Canada Gazette, Part I, Volume 153, Number 20: Regulations Amending the Explosives Regulations, 2013 (Restricted Components)

May 18, 2019

Statutory authority
Explosives Act

Sponsoring department
Department of Natural Resources

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: Part 20 of the Explosives Regulations, 2013 (the Regulations) restricts the acquisition and sale of 10 explosives precursor chemicals and sets out the requirements for their sale and storage. While the Regulations have increased controls on the use of these chemicals by members of the general public and improved the reporting of suspicious transactions, analysis of environmental and international terrorism, as well as Islamist and far right extremism shows new and evolving threats. Explosives precursor chemicals continue to be misused for the manufacture of homemade explosives (HMEs), which threatens the safety and security of Canadians.

Description: The proposed amendments would add four explosives precursor chemicals (calcium ammonium nitrate, hexamine, acetone, and aluminium powder) to the current regulated list of explosives precursor chemicals.

Rationale: There is a need to strengthen Canada’s security controls in order to address new threats from HMEs used by criminals in recent years. Based on consultations and agreement with industry stakeholders and law enforcement partners, the current list of 10 explosives precursor chemicals would be updated to 14 and include calcium ammonium nitrate, hexamine, acetone, and aluminium powder. The proposal is striving for an optimal balance between additional regulatory burden and cost to industry and the economy versus appropriate safety and security controls. Sensible upgrades to the federal government’s control regime would be applied, with layered controls based on level of risk. Costs and impact on small businesses were taken into consideration and the proposed requirements minimize additional burden as much as possible.

Issues

Although it is impossible to completely eliminate the threat from HMEs or improvised explosive devices (IEDs), the Government of Canada has a vital role to play where access to explosives precursor chemicals is concerned. Of importance are the chemicals used to make HMEs, which are referred to as explosives precursor chemicals (also known as “restricted components” for those chemicals that are subject to the Regulations). Two key threats to public safety and security have increased: (1) the risk of terrorists or criminals using explosives for an attack within Canada or for committing a crime, and (2) the danger that Canadian-sourced bomb materials will be used in an attack elsewhere, particularly in the United States. Given the recent rise in large-scale attacks involving HMEs among Canada’s allies, government action is needed to address these threats before events occur, and to help with terrorist and crime prevention.

Canada’s security measures and control systems on explosives precursor chemicals have fallen behind those of allied countries, and federal regulatory controls are not up to date to reflect the risks of recent bomb attacks using new chemical formulas. The Royal Canadian Mounted Police (RCMP) and the Canadian Security Intelligence Service (CSIS) have publicly stated that they are investigating a number of terrorist cells within Canada. Their efforts to thwart such attacks have been impressive to date, but additional measures are required in partner programs such as the Explosives Safety and Security Branch (ESSB) of Natural Resources Canada (NRCan) to support continued joint efforts to enhance the safety and security of Canadians.

Background

The Minister of Natural Resources is responsible for the administration of the Explosives Act (the Act), which regulates the manufacture, testing, acquisition, possession, sale, storage, transportation, importation and exportation of explosives and the use of fireworks. The main objective of the Act is to ensure public safety and to strengthen national security. As part of this ministerial mandate, the Regulations made under this Act were fully reviewed in recent years to modernize them as well as to introduce new security-related regulatory provisions mandated by the Public Safety Act, 2002. The modernization expanded the scope of the Explosives Act and other legislation that also included a national security mandate post-9/11. This resulted in the adoption of the Explosives Regulations, 2013 (the Regulations), which came into force on February 1, 2014.

Part 20 of the Regulations restricts the acquisition and sale of 10 explosives precursor chemicals and sets out the requirements for their acquisition, sale and storage.

As technologies evolve, there is an ongoing need to adapt the Regulations to ensure Canada’s competitiveness while addressing national security issues. In order to enhance the Government of Canada’s capacity to support public safety and national security, Budget 2017 provided $8.7M over five years to further strengthen security controls on explosives precursor chemicals that can be used to make HMEs.

Objective

The objective of the proposed amendments is to strengthen NRCan’s security regime by updating the current list of 10 explosives precursor chemicals to include 4 additional explosives precursor chemicals of concern and implement regulatory measures on those 4 explosives precursor chemicals.

Description

The proposed amendments would update the current list of restricted components from 10 to 14 explosives precursor chemicals subject to regulation by adding the following to the list: calcium ammonium nitrate; hexamine, UN number 1328; acetone, UN number 1090; and aluminium powder, UN number 1309 and UN number 1396, in dry form and with a particle size of less than 200 μm.

Regulatory development

Consultations

Canada’s $47-billion chemical industry operates in every province and territory, with key clusters in Ontario, Alberta and Quebec. The chemical supply chain is extensive and complex, and includes manufacturers, distributors and retailers of explosives precursor chemicals. There are approximately 1 900 retailers and distributors that sell the four explosives precursor chemicals in Canada and that may be impacted by the proposed changes. They are represented by Fertilizer Canada, Responsible Distribution Canada, and the Canadian Paint and Coatings Association. These stakeholders were identified as the Government’s key partners in enhancing the explosives safety and security of the proposed four explosives precursor chemicals.

