Off-road Compression-Ignition (Mobile and Stationary) and Large Spark-Ignition Engine Emission Regulations: SOR/2020-258

Canada Gazette, Part II, Volume 154, Number 26

Registration
SOR/2020-258 December 4, 2020

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

P.C. 2020-975 December 4, 2020

Whereas, pursuant to subsection 332(1)footnote a of the Canadian Environmental Protection Act, 1999footnote b, the Minister of the Environment published in the Canada Gazette, Part I, on March 9, 2019, a copy of the proposed Off-road Compression-Ignition (Mobile and Stationary) and Large Spark-Ignition Engine Emission Regulations, substantially in the annexed form, and persons were given an opportunity to file comments with respect to the proposed Regulations or to file a notice of objection requesting that a board of review be established and stating the reasons for the objection;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of the Environment, pursuant to sections 160footnote c and 319 of the Canadian Environmental Protection Act, 1999 footnote b, makes the annexed Off-road Compression-Ignition (Mobile and Stationary) and Large Spark-Ignition Engine Emission Regulations.

Off-road Compression-Ignition (Mobile and Stationary) and Large Spark-Ignition Engine Emission Regulations

Interpretation

Definitions

1 (1) The following definitions apply in these Regulations.

Act
means the Canadian Environmental Protection Act, 1999. (Loi)
adjustable parameter
means a device, a system or an element of design that is capable of being adjusted to affect the emissions or performance of an engine during emission testing or normal in-use operation, but does not include a device, a system or an element of design that is permanently sealed by the engine manufacturer or that is inaccessible using ordinary tools. (paramètre réglable)
CFR
means chapter I of Title 40 of the Code of Federal Regulations of the United States. (CFR)
CFR 60
means subchapter C, part 60, of the CFR, as amended from time to time. (CFR 60)
CFR 86
means subchapter C, part 86, of the CFR, as amended from time to time. (CFR 86)
CFR 89
means subchapter C, part 89, of the CFR, as it existed on July 1, 2020. (CFR 89)
CFR 94
means subchapter C, part 94, of the CFR, as it existed on July 1, 2020. (CFR 94)
CFR 1039
means subchapter U, part 1039, of the CFR, as amended from time to time. (CFR 1039)
CFR 1042
means subchapter U, part 1042, of the CFR, as amended from time to time. (CFR 1042)
CFR 1048
means subchapter U, part 1048, of the CFR, as amended from time to time. (CFR 1048)
CFR 1051
means subchapter U, part 1051, of the CFR, as amended from time to time. (CFR 1051)
CFR 1054
means subchapter U, part 1054, of the CFR, as amended from time to time. (CFR 1054)
CFR 1060
means subchapter U, part 1060, of the CFR, as amended from time to time. (CFR 1060)
CFR 1068
means subchapter U, part 1068, of the CFR, as amended from time to time. (CFR 1068)
complete fuel system
means a fuel system that is attached to an engine and that consists of fuel lines and at least one fuel tank. (système complet d’alimentation en carburant)
compression-ignition engine
means an engine that operates as a reciprocating internal combustion engine other than an engine that operates under characteristics significantly similar to the theoretical Otto combustion cycle or uses a spark plug or other sparking device. (moteur à allumage par compression)
crankcase emissions
means substances that are emitted into the atmosphere from any portion of the crankcase ventilation or lubrication systems of an engine and that cause air pollution. (émissions du carter)
element of design,
in respect of an engine, means
  • (a) any control system, including computer software, electronic control systems and computer logic;
  • (b) any control system calibrations;
  • (c) the results of systems interaction; or
  • (d) any hardware items. (élément de conception)
emergency machine
means a machine that is designed
  • (a) to be used exclusively for aircraft rescue or to fight fires at airports;
  • (b) primarily to fight wildfires, including a vehicle that is designed to be equipped with an auxiliary firefighting machine; or
  • (c) to be used exclusively in emergency situations. (machine de première intervention)
emergency situation
means any situation in which there is a direct or indirect risk of loss of human life. (situation d’urgence)
emission control system
means any device, system or element of design that controls or reduces the emissions from an engine. (système antipollution)
emission family
means,
  • (a) in respect of a company’s engines that are covered by an EPA certificate, the grouping that is specified in the EPA certificate;
  • (b) in respect of any fuel lines and fuel tanks that form part of a complete fuel system and that are covered by one or more EPA certificates, the grouping that is specified in the EPA certificates;
  • (c) in respect of a company’s engines other than those referred to in paragraph (a), the grouping determined in accordance with,
    • (i) in the case of mobile compression-ignition engines — other than those referred to in subparagraph (iii) — section 230, subpart C, of CFR 1039 and, if the engine conforms to the alternative standards referred to in section 14, section 645(c), subpart G, of CFR 1039,
    • (ii) in the case of stationary compression-ignition engines that have a per-cylinder displacement of
      • (A) more than 10 L, section 230, subpart C, of CFR 1042 or, in the case of an engine that conforms to the alternative standards referred to in subsection 16(1) or (3), section 204(a) to (c), of subpart C, of CFR 94, and
      • (B) 10 L or less, section 230, subpart C, of CFR 1039 or, in the case of an engine that conforms to the alternative standards referred to in subsection 16(1) or (3), section 116(a) to (d), of subpart B, of CFR 89,
    • (iii) in the case of mobile compression-ignition engines that are or will be installed in recreational vehicles, section 230, subpart C, of CFR 1051, and
    • (iv) in the case of large spark-ignition engines, section 230, subpart C, of CFR 1048; or
  • (d) in respect of any fuel lines and fuel tanks that form part of a complete fuel system other than those referred to in paragraph (b), the grouping determined in accordance with section 230, subpart C, of CFR 1060. (famille d’émissions)
EPA
means the United States Environmental Protection Agency. (EPA)
EPA certificate
means a certificate of conformity to United States federal standards issued by the EPA. (certificat de l’EPA)
evaporative emissions
means fuel compounds that are emitted into the atmosphere from an engine that is fuelled with volatile liquid fuel, other than exhaust emissions, crankcase emissions and smoke emissions. (émissions de gaz d’évaporation)
exhaust emissions
means substances emitted into the atmosphere from any opening downstream from the exhaust port of an engine. (émissions de gaz d’échappement)
fire-pump engine
means a stationary internal combustion engine that is certified by the National Fire Protection Association and designed to be used in emergency situations to provide power to pump water for fire suppression or prevention. (moteur de pompe à incendie)
fuel line
means hose, tubing and primer bulbs containing or exposed to liquid fuel — including moulded hose, tubing and primer bulbs — that transport fuel to or from an engine, excluding
  • (a) fuel tank vent lines;
  • (b) segments of hose or tubing in which the external surface is normally exposed to liquid fuel inside the fuel tank; and
  • (c) primer bulbs that contain liquid fuel only for priming the engine before starting. (conduite d’alimentation en carburant)
fuel tank
means a tank that is equipped with a cap and designed to hold fuel. (réservoir de carburant)
hazardous location
means any location in which an explosive gas atmosphere — as defined in section 18-002 of the most recent version of the Canadian Standards Association standard C22.1, Canadian Electrical Code, Part 1 — is or may be present. (emplacement dangereux)
large spark-ignition engine
means an engine that
  • (a) operates under characteristics significantly similar to the theoretical Otto combustion cycle;
  • (b) uses a spark plug or other sparking device; and
  • (c) develops more than 19 kW of power measured at the crankshaft, or its equivalent, when equipped only with standard accessories that are necessary for its operation. (gros moteur à allumage commandé)
machine
means anything that is powered by an engine. (machine)
mobile,
in respect of an engine, means any engine that is designed to be used in or on a machine that is designed to be mobile. (mobile)
model year
means the year, as determined under section 4, that is used by a manufacturer to designate a model of engine. (année de modèle)
remote location
means a geographic area that is serviced neither by
  • (a) an electrical distribution network that is under the jurisdiction of the North American Electric Reliability Corporation or the main Newfoundland and Labrador electrical distribution networks; nor
  • (b) a natural gas distribution network. (région éloignée)
replacement engine,
subject to subsection 25(4), means an engine that is manufactured to replace the engine of a machine for which no engine exists that
  • (a) conforms to the applicable standards referred to in sections 10 to 23;
  • (b) has the physical or performance characteristics necessary for the operation of the machine; and
  • (c) is manufactured by the manufacturer of the original engine or the replacement engine. (moteur de remplacement)
smoke emissions
means substances in exhaust emissions that prevent the transmission of light. (émissions de fumée)
stationary,
in respect of an engine, means any engine that is designed to be used in or on a machine that is designed to be stationary. (fixe)
transportation refrigeration unit
means a refrigeration system that is powered by an engine — other than an engine that meets the criteria set out in any of sections 645(f)(1) to (4), subpart G, of CFR 1039 — and that is designed to control the temperature of products that are transported in rolling stock, vehicles or trailers. (dispositif frigorifique de transport)
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 use in respect of which an emission standard applies to an engine, as set out in subsection 10(2), 11(3), 12(2), 13(2), 14(2), 15(2), 16(4) or 18(5), as the case may be. (durée de vie utile)
volatile liquid fuel
means any fuel that is a liquid at atmospheric pressure and has a Reid vapour pressure greater than 13.79 kPa. (carburant liquide volatil)

