Vol. 145, No. 7 — February 12, 2011

ARCHIVED — Regulations Amending the Off-Road Compression-Ignition Engine Emission Regulations

Statutory authority

Canadian Environmental Protection Act, 1999

Sponsoring department

Department of the Environment

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue

Emissions from mobile sources such as off-road diesel engines are a significant contributor of air pollution in Canada, which leads to numerous environmental- and health-related problems. As shown in Table 1, mobile sources are responsible for a major share of criteria air contaminant (CAC) emissions relative to the total national emissions inventory. CACs describe a group of air pollutants such as VOCs, NO_x and PM that cause smog and acid rain. Smog is a respiratory irritant and a major factor in numerous health-related problems such as cardiovascular ailments and respiratory distress, while acid rain can have harmful effects upon plants and aquatic organisms and lead to reduced productivity of vegetation, building soiling and corrosion.

Table 1: Estimated CAC emissions from off-road diesel engines in Canada in 2007 (see footnote 2)

source	NOx	SO2	VOC	PM2.5	CO
Mobile emissions (megatonnes)	1 209	13	554	65	6 852
Percentage contribution of mobile sources to National Inventory*	53.5%	5.3%	28.2%	21.6%	82.6%
Off-road diesel emissions (megatonnes)	403	102	40	34	212
Percentage contribution of off-road relative to mobile sources**	33.4%	12.8%	7.2%	52.2%	1.4%

 * Without open and natural sources (i.e. excluding dust from roads, mine tailings, and forest fires).

** Mobile sources include heavy duty diesel/trucks, light duty vehicles/diesel/ trucks, marine transportation, etc.

Emissions from off-road diesel engines represent an important share of total emissions from the mobile sector in Canada, also shown in Table 1. In fact, since 1985, emissions from off-road diesel engines now represent a relatively larger proportion of total mobile emissions of several CACs such as VOCs, NO_x, PM_2.5, SO₂, and CO. In order to provide a healthier environment for Canadians, strong action is required on a continuous basis to reduce emissions from off-road diesel engines and machines. These emissions are currently regulated under the Off-Road Compression-Ignition Engine Emission Regulations.

Objectives

The objective of the proposed Amendments is to protect Canada’s health and environment by further reducing off-road diesel engine emissions of VOCs, NO_x, PM and other pollutants listed as “toxic substances” (see footnote 3) in Schedule 1 of the Canadian Environmental Protection Act, 1999 (CEPA 1999).

The proposed Amendments establish more stringent Canadian off-road diesel emission standards and test procedures and align Canadian emission standards and test procedures with those of the U.S. EPA, allowing Canada to fulfill its commitments under the Ozone Annex. The proposed Amendments would minimize the regulatory burden on companies, where possible, and allow companies to use the transition engine provisions. Transition engine provisions would also be available to those companies that sell exclusively to Canada.

Background

The Ozone Annex to the 1991 Canada-United States Air Quality Agreement (December 7, 2000) was introduced to reduce the transboundary flow of ground-level ozone and its precursors (VOCs and NO_x) between the United States and Canada. Under this agreement, Canada committed to “develop and implement . . . emission Regulations under the Canadian Environmental Protection Act, 1999 for new non-road engines aligned with the U.S. federal emissions program.”

In the spring of 1999, as a precursor to regulatory action, memoranda of understanding (MOUs) were initiated under CEPA 1999 between Environment Canada and 13 major engine manufacturers. Under the terms of the MOUs, manufacturers voluntarily agreed to supply off-road diesel engines that met the applicable Tier 1 emission standards of the EPA.

In January of 2006, the Regulations (see footnote 4) under section 160 of CEPA 1999 introduced standards to reduce smog-forming emissions from off-road diesel engines typically used in construction, mining, farming and forestry machines. The Regulations aligned Canadian requirements with the corresponding U.S. EPA emission standards, as per Canada’s commitments under the Ozone Annex.

On April 26, 2007, the Government reaffirmed its commitment to reduce smog-forming emissions from vehicles and engines through alignment with the U.S. EPA rules, with publication of the Notice of intent to develop and implement regulations and other measures to reduce air emissions (see footnote 5) (October 2006) and the associated Regulatory Framework for Air Emissions. (see footnote 6)

Description

The proposed Amendments would align Canadian emissions standards with those of the U.S. EPA for off-road diesel engines as established under Title 40, Part 1039 of the Code of FederalRegulations (CFR). The U.S. EPA introduced interim Tier 4 and Tier 4 emission standards in 2004 and these standards came or will come into effect for different power categories between the 2008 and 2015 model years and beyond.

The new Canadian emission standards would apply to diesel engines of 2012 and later model years that are manufactured on, or after, the coming into force date of the proposed Amendments. The proposed Amendments apply to off-road diesel engines such as those found in construction, and in some mining, farming and forestry machines. This includes tractors, excavators, log skidders and bulldozers.

The proposed Amendments include new emissions standards; installation instructions, maintenance manuals and procedures; labelling requirements; updates to the transition engine provisions; requirements for engines used in transportation refrigeration units; requirements for stationary engines; and other miscellaneous changes to improve the clarity of the Regulations.

New standards for exhaust, crankcase and evaporative emissions

The proposed Amendments would incorporate the U.S. EPA’s steady state and transient emission standards for exhaust, crankcase, and evaporative emissions for 2012 and later model years. The allowable emission levels from individual engines would be significantly reduced from current standards, including reductions of 37% of non-methane hydrocarbons (NMHC (see footnote 7) and 50% to 95% reductions of PM.

Crankcase emissions and evaporative emission standards

In addition, turbocharged diesel engines, like all engines, can no longer release crankcase emissions, and an evaporative emission standard is introduced for off-road diesel engines fuelled with volatile liquid fuels (i.e. fuels that easily evaporate such as methanol).

Installation instructions, maintenance manuals and procedures

The proposed Amendments would include requirements for maintenance manuals and installation instructions for emission control systems. The content of the manuals would be consistent with the instructions set out in CFR 1039.

New labelling requirements

The proposed Amendments would require that engines have a unique identification number and an attached label which states the name of the manufacturer, date of manufacture (or manufacturer maintains a record), and the gross power category.

In addition, engines excluded from the emission requirements of the proposed Amendments would require a label as a condition of exclusion. The label would indicate that the engines are only to be used for the specific applications for which they are excluded from the application of the proposed Amendments.

Engines certified by EPA

Tier 4 engines that have EPA certification and are available for sale in Canada and the United States will be required to meet the emission standards specified in the EPA certificate for the engine.

Use of the national emissions mark

The national emissions mark (NEM) would be required for engines that are manufactured in Canada, and engines that have emission control systems installed in Canada that do not corres-pond to the EPA certificate for the engine. The NEM is required for engines that are manufactured and for sale in Canada.

Updates to the transition engine provisions

The proposed Amendments update the transition engine provisions based on the flex engine provisions under CFR 1039 to allow an importer or machine manufacturer to import or install engines meeting the Tier 2 or 3 standards, in a limited percentage. There would also be associated reporting requirements for members of the regulated community that use these provisions.

Engines powering transportation refrigeration units

The proposed Amendments incorporate the emission requirements for engines used in transportation refrigeration units (TRUs), as outlined in CFR 1039. A TRU is a refrigeration system that is powered by an engine and that is designed to control the temperature of products that are transported in rolling stock, vehicles or trailers. Emissions from TRUs have optional alternate standards under CFR 1039 which will be incorporated by the proposed Amendments.

Requirements for stationary engines

While stationary engines would continue to be exempt from the emission requirements, the proposed Amendments would require, as a condition to benefit from that exemption, that these engines bear a label. This would help improve the enforceability of the Regulations and record keeping.