The ESSB undertook a series of ongoing consultations from October 2017 to December 2018. These consultations were used to shape the options under consideration and to collect information about possible impacts. All major industry and stakeholder groups were extensively consulted and involved throughout the development of the policy content that underpins the proposed Regulations. The majority felt that the current controls on the production, distribution, and sale of explosives precursor chemicals have entailed relatively low costs but ensured only the partial safety and security of the general public. They indicated that the availability on the market of certain non-regulated but potentially dangerous chemicals poses security concerns.

As a result of the consultations, there is concurrence among key stakeholder groups that includes, but is not limited to, Fertilizer Canada, Responsible Distribution Canada, the Canadian Explosives Association, the Canadian Paint and Coatings Association, the Canadian Consumer Specialty Products Association and Amazon.

Consultations with major stakeholders were positive and welcomed. It was made very clear that NRCan is committed to respecting industry’s commerce activity while being committed to the public safety concerns and objectives that are associated with explosives precursor chemicals and HMEs. Industry had initial concerns regarding the requirements for hexamine, acetone and aluminum powder chemicals, which are commonly used by the general public. Concern was raised that it would be impossible to follow all the requirements for small-volume purchases, such as a small bottle of nail polish remover (acetone) or products made with acetone, hexamine, or aluminium powder. NRCan ensured industry stakeholders that the majority of requirements are for thresholds of over 3 L for acetone, 1 kg for hexamine, and 1 kg for aluminium powder and that only substances of acetone, hexamine, and aluminium powder would be regulated and not other products made with those chemicals. Industry confirmed that this was acceptable.

Modern treaty obligations and Indigenous engagement and consultations

New requirements are mostly targeted towards the retailer supply chain and the chemical industry supply chain and are intended for the safety and security of all Canadians. The addition of four chemicals of concern and the implementation of security regulatory requirements would not result in impacts on asserted or established Aboriginal and treaty rights. NRCan has not learned of any impacts on Indigenous people resulting from the regulation of nine explosives precursor chemicals in 2008.

Instrument choice

The ESSB explored three options that could possibly meet the objectives for the adoption of strengthened security measures for explosives precursor chemicals:

Option 1 — Baseline

The existing restrictions and controls have proven to be insufficient to prevent the illicit manufacture of homemade explosives using the four proposed explosives precursor chemicals, as these chemicals are inexpensive, readily available and easily converted into powerful explosives. There is a number of security deficits along the supply chain, and not all vendors are aware of the appropriate and necessary safety and security controls. The regulations lack provisions that facilitate compliance verification and enforcement for the four proposed explosives precursor chemicals.

Option 2 — Non-regulatory

This entails reinforcing the application of the Regulations with non-legislative measures through the use of guidelines, continued outreach and communication initiatives. This has been a consistent approach of the ESSB since the coming into force of the Restricted Components Regulations (2008), and while it has met some success, there remains identified vulnerabilities in the capacity of industry to contribute to the management of security risks associated with the legitimate and illegal access of explosives precursor chemicals. Many chemical industry groups abide by well-known codes of practice, but these refer mostly to the safety of the chemical itself and many security aspects are missing from those codes. The benefits of compliance verifications would not be realized.

Option 3 — Regulatory

Identified vulnerabilities justify some form of corrective intervention to increase the controls to ensure the effectiveness and efficiency of the restrictions via enforcement by the authorities and compliance by the sellers. Corrective action resulting from compliance verification by NRCan would accommodate the interests of registered sellers and the general public through a focus on legitimate economic activities, the safety and security of the public, and national security. This option would address the identified problems and contribute to the specific objectives of a strengthened regulatory framework while preserving the spirit and characteristics of the Regulations themselves.

Regulatory analysis

Sector profile

Explosives precursor chemicals are an important component of key economic and day-to-day activities.

Calcium ammonium nitrate is utilized as a nitrogen fertilizer. Sale in Canada is conducted through an established network of manufacturers, wholesalers / agricultural distributors, and retail distributors.

Hexamine is the primary ingredient in camping stove fuel tablets, which are available at recreational and camping supply stores, as well as from online retailers. In addition, various industrial sectors utilize hexamine and purchase it from chemical distributors and suppliers.

Acetone is utilized as an industrial solvent, paint thinner/cleaner and nail polish remover. Sales of acetone in Canada are mainly through chemical distributors and suppliers, hardware stores, automotive supply stores, pharmacies, beauty supply stores, paint supply stores, and online retailers.

Aluminium powder is used in the manufacture of silver metallic pigments for automotive coatings, electronics and packaging, lightweight concrete, and is utilized as an alloying agent, fuel in explosives, pyrotechnics and propellants. Chemical distributors and suppliers sell aluminium powder. Aluminium powder is also utilized by sculptors and consumers can purchase aluminium from sculpture supply outlets and marine supply stores.

It is expected that approximately 1 900 retailers and distributors that sell these four explosives precursor chemicals in Canada would be impacted by this proposal. The table below provides the estimated number of businesses currently engaged in the selling of the chemicals being considered by this proposal.