Incorporation by reference

(2) Standards that are incorporated by reference in these Regulations from the CFR are those expressly set out in the CFR and must be read as excluding

Terms used in CFR

(3) For the purposes of these Regulations, a reference in the CFR to

Interpretation of standards

(4) The standards set out in the CFR that are referred to in these Regulations are the certification, in-use and field-testing standards and the test procedures, fuels and calculation methods referred to in CFR 60, CFR 89, CFR 94, CFR 1039, CFR 1042, CFR 1048, CFR 1051, CFR 1054, CFR 1060 or CFR 1068, as the case may be, for the model year in question.

Concurrent sale

2 For the purposes of these Regulations, an engine that is sold in Canada is considered to be sold concurrently in Canada and in the United States if an engine that belongs to the same emission family — or to the same emission families in the case of an engine that is subject to evaporative emission standards and belongs to more than one emission family — is offered for sale in the United States during the 365 days preceding

Application

Prescribed engines

3 These Regulations apply in respect of the engines that are prescribed under section 5.

Model Year

Model year

4 (1) A year that is used by a manufacturer of an engine as a model year must

Limitation

(2) The period of production must not include more than one January 1.

Imported engines

(3) If an engine that is imported does not bear the engine’s date of manufacture, its model year corresponds to the calendar year during which it is imported.

Prescribed Engines

Section 149 of Act — definition engine

5 (1) Mobile or stationary compression-ignition engines or mobile large spark-ignition engines — including those that have a complete fuel system — are prescribed for the purposes of the definition engine in section 149 of the Act unless they

Section 152 of Act

(2) For the purposes of section 152 of the Act, the prescribed engines are those referred to in subsection (1) that are manufactured in Canada other than

Section 154 of Act

(3) The classes of engines that are prescribed for the purposes of section 154 of the Act are those that are prescribed under subsection (1).

Engine Standards

General Standards

Evaporative emission standards — application

6 The evaporative emission standards referred to in these Regulations apply in respect of engines that have a complete fuel system with non-metallic fuel lines or fuel tanks and that are fuelled with volatile liquid fuels.

Emission control system — requirements

7 (1) An emission control system that is installed on an engine to enable it to conform to the standards set out in these Regulations must not

Defeat device

(2) An engine must not be equipped with an auxiliary emission control device that reduces the effectiveness of the emission control system under conditions that may reasonably be expected to be encountered under normal operation of the engine, unless a description of the auxiliary emission control device is included in the evidence of conformity under section 40 or 41 and

Standards

(3) Subject to subsection 11(2), if a compression-ignition engine is equipped with an auxiliary emission control device referred to in subsection (2) that meets the requirements set out in paragraph (2)(d) or (e), the engine and the diagnostic system with which it is equipped are not required to conform to the following standards when the auxiliary emission control device is operating:

Adjustable parameters — requirements

8 (1) Engines equipped with adjustable parameters must conform to the applicable standards under these Regulations for any specification within the physically adjustable range.

Engines using non-commercial fuel

(2) Subsection (1) does not apply to an engine that is designed to operate using fuel that is not generally offered for sale in Canada if the engine is adjusted in accordance with the manufacturer’s instructions referred to in subsection 36(2) and conforms to the applicable standards under these Regulations for those specifications.

Alternative test procedures

9 (1) Despite subsection 1(4), a company may, instead of using the test procedures set out in CFR 60 in respect of their stationary compression-ignition engines, replace one or more of those test procedures with alternative test procedures that have parameters and specifications that are equivalent to or more stringent than the parameters and specifications of the test procedures set out in CFR 60.