Importation documentation

To improve the administration of the Regulations, the proposed Amendments would require that importers submit an importation declaration document to the Minister instead of the Canada Border Services Agency prior to importation of the engines or machines.

The Canadian off-road compression-ignition engine industry

There is no known production of off-road diesel engines in Canada. The Canadian off-road diesel engine and machine market is mainly supplied by established manufacturers, either multinationals or North American.

It is estimated that in 2007, roughly 160 000 engines with a value of $883 million were imported into Canada. However, domestic demand for off-road diesel engines and machines was impacted by the recent recession. By 2009, just 55 765 engines were imported having a value of about $327 million. These engines were imported for installation in new diesel machines, or to replace engines in existing applications.

Likewise, in 2007, an estimated 67 000 off-road diesel machines were imported into Canada, with an approximate value of $5.9 billion. In 2009, the sector imported just 28 335 machines with an estimated value of about $2.7 billion. The market for off-road diesel machines is comprised of firms in the following sectors: agriculture, construction, general industrial, lawn and garden, material handling, pumps and compressors, and welders and generators. Off-road diesel machines represent an essential part of operative assets of these sectors.

In terms of quantity, about 96% of imported machines are shipped from countries which have incorporated Tier 4 or similar standards or are significant manufactures of Tier 4-compliant machines. In 2007, the majority of imports were shipped from the United States (65%), the European Union (19%) and Japan (12%).

Regulatory and non-regulatory options considered

Several regulatory and non-regulatory measures have been considered, and descriptions of each are provided below.

Status quo

Under the status quo, most imported off-road diesel engines are expected to be compliant with the interim Tier 4 and Tier 4 standards in the United States. However the option of retaining the current standards does not take full advantage of the opportunity for continued reductions in off-road diesel engine emissions, as the Canadian market would remain open to increasing use of Tier 2 and Tier 3 engines and machines. Maintaining the status quo would also be inconsistent with Canada’s commitment to align Canada’s emission standards with those of the United States as outlined in the Ozone Annex. This option was therefore rejected.

Regulations aligning Canadian standards with those of the United States

Given the highly integrated North American engine and vehicle industry and the progressive nature of U.S. federal emission standards, there has been broad support from stakeholders (i.e. industry, other government departments, and environmental non-governmental organizations) for the policy of aligning Canada’s emission standards with those of the United States. This support was evidenced throughout the consultation process on the regulatory development of the three on-road and off-road vehicle and engine emission regulations that are in effect under CEPA 1999. Aligning with U.S. rules allows for reductions in emissions by preventing the potential importation of higher emitting engines, is cost-effective for companies and consumers, and creates a level North American market.

Alignment with U.S. EPA emission standards represents the most cost-effective alternative for Canada to achieve its desired environmental objectives, and was therefore chosen.

Benefits and costs

Summary

From 2012 to 2030, the proposed Amendments are estimated to reduce emissions of several CACs including 2.7 kt of VOCs, 63.3 kt of NO_x, 8.4 kt of PM_2.5, and 9.5 kt of SO₂. These benefits have been estimated using a social discount rate of 3% and have a present value ranging from around $107 million to $213 million. However, to the extent that the proportion of compliant machines is reduced in the base case, the benefits would increase accordingly. There are also a range of benefits that have not been monetized including potential benefits from engines used in non-populated settings.

The costs of the proposed Amendments during this same period were also discounted using a 3% social discount rate. It is estimated that the total discounted costs of the proposed Amendments would be around $89 million including about $84.5 million to importers of off-road diesel machines and about $4.5 million to government. The net benefit of the proposed Regulations is estimated to range from $18 million to $124 million. The benefits are estimated to be 1.2 to 2.5 times the costs. The benefits of the proposed Amendments are expected to exceed the costs over a broad range of scenarios.

Benefits

Emission reductions

The proposed Amendments further reduce CAC and smog-forming emissions from off-road diesel engines in Canada. Tier 4 compliant engines would be phased in over several years as they gradually replace the existing higher-emitting engines, allowing for progressively greater emission reductions of air pollutants from the off-road diesel fleet. Tier 4 engines are expected to enter the engine fleet via imports and manufacturing of new machines, as well as through the replacement of older engines in existing machines.

To provide an indication of the possible emission reductions, Environment Canada forecast emissions from off-road diesel engines for several benchmark years between 2012 and 2030 using the EPA NONROAD (see footnote 8) model with Canadian input data. While recognizing that the absence of a comprehensive data set which accurately captures the stock and flow of off-road diesel engines in Canada creates uncertainty with respect to these scenarios, they depict a plausible and directionally representative forecast of emission trends.

The following two emission forecast scenarios were modeled: a baseline scenario in which there is zero penetration of Tier 4 off-road diesel engines in Canada; and a regulatory scenario, in which 100% compliance with Tier 4 standards is assumed. A linear growth rate between benchmark years was also applied to estimate total annual emissions from 2012 to 2030. Given the limitations on data, this is viewed as an imperfect but reasonable method to extrapolate overall emission reductions.

Based on the conservative assumption that 96% of off-road diesel machines entering the Canadian marketplace would be compliant under the status quo over the following 19 years, the analysis only attributes 4% of the total emission reductions to the proposed Amendments. Table 2 shows that the more stringent Tier 4 standards for off-road diesel engines result in reductions of several CACs and toxics over the next 19 years. Table 2 also demonstrates that the proposed Amendments would reduce emissions of other substances on the list of toxic substances. While the proposed Amendments do not enforce specific limits for these substances, the application of Tier 4 technology would offer co-benefits for human health and the environment in terms of reduced emissions of these toxics.

Table 2: Emission reductions from off-road diesel engines, 2012 to 2030

Toxic substances	Total Emission Reductions (kt)
	2012–2030
VOCs	2.7
NOx	63.3
PM2.5	8.4
SO2	9.5
NMHC	2.4
Benzene	53.8
Formaldehyde	403.6

Health and environmental benefits

The upgrade to Tier 4 emissions standards for off-road diesel engines would reduce emissions and provide significant benefits in terms of improved air quality and reduced exposure to air pollutants and toxic substances. The potential impacts on the health and environment of Canadians are measured here as changes in mortality and morbidity, impacts on agriculture such as improved crop productivity and yield due to less ozone, and improved visibility by reducing haze formation. Other potential benefits such as reduced corrosion and soiling of buildings and infrastructure associated with deposition of air pollutants, and benefits for forests and ecosystems, will also arise but are not included in this analysis.

By ensuring the emission reductions through a regulatory framework, the proposed Amendments would further improve air quality and reduce exposure to air pollutants and toxic substances, as identified in Table 2. Although it is often challenging to monetize benefits associated with emissions reductions, Environment Canada has used the damage cost values for CAC emissions most recently published in the Regulatory Impact Analysis Statement for the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations (see footnote 9) in order to provide a reasonable estimate of the benefits. These estimates are based upon a previously contracted study for Transport Canada in 2007 which assessed the damage cost of air pollution from transportation sources (primarily used in populated areas) to health (morbidity and mortality), agriculture (lost production yields for crops) and visibility (haze). (see footnote 10) Recently, a contracted report for Environment Canada updated the unit costs for each main pollutant to allow for inflation, resulting in the following 2009 values. (see footnote 11) Although this study was not carried out specifically for these proposed Amendments, it is reasonable and defensible to use the information presented to analyze the benefits for this initiative.

