Vol. 137, No. 24 — November 19, 2003

Registration
SOR/2003-355 6 November, 2003

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

P.C. 2003- 1774 6 November, 2003

Whereas, pursuant to subsection 332(1) of the Canadian Environmental Protection Act, 1999 (see footnote a) , the Minister of the Environment published in the Canada Gazette, Part I, on March 29, 2003, a copy of the proposed Off-Road Small Spark-Ignition Engine Emission Regulations, substantially in the annexed form, and persons were given an opportunity to file comments with respect to the Regulations or a notice of objection requesting that a board of review be established and stating the reasons for the objection;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of the Environment, pursuant to section 160 of the Canadian Environmental Protection Act, 1999 (see footnote b) , hereby makes the annexed Off-Road Small Spark-Ignition Engine Emission Regulations.

OFF-ROAD SMALL SPARK-IGNITION ENGINE EMISSION REGULATIONS

INTERPRETATION

1. (1) The following definitions apply in these Regulations.

"Act" means the Canadian Environmental Protection Act, 1999. (Loi)

"CFR" means Title 40, chapter I, subchapter C, part 90, of the Code of Federal Regulations of the United States as amended from time to time. (CFR)

"element of design" means, in respect of an engine,

(a) any control system including computer software, electronic control systems and computer logic;
(b) any control system calibrations;
(c) the results of systems interaction; or
(d) any hardware items. (élément de conception)

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

"engine" means an off-road engine that is prescribed under subsection 5(1). (moteur)

"EPA" means the United States Environmental Protection Agency. (EPA)

"EPA certificate" means a certificate of conformity to United States federal standards issued by the EPA. (certificat de l'EPA)

"exhaust emissions" means substances emitted into the atmosphere from any opening downstream from the exhaust port of an engine. (émissions de gaz d'échappement)

"machine" means anything, including a vehicle, device, appliance or implement, powered by an engine. (machine)

"model year" means the year, as determined under section 4, that is used by a manufacturer to designate a model of engine. (année de modèle)

"off-road engine" means an engine, within the meaning of section 149 of the Act,

(a) that is used or designed to be used by itself and that is designed to be or is capable of being carried or moved from one location to another; or
(b) that is used or designed to be used
(i) in or on a machine that is designed to be or is capable of being carried or moved from one location to another,
(ii) in or on a machine that is self-propelled,
(iii) in or on a machine that serves a dual purpose by both propelling itself and performing another function, or
(iv) in or on a machine that is designed to be propelled while performing its function. (moteur hors route)

(2) Standards that are incorporated by reference in these Regulations from the CFR are those expressly set out in the CFR and shall be read as excluding

(a) references to the EPA or the Administrator of the EPA exercising discretion in any way;

(b) alternative standards related to the averaging, banking and trading of emission credits, to small volume manufacturers or to financial hardship; and

(c) standards or evidence of conformity of any jurisdiction or authority other than the EPA.

(3) For the purposes of these Regulations, a reference in the CFR to

(a) "nonroad vehicle" shall be read as "machine"; and

(b) "nonroad engine" shall be read as "engine".

PURPOSE

2. The purpose of these Regulations is to

(a) reduce emissions of hydrocarbons, oxides of nitrogen and carbon monoxide from engines by establishing emission limits for those substances or combinations of those substances;

(b) reduce emissions of the toxic substances formaldehyde, 1,3 butadiene, acetaldehyde, acrolein and benzene through the establishment of emission limits for hydrocarbons from engines; and

(c) establish emission standards and test procedures for engines that are aligned with those of the EPA.

APPLICATION

3. These Regulations apply to engines of the 2005 and later model years.

MODEL YEAR

4. (1) A year that is used by a manufacturer of an engine as a model year shall

(a) if the period of production of a model of engine does not include January 1 of a calendar year, correspond to the calendar year during which the period of production falls; or

(b) if the period of production of a model of engine includes January 1 of a calendar year, correspond to that calendar year.

(2) The period of production of a model of engine shall include only one January 1.

PRESCRIBED ENGINES

5. (1) Subject to subsection (2), the off-road engines that are prescribed for the purposes of the definition "engine" in section 149 of the Act are those that

(a) operate under characteristics significantly similar to the theoretical Otto combustion cycle;

(b) use a spark plug or other sparking device; and

(c) develop no more than 19 kW of power measured at the crankshaft, or its equivalent, when equipped only with standard accessories (such as oil pumps or coolant pumps) necessary for their operation.

(2) The engines referred to in subsection (1) do not include engines that are

(a) designed exclusively for competition and with features that are not easily removed and characteristics that render their use other than in competition unsafe, impractical or unlikely;

(b) regulated by the On-Road Vehicle and Engine Emission Regulations;

(c) designed to be used exclusively in underground mines;

(d) designed to be used to power snowmobiles, all-terrain vehicles or restricted-use motorcycles, as those vehicles are defined in subsection 2(1) of the Motor Vehicle Safety Regulations;

(e) designed to be used in reduced-scale models of vehicles that are not capable of transporting a person;

(f) designed to be used exclusively in emergency and rescue machines;

(g) designed to be used in military machines designed for use in combat or combat support;

(h) designed to propel a vessel; or

(i) being exported and that are accompanied by a written statement establishing that they will not be sold or used in Canada.

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

APPLICATION FOR AUTHORIZATION TO APPLY
THE NATIONAL EMISSIONS MARK

6. (1) Any company that intends to apply a national emissions mark in relation to an engine shall apply to the Minister to obtain an authorization.

(2) The application shall be signed by a person who is authorized to act on behalf of the company and shall include

(a) the name and street address of the head office of the company and, if different, its mailing address;

(b) a statement that the company is seeking to obtain the authorization to apply the national emissions mark under these Regulations;

(c) the street address of the location at which the national emissions mark will be applied; and

(d) information to show that the company is capable of verifying compliance with the standards set out in these Regulations.

NATIONAL EMISSIONS MARK

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

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

(3) The national emissions mark shall be located

(a) on or immediately next to the engine information label referred to in paragraph 16(d); or

(b) if there is no such label applied to the engine, in a visible or readily accessible location.

