Vol. 140, No. 24 — November 29, 2006

Registration
SOR/2006-279 November 9, 2006

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

Regulations Amending the Prohibition of Certain Toxic Substances Regulations, 2005 (2-Methoxyethanol, Pentachlorobenzene and Tetrachlorobenzenes)

P.C. 2006-1298 November 9, 2006

Whereas, pursuant to subsection 332(1) (see footnote a) of the Canadian Environmental Protection Act, 1999 (see footnote b), the Minister of the Environment published in the Canada Gazette, Part I, on July 9, 2005, a copy of the proposed Regulations Amending the Prohibition of Certain Toxic Substances Regulations, 2005 (2-Methoxyethanol, Pentachlorobenzene and Tetrachlorobenzenes), substantially in the annexed form, and persons were given an opportunity to file comments with respect to the proposed Regulations or to file a notice of objection requesting that a board of review be established and stating the reasons for the objection;

Whereas, pursuant to subsection 93(3) of that Act, the National Advisory Committee has been given an opportunity to provide its advice under section 6 (see footnote c) of that Act;

And whereas, in the opinion of the Governor in Council, pursuant to subsection 93(4) of that Act, the proposed Regulations do not regulate an aspect of a substance that is regulated by or under any other Act of Parliament in a manner that provides, in the opinion of the Governor in Council, sufficient protection to the environment and human health;

Therefore, Her Excellency the Governor General in Council, pursuant to subsection 93(1) of the Canadian Environmental Protection Act, 1999 (see footnote d), on the recommendation of the Minister of the Environment and the Minister of Health, hereby makes the annexed Regulations Amending the Prohibition of Certain Toxic Substances Regulations, 2005 (2-Methoxyethanol, Pentachlorobenzene and Tetrachlorobenzenes).

REGULATIONS AMENDING THE PROHIBITION OF
CERTAIN TOXIC SUBSTANCES REGULATIONS, 2005
(2-METHOXYETHANOL, PENTACHLOROBENZENE
AND TETRACHLOROBENZENES)

AMENDMENTS

1. Part 1 of Schedule 2 to the Prohibition of Certain Toxic Substances Regulations, 2005 (see footnote 1) is amended by adding the following after item 1:

Item	Column 1 Toxic Substance	Column 2 Mixture or Product Containing the Toxic Substance	Column 3 Concentration Limit of the Toxic Substance
2.	2-Methoxyethanol, which has the molecular formula C3H8O2	Diethylene glycol methyl ether, which has the molecular formula C5H12O3	0.5% (w/w)

2. Part 2 of Schedule 2 to the Regulations is amended by adding the following after item 1:

Item	Column 1 Toxic Substances	Column 2 Permitted Uses
2.	2-Methoxyethanol, which has the molecular formula C3H8O2	(a) Coatings for aircraft refinishing (b) Semiconductor manufacturing process
3.	Pentachlorobenzene, which has the molecular formula C6HCl5	Any use with any chlorobiphenyls described in item 1 of the List of Toxic Substances in Schedule 1 to the Canadian Environmental Protection Act, 1999
4.	Tetrachlorobenzenes, which have the molecular formula C6H2Cl4	Any use with any chlorobiphenyls described in item 1 of the List of Toxic Substances in Schedule 1 to the Canadian Environmental Protection Act, 1999

COMING INTO FORCE

3. These Regulations come into force three months after the day on which they are registered.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

The purpose of the Regulations Amending the Prohibition of Certain Toxic Substances Regulations, 2005 (2-Methoxyethanol, Pentachlorobenzene and Tetrachlorobenzenes) (hereinafter referred to as the Regulations) is to add pentachlorobenzene (QCB) and tetrachlorobenzenes (TeCBs) to the Prohibited Toxic Substances List in Schedule 2, Part 2 of the Prohibition of Certain Toxic Substances Regulations, 2005 (hereinafter referred to as the Prohibition Regulations), and to add 2-methoxyethanol (2-ME) to the Prohibited Toxic Substances List in Schedule 2, Parts 1 and 2, of the Prohibition Regulations.