• VOC: $520/tonne
• NO_x: $4 300/tonne
• PM_2.5: $15 100/tonne
• SO₂: $4 800/tonne

Applying these values to the emission reductions found in Table 2 yields a present value of benefits of about $323 million from 2012 to 2030. However, as many off-road diesel engines are used in less populated locations, the geographic composition of the engine fleet would differ from that which is assumed for all transportation modes. Therefore, the value of benefits derived from improved air quality and corresponding affects on human health and the environment would likely be less than the full sum of $323 million. In order to gauge the possible value of benefits, the larger proportion of off-road diesel engines used in less populated areas is accounted for by assuming that roughly 33% to 66% of the full value of benefits would be realized. Under these assumptions, the total present value of benefits would range from $107 million to $213 million.

Benefits to industry

The proposed Amendments would ensure a level playing field for companies supplying the Canada-U.S. market for off-road diesel engines. At the domestic level, it would ensure that all manufacturers, importers and distributors operating in this competitive market comply with the same standards.

Furthermore, given that the emission certification process for engines is complex and costly for manufacturers and governments, aligning Canada’s emission standards with those of the EPA would allow Canada to benefit from the EPA’s emission certification program. This would result in cost savings for Can-adian companies and the federal government.

Benefits to Canada

The proposed Amendments would enable Canada to meet its commitment under the Ozone Annex to the 1991 Canada-United States Air Quality Agreement and under the Regulatory Framework for Air Emissions.

Costs

Costs to importers

All engines imported into Canada for the domestic manufacturing of off-road diesel machines are assumed to be compliant with the proposed Amendments. Therefore, the proposed Amendments do not result in incremental costs for manufacturers of machines.

The vast majority of costs for importers of machines are also assumed to be incurred under the baseline scenario, given that imports from the United States, the European Union and Japan represent almost 96% of total imports. As such, the costs of the proposed Amendments are incurred by the importers of the remaining 4% of off-road diesel machines, which are shipped from countries with production that is assumed to be non-compliant with the U.S. EPA rules.

The EPA estimated in its Regulatory Impact Analysis Statement (RIAS) that the upgrade to Tier 4 engines would result in average price increases for off-road diesel machines of about 2.9% in the near-term. (see footnote 12) Using import data from Statistics Canada, it was estimated that Canadian importers of off-road diesel machines would pay about $5.3 million in higher prices in 2012. The present value of these costs to industry from 2012 to 2030 is estimated to be $84.5 million.

Costs to Consumers

Machine manufacturers are expected to pass some or all of the direct compliance costs (machine redesign) and indirect costs (increased engine costs) to application market producers, who will then pass on costs to final application markets. The US EPA RIAS estimated that the average price of goods and services produced using machines and fuel affected by the rule would increase by about 0.1%. As noted earlier, most of these consumer costs are incurred under the baseline scenario and are incremental to those of the proposed Amendments. The proposed Amendments are therefore not expected to adversely impact the output and the prices of goods produced by these sectors.

Costs to the Government

The federal government would incur incremental costs related to regulatory administration, compliance promotion, compliance verification, laboratory upgrades to allow for emissions testing of off-road diesel engines, and enforcement activities. These costs would supplement the existing program of integrated initiatives. With respect to enforcement costs, a one-time amount of about $200,000 will be required for the training of enforcement officers. Following this, the annual cost to Government associated with an effective program to implement the proposed Amendments would vary from year to year and is estimated to be up to $380,000 per year during the initial years of implementation. The present value of costs to Government from 2012 to 2030 is estimated to be about $4.5 million.

Distributional impact

In 2007, almost 40% of the total Canadian value of assumed non-Tier 4 imports was shipped to Ontario. However, in relative terms, the impact would likely be larger for the Pacific and Yukon regional sector, in which almost 26% of the value of total off-road diesel imports came from countries assumed to be non-Tier 4 compliant. In terms of firm size, firms that import fewer than 500 units represented almost 57% of non-Tier 4 imports, while firms importing greater than 10 000 units represented 3%.

Competitiveness implications

As the majority of engines and machines sold in Canada are designed for both the American and Canadian markets, implementing harmonized Regulations with the United States would actually ensure a level playing field for companies and support the competitiveness of the Canadian manufacturing industry and that of Canadian distributors of these engines and machines.

Conclusion

The proposed Amendments are estimated to result in benefits that exceed the costs when accounting for the range of benefits in the analysis above ($107 million to $213 million). The net benefit of the proposed Amendments is estimated to range from about $18 million to $124 million as illustrated in Table 3.

Table 3: Summary of cost-benefit statement

Cost-benefit statement		Base year	Final year	Total	Average annual
A. Quantified impacts $ millions
Benefits
	33%	$2.0	$7.3	$107	$5.6
Costs	Importers	($5.3)	($3.7)	($84.5)	($4.4)
	Government	($0.4)	($0.2)	($4.5)	($0.2)
	Total costs	($5.7)	($3.9)	($89)	($4.6)
Net benefit
	33%	($3.7)	$3.4	$18	$1.0
B. Qualitative impacts
Environment	The proposed Amendments would help reduce CAC emissions, the formation of ozone, and toxics, which are shown to cause injury to forests and ecosystems, and physical structures.
Health	The proposed Amendments would reduce emissions of several toxins such as benzene and formaldehyde, which are linked to numerous health effects.
Industry	The proposed Amendments would help level the playing field for Canada’s machine manufacturers.
International commitments	Amending the Regulations would allow Canada to align its rules with those of the U.S. EPA and meet its commitments under the Ozone Annex.
Consumers	The price of off-road diesel machines is expected to increase by less than 3% on average for most models.

Rationale

The combustion of fuels to power engines such as off-road diesel engines contributes significantly to air pollution, resulting in adverse impacts on the environment and on the health of Canadians. This includes impacts such as restricted activity days, hospital admissions, work-loss days, and premature mortality, as well as environmental damage to crops and other vegetation. An assessment of alternatives to manage these risks shows that maintaining the status quo would not take advantage of the opportunity to use readily accessible technologies to further reduce emissions. Under the status quo, most imported engines and machines are assumed to comply with the EPA Tier 4 standards. However, Canada would be vulnerable to increasing imports of non-compliant engines with corresponding impacts on the health and environment of Canadians.

The proposed Amendments are the best option to address this risk and further mitigate the impacts of off-road diesel engines in Canada. The proposed Amendments would also provide the necessary flexibility for manufacturers and importers to transition to the new emissions standards. The regulatory framework provides a level playing field, ensuring that no single company can place other companies under competitive pressure by manufacturing or importing engines or machines that do not meet the established standards.

Under the assumptions discussed above, some incremental costs are estimated for importers of machines having nonTier 4 engines. The increased price of machines would result in total present value costs to importers of about $84.5 million, with total costs to Government of roughly $4.5 million for the training of enforcement officers for compliance and promotion, regulatory administration, and testing. Therefore, the net costs amount to $89 million (present value).

The proposed Amendments were developed in consultation with industry, provincial and territorial governments, environmental non-governmental organizations and other government departments who all showed support for the policy of alignment with U.S. federal emission requirements.

Coordination and cooperation

Under the Ozone Annex to the 1991 Canada-United States Air Quality Agreement, Canada committed to develop and implement emission regulations for new off-road engines under CEPA 1999 that are aligned with the U.S. federal emissions program. Environment Canada is also currently coordinating joint initiatives with the U.S. EPA in the areas of administration of regulations and compliance promotion in order to allow for efficiencies in the delivery of the regulatory programs. Coordinating efforts will increase the breadth and depth of monitoring and verification, allowing for more effective use of resources (avoiding duplication of efforts for both the regulated community and regulators) and show industry that governments are working to reduce industry burden while improving regulatory oversight and performance monitoring.

