of "mg/kg." The Hazardous Products Act (the Act) prohibits or restricts the advertisement, sale or importation of products which are or are likely to be a danger to the health or safety of the public. Under the authority of the Hazardous Products Act, the Hazardous Products (Liquid Coating Materials) Regulations were introduced in 1976 to protect the public, especially children, from the toxic effects of lead by restricting the lead content of paints and other liquid coating materials to 0.5 percent weight/weight (5 000 mg/kg). Subsequent scientific studies have shown that previously considered "safe" lead levels pose a significant risk to the public, especially to children and pregnant women. Exposure to low lead levels in utero and during infancy or early childhood can result in smaller body size, behavioural problems, learning disabilities and reduced intelligence. Lead exposure also increases the risk of miscarriages, stillbirths and premature deliveries in pregnant women. In September 1977, the intentional addition of lead to consumer paints was banned under the United States Ban of Lead-Containing Paint and Certain Consumer Products Bearing Lead-Containing Paint (16CFR1303), and the maximum allowable lead level in the United States was set at 0.06 percent weight/weight (600 mg/kg). In January 1991, through negotiations with Health Canada, the Canadian Paint and Coatings Association (CPCA) voluntarily adopted this value for all Canadian produced consumer paints. Mercury is another neurotoxin, especially hazardous to children, that is not included in the current Hazardous Products (Liquid Coating Materials) Regulations. Under the voluntary industry program implemented by the CPCA in January 1991, the intentional addition of mercury to Canadian produced consumer paints for interior use was stopped. Since December 2000, mercury-based antimicrobial pesticides are no longer registered under the Pest Control Products Act issued by the Pest Management Regulatory Agency (PMRA), and are not allowed to be intentionally added to any Canadian produced interior or exterior paints. Consequential amendments to Items 2, 9 and 18 of Part I of Schedule I to the Hazardous Products Act, and Item 31 of Part II of Schedule I to the Hazardous Products Act reflect the Surface Coating Materials Regulations. Key changes in this regulatory initiative include: — reduction of the maximum allowable lead content requirement from 5 000 mg/kg (0.5 percent weight/weight) to 600 mg/kg (0.06 percent weight/weight) for surface coating materials used in or around the house or other premises attended by children or pregnant women, or on furniture, toys and other articles for children, as well as on pencils and artist's brushes; — exemption of certain specific-use, non-residential surface coating materials from the maximum allowable lead content requirement, with precautionary labelling; — setting of the maximum allowable mercury content requirement to 10 mg/kg (0.001 percent weight/weight) for all surface coating materials; — a transitional phase-in period for the maximum allowable mercury content requirement for recycled paints, with precautionary labelling; and — specification of test methodologies that conform to good laboratory practices as set by the Organization for Economic Co-operation and Development (OECD). The 600 mg/kg maximum allowable lead level is in harmony with that of the United States Ban of Lead-Containing Paint and Certain Consumer Products Bearing Lead-Containing Paint (16CFR1303). The level is based on a toxicological assessment by the American Academy of Pediatrics Committee on Environmental Health in 1972, which was affirmed by the National Academy of Sciences in 1973. The 10 mg/kg maximum allowable mercury level is unique to Canada. The level is based on a toxicological assessment by Health Canada in 1995. These maximum allowable lead and mercury levels are known to effectively eliminate the intentional addition of lead and mercury in paint, and serve to protect children from toxicity associated with lead and mercury exposure. The lead and mercury remaining in paint is a result of impurities in the paint ingredients, cross-contamination due to other manufacturing processes, and some uncertainty about the precision of testing methods. According to a 1995 Health Canada survey of six consumer paints labelled to be free of intentionally added lead and mercury, paints were already in compliance with the proposed 10 mg/kg mercury limit. Therefore, 10 mg/kg is an achievable background level for mercury in surface coating materials. The Regulations and consequential amendments to Parts I and II of Schedule I to the Hazardous Products Act are in line with Health Canada's commitment to eliminate unnecessary lead exposure in children through its proposed Lead Risk Reduction Strategy for Consumer Products, and to protect Canadians against risk factors over which they have little control. The Regulations are also in line with the de-registration of mercury-based antimicrobial pesticides under the Pest Control Products Act. Alternatives 1. To continue with the current Hazardous Products (Liquid Coating Materials) Regulations (status quo) The current maximum allowable lead level is 0.5 percent weight/weight (5 000 mg/kg) for paints and other liquid coating materials for use on the interior or exterior surfaces of buildings, furniture or household products, or on furniture, toys and other articles for children, as well as on pencils and artist's brushes. The lead content of other surface coating materials is not regulated, and there is no limit for mercury. Continuing with the current Hazardous Products (Liquid Coating Materials) Regulations does not adequately protect the public, especially children and pregnant women, from the toxic effects of lead and mercury in all surface coating materials they may encounter. For these reasons, this option was rejected. 