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Vol. 136, No. 33 — August 17, 2002 Regulations Amending the Fish Inspection RegulationsStatutory Authority Fish Inspection Act Sponsoring Agency Canadian Food Inspection Agency REGULATORY IMPACT ANALYSIS STATEMENT Description This initiative addresses amendments to the Meat Inspection Regulations (MIR) and the Fish Inspection Regulations (FIR). The Meat Inspection Act and the Fish Inspection Act enable the Government of Canada to regulate the safety and quality of meat and fish products imported into Canada or produced in federally registered establishments for export or interprovincial trade. Pursuant to these Acts, the MIR and the FIR specify the conditions for operators of federally registered establishments. The current regulations require companies preparing products which are a combination of fish and meat to be dually registered under both sets of regulations. This requirement applies even if the raw materials used for the manufacture of the final product originated from an establishment registered in accordance with the respective regulations for that product, and there is no further processing of the raw materials. Examples include a registered fish establishment processing scallops planning to expand its product line to include bacon wrapped scallops, using bacon prepared by a registered meat processor, or a registered meat establishment processing beef wishing to expand its product line to include beefsteak stuffed with shrimp, using shrimp from a federally registered fish plant. In both cases, the processor would need to be dually registered even though the processing of the materials added to its main product receive no significant transformation. The current regulations requiring processors to become dually registered in order to add products already processed by a federally registered plant to their main product offers no further safeguards to public health and consumer protection, although it does result in increased costs to Canadian fish and meat processors. Canadian processors' ability to respond to consumer demands for greater product variety and convenience is, therefore, limited. This may also result in situations where it is easier to import meat and seafood combinations for the Canadian market than to prepare them in Canada. It is proposed to amend the MIR to exempt foods that are primarily fish products and amend the FIR to exempt foods that are primarily meat products. In order to qualify for an exemption, several important criteria would need to be met. For example, — The food must be primarily either a fish product or a meat product having regard to the nature of the food and the relative proportions of meat product and fish therein, and — In the case of a fish product, the meat component utilized in the preparation of the fish product must originate from an establishment registered in accordance with the MIR or a foreign establishment authorized to export meat products to Canada; — In the case of a meat product, the fish component utilized in the preparation of the meat product must originate from an establishment registered in accordance with the FIR or have been imported in accordance with those Regulations. Alternatives Option 1 Status Quo — Most processors handling both fish and meat products are already dually registered. Maintain current requirement that processors handling meat and seafood mixtures must be registered in accordance with both the FIR and the MIR. Pros: — Certification of product from dually registered plants can be supported by both MIR and FIR. Cons: — Industry faces additional costs. — May result in conditions favouring imported products over domestic products. — The Canadian Food Inspection Agency (CFIA) not seen to be responsive to its mandate "to enhance the effectiveness and efficiency of federal inspection and related services for food". — Offers no further reinforcement of product safety and consumer protection. Option 2 Amend both the FIR and the MIR to exempt meat and fish mixtures based on the percentage of meat and fish in the product. Pros: — Product safety and consumer protection would be maintained. — Industry would not face additional costs to produce product for the domestic market. — Establishes equivalent requirements for both domestic and imported products. — CFIA would be responsive to its mandate "to enhance the effectiveness and efficiency of federal inspection and related services for food". Cons: — The proposed amendment may have a potential negative effect on the Agency's ability to certify exempted products for export when the certificate requires support from the authorities of both the MIR and FIR. — Actual percentage of meat and fish in product may vary as a result of variations in raw materials. Option 3 (preferred option) Amend both the FIR and the MIR to exempt meat and fish mixtures that are primarily either a fish product or a meat product. Pros: — Product safety and consumer protection are maintained. — Industry will not face additional costs to produce product for the domestic market. — Establishes equivalent requirements for both domestic and imported products. — CFIA is being responsive to its mandate "to enhance the effectiveness and efficiency of federal inspection and related services for food". Cons: — The proposed amendment may have a potential negative effect on the Agency's ability to certify exempted products for export when the certificate requires support from the authorities of both the MIR and FIR. Benefits and Costs This regulatory amendment will streamline inspection activities for companies producing fish and meat mixtures as they will have the option to produce this product under the requirements of a single piece of legislation. In addition, this initiative will eliminate the duplication of inspection activities for the regulation of these establishments. Consultation The consultation process included a presentation to members of five different industry associations representing different sectors of the Canadian food processing industry that are regulated under either the FIR or the MIR. The following associations were consulted: Canadian Meat Council, Canadian Poultry and Egg Processors Council, Food Institute of Canada, Fisheries Council of Canada and Further Poultry Processors Association of Canada. Following this meeting, a discussion paper on the subject was forwarded to the participants of this meeting to allow them to circulate the document for comment amongst their members and technical experts. Comments were provided either in writing or verbally by telephone conversation. All responses to the initial external consultation were favourable. The five industry associations, the Canadian Meat Council, the Food Institute of Canada, and the Further Poultry Processors Association of Canada responded favourably to this approach. The Canadian Poultry and Egg Processors Council expressed concerns over timely updates to the list of exempted products and therefore opposed including the list of exempted products in the regulations. With respect to the proposed amendment having a potential negative effect on the Agency's ability to certify exempted products for export when the certificate requires support from the authorities of both the MIR and FIR, this issue was identified early during the consultations and industry indicated that they were comfortable with the proposed approach. Should the above situation present itself, the Agency would engage in bilateral discussions with the importing