Consultation

In recent years, several regulations have been adopted based on a policy of alignment with U.S. standards, including the On-Road Vehicle and Engine Emission Regulations, the Off-Road Small Spark-Ignition Engine Emission Regulations and the current Off-Road Compression-Ignition Engine Emission Regulations. Environment Canada consulted with industry, provinces, territories, municipalities, federal departments as well as environmental and health groups on the Regulations. The consultations associated with the development of each of these regulations revealed a broad consensus that Canada’s regulatory emission standards for on-road and off-road vehicles and engines should be based on alignment with corresponding U.S. federal requirements. Stakeholders have generally identified that the integrated nature of the Canada/U.S. economy, and the implementation of aggressive national programs for on-road and off-road vehicles and engines by the EPA, are two key elements supporting a policy of alignment with U.S. federal programs as a logical approach for Canada to achieve significant emission reductions in a cost-effective manner.

On October 26, 2009, a discussion document outlining the planned approach of the proposed Amendments was released by Environment Canada to interested parties. The objective of this consultation was to provide stakeholders with detailed information and solicit input on the proposed Amendments. Comments were received from two industry associations and four companies. The specific comments and concerns raised are presented below, along with Environment Canada’s responses.

• Timelines: Stakeholders expressed concerns about the proposed Amendments skipping critical interim standards. Environment Canada modified the proposed Amendments to allow for interim standards.
  Stakeholders suggested that any divergence from EPA timelines would result in significant costs and logistical issues. Environment Canada is providing guidance to companies relative to this issue.

• Definitions: Stakeholders noted the discrepancy between some definitions in the proposed Amendments and EPA definitions. Environment Canada recognizes the differences, although no change has been made since these definitions are consistent with other Environment Canada regulations and in line with CEPA 1999. Also, they do not directly affect the implementation and requirements of the proposed Amendments.
  Concerns were raised about the revised definition of an “off-road engine” in the proposed Amendments. The definition included stationary engines which are then exempt from the emission standards if they are appropriately labelled. To address this concern, Environment Canada kept stationary engines within the definition but modified the labelling requirements to allow the EPA label for stationary engines.

• Labelling requirements: Since there is limited suitable space for labels on engines, stakeholders voiced concerns about the additional labelling requirements in the proposed Amendments. In response, Environment Canada updated the proposed Amendments to allow the equivalent EPA labels to be sufficient.
• Sample documents: Stakeholders requested samples of standardized reporting forms or letters to simplify reporting requirements. Environment Canada plans to develop the sample documents and they will likely be posted online.
• Transition engine provisions: Stakeholders raised concerns over the effect that the transition engine provisions in the proposed Amendments would have on their businesses. Environment Canada is working toward ensuring any impacts are minimized by aligning the requirements more closely to the U.S. EPA rules.
• Minor changes and corrections: Stakeholders requested changes to references in the proposed Amendments for clarity. Additionally, stakeholders highlighted a section where EPA language could be used to provide clarity and consistency. Environment Canada agrees and where possible has made the appropriate modifications.
  It was suggested that references should not be made to specific subsections of the CFR, since an amendment to the EPA standards would cause the reference to be incorrect. Environment Canada agrees and where possible has made the appropriate adjustments.
  Finally, stakeholders sought clarification on some technical aspects and language of the draft Amendments; as a result, Environment Canada made some minor changes to the wording to provide clarity.

Implementation, enforcement and service standards

Implementation

For the purpose of implementing the proposed Amendments, Environment Canada would undertake a number of compliance promotion activities. These activities would be targeted toward raising awareness and encouraging the regulated community to achieve a high level of overall compliance as early as possible during the regulatory implementation process. This would include the following:

• continued development of a comprehensive database of regulatees with regular updates;
• developing and distributing compliance promotion materials including a general mail-out or email including the proposed Amendments and a detailed technical guidance document which identifies requirements concerning compliance with the standards, evidence of conformity and other required information;
• maintaining a Web page related to the proposed Amendments on Environment Canada’s CEPA Environmental Registry to make information widely available; and
• responding to inquiries and delivering information sessions as required.

Environment Canada administers a comprehensive program to monitor compliance with vehicle and engine emission standards. Manufacturers and importers are responsible for ensuring that their products comply with the Regulations and are required to maintain and produce evidence of such conformity. Environment Canada’s program to monitor compliance includes

• authorizing and monitoring use of the national emissions mark;
• monitoring vehicle and engine importation;
• reviewing company evidence of conformity;
• monitoring data submission for compliance with the emissions averaging program;
• registering company notices of defects affecting emission controls;
• inspection of test engines and vehicles and their emission-related components; and
• laboratory emissions tests of sample new engines and vehicles that are representative of products offered for sale in Canada.

If an engine or vehicle is found to not comply with the Regulations, the manufacturer or importer will be subject to the enforcement provisions of CEPA 1999. Environment Canada is coordinating efforts with the EPA by sharing information to increase program efficiency and effectiveness. Coordination and cooperation opportunities also exist to partner with organizations outside Environment Canada to perform compliance promotion activities such as identifying regulatees and delivering key messages.

Compliance promotion activities would be revisited from time to time to ensure that the proposed Amendments are implemented in the most effective and efficient manner.

Service standards

For the proposed Amendments, in its administration of the regulatory program, Environment Canada would provide these services in a timely manner:

• reviewing applications and preparing authorizations to use the national emissions mark;
• assessing company’s declarations for temporary importations;
• assessing expected and actual transition engine reports; and
• assessing requests for exemptions from the proposed Amendments.

In addition, the Department would audit evidence of conformity for engines and machines and provide to manufacturers an acknowledgement of its receipt and whether it is presented “in a form and manner that is satisfactory” based on a set of criteria established by the Department. The Department intends to develop a technical guidance document describing the required evidence of conformity and the procedures to be followed when submitting required documentation.

Enforcement

The proposed Amendments would be made under CEPA 1999, therefore enforcement officers would, when verifying compliance with the proposed Amendments, apply the Compliance and Enforcement Policy (see footnote 13) for CEPA 1999. This Policy sets out the range of possible responses to alleged 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 prosecution after the laying of charges for a CEPA 1999 violation). In addition, the Policy explains when Environment Canada will resort to civil suits by the Crown for cost recovery.

To verify compliance, enforcement officers may carry out inspections. An inspection may identify an alleged violation, and alleged violations may also be identified by Environment Canada’s technical personnel, through information transmitted to the Department by the Canada Border Services Agency or through complaints received from the public. Whenever a possible violation of the proposed Amendments is identified, enforcement officers may carry out investigations.

When, following an inspection or an investigation, an enforcement officer discovers an alleged violation, the officer would 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 cooperate with enforcement officers, and evidence of corrective action already taken; and
• Consistency: Enforcement officers would consider how similar situations have been handled in determining the measures to be taken to enforce the Act.

Performance measurement and evaluation

The Regulatory Framework for Air Emissions is a government-wide initiative designed to improve the health of Canadians and their environment through measurable reductions in both greenhouse gas and air pollutant emissions in all sectors of the Canadian economy. The proposed Amendments are an element of the Government’s Regulatory Framework for Air Emissions and contribute to meeting the Government’s commitment to reduce air pollutant emissions in the transportation sector.

The proposed Amendments include provisions designed to facilitate Environment Canada’s verification that compliance with the proposed amendments is achieved. Various compliance-related activities such as submitting annual end-of-year reports detailing a company’s use of transition engine provisions (if used), auditing evidence of conformity, and verification of emissions levels through testing will be carried out. Monitoring of compliance with the proposed Amendments will be done on an ongoing basis. Reporting of the incidences of non-compliance by enforcement officers is expected to provide indicators of this achievement.

The proposed Amendments will be administered by Environment Canada’s Transportation Division and will be evaluated as part of the program evaluation under the Regulatory Framework for Air Emissions. Follow-up evaluations will be scheduled as per the department’s evaluation planning cycle.

