Canada Gazette, Part I, Volume 146, Number 12: Administrative Monetary Penalties (Consumer Products) Regulations

March 24, 2012

Statutory authority

Canada Consumer Product Safety Act

Sponsoring department

Department of Health

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue

The Canada Consumer Product Safety Act (CCPSA) came into force on June 20, 2011. It establishes legislative and regulatory requirements to help protect the public by addressing dangers posed by unsafe consumer products.

The Act also established an administrative monetary penalty (AMP) system for compliance and enforcement of the CCPSA and the associated Regulations. An AMP system is a compliance and enforcement tool that assigns a monetary penalty for contravening certain provisions of the Act. The Minister of Health is now proposing to introduce the Administrative Monetary Penalties (Consumer Products) Regulations (proposed Regulations), which would enable this AMP system.

Objectives

The purpose of the proposed Regulations is to enable the implementation of the AMP system laid out within the CCPSA (see sections 49 to 66). The proposed Regulations would prescribe the time and manner in which the penalty would be calculated, modified, and paid as well as the manner in which certain documents referred to in the proposed Regulations must be provided to an individual, a person (see footnote 1) or the Minister of Health.

Description

The AMP system is a compliance and enforcement tool that assigns a monetary penalty for contravention of certain provisions of the Act. More specifically, under the CCPSA, an AMP may be issued in response to non-compliance with orders made under sections 31 or 32, or orders reviewed under section 35. These orders are written notices that direct a person to take specific actions. Contravention of these orders constitutes either a violation or an offence. Note that proceeding in one manner precludes proceeding in the other.

Therefore, violation of an order made under sections 31 or 32, or reviewed under section 35, is the action that could initiate the AMP system and, in that case, would result in the issuance of a Notice of Violation (NoV) — the document by which the monetary penalty is issued.

Penalty ranges

The penalties within the proposed Regulations would range from $1,000 to $25,000 per violation for which a NoV was issued. In the case of a violation committed by a non-profit organization (or by any other person for non-commercial purposes), the maximum penalty for a violation would be $5,000, and $25,000 in any other case. Furthermore, the violation of an order made under section 31 or section 32 or reviewed under section 35 that is continued on more than one day constitutes a separate violation. Therefore, a NoV could be issued each day until the order is complied with.

The determination of the amount of the penalty would depend on two factors: (i) the CCPSA provision under which the order was issued; and (ii) the person’s past AMP history. Once a penalty has been determined and issued on a NoV, it must be paid within the allotted time-frame stated within the proposed Regulations. Persons who submit payment early (within 15 days of issuance of the NoV) would only have to pay half of the original penalty. This incentive is intended to encourage persons to pay their penalty and end the process quickly. In addition, the CCPSA also allows persons who receive a NoV that has a penalty of $5,000 or more to make a request to enter into a compliance agreement with the Minister of Health. Under compliance agreements, the penalty may be reduced if persons agree to take appropriate steps to ensure compliance with the order to which the violation relates.

Finally, under the CCPSA, there are two conditions under which the NoV may be reviewed, and potentially corrected: (i) the facts surrounding the case indicate that a violation was not committed (i.e. the order was not contravened); or (ii) the calculation of the penalty was not established in accordance with the proposed Regulations. All requests for a review by the Minister of Health would be made in writing and delivered or sent to the address set out in the NoV, according to the proposed Regulations.

Regulatory and non-regulatory options considered

No non-regulatory options are available. These provisions of the AMP system must be implemented by regulation in accordance with the CCPSA.

Benefits and costs

Costs

Annual cost to industry

There are no additional costs to industry for implementing this proposal.

Annual cost to Government

All costs associated with administering the proposed Regulations have already been funded through the Food and Consumer Safety Action Plan.

Annual cost to consumers

Annual consumer costs are not expected to change.

Benefits

While it is impractical to put a monetary amount on the increased compliance that would result from the introduction of this system, this compliance and enforcement tool is expected to assist Health Canada (HC) in promoting compliance with the requirements of the Act, which would in turn benefit the health and safety of Canadians. Furthermore, it is expected that the existence of these proposed Regulations and the manner in which the penalty is calculated would act as a deterrent.

It is anticipated that over the long term, these penalties, coupled with the fact that the Minister may publish information about any contravention of the Act or its regulations, or any violations referred to in section 49, for the purpose of encouraging compliance with this Act and its regulations, would help to prompt persons to comply with the Act and its regulations.