(4) The national emissions mark shall be on a label that

(a) is permanently applied;

(b) is resistant to or protected against any weather condition; and

(c) bears inscriptions that are legible and indelible and that are indented, embossed or in a colour that contrasts with the background of the label.

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

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

(a) the engine conforms to the standards set out in these Regulations for engines of the 2005 model year; and

(b) the company meets the requirements of these Regulations in respect of that engine.

ENGINE STANDARDS

9. (1) An emission control system that is installed on an engine to enable it to conform to the standards set out in these Regulations shall not

(a) in its operation or function, release a substance that causes air pollution and that would not have been released if the system were not installed; or

(b) in its operation, function or malfunction, make the engine or the machine in which the engine is installed unsafe, or endanger persons or property near the engine or machine.

(2) No engine shall be equipped with a defeat device as defined in paragraph 111(b), subpart B, of the CFR.

10. (1) Subject to subsection (2) and sections 13 and 14, an engine of a given model year shall conform to the exhaust emission standards set out in sections 103 to 105, subpart B, of the CFR that are applicable to engines of that model year and of the same engine class described in paragraph 116(a), subpart B, of the CFR.

(2) Where less than 2,000 units of a class III, IV or V engine of a given model and model year are sold in Canada, the engine may, instead of conforming to the exhaust emission standards set out in Table 4 of section 103, subpart B, of the CFR,

(a) in the case of a class III or IV engine

(i) of the model year 2007 or earlier, conform to the exhaust emission standards set out in Table 1 of section 103, subpart B, of the CFR applicable to an engine of the same class, or
(ii) of the model year 2008 or later, conform to the exhaust emission standards set out in paragraph 203(f), subpart C, of the CFR for the applicable class of engine and have a carbon monoxide emission no greater than 805 grams per kilowatt-hour; and

(b) in the case of a class V engine

(i) of the model year 2009 or earlier, conform to the exhaust emission standards set out in Table 1 of section 103, subpart B, of the CFR applicable to an engine of the same class, or
(ii) of the model year 2010 or later, conform to the exhaust emission standards set out in paragraph 203(f), subpart C, of the CFR and have a carbon monoxide emission no greater than 603 grams per kilowatt-hour.

(3) For the purpose of this section, engines of a model year not included in the Phase 2 classification referred to in the CFR shall meet the standards applicable to engines of the same class and model year in the Phase 1 classification referred to in the CFR.

(4) The standards referred to in this section include the test procedures, fuels and calculation methods set out in the CFR for those standards.

11. (1) The crankcase of an engine must be closed.

(2) Despite subsection (1), an engine may have an open crankcase if it

(a) is designed exclusively to power a snowblower; and

(b) meets the emission standards that are prescribed by these Regulations and applicable to the combination of exhaust emissions, measured using the procedures set out in subpart E, of the CFR, and crankcase emissions.

12. (1) In this section, "adjustable parameter" means a device, system or element of design that is physically capable of being adjusted to affect emissions or engine performance during emission testing or normal in-use operation, but does not include devices, systems or elements of design that are permanently sealed by the engine manufacturer or that are inaccessible with the use of ordinary tools.

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

REPLACEMENT ENGINES

13. (1) In this section, "replacement engine" means an engine manufactured exclusively to replace an engine in a machine for which no current model year engine with the physical or performance characteristics necessary for the operation of the machine exists.

(2) A replacement engine may conform to, instead of the standards set out in sections 9 to 12,

(a) in the case where there exists a replacement engine manufactured to the specifications of a model year later than the model year of the original engine and with the physical or performance characteristics necessary for the operation of the machine,

(i) the standards referred to in sections 9 to 12 applicable to an engine manufactured to the specification of the model year of the replacement engine, or
(ii) where none of the standards referred to in sections 9 to 12 apply, the manufacturer's specifications; and

(b) in any other case,

(i) the standards referred to in sections 9 to 12 applicable to the original engine, or
(ii) if none of those standards applied, the manufacturer's specifications.

(3) A replacement engine shall bear a label that meets the requirements set out in

(a) subsections 7(3) and (4) and that sets out, in both official languages, that the engine is a replacement engine; or

(b) paragraph 1003(b)(5), subpart K, of the CFR.

ENGINES COVERED BY AN EPA CERTIFICATE

14. (1) In this section, "an engine of a specific model year that is covered by an EPA certificate and that is sold concurrently in Canada and the United States" includes an engine that is sold in Canada and that has

(a) the same features set out in the CFR to classify engines into engine families as an engine in an engine family covered by an EPA certificate and sold in the United States in the same model year; and

(b) no features that could cause it to have a higher level of emissions than the engine family sold in the United States.

(2) An engine of a specific model year that is covered by an EPA certificate and that is sold concurrently in Canada and in the United States shall conform to, instead of the standards set out in sections 9 to 12, the emission standards referred to in the EPA certificate.

(3) For the purposes of subsection 153(3) of the Act, the provisions of the CFR that are applicable to an engine referred to in subsection (2) pursuant to the EPA certificate correspond to the emission standards referred to in subsection (2).

(4) For the purposes of subsection 153(3) of the Act, the EPA is the prescribed agency.

EMISSION-RELATED MAINTENANCE INSTRUCTIONS

15. (1) Every company shall ensure that written instructions respecting emission-related maintenance are provided to the first retail purchaser of every engine or machine and that the instructions are consistent with the maintenance instructions set out in paragraphs 1104(a) and (b), subpart L, of the CFR for the applicable model year.

(2) The instructions shall be provided in English, French or both official languages, as requested by the purchaser.

RECORDS

16. In the case of an engine referred to in subsection 14(2), evidence of conformity for the purposes of paragraph 153(1)(b) of the Act in respect of a company shall consist of

(a) a copy of the EPA certificate covering the engine;

(b) a document demonstrating that the engine covered by the EPA certificate is sold concurrently in Canada and in the United States;

(c) a copy of the records submitted to the EPA in support of the application for the issuance of the EPA certificate in respect of the engine; and

(d) an engine information label that is permanently affixed in the form and location set out in section 114, subpart B, of the CFR for the applicable model year of the engine.