country to advise them of regulatory controls for the product. A subsequent consultation phase involved the distribution of a communiqué and discussion paper describing the proposed options to all licensed fish importers, all federally registered fish processing establishments and all federally registered meat processing establishments. The CFIA received two written responses to the communiqué. One response was not favourable as the respondent had already invested in operating under the requirements of both the MIR and the FIR and felt others should be required to do the same. It should be noted that this investment allows the operator of the establishment to process both meat and fish products that are not addressed through this regulatory amendment. The other response supported the initiative as it would allow processors to develop new products. Compliance and Enforcement The proposed amendments would not affect the current enforcement process. Contact Alf Bungay, Fish, Seafood and Production Division, Canadian Food Inspection Agency, 59 Camelot Drive, Nepean, Ontario K1A 0Y9, (613) 225-2342, extension 4576 (Telephone), (613) 228-6654 (Facsimile). PROPOSED REGULATORY TEXT Notice is hereby given that the Governor in Council, pursuant to section 3(see footnote a) of the Fish Inspection Act, proposes to make the annexed Regulations Amending the Fish Inspection Regulations. Interested persons may make representations concerning the proposed amendment within 30 days after the date of publication of this notice. All such representations should cite the Canada Gazette, Part I, and the date of publication of this notice and be sent to Mr. Alf Bungay, Fish, Seafood and Production Division, Canadian Food Inspection Agency, 59 Camelot Drive, Nepean, Ontario, K1A 0Y9. Tel.: (613) 225-2342 (ext. 4576); Fax: (613) 228-6654. Ottawa, August 8, 2002
EILEEN BOYD
REGULATIONS AMENDING THE FISH INSPECTION REGULATIONS AMENDMENTS 1. Subsection 3(2) of the Fish Inspection Regulations (see footnote 1) is replaced by the following: (2) Subject to subsection 6(4), these Regulations do not apply to
(b) a food that meets the following specifications, namely,
(ii) the food is commonly recognized as a meat product, having regard to
(B) the common name of the food, (C) the type of processing applied to the fish and meat ingredients, and (D) the historical recognition of the food as a meat product,
(iv) the fish product used in the preparation of the food originates from an establishment registered in accordance with these Regulations or the fish product has been imported into Canada in compliance with these Regulations. 2. The Regulations are amended by adding the following after section 3: 3.1 No person shall prepare in a registered establishment a food that is a mixture of a fish product and a meat product unless
(b) the food is exempt from the application of sections 7 to 9 of the Meat Inspection Act because of paragraph 3(1)(l) of the Meat Inspection Regulations, 1990. COMING INTO FORCE 3. These Regulations come into force on the day on which they are registered. [33-1-o] Regulations Amending the Meat Inspection Regulations, 1990Statutory Authority Meat Inspection Act Sponsoring Agency Canadian Food Inspection Agency REGULATORY IMPACT ANALYSIS STATEMENT Description This initiative addresses amendments to the Meat Inspection Regulations (MIR) and the Fish Inspection Regulations (FIR). The Meat Inspection Act and the Fish Inspection Act enable the Government of Canada to regulate the safety and quality of meat and fish products imported into Canada or produced in federally registered establishments for export or interprovincial trade. Pursuant to these Acts, the MIR and the FIR specify the conditions for operators of federally registered establishments. The current regulations require companies preparing products that are a combination of fish and meat to be dually registered under both sets of regulations. This requirement applies even if the raw materials used for the manufacture of the final product originated from an establishment registered in accordance with the respective regulations for that product, and there is no further processing of the raw materials. Examples include a registered fish establishment processing scallops planning to expand its product line to include bacon wrapped scallops, using bacon prepared by a registered meat processor, or a registered meat establishment processing beef wishing to expand its product line to include beefsteak stuffed with shrimp, using shrimp from a federally registered fish plant. In both cases, the processor would need to be dually registered even though the processing of the materials added to its main product receive no significant transformation. The current regulations requiring processors to become dually registered in order to add products already processed by a federally registered plant to their main product offers no further safeguards to public health and consumer protection, although it does result in increased costs to Canadian fish and meat processors. Canadian processors' ability to respond to consumer demands for greater product variety and convenience is, therefore, limited. This may also result in situations where it is easier to import meat and seafood combinations for the Canadian market than to prepare them in Canada. It is proposed to amend the MIR to exempt foods that are primarily fish products and amend the FIR to exempt foods that are primarily meat products. In order to qualify for an exemption, several important criteria would need to be met. For example, — The food must be primarily either a fish product or a meat product having regard to the nature of the food and the relative proportions of meat product and fish therein, and — In the case of a fish product, the meat component utilized in the preparation of the fish product must originate from an establishment registered in accordance with the MIR or a foreign establishment authorized to export meat products to Canada; — In the case of a meat product, the fish component utilized in the preparation of the meat product must originate from an establishment registered in accordance with the FIR or have been imported in accordance with those Regulations. Alternatives Option 1 Status Quo — Most processors handling both fish and meat products are already dually registered. Maintain current requirement that processors handling meat and seafood mixtures must be registered in accordance with both the FIR and the MIR. Pros: — Certification of product from dually registered plants can be supported by both MIR and FIR. Cons: — Industry faces additional costs. — May result in conditions favouring imported products over domestic products. — The Canadian Food Inspection Agency (CFIA) is not seen to be responsive to its mandate "to enhance the effectiveness and efficiency of federal inspection and related services for food". — Offers no further reinforcement of product safety and consumer protection. Option 2 Amend both the FIR and the MIR to exempt meat and fish mixtures based on the percentage of meat and fish in the product. Pros: — Product safety and consumer protection would be maintained. — Industry would not face additional costs to produce product for the domestic market. — Establishes equivalent requirements for both domestic and imported products. — CFIA would be responsive to its mandate "to enhance the effectiveness and efficiency of federal inspection and related services for food". Cons: — The proposed amendment may have a potential negative effect