On August 9, 2003, the Ministers of the Environment and of Health published their final decision on the assessment of 2-ME in the Canada Gazette, and recommended that 2-ME be added to the List of Toxic Substances in Schedule 1 under the Canadian Environmental Protection Act, 1999 (CEPA 1999). The final version of the assessment report concluded that 2-ME is harmful to human health. However, 2-ME was not considered to have an immediate or long-term harmful effect on the environment or its biological diversity, neither was it found to constitute a danger to the environment on which life depends. On March 9, 2005 an order was published in the Canada Gazette, Part II, adding 2-ME to the List of Toxic Substances in Schedule 1 of CEPA 1999.

The final assessment of QCB and TeCBs was published on April 3, 2004, in the Canada Gazette, Part I, and, on August 31, 2005, the substances were added to the List of Toxic Substances in Schedule 1 under CEPA 1999. The assessment report concluded that QCB and TeCBs are harmful to the environment or its biological diversity. Therefore, it was recommended that these substances be declared toxic under CEPA 1999. Moreover, because QCB and TeCBs are considered to be toxic under the Act, and are persistent, bioaccumulative and predominantly the result of human activity, they meet the criteria for virtual elimination under the Toxic Substances Management Policy.

Adding QCB and TeCBs to the Prohibited Toxic Substances List in Schedule 2, Part 2 of the Prohibition Regulations will enact a ban on the manufacture, use, sale, offer for sale and import of QCB and TeCBs or any mixture or product containing these substances but allow use exemptions where they are used with chlorobiphenyls. QCB and TeCBs are found in small amounts in chlorobiphenyl liquid, such as liquid used for servicing equipment containing chlorobiphenyls which is regulated under the Chlorobiphenyls Regulations and Storage of PCB Material Regulations.

Adding 2-ME to the Prohibited Toxic Substances List in Schedule 2, Parts 1 and 2 of the Prohibition Regulations will impose a similar prohibition, while providing flexibility for exempting uses where human exposure is not a concern and technical alternatives are not available. Part 1 establishes a concentration limit for the presence of 2-ME in diethylene glycol methyl ether (DEGME). Part 2 allows the use of 2-ME in coatings for aircraft refinishing and semiconductor manufacturing processes.

The Prohibition Regulations provide a permit system for cases where:

• there is no technically or economically feasible alternative or substitute available to the applicant for the substance;
• the applicant has taken all necessary measures to minimize or eliminate any harmful effect of the toxic substance on the environment and human health; and,
• a plan has been prepared identifying the measures to be taken by the applicant so that the applicant's continued activity will be in compliance with the Prohibition Regulations.

Permits are issued for a period of 12 months and may be renewed twice for the same purpose or use of the substance.

The amendment to the Prohibition Regulations will ensure that the environment and health of Canadians are protected from the potential harmful effects attributed to these toxic substances.

These Regulations will come into force three months after registration by the Clerk of the Privy Council.

Background

2-Methoxyethanol

The purpose of adding 2-ME to Schedule 2, Parts 1 and 2 of the Prohibition Regulations is to protect the health of Canadians by minimizing the potential for human exposure to this substance. Human exposure to 2-ME results from the use of one consumer product by the general population, as well as from potential air releases, leakages and accidental spills in military and industrial uses. Industrial uses include applications as a solvent, chemical intermediate and dispersion agent. The military has used 2-ME as an anti-icing agent for jet fuel and as a component of decontamination agents. Current information indicates that 2-ME is only being used in one consumer product, a cleaning solvent for white-boards.

The use of 2-ME in the consumer product is estimated to be very small, compared to military and industrial uses, but generates the greatest potential for human exposure. Human exposure would occur mainly through dermal contact with the product containing 2-ME, but also through inhalation of 2-ME evaporated during and after product use. Several countries have already recognized the health concern associated with 2-ME in consumer products. In particular, the European Union has forbidden the sale of products containing 2-ME to the general public since 1994, and France has banned the use of 2-ME in household products since 1997 and in cosmetics since 1998.

The human health risk posed by 2-ME is primarily associated with developmental and reproductive toxicity, including adverse effects on the development of the fetus at levels that are not toxic to the mother (teratogenic effects) observed in experimental animals. Some of the symptoms that have been identified as potential health outcomes of exposure to 2-ME are the occurrence of miscarriages and stillbirths, low-birth-weight babies, reduced fertility, and endocrine disruptions. The risk assessment report concluded that there are no safe thresholds for exposure to 2-ME. Therefore, the environmental objective is to reduce uncontrolled human exposure to 2-ME to the greatest extent possible.