17. In the case of an engine other than one referred to in subsection 14(2), evidence of conformity required under paragraph 153(1)(b) of the Act shall be obtained and produced by a company in a form and manner that is satisfactory to the Minister instead of that specified in section 16.

18. On written request by the Minister for the evidence of conformity referred to in paragraphs 16(a) to (c) or section 17, the company shall provide the Minister with the evidence of conformity in respect of any engine manufactured in the eight years preceding the request, in either official language and

(a) within 40 days after the request is delivered to the company; or

(b) within 60 days after the request is delivered to the company, if the evidence of conformity must be translated from a language other than French or English.

IMPORTATION REQUIREMENTS AND DOCUMENTS

19. (1) Subject to subsection (2), any company importing an engine into Canada shall submit a declaration at a customs office, signed by its duly authorized representative, that contains the following information:

(a) the name and street address and, if different, the mailing address of the importer;

(b) the business number assigned to the company by the Minister of National Revenue;

(c) in respect of an engine that is not installed in or on a machine, the name of the manufacturer and the model and model year of the engine;

(d) in respect of a machine, the name of the manufacturer and the make, model and type of the machine;

(e) the date on which the engine is imported; and

(f) a statement that

(i) the engine bears the national emissions mark, or
(ii) the company is able to produce the evidence of conformity in accordance with section 16 or complies with section 17.

(2) For the purposes of paragraph 153(1)(b) of the Act, any company that imports 500 or more engines into Canada in a calendar year may provide the information referred to in subsection (1) in any form and manner that is satisfactory to the Minister.

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

(a) the information described in paragraphs 19(1)(a) to (e);

(b) a statement that the engine will be used in Canada solely for purposes of exhibition, demonstration, evaluation or testing; and

(c) the date on which the engine will be removed from Canada or destroyed.

21. Any engine that is imported into Canada by a person that is not a company shall be labelled with

(a) the national emissions mark;

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

(c) a label showing that the engine conformed to the emission standards of the California Air Resources Board in effect at the time of its manufacture.

22. A company that imports an engine into Canada in reliance on subsection 153(2) of the Act shall submit a declaration at a customs office, signed by its duly authorized representative, that contains the information described in paragraphs 19(1)(a) to (e) and, in addition,

(a) a statement from the manufacturer of the engine that the engine will, when completed in accordance with instructions provided by the manufacturer, conform to the standards prescribed under these Regulations; and

(b) a statement from the company that the engine will be completed in accordance with the instructions referred to in paragraph (a).

RENTAL RATE

23. The annual rental rate to be paid to a company by the Minister under subsection 159(1) of the Act, prorated on a daily basis for each day that an engine is made available, is 21% of the manufacturer's suggested retail price of the engine.

EXEMPTION

24. A company applying under section 156 of the Act for an exemption from conformity with any standard prescribed under these Regulations shall submit in writing to the Minister

(a) its name and street address and, if different, mailing address;

(b) the province or country under the laws of which it is established;

(c) the section number, title and text of the standards from which an exemption is sought;

(d) the duration requested for the exemption;

(e) the estimated number of engines for which the exemption is sought and an estimate of the changes in the level of emissions if the exemption is granted;

(f) the reason for requesting the exemption, including technical and financial information that demonstrates in detail why conformity to the standards referred to in paragraph (c) would

(i) create substantial financial hardship for the company,
(ii) impede the development of new features for emission monitoring or emission control that are equivalent or superior to those that conform to prescribed standards, or
(iii) impede the development of new kinds of engines or engine systems or components;

(g) if the basis of the application is substantial financial hardship,

(i) the world production of engines manufactured by the company or by the manufacturer that is the subject of the application in the 12-month period beginning two years before the start of the exemption period being sought, and
(ii) the total number of engines manufactured for, or imported into, the Canadian market in the 12-month period beginning two years before the start of the exemption period being sought;

(h) if the company is requesting that information submitted be treated as confidential under section 313 of the Act or otherwise, the reasons for the request; and

(i) the reasons why the granting of the exemption would be in the public interest and consistent with the objectives of the Act.

25. (1) In the case of a model of engine in respect of which the Governor in Council has, by order, granted an exemption under section 156 of the Act, the engine shall bear a label that meets the requirements set out in subsections 7(3) and (4).

(2) The label referred to in subsection (1) shall set out, in both official languages, the standard for which the exemption has been granted, as well as the title and date of the exemption order.

DEFECT INFORMATION

26. (1) The notice of defect referred to in subsections 157(1) and (4) of the Act shall be given in writing and shall contain the following information:

(a) the name of the company giving the notice;

(b) a description of each engine in respect of which the notice is given, including the model, the model year, the period during which the engine was manufactured and, if applicable, the EPA engine family identification;

(c) a description of the machine or type of machine in or on which the engine is installed or is likely to be installed;

(d) the estimated percentage of the potentially affected engines that contain the defect;

(e) a description of the defect;

(f) an evaluation of the pollution risk arising from the defect;

(g) a statement of the measures to be taken to correct the defect; and

(h) a description of the means available to the company to contact the current owner of each affected engine.

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

(a) the information required by subsection (1);

(b) the total number of engines in relation to which the notice of defect has been given;

(c) a chronology of all principal events that led to the determination of the existence of the defect;

(d) a description of the measures taken to correct the defect; and

(e) copies of all notices, bulletins and other circulars issued by the company in respect of the defect, including a detailed description of the nature and physical location of the defect with diagrams and other illustrations as necessary.

(3) A report respecting the defect and its correction shall be submitted to the Minister and shall contain the following information:

(a) the number, title or other identification assigned by the company to the notice of defect;

(b) the number of engines in respect of which the notice of defect was given;

(c) the date that notices of defect were given to the current owners of the affected engines; and

(d) the total number or percentage of engines repaired, including engines requiring inspection only.