Published test procedures

(2) The alternative test procedures referred to in subsection (1) must be included in a test procedure published by

Equivalence

(3) A company that uses alternative test procedures under subsection (1) must, as part of the evidence of conformity under section 40 or 41, as the case may be, include evidence demonstrating that the alternative test procedures have parameters and specifications that are equivalent to or more stringent than the parameters and specifications of the test procedures set out in CFR 60.

Compression-Ignition Engine Standards

Emission Standards

Emission standards — mobile engines

10 (1) Subject to sections 12 to 15 and 22 and 23, a mobile compression-ignition engine must conform to

Useful life

(2) The standards referred to in subsection (1) apply for the useful life of the engine, as specified

Emission standards — stationary engines

11 (1) Subject to sections 15, 16 and 23, a stationary compression-ignition engine must conform to the emission standards set out in sections 4201(a), (c) and (e)(2), subpart IIII, of CFR 60.

Auxiliary emission control device

(2) An engine referred to in subsection (1) that is equipped with an auxiliary emission control device referred to in subsection 7(2) that meets the requirements set out in paragraph 7(2)(d) or (e) must conform to the emission standards set out in section 4210(j), subpart IIII, of CFR 60 when the auxiliary emission control device is operating.

Useful life

Alternative Emission Standards for Certain Types of Engines

Mobile engines used in remote locations

12 (1) A mobile compression-ignition engine that is to be used exclusively to provide a primary source of electrical power in a remote location may, instead of conforming to the emission standards set out in section 10, conform to the emission standards set out in

Useful life

(2) The standards referred to in subsection (1) apply for the applicable useful life, as follows:

North Warning System sites

13 (1) A mobile compression-ignition engine that is to be used exclusively at a North Warning System site established by the North American Aerospace Defense Command may, instead of conforming to the emission standards set out in section 10, conform to the emission standards set out in Table 1 to section 112(a), subpart B, of CFR 89.

Useful life

(2) The standards referred to in subsection (1) apply for the applicable useful life, as follows:

Transportation refrigeration unit

14 (1) A mobile compression-ignition engine that is used in a transportation refrigeration unit may, instead of conforming to the emission standards referred to in section 10, conform to the applicable standards referred to in sections 645(a), (b) and (e), subpart G, of CFR 1039, as specified in those sections.

Useful life

(2) The standards referred to in subsection (1) apply for the useful life of the engine as specified in section 101(g), subpart B, of CFR 1039.

Engines for use in hazardous location

15 (1) A compression-ignition engine that is or will be installed in a machine to be used only in a hazardous location where the maximum permissible surface temperature for the machine is 200°C or less may, if the engine or the machine bears the markings referred to in rule 18-052 of the most recent version of the Canadian Standards Association standard C22.1, Canadian Electrical Code, Part 1, conform to the following emission standards instead of those referred to in subsection 10(1) or 11(1), as applicable:

Useful life

(2) The standards referred to in subsection (1) apply for the following useful life:

Backup or emergency stationary engines

16 (1) A stationary compression-ignition engine that is intended to provide electrical power or mechanical work during a power outage may, instead of conforming to the emission standards referred to in subsection 11(1), conform to those set out in sections 4202(a)(1)(ii), (a)(2), (b)(2), (e)(2) and (4) and (f)(1) and (2), subpart IIII, of CFR 60.

Stationary fire-pump engines

(2) A stationary compression-ignition engine that is a fire-pump engine may, instead of conforming to the emission standards referred to in subsection 11(1), conform to those set out in section 4202(d), subpart IIII, of CFR 60.

Stationary engines used in remote locations

(3) A stationary compression-ignition engine that is to be used in a remote location may, instead of conforming to the emission standards set out in subsection 11(1), conform to those set out in section 4201(f), subpart IIII, of CFR 60 or those set out in sections 4202(a)(1)(ii), (a)(2), (b)(2), (e)(2) and (4) and (f)(1) and (2), subpart IIII, of CFR 60.

Useful life

(4) The standards referred to in subsections (1) to (3) apply for the useful life of the engine referred to in subsection 11(3).

Diagnostic System Standards

Standards

17 A compression-ignition engine that is equipped with a selective catalytic reduction system that uses a reductant other than the engine’s fuel must be equipped with a diagnostic system that conforms to the standards set out in,

Large Spark-Ignition Engine Standards

Emission Standards

Standards

18 (1) Subject to subsections (3) and (4) and sections 19, 22 and 23, a large spark-ignition engine must conform to

Demonstrating conformity

(2) For greater certainty, a company may demonstrate an engine’s conformity to the evaporative emission standards referred to in paragraph (1)(c) as specified in section 245(e), subpart C, of CFR 1048.

Alternate exhaust emission standards

(3) An engine that meets the conditions set out in sections 101(d)(1) to (4), subpart B, of CFR 1048 may, instead of conforming to the exhaust emission standards set out in section 101(b)(3), subpart B, of CFR 1048, conform to the exhaust emission standards set out in section 101(d), subpart B, of CFR 1048.

“Blue Sky Series” emission standards

(4) An engine may, instead of conforming to the exhaust emission standards referred to in paragraph (1)(a), conform to the “Blue Sky Series” standards set out in section 140, subpart B, of CFR 1048.

Useful life

(5) The standards referred to in subsections (1), (3) and (4) apply for the useful life of the engine as specified in

Alternate standards

19 A large spark-ignition engine that is fuelled solely by natural gas or liquefied petroleum gas and that has a gross engine power of 250 kW or more may, instead of conforming to the standards referred to in sections 18, 20 and 21, conform to the standards referred to in sections 10 and 17, as if it were a compression-ignition engine.

Diagnostic and Torque Broadcasting System Standards

Diagnostic system

20 A large spark-ignition engine that is equipped with three-way catalysts and closed-loop control of air-fuel ratios must be equipped with a diagnostic system that conforms to the applicable standards set out in section 110, subpart B, of CFR 1048.

Torque broadcasting system

21 An electronically controlled large spark-ignition engine must be equipped with a torque broadcasting system that meets the requirements of section 115(b), subpart B, of CFR 1048.