on the Agency's ability to certify exempted products for export when the certificate requires support from the authorities of both the MIR and FIR. — Actual percentage of meat and fish in product may vary as a result of variations in raw materials. Option 3 (preferred option) Amend both the FIR and the MIR to exempt meat and fish mixtures that are primarily either a fish product or a meat product. Pros: — Product safety and consumer protection are maintained. — Industry will not face additional costs to produce product for the domestic market. — Establishes equivalent requirements for both domestic and imported products. — CFIA is being responsive to its mandate "to enhance the effectiveness and efficiency of federal inspection and related services for food". Cons: — The proposed amendment may have a potential negative effect on the Agency's ability to certify exempted products for export when the certificate requires support from the authorities of both the MIR and FIR. Benefits and Costs This regulatory amendment will streamline inspection activities for companies producing fish and meat mixtures as they will have the option to produce this product under the requirements of a single piece of legislation. In addition, this initiative will eliminate the duplication of inspection activities for the regulation of these establishments. Consultation The consultation process included a presentation to members of five different industry associations representing different sectors of the Canadian food processing industry that are regulated under either the FIR or the MIR. The following associations were consulted: Canadian Meat Council, Canadian Poultry and Egg Pro-cessors Council, Food Institute of Canada, Fisheries Council of Canada and Further Poultry Processors Association of Canada. Following this meeting, a discussion paper on the subject was forwarded to the participants of this meeting to allow them to circulate the document for comment amongst their members and technical experts. Comments were provided either in writing or verbally by telephone conversation. All responses to the initial external consultation were favourable. The five industry associations, the Canadian Meat Council, the Food Institute of Canada, and the Further Poultry Processors Association of Canada responded favourably to this approach. The Canadian Poultry and Egg Processors Council expressed concerns over timely updates to the list of exempted products and therefore opposed including the list of exempted products in the regulations. With respect to the proposed amendment having a potential negative effect on the Agency's ability to certify exempted products for export when the certificate requires support from the authorities of both the MIR and FIR, this issue was identified early during the consultations and industry indicated that they were comfortable with the proposed approach. Should the above situation present itself, the Agency would engage in bilateral discussions with the importing country to advise them of regulatory controls for the product. A subsequent consultation phase involved the distribution of a communiqué and discussion paper describing the proposed options to all licensed fish importers, all federally registered fish processing establishments and all federally registered meat pro-cessing establishments. The CFIA received two written responses to the communiqué. One response was not favourable as the respondent had already invested in operating under the requirements of both the MIR and the FIR and felt others should be required to do the same. It should be noted that this investment allows the operator of the establishment to process both meat and fish products that are not addressed through this regulatory amendment. The other response supported the initiative as it would allow processors to develop new products. Compliance and Enforcement The proposed amendments would not affect the current enforcement process. Contact English: Dr. Zul Nanjee, Food of Animal Origin Division, Canadian Food Inspection Agency, 59 Camelot Drive, Nepean, Ontario K1A 0Y9, (613) 225-2342, extension 4722 (Telephone), (613) 228-6636 (Facsimile); French: Dr. Claude Boissonneault, Chief, Red Meat Programs, Canadian Food Inspection Agency, 59 Camelot Drive, Nepean, Ontario K1A 0Y9, (613) 225-2342, extension 4676 (Telephone), (613) 228-6636 (Facsimile). PROPOSED REGULATORY TEXT Notice is hereby given that the Governor in Council, pursuant to section 20(see footnote b) of the Meat Inspection Act(see footnote c) , proposes to make the annexed Regulations Amending the Meat Inspection Regulations, 1990. 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 Dr. Zul Nanjee, Food of Animal Origin Division, Canadian Food Inspection Agency, 59 Camelot Drive, Nepean, Ontario K1A 0Y9 Tel.: (613) 225-2342 (ext. 4722); fax: (613) 228-6636. Ottawa, August 8, 2002
EILEEN BOYD
REGULATIONS AMENDING THE MEAT INSPECTION REGULATIONS, 1990 AMENDMENTS 1. Subsection 3(1) of the Meat Inspection Regulations, 1990 (see footnote 2) is amended by striking out the word "and" at the end of paragraph (j), by adding the word "and" at the end of paragraph (k) and by adding the following after paragraph (k):
(ii) the food is commonly recognized as a fish product, having regard to
(B) the common name of the food, (C) the type of processing applied to the fish and meat ingredients, and (D) the historical recognition of the food as a fish product,
(iv) the meat product used in the preparation of the food originates from an establishment registered in accordance with these Regulations or a foreign establishment authorized to export meat products to Canada in accordance with these Regulations. 2. The Regulations are amended by adding the following after section 43: 43.1 No person shall prepare in a registered establishment a food that is a mixture of a fish product and a meat product unless
(b) the food is exempt from the application of the Fish Inspection Regulations because of paragraph 3(2)(b) of those Regulations. COMING INTO FORCE 3. These Regulations come into force on the day on which they are registered. [33-1-o] Regulations Amending the Notifiable Transactions RegulationsStatutory Authority Competition Act Sponsoring Department Department of Industry REGULATORY IMPACT ANALYSIS STATEMENT Description Part IX of the Competition Act (the "Act") requires parties to certain proposed transactions which meet the prescribed thresholds to notify the Commissioner of Competition (the "Commissioner"), to provide specified information and to wait a prescribed period of time before completing the transaction. (see footnote 3) The Notifiable Transaction Regulations (the "Regulations"), which were amended in 1999, specify the calculation method and the appropriate annual period to evaluate the total value of the assets or the gross revenues from sales that define prescribed thresholds. The Act provides that the proposed party-size threshold (section 109) and the transaction-size threshold (section 110) can be increased by regulation. For a proposed merger to be notifiable it must exceed both the party-size threshold and the transaction-size threshold. The thresholds are generally based on the monetary value of the transacting parties. If on a combined basis the merging parties have assets in Canada or gross revenues from sales in from or into Canada of over $400 million, the party-size threshold is exceeded. If the assets or target firm being bought are valued over, or generate gross revenues from sales in or from Canada