(4) Unless the Minister directs otherwise under subsection 157(8) of the Act, the company shall submit the report to the Minister respecting the defect and its correction not later than 24 months after giving a notice of defect.

COMING INTO FORCE

27. (1) These Regulations, except sections 3 to 5 and 9 to 26, come into force on the day on which they are registered.

(2) Section 3 to 5 and 9 to 26 come into force on January 1, 2005.

SCHEDULE
(subsection 7(1))

NATIONAL EMISSIONS MARK

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

The Off-Road Small Spark-Ignition Engine Emission Regulations (hereinafter referred to as "the Regulations") introduce exhaust emission standards for off-road (see footnote 1)  small spark-ignition engines developing no more than 19 kW (25 hp). These engines typically use gasoline fuel but liquefied petroleum gas or natural gas can also be used. Small spark-ignition engines are typically found in lawn and garden machines (hedge trimmers, brush cutters, lawnmowers, garden tractors, snow-blowers, etc.); in light-duty industrial machines (generator sets, welders, pressure washers, etc.); and in light-duty logging machines (chainsaws, log splitters, shredders, etc.).

The Regulations, under Part 7, Division 5 of the Canadian Environmental Protection Act, 1999 (CEPA 1999), establish Canadian emission standards aligned with those of the United States Environmental Protection Agency (U.S. EPA) rules for small spark-ignition engines. The Regulations will apply to engines of the 2005 and later model year.

The combustion of fuel in such engines contributes to air pollution, resulting in adverse impacts on the environment and on the health of Canadians. The Regulations will help to mitigate these impacts by reducing or controlling emissions of pollutants such as hydrocarbons (HC), oxides of nitrogen (NO_x), carbon monoxide (CO) and certain pollutants listed as "toxic substances" in Schedule 1 of CEPA 1999 (see footnote 2) .

The Regulations apply to persons (see footnote 3)  in the business of manufacturing, distributing, or importing for sale in Canada small spark-ignition engines and machines.

Background

Contribution of Small Spark-Ignition Engines to Air Pollution in Canada

The use of small spark-ignition engines results in emissions of air pollutants such as NO_x, CO and volatile organic compounds (VOCs), which are mainly composed of hydrocarbons (see footnote 4) .

NO_x and VOCs are involved in a series of complex reactions activated by sunlight that result in the formation of ground-level ozone, a respiratory irritant and a component of smog. Smog is a noxious mixture of air pollutants, primarily ground-level ozone and particulate matter (PM), which can often be seen as a haze in the air, especially over urban centres. Because many small spark-ignition engines power lawn and garden machines used mostly in summertime and in urban areas, they can contribute acutely to smog.

CO is a poisonous gas which inhibits the capacity of the blood to carry oxygen to organs and tissues. The direct health effect of CO exposure can be important in small spark-ignition applications since the operator is typically near the machine during its operation.

Table 1 shows the amount of pollution from small spark-ignition engines and how they contribute to air pollution from off-road (see footnote 5)  machines and mobile sources (see footnote 6) .

Table 1 — Small Spark-Ignition Engine Emissions in
Canada in 2000

^a HC emissions have a mass of 59.3 kilotonnes

Small spark-ignition engines also emit particulate matter with a diameter of less than 10 micrometers (PM₁₀), benzene, 1,3-butadiene, acetaldehyde, acrolein, and formaldehyde. All these compounds, with the exception of PM₁₀, are hydrocarbon species resulting from incomplete fuel combustion. Formaldehyde, acetaldehyde and 1,3-butadiene, in addition to their role with other reactive VOCs in the formation of ground-level ozone have a direct harmful effect on human health.

Emissions from small spark-ignition engines were unregulated while progressively more stringent emission controls were being applied to on-road vehicles. Thus, emissions from off-road sources became an increasingly significant source of pollution.

Health studies report that air pollution contributes to premature deaths and numerous health-related problems, such as cardiovascular ailments and respiratory distress, leading to an increase in the number of emergency room visits and hospital admissions. There is a need to continue taking strong actions to provide a healthier environment. To that end, the Regulations set Canadian emission standards for the first time for a category of off-road engines. Regulations to control emissions from other categories of off-road engines, such as off-road diesel engines, outboard engines and personal watercraft, recreational vehicles, and large spark-ignition engines are also under development.

Small Spark-Ignition Engine Technology

Small spark-ignition engines are either two- or four-stroke. Four-stroke engines have typically been cleaner, quieter and more fuel efficient, but are mechanically more complex, as they use intake and exhaust valves, and are heavier for a given power output. Two-stroke engines have typically emitted more pollutants because they use a mixture of fuel and oil and because their simpler design results in more unburned fuel being exhausted directly into the air.

U.S. emissions standards for small spark-ignition engines have been in place since 1997. Emissions reductions from small-spark ignition engines were first achieved by better engine adjustment without significant design modifications. Engine manufacturers are adopting two basic approaches to reduce emissions further: replace two-stroke with four-stroke engines and incremental improvements to engine design by enhancing fuel-air mixing on two-stroke engines or by moving to overhead valve designs on four-stroke engines. Both approaches are proving to be feasible, and newly-designed two-stroke and four-stroke engines are both expected to meet regulatory standards. The introduction of many of these cleaner engine technologies also results in reduced fuel consumption.

Canadian Market for Small Spark-Ignition Engines and Machines

The vast majority of small spark-ignition engines sold in Canada are imported already assembled in a machine. A number of loose engines are imported for integration into products by Canadian machine manufacturers. More than 400 companies import engines and machines for the purposes of resale in Canada and they are typically Canadian subsidiary distributors of a foreign manufacturer, independent Canadian distributors, or large-scale retailers directly importing machines.

Canada imported $471 million worth of small spark-ignition engines and machines in 2000. The U.S., the European Union (mainly Sweden and Germany), and Japan respectively supplied 80%, 10%, and 7% of this market. Total imports comprised approximately 327,000 loose engines, 538,000 handheld machines, 362,000 non-handheld lawn and garden machines, and 109,000 non-handheld industrial machines.