On-Road Engines Adapted for Off-road Use

Alternate standards — engines

22 (1) A mobile compression-ignition engine or a large spark-ignition engine may, instead of conforming to the applicable standards referred to in sections 10, 12 to 15 and 17 to 21, conform to the applicable standards under the On-Road Vehicle and Engine Emission Regulations if

Applicable standards

(2) For the purposes of subsection (1), the applicable standards under the On-Road Vehicle and Engine Emission Regulations are those that were applicable to the engine under those Regulations before its alteration.

Engines Covered by EPA Certificate

Certificate issued under certain parts of CFR

23 (1) Subject to subsection (2), an engine that is covered by an EPA certificate may, instead of conforming to the applicable standards referred to in sections 10 to 22, conform to

Certificate issued under CFR 86

(2) A mobile compression-ignition engine or a large spark-ignition engine that is covered by an EPA certificate issued under CFR 86 may, instead of conforming to the applicable standards referred to in sections 10, 12 to 15 and 17 to 21, conform to the standards referred to in the EPA certificate if the engine was, before importation or before its sale to the first retail purchaser, altered in a manner that meets the specific requirements set out in section 605(d)(2), subpart G, of CFR 1039 or section 605(d)(2), subpart G, of CFR 1048, as the case may be.

Subsection 153(3) of Act

24 (1) For the purposes of subsection 153(3) of the Act, the provisions of the CFR that are applicable under an EPA certificate to an engine referred to in subsection 23(1) or (2), or to any attached fuel lines or fuel tanks referred to in paragraph 23(1)(a), correspond to the standards referred to in sections 10 to 22.

EPA

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

Replacement Engines

Standards

25 (1) Despite sections 10 to 23 and subject to subsection (2), a replacement engine must, instead of conforming to the applicable standards referred to in those sections, conform to

References to CFR

(2) For the purposes of subparagraphs (1)(a)(i) and (1)(b)(i), a reference in the Off-Road Compression-Ignition Engine Emission Regulations to a provision of the CFR is to be read as a reference to that provision as it read immediately before the day on which these Regulations come into force.

Interpretation

(3) For the purposes of subparagraph (1)(b)(i), the reference to subsection 13(2) of the Off-Road Compression-Ignition Engine Emission Regulations must be read as excluding the dates mentioned in that subsection.

Limitation

(4) An engine is a replacement engine only if it was manufactured to replace the engine of a machine that is located in Canada and that, on the day that the replacement engine is installed, had its manufacture completed

National Emissions Mark and Label Requirements

Request for authorization

26 (1) Before applying a national emissions mark to an engine, a company must make a request to the Minister for authorization to do so.

Required information

(2) The request must be signed by an authorized representative of the company and must include

National emissions mark

27 (1) The national emissions mark is the mark set out in the schedule.

Dimensions

(2) The national emissions mark must be at least 7 mm in height and 10 mm in width.

Authorization number

(3) A company that is authorized to apply the national emissions mark must display the authorization 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.

Label — compression-ignition engines

28 (1) A compression-ignition engine — other than an engine that is covered by an EPA certificate, an engine that is used in a transportation refrigeration unit and that conforms to the alternative standards referred to in subsection 14(1) or a replacement engine — must bear a label that sets out

Label — complete fuel system

(2) Subject to subsection 34(4), a compression-ignition engine that has a complete fuel system with a non-metallic fuel line or fuel tank and is fuelled with volatile liquid fuel — other than an engine that is covered by an EPA certificate, an engine that is used in a transportation refrigeration unit and that conforms to the alternative standards referred to in subsection 14(1) or a replacement engine — must bear a label that includes the following information, in addition to the information set out in subsection (1):

Non-application

(3) Paragraphs (1)(a) and (2)(a) and (b) do not apply if a national emissions mark is affixed to the engine or to the machine in which the engine is installed.

Insufficient space on label

(4) Paragraph (1)(g) does not apply if there is insufficient space on the label to accommodate the information referred to in that paragraph and that information is included in the emissions-related maintenance instructions.

Label — large spark-ignition engines

29 (1) A large spark-ignition engine — other than an engine that is covered by an EPA certificate or a replacement engine — must bear a label that sets out

Label — complete fuel system

(2) Subject to subsection 34(4), a large spark-ignition engine that has a complete fuel system — other than an engine that is covered by an EPA certificate or a replacement engine — must bear a label that includes the following information, in addition to the information set out in subsection (1):

National emissions mark

(3) Paragraphs (1)(a) and (2)(a) and (b) do not apply if a national emissions mark is affixed to the engine or to the machine in which the engine is installed.

Insufficient space on label

(4) Paragraph (1)(f), (g) or (h) does not apply if there is insufficient space on the label to accommodate the information referred to in one of those paragraphs and that information is included in the emissions-related maintenance instructions.

Label — transportation refrigeration unit

30 An engine that conforms to the alternative standards referred to in subsection 14(1) must bear either a label

Label — replacement engine

31 A replacement engine must bear a label that

United States emission control information label

32 An engine that is covered by an EPA certificate and that, as authorized by subsection 23(1) or (2), conforms to the standards referred to in the EPA certificate instead of the applicable standards referred to in sections 10 to 21, must bear a United States emission control information label that meets the requirements set out in the following provisions:

Label — exemption under section 156 of Act

33 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 must bear a label that sets out, in both official languages, the standard in respect of which the exemption has been granted, as well as the Privy Council number and date of the order.

Location — national emissions mark and label

34 (1) Subject to subsection (3), the national emissions mark and any label required by these Regulations, other than a label referred to in section 35 and a United States emission control information label, must be located on the engine

United States emission control information label

(2) In the case referred to in paragraph (1)(a), the national emissions mark and the information required to be included on any label required by these Regulations may be included on the United States emission control information label, instead of appearing as specified in paragraph (1)(a).

Choice of location

(3) The information referred to in subsection 28(2) or 29(2), as the case may be, may appear on the same label as the information referred to in subsection 28(1) or 29(1), as the case may be, or on a separate label that is placed immediately next to the label on which the information referred to in subsection 28(1) or 29(1) appears, as the case may be.

Engine installed in machine

(4) If an engine referred to in subsection 28(2) or 29(2) is installed in a machine and the label referred to in that subsection is no longer visible during routine engine maintenance once the engine is installed in the machine, a duplicate of the label must be affixed on the machine.

Other requirements

(5) The national emissions mark and any label required by these Regulations, other than a United States emission control information label, must

Unique Identification Number

Unique identification number

35 For the purposes of paragraph 153(1)(d) of the Act, a unique identification number must be affixed to every engine. It must be legible and be on a label or be engraved on, stamped on or moulded into the engine.