It is expected that the replacement of 2-ME is technically feasible in most applications. Currently available substitutes also belong to the category of glycol ethers, but present a lower risk to human health than 2-ME. In the consumer product, which poses the highest health risk, and in other uses such as anti-icing agent for jet fuel, 2-ME can be directly replaced by substitutes. Overall, substitution is considered to be technically feasible and economically achievable, given the market prices and relative performances of available substitutes.

The Regulations will offer the necessary measures to protect the health of Canadians from exposure to 2-ME in consumer products.

Pentachlorobenzene and Tetrachlorobenzenes

In 2004, QCB and TeCBs were declared toxic under CEPA 1999, based on the conclusion that QCB and TeCBs are entering the environment in a quantity or concentration or under conditions that have or may have an immediate or long-term harmful effect on the environment or on its biological diversity. Because these substances are persistent, bioaccumulative, predominantly anthropogenic and have been declared toxic, releases of QCB and TeCBs are targeted for virtual elimination.

QCB and TeCBs are known to cause both chronic and acute effects on sediment- and soil-dwelling organisms. In general, sediment-dwelling organisms are more sensitive to these chlorobenzenes than soil-dwelling species, based on toxicity studies to date. Additionally, QCB and TeCBs are subject to atmospheric transport from their sources to remote areas.

Total QCB and TeCBs emissions in the Canadian environment are estimated to be 41.8 kilograms (kg) per year and 68.2 kg/year, respectively. QCB and TeCBs are present in products as impurities or are unintentionally produced through waste incineration. The Canada-wide Standards for dioxins and furans, and the regulatory approaches in other Canadian jurisdictions to either prohibit open burning, (including backyard and barrel burning of household waste) or permit it only under pre-approved conditions, will indirectly contribute to the reduction of QCB and TeCBs emissions.

Minor sources of QCB and TeCBs include wood treatment, pesticide use, dielectric fluids, magnesium production, solvent use and long-range transport. Amendments to the existing Chlorobiphenyls Regulations, the Wood Preservation Strategic Options Process, and the Tetrachloroethylene (Use in Dry Cleaning and Reporting Requirements) Regulations all provide co-benefits by reducing QCB and TeCBs releases from these sources.

Unintentional releases of QCB and TeCBs to water are controlled through the Canadian Council of Ministers of the Environment's interim chronic exposure water quality guideline at 0.0018 milligrams/litre (mg/L) for TeCBs and 0.006 mg/L for QCB. In addition, movement of wastes containing more than 8 parts per million of chlorobenzenes is controlled under the Export and Import of Hazardous Wastes and Hazardous Recyclable Material Regulations and the Interprovincial Movement of Hazardous Waste Regulations.

Alternatives

2-Methoxyethanol

Status Quo

The health risks associated with 2-ME are serious. Furthermore, there is no safe margin of safety for human exposure. It was hence concluded that the status quo could not be allowed to persist and that action to control exposure of the general population to 2-ME would need to be undertaken.

Economic Instruments

Economic instruments, such as emission trading programs and environmental charges, were considered. Emission-trading programs provide a means for seeking cost-effective solutions to reducing exposure, usually below a pre-determined level. However, there is no emission trading possible in a context of eliminating the potential for human exposure to this substance.

Environmental charges present the advantage that they can be aimed at the firms that produce, import, and/or sell 2-ME or products containing 2-ME. However, because charges under CEPA 1999 can only be raised to cover administration costs, there is a high probability that they will not provide enough of an incentive for firms to change their behaviour, therefore resulting in continued human exposure to 2-ME.

Voluntary Measures

Voluntary measures were considered inappropriate for controlling exposure to 2-ME. Potentially adverse health effects are serious and voluntary measures do not ensure that the use of 2-ME will be discontinued, especially in consumer products.

Regulations prohibiting the manufacture, import, offer for sale, sale and use of 2-ME only in consumer products

Prohibiting the use of 2-ME in consumer products would eliminate the most important current route of human exposure to 2-ME. However, health risks might still persist from industrial and military uses. In addition, industry and the Department of National Defence have been receptive to the health concerns associated with 2-ME, and have indicated that they are in the process of moving away from using this substance.

Adding 2-ME to Schedule 2, Parts 1 and 2 of the Prohibition of Certain Toxic Substances Regulations, 2005

Prohibiting the manufacture, import, sale, offer for sale and use of 2-ME presents the most sound and effective way of controlling human exposure. The Regulations will provide a level playing field and ensure that the environmental objective of reducing the potential for human exposure to 2-ME is achieved. In addition, the Regulations will allow the use of 2-ME in specified uses with virtually no risk to human health and where there are no technical alternatives available.