The Canadian market represents a small portion of the North American market. For example, the Canadian market for home consumer lawn and garden equipment is estimated to be less than 4% of the value of the U.S. market. Many small spark-ignition products have a duty-free status under the North-America Free Trade Agreement. As a result, most manufacturers, distributors and large-scale retailers prepare their business plans for a single North-American market.

The manufacturing sector in Canada includes one manufacturer of small spark-ignition engines, one major manufacturer of lawn and garden machines and a number of smaller manufacturers of light-duty machines such as pressure washers and log splitters. Most of the Canadian production of engines is exported to the U.S.

Statistics Canada does not disaggregate small spark-ignition engine and machine manufacturing data; consequently, there is limited economic data. It is estimated that 900 to 1,000 persons are directly employed by this sector. Canadians are also employed by distributors of engines and machines.

Policy Framework

As interim measures until the Regulations are implemented, Memoranda of Understanding between Environment Canada, 10 manufacturers of handheld machines and 9 manufacturers of engines used in non-handheld machines were put into place in 1999-2000. These manufacturers produce the majority of engines currently sold in Canada. Under these agreements, these companies voluntarily supply small spark-ignition engines designed to meet the then applicable Phase 1 emissions standards of the EPA (see footnote 7) .

In the spring of 2000, the Minister of the Environment announced the federal government's integrated clean air strategy and reaffirmed the strategy in February 2001 by announcing that the Government will invest $120 million in new measures to accelerate action on air quality. A key component is the Federal Agenda on Cleaner Vehicles, Engines and Fuels, published in the Canada Gazette, Part I, on February 17, 2001, which sets out a series of measures to be developed and implemented over the next decade (see footnote 8) . The Regulations are an important element of this Agenda.

The Regulations partly fulfill one of Canada's commitments under the December 2000 Ozone Annex to the 1991 Canada-United States Air Quality Agreement. Canada is committed to replace the Memoranda of Understanding by "emission regulations under the CEPA 1999 for new non-road engines aligned with the U.S. federal emissions program". Actions under the Ozone Annex will reduce the transboundary flow of ground-level ozone and its precursors with consequent health and environmental benefits in both countries.

In June 2000, the Government of Canada, the provinces and the territories, except Quebec, adopted the Canada-Wide Standards for Particulate Matter and Ozone. These standards set ambient air quality concentration targets for ground-level ozone and fine particulate matter for the year 2010. The Regulations contribute to meeting the ground-level ozone target.

The Regulations

Until the passage of CEPA 1999, there was no federal authority for controlling emissions from off-road engines. The Regulations establish Canadian emission standards aligned with U.S. EPA rules for small spark-ignition engines as published in Title 40, Part 90 of the Code of Federal Regulations (see footnote 9)  (CFR), including the amendments to Part 90 finalized in September 2002 (see footnote 10) .

Phase 1 U.S. standards, applicable to engines manufactured during or after the 1997 model year, were introduced in 1995 while Phase 2 standards, introduced in 1999-2000, are phased-in over the 2001-2007 model years. Phase 2 introduced more stringent standards for HC and NO_x to be met throughout the useful life of an engine.

Companies are responsible for ensuring that their products comply with the Regulations and are required to produce, upon request, evidence of such conformity. Almost all engines are expected to demonstrate compliance with the Regulations through a valid EPA certificate of conformity and concurrent sales in the U.S. Engines that are sold only in Canada will be required to demonstrate compliance according to the procedures set out in the Regulations, which are aligned with the EPA standards.

Technical Emissions Standards

The Regulations apply to off-road engines of model year 2005 and later that use sparkplugs and develop no more than 19 kW (25 hp) of power. The emissions standards are divided into seven classes based on engine displacement and usage in either a handheld or non-handheld application as shown in Table 2.

Table 2 — Small spark-ignition engine classes and exhaust emission standards

^a Standards apply throughout the engine useful life

^b Standards apply only when the engine is new

^c Some engine classes include a combined non-methane hydrocarbons (NMHC) and NOx standard that applies only when the engine is fuelled by natural gas

(1) For models already in production at coming into force of the Regulations

(2) For models initially produced after coming into force of the Regulations

(3) For all models

The Regulations establish a maximum level of CO and a combined HC and NO_x emissions for each engine class. As shown in Table 2, these standards are defined as mass of pollutant per unit of engine work expressed in grams per kilowatt-hour (i.e., brake-specific emissions).

The Regulations account for in-use deterioration as an engine must meet the standards throughout its useful life. At the time of engine certification, a manufacturer can select one of three specified useful life duration periods, which range from 50 to 1000 hours depending on the engine class. For example, for a class I engine, the useful life can be 125, 250 or 500 hours. The selection of useful life duration must be supported by technical information. Longer useful lives, which entail a higher manufacturing cost, are typically found in commercial equipment while home consumer products are often designed for shorter useful lives. Class I engines already in production when the Regulations come into force do not have to meet the useful life requirements.

Alternative less stringent emission standards, consistent with those available under the CFR, are available:

•  for HC+NO_x levels for engines in machines used exclusively in wintertime, such as ice augers and snow-blowers; These engines are subject to the applicable CO standard.

•  for replacement engines which are engines manufactured exclusively to replace an existing engine in a machine for which no current model year engine with physical or performance characteristics necessary for the operation of the machine exists;

•  for class III, IV and V when less than 2000 engines of a particular model are sold in total in Canada to accommodate Canada-only niche products. This new provision was introduced following comments raised by manufacturers supplying specialized products used by the forestry industry (see footnote 11) .

Other Standards

The Regulations include general provisions concerning the performance of emission control devices and a prohibition on the use of defeat devices. There is also a requirement for closed engine crankcases, except for snow-blowers where a special provision is available. Engines equipped with adjustable parameters must comply with all requirements of the Regulations regardless of how the parameters are adjusted.

Administrative Provisions

The Regulations include administrative provisions necessary to operate and enforce the legislative scheme.

The national emissions mark is required for small spark-ignition engines manufactured in Canada. The Regulations establish the symbol of the national emissions mark and set out the manner of applying for the Minister's authorization to use it. Provisions of the Regulations related to the national emission mark enable companies to apply for authorization to apply the national emission mark well in advance of coming into force of the other provisions of the Regulations.