Number of businesses

Stakeholder group

Number of small businesses footnote 1

Number of medium and large businesses

Total by group

Calcium ammonium nitrate sellers

100

100

200

Hexamine sellers

100

500

600

Acetone sellers

100

900

1 000

Aluminium powder sellers

95

5

100

Total by size

395

1 505

Grand total: 1 900

Benefits and costs

A cost-benefit analysis has been conducted to assess the incremental impacts of the proposed amendments. Due to limited data and the sensitive nature of the proposed amendments as they relate to public security, the benefits are described qualitatively.

A. Cost-benefit analysis summary

The present value of total costs from the proposed amendments is estimated to be about $51M. Sellers of calcium ammonium nitrate are expected to be the most impacted, with average annualized costs of about $22.3K per stakeholder, compared to $1.8K for sellers of hexamine, $1.6K for sellers of acetone, and $1.5K for sellers of aluminium powder.

The incremental costs have been quantified and monetized in accordance with the Treasury Board of Canada Secretariat’s Guidance on Cost-Benefit Analysis. The monetized costs have been expressed in 2018 Canadian dollars. The analytical period is 2019–2028. A real discount rate of 7% is used to estimate the present value of costs. Monetary values are discounted to the base year of 2019.

Cost-benefit statement (in millions $CAN 2018)
 

2019
(implementation year)

2028

Total
(present value)

Annualized average

Annualized average per stakeholder

Quantified costs (in $CAN, 2018 constant dollars)

Sellers of calcium ammonium nitrate

$6.9M

$3.9M

$31.3M

$4.4M

$22.3K

Sellers of hexamine

$2.1M

0.9M

$7.6M

$1.1M

$1.8K

Sellers of acetone

$3.2M

$1.2M

$10.9M

$1.6M

$1.6K

Sellers of aluminium powder

$0.3M

$0.1M

$1.1M

$151K

$1.5K

Total costs

$12.6M

$6.1M

$51M

$7.2M

 

Qualitative benefits

Improved public security

Canadians would be safer from the risk of misuse of these chemicals by the limited illegitimate access to the four explosives precursor chemicals.

Increased regulatory alignment

Increased regulatory alignment with Canada’s major trading partners, including the United States, could prevent adverse economic consequences such as weakened consumer confidence and border delays if Canadian-sourced bomb material is used abroad.

Note: Costs have been estimated for the 2019–2028 and are discounted to base year 2019 with a discount rate of 7%. Figures may not add up to totals due to rounding.

Consumers of the four proposed restricted components might see a slight increase in the cost of the chemicals. This would be a result of business having to recuperate the additional cost and passing the cost onto consumers. This is predicted to be fairly low for the typical consumer due to the small initial and annual costs for sellers of hexamine, acetone, and aluminium powder.

Descriptions of costs and benefits, including underlying assumptions, are provided in sections B and C.

B. Incremental costs

The incremental costs have been estimated for the compliance activities that stakeholders are expected to undertake in order to comply with the proposed amendments. The assumptions adopted to estimate the costs for each compliance activity are presented in this section.

(1) Locking up of restricted components and posting of signs

It is expected to cost $15,000 for each seller of calcium ammonium nitrate to install fences, lights, and signs at each entrance of locations where the component is stored. This cost includes all material and labour. Costs to each seller of hexamine, acetone, and aluminium powder are expected to be about $2,000 for the installation of glass window covers or cabinets as well as signs. It is also assumed that the share of businesses that would assume these costs is 100% for all stakeholder groups. This cost would be assumed once, in the implementation year.

(2) Weekly inspection (including record keeping)

All stakeholder groups are expected to have a supervisor-level staff spend about 30 minutes each week, at a wage rate of about $50 per hour including overhead, to conduct an inspection of restricted components and produce a record of the inspection. It is assumed that 100% of calcium ammonium nitrate and hexamine sellers would be impacted by this requirement. It is assumed that about 80% of sellers of acetone and aluminium powder would be impacted. This cost would be assumed 52 times each year.

(3) Application to enroll and keeping information up-to-date (administrative burden)

All stakeholder groups are expected to have an administrative officer spend about 30 minutes each year, at a wage rate of about $25 per hour including overhead, to complete an application form and send it to the Chief Inspector of Explosives of Natural Resources Canada and provide a written notice of any change to the information provided if any change was made. It is assumed that the proportion of impacted businesses would be 100% for sellers of calcium ammonium nitrate and hexamine, 20% for acetone, and 50% for aluminium powder.

(4) Identification and record of sale

Sellers of all components are expected to have retail vendors spend about 10 minutes, at a wage rate of about $20 per hour including overhead, to document the identity of buyers and create a record for each sale. It is assumed that 100% of calcium ammonium nitrate sellers would be impacted and that each business sells about 300 units every year, while 25% of sellers of hexamine, acetone, and aluminium powder would be impacted, each of which are selling about 50 units every year.