of over $35 million, then the transaction size threshold is exceeded. If either one of the thresholds is not exceeded then the parties to the merger do not have to notify the Commissioner. However, the Commissioner has a statutory right to review all mergers that affect a Canadian operating business regardless of their value. The proposed amendment to the Regulations would raise the transaction-size threshold from the current $35 million to $50 million. Under the current threshold, in force since 1987, acquisitions of assets [110(2)], acquisitions of voting shares [110(3)] and combinations [110(5) and 110(6)] must be notified if the total value of the assets or the gross revenues from sales of the acquired party exceed $35 million. (see footnote 4) This proposed amendment is the result of formal and informal consultations with stakeholders (see footnote 5) and is furthered by a recommendation of the House of Commons Standing Committee on Industry in June 2000 and most recently the House of Commons Standing Committee on Industry, Science and Technology, which recommended that the Government of Canada increase the merger transaction-size notification threshold. This amendment affects one threshold triggering merger notification; the amendment does not affect merger review. All mergers, notwithstanding their size, can be reviewed under the Act. The proposed increase of the transaction-size threshold from $35 million to $50 million (CDN) will approximately match the price index increase since 1987. The equivalent threshold in the United States under the Hart-Scott-Rodino Antitrust Improvements Act was raised from $15 to $50 million (USD) in February 2001. The party-size threshold, which is $400 million, will stay the same. This threshold was considered relatively high both with respect to the size of the Canadian economy and in comparison with its equivalent American threshold. In the United States, the equivalent threshold requires a merger notification filing where at least one of the persons involved in the transaction has $100 million or more in annual net sales or total assets worldwide, and the other has $10 million or more worldwide. Moreover, under American law, the party-size threshold is not considered and is eliminated in transactions valued in excess of $200 million. Alternatives More than 80 percent of notifiable transactions submitted to the Commissioner do not raise any issues under the Act. The purpose of the amendment is to reduce the number of notifiable transactions which are unlikely to raise any competition issues in order to reduce the compliance burden imposed on business. Another way to reduce the number of notifiable transactions is to create exemptions for other classes of transactions that are not likely to raise any competition issues. So far, our analysis has not identified a class of transactions for which exemptions should be created. An automatic price indexation has also been advocated, however this proposal would not enable the government to make a change to the threshold and assess the impact. Benefits and costs The proposed increase to the transaction-size threshold will alleviate the burden for parties, and business in general, involved in small scale transactions, as it will reduce by approximately 10 percent the number of transactions that must be notified. It is estimated that the affected 10 percent of notifiable transactions represent increased costs to businesses who engage in mergers with little likelihood of raising competition concerns. The proposed increase to the transaction-size threshold will likely not increase the risk that the Commissioner would not be notified of a problematic transaction. During the 2000-2001 fiscal year, it would not appear that any of the notifiable transactions valued between $30 million and $50 million (i.e. were above the current threshold, but would have been below the proposed threshold) gave rise to any competition concerns. On this basis, the change in the threshold would not materially hinder the Commissioner from being notified of any problematic transaction. In any event, in all instances the Commissioner will retain his statutory ability to review all mergers affecting Canadian operating businesses. As parties that must submit a merger notification pay a fee of $25,000, the proposed amendment would have an impact on the revenues generated by the Mergers Branch of the Competition Bureau. In 2000-2001, revenues collected amounted to $7.5 million. A 10 percent decrease in the number of notifiable transactions would correspondingly result in a 10 percent decrease in revenues of approximately $750,000 per annum. This estimated shortfall will be offset by the proposed increase to fees which, it is anticipated, will take effect at approximately the same time as the proposed increase in the notification threshold. The affected transactions are small, non-problematic cases which currently involve very low costs. Since about 90 percent of the costs of reviewing mergers are related to complex and very complex cases, any savings related to the higher threshold are expected to be minimal and used to address workload associated with complex cases. Therefore, there will be little if any savings related to raising the threshold. As a result of the above, it may be concluded that the current transaction-size threshold is overly-inclusive as it needlessly imposes an additional expense and regulatory burden upon merging firms while providing the Commissioner with notice of very few, if any, problematic transactions that would not be notified at the proposed $50 million dollar transaction-size threshold. Consultation In the process surrounding the last amendment to the Act (1995-1999), stakeholders and members of the legal community frequently suggested that the current thresholds should be raised. These requests were repeated when filing fees for the notifiable transactions came into force. As a result of consultations conducted by the Competition Bureau, including forums organized by the Merger Notification Unit of the Competition Bureau where main stakeholders had the opportunity to comment on the proposal, the Competition Bureau concluded that only the transaction-size threshold should be increased for the time being. Generally, the proposal to increase the transaction-size threshold has been well received. Compliance and Enforcement The amendment to the Regulations does not require new enforcement mechanisms. The Government will continue to monitor compliance with the notifiable transactions through publicly available information. Contact For further information, please contact Mr. Doug Milne, Special Advisor to the Senior Deputy Commissioner of Competition, Mergers Branch, Competition Bureau, Industry Canada, Place du Portage, Phase I, 50 Victoria Street, 19th Floor, Hull, Québec K1A 0C9. PROPOSED REGULATORY TEXT Notice is hereby given, pursuant to subsection 124(2) (see footnote d) of the Competition Act (see footnote e) , that the Governor in Council, pursuant to subsection 124(1) (see footnote f) of that Act, proposes to make the annexed Regulations Amending the Notifiable Transactions Regulations. A copy of the proposed Regulations is available on the Internet at the following address: http://competition.ic.gc.ca. Interested persons may make representations with respect to the proposed Regulations within 60 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 the Senior Deputy Commissioner of Competition, Mergers Branch, Competition Bureau, Industry Canada, Place du Portage, Phase I, 21st Floor, 50 Victoria Street, Hull, Quebec K1A 0C9. 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, August 8, 2002