Instructions

Engine maintenance

36 (1) Every company must ensure that the first retail purchaser of every engine, including an engine that is installed in a machine, is provided with written instructions respecting emission-related maintenance and that the instructions are consistent with the instructions set out in

Engines using non-commercial fuel

(2) Every company must ensure that the first retail purchaser of every engine — other than an engine referred to in subsection 40(1) — that is designed to operate using fuel that is not generally offered for sale in Canada is provided with written instructions describing how the engine’s adjustable parameters are to be adjusted so that the engine conforms to the emission standards prescribed under these Regulations while the engine is operating on fuel that is not generally offered for sale in Canada.

Language

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

Instructions — replacement engines

37 Every company that imports or manufactures a replacement engine for which the manufacture may be completed to achieve different configurations must ensure that the engine is accompanied by written instructions for completing the manufacture of the engine to achieve those configurations and for determining the configurations that are appropriate for an engine that will be used in a given application.

Instructions — installation of emission control system

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

Required information

(2) The instructions must contain the following information:

Language

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

Auxiliary emission control device

39 (1) Every company must ensure that every engine that is equipped with an auxiliary emission control device described in paragraph 7(2)(e) is accompanied by written instructions for its use and how to request its reset.

Language

(2) The instructions must be provided in both official languages.

Evidence of Conformity

Engine covered by EPA certificate

40 (1) For the purposes of paragraph 153(1)(b) of the Act, in the case of an engine that is covered by an EPA certificate and that, under subsection 23(1) or (2), conforms to the standards referred to in the EPA certificate instead of the applicable standards set out in sections 10 to 22, the evidence of conformity to be obtained and produced by a company includes

Submission

(2) If the engine does not bear the national emissions mark and is not sold concurrently in Canada and the United States, the company must submit the evidence of conformity referred to in paragraphs (1)(a), (b) and (d) to the Minister before importing the engine or applying a national emissions mark to it.

Engine not covered by EPA certificate

41 (1) Subject to subsection (2) and for the purposes of paragraph 153(1)(b) of the Act, in the case of an engine other than one referred to in subsection 40(1), evidence of conformity must be obtained and produced by a company in a form and manner that is satisfactory to the Minister, and must include a copy of the label referred to in section 28 or 29, paragraph 30(a) or section 31, as the case may be.

Engine altered for off-road use

(2) For the purposes of paragraph 153(1)(b) of the Act, in the case of an engine referred to in section 22 that conforms to the emission standards that were applicable to it under the On-Road Vehicle and Engine Emission Regulations before its alteration, evidence of conformity must be obtained and produced by a company in a form and manner that is satisfactory to the Minister.

Submission

(3) A company must submit the evidence of conformity referred to in subsections (1) and (2) to the Minister as follows:

Subsection 153(2) of Act

42 For greater certainty, a company that imports an engine or applies a national emissions mark to it in reliance on subsection 153(2) of the Act must submit the required evidence of conformity to the Minister before the engine leaves the possession or control of the company.

Suspension or revocation of EPA certificate

43 If an EPA certificate referred to in subsection 40(1) is suspended or revoked, the company must submit the following information to the Minister within 60 days after the day on which the certificate is suspended or revoked:

Declarations

Declarations Prior to Importation

Declaration — company

44 (1) For the purposes of paragraph 153(1)(b) of the Act, a company that imports an engine must make a declaration that contains the following information:

Submission

(2) Subject to subsection (3), the declaration must be signed by an authorized representative of the company and submitted to the Minister before the engine is imported.

50 engines or more

(3) A company that imports 50 engines or more during a calendar year may submit the declaration after importation — but no later than March 31 of the calendar year following the calendar year during which the engines are imported — if, before importing the first of those engines, the company submits a notice to the Minister that includes the following information:

One-time submission

(4) The notice referred to in subsection (3) is only required to be submitted in respect of the first calendar year during which the company imports engines in reliance on that subsection.

Replacement engines

(5) Subsection (3) does not apply in respect of replacement engines.

Declaration — person that is not a company

45 (1) For the purposes of paragraph 153(1)(b) of the Act, a person that imports an engine and that is not a company must make a declaration that contains the following information:

Submission

(2) Subject to subsection (3), the declaration must be signed by the person or by their authorized representative and submitted to the Minister before the engine is imported.

Exception

(3) The declaration in respect of each of the first through ninth engines that a person imports during a calendar year may be submitted to the Minister before the person imports a tenth engine during that calendar year, instead of before the importation of each engine. If the person does not import a tenth engine, a declaration is not required in respect of the first through ninth engines.

Subsection 153(2) of Act

46 (1) A company may only import an engine in reliance on subsection 153(2) of the Act if

Content of declaration

(2) Subject to subsections (3) and (4), the declaration must be submitted before the engine is imported, be signed by an authorized representative of the company and contain the following information:

Alternate declaration

(3) In the case of an engine that is covered by an EPA certificate and meets either of the following conditions, the company may make a declaration that contains the information set out in paragraphs (4)(d) and 44(1)(a) to (d) instead of the information set out in paragraphs (2)(a) to (i):

50 engines or more

(4) A company that imports 50 engines or more during a calendar year may submit the declaration referred to in subsection (3) after importation — but no later than March 31 of the calendar year following the calendar year during which the engine is imported — if, before importing the engine, the company submits a notice to the Minister that includes the following information:

Paragraph 155(1)(a) of Act

47 (1) For the purposes of paragraph 155(1)(a) of the Act, the declaration to be made by a person importing an engine must contain

Submission

(2) The declaration must be signed by the person or by their authorized representative and submitted to the Minister before the engine is imported. However, in the case of a person that imports more than 50 engines during a calendar year, the declaration may be submitted quarterly.

Format of Declarations

Electronic submission

48 Any declaration required under these Regulations and any declaration required under paragraph 155(1)(a) of the Act must be submitted electronically in a format provided by the Minister, but the declaration must be submitted in writing if

Maintenance, Retention and Submission of Records

Records to be maintained

49 (1) A company must maintain records, in writing or in a readily readable electronic or optical form, that contain the following information in relation to an engine:

Period of retention

(2) The records must be retained for a period of eight years beginning on any one of the following days, as applicable:

Subsection 155(6) of Act

(3) For the purposes of subsection 155(6) of the Act, the record maintained by a person who makes a declaration referred to in paragraph 155(1)(a) of the Act must include a copy of the declaration and documents evidencing the use of the engine in Canada and its disposition and must be kept as follows:

Location of retention

(4) If the records referred to in subsection (1), subparagraph (3)(a)(ii) or paragraph (3)(b) are retained at a location other than a place of business of the company or person, the company or person must keep a record of the name and telephone number of a contact person at that location and the street address and, if different, the mailing address of that location.