Pentachlorobenzene and Tetrachlorobenzenes

Adding QCB and TeCBs to Schedule 2, Part 2 of the Prohibition of Certain Toxic Substances Regulations, 2005

QCB and TeCBs have been assessed to be toxic under CEPA 1999. Currently, QCB and TeCBs are not manufactured in Canada. It was concluded that prohibiting the manufacture, import, sale, offer for sale and use of QCB and TeCBs, with exemptions for use with chlorobiphenyls, will ensure that the environment and health of Canadians are protected from the potential harmful effects attributed to these toxic substances.

Benefits and Costs

2-Methoxyethanol

Profile and Scenarios

Currently, there is no 2-ME production in Canada. All of 2-ME used in Canada is generally imported from the United States. The quantity of 2-ME imported showed a significant annual variation during the 1990's, fluctuating between 300 and 1,600 tonnes per year. Starting in 2000, imports of 2-ME stabilized around 400-600 tonnes per year and have since remained at that level.

It is estimated that uses of 2-ME are distributed in the following way: 80 percent are military uses in anti-icing agents for jet fuel and decontamination agents; 15 percent are chemical intermediates; 3 percent are dye dispersion agents; 2 percent are industrial processing solvents and analytical reagents (e.g. pharmaceutical processing, electronics manufacturing, electroplating, photographic chemicals, hydraulic and heat transfer fluids); and a very small amount (~0.1 percent) is used in consumer products (see footnote 2).

Sectors where 2-ME has been used encompass chemicals, furniture manufacturing, rubber manufacturing, pharmaceutical, photographic, and electronics sections. It is estimated that approximately 20 to 36 companies have recently used or currently use 2-ME.

In order to account for uncertainty, two baseline 2-ME demand scenarios were developed using historical data and trends on 2-ME imports, as well as information on firms that are already planning to reformulate away from 2-ME. A high-demand scenario assumed that imports of 2-ME will be 481 tonnes in 2005, and will then decrease to 470 tonnes by 2014 as a result of planned reductions in the use of 2-ME as a dye dispersion agent. After that, 2-ME imports will remain at 470 tonnes from 2014 until 2030. A low-demand scenario assumed that imports will remain constant at 300 tonnes throughout the entire period of the analysis (2005-2030).

The analysis assumed that once the Regulations enter into force, 2-ME would be immediately phased out.

The substitutes considered in this analysis are presented in Table 1, together with the applications where they might be used, their market price, and the expected substitution ratio for 2-ME.

Table 1: 2-ME substitutes, applications where they might be used, market prices, and substitution ratios

Substances	Applications	2004 List Price ($/kg)	Substitution Ratio for 2-ME
2-ME	- All	3.49	N/A
DEGME*	- Fuel additives / decontamination agents	2.78	1:1
	- Chemical intermediates	2.78	1.1
	- Industrial processing solvents / analytical agents	2.78	1.1
PGME**	- Dye dispersion agent	3.58	1:2
PGME & PGMEA*** (electrical grade)	- Consumer products	3.58	1:1
	- Industrial processing solvents / analytical agents	3.88	1:2
EcoSoft PE	- Dye dispersion agent	2.64	1:1
DEGBE****	- Consumer Products	2.81	1:1

^* DEGME diethylene glycol methyl ether

^** PGME propylene glycol monomethyl ether

^*** PGMEA propylene glycol monomethyl ether acetate

^**** DEGBE diethylene glycol monobutyl ether

 

Cost-Benefit Analysis Framework

The following are the relevant categories of costs and benefits considered in the analysis:

1. Industry compliance costs. For the purposes of this assessment, we define industry as importers and industrial users of 2-ME. These costs encompassed:

• Reformulation costs
• Input substitution costs

2. Government costs, including:

• Enforcement costs
• Compliance promotion costs
• Input substitution costs to the Department of National Defence

3. Benefits to Canadian Society:

• Reduced health risk

Costs and benefits were assessed over a 25-year timeframe (2005-2030). It was assumed that the Regulations will come into force in 2006 and that 2-ME will be completely substituted in 2007. The costs and benefits assessed are those that directly or indirectly affect Canada or Canadians. All costs and benefits were expressed in 2004 Canadian Dollars.