2. To ban the intentional addition of lead and mercury to all paints and other surface coating materials Lead is commonly added to non-residential surface coating materials because of its anti-corrosion and anti-weathering properties. Lead-based pigments are also used to provide durability and brilliance of colour to a variety of specialty coatings such as artist's paints, coatings for markings and display purposes, and coatings for boats and automobiles. Health Canada is unaware of information which indicates that such surface coating materials pose a health risk to the public if used properly — typically, they are either not readily accessible or the finish is so durable and tightly adhered to the surface, making it difficult for children to chew or chip. In addition, safer and effective non-lead substitutes do not exist for some specialty applications. Banning the intentional addition of lead from certain specific-use, non-residential surface coating materials was consequentially rejected. This harmonizes with the United States Ban of Lead-Containing Paint and Certain Consumer Products Bearing Lead-Containing Paint (16CFR1303). Mercury was added to paints primarily as a fungicide and preservative. The intentional addition of mercury to Canadian produced paints was banned in December 2000 under the Pest Control Products Act issued by PMRA. Under the Surface Coating Materials Regulations, this ban is extended to all surface coating materials advertised, sold or imported into Canada, with a transitional phase-in period for recycled paints. 3. To continue with industry self-regulation Continuing with the program of industry self-regulation without government intervention was rejected because such a voluntary program does not provide the legislative powers necessary to protect the public from hazardous domestic and imported products over which they have little control. 4. To implement a public information program Implementing a public information program on the safe use of surface coating materials instead of legislating the lead and mercury limits for these products was rejected because such a program is not only expensive, but it would not adequately address the inherent health hazards of these toxic metals. Benefits and Costs An economic impact assessment entitled "Evaluation of the Regulations for Lead and Mercury Content in Paints" was conducted in 1991. This study assessed the expected costs and benefits associated with limiting lead to 600 mg/kg in paints and other surface coating materials applied to consumer items and in some exterior applications which could come into contact with children. The study also assessed the impacts of banning the use of mercury compounds in surface coating materials intended for interior and exterior uses. The assessment was performed using a standard cost-benefit framework, which measures impacts in terms of their social values. Copies of this study may be obtained from the contact listed at the end of this Regulatory Impact Analysis Statement. Costs were assessed based on the value of the extra resources required to produce surface coating materials with reduced lead and mercury levels. Cost data came primarily from industry representatives (personal interviews and a focus group), as well various government departments responsible for the purchase of large quantities of surface coating materials. Benefits were assessed based on the willingness of the public to pay more for surface coating materials with reduced lead and mercury levels. The willingness to pay more indicates public perception of the health risks associated with lead and mercury in surface coating materials, as well as their desire to reduce the risks. Benefit data came primarily from a mall intercept study of 200 consumers of surface coating materials. The assessment also took into account: — scientific and medical information from literature sources and from discussions with health officials on the health risks of lead and mercury; — information on the performance and quality characteristics of surface coating materials formulated with and without lead and mercury; and — information from discussions with regulators in other jurisdictions, including the United States. Since the assessment was conducted in 1991, industry has maintained or improved its formulations to reduce the levels of lead and mercury in their products. In addition, the public is equally or more aware of the health risks related to toxic substances such as lead and mercury, and the public has an equal or greater desire to reduce these risks. Therefore, the 1991 assessment is considered to accurately or conservatively represent the current economic impact of reducing lead and mercury levels in surface coating materials. To update the dollar values presented in the 1991 