(5) Shipping controls on vehicles and trains

Sellers of calcium ammonium nitrate are expected to spend about two hours of shippers’ time for each shipment, at a wage rate of about $30 per hour, to lock or seal components with a security cable after the shipment is loaded onto a vehicle, ensure that the component is attended when necessary, and inspect all locks and seals at each stop and at the destination. When the component is shipped by rail, shippers must ensure that each access point on the rail car containing the component is locked or sealed and ensure a daily tracking of shipments until the delivery occurs. Each seller of calcium ammonium nitrate is expected to make about 250 shipments every year.

(6) Information technology system upgrades

Sellers of calcium ammonium nitrate are expected to spend about two hours of time for an information technology (IT) specialist to upgrade computer systems each year to ensure that information is managed according to the requirements, at a wage rate of about $42 per hour including overhead. It is assumed that 100% of sellers would be impacted.

(7) Security and control plans

Sellers of calcium ammonium nitrate are expected to have a supervisor-level staff spend about five hours to prepare a security plan, at a wage rate of about $30 per hour including overhead, to produce emergency procedures to be followed in response to risk events, descriptions of measures to be taken to control access to the component and to sales records, descriptions of the stock management system to be implemented and measures to be taken when the selling of components is refused. This activity would be conducted by 100% of sellers, and once, in the year of implementation.

(8) Audit and annual inventory (administrative burden)

Sellers of calcium ammonium nitrate are expected to have a manager spend about two hours every year, at a wage rate of about $50 per hour including overhead, to submit an inventory to the Chief Inspector of Explosives to provide information related to the storage and selling of the component as a means to demonstrate compliance with the proposed amendments. It is assumed that 100% of sellers of calcium ammonium nitrate would be impacted.

A breakdown of total annualized costs by stakeholder group and by compliance activity is presented in the table below.

Total annualized costs by stakeholder group and compliance activity ($CAN 2018)
 

Sellers of calcium ammonium nitrate

Sellers of hexamine

Sellers of acetone

Sellers of aluminium powder

Locking up of restricted components and posting of signs

$427,133

$170,853

$284,755

$28,476

Weekly inspection

$293,554

$880,662

$1,174,216

$117,422

Application to enroll and keeping information up-to-date

$2,704

$6,813

$2,271

$568

Identification and record of sale

$232,667

$29,067

$96,923

$4,844

Shipping controls on vehicles and trains

$3,430,546

Not applicable

Not applicable

Not applicable

IT system upgrades

$37,250

Not applicable

Not applicable

Not applicable

Security and control plans

$4,791

Not applicable

Not applicable

Not applicable

Audit and annual inventory

$21,840

Not applicable

Not applicable

Not applicable

Total

$4,450,484

$1,087,396

$1,558,165

$151,309

Notes:
(1) implementation costs are assumed once (in 2019) while ongoing costs are assumed every year over the 2019–2028 period.
(2) Ongoing costs in this table are only showed for one year for illustrative purposes.

Confirmation of assumptions and estimates was sought as part of the consultation process. In order to determine costs that would be assumed by stakeholders, including small businesses, various associations were consulted. Cost estimates were obtained from the Fertilizer Canada association and were incorporated into the calculations of costs.

Some security and administrative measures are already in place by distributors and sellers (such as stock management, employee list, verification of quantity received) and only require formalization of existing systems. Therefore, these costs were not included in the overall analysis.

C. Incremental benefits

Benefits are described qualitatively due to the sensitive nature of the information on terrorist activity reported to the RCMP and the limited data available in the public domain.

(1) Improved public security (benefit to Canadians)

With the terrorism events that have occurred within the last decade, there is a strong general public expectation that Government will take all reasonable steps to ensure the safety and security of its citizens while protecting their economic well-being. The proposed Regulations would have a positive impact on Canadian’s well-being through security measures that would minimize illegitimate access to explosives precursor chemicals while not impeding legitimate commercial supply chain activities. The proposed Regulations would also result in increased industry awareness about the four additional chemicals and ensure compliance verification activities of sellers and distributors of the explosives precursor chemicals. As a result, Canadians would be safer from the risk of misuse of these chemicals and it would be more difficult for criminals or terrorists to acquire these chemicals.

Security has become a much greater concern since September 11, 2001. It is now recognized that there are serious issues of security from homegrown terrorists, such as the incident in Strathroy, Ontario (2016), the British Columbia legislature bomb plot (2015), the VIA Rail bombing plot at Niagara Falls (2013), and the “Toronto 18” (attacks on key Ontario landmarks in 2006 thwarted).

The Government of Canada responded by implementing the Restricted Components Regulations in 2008, which regulated nine explosives precursor chemicals; and further updating them in 2013 when the restricted components provisions were incorporated into the Explosives Regulations, 2013, which added a mixture of two of the chemicals and updated concentration levels to better control explosives precursor chemicals used in the making of HMEs. The overall objectives of the modifications remain relevant to the current needs due to the continued terrorist/criminal threat and because they have been effective overall in contributing to limiting the availability of explosives precursor chemicals to criminals and terrorists. However, new regulatory requirements on four additional chemicals are necessary to further increase protection of public by reducing the risks of terrorist incidents using these four chemicals.