Wherever possible, economic impacts were reported as present values. The real social discount rate used was 5.5 percent, and a sensitivity range of 3 percent and 10 percent was then applied. The distributional analysis evaluated the allocation of costs and benefits among sectors and regions. The sensitivity analysis considered uncertainty and risk affecting the discount rate, the relative volume and cost of substitutes, the baseline scenario assumptions, and the scale and monetary valuation of expected health benefits.

Costs to the Private Sector

It is expected that industry will respond to the ban on 2-ME by switching to alternative glycol ethers. Substituting 2-ME with other glycol ethers might require reformulation efforts for some applications. In particular, sectors using 2-ME as a chemical intermediate, reagent and solvent might need to reformulate their products. Some sectors, such as office supply manufacturers, will likely replace 2-ME directly with other glycol ethers without reformulating. In addition, the coatings sector using 2-ME as a dye dispersion agent has already started to reformulate to water-based coatings, which do not contain 2-ME.

Reformulation costs were not quantified in this analysis. However, industrial uses of 2-ME are relatively small, hence potential reformulation costs are not expected to be significant from a firm, sector or economy-wide perspective.

Using market prices and substitution ratios based on technical performance, the incremental input costs to the private sector were calculated. Market prices of most substitutes were found to be lower than 2-ME, and many of them were also found to have similar performance ratios (Table 1). Therefore, the Regulations are expected to result in cost savings for most sectors and/or applications. Nevertheless, it is possible that individual sectors or firms might have to use substitutes with a higher price or a lower performance ratio, which will entail input cost increases.

The final results indicate that overall the Regulations will generate cost savings to the Canadian industry. Total cost savings were estimated at C$0.5 and C$1.5 million ($ 2004), for the low- and high-demand scenarios, respectively.

The Regulations are not expected to require any changes in manufacturing equipment, thus no incremental costs associated with capital investment were included. Firms will not have any administrative requirements, such as reporting or monitoring. Product availability and quality are not predicted to be a problem, as there are readily available substitutes that perform as well as 2-ME and sectors where this could be an issue are being exempted (i.e. coatings for aircraft refinishing and semiconductor manufacturing sectors). Any other costs, such as indirect or transitional costs, were determined to be either non-existent or negligible.

Costs to the Government

Costs to the Government encompass compliance promotion and enforcement costs that Environment Canada will incur in implementing the Regulations. They also include the costs to the Department of National Defence (DND) of replacing 2-ME in its current uses in jet-fuel anti-icing and decontamination agents.

DND will have to phase out the uses of 2-ME in jet fuel additives and decontamination agents. Given that alternative specifications for an anti-icing agent for jet fuel are available that do not contain 2-ME, it is expected that DND will not incur reformulation costs associated with this use. Reformulation of decontamination agents will be required, but cost estimates were not available. In addition, because the available substitute (i.e. DEGME) was cheaper in price and had a similar performance to 2-ME, it is estimated that DND will not incur any costs but rather will see cost savings from lower input costs. The present value of cost savings to DND was estimated at C$2 million and C$3.2 million ($2004) for the low- and high-demand scenarios, respectively.

Compliance promotion activities are intended to encourage the regulated community to achieve compliance. Compliance promotion costs would require an annual budget of C$20,000 ($2004) during the first year of coming into force of the Regulations. Given the small size of the regulated community and the nature of the Regulations, compliance promotion activities will be minimal. Activities could include mailing out of the Regulations, answering inquiries and developing and distributing promotional materials explaining the Regulations (e.g. fact sheet, Web site material). In years two and three, compliance promotion activities will be at a maintenance level and will be limited to responding and tracking inquiries as well as contributing to the compliance promotion database. This would require an annual budget of C$1,000 ($2004). The net present value of compliance promotion activities was estimated at C$20,700 ($2004). However, it should be noted that a higher level of effort for compliance promotion may be required if, following enforcement activities, compliance with the Regulations is found to be low.

Permits-system administration activities will include developing permits, administering permits, verifying information, and answering inquiries. Since the requests for permits are estimated to be low for the first year and onward, the cost is estimated to be negligible.

Annual enforcement costs are estimated at C$93,548 per year, starting in 2007. The annual cost is broken down as follows: $28,198 for inspections, $46,426 for investigations and $18,924 for measures to deal with alleged violations (including but not limited to environmental protection compliance orders, injunctions and prosecutions). The present value of enforcement costs for 2007 to 2030 was calculated to be C$578,930 ($2004).

