Canada Gazette, Part I, Volume 147, Number 48: Exemption Regulations (Consumer Products)

November 30, 2013

Statutory authority

Canada Consumer Product Safety Act

Sponsoring department

Department of Health

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Background

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

In particular, section 13 of the CCPSA requires those who manufacture, import, advertise, sell or test consumer products for commercial purposes to maintain records of their product sources and customers. Subparagraph 13(1)(a)(i) specifies that retailers who sell consumer products for commercial purposes must prepare and maintain documents that indicate the name and address of the person from whom they obtained the consumer product, and the location where and the period during which they sold the consumer product. This requirement helps facilitate tracking of products through the supply chain up to the highest level of trade in the event of a consumer product safety issue. Identification of the highest level of trade permits an easier determination of when and where consumer products are distributed in the supply chain. This allows safety issues to be addressed at the source and enables industry to carry out recalls or other safety measures more efficiently and effectively if required.

As a result of ongoing dialogue with stakeholders regarding the then-proposed versions of the CCPSA (Bills C-52, C-6 and C-36), concerns regarding the requirement for the preparation and maintenance of documents by retailers were brought to the attention of Health Canada. The CCPSA has regulation-making authority under subsection 37(1) respecting the exemption of a class of consumer products or a class of persons from the application of the Act or regulations. This authority is now being used to introduce the proposed Exemption Regulations (Consumer Products) to exempt certain retailers from the preparation and maintenance of documents requirements.

Similar exemptions from legislative requirements have been implemented in both the United States and the European Union. In the United States, stakeholders who sell children’s products must have third-party accredited laboratory testing performed to demonstrate that the products are in compliance with the requirements of the Consumer Product Safety Improvement Act (CPSIA) of 2008. As this requirement is cost-prohibitive to resellers such as second-hand stores and consignment stores, they are not required to test children’s products in inventory before they are sold. However, resellers in the United States are still prohibited from selling children’s products that are not in compliance with the CPSIA.

The European Union’s General Product Safety Regulations (GPSR) of 2005 apply to the supply of all new and second-hand products, but exclude “second-hand products supplied as antiques or as products to be repaired or reconditioned prior to being used.” The GPSR require that distributors keep and provide documentation necessary to trace the origin of unsafe products. However, charities are exempt from this requirement and are not expected to have documentation that would help trace the origin of products that are donated free of charge by members of the public, often anonymously. Charities must still keep records in respect of any other product obtained through commercial channels that they may from time to time supply or make available.

Issues and objectives

Some stakeholders — including retailers — who sell consumer products obtained through donation, have indicated that it would be virtually impossible to comply with the record-keeping requirements in the CCPSA. Requiring these stakeholders to prepare and maintain documents related to certain donated consumer products would not effectively further the purposes of the CCPSA.

The objective of the proposed Exemption Regulations (Consumer Products) is to allow these stakeholders to continue operating as they had before the CCPSA came into force with no increase in administrative burden. The Regulations would provide an exemption from the CCPSA requirements for preparing and maintaining documents while continuing to protect the public from potential dangers posed by consumer products.

Description

The proposed Exemption Regulations(Consumer Products) would exempt retailers from the requirements to prepare and maintain documents established under subparagraph 13(1)(a)(i) of the CCPSA in respect of a consumer product they obtain by donation from persons other than those who are or were engaged in the business of manufacturing, importing or selling of such consumer products.

However, if a consumer product is donated to a retailer by a manufacturer, importer or seller, the retailer receiving the donation would be required to prepare and maintain the documents required under the CCPSA. These types of donations tend to be on a larger scale and consist of similar consumer products; they are often from year-end clearances, end-of-run productions or old stock. Additionally, packaging, instructions and labelling information such as serial numbers or lot numbers are likely to be present. It is reasonable to expect that documentation that would satisfy the requirements under section 13 of the CCPSA would also be prepared and maintained for other purposes, such as bookkeeping, inventory or tax records. This would allow more effective tracking of products back through the supply chain, to more effectively protect the health and safety of Canadians.

Consultation

Over the course of the industry consultations from 2008 to 2010, some charitable organizations that obtain consumer products through donations raised concerns about the record-keeping requirements. More specifically, they indicated that the requirements would be an unreasonable burden given their limited resources to handle the large volume and diversity of donated consumer products. The staff capacity required to prepare and maintain documents would result in resources being diverted away from other activities, which are often charitable in nature. It is also likely that documents will be incomplete, due to the fact that donors may wish to remain anonymous or may be unavailable to provide their name and address. This difficulty would be further compounded by the fact that many second-hand items have had the packaging, instructions or labelling removed. Without this identifying information, these stakeholders may not have the records necessary to facilitate tracking up the supply chain.

On August 6, 2010, a consultation document was posted on Health Canada’s Web site; it was also mailed to 12 charitable organizations and 2 government agencies, and was emailed to over 7 500 consumer product safety news subscribers. A total of 11 submissions were received during the comment period. Three industry associations, 1 consumer advocacy group and 7 charitable organizations provided comments.