As part of the overall effort to address crime prevention in Canada, the ESSB’s controls on explosives precursor chemicals are playing a role in ensuring that the number of occurrences of illegal acquisitions of explosives precursor chemicals are minimized. Strengthened access controls to explosives precursor chemicals in Canada would help ensure that criminals and terrorists would encounter efficient barriers that hinder their plans to proceed with attacks with HMEs, or that they would be more easily detected.

The ESSB actively cooperates with intelligence and law-enforcement agencies in early detection efforts in order to prevent occurrences from translating into tragic events. Hexamine was used in Ontario by a person who pledged allegiance to ISIS for making an HME with the intent of carrying out an attack in Ontario. Acetone is an ingredient required for making a triacetone triperoxide (TATP) explosive that is commonly used in terrorist attacks. Since regulating 10 explosives precursor chemicals beginning 2008, there were a number of instances where suspicious transactions were reported to law-enforcement agencies.

(2) Regulatory alignment with major trading partners (benefit to Canadians and the economy)

The long-term benefits of this proposal are increased alignment among Canada, the United States and allied countries concerning controls and policies related to explosives precursor chemicals. The potential costs of not proceeding could be much greater than the real cost of this proposal. The trade, political, and economic impacts of Canadian-sourced bomb material could be many degrees of magnitude greater than the costs. The economic consequences could include weakened consumer confidence, reduced consumption and border delays (increased security).

Small business lens

The new requirements are directed predominantly at larger organizations. The ESSB is proposing a number of exemptions for sellers of small volumes in order to minimize the burden on small businesses

In addition, companies that acquire hexamine, acetone, or aluminium powder to manufacture other products for sale (product sellers) would not be regulated, and holders of an authorization certificate for acetone, issued under the Precursor Control Regulations of Health Canada, would not be regulated. Nevertheless, the small business lens would apply to businesses that may not yet have all the proposed security measures in place.

A coming-into-force grace period of 90 days would be provided for calcium ammonium nitrate, hexamine, acetone, and aluminium powder sellers to comply with the new requirements after the Regulations are published in the Canada Gazette, Part II.

Over the 2019–2028 period, a total of 395 small businesses across all stakeholder groups are expected to be impacted by the proposed amendments. The total annualized value of costs to small businesses is estimated to be about $2.7M, or about $7K per small business. The total present value of costs is estimated to be about $19M, or about $48K per small business. As shown in the small business lens summary table below, sellers of calcium ammonium nitrate are expected to be impacted to a greater extent than the other stakeholder groups.

Small business lens summary ($CAN 2018)

Small Business Lens Summary

Number of small businesses impacted

395

Number of years

10

Base year for costing

2018

Annualized

Total Present
Value

Compliance costs

$2,691,861

$18,906,506

Administrative costs

$14,174

$99,552

Total costs

$2,706,035

$19,006,058

Cost per small business

$6,851

$48,117

“One-for-One” Rule

The “One-for-One” Rule applies because the proposed amendments would impose incremental administrative costs to businesses and are therefore considered an “IN” under the “One-for-One” Rule.

The regulatory proposal would result in an increase of administrative regulatory burden. The estimated annualized value is $19,428, which is equivalent to about $10 per business. The cost increase is a result of new regulatory administrative burden requirements such as an applicant having to enroll and keep application information up-to-date. For sellers of calcium ammonium nitrate, additional administrative burden requirements include preparing and keeping security and control plans up to date and submitting an annual inventory. The monetized costs presented in this section have been expressed in 2012 Canadian dollars (2012 CAN$).

The ESSB is proposing several exemptions to minimize the level of administrative burden when selling hexamine, acetone, and aluminium powder

In addition, companies that acquire hexamine, acetone, or aluminium powder to manufacture other products for sale (product sellers) would not be regulated, and holders of an authorization certificate for acetone, issued under the Precursor Control Regulations of Health Canada, would not be regulated.

Regulatory cooperation and alignment

This amendment would address current security weaknesses to better align Canada’s explosives control frameworks against international best practices, including those of the United States. It would address the relative ease of access to some explosives precursor chemicals in Canada (in comparison to allied countries). The current Canadian explosives precursor chemicals program regulates 10 of the highest risk chemicals and focuses on all vendors of these chemicals. The United States controls 60 chemicals of concern and focuses on manufacturers. The European Union has 14 chemicals on its list of concern chemicals (some are regulated and some have controls and requirements for users). Canada has a different regulatory program and approach than the United States and the European Union, but the ESSB is aiming to harmonize and better align the explosives precursor chemicals that would be controlled.

There is no formal commitment under the Canada–United States Regulatory Cooperation Council for the regulatory alignment with the United States for explosives precursor chemicals, but in keeping with the spirit of the Council, the ESSB is working to align and coordinate regulatory development and implementation to foster and strengthen regulatory cooperation between both countries wherever possible. The proposal’s objective is to align more closely with international practices and those of allied countries.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified for this proposal.