Submission to Minister

(5) If the Minister makes a written request for a record referred to in subsection (1), the record must be submitted to the Minister in either official language

Registration System

Auxiliary emission control device

50 (1) For the purposes of paragraph 153(1)(h) of the Act, the registration system maintained by a company in respect of the engines that it manufactures or imports must include the following information:

Imported engines

(2) In the case of an imported engine, the registration system in respect of the engine may be maintained by the manufacturer of the engine on the company’s behalf.

Period of retention

(3) The information included in the registration system in respect of an engine must be retained for a period of eight years beginning on the day on which the engine is imported or its manufacture is completed.

Location of retention

(4) If the registration system is retained at a location other than a place of business of the company, the company must keep a record of the name and telephone number of a contact person at that location as well as the street address and, if different, the mailing address of that location.

Rental Rate

Subsection 159(1) of Act

51 The annual rental rate to be paid to a company by the Minister under subsection 159(1) of the Act, prorated on a daily basis for each day that an engine is made available, is 12% of the manufacturer’s suggested retail price for the engine.

Exemption

Application for exemption

52 A company applying under section 156 of the Act for an exemption from conformity with any standard prescribed under these Regulations must, before manufacturing or importing the engine, submit the following information in writing to the Minister:

Defect Information

Required information

53 (1) The notice of defect referred to in subsections 157(1) and (4) of the Act must contain the following information:

Language of notice

(2) The notice of defect must be given in writing and, when given to a person other than the Minister, must be

Initial report

(3) A company must, within 60 days after giving a notice of defect, submit to the Minister the initial report referred to in subsection 157(7) of the Act containing

Quarterly report

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

Transitional Provisions

SOR/2005-32

54 (1) The provisions of the Off-Road Compression-Ignition Engine Emission Regulations set out in column 1 of the table to this subsection, as they read immediately before the day on which these Regulations come into force, continue to apply to engines — other than transition engines referred to in subsection (2) — whose manufacture was completed before the day on which these Regulations come into force, instead of the provisions of these Regulations set out in column 2.

Item

Column 1

Provisions of the Off-Road Compression-Ignition Engine Emission Regulations

Column 2

Provisions of the Off-road Compression-Ignition (Mobile and Stationary) and Large Spark-Ignition Engine Emission Regulations
1 section 1 section 1
2 section 3 section 3
3 section 5 section 5
4 sections 8 to 12, 14 and 24 sections 6 to 11, 14, 16 to 25 and 28 to 34
5 sections 15 and 15.1 sections 36 to 39
6 sections 16 to 17.1 sections 40 to 42
7 section 18 section 49

Transition engines

(2) The provisions of the Off-Road Compression-Ignition Engine Emission Regulations, as they read immediately before the day on which these Regulations come into force, continue to apply to transition engines within the meaning of section 13 of those Regulations, instead of the provisions of these Regulations.

References to CFR

(3) For the purposes of this section, a reference in the Off-Road Compression-Ignition Engine Emission Regulations to a provision of the CFR is to be read as a reference to that provision as it read immediately before the day on which these Regulations come into force.

Amendments to These Regulations

55 Subsection 44(2) of these Regulations is replaced by the following:

Submission

(2) Subject to subsection (3), the declaration must be signed by an authorized representative of the company and submitted to the Minister before the engine is imported, unless a declaration containing the information referred to in paragraphs (1)(a) to (d) has been submitted to the Canada Border Services Agency using the electronic declaration system made available by the Agency.

56 Subsection 45(2) of these Regulations is replaced by the following:

Submission

(2) Subject to subsection (3), the declaration must be signed by the person or by their authorized representative and submitted to the Minister before the engine is imported, unless a declaration containing the information referred to in paragraphs (1)(a) to (g) has been submitted to the Canada Border Services Agency using the electronic declaration system made available by the Agency.

Related Amendments

Off-Road Small Spark-Ignition Engine Emission Regulations

57 (1) The definitions CFR, CFR 90, CFR 1051, CFR 1054, CFR 1060, CFR 1068, emission family, engine and volatile liquid fuel in subsection 1(1) of the Off-Road Small Spark-Ignition Engine Emission Regulationsfootnote 1 are replaced by the following:

CFR
means Title 40, chapter I of the Code of Federal Regulations of the United States. (CFR)
CFR 90
means subchapter C, part 90, of the CFR, as it existed on July 1, 2020. (CFR 90)
CFR 1051
means subchapter U, part 1051, of the CFR, as amended from time to time. (CFR 1051)
CFR 1054
means subchapter U, part 1054, of the CFR, as amended from time to time. (CFR 1054)
CFR 1060
means subchapter U, part 1060, of the CFR, as amended from time to time. (CFR 1060)
CFR 1068
means subchapter U, part 1068, of the CFR, as amended from time to time. (CFR 1068)
emission family
means, for the 2019 and later model years,
  • (a) in respect of a company’s engines that are covered by an EPA certificate, the grouping that is specified in the EPA certificate;
  • (b) in respect of any fuel lines and fuel tanks that form part of the complete fuel system of an engine and that are covered by one or more EPA certificates, the grouping that is specified in the EPA certificates;
  • (c) in respect of a company’s engines other than those referred to in paragraph (a), the grouping determined in accordance with
    • (i) in the case of a bicycle engine, section 230 of subpart C of CFR 1051, and
    • (ii) in the case of any other engine, section 230 of subpart C of CFR 1054; and
  • (d) in respect of any fuel lines and fuel tanks that form part of the complete fuel system of an engine other than those referred to in paragraph (b), the grouping determined in accordance with
    • (i) in the case of a bicycle engine, section 230 of subpart C of CFR 1051, and
    • (ii) in the case of any other engine, section 230 of subpart C of CFR 1060. (famille d’émissions)
engine
means an off-road engine that is prescribed under subsection 5(1). (moteur)
volatile liquid fuel
means any fuel that is a liquid at atmospheric pressure and has a Reid vapour pressure greater than 13.79 kPa. (carburant liquide volatil)