EILEEN BOYD
REGULATIONS AMENDING THE NOTIFIABLE TRANSACTIONS REGULATIONS AMENDMENTS 1. The Notifiable Transactions Regulations (see footnote 6) are amended by adding the following after section 14: LIMITS APPLICABLE TO TRANSACTIONS 14.1 (1) For the purposes of subsection 110(2), subparagraph 110(3)(a)(i), paragraph 110(5)(a) and subparagraph 110(6)(a)(i) of the Act, the prescribed amount in respect of the aggregate value of the assets in Canada is fifty million dollars. (2) For the purposes of subsection 110(2), subparagraph 110(3)(a)(ii), paragraph 110(5)(b) and subparagraph 110(6)(a)(ii) of the Act, the prescribed amount in respect of the gross revenues from sales in or from Canada generated from the assets referred to in subsection (1) is fifty million dollars. COMING INTO FORCE 2. These Regulations come into force on the first day of the month next following the month in which falls the thirtieth day after the day on which they are published in the Canada Gazette, Part II. [33-1-o] National Energy Board Processing Plant RegulationsStatutory Authority National Energy Board Act Sponsoring Agency National Energy Board REGULATORY IMPACT ANALYSIS STATEMENT Description The National Energy Board Processing Plant Regulations (the Regulations) are made pursuant to subsection 48(2) of the National Energy Board Act (the Act). Subsection 48(2) provides the National Energy Board (the Board), subject to the approval of the Governor in Council, with the authority to make regulations governing the design, construction, operation and abandonment of processing plants which may be included under the definition of "pipeline" as it occurs within the Act. The Act further allows the Board to establish regulations which provide for the protection of property and the environment and the safety of the public and of the company's employees in the construction, operation and abandonment of a processing plant. The Board currently has regulatory jurisdiction over processing plants operated by Duke Energy (formerly Westcoast Energy Incorporated) situated within the province of British Columbia and ExxonMobil Canada (formerly Sable Offshore Energy Incorporated) situated within the province of Nova Scotia. Until such time as the Regulations are promulgated, these plants are required to comply with the Board's Onshore Pipeline Regulations, 1999. The Onshore Pipeline Regulations, 1999 do not specifically address the unique aspects associated with the design, construction, operation and abandonment of processing plants. Following the 1998 decision by the Supreme Court of Canada in which the Board's regulatory authority over processing plants was confirmed (Westcoast Energy Inc. v. Canada (National Energy Board)), the Board undertook the development of the Regulations. These Regulations establish minimum requirements specific to processing plants for the safety of persons, and the protection of property and the environment. The Regulations reflect the Board's progression towards the development of goal oriented regulations. The Regulations clearly place the onus on companies for ensuring the safety of persons and the protection of property and the environment. Alternatives The Board considered the following three alternatives to the proposed Regulations:
(b) making amendments to the Onshore Pipeline Regulations, 1999 to include provisions for the design, construction, operation and abandonment of processing plants; and (c) using existing voluntary standards. The Board considered allowing processing plants to remain under the Onshore Pipeline Regulations, 1999 without any amendments. This option was ruled out given the unique nature of processing plants in light of the Board's goal to protect property and the environment and to promote the safety of persons. Amendments to the Onshore Pipeline Regulations, 1999 were not considered a practical alternative. Processing plants are markedly different from the commonly held understanding of the term "pipeline". They are situated in small geographic locations and include intensive operations involving a wide range of chemical processes. Processing plants are designed and constructed using different standards and include a wide variety of pressure vessels, pressure piping and boilers. As such, the inclusion of requirements specific to processing plants within the Onshore Pipeline Regulations, 1999 was determined to be less than optimal. Finally, the Board considered deferring to voluntary standards for the design, construction, operation and abandonment of processing plants. This alternative was not pursued due to the large number of standards available for the design and construction of the numerous and varied systems within processing plants. Further complicating this approach was the fact that the pressure containing elements of processing plants are typically designed using standards developed by the American Society of Mechanical Engineers (ASME). ASME standards are not available in languages other than English. Benefits and Costs The Regulations require companies to develop designs, specifications, programs, manuals, procedures, measures and plans to ensure compliance. This approach is in keeping with the Board's commitment towards the continued development of goal oriented regulations which provide companies with flexibility in ensuring the safety of persons and the protection of property and the environment. Processing plants fall under a confusing mix of municipal, provincial and federal regulatory oversight. Goal oriented regulations allow companies operating under different regulatory authorities increased flexibility in developing programs designed for safety and protection of property and the environment. Companies already have the elements and information needed for the development of designs, specifications, programs, manuals, procedures, measures and plans required by the Regulations. The Regulations require companies to be able to produce them along with evidence of compliance for audit purposes. As such, some costs will be incurred by companies for the gathering and codifying of existing practices and procedures. These costs are balanced by the decreased regulatory burden and the increased flexibility in methods for ensuring the safety of persons and the protection of property and the environment. An increase in compliance monitoring costs will likely be incurred by the Board during the first few years after promulgation of the Regulations. This will result primarily from the development and refinement of the Board's existing audit program. Consultation The Regulations were developed in extensive consultation with the two companies which operate processing plants currently regulated by the Board (Duke Energy and ExxonMobil Canada) as well as the provinces of British Columbia, Alberta, New Brunswick and Nova Scotia. All companies regulated by the Board were provided with opportunities to comment on the draft Regulations prior to their submission to the Department of Justice for scrutiny under the Statutory Instruments Act. Duke Energy and ExxonMobil Canada have also been consulted where substantive changes have been made to the Regulations arising from the review conducted by the Department of Justice. The Regulations are not envisioned to have substantive impacts beyond the stakeholders who have been consulted during development. Compliance and Enforcement In order for a company to