Contacts

Josée Lavergne
Manager
Air Pollution Regulatory Development Section
Transportation Division
Energy and Transportation Directorate
Environment Canada
351 Saint-Joseph Boulevard
Gatineau, Quebec
K1A 0H3
Telephone: 819-953-1651
Fax: 819-953-7815
Email: josee.lavergne@ec.gc.ca

Luis Leigh
Director
Regulatory Analysis and Valuation Division
Economic Analysis Directorate
Environment Canada
10 Wellington Street
Gatineau, Quebec
K1A 0H3
Telephone: 819-953-1170
Fax : 819-997-2769
Email: Luis.Leigh@ec.gc.ca

PROPOSED REGULATORY TEXT

Notice is hereby given, pursuant to subsection 332(1) (see footnote a) of the Canadian Environmental Protection Act, 1999 (see footnote b), that the Governor in Council, pursuant to section 160 of that Act, proposes to make the annexed Regulations Amending the Off-Road Compression-Ignition Engine Emission Regulations.

Any person may, within 60 days after the date of publication of this notice, file with the Minister of the Environment comments with respect to the proposed Regulations or a notice of objection requesting that a board of review be established under section 333 of that Act and stating the reasons for the objection. All comments and notices must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Steve McCauley, Director General, Energy and Transportation Directorate, Environmental Stewardship Branch, Department of the Environment, Gatineau, Quebec K1A 0H3.

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

Ottawa, February 3, 2011

JURICA ČAPKUN
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE OFF-ROAD COMPRESSION-IGNITION
ENGINE EMISSION REGULATIONS

AMENDMENTS

1. (1) The definitions “CFR” and “off-road engine” in subsection 1(1) of the Off-Road Compression-Ignition Engine Emission Regulations (see footnote 14) are replaced by the following:

“CFR” means chapter I of Title 40 of the Code of Federal Regulations of the United States as amended from time to time. (CFR)

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

• (a) that is designed to be or is capable of being carried or moved; or
• (b) that is used or designed to be used in or on a machine. (moteur hors route)

(2) Subsection 1(1) of the Regulations is amended by adding the following in alphabetical order:

“CFR 89” means subchapter C, part 89, of the CFR. (CFR 89)

“CFR 1039” means subchapter U, part 1039, of the CFR. (CFR 1039)

“CFR 1068” means subchapter U, part 1068, of the CFR. (CFR 1068)

“crankcase emissions” means substances that cause air pollution and that are emitted into the atmosphere from any portion of the engine crankcase ventilation or lubrication systems. (émissions du carter)

“engine family” means an engine family as described in section 230, subpart C, of CFR 1039. (famille de moteurs)

“evaporative emissions” means hydrocarbons emitted into the atmosphere from an engine, other than exhaust emissions and crankcase emissions. (émissions de gaz d’évaporation)

“smoke emissions” means substances in exhaust emissions that prevent the transmission of light. (émissions de fumée)

“unique identification number” means a number, consisting of arabic numerals, roman letters or both, that the manufacturer assigns to the engine for identification purposes. (numéro d’identification unique)

“useful life” means the period of time or of use in respect of which an emission standard applies to an engine, as set out in section 104(a), subpart B, of CFR 89 or in section 101(g), subpart B, of CFR 1039. (durée de vie utile)

(3) Paragraph 1(2)(b) of the Regulations is replaced by the following:

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

(4) Subsection 1(3) of the Regulations is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c):

• (d) “phase-out” shall be read as “abandon progressif” in the French version of these Regulations.

2. The Regulations are amended by adding the following after section 2:

BACKGROUND

2.1 These Regulations set out

• (a) the prescribed off-road compression-ignition engines for the purposes of the definition “engine” in section 149 of the Act;
• (b) the requirements respecting the conformity of off-road compression-ignition engines with emission standards for the purposes of sections 153 and 154 of the Act; and
• (c) other requirements for carrying out the purposes and provisions of Division 5, Part 7 of the Act.

3. Subsections 5(2) and (3) of the Regulations are replaced by the following:

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

• (a) that are designed to be used exclusively for competition and that bear a label to that effect;
• (b) that are regulated by the On-Road Vehicle and Engine Emission Regulations;
• (c) that are designed to be used exclusively in underground mines and that may be used outside of underground mines that are
  
  • (i) certified by the Canada Centre for Mineral and Energy Technology (CANMET), or
  • (ii) certified by the Mine Safety and Health Administration of the United States in accordance with Title 30, chapter I, subchapter B, part 7, subpart E of the Code of Federal Regulations of the United States;
    
  (d) that have a per-cylinder displacement of less than 50 cm³;
• (e) that are designed exclusively to be used in military machines designed exclusively for use in combat or combat support and that either bear a label to that effect or bear the U.S. emission control information label referred to in section 225(d) of CFR 1068;
• (f) that are being exported and that are accompanied by a written statement establishing that they will not be sold or used in Canada;
• (g) that are designed to be used in a vessel and that have fuel, cooling and exhaust systems that are integral parts of the vessel; or
• (h) that are used or designed to be used in or on machines designed and intended not to be moved and that either bear a label that indicates that those engines are stationary engines or the U.S. emission control information label referred to in section 20 of CFR 1039.

(2.1) For the purposes of paragraphs (2)(a), (e) and (h), and for greater certainty, the label, other than the U.S. emission control information label affixed under CFR 89, 1039 or 1068, shall meet the requirements set out in section 8.

(3) Subject to subsection (4), for the purposes of section 152 of the Act, the prescribed engines are those referred to in subsection (1) that are manufactured in Canada, including those that have their manufacture completed by the addition of an emission control system at the time of installation in or on a machine.

(4) Despite subsection (3), section 152 of the Act does not apply to

• (a) engines of a specific model year that are covered by an EPA certificate, that have their manufacture completed in Canada by the addition of an emission control system in accordance with the certificate and the installation instructions that accompany the engines under section 15.1, and that are sold concurrently in Canada and the United States; or
• (b) engines that are to be used in Canada solely for purposes of exhibition, demonstration, evaluation or testing.

4. Subsection 6(1) of the Regulations is replaced by the following:

6. (1) A company that intends to apply a national emissions mark in relation to an engine shall apply to the Minister to obtain an authorization to apply the mark in the form set out in Schedule 1.

5. The heading before section 7 of the Regulations is replaced by the following:

NATIONAL EMISSIONS MARK AND LABEL REQUIREMENTS

6. (1) Subsection 7(1) of the Regulations is replaced by the following:

7. (1) The national emissions mark is the mark set out in Schedule 2.

(2) Subsections 7(3) to (5) of the Regulations are replaced by the following:

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

7. Section 8 of the Regulations is replaced by the following:

8. (1) The national emissions mark and any label required by these Regulations, other than a U.S. emission control information label, shall be located

• (a) on or immediately next to the emission control information label referred to in paragraph 16(d); or
• (b) if there is no such emission control information label, in a visible or readily accessible location.

(2) The national emissions mark and any label required by these Regulations, other than a U.S. emission control information label, shall

• (a) be permanently applied;
• (b) be resistant to or protected against any weather condition; and
• (c) bear inscriptions that are legible and indelible and that are indented, embossed or in a colour that contrasts with the label’s background.

UNIQUE IDENTIFICATION NUMBER

8.1 (1) A unique identification number shall be applied to every engine.

(2) The unique identification number shall be legible and may be engraved or stamped on the engine or may be on a label that meets the requirements set out in section 8.