(2) Paragraph (c) of the definition handheld machine in subsection 1(1) of the Regulations is replaced by the following:

(3) Paragraph (g) of the definition handheld machine in subsection 1(1) of the Regulations is replaced by the following:

(4) The portion of the definition fuel line in subsection 1(1) of the English version of the Regulations before paragraph (a) is replaced by the following:

fuel line
means hose, tubing and primer bulbs containing or exposed to liquid fuel — including moulded hose, tubing and primer bulbs — that transport fuel to or from an engine, but does not include

(5) The portion of the definition machine portative in subsection 1(1) of the French version of the Regulations before paragraph (a) is replaced by the following:

machine portative
Machine, à l’exclusion d’une bicyclette actionnée par un moteur de bicyclette, qui, selon le cas :

58 (1) Subsections 5(1) to (1.2) of the Regulations are replaced by the following:

5 (1) Off-road engines, including those of the 2019 and later model years that have a complete fuel system, are prescribed for the purposes of the definition engine in section 149 of the Act if they

(1.1) For the purposes of these Regulations, an engine kit is considered to be an engine that has a complete fuel system.

(2) The portion of subsection 5(2) of the Regulations before paragraph (a) is replaced by the following:

(2) The engines referred to in subsection (1) do not include an engine that is

(3) Subsection 5(2) of the Regulations is amended by striking out “or” at the end of paragraph (g) and by replacing paragraph (h) with the following:

(4) Subsection 5(3) of the Regulations is replaced by the following:

(3) For the purpose of section 152 of the Act, the prescribed engines are those prescribed under subsection (1) that are manufactured in Canada, except any engine that will be used in Canada solely for purposes of exhibition, demonstration, evaluation or testing.

(4) For greater certainty, the classes of engines that are prescribed for the purposes of section 154 of the Act are those that are prescribed under subsection (1).

59 Subsections 9(2) to (4) of the Regulations are replaced by the following:

(2) An engine must not be equipped with an auxiliary emission control device that reduces the effectiveness of the emission control system under conditions that may reasonably be expected to be encountered under normal operation of the engine, unless a description of the auxiliary emission control device is included in the evidence of conformity under section 16 or 17 and

60 Paragraphs 12.5(1)(a) and (b) of the Regulations are replaced by the following:

61 Section 12.6 of the Regulations is replaced by the following:

12.6 A company may choose to exempt one or more of its wintertime engines of the 2019 and later model years from the applicable exhaust emission standards for HC + NOx set out in section 12.5 if it includes a statement to that effect in the evidence of conformity in respect of the engines in question.

62 (1) The portion of paragraph 12.7(1)(b) of the Regulations before subparagraph (i) is replaced by the following:

(2) Paragraph 12.7(1)(c) of the French version of the Regulations before subparagraph (i) is replaced by the following:

63 (1) The portion of paragraph 12.8(1)(a) of the Regulations before subparagraph (i) is replaced by the following:

(2) Subsection 12.8(2) of the Regulations is replaced by the following:

(1.1) If a bicycle has a dry weight of less than 20 kg when a bicycle engine with a complete fuel system is installed on it, the bicycle engine may, instead of conforming to the standards referred to in paragraph (1)(a), conform to

(2) Despite paragraph (1)(a), a bicycle engine that has a total engine displacement of 70 cm³ or less may, instead of conforming to the exhaust emission standards referred to in paragraph (1)(a), conform to the exhaust emission standards set out in paragraph 615(b) of subpart G of CFR 1051.

64 (1) Subparagraph 16(d)(i) of the English version of the Regulations is replaced by the following:

(2) Subparagraphs 16(d)(ii) to (iv) of the Regulations are replaced by the following:

(3) Section 16 of the Regulations is amended by striking out “and” at the end of paragraph (c) and by adding the following after paragraph (d):

65 Section 17.1 of the Regulations is repealed.

66 Paragraph 17.2(4)(a) of the Regulations is replaced by the following:

67 Paragraph 17.4(1)(e) of the Regulations is replaced by the following:

68 Clause 19(1)(c)(ii)(B) of the French version of the Regulations is replaced by the following:

69 Paragraph 20(c) of the Regulations is replaced by the following:

70 Paragraph 26(1)(a) of the French version of the Regulations is replaced by the following:

Marine Spark-ignition Engine, Vessel and Off-road Recreational Vehicle Emission Regulations

71 (1) The definition fuel tank in subsection 1(1) of the Marine Spark-ignition Engine, Vessel and Off-road Recreational Vehicle Emission Regulationsfootnote 2 is replaced by the following:

fuel tank
means a fuel tank that is not portable. (réservoir de carburant)

(2) The portion of the definition fuel line in subsection 1(1) of the Regulations before paragraph (a) is replaced by the following:

fuel line means hose, tubing, and primer bulbs containing or exposed to liquid fuel, including hose or tubing that transports fuel to or from an engine or a vehicle’s engine that includes

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

amphibious vehicle
means a vehicle with wheels or tracks that is designed primarily for operation on land and secondarily for operation in or on water. (véhicule amphibie)

72 Subsection 5(2) of the Regulations is replaced by the following:

Prescribed vehicles — vessels

(2) Vessels — other than amphibious vehicles — that are designed to be propelled by a prescribed engine and in which a fuel line or fuel tank is installed are prescribed for the purposes of the definition vehicle in section 149 of the Act.

73 (1) Paragraph 5(4)(g) of the Regulations is replaced by the following:

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

Section 154 of Act

(6) For greater certainty, the classes of engines and vehicles that are prescribed for the purposes of section 154 of the Act are those that are prescribed under subsections (1) to (3).

74 Subsections 9(2) to (4) of the Regulations are replaced by the following:

Prohibition of defeat devices

(2) An engine, vessel or vehicle must not be equipped with an auxiliary emission control device that reduces the effectiveness of the emission control system under conditions that may reasonably be expected to be encountered under normal operation of the engine, vessel or vehicle, unless a description of the auxiliary emission control device is included in the evidence of conformity under section 35 and

75 Paragraphs 19(a) and (b) of the Regulations are replaced by the following:

76 Subparagraph 33(3)(d)(i) of the Regulations is replaced by the following:

77 Paragraph 37(1)(a) of the Regulations is replaced by the following:

Repeal

78 The Off-Road Compression-Ignition Engine Emission Regulationsfootnote 3 are repealed.

Coming into Force

Registration

79 (1) Subject to subsections (2) and (3), these Regulations come into force on the day on which they are registered.