Rationale

The ESSB has engaged with its security and industry partners to seek feedback and comments on the update of the currently regulated list of explosives precursor chemicals (known as “restricted components” in the Regulations). The proposed update is based on threat and risk, substances used in recent attacks, and scientific research, and is aimed to ensure that Canada’s explosives control framework is effective and harmonized as much as possible with Canada’s allies. This would be achieved through new regulatory measures. Through positive consultations and agreement with industry stakeholders and law enforcement partners, detailed descriptions of proposed requirements and exemptions were developed.

Calcium ammonium nitrate

The intent is to regulate a fertilizer containing, as its essential ingredients only, ammonium nitrate and calcium carbonate (for instance limestone) and/or magnesium carbonate and calcium carbonate (for instance dolomite), prepared as a homogeneous prill or granule, which

All requirements for calcium ammonium nitrate (CAN) would be identical to the current requirements in the Regulations for ammonium nitrate. Sellers of CAN (component sellers) and manufacturers that acquire CAN to make other products for sale (product sellers) would have to enroll with NRCan and follow the applicable requirements of Part 20.

The requirements for the sellers would be to submit an application and provide the Chief Inspector of Explosives with a written notice of any change to the information provided in an application within 10 days after the date of the change, prepare a security plan and keep it updated every 12 months, notify police of all locations where CAN is to be stored or sold, lock up CAN when not attended, prepare and implement a key control plan, have main entrances to a building in which CAN is stored lit at all times outside business hours, have a sign that warns against unauthorized access posted on the outside at each entrance to each location where CAN is stored, limit access to CAN to people authorized by the component seller or product seller, have a list of the employees who work at each location where CAN is stored or sold kept at the location, verify the quantity of CAN when it is received, record any sign of tampering, report any signs of tampering or attempted theft and any loss that is not attributable to normal operations, have a stock management system in place to account for all CAN, perform an annual inventory audit of CAN, carry out weekly inspections of CAN and record the result, submit an annual inventory, inform the local police force if any theft or attempted theft of or tampering with CAN is discovered and submit a written report of the incident, refuse a sale of CAN in suspicious cases and report when a sale is refused, verify identification for each sale and keep sale records for quantities above 1 kg, maintain security provisions during transport, and provide a written notice to the end user about securing product, reporting theft to police, and prohibiting resale.

Hexamine UN number 1328

The intent is to regulate the sale of hexamine when it is classified as UN number 1328. Sellers of hexamine (component sellers) would have to enroll with NRCan and follow the applicable requirements of Part 20. All requirements would be identical to the current requirements in the Regulations for the other nine restricted components, with the exception that companies that acquire hexamine to manufacture other products for sale (product sellers) would not be regulated.

The requirements for sellers of hexamine would be to submit an application and provide the Chief Inspector of Explosives with a written notice of any change to the information provided in an application within 10 days after the date of the change, lock up hexamine when not attended, have a sign that warns against unauthorized access posted on the outside at each entrance to each location where hexamine is stored, limit access to hexamine to people authorized by the seller, have a list of the employees who work at each location where hexamine is stored or sold kept at the location, have a stock management system in place to account for all hexamine, carry out weekly inspections of the hexamine and record the result, report any signs of tampering or attempted theft, refuse the sale of hexamine if the seller has reasonable grounds to suspect that the hexamine will be used for a criminal purpose and report when a sale is refused, verify identification for each sale, and keep sale records for quantities above 1 kg.

Acetone UN number 1090

The intent is to regulate the sale of acetone when it is classified as UN number 1090. Sellers of acetone (component sellers) would have to enroll with NRCan and follow the applicable requirements of Part 20. All requirements would be identical to the current requirements in the Regulations for the other nine restricted components with the following exceptions:

The requirements for sellers of acetone would be to submit an application and provide the Chief Inspector of Explosives with a written notice of any change to the information provided in an application within 10 days after the date of the change, lock up acetone when not attended (only applies to a quantity of more than 3 L in a container), have a sign that warns against unauthorized access posted on the outside at each entrance to each location where acetone is stored (only applies to a quantity of more than 3 L in a container), limit access of acetone to people authorized by the seller (only applies to a quantity of more than 3 L in a container), have a list of the employees who work at each location where acetone is stored or sold kept at the location (only applies to a quantity of more than 3 L in a container), have a stock management system in place to account for all acetone (only applies to a quantity of more than 3 L in a container), carry out weekly inspections of the acetone and record the result (only applies to a quantity of more than 3 L in a container), report any signs of tampering or attempted theft, refuse the sale of acetone if the seller has reasonable grounds to suspect that the acetone will be used for a criminal purpose and report when a sale is refused, verify identification for each sale and keep sale records (only applies if the quantity sold is more than 3 L).

Aluminium powder, UN number 1309 and UN number 1396, in dry form and with a particle size of less than 200 μm

The intent is to regulate the sale of aluminium powder when it is classified as UN number 1309 or UN number 1396 and with a particle size of less than 200 μm. Sellers of aluminium powder (components sellers) would have to enroll with NRCan and follow the applicable requirements of Part 20.