Total Costs

The Regulations are expected to result in cost savings to both the private and public sector. The total cost savings to Canadian society was calculated by aggregating all cost savings, including private and public sector. The present value estimates of total cost savings were C$1,930,000 ($2004) and C$4,130,000 ($2004) for the low- and high-demand scenarios, respectively.

Benefits to Canadians

Health Benefits

The ban on 2-ME will bear the largest benefit in terms of lower risks to human health. In particular, this substance was associated in test animals with reproductive and developmental complications, including adverse effects on the development of the fetus at levels that are not toxic to the mother (teratogenic effects). In contrast, the substitutes that will likely replace 2-ME in the consumer product do not present such risks to human health. These substitutes are not associated with teratogenic effects, and do not present the reproductive effects shown by 2-ME. In addition, glycol ethers that will likely be used as 2-ME replacements in industrial and military applications also present a more benign toxicological profile, including lower dermal absorption rates and higher health risk thresholds than 2-ME.

A quantitative analysis of baseline consumer exposure was conducted using the ConsExpo model developed by the National Institute for Public Health and the Environment in the Netherlands. The parameters used in developing the exposure scenarios included consumer product properties, use-setting characteristics, contact exposure information, evaporation and dermal absorption rates, and physiology and anatomy of users and bystanders. The results indicated that, under normal circumstances, users of whiteboard cleaners that contain 2-ME are being exposed to potentially harmful levels.

Based on an annual estimate of 5,035 bottles of consumer product containing 2-ME used, and assuming that each bottle is used by a different person, it was found that 5,035 people would be exposed to potentially harmful levels of 2-ME every year.

Four health end-points were used to determine the health risk to consumer product users, namely miscarriages, low-birth-weight babies, infertility, and endocrine symptoms. Because several of these end-points are associated with pregnancy, the number of pregnant women and adults seeking to have a child were estimated using birth rate statistics for Canada. From the total of 5,035 people using the consumer product, it was estimated that about 22 pregnant women and about 100 adults seeking to have a child would be exposed to unhealthy levels of 2-ME every year. In addition, it was assumed that all remaining people exposed to 2-ME would suffer endocrine symptoms requiring a yearly visit to the doctor.

The analysis indicated that all pregnant women exposed to 2-ME through the use of the consumer product would either suffer a miscarriage or have a low-birth-weight baby (i.e. about 22 cases of either miscarriage or low-birth-weight baby). In addition, the approximately 100 adults seeking to have a child every year are expected to have to deal with fertility problems.

The Regulations will lead to the use of more benign substances, which do not present any of the health risks attributed to 2-ME. Hence, it is estimated that the aforementioned health risks will be minimized or eliminated. The reduction in health risks was converted to monetary values using the cost of illness approach. The only health outcome that was not monetized was the risk of miscarriages, due to the lack of guidance and monetary estimates in the academic literature and the work of other regulatory entities.

The cost of illness approach reflects the costs of treating an illness, incurred by both the individual and the society. Estimates in the Cost of Illness Handbook of the United States Environmental Protection Agency (available at www.epa.gov/oppt/coi) were used to value the reduction in the risk of a low-birth-weight baby. The estimate for reducing the risk of a low-birth-weight baby was C$150,178 ($2004). Reducing the risk of a case of infertility was valued at C$10,330 ($2004), based on the average cost of a basic in vitro fertilization cycle in Canada. The cost of illness of a case of endocrine symptoms was assumed to be the cost of a doctor's visit, which was estimated to be C$62 ($2004). Because these values do not include all possible costs related to the health risk, they should be considered lower bounds of actual benefits.

Total Benefits

The present value of total benefits was estimated at C$33.4 million ($2004), with a range of $16-48 million ($2004). In addition, it was estimated that up to 22 cases of miscarriages will be avoided by establishing a ban on 2-ME, which were not monetized.

Net Benefits

Net benefits to Canadian society were estimated to be positive. The present value of net benefits was calculated to be in the range of C$17,9 to C$52,1 million ($2004), depending on the demand and health outcome scenario considered, using a discount rate of 5.5 percent. Because the estimated risk reduction of up to 22 cases of miscarriage could not be monetized, due to methodology and data limitations, it is realistic to assume that the estimates of net benefits provided here are lower bounds of the actual net benefits.