design, construct, operate or abandon a processing plant under the Board's jurisdiction, an applicant must prepare, and upon request, submit for Board review or approval, information pursuant to the Regulations. The Board intends to monitor compliance with the Regulations by reviewing specifications and procedures to be used by the regulated companies, by auditing their records and activities to determine their adequacy and effectiveness, by assessing the skill levels of personnel, and by performing inspections of processing plants during their operating life. The new provisions will have an effect on the Board's regulatory approach in that more detailed audits of company specifications and management systems will be required. Contact Ken Paulson, Pipeline Engineer, Regulatory Development Team, National Energy Board, 444 Seventh Avenue SW, Calgary, Alberta T2P 0X8, (403) 299-3194 (Telephone), (403) 292-5503 (Facsimile), kpaulson@neb-one.gc.ca (Electronic mail). PROPOSED REGULATORY TEXT Notice is hereby given that the National Energy Board, pursuant to subsection 48(2) of the National Energy Board Act, proposes to make the annexed National Energy Board Processing Plant Regulations, subject to the approval of the Governor in Council. 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. Michel Mantha, Secretary, National Energy Board, 444 Seventh Avenue SW, Calgary, Alberta T2P 0X8. E-mail: mmantha@neb-one.gc.ca Ottawa, August 8, 2002
EILEEN BOYD
NATIONAL ENERGY BOARD PROCESSING PLANT REGULATIONS INTERPRETATION 1. The definitions in this section apply in these Regulations. "abandon" means to remove permanently from service. (cessation d'exploitation) "Act" means the National Energy Board Act. (Loi) "construction" means building or fabricating and includes any clearing or grading required for the purpose of building or fabricating. (construction) "deactivate" means to remove temporarily from service. (mettre hors service) "environment" means the components of the Earth and includes
(b) all layers of the atmosphere; (c) all organic and inorganic matter and living organisms; and (d) the interacting natural systems that include components referred to in paragraphs (a) to (c). (environnement) "incident" means an occurrence that results or could result in a significant adverse effect on property, the environment or the safety of persons. (incident) "operate" includes repair, maintain, deactivate and reactivate. (exploiter) "pressure piping" means an assembly of pipes, pipe fittings, valves, safety devices, pumps, compressors and other equipment that is designed for the transport of fluids and is connected to a boiler or pressure vessel. (tuyauterie sous pression) "pressure vessel" means a vessel that is designed for the containment of fluids at internal gauge pressures of 101.3 kPa or more, has an internal volume of 40 litres or more and has an internal diameter
(b) of 610 mm or more, if it is in water service. (appareil sous pression) "processing plant" means a plant used for the processing, extraction or conversion of fluids and all structures located within the boundaries of the plant, including compressors and other structures integral to the transportation of fluids. (usine de traitement) "release" includes discharge, spray, spill, leak, seep, pour, emit, dump and exhaust. (rejet) APPLICATION 2. (1) These Regulations apply in respect of hydrocarbon processing plants that fall within the definition of "pipeline" in section 2 of the Act. (2) These Regulations do not apply in respect of
(b) field facilities. 3. The duties imposed on a company under these Regulations are duties in respect of a processing plant that is designed, constructed, operated or abandoned by the company. PART 1 GENERAL 4. (1) A company shall ensure that its processing plant is designed, constructed, operated or abandoned in accordance with the provisions of
(b) the Canada Occupational Safety and Health Regulations. (2) If there is an inconsistency between these Regulations and the Canada Occupational Safety and Health Regulations, the latter Regulations prevail to the extent of that inconsistency. 5. A company shall ensure that its processing plant is designed, constructed, operated or abandoned in accordance with the designs, specifications, programs, manuals, procedures, measures and plans developed and implemented by the company in accordance with these Regulations. 6. If a company is required by these Regulations to develop a design, specification, program, manual, procedure, measure or plan, the Board may order amendments to it if the Board considers the amendments to be necessary for safety or environmental reasons or in the public interest. 7. The Board may order a company to submit to the Board within a specified period a design, specification, program, manual, procedure, measure, plan or document if
(b) the Board receives any information that the design, construction, operation or abandonment of the company's processing plant, or a part of it, is or may cause
(ii) a hazard to the safety of persons. 8. A company shall comply with an order of the Board made under these Regulations. 9. (1) A company shall develop a program for the design, construction, operation and abandonment of pressure vessels and pressure piping at its processing plant and shall submit the program to the Board prior to implementation. (2) The program referred to in subsection (1) shall include provisions for document handling and record retention. 10. A company shall develop, implement and maintain quality control and quality assurance programs in respect of the design, construction, operation and abandonment of its processing plant. 11. A company shall conduct a risk analysis to determine the spatial separation of sources of ignition from any possible source of flammable vapours. 12. A company shall ensure that its employees at its processing plant have the knowledge and training appropriate to the tasks to which they are assigned. 13. A company shall develop and implement a safety program to anticipate, prevent, manage and mitigate potentially dangerous conditions and exposure to those conditions during all construction, operations and emergency activities. 14. A company shall develop and implement an environmental protection program to anticipate, prevent, manage and mitigate conditions that have a potential to affect the environment significantly and adversely. 15. (1) If a company contracts for the provision of services in respect of the construction, operation or abandonment of its processing plant, the company shall
(b) inform the contractor of all special safety practices and procedures to be followed as a result of those conditions or features; (c) take all reasonable steps to ensure that the construction, operation or abandonment activities are conducted in accordance with the manuals developed under sections 27 and 30; and (d) authorize a person to halt a construction, operation or abandonment activity in circumstances where, in the person's judgment, the construction, operation or abandonment activity is not being conducted in accordance with the manuals developed under sections 27 and 30 or is creating a hazard to the safety of anyone at the construction, operation or abandonment site. (2) The company shall ensure that the person it authorizes under paragraph (1)(d) has sufficient expertise, knowledge and training to carry out competently the obligations set out in that paragraph. PART 2 DESIGN 16. A company shall develop, implement and maintain detailed designs of its processing plant. 17. A company shall ensure that its processing plant is equipped with a source of emergency power. 18. A company shall ensure that each tank, bullet, sphere or other container that contains any fluid, other than fresh water, is designed, constructed and maintained to restrict and contain fluids and to minimize the risk to the safety of persons and to the environment in the event of an unintentional release. 19. A company shall ensure that equipment that has a source of ignition with which gas at explosive levels may come into contact is not located in the same building as any process vessel or other source of flammable vapour, unless