These benefits all culminate to provide a net benefit to Canadians who can expect more efficient and responsive actions to legislative and regulatory non-compliances. The experience of other agencies administering similar AMP systems has demonstrated that this approach is very effective in increasing compliance.

Consultation

Over the course of 2008 to 2010, several consultative efforts took place to engage industry, consumer, and other government stakeholders and determine their views on the then-proposed versions of the CCPSA (Bills C-52, C-6 and C-36). Overall, the reaction to these new legislative efforts, including the proposed AMP provisions, was favourable.

A Web-based consultation for all stakeholders was conducted from August 25, 2010, to November 26, 2010 (www.hc-sc.gc. ca/cps-spc/legislation/consultation/_2010ampr-rsap/index-eng.php), for the purposes of bringing attention to and informing about the proposed Regulations, the maximum/minimum penalties, the methods of accepted payment and the methods of penalty modification. A total of three submissions were received during the comment period. All three respondents supported the proposed Regulations and also provided suggestions on ways to improve the proposal.

As described in greater detail below, HC received comments regarding the following elements associated with this proposal:

  • Gravity factors, and their respective gravity point values;
  • Internal deadlines surrounding the AMP system;
  • Measurement of days;
  • Delivery of AMP;
  • Additional mechanisms for unpaid debts; and
  • Different penalty ranges for non-profit organizations.

Gravity factors

Health Canada received three comments regarding the gravity factors, and their respective gravity point values. A “gravity factor” is a numerical value assigned to a set of criteria that the proposed Regulations would use to determine the amount of a penalty (see “Penalty ranges” above for more information). Each comment suggested various ways of modifying the existing criteria to capture different situations. All comments were taken into consideration and led to the development of the proposed two factors that influence the penalty amount: (i) the CCPSA provision under which the order was issued; and (ii) the person’s past AMP history (see “Penalty ranges” section for more information).

Internal deadlines

Comments were provided concerning HC’s internal deadlines and processes to facilitate and manage the AMP system. These suggestions will be addressed through HC’s internal service standards and protocols since they do not impact the proposed Regulations themselves.

Measurement of days

Health Canada received one comment concerning the measurement of days when determining deadlines under the proposed Regulations. This comment will be addressed and further clarified in separate guidance.

Delivery of AMP

A suggestion was made to add electronic modes, such as facsimile and email, to the delivery methods of the NoV and other documents provided for in the proposed Regulations. These modes of delivery are not included in the proposal as they are not considered as secure or reliable as hand-delivery, conventional post and courier services.

Comments were provided regarding the duration of the issuance of successive NoVs for the same violation. For example, respondents wondered whether it would be appropriate to issue a NoV every day for an extended period without addressing the hazard posed to Canadians, should a non-compliant product still be available on store shelves. Section 63 of the CCPSA addresses the comment of issuing new NoVs on subsequent days stating that

63. A violation that is continued on more than one day constitutes a separate violation in respect of each day on which it is continued.

Additional mechanisms for unpaid debts

A suggestion was made that additional mechanisms be put into place to ensure that debts owing to the Crown were appropriately managed. It should be noted that the enforcement of debts is already established within the CCPSA as per section 58:

58. (1) Any debt referred to in subsection 57(1) in respect of which there is a default of payment, or the part of any such debt that has not been paid, may be certified by the Minister.

(2) On production to the Federal Court, the certificate shall be registered in that Court and, when registered, has the same force and effect, and all proceedings may be taken on the certificate, as if it were a judgment obtained in that Court for a debt of the amount specified in it and all reasonable costs and charges associated with the registration of the certificate.

As this comment is already addressed by the CCPSA, it was not included in this proposal.

Different penalty ranges for non-profit organizations

Finally, a comment was made requesting that the maximum allowable penalty for non-profit and other organizations be made more consistent with all other profit-bearing organizations. Note that these maximums are already established in the CCPSA under subsection 50(2) as follows:

(2) The maximum penalty for a violation is $5,000 in the case of a violation committed by a non-profit organization — or by any other person for non-commercial purposes — and $25,000 in any other case.

As this comment is already addressed by the CCPSA, it was not included in this proposal.

Implementation, enforcement and service standards

It is proposed that the Administrative Monetary Penalties (Consumer Products) Regulations come into force on the day on which they are registered.

The proposed Regulations would provide another effective tool to encourage compliance with the CCPSA and its regulations.