In addition to testing the sensitivity of net benefits to possible demand and health risk scenarios, sensitivity analysis of net benefits was conducted on the discount rate and the input cost of substitutes. The objective of this sensitivity analysis was to determine the confidence in the calculated estimate of net benefits and whether or not the Regulations have inherent risks that may significantly impact the value of the net benefit estimate. The results of the sensitivity analysis indicated that the net benefits remain positive within the ranges of discount rates and input cost of substitutes tested. Therefore, it can be concluded that the Regulations are desirable from an economic-efficiency perspective.

Competitiveness

2-ME is not manufactured in Canada and demand is satisfied entirely with imports. The primary substitutes to 2-ME are other glycol ethers. Most of these substitutes would also be imported. As a result, net impacts on importers are expected to be limited. In addition, the volumes of 2-ME used are very small, in comparison to total trade, so there would be no significant impact on Canada's trade balance, even if the required volume or import price of substitutes were different from 2-ME. Finally, no other upstream or downstream impacts on exports or imports are anticipated.

The analysis indicated that many available substitutes are cost-effective alternatives, while others might represent cost increases. Given the small quantities of 2-ME used, the Regulations are not expected to have negative impacts in the competitiveness of the Canadian economy. However, individual firms might have difficulties finding appropriate substitutes or might find more costly ones. This analysis did not find substantial information indicating that the implementation of the Regulations would result in employment losses or plant closures. In the absence of significant demand feedbacks, such as reductions in the overall demand for products produced using 2-ME, no impacts on employment in other sectors are anticipated.

Pentachlorobenzene and Tetrachlorobenzenes

QCB and TeCBs are not manufactured in Canada, and there is no commercial domestic demand for these substances. There are also no known natural sources of QCB or TeCBs. These substances are present in products as impurities or are unintentionally produced through waste incineration.

Various initiatives indirectly contribute to reductions in QCB and TeCBs emissions, such as:

• the Canada-wide Standards for dioxins and furans;
• the regulatory approaches in other Canadian jurisdictions to either prohibit open burning, or permit it only under pre-approved conditions;
• amendments to the existing Chlorobiphenyls Regulations;
• the Wood Preservation Strategic Options Process; and
• the regulations for the control of tetrachloroethylene from the dry-cleaning sector.

The purpose of adding QCB and TeCBs to Schedule 2, Part 2 of the Prohibition Regulations is to ensure the prohibition of the manufacture, use, sale, offer for sale and import of QCB and TeCBs or any mixture or product containing these substances but allow use exemptions where they are used with chlorobephenyls.

As a consequence, no significant incremental costs or benefits will accrue to the Canadian economy and federal government as a result of placing the two substances on Schedule 2, Part 2 of the Prohibition Regulations.

Consultation

Comments before the pre-publication in the Canada Gazette , Part I, on July 9, 2005

2-Methoxyethanol

Public consultation with representatives from environmental non-governmental organizations, industry and other government departments were conducted as part of the risk management process of 2-ME before the proposed Regulations were pre-published in the Canada Gazette, Part I.

Overall, stakeholders supported the proposed Regulations. However, one stakeholder expressed concerns about the potential socio-economic impacts of prohibiting the use of 2-ME on the sectors using the substance as a chemical intermediate. The stakeholder also suggested that 2-ME be added to Schedule 2 of the Prohibition Regulations instead of Schedule 1, in order to permit certain uses of 2-ME. This concern has been addressed by the changes to the Regulations.

Pentachlorobenzene and Tetrachlorobenzenes

Public consultation was conducted as part of the risk management process for QCB and TeCBs, before the proposed Regulations were pre-published in the Canada Gazette, Part I. The proposed risk management strategy was posted on Environment Canada's Web site for formal consultation with stakeholders of affected sectors (municipal incineration facilities, hazardous waste incineration facilities, importers and users of perchloroethylene, the Pest Management Regulatory Agency, Industry Canada, Agriculture and Agri-Food Canada, and environmental non-governmental organizations). Comments were received from two facilities and one industry association.

No major issues were raised with regard to the proposed addition of QCB and TeCBs to the Prohibition of Certain Substances Regulations, 2005. One facility raised concern over potential economic costs associated with the addition of these substances to the Prohibition Regulations, if they were to apply to products that incidentally contain QCB or TeCBs. The proposed Regulations will not be applicable to products that incidentally contain QCB or TeCBs. It was also commented that the addition of QCB and TeCBs to Schedule 1 of the Prohibition Regulationswill not address all of the sources of these two substances.