(b) relief valves, burst plates and other sources of flammable fluids are vented from the building or discharged to a flare header, or other location that is environmentally safe; (c) a specific risk analysis is conducted to determine what active, reactive or passive safety devices should be installed on that equipment and the company installs those devices; and (d) the building is cross-ventilated. 20. A company shall ensure that all process vessels and equipment from which any flammable fluid or toxic substance may be released are safely vented to a flare header or to other locations where the protection of the environment and the safety of persons are maintained. 21. A company shall ensure that all flare headers are equipped with a means by which the flame from the flare header is prevented from entering into piping or a vessel from which the flammable vapour is being released. 22. A company shall ensure that hydrocarbon storage vessels or buildings used for the processing of hydrocarbons are equipped with reliable fire suppression systems appropriate to the risk that the vessels or buildings pose to the safety of persons or to the environment if the vessels or buildings catch fire or come into contact with fire. 23. A company shall equip its processing plant with systems that are appropriate to its buildings or structures and that are designed for the detection of
(b) toxic or noxious gases; and (c) fire, the products of combustion or temperature rise. 24. A company shall equip its processing plant with alarm devices that are
(b) designed in a manner that will allow a timely warning of danger to be given to persons in the plant or in the vicinity of the plant in order to permit safe evacuation or actions to control the danger. 25. A company shall ensure that all pressure-relief piping and systems are designed and constructed so that an emergency pressure release does not create a detriment to property or to the environment or a hazard to the safety of persons. PART 3 CONSTRUCTION 26. A company shall, during the construction of its processing plant, take all reasonable steps to ensure that
(b) persons at the construction site are informed of the practices and procedures that are to be followed for their safety and for the protection of the environment; and (c) persons on the work site are made fully aware of any escalation of risk when, during the final phases of construction, equipment testing and acceptance procedures begin at the processing plant. 27. (1) A company shall develop and implement a construction safety manual and shall submit it to the Board within the time specified by the Board. (2) A company shall keep a copy of the construction safety manual or the relevant parts of it at its processing plant, in a location where it is readily accessible to every person engaged in construction at the plant. PART 4 TESTING AND EXAMINATION 28. (1) A company shall ensure that each pressure test conducted at its processing plant is performed under its direct supervision or the direct supervision of its agent. (2) A company shall ensure that an agent referred to in subsection (1) is independent of any contractor that conducts the pressure test or any contractor that participated in the fabrication of the work to be tested. (3) The company, or the agent who supervised the test, shall date and sign any logs, charts and other records of the test. 29. (1) A company shall develop and implement a program for the non-destructive examination of welded joints for the purpose of determining their suitability and shall ensure that the program meets the requirements of this section. (2) Subject to subsection (3), the program shall include a requirement for the mandatory non-destructive examination of the entire weld volume of all piping welds. (3) The program may allow for examination of fewer than all piping welds provided that the program is based on a documented risk analysis. (4) If a company proposes to implement a program referred to in subsection (3) or a modification to that program, the company shall submit the program or modification and the risk analysis on which the program or modification is based to the Board prior to implementation. (5) Visual examination alone is not an accepted form of non-destructive examination for the purposes of this section. PART 5 OPERATION 30. (1) A company shall
(b) keep a current copy of the operations manuals or the relevant parts of them at its processing plant, in a location where they are readily accessible to every person engaged in operations at the plant. (2) A company shall ensure that the operations manuals contain safe-work procedures for all tasks that present risks to the safety of persons or that may be detrimental to the environment. 31. (1) In this section, "safe-work permit" means a written authorization granted by a company that permits an activity to be carried on in or around its processing plant, subject to any conditions on the authorization. (2) A company shall develop and implement a safe-work permit system to manage and regulate all work at its processing plant. 32. A company shall ensure that its processing plant is staffed at all times with at least the number of employees set out in the report referred to in section 50. 33. A company shall take all reasonable steps to ensure that
(b) persons at a maintenance site are informed of the practices and procedures that are to be followed for their safety and for the protection of the environment. 34. No company shall operate any equipment with a hazard-detection alarm or shutdown device bypassed or rendered inoperable, unless other means are used to achieve an equivalent level of safety. 35. A company shall
(b) submit the emergency procedures manual to the Board sufficiently in advance of the initial processing of fluids to allow for a thorough review by the Board; and (c) submit to the Board any updates that are made to the manual. 36. A company shall establish and maintain a liaison with the agencies that may be involved in an emergency response activity at its processing plant and shall consult with them in developing and updating the emergency procedures manual. 37. A company shall take all reasonable steps to inform persons who may be associated with an emergency response activity at its processing plant of the practices and procedures to be followed and make available to them the relevant information from the emergency procedures manual. 38. A company shall develop and implement a continuing educational program for the police, fire departments, medical facilities, other appropriate organizations and agencies and the public residing adjacent to its processing plant to inform them of the location of the plant, potential emergency situations involving the plant and the safety procedures to be followed in the event of an emergency. 39. A company shall