All requirements would be identical to the current requirements in the Regulations for the other nine restricted components with the following exceptions:

The requirements for sellers of aluminium powder would be to submit an application and provide the Chief Inspector of Explosives with a written notice of any change to the information provided in an application within 10 days after the date of the change, lock up aluminium powder when not attended (only applies to a quantity of more than 1 kg in a container), have a sign that warns against unauthorized access posted on the outside at each entrance to each location where aluminium powder is stored (only applies to a quantity of more than 1 kg in a container), limit access to aluminium powder to people authorized by the seller (only applies to a quantity of more than 1 kg in a container), have a list of the employees who work at each location where aluminium powder is stored or sold kept at the location (only applies to a quantity of more than 1 kg in a container), have a stock management system in place to account for all aluminium powder (only applies to a quantity of more than 1 kg in a container), carry out weekly inspections of the aluminium powder and record the result (only applies to a quantity of more than 1 kg in a container), report any signs of tampering or attempted theft, refuse the sale of aluminium powder if the seller has reasonable grounds to suspect that the aluminium powder will be used for a criminal purpose and report when a sale is refused, verify identification for each sale and keep sale records (only applies if the quantity sold is more than 1 kg).

Implementation, compliance and enforcement, and service standards

Implementation

A coming-into-force grace period of 90 days would be provided for calcium ammonium nitrate, hexamine, acetone, and aluminium powder sellers to comply with the new requirements after the Regulations are published in the Canada Gazette, Part II. To assist stakeholders during the transition, the ESSB has developed a webpage to provide industry stakeholders and partners with a single window access to the Regulations, the changes and FAQs. This site will provide guideline documents, forms and information for compliance with the Regulations. Furthermore, continued engagement with industry stakeholders will be maintained.

Compliance and enforcement

Enforcement of the Regulations will continue to be conducted through education, licensing, inspections and prosecution if necessary. The Chief Inspector of Explosives has the right to suspend a seller’s enrolment where the Act or the Regulations are contravened. The Chief Inspector may cancel a seller’s enrolment in situations where there has been a repeat history of non-compliance with the Act and Regulations or where the seller jeopardizes the security or safety of the public. In both cases, the seller must be notified in writing and be given a reasonable opportunity to give reasons as to why suspension or cancellation is unwarranted. In a case where the Chief Inspector chooses to suspend or cancel a seller’s enrolment, the seller may submit a request to the Minister within 15 days to review that decision. In the absence of valid enrolment, the seller cannot sell and, if found to be in violation, may be charged under the Act.

The newly formed Explosives Precursors Unit (Budget 2017 investment) will expand the current regulatory work by focusing on increased inspections, direct engagement with front-line distributors and retailers, and increased regulatory compliance and verification. The ESSB continually monitors compliance rates with its regulations as well as accident and incident rates in Canada. The impact of the changes in the Regulations will be assessed by trends in accident and incident rates, and stakeholder compliance rates.

Service standards

The Regulations will be measured and evaluated through the ESSB regular performance measurement framework. In addition, for improved service predictability and performance for high-volume regulatory authorizations, the ESSB develops and publicly releases service standards that address the timeliness of authorizations on an annual basis. Processing of the application and decision to issue are made within 30 days of receiving an application that contains all necessary information. The target for achieving this standard is set at 95% under normal circumstances.

Contact

Jean-Luc Arpin
Director and Chief Inspector of Explosives
Explosives Safety and Security Branch
Lands and Minerals Sector
Natural Resources Canada
Telephone: 613‑948‑5200
Email: jean-luc.arpin@canada.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council, pursuant to section 5 footnote a of the Explosives Act footnote b, proposes to make the annexed Regulations Amending the Explosives Regulations, 2013 (Restricted Components).

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Jean-Luc Arpin, Director, Chief Inspector of Explosives, Natural Resources Canada, 580 Booth Street, 10th Floor, Room: D1-2, Ottawa, Ontario K1A 0E4 (tel.: 613‑948‑5200; fax: 613‑948‑5195; email: jean-luc.arpin@canada.ca).

Ottawa, May 9, 2019

Julie Adair
Assistant Clerk of the Privy Council

Regulations Amending the Explosives Regulations, 2013 (Restricted Components)

Amendments

1 (1) Subsection 456(1) of the Explosives Regulations, 2013 footnote 2 is amended by adding the following after paragraph (j):

(2) Section 456 of the Regulations is amended by adding the following after subsection (3):

Exception

(4) The requirements set out in this Part do not apply to a holder of an authorization certificate for acetone issued under section 77 of the Precursor Control Regulations.

2 Section 458 of the Regulations is renumbered as subsection 458(1) and is amended by adding the following:

Exception

(2) The requirements set out in this Part do not apply to a product seller who acquires hexamine, acetone, or aluminium powder for the purpose of manufacturing restricted component products for sale.

3 (1) Subsection 460(1) of the Regulations is replaced by the following:

Application — component seller

460 (1) An applicant for inclusion on the component sellers list must complete, sign and send to the Chief Inspector of Explosives the application form provided by the Department of Natural Resources.