Overall, the charitable organizations supported the proposal, but four organizations expressed that they would have liked to have seen the exemption for preparing and maintaining documents in the CCPSA and not in regulations. They also wished to ensure that the proposed Regulations would spell out clearly that retailers would be exempt from the requirements relating to donations obtained from individuals. Furthermore, one charitable organization provided general comments about potential impacts should there be no exemption, such as a possible increased paper burden, difficulty in tracking recalled products dropped off and resources to train volunteers.

This proposal will address stakeholder concerns relating to administrative burden.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this proposal because there is no increase in the administrative burden on industry. Retailers who receive donated consumer products other than from manufacturers, importers, or sellers would be exempt from the requirements of subparagraph 13(1)(a)(i).

Small business lens

The small business lens does not apply to this proposal, as there are no costs to small business.

Rationale

Without the Regulations, stakeholders — including retailers — who obtain donated consumer products other than from manufacturers, importers, or sellers would be required to comply with the requirements for preparing and maintaining documents under the CCPSA. Currently, Health Canada undertakes compliance and enforcement activities, including inspections and outreach, with about 2 000 second-hand stores across Canada, the vast majority of which are thrift stores. Many thrift stores are associated with charitable organizations. They respond to the needs of people with low incomes, and at the same time reuse and recycle donated household goods to raise money for their charitable programs. Many of these organizations have branches and thrift stores across Canada. The administrative burden for documenting donated consumer products is very high. Properly identifying original manufacturers or sellers and related information may be impossible, and in many instances, the staff capacity required to obtain and maintain such information would cause resources to be diverted away from other activities, which are often charitable in nature.

In fact, the information obtained from stakeholders exempt from the requirement would do little to advance the underlying purpose of the documentation provision of tracking products back through the supply chain in order to facilitate product recalls or other health or safety measures. Obtaining the name and address of a local resident who drops off items at a charitable organization would not allow the effective determination of the highest level of trade, rendering this type of document maintenance insignificant in helping protect the health and safety of the public.

This requirement could discourage a number of people from donating consumer products and result in both a reduction in the number of donations of consumer products and volume of sales of retailers of donated consumer products. This would in turn have a direct impact on people with low income who benefit directly or indirectly from these donated consumer products.

Finally, a report entitled “Cost-Benefit Analysis — Exemptions Regulations” (May 2011) that was prepared for Health Canada describes the potential impact on Government, industry and consumers that would occur as a result of the proposed Regulations. While quantitative analysis was not possible, it was concluded that the overall net benefits relating to this proposal are likely to be positive. The cost-benefit analysis report is available upon request. The proposed Exemption Regulations (Consumer Products) would allow many retailers of donated consumer products to continue operating as they had before the CCPSA came into force, without an increase in administrative burden.

Implementation, enforcement and service standards

Inspections of retailers, which are recipients of donated consumer products, would continue to be part of Health Canada’s compliance and enforcement work. Although exemptions from preparing and maintaining documents for donated consumer products under specific circumstances might apply pursuant to the proposed Regulations, all other requirements under the CCPSA would continue to apply and be enforced. Retailers must ensure that all consumer products they obtain by donation meet the requirements of the CCPSA before selling or advertising them. Health Canada would continue to address non-compliance as required. Non-compliant products obtained by donation are subject to the compliance and enforcement tools available to Health Canada inspectors and other officials, and use of these tools depends on the risk to health or safety. Guidelines and industry training programs would be developed to clarify retailer responsibilities related to the exemption from record keeping for donated consumer products. Training and updates to industry guides would continue as part of regular information, education and outreach activities.

Contact

Sheila Davidson
Project Officer
Risk Management Strategies Division
Risk Management Bureau
Consumer Product Safety Directorate
Healthy Environments and Consumer Safety Branch
Health Canada
269 Laurier Avenue W, 8th Floor
Address Locator 4908B
Ottawa, Ontario
K1A 0K9
Fax: 613-952-2551
Email: sheila.davidson@hc-sc.gc.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council, pursuant to section 37 of the Canada Consumer Product Safety Act (see footnote a), proposes to make the annexed Exemption Regulations (Consumer Products).

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 Sheila Davidson, Project Officer, Risk Management Bureau, Consumer Product Safety Directorate, Health Canada, Address Locator: 4908B, 269 Laurier Avenue W, Ottawa, Ontario K1A 0K9 (fax: 613-952-2551; email: sheila.davidson@hc-sc. gc.ca).

Ottawa, November 21, 2013

JURICA ČAPKUN
Assistant Clerk of the Privy Council

EXEMPTION REGULATIONS (CONSUMER PRODUCTS)

DEFINITION

1. In these Regulations, “donation” means a transfer of a consumer product made without consideration.

EXEMPTION

2. (1) A retailer is exempt from the application of subparagraph 13(1)(a)(i) of the Canada Consumer Product Safety Act in respect of a consumer product that they obtained by donation.

(2) Subsection (1) does not apply if the consumer product was donated by a person who, in the course of business, is or was engaged in manufacturing, importing or selling such consumer products.

COMING INTO FORCE

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

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