Contact

James Hardy
Project Officer
Consumer Product Safety Directorate
Healthy Environments and Consumer Safety Branch
Department of Health
MacDonald Building, 4th Floor
123 Slater Street
Address Locator 3504D
Ottawa, Ontario
K1A 0K9
Fax: 613-952-9138
Email: james.hardy@hc-sc.gc.ca

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to paragraphs 37(1)(i) and (p) and subsection 50(1) of the Canada Consumer Product Safety Act (see footnote a), proposes to make the annexed Administrative Monetary Penalties (Consumer Products) Regulations.

Interested persons may make representations concerning the proposed Regulations within 75 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 James Hardy, Project Officer, Risk Management Strategies Division, Risk Management Bureau, Consumer Product Safety Directorate, Healthy Environments and Consumer Safety Branch, Department of Health, 123 Slater Street, 4th floor, Address Locator 3504D, Ottawa, Ontario K1A 0K9 (fax: 613-952-9138; email: cps.spc@hc-sc.gc.ca).

Ottawa, March 8, 2012

JURICA ČAPKUN
Assistant Clerk of the Privy Council

ADMINISTRATIVE MONETARY PENALTIES (CONSUMER PRODUCTS) REGULATIONS

INTERPRETATION

Definitions

1. The following definitions apply in these Regulations.

“Act”
« Loi »

“Act” means the Canada Consumer Product Safety Act.

“compliance agreement”
« transaction »

“compliance agreement” means an agreement referred to in paragraph 53(2)(a) of the Act.

“violation”
« violation »

“violation” means a violation committed under section 49 of the Act.

CLASSIFICATION

Violation — minor, serious, and very serious

2. A violation is classified as

  1. (a) minor, if the total gravity factor for the violation is two;
  2. (b) serious, if the total gravity factor for the violation is three or four; and
  3. (c) very serious, if the total gravity factor for the violation is five.

TOTAL GRAVITY FACTOR

Gravity factor — sum

3. (1) Subject to subsection (2), the total gravity factor for a violation is the sum of the gravity factor set out in column 2 of Table 1 that is associated with the applicable description set out in column 1, and the gravity factor set out in column 3 of Table 2 that is associated with the applicable provision set out in column 1.

TABLE 1

HISTORY
Item

Column 1

Description

Column 2

Gravity Factor
1. No previous violation in respect of which a notice of violation was issued was committed by the person within the five years before the day on which the violation is committed 0
2. One violation in respect of which a notice of violation was issued was committed by the person within the five years before the day on which the violation is committed 1
3. More than one violation in respect of which a notice of violation was issued was committed by the person within the five years before the day on which the violation is committed 2

TABLE 2

TYPE OF VIOLATION
Item

Column 1

Provision of the Act

Column 2

Short-form Description(see footnote 2)

Column 3

Gravity Factor
1. Paragraph 32(1)(a) Failure to comply with an order by the Minister to take measures — person did not comply with an order made under section 12 of the Act 2
2. Paragraph 32(1)(c) Failure to comply with an order by the Minister to take measures — Minister believes on reasonable grounds that a product is the subject of a voluntary measure or recall 2
3. Paragraph 32(1)(d) Failure to comply with an order by the Minister to take measures — Minister believes on reasonable grounds that there is a contravention of the Act or regulations 2
4. Subsection 31(1) Failure to comply with an order by the Minister to recall a product 3
5. Paragraph 32(1)(b) Failure to comply with an order by the Minister to take measures — Minister has already made an order under section 31 of the Act 3

Gravity factor — reviewed order

(2) If, after completing a review under section 35 of the Act, the review officer decides that the order should have been made under a different provision, the calculation under subsection (1) must reflect that decision.

PENALTIES

Amount

4. The penalty for a violation with a total gravity factor set out in column 1 of the table is, in the case of a violation committed by a non-profit organization or by any other person for non-commercial purposes, the penalty set out in column 2 and, in any other case, the penalty set out in column 3.

TABLE

PENALTIES
Item

Column 1

Total Gravity Factor (Classification of Violation)

Column 2

Penalty for Violation Committed by a Non-profit Organization or by any Other Person for Non-commercial Purposes

Column 3

Penalty for Violation Committed in any Other Case
1. 2 (minor) $1,000 $10,000
2. 3 (serious) $2,000 $15,000
3. 4 (serious) $3,500 $20,000
4. 5 (very serious) $5,000 $25,000

PAYMENT REFERRED TO IN SUBSECTIONS 52(1) AND 53(1) OF THE ACT

Reduced penalty

5. (1) For the purposes of paragraph 52(1)(e) of the Act, the lesser amount that may be paid as complete satisfaction of the penalty is one half of the amount of the penalty.