economic impact assessment, a conversion factor of 1.164 was used. This factor represents the ratio between the average annual Consumer Price Index (CPI) for 1992 and 2001. The CPI is a measure of the rate of price change for goods and services bought by Canadian consumers, and is the most widely used indicator of price changes in Canada. Costs Costs are associated with the extra expenditure required for substitutes used to meet the intended purpose(s) for the lead and mercury found in various product formulations, and the negative impacts on the performance or quality of the product when made with the substitute. These costs are relevant only if substitutions for lead and mercury occur as a result of the regulatory change. The CPCA represents more than 90 percent of consumer paint production in Canada. In January 1991, CPCA members voluntarily agreed to stop the intentional addition of lead to all consumer paints and mercury to consumer paints for interior use. In December 2000, the addition of mercury to all Canadian produced paints was prohibited under the Pest Control Products Act. Therefore, the majority of the Canadian paint industry is already producing consumer paints containing no more than 600 mg/kg lead and no more than 10 mg/kg mercury. The cost of the regulatory change for the remainder of industry that does not currently adhere to these limits for lead and mercury is shown in Tables 1 and 2. Table 1. Cost of Reductions in the Use of Lead in Surface Coating Materials
Table 2. Cost of Reductions in the Use of Mercury in Surface Coating Materials
Analyses conducted in 1996 and 1997 on the lead and mercury content of recycled paints showed that recycled paints generally comply with the lead limit of 600 mg/kg (8.4-395 mg/kg; maximum 4 655.9 mg/kg) but not with the mercury limit of 10 mg/kg (1.97-61.6 mg/kg). During a multi-stakeholder meeting in June 1999, recycled paint industry representatives stated that the mercury limit would have a significant cost impact, which would be substantially reduced by a transitional phase-in period. The transition period set out for recycled paints will reduce the costs to this industry sector when complying with the Regulations. Costs to meet the precautionary labelling requirements for certain specific-use, non-residential surface coating materials which exceed the 600 mg/kg lead limit and for recycled paints which exceed the 10 mg/kg mercury limit are expected to be minimal. Benefits According to the 1991 mall intercept study, some consumers expose themselves to potentially increased health risks through their use of surface coating materials. For example: — surface coating materials marked "interior/exterior" or "exterior" may have higher levels of lead and/or mercury than surface coating materials intended for interior use, yet 39 percent of surface coating materials marked "interior/exterior" and 8 percent of surface coating materials marked "exterior" have been used inside the house; — application of surface coating materials containing lead and/or mercury to metal air heating ducts may cause distribution of lead chips and dust and/or mercury vapours throughout the house, yet 25 percent of consumers have painted metal air heating ducts; — application of surface coating materials containing lead and/or mercury to surfaces accessible to children increases the risk of exposure by ingestion (lead) or inhalation (mercury), yet 94 percent, 16 percent and 4 percent of consumers have painted trim around doors and windows, children's cribs or other furniture, and children's toys, respectively; and — although many consumers claim to follow safety procedures when applying surface coating materials to reduce their risks from mercury vapours, 40 percent of consumers paint during the winter, when it is less likely that safety procedures would be followed. Furthermore, the procedures that are followed tend to reduce short-term and not long-term risks related to mercury. The mall intercept study also showed that many consumers are willing to pay to reduce the health risks associated with surface coating materials. The amount consumers are willing to pay to reduce these risks is a measure of the benefit of this risk reduction. To reduce the use of lead in consumer surface coating materials, 81 percent of consumers were willing to pay $7.33 above the $34.92 price identified for a 4-litre can of paint. Across all consumers surveyed, including those not willing to pay more, the average willingness to pay was $5.96. To reduce the use of mercury in consumer surface coating materials for interior use, 86 percent of consumers were willing to pay $7.11 above the $34.92 price identified for a 4-litre can of paint, and for exterior use, 71 percent of consumers were willing to pay $6.90 more. Across all consumers surveyed, including those not willing to pay more, the average willingness to pay was $6.12 for surface coating materials for interior use and $4.87 for surface coating materials for exterior use. The high percentage of consumers willing to pay, and the high average amount they are willing to pay indicates that consumers place a high value on risk reduction related to lead and mercury in surface coating materials. Net Benefit The Regulations are justified from a social perspective. The costs, as measured by the resources expended to comply with them, are