Application — paragraphs 456(1)(a) to (l)

(1.1) An application relating to a restricted component referred to in one of paragraphs 456(1)(a) to (l) must include the following information:

Application — acetone and aluminium powder

(1.2) An application relating to acetone or aluminium powder must include the following information:

(2) The portion of subsection 460(2) of the Regulations before paragraph (a) is replaced by the following:

Security plan

(2) If ammonium nitrate or calcium ammonium nitrate is to be sold, the application must also include a declaration that a security plan has been prepared for each location where ammonium nitrate or calcium ammonium nitrate will be stored or sold. The plan must include

4 The portion of subsection 461(2) of the Regulations before paragraph (a) is replaced by the following:

Security plan

(2) If ammonium nitrate or calcium ammonium nitrate is to be stored, the application must include a declaration that a security plan has been prepared for each location where ammonium nitrate or calcium ammonium nitrate will be stored. The plan must include

5 Section 468 of the Regulations is amended by adding the following after subsection (3):

Acetone

(4) In the case of acetone, subsections (1) to (3) only apply to a quantity of more than 3 L in a container.

Aluminium powder

(5) In the case of aluminium powder, subsections (1) to (3) only apply to a quantity of more than 1 kg in a container.

6 Section 469 of the Regulations is renumbered as subsection 469(1) and is amended by adding the following:

Acetone

(2) In the case of acetone, subsection (1) only applies to a quantity of more than 3 L in a container.

Aluminium powder

(3) In the case of aluminium powder, subsection (1) only applies to a quantity of more than 1 kg in a container.

7 Section 470 of the Regulations is amended by adding the following after subsection (2):

Acetone

(3) In the case of acetone, subsections (1) and (2) only apply to a quantity of more than 3 L in a container.

Aluminium powder

(4) In the case of aluminium powder, subsections (1) and (2) only apply to a quantity of more than 1 kg in a container.

8 Section 473 of the Regulations is renumbered as subsection 473(1) and is amended by adding the following:

Acetone

(2) In the case of acetone, subsection (1) only applies if the quantity sold is more than 3 L.

Aluminium powder

(3) In the case of aluminium powder, subsection (1) only applies if the quantity sold is more than 1 kg.

9 Subsection 475(4) of the Regulations is replaced by the following:

Exception

(4) This section does not apply to a sale of the following restricted components if the quantity sold is no more than the quantity set out below:

10 Subsection 481(1) of the Regulations is replaced by the following:

Locked structures

481 (1) Any structure that contains ammonium nitrate or calcium ammonium nitrate and every door, window or other point of access to a building in which ammonium nitrate or calcium ammonium nitrate is stored must be locked when the ammonium nitrate or calcium ammonium nitrate is not *attended.

11 Paragraphs 485(b) to (d) of the Regulations are replaced by the following:

12 Subsection 486(3) of the Regulations is replaced by the following:

Weekly inspections

(3) Weekly inspections of the ammonium nitrate or calcium ammonium nitrate must be carried out. A record of the results of each inspection, including any loss or tampering and the cause of any loss that is not attributable to normal operations, must be kept for two years after the record is made.

13 Paragraph 487(b) of the Regulations is replaced by the following:

14 (1) Paragraph 492(1)(i) of the Regulations is replaced by the following:

(2) Subsection 492(4) of the Regulations is replaced by the following:

Exemption — records

(4) This section does not apply if the quantity of ammonium nitrate or calcium ammonium nitrate sold is 1 kg or less.

15 (1) Paragraph 493(1)(a) of the Regulations is replaced by the following:

(2) Paragraph 493(2)(a) of the Regulations is replaced by the following:

16 Section 494 of the Regulations is replaced by the following:

Notice

494 When ammonium nitrate or calcium ammonium nitrate is sold to a buyer who is not a component seller or product seller, the buyer must be provided with a written notice which states that

17 The Regulations are amended by replacing “ammonium nitrate” with “ammonium nitrate or calcium ammonium nitrate” in the following provisions:

18 The Regulations are amended by replacing “ammonium nitrate” with “ammonium nitrate or calcium ammonium nitrate” in the following provisions:

19 The heading before section 465 of the Regulations is amended by replacing “Ammonium Nitrate” with “Ammonium Nitrate or Calcium Ammonium Nitrate”.

20 The Regulations are amended by replacing “ammonium nitrate” with “ammonium nitrate and calcium ammonium nitrate” in the following provisions:

21 The heading before section 477 of the Regulations is amended by replacing “Ammonium Nitrate” with “Ammonium Nitrate or Calcium Ammonium Nitrate”.

22 The Regulations are amended by replacing “ammonium nitrate” with “ammonium nitrate or calcium ammonium nitrate” in the following provisions:

23 Section 479 of the Regulations is amended by replacing “Ammonium nitrate” with “Ammonium nitrate or calcium ammonium nitrate”.

24 The Regulations are amended by replacing “ammonium nitrate” with “ammonium nitrate or calcium ammonium nitrate” in the following provisions:

25 Paragraph 492(1)(j) of the French version of the Regulations is amended by replacing “nitrate d’ammonium” with “nitrate d’ammonium ou le nitrate d’ammonium et de calcium”.

Coming into Force

26 These Regulations come into force 90 days after the day on which they are registered.