The Regulations specify the form of the records and evidence of conformity that companies must provide, and the deadlines for their submission if requested by the Minister. These records can include copies of the EPA certificate of conformity and supporting documentation used to obtain this certificate along with evidence demonstrating concurrent sale of engines in Canada and in the U.S. The Department recognizes that companies that import and sell engines do not normally maintain these technical documents in Canada. The Regulations do not oblige companies to maintain these records, but companies are responsible to make them available upon request.

Other administrative provisions specify: (1) the information to be provided when importing engines; (2) the written instructions respecting emission-related maintenance that must be furnished to the first retail purchaser of every engine; (3) the information to be submitted by a company when applying for an exemption pursuant to section 156 of CEPA 1999; (4) the procedure to be followed by a company issuing a notice of defect pursuant to section 157 of CEPA 1999; and (5) the rental rate that the Minister shall pay to a company that makes available a test engine in accordance with section 159 of CEPA 1999.

Alternatives

Voluntary Emissions Standards

The option exists to continue a voluntary program to control emissions by either keeping the current Memoranda of Understanding to supply Phase 1 engines to the Canadian market or by updating these agreements to reflect the implementation of the EPA Phase 2 standards. Given the importance of environmental protection, Environment Canada concludes that a regulatory program is preferable to a voluntary emission control program and this is reflected in the authority provided in CEPA 1999 and in the policies announced by the Minister. Regulations provide for a level playing field where engines that do not meet the applicable standards cannot be introduced in the Canadian market. The Memoranda of Understanding were intended as interim measures until regulations could be developed under CEPA 1999.

Regulations with unique Canadian Standards

The option exists for Canada to adopt its own emissions standards. However, as more than 99 percent of small spark-ignition engines currently sold in Canada are certified to the EPA standards, unique Canadian standards would represent an additional burden and would conflict with the trend towards global harmonization of emission standards. The European Union has adopted a directive for emission standards for small spark-ignition engines that are essentially aligned with those of the U.S. EPA (see footnote 12) . Additionally, unique Canadian standards would entail extensive development of testing and certification procedures.

If Canada were to adopt emissions standards more stringent than in the U.S., the cost of engines and machines designed to meet Canadian standards could be expected to increase significantly and product availability would be reduced. On the other hand, adopting emission standards less stringent than the EPA standards would reduce overall environmental benefits for Canada.

Regulations with Averaging, Banking and Trading provisions

The EPA emission program for small spark-ignition engines incorporates an optional averaging, banking and trading program that allows manufacturers to certify engines to a level less stringent than the prescribed standard as long as the increased emissions are offset, on a sales weighted basis, by engines certified better than the standard. Engines certified under the averaging provisions cannot exceed a prescribed maximum level.

Environment Canada has determined that administrating a Canadian averaging program for this category of engines would be a major regulatory burden without commensurate environmental benefits. The U.S. averaging program primarily applies to manufacturers that design products, incorporate technology and plan production to meet the averages. The Canadian regulations apply primarily to importers without any control over engine design or production. The burden is created by the requirement for companies to establish their emission credits and to independently manipulate Canadian sales to ensure meeting the required average. While the U.S. averaging program is available to 41 manufacturers and importers of engines, the Canadian regulations would apply to more than 400 importing companies.

As the industry tends to consider North America as a single market, it is expected that product offerings and sales mix will be proportionally similar in Canada and the U.S. and therefore overall emission levels from small spark-ignition engines should be similar.

Regulations with Canadian standards aligned with those of the U.S.

Aligning Canadian off-road emission standards with U.S federal standards enables manufacturers to certify engines only once for both countries. Environment Canada selected this option since the Regulations provide for comparable emission performance on both sides of the border in a cost effective manner and without additional burden on companies and consumers.

Benefits and Costs

Benefits

Emission Reductions and Commensurate Benefits

Environment Canada has estimated the emission reductions accruing over the years 2000 to 2025 as a result of the Regulations using the U.S. EPA Nonroad (see footnote 13)  model adapted to reflect Canadian parameters.

The forecasts include a "base case" reflecting the continuation of the existing voluntary agreements and a "regulated case" where the penetration rate of cleaner engines is assumed to be the same in Canada as in the U.S. The base case reflects the close integration of the North American market by assuming that Phase 2 engines would still penetrate the Canadian market in the absence of regulations, albeit at a slower rate.

Year 2000 is the starting point for both cases and mass emissions for that year are shown in Table 1. Emissions projections for 2025 are shown in Table 3.

Table 3 — Small Spark-Ignition Engine Emissions
in Year 2025

^a Emissions for HC and NO_x are calculated separately, but the standards apply to their combined values.

By 2025, the Regulations will result in a 44 percent reduction in combined HC+NO_x emissions, compared to the base case. CO emissions will not be reduced significantly compared with the base case since the Regulations maintain essentially the same allowable CO levels as those under the existing Memoranda of Understanding.

Toxic emissions were estimated using emissions factors from a study conducted for Environment Canada by SENES Consultants Limited. Table 3 shows that the Regulations will result in significant reductions of toxic hydrocarbon emissions and a marginal reduction of PM₁₀. The standards for HC will have the effect of reducing toxic emissions although specific limits are not included. PM₁₀ will be reduced through the application of improved emission control technologies.

The reduction in emissions can be translated in terms of health impacts and environmental damages avoided. The Regulations contribute to reduced exposure to ground-level ozone and toxic substances. Estimating the benefits from reducing these pollutants is very difficult. It is impossible to disaggregate health and environmental impacts due to emissions from small spark-ignition engines from the other sources of air pollution. However the reduction of emission of ground-level ozone precursors will be especially beneficial because many of these engines tend to be used in summertime when smog-related health problems are more acute.

Other Benefits

The upgrades in engine technologies needed to meet the standards provide the additional benefit of reducing fuel consumption. As shown in Table 3, the Regulations reduce emissions of carbon dioxide (CO₂), a by-product of fuel combustion linked to the greenhouse effect and climate change, by nearly 9% in comparison to the base case in 2025. Improved fuel efficiency also leads to reductions of fuel costs and refuelling losses because of increased intervals between refuelling.