low relative to the benefits, as measured by consumers' willingness to pay for reductions in lead and mercury in surface coating materials. Thus, the net benefit of increased regulatory restrictions is positive. As most of the Canadian industry is already meeting the proposed lead and mercury limits, few products available in the marketplace will be affected by these Regulations. However, regulation of these products provides increased protection for both consumers and industry. Regulation creates a uniform level of risk associated with the products, and thereby increases consumer protection. Regulation also establishes common requirements for production of surface coating materials, making domestic and imported products the same. These requirements also prevent existing and future industry members, or those with less concern for consumer protection, from producing products with high levels of lead and mercury in their formulation. Such products are typically cheaper than those without added lead and mercury. If regulation did not restrict such products, they could undercut the price of existing products and thereby displace them in the market, resulting in lost sales for those in the industry that comply with the Regulations. Furthermore, consumer protection would be compromised. In addition, harmonizing the Canadian lead content requirements for paints and other surface coating materials with those of the United States facilitates trade by opening up new markets with the same regulatory requirements. Health Canada enforcement strategies should also benefit from increased partnerships on monitoring compliance. Consultation During the development of the Regulations, on-going consultations were conducted with interested parties, including the paint and other surface coating materials industry, the recycling industry, child health organizations, technical experts, and federal, provincial and municipal government departments for health, industry and the environment. On June 14, 1997, the revised Regulations were pre-published in Part I of the Canada Gazette. Resulting comments were discussed at a multi-stakeholder meeting on June 23, 1999. The key recommendations included: — harmonizing Canadian requirements for paints and other surface coating materials with those of the United States Ban of Lead-Containing Paint and Certain Consumer Products Bearing Lead-Containing Paint (16CFR1303), which came into effect in September 1977; — restricting the mercury content of paints and other surface coating materials; — implementing a transitional phase-in period for the mercury content in recycled paints; and — republishing the revised Regulations in Part I of the Canada Gazette. The recommendations were reviewed to ensure consistency with the mission and mandate of Health Canada. The Pest Management Regulatory Agency and the United States Consumer Product Safety Commission were subsequently consulted regarding lead and mercury content and labelling requirements for paints. The recommendations were approved and integrated into the Regulations. Compliance and Enforcement Compliance and enforcement of the Regulations and consequential amendments to Parts I and II of Schedule I to the Hazardous Products Act will follow Departmental policy and procedures, including sampling and testing of paints and other surface coating materials, and follow-up of consumer and trade complaints. Action taken on non-complying products will range from negotiation with traders for the voluntary withdrawal of these products from the market to prosecution under the Hazardous Products Act. Contact Mary Korpan, Project Officer, Consumer Product Safety Bureau, Product Safety Programme, Healthy Environments and Consumer Safety Branch, Department of Health, Address Locator 3504D, MacDonald Building, 123 Slater Street, Ottawa, Ontario K1A 0K9, (613) 952-6629 (Telephone), (613) 952-1994 (Facsimile), mary_korpan@hc-sc.gc.ca (Electronic-mail). PROPOSED REGULATORY TEXT Notice is hereby given that the Governor in Council, pursuant to section 5 (see footnote a1) of the Hazardous Products Act, proposes to make the annexed Surface Coating Materials Regulations. Interested persons may make representations with respect to the proposed Regulations within 75 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Mary Korpan, Project Officer, Consumer Product Safety Bureau, Product Safety Programme, Healthy Environments and Consumer Safety Branch, Department of Health, Address Locator No. 3504D, MacDonald Building, 123 Slater Street, Ottawa, Ontario K1A 0K9 (fax: (613) 952-1994; e-mail: mary_ korpan@hc-sc.gc.ca). Persons making representations should identify any of those representations the disclosure of which should be refused under the Access to Information Act, in particular under sections 19 and 20 of that Act, and should indicate the reasons why and the period during which the representations should not be disclosed. They should also identify any representations for which there is consent to disclosure for the purposes of that Act. Ottawa, June 5, 2003 EILEEN BOYD Assistant Clerk of the Privy Council
TABLE TO PARAGRAPH 3(1)(C) MINIMUM HEIGHT AND SIZE OF TYPE
S.C. 2000, c. 32 R.S., c. 24 (3rd Supp.), s. 1 C.R.C., c. 1134; SOR/2001-320 C.R.C., c. 928 S.C. 1999, c. 33, s. 347 C.R.C., c. 870 |
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