Comments Following Pre-Publication in the Canada Gazette , Part I, on July 9, 2005

2-Methoxyethanol

During the 60-day comment period, a total of five comments were submitted by stakeholders.

Three stakeholders indicated potential impacts in applications where substitutes for 2-ME are not available. These applications included coatings for aircraft refinishing, semiconductor manufacturing processes, and DEGME manufacturing. After reviewing the information provided by the stakeholders concerning the quantities and conditions of use of 2-ME, and the potential releases of 2-ME from industrial processes and manufactured products, Environment Canada and Health Canada concluded that there is virtually no risk to human health associated with the continued use of 2-ME in these applications. Therefore, uses of 2-ME in coatings for aircraft refinishing and semiconductor manufacturing processes were included as permitted uses, and concentration limits were established on the presence of 2-ME in DEGME.

Other commenters were concerned with the analysis of costs and benefits stemming from the Regulations. Environment Canada believes that the analytical framework used and the results achieved are sound and defensible. Hence, no modifications have been made to the analysis of economic impacts.

Pentachlorobenzene and Tetrachlorobenzenes

Following pre-publication of the Regulations in the Canada Gazette, Part I, three comments were submitted by stakeholders during the 60-day comment period.

No major issues were raised with regard to the proposed addition of QCB and TeCBs to the Prohibition of Certain Substances Regulations, 2005.

It should be noted that QCB and TeCBs have been added to Schedule 2, Part 2 of the Prohibition Regulations instead of Schedule 1. This change is being made to allow the use of QCB and TeCBs in chlorobiphenyl liquid such as liquid used for servicing equipment containing chlorobiphenyls. The current rate of chlorobiphenyl attrition will lead to a discontinuation of the use of the two chlorobenzenes found in equipment containing chlorobiphenyls. Moving QCB and TeCBs to Schedule 2, Part 2 does not impact the original intent of the Regulations. The regulatory text and the Regulatory Impact Analysis Statement have been revised to reflect this change.

Compliance and Enforcement

Since the Regulations are promulgated under CEPA 1999, enforcement officers will, when verifying compliance with the Regulations, apply the Compliance and Enforcement Policy implemented under the Act. The Policy also sets out the range of possible responses to violations, including: warnings, directions,environmental protection compliance orders, ticketing, ministerial orders, injunctions, prosecution, and environmental protection alternative measures (which are an alternative to a court trial after the laying of charges for a CEPA 1999 violation). In addition, the Policy explains when Environment Canada will resort to civil suits by the Crown for costs recovery.

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

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

Contacts

2-Methoxyethanol

Mr. Alex Cavadia
Head
Volatile Organic Compound Controls Unit
Chemicals Sector Division
Environment Canada
351 St. Joseph Boulevard, 12th Floor
Gatineau, Quebec
K1A 0H3
Telephone: (819) 953-1132
FAX: (819) 994-0007
E-mail: alex.cavadias@ec.gc.ca

Mr. Markes Cormier
A/Senior Economist
Impact Analysis and Instrument Choice Division
Environment Canada
10 Wellington Street, 24th Floor
Gatineau, Quebec
K1A 0H3
Telephone: (819) 953-5236
FAX: (819) 997-2769
E-mail: markes.cormier@ec.gc.ca

Pentachlorobenzene and Tetrachlorobenzenes

Ms. France Jacovella
Director
Chemicals Sector Divisionw
Environment Canada
351 St. Joseph Boulevard, 12th Floor
Gatineau, Quebec
K1A 0H3
Telephone: (819) 956-5263
FAX: (819) 994-0007
E-mail: france.jacovella@ec.gc.ca

Footnote a

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

Footnote b

S.C. 1999, c. 33

Footnote c

S.C. 2002, c. 7, s. 124

Footnote d

S.C. 1999, c. 33

Footnote 1

SOR/2005-41

Footnote 2

Information obtained from "2-Butoxyethanol and 2-Methoxyethanol: Current use patterns in Canada, toxicology profiles of alternatives, and feasibility of performing an exposure assessment study", by ToxEcology Environmental Consulting Ltd., May 2003. A copy of the report can be obtained from the contact persons listed at the end of this document

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