Costs

Since almost all small spark-ignition engines currently supplied to the Canadian market already comply with the EPA standards, additional costs to industry associated with the Regulations are minimal. In fact, incremental costs to engines due to the Regulations are expected to be negligible. For example, the administrative cost of affixing the national emissions mark is estimated to be a few cents per engine.

Incremental costs to Government associated with the development and administration of the Regulations are part of a number of integrated initiatives to reduce emissions from vehicles, engines and fuels totalling $48.4 million over a four-year period starting in the 2001-2002 fiscal year. It is estimated that about one third of this amount will be spent in support of the Regulations and the other 4 planned off-road regulations. Major cost components include laboratory upgrades to allow for emissions testing of off-road engines, regulatory development and administration, enforcement, and compliance verification activities.

Competitiveness implications

Neither the standards nor the administrative requirements of the Regulations are expected to have a negative impact upon the competitiveness of the small spark-ignition engine and machine industries in Canada. Engine and machine manufacturing industries in Canada should not be adversely affected by the Regulations as they already operate on a North-American basis. There should not be any competitiveness implications for distributors of engines and machines.

Consultation

In April 2000, the Deputy Minister of the Environment wrote to a wide range of stakeholders inviting them to participate in the development of the Federal Agenda on Cleaner Vehicles, Engines and Fuels. In May 2000, Environment Canada convened a stakeholder workshop in Toronto to discuss measures to reduce air pollution from vehicles, engines and fuels. The workshop was attended by 125 representatives from federal, provincial, territorial and municipal governments, environmental and health organizations, the petroleum refining industry, automotive and engine manufacturers, and the alternative fuels sector. Workshop presentations and related written submissions were distributed to all stakeholders in July 2000.

The consultation revealed a broad consensus that Canada's emission standards for off-road engines should be based on alignment with corresponding U.S. federal programs. Commenters identified the integrated nature of the North American economy and the implementation of aggressive national programs for off-road engines by the U.S. EPA as two key elements supporting a policy of alignment with U.S. federal programs as a logical approach for Canada to achieve significant emission reductions in a cost-effective manner. The "Support Document to the Notice of Intent on the Federal Agenda on Cleaner Vehicles, Engines and Fuels" (see footnote 14)  contains further background on the issues and summarizes the input provided at the workshop and through written submission.

Starting in June 2001, Environment Canada officials met on an informal basis with Canadian manufacturers, importers and distributors of small spark-ignition engines and machines, and major industry associations. These meetings were intended to involve the industry in the development of the Regulations.

In July 2002, Environment Canada released a discussion draft of the proposed Regulations. The discussion draft was accompanied by a note describing four specific regulatory issues: accepting engines certified to European Union emissions standards; Canadian regulatory plans to address proposed EPA amendments to Part 90 of the CFR; special provisions to identify winter engines; and emission averaging provisions (see footnote 15) . Comments received show support for many aspects of the Regulations and for the approach proposed to address the specific issues listed in the discussion document. The main issues raised by stakeholders and the Department's response were summarized in the publication of the proposed Regulations in the Canada Gazette, Part I, on March 29, 2003. The complete response to comments document is also available (see footnote 16) .

Comments after Canada Gazette, Part I Publication

Pre-publication of the proposed Off-Road Small Spark-Ignition Engine Emission Regulations in the Canada Gazette, Part I, on March 29, 2003, initiated a 60-day public comment period where stakeholders were invited to submit their views on the proposed Regulations. Additionally, an advisory letter explaining aspects of the proposed Regulations that could affect the importation of small spark-ignition engines and machines was mailed to nearly 200 importers and posted to the Environment Canada CEPA Registry (see footnote 17) .

The Department received comments from 4 interested parties. Once again, the comments indicated broad support for the policy of aligning Canada's emission standards with those of the EPA. Many comments supported modifications to the discussion draft document found in the proposed Regulations.

The Outdoor Power Equipment Institute (OPEI) raised concerns regarding Canada-only niche products used by the forestry industry. The Department has concluded that allowing these products to meet alternative exhaust emission standards was the best option to keep these products available in Canada, considering their importance to the forestry sector and their small contribution to national air pollution. The Regulations include less-stringent standards for handheld engines not covered by an EPA certificate when less than 2,000 engines of a given model are sold annually in total in Canada. The alternative standards are consistent with those available under the CFR for engines sold in the U.S.

OPEI also commented that there are instances of engines used for Canadian and U.S. versions of the same machine that have minor variations, unrelated to emissions. This could make it problematic to meet the regulatory requirement of "concurrent sale" in Canada and the U.S. for an engine of a specific model covered by an EPA certificate. The Regulations include a provision clarifying the scope of engines deemed to be "covered by an EPA certificate and sold concurrently in Canada and in the U.S". An engine sold in Canada that shares all the features (used by the EPA to classify engines into engine families) with an engine in an engine family covered by an EPA certificate and sold in the U.S. in the same model year shall conform to the emission standards referred to in the EPA certificate, instead of standards set out in the Regulations.

Environment Canada plans to release a guidance document to assist companies with the administrative and technical provisions of the regulatory framework.

Moreover, following their pre-publication in the Canada Gazette, Part I, technical changes were made to the Regulations. These changes, listed below, are required to better align the Regulations with CFR Part 90 and to facilitate their administration and enforcement:

•  exclusion from the Regulations of small spark-ignition engines designed to propel vessels;

•  exclusion from the Regulations of engines that are being exported;

•  requirement for a label on replacement engines;

•  requirement for companies to provide the business number assigned by the Canada Customs and Revenue Agency on importation documentation; and

•  requirement for a declaration for engines imported solely for the purposes of exhibition, demonstration, evaluation and testing.

The date of the coming into force of the Regulations was revised to simplify the administrative procedures at implementation. The Regulations come into force on January 1, 2005 while provisions of the Regulations related to the national emission mark remain unchanged and come into force when the Regulations are registered.