Payment of reduced penalty

(2) A person that is provided with a notice of violation and wishes to pay the lesser amount must

  1. (a) deliver the amount in person no later than 15 days after the day on which the notice is provided;
  2. (b) send the amount by regular mail that is postmarked no later than 15 days after the day on which the notice is provided; or
  3. (c) send the amount, by a mail or courier service that issues a receipt, no later than 15 days after the day on which the notice is provided, as evidenced by the date on the receipt.

Payment of penalty

(3) A person that is provided with a notice of violation and wishes to pay the amount of the penalty set out in the notice must

  1. (a) deliver the amount in person no later than 30 days after the day on which the notice is provided;
  2. (b) send the amount by regular mail that is postmarked no later than 30 days after the day on which the notice is provided; or
  3. (c) send the amount, by a mail or courier service that issues a receipt, no later than 30 days after the day on which the notice is provided, as evidenced by the date on the receipt.

Manner of payment

(4) Payments must be made by means of a certified cheque or bank draft made payable to the Receiver General for Canada and must be delivered or sent to the address set out in the notice of violation.

COMPLIANCE AGREEMENTS

Request

6. (1) For the purposes of paragraph 53(2)(a) of the Act, a request to enter into a compliance agreement must be made in writing and must be

  1. (a) delivered in person to the address set out in the notice of violation no later than 15 days after the day on which the notice is provided to the person;
  2. (b) sent, to the address set out in the notice of violation, by regular mail that is postmarked no later than 15 days after the day on which the notice is provided to the person; or
  3. (c) sent to the address set out in the notice of violation, by a mail or courier service that issues a receipt, no later than 15 days after the day on which the notice is provided to the person, as evidenced by the date on the receipt.

Payment under paragraph 54(4)(a) of Act

(2) For the purposes of paragraph 54(4)(a) of the Act, if the person is liable to pay twice the amount of the original penalty, that amount must be paid in a manner set out in subsection 5(2) no later than 15 days after the day on which the notice of default is provided to the person and must be paid in accordance with subsection 5(4).

Payment under subsection 55(1) of Act

7. For the purposes of subsection 55(1) of the Act, the amount of the penalty must be paid in a manner set out in subsection 5(2) no later than 15 days after the day on which written notice of the Minister’s refusal is provided to the person and must be paid in accordance with subsection 5(4).

REVIEW BY MINISTER

Time and manner of request

8. (1) For the purposes of paragraph 53(2)(b) of the Act, a request for a review by the Minister must be made in writing and must be

  1. (a) delivered in person to the address set out in the notice of violation no later than 30 days after the day on which the notice is provided to the person;
  2. (b) sent, to the address set out in the notice of violation, by regular mail that is postmarked no later than 30 days after the day on which the notice is provided to the person; or
  3. (c) sent to the address set out in the notice of violation, by a mail or courier service that issues a receipt, no later than 30 days after the day on which the notice is provided to the person, as evidenced by the date on the receipt.

Payment under subsection 56(3) of Act

(2) For the purposes of subsection 56(3) of the Act, the amount of the confirmed or corrected penalty must be paid in a manner set out in subsection 5(2) no later than 30 days after the day on which the notice of the decision is provided to the person and must be paid in accordance with subsection 5(4).

PROVIDING DOCUMENTS

Individuals

9. (1) Any document referred to in these Regulations, except an order made under section 31 or 32 of the Act, that is to be provided to an individual, other than the Minister, who is named in the document must be provided by

  1. (a) delivering it
    1. (i) to the individual at any place, or
    2. (ii) to someone who appears to be an adult at the individual’s last known address or usual place of residence, if the individual is not at that address or place of residence at the time of delivery; or
  2. (b) sending it, by a mail or courier service that issues a receipt, to the individual’s last known address or usual place of residence.

Persons other than individuals

(2) Any document referred to in these Regulations, except an order made under section 31 or 32 of the Act, that is to be provided to a person, other than an individual, that is named in the document must be provided by

  1. (a) sending it, by a mail or courier service that issues a receipt, to the person at the person’s head office or place of business or at the head office or place of business of the person’s agent or mandatary; or
  2. (b) delivering it, at the head office or place of business of the person or of the person’s agent or mandatary, to an officer or any other individual who appears to be in control of or managing the head office or place of business.

Notice of compliance

(3) The requirements in this section also apply to notices provided under subsection 54(3) of the Act.

COMING INTO FORCE

Registration

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

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