8. (1) Paragraphs 9(1)(a) and (b) of the English version of the Regulations are replaced by the following:

• (a) in its operation, release a substance that causes air pollution and that would not have been released if the system had not been installed; or
• (b) in its operation or malfunction, make the engine or the machine in which the engine is installed unsafe, or endanger persons or property near the engine or machine.

(2) Subsection 9(2) of the Regulations is replaced by the following:

(2) No engine shall be equipped with a defeat device as defined in section 107(b), subpart B, of CFR 89 or section 115(g), subpart B, of CFR 1039, as the case may be.

9. Section 10 of the Regulations is replaced by the following:

10. (1) Subject to sections 11.1 to 14, an engine of a given gross power category shall conform to,

• (a) for the 2006 to 2011 model years,
  
  • (i) the exhaust emission standards set out in section 112, subpart B, of CFR 89 for those model years,
  • (ii) the crankcase emission standards set out in section 112(e), subpart B, of CFR 89 for those model years, and
  • (iii) the smoke emission standards set out in section 113, subpart B, of CFR 89 for those model years;
    
  (b) for the 2012 to 2014 model years,
  
  • (i) subject to subsection (4), either the exhaust emission standards set out in sections 101(a), (b), (c), (e) and (f), or sections 102(a) and (b), subpart B, of CFR 1039 for those model years,
  • (ii) the crankcase emission standards set out in section 115(a), subpart B, of CFR 1039 for those model years,
  • (iii) the smoke emission standards set out in section 105, subpart B, of CFR 1039 for those model years, and
  • (iv) the evaporative emission standards for engines fuelled with volatile liquid fuels set out in section 107, subpart B, of CFR 1039 for those model years; and
    
  (c) for the 2015 and subsequent model years,
  
  • (i) the exhaust emission standards set out in sections 101(a), (b), (c), (e) and (f), subpart B, of CFR 1039 for those model years,
  • (ii) the crankcase emission standards set out in section 115(a), subpart B, of CFR 1039 for those model years,
  • (iii) the smoke emission standards set out in section 105, subpart B, of CFR 1039 for those model years, and
  • (iv) the evaporative emission standards for engines fuelled with volatile liquid fuels set out in section 107, subpart B, of CFR 1039 for those model years.

(2) Subject to subsection (3), the standards referred to in subsection (1) apply for the useful life of the engine and include the test procedures, fuels and calculation methods set out in CFR 89 or CFR 1039, as the case may be, for the model year in question. For greater certainty, the certification standards described in section 120, subpart B, of CFR 89 and section 240, subpart C, of CFR 1039, as the case may be, apply to the model year in question.

(3) The in-use standards that apply for the useful life of engines of the 2012 and subsequent model years set out in the table to section 104(b), subpart B, of CFR 1039, are determined in accordance with that section.

(4) For the purposes of subparagraph (1)(b)(i), the applicable standards for interim Tier 4 engines that have a gross power category of 56 kW to less than 560 kW are the phase-out standards set out in tables 4 to 6, as applicable, of section 102, subpart B, of CFR 1039.

10. The Regulations are amended by adding the following after section 10:

10.1 (1) An engine that is imported, other than an EPA-certified engine and a replacement engine referred to in section 12, shall bear a label that sets out

• (a) the statement “THIS ENGINE CONFORMS TO ALL APPLICABLE STANDARDS PRESCRIBED BY THE CANADIAN OFF-ROAD COMPRESSION-IGNITION ENGINE EMISSION REGULATIONS IN EFFECT ON THE DATE OF MANUFACTURE / CE MOTEUR EST CONFORME À TOUTES LES NORMES QUI LUI SONT APPLICABLES EN VERTU DU RÈGLEMENT SUR LES ÉMISSIONS DES MOTEURS HORS ROUTE À ALLUMAGE PAR COMPRESSION CANADIEN EN VIGUEUR À LA DATE DE SA CONSTRUCTION”;
• (b) the model year of the engine;
• (c) the date of manufacture of the engine;
• (d) the gross power category of the engine;
• (e) an identification of the emission control system;
• (f) the name of the manufacturer of the engine; and
• (g) the name of the company referred to in subsection 17(1).

(2) Paragraph 10.1(1)(a) does not apply when a national emissions mark is affixed to the engine.

(3) Paragraph 10.1(1)(e) does not apply to a transition engine as referred to in subsection 13(1).

11. Subsection 11(1) of the Regulations is replaced by the following:

11. (1) In this section, “adjustable parameter” means a device, system or element of design that is capable of being physically adjusted and as a result can affect emissions or engine performance during emission testing or normal in-use operation, but does not include a device, system or element of design that is permanently sealed by the engine manufacturer or that is inaccessible with the use of ordinary tools.

12. The Regulations are amended by adding the following after section 11:

TRANSPORTATION REFRIGERATION UNIT

11.1 (1) The following definitions apply in this section.

“constant-speed engine” means an engine that operates only at its maximum full load governed speed for governed engines or its maximum horsepower speed for ungoverned engines. (moteur à vitesse constante)

“transportation refrigeration unit” means a refrigeration system that is powered by an engine and that is designed to control the temperature of products that are transported in rolling stock, vehicles or trailers. (groupe frigorifique de transport)

(2) The following engines that are used in a transportation refrigeration unit may, instead of complying with the exhaust emission standards set out in subparagraphs 10(1)(b)(i) and (c)(i), comply with those set out in sections 645(a), (b), (d)(2), (d)(3), (e) and (f), subpart G, of CFR 1039:

• (a) an engine of the 2012 model year that has a gross power of less than 37 kW;
• (b) an engine of the 2012 to 2015 model years that has a gross power of 37 kW to less than 56 kW; and
• (c) a constant-speed engine.

(3) An engine referred to in subsection (2) shall bear either

• (a) a label that sets out
  
  • (i) a statement, in both official languages, that the engine is to be used only in a transportation refrigeration unit,
  • (ii) the model year of the engine,
  • (iii) the date of manufacture of the engine,
  • (iv) the gross power category of the engine,
  • (v) an identification of the emission control system,
  • (vi) the name of the manufacturer, and
  • (vii) the name of the company referred to in subsection 17(1); or
    
  (b) the U.S. emission control information label referred to in section 645(d)(1), subpart G, of CFR 1039.

13. Paragraphs 12(3)(a) and (b) of the Regulations are replaced by the following:

• (a) section 8 and that sets out
  
  • (i) a statement, in both official languages, that the engine is a replacement engine,
  • (ii) the model year of the engine,
  • (iii) the date of manufacture of the engine,
  • (iv) the gross power category of the engine,
  • (v) an identification of the emission control system,
  • (vi) the name of the manufacturer, and
  • (vii) the name of the company referred to in subsection 17(1); or
    
  (b) section 1003(b)(7), subpart K, of CFR 89 or section 240(b)(6), subpart C, of CFR 1068 as the case may be.

14. Section 13 of the Regulations is replaced by the following:

13. (1) This section applies to an engine for which a company elects to apply a standard set out in subsection (2), hereinafter referred to as a transition engine,

• (a) that is imported into or manufactured in Canada for the purpose of being installed in or on a machine; or
• (b) that is installed in or on a machine, that is imported into Canada and for which at least one engine of the same engine family is sold concurrently in Canada and the United States.