(b) retain for analysis, in the event of an incident, data recorded at the processing plant; (c) if practical, clearly mark the open and closed positions of main emergency shutdown valves; (d) post along the boundaries of its processing plant signs indicating the name of the company and the telephone number to call in the event of an emergency at the processing plant; and (e) post signs warning of potential hazards. 40. A company shall
(b) document and maintain records of all testing, repairs and replacement of parts in the hazard-detection devices. 41. A company shall develop and implement a processing plant integrity program that sets out management systems, records systems and methodologies for monitoring the processes and components and for mitigating identifiable hazards at the plant. 42. (1) If a company proposes to deactivate its processing plant for 12 months or more, has maintained the processing plant in a deactivated mode for 12 months or more or has not operated the processing plant for 12 months or more, the company shall notify the Board of that fact. (2) The company shall set out in the notification the reasons for the deactivation or the cessation of operations and the procedures used or to be used in the deactivation. 43. (1) If a company proposes to reactivate a processing plant that has been deactivated for 12 months or more or to resume operating a processing plant that has not been operated for 12 months or more, the company shall notify the Board of that fact before the reactivation or the operation resumes. (2) The company shall set out in the notification the reasons for the reactivation or the resumption of operations and the procedures to be used in the reactivation. 44. (1) A company shall develop and implement a training program for persons who are directly involved in the operation of its processing plant. (2) The company shall ensure that the training program instructs those persons on
(b) responsible environmental practices and procedures in the day-to-day operation of the processing plant; (c) the proper operating procedures for the equipment that the persons could reasonably be expected to use; and (d) the emergency procedures set out in the manual referred to in section 35 and the operating procedures for all emergency equipment that the persons could reasonably be expected to use. 45. The company shall ensure that all visitors to its processing plant are made familiar with the components of the safety program necessary for their personal safety before they enter the plant. PART 6 REPORTING 46. A company shall immediately notify the Board of any incident relating to the construction, operation or abandonment of its processing plant and shall submit to the Board a preliminary incident report as soon as practicable and a detailed incident report as soon as practicable. 47. A company shall
(b) as soon as practicable provide the Board with a report assessing the hazard identified in paragraph (a) including a proposed contingency plan and a description of the cause, duration and potential impacts of the hazard, of repairs to be made and of measures to prevent future failures. 48. A company shall report to the Board, and to the appropriate authorities of the province in which its processing plant is located, any burning of either hydrocarbon gas or a byproduct of the processing of hydrocarbon gas that occurs as a result of an emergency condition. 49. (1) A company shall, as soon as practicable, notify the Board and the appropriate authorities of the province in which its processing plant is located of any decision made by the company to suspend
(b) the planned or routine operation of any portion of the plant for a period exceeding seven days. (2) In addition to the notification under subsection (1), the company shall provide the following information to the Board and to the appropriate authorities of the province in which its processing plant is located:
(b) the reason for the suspension; (c) the duration of the suspension; and (d) the effect of the suspension on the throughput of the plant, on the safety of persons or on the environment. 50. A company shall prepare and keep current a report setting out the number of employees necessary to operate its processing plant safely and the competencies required for each position. 51. A company shall, on a regular basis, conduct a balance analysis measuring input quantities and product and emission quantities for its processing plant. PART 7 AUDITS, INSPECTIONS AND RECORD RETENTION 52. (1) A company shall conduct audits and inspections on a regular basis to ensure that its processing plant is designed, constructed, operated or abandoned in compliance with
(b) Part V of the Act as it relates to the protection of property and the environment and the safety of persons; (c) these Regulations; and (d) the terms and conditions of any certificate or order issued by the Board, as they relate to the protection of property and the environment and the safety of persons. (2) The company shall ensure that an audit sets out
(b) any corrective action taken or planned to be taken. 53. (1) When a company constructs, operates or abandons a processing plant, the company or its agent shall inspect the construction, operation or abandonment to ensure that the requirements of these Regulations are met and that the terms and conditions of any certificate or order issued by the Board are complied with. (2) The company shall ensure that an inspection is performed by a person who has sufficient expertise, knowledge and training to perform the inspection competently. (3) The company shall ensure that its agent is independent of any contractor hired to construct, operate or abandon the processing plant. 54. A company shall annually audit the competencies of all employees in supervisory or operational positions at its processing plant. 55. A company shall develop, implement and maintain a record retention and handling program. PART 8 CONSEQUENTIAL AMENDMENT AND COMING INTO FORCE CONSEQUENTIAL AMENDMENT 56. Section 2 of the Onshore Pipeline Regulations, 1999 (see footnote 7) is replaced by the following: 2. Subject to sections 2.1 and 3, these Regulations apply in respect of onshore pipelines designed, constructed, operated or abandoned after the coming into force of these Regulations. 2.1 These Regulations do not apply in respect of a hydrocarbon processing plant that is subject to the National Energy Board Processing Plant Regulations. COMING INTO FORCE 57. These Regulations come into force on the day on which they are registered. [33-1-o] S.C. 1993, c. 44, s. 184 C.R.C., c. 802 S.C. 1993, c. 44, s. 184 R.S., c. 25 (1st Supp.) SOR/90-288 Under subsection 114(2) of the Act, parties to a proposed transaction have the option to file the short-form information requirements or the long-form information requirements. Paragraph 123 (1)(a) of the Act provides that parties filing a short form shall not complete the proposed transaction before the expiration of a 14-day waiting period after receipt by the Commissioner of the prescribed information. For parties filing the long form, paragraph 123(1)(b) of the Act provides for a waiting period of 42 days after receipt of the prescribed information. The threshold of $70 million relating to amalgamations [110(4)] will stay at its current level. Stakeholders include the Canadian Bar Association, business and trade associations, and the Canadian Chamber of Commerce. R.S., c. 19 (2nd Supp.), s. 45 R.S., c. 19 (2nd Supp.), s. 19 R.S., c. 19 (2nd Supp.), s. 45 SOR/87-348 SOR/99-294 |
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