Other editorial changes were made for clarification and do not effect the intent of the Regulations.

Compliance and Enforcement

Environment Canada administers a comprehensive program to monitor compliance with emission standards. The program includes:

•  authorizing and monitoring use of the national emissions mark;

•  reviewing company evidence of conformity;

•  registering manufacturers notices of defects affecting emission controls;

•  inspection of test engines and their emission-related components; and

•  laboratory emissions tests of sample new engines that are representative of products offered for sale in Canada.

Environment Canada plans to coordinate efforts with the EPA by sharing information to increase program efficiency and effectiveness.

If an engine is found not to comply with the Regulations, the manufacturer or importer is subject to the provisions of CEPA 1999. In this situation, the normal course of events is to perform sufficient engineering assessment to determine if a notice of defect should be issued.

Environment Canada's Compliance and Enforcement Policy (see footnote 18)  will be applied when verifying compliance with the Regulations. This Policy sets out the range of possible responses to alleged violations: warnings, environmental protection compliance orders, ticketing, ministerial orders, injunctions, prosecution and environmental protection alternative measures (which are an alternative to a court prosecution 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 cost recovery.

Whenever a possible violation of the Regulations is identified, enforcement officers may carry out inspections, investigations or both. Alleged violations may be identified by Environment Canada's technical personnel, through information transmitted to the Department by the Canada Customs and Revenue Agency or through complaints received from the public. Enforcement activities may also include inspections by enforcement officers at Canada's international borders.

When, following an inspection or an investigation, a CEPA enforcement officer discovers an alleged violation, the officer will choose the appropriate enforcement action based on the following criteria:

•  Nature of the alleged violation: This includes consideration of the seriousness of the harm or potential harm to the environment, 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 with the Act 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 in enforcement: enforcement officers will consider how similar situations have been handled in determining the measures to be taken to enforce the Act.

Contacts
Ross White
Director
Transportation Systems Branch
Air Pollution Prevention Directorate
Gatineau, Quebec
K1A 0H3
Telephone: (819) 953-1120
FAX: (819) 953-7815
E-mail: ross.white@ec.gc.ca

Céline Labossière
Policy Manager
Regulatory and Economic Analysis Branch
Economic and Regulatory Affairs Directorate
Gatineau, Quebec
K1A 0H3
Telephone: (819) 997-2377
FAX: (819) 997-2769
E-mail: celine.labossiere@ec.gc.ca

Footnote a 

S.C. 1999, c. 33

Footnote b 

S.C. 1999, c. 33

Footnote 1 

An engine is an off-road engine if it is used in a machine that is: (1) self-propelled or serves the dual purpose of propelling itself and performing another function (e.g., a garden tractor); (2) intended to be propelled while performing its function (e.g., a lawnmower); or (3) designed to be moved from one location to another (e.g., a portable generator). Some specific applications of small spark-ignition engines are not covered by the Regulations.

Footnote 2 

Schedule 1 of CEPA 1999 includes the following air pollutants: acetaldehyde, acrolein, benzene, 1,3-butadiene, formaldehyde, nitric oxide, nitrogen dioxide, respirable particulate matter with a diameter of less than 10 micrometers, and certain VOCs identified as precursors to ground-level ozone.

Footnote 3 

Many provisions of Part 7, Division 5 of CEPA 1999 apply to a company, which is defined as a person who is: (1) engaged in the business of manufacturing engines in Canada; (2) engaged in the business of selling engines manufactured in Canada to other persons for the purposes of resale by those persons or; (3) imports engines into Canada for the purpose of sale.

Footnote 4 

VOCs include all hydrocarbons, except methane and ethane, and aldehydes. HC includes all hydrocarbons (including methane and ethane), but does not include aldehydes.

Footnote 5 

Off-road sources include small spark-ignition engines; large spark-ignition engines such as those in forklifts; recreational vehicles such as outboard engines, personal watercraft, snowmobiles and off-highway motorcycles; and off-road diesel engines such as those used in agricultural and construction machines.

Footnote 6 

Mobile sources include on-road transportation and off-road machines. Mobile sources do not include commercial marine, air and rail transportation, but include some machines used for loading or maintenance activities associated with these modes of transportation.

Footnote 7 

Additional details on U.S. emissions standards are found in The Regulations section.

Footnote 8 

The Notice of Intent can be found at http://www.ec.gc.ca/Ceparegistry/documents/notices/g1-13507_n1.pdf.

Footnote 9 

The U.S. Code of Federal Regulations is available at: http://www.access.gpo.gov/nara/cfr/waisidx_02/40cfr90_02.html.

Footnote 10 

The updated off-road U.S. rules can be found at http://www.epa.gov/otaq/regs/nonroad/2002/regs.pdf.

Footnote 11 

Additional details on these standards are found in the "Consultation" section.

Footnote 12 

The directive can be retrieved at http://europa.eu.int/eur-lex/en/archive/2003/l_03520030211en.html. Member countries of the European Union have until August 2004 to implement these standards nationally.

Footnote 13 

he Nonroad code and supporting documentation can be found at http://www.epa.gov/otaq/nonrdmdl.htm.

Footnote 14 

The document can be obtained at http://www.ec.gc.ca/transport/publications.htm.

Footnote 15 

The Discussion Draft and accompanying document can be obtained at http://www.ec.gc.ca/CEPARegistry/default.cfm.

Footnote 16 

The document "Reply to Comments Received on the Discussion Draft of the Off-Road Small Spark-Ignition Engine Emission Regulations" can be retrieved at: http://www.ec.gc.ca/CEPARegistry/default.cfm.

Footnote 17 

The letter is posted at: http://www.ec.gc.ca/CEPARegistry/default.cfm.

Footnote 18 

The policy can be found at http://www.ec.gc.ca/CEPARegistry/enforcement/CandEpolicy.pdf.

NOTICE:
The format of the electronic version of this issue of the Canada Gazette was modified in order to be compatible with hypertext language (HTML). Its content is very similar except for the footnotes, the symbols and the tables.

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