(2) Instead of the standards referred to in sections 9 to 11, a company may elect to apply one of the following standards to a number of engines as determined under subsection (3) that correspond to the following model years and that fall within the following gross power categories:

• (a) in the case of engines that have a gross power of less than 19 kW, the standards for Tier 2 engines set out in CFR 89 as referred to in paragraph 10(1)(a) for the 2012 to 2014 model years;
• (b) in the case of engines that have a gross power of 19 kW to less than 37 kW, either
  
  • (i) the standards for Tier 2 engines set out in CFR 89 as referred to in paragraph 10(1)(a) for the 2012 to 2014 model years, or
  • (ii) the standards for interim Tier 4 engines set out in Table 2 of section 102 of CFR 1039 for the 2012 to 2018 model years;
    
  (c) in the case of engines that have a gross power of 37 kW to less than 56 kW, either
  
  • (i) the standards for Tier 2 engines set out in CFR 89 as referred to in paragraph 10(1)(a) for the 2012 to 2014 model years, or
  • (ii) the standards for interim Tier 4 engines set out in Table 3 of section 102 of CFR 1039 for the 2012 to 2018 model years;
    
  (d) in the case of engines that have a gross power of 56 kW to less than 75 kW, either
  
  • (i) the standards for Tier 3 engines set out in CFR 89 as referred to in paragraph 10(1)(a) for the 2012 to 2018 model years, or
  • (ii) the phase-out standards for interim Tier 4 engines set out in Table 4 of section 102 of CFR 1039 for the 2014 to 2020 model years;
    
  (e) in the case of engines that have a gross power of 75 kW to less than 130 kW, either
  
  • (i) the standards for Tier 3 engines set out in CFR 89 as referred to in paragraph 10(1)(a) for the 2012 to 2018 model years, or
  • (ii) the phase-out standards for interim Tier 4 engines set out in Table 5 of section 102 of CFR 1039 for the 2014 to 2020 model years;
    
  (f) in the case of engines that have a gross power of 130 kW to 560 kW, either
  
  • (i) the standards for Tier 3 engines set out in CFR 89 as referred to in paragraph 10(1)(a) for the 2012 to 2017 model years, or
  • (ii) the phase-out standards for interim Tier 4 engines set out in Table 6 of section 102 of CFR 1039 for the 2014 to 2020 model years; or
    
  (g) in the case of engines that have a gross power of more than 560 kW, either
  
  • (i) the standards for Tier 2 engines set out in CFR 89 as referred to in paragraph 10(1)(a) for the 2012 to 2017 model years, or
  • (ii) the standards for interim Tier 4 engines set out in Table 7 of section 102 of CFR 1039 for the 2015 to 2021 model years.

(3) A company that elects to apply one of the standards set out in subsection (2) may only do so with respect to a percentage of the engines that fall within the gross power category and model years applicable for that standard, and the sum of those percentages calculated over the period corresponding to those model years shall not exceed

• (a) 34 percentage points for the engines referred to in paragraph (2)(a) and subparagraphs (2)(b)(i) and (c)(i);
• (b) 69 percentage points for the engines referred to in subparagraphs (2)(f)(i) and (g)(i); and
• (c) 80 percentage points for the engines referred to in subparagraphs (2)(b)(ii) and (c)(ii), paragraphs (2)(d) and (e) and subparagraphs (2)(f)(ii) and (g)(ii).

(4) A transition engine shall bear either

• (a) a label that sets out the information described in section 10.1 along with a statement, in both official languages, that the engine is a transition engine; or
• (b) the U.S. emission control information label referred to in section 625(j)(1), subpart G, of CFR 1039.

15. The Regulations are amended by adding the following after section 13:

13.1 (1) A company that elects to apply one of the standards set out in subsection 13(2) shall submit to the Minister an initial report, signed by a person who is authorized to act on behalf of the company, before January 1 of the calendar year during which it intends to manufacture or import the engine.

(2) The initial report shall contain the following information:

• (a) a declaration that contains the information set out in paragraphs 19(1)(a) to (d) and subparagraph 19(1)(e)(i);
• (b) a statement indicating that the engines will be transition engines as referred to in subsection 13(1);
• (c) a statement indicating which standard the company has chosen to apply in subsection 13(2);
• (d) the model years of the engines to which the standards set out in subsection 13(2) will apply;
• (e) the expected number of engines to which the standards set out in subsection 13(2) will apply;
• (f) the number of percentage points as referred to in subsection 13(3) that, at the time of preparation of the initial report, may be used; and
• (g) the percentage expected to be used during the calendar year in question in accordance with subsection 13(3).

13.2 (1) A company that elects to apply one of the standards set out in subsection 13(2) shall submit to the Minister, in addition to the initial report referred to in section 13.1, an annual report signed by a person who is authorized to act on behalf of the company, within 45 days after the end of each calendar year.

(2) The annual report shall contain the following information:

• (a) a declaration that contains the information set out in paragraphs 19(1)(a) to (d) and subparagraph 19(1)(e)(i);
• (b) a statement indicating that the engines are transition engines as referred to in subsection 13(1), that they conform to the standards set out in subsection 13(2) and that they bear the label referred to in subsection 13(4);
• (c) a statement indicating which standard the company has chosen to apply in subsection 13(2);
• (d) the model years of the engines to which the standards set out in subsection 13(2) apply;
• (e) the number of engines to which the standards set out in subsection 13(2) apply;
• (f) the number of percentage points as referred to in subsection 13(3) that, at the time of preparation of the initial report, may be used;
• (g) the percentage used during the calendar year in question in accordance with subsection 13(3); and
• (h) the remaining number of percentage points that may be used during the period referred to in subsection 13(3).

16. Section 14 of the Regulations is replaced by the following:

14. (1) Engines of a given model year that are covered by an EPA certificate shall conform to, instead of the standards set out in sections 9 to 11, the certification and in-use standards referred to in the EPA certificate, if at least one engine of the same engine family is sold concurrently in Canada and the United States.

(2) For the purposes of subsection 153(3) of the Act, the provisions of the CFR that are applicable to an engine referred to in subsection (1), under the EPA certificate, correspond to the certification and in-use standards referred to in subsection (1).

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

17. The heading before section 15 of the Regulations is replaced by the following:

INSTRUCTIONS

EMISSION-RELATED MAINTENANCE

18. Subsection 15(1) of the Regulations is replaced by the following:

15. (1) Every company shall ensure that the first retail purchaser of every engine or machine is provided with written instructions respecting emission-related maintenance and that the instructions are consistent with the maintenance instructions set out in section 109(a), subpart B, of CFR 89 or section 125, subpart B, of CFR 1039, as the case may be, for the model year in question.

19. The Regulations are amended by adding the following after section 15:

INSTALLATION OF EMISSION CONTROL SYSTEM

15.1 (1) Every company shall ensure that every engine that is installed in or on a machine in Canada is accompanied with written instructions for installing the engine and emission control system, or with the address of the place or the website where those instructions may be obtained.

(2) The instructions shall contain the following information:

• (a) detailed installation procedures for the exhaust system, emission control system and any other of their components; and
• (b) any limits on the types of use for the engine to ensure that the emissions standards are complied with.

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

20. The heading before section 16 of the Regulations is replaced by the following:

RECORDS

EVIDENCE OF CONFORMITY

21. (1) The portion of section 16 of the Regulations before paragraph (a) is replaced by the following:

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

(2) Paragraph 16(d) of the Regulations is replaced by the following:

• (d) a U.S. emission control information label that is permanently affixed in the form and location set out in section 110, subpart B, of CFR 89 or section 135, subpart B, of CFR 1039 for the applicable model year of the engine.

22. Section 17 of the Regulations is replaced by the following:

17. (1) In the case of an engine other than one referred to in subsection 14(1), evidence of conformity required under paragraph 153(1)(b) of the Act shall be obtained and produced by a company in a form and manner that is satisfactory to the Minister instead of that specified in section 16 and shall include a copy of the label referred to in section 10.1 or in subsection 13(4), as the case may be.

(2) For greater certainty, the company shall submit the evidence of conformity referred to in subsection (1) to the Minister before importing an engine other than a transition engine as referred to in subsection 13(1) or before applying a national emissions mark to it.

17.1 For greater certainty, a company that imports an engine or applies a national emissions mark to it under subsection 153(2) of the Act is not required to provide the Minister with the evidence of conformity referred to in subsection 17(1) before importing it or applying a national emissions mark to it, but shall provide that evidence in accordance with subsection 153(2) of the Act before the engine leaves the possession or control of the company.

23. The portion of section 18 of the Regulations before paragraph (a) is replaced by the following:

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

24. The heading before section 19 of the Regulations is replaced by the following:

IMPORTATION REQUIREMENTS AND DOCUMENTS

EVIDENCE OF CONFORMITY

25. (1) The portion of subsection 19(1) of the Regulations before paragraph (a) is replaced by the following:

19. (1) Subject to subsections (1.1) and (2) and for the purposes of paragraph 153(1)(b) of the Act, any person importing an engine into Canada shall, prior to importation, submit a declaration to the Minister, signed by that person or their duly authorized representative, that contains the following information:

(2) Paragraphs 19(1)(b) to (d) of the Regulations are replaced by the following:

• (b) in respect of an engine that is not installed in or on a machine, the name of the manufacturer and the make, model, unique identification number and model year of the engine;
• (c) in respect of a machine, the name of the manufacturer and the make, model and type of the machine, as well as the name of the manufacturer and the make, model, unique identification number and model year of the engine that is installed in or on the machine;
• (d) the expected date of importation;

(3) Subparagraph 19(1)(f)(i) is amended by striking out “or” at the end of clause (C) and by adding the following after clause (C):

(D) the label referred to in section 10.1 showing that the engine conformed to these Regulations at the time of its manufacture, or

(4) Section 19 of the regulations is amended by adding the following after subsection (1):

(1.1) A person that is not a company who imports five engines or less per calendar year is exempt from the obligation of submitting to the Minister the declaration referred to in paragraph (1).

26. Section 20 of the Regulations is replaced by the following:

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

• (a) the information set out in paragraphs 19(1)(a) to (d) and, if applicable, subparagraph 19(1)(e)(i);
• (b) a written statement that the engine will be used in Canada solely for purposes of exhibition, demonstration, evaluation or testing;
• (c) the date on which the engine will be removed from Canada or destroyed; and
• (d) the engine’s unique identification number.

(2) The declaration shall be submitted to the Minister before the engine is imported or, in the case of a company that imports more than 50 engines, quarterly, at the option of the company.

(3) A copy of the statement referred to in paragraph (1)(b) shall accompany the engine.

27. The portion of section 21 of the Regulations before paragraph (a) is replaced by the following:

21. A company that imports an engine in reliance on subsection 153(2) of the Act shall, before the importation, submit a declaration to the Minister, signed by its duly authorized representative, that contains the information described in paragraphs 19(1)(a) to (d) and subparagraph 19(1)(e)(i) along with

28. (1) Subparagraph 23(f)(ii) of the French version of the Regulations is replaced by the following:

• (ii) entraverait la mise au point de nouveaux dispositifs de mesure ou de contrôle des émissions équivalents ou supérieurs à ceux qui sont conformes aux normes réglementaires,

(2) Section 23 of the Regulations is amended by adding “and” at the end of paragraph (g), by striking out “and” at the end of paragraph (h) and by repealing paragraph (i).

29. Subsection 24(1) of the Regulations is replaced by the following:

24. (1) In the case of a model of engine in respect of which the Governor in Council has, by order, granted an exemption under section 156 of the Act, the engine shall bear a label that meets the requirements set out in section 8.

30. (1) The portion of subsection 25(3) of the Regulations before paragraph (a) is replaced by the following:

(3) If a company submits an initial report under subsection (2), it shall submit within 45 days after the end of each calendar quarter, quarterly reports to the Minister respecting the defect and its correction that contain the following information:

(2) Paragraph 25(3)(d) of the Regulations is replaced by the following:

• (d) the total number or percentage of engines repaired by or on behalf of the company, including engines requiring inspection only.

31. The schedule to the Regulations is renumbered as Schedule 2.

32. The Regulations are amended by adding, before Schedule 2, the Schedule 1 set out in the schedule to these Regulations.

COMING INTO FORCE

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

SCHEDULE
(Section 31)

SCHEDULE 1
(Subsection 6(1))

MINISTERIAL AUTHORIZATION

Department of the Environment

Canadian Environmental Protection Act, 1999

Off-Road Compression-Ignition Engine Emission Regulations

Identification Number _____________________

Pursuant to the Canadian Environmental Protection Act, 1999, I, __________________________________ the Minister of the Environment, hereby authorize (name and address) to use and apply at its premises located at (location) the national emissions mark and this identification number on the following gross power categories of prescribed engines, provided that the engines conform to all applicable emission standards: (list gross power categories).

This authorization expires on (date).

Issued on (date).

_____________________

for the Minister of the Environment

[7-1-o]

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

Footnote b
S.C. 1999, c. 33

Footnote 1
Schedule 1 of CEPA 1999 includes the following air pollutants, which are typically emitted from engines and vehicles: acetaldehyde, acrolein, benzene, 1, 3-butadiene, formaldehyde, nitric oxide, nitrogen dioxide, respirable particulate matter with a diameter of less than 10 µm, sulphur dioxide, and volatile organic compounds that participate in atmospheric photochemical reactions.

Footnote 2
National Pollutant Release Inventory, available at www.ec.gc.ca/inrp-npri/default.asp?lang=En&n=4A577BB9-1.

Footnote 3
Schedule 1 of CEPA 1999 includes the following air pollutants, which are typically emitted from engines and vehicles: acetaldehyde; acrolein; benzene; 1, 3-butadiene; formaldehyde; nitric oxide; nitrogen dioxide; respirable particulate matter with a diameter of less than 10 µm; sulphur dioxide; and volatile organic compounds that participate in atmospheric photochemical reactions.

Footnote 4
Off-Road Compression-Ignition Engine Emission Regulations, Canada Gazette, Part II, February 23, 2005, SOR/2005-32, available at www.ec.gc.ca/lcpe-cepa/eng/regulations/detailReg.cfm?intReg=88.

Footnote 5
Notice of intent to develop and implement regulations and other measures to reduce air emissions, Canada Gazette, Part I, October 21, 2006, Vol. 140, No. 42, at page 3351, available at www.gazette.gc.ca/rp-pr/p1/2006/2006-10-21/pdf/g1-14042.pdf.

Footnote 6
Regulatory Framework for Air Emissions, April 26, 2007, available at www.ecoaction.gc.ca/news-nouvelles/20070426-1-eng.cfm.

Footnote 7
It should be noted that NMHC consists of NOx and VOCs.

Footnote 8
The NONROAD model and supporting documentation is available at www.epa.gov/otaq/nonrdmdl.htm.

Footnote 9
Environment Canada, Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations, 2010.

Footnote 10
Marbek Resource Consultants and RWDI Inc., Evaluation of Total Cost of Air Pollution Due to Transportation in Canada (Transport Canada, 2007).

Footnote 11
John Lawson, Technical Report on Analysis of Proposed Regulation of Passenger Automobile and Light Truck Greenhouse Gas Emissions (Environment Canada, 2010).

Footnote 12
Final Regulatory Analysis: Control of Emissions from Nonroad Diesel Engines, Executive Summary, available at www.epa.gov/nonroad-diesel/2004fr/420r04007a.pdf.

Footnote 13
Environment Canada’s Compliance and Enforcement Policy is available at www.ec.gc.ca/alef-ewe/default.asp?lang=En&n=AF0C5063-1.

Footnote 14
SOR/2005-32