Six months after registration

(2) Sections 1 to 25, 28 to 54 and 57 to 78 come into force on the day that, in the sixth month after the month in which these Regulations are registered, has the same calendar number as the day on which they are registered or, if that sixth month has no day with that number, the last day of that sixth month.

Eighteen months after registration

(3) Sections 55 and 56 come into force on the day that, in the eighteenth month after the month in which these Regulations are registered, has the same calendar number as the day on which they are registered or, if that eighteenth month has no day with that number, the last day of that eighteenth month.

SCHEDULE

(Subsection 27(1))

National Emissions Mark

The letters EC in large font with a maple leaf pictured inside the letter C.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: Emissions of air pollutants such as nitrogen oxides (NOx), hydrocarbons (HC), carbon monoxide (CO) and particulate matter (PM) from off-road engines contribute to adverse environmental and human health impacts. Canada has committed to developing standards that improve air quality in collaboration with the United States Environmental Protection Agency (U.S. EPA).

The existing Off-Road Compression-Ignition Engine Emission Regulations set emission standards for mobile compression-ignition (MCI) engines in Canada and are aligned with those of the U.S. EPA. However, there are no federal regulations in Canada setting emission standards for off-road engines such as large spark-ignition (LSI) and stationary compression-ignition (SCI) engines, both of which are regulated by the U.S. EPA.

In addition, the Standing Joint Committee for the Scrutiny of Regulations (SJCSR) has identified sections within the existing Off-Road Compression-Ignition Engine Emission Regulations (the previous Regulations) and the Off-Road Small Spark-Ignition Engine Emission Regulations (the SSI Regulations) that lack clarity or contain minor inconsistencies between the English and French text.

Description: The Off-road Compression-Ignition (Mobile and Stationary) and Large Spark-Ignition Engine Emission Regulations (the Regulations) will reduce air pollutant emissions from off-road engines and create a level playing field in the Canada–U.S. market for importers and manufacturers of these engines.

The Regulations will introduce new emission standards and requirements in alignment with the U.S. EPA’s standards for LSI and SCI engines. These standards include limits for NOx, HC, CO and, in the case of SCI engines, PM. The previous Regulations will be repealed and replaced by the Regulations, and while the standards for MCI engines will not be changed, new administrative and compliance flexibilities will be introduced.

In addition, the Regulations will address SJCSR concerns regarding clarity and inconsistency and introduce minor consequential amendments to other vehicle and engine emission regulations.

Rationale: From 2021 to 2035, the Regulations will reduce air pollutant emissions, including approximately 179 500 tonnes of CO, 26 900 tonnes of NOx, and 10 600 tonnes of volatile organic compounds (VOCs) from LSI engines as well as 19 600 tonnes of non-methane HC + NOx and 900 tonnes of PM from SCI engines. These estimated emission reductions will contribute to the protection of human health and the environment in Canada. The LSI engine emission standards are also expected to result in reductions of greenhouse gas (GHG) emissions of about 133 000 tonnes of CO2 equivalent, valued at approximately $7.8M. It is also estimated that the Regulations will result in cost savings of about $153.5M over the 15-year analytical period associated with fuel savings and reductions in maintenance for LSI engines, and reductions in administrative costs for importers of LSI, SCI and MCI engines. The Regulations will result in incremental costs of about $79.0M over the 15-year analytical period, based on the engine modifications that will be necessary to meet the LSI and SCI emission standards, and costs to the federal government. These estimated costs, in conjunction with the monetized benefits, will yield a net benefit of approximately $82.3M. This is a conservative estimate, as it does not include the monetized value of expected human health and environmental benefits related to air quality improvements. The Regulations will incorporate the U.S. EPA air pollutant emission standards for LSI, SCI, and MCI engines, which is consistent with the objectives of the Canada–U.S. Air Quality Agreement and the Canada–U.S. Regulatory Cooperation Council.

Issues

Emissions of air pollutants from off-road engines, including mobile compression-ignition (MCI), large spark-ignition (LSI) and stationary compression-ignition (SCI) engines, contribute to environmental and human health impacts in Canada. These engines emit nitrogen oxides (NOx), carbon monoxide (CO), volatile organic compounds (VOCs), hydrocarbons (HC) and particulate matter (PM) through the combustion and evaporation of fuel, which can result in the formation of ground-level ozone and contribute to smog. Smog is a noxious mixture of air pollutants, primarily ground-level ozone and PM. It can often be seen as a haze in the air, especially over urban centres, and leads to numerous negative impacts relating to human health and the environment.

Under the Ozone Annex to the Canada–U.S. Air Quality Agreement, Canada committed to developing standards that improve air quality in collaboration with the United States Environmental Protection Agency (U.S. EPA). Although emission standards already exist in Canada for MCI engines, emission standards for LSI and SCI engines are necessary to further reduce air pollutants and to ensure that all manufacturers, importers and distributors operating in the highly integrated Canada–U.S. market comply with the same standards. Without these standards, there is a risk that LSI and SCI engines that emit much higher levels of air pollution than equivalent engines permitted in the U.S. could continue to be imported into Canada. Such a scenario would result in adverse impacts on the environment and the health of Canadians.

In addition, the Standing Joint Committee for the Scrutiny of Regulations (SJCSR) identified sections within the now-repealed Off-Road Compression-Ignition Engine Emission Regulations (the previous Regulations) and the Off-Road Small Spark-Ignition Engine Emission Regulations (the SSI Regulations) that lack clarity or contain minor inconsistencies between the English and French text.

Background

The Government of Canada’s Addressing Air Pollution Horizontal Initiative (AAP HI) aims to ensure that Canadians have clean air and that the environment is protected. The AAP HI includes activities to address domestic and international air pollution sources including the reduction of transboundary air pollution, as agreed to under the Canada–U.S. Air Quality Agreement. Under the Ozone Annex to this agreement, Canada and the United States agreed to reduce emissions of ozone precursors that contribute to smog.

Despite improvements in air quality over the past two decades, the burden of air pollution on the health of Canadians continues to be significant. Many Canadians live in communities where ambient levels of nitrogen dioxide (NO2), sulphur dioxide (SO2), fine particulate matter (PM2.5) and ground-level ozone exceed current air quality standards, based on estimates calculated annually by the Department.footnote 7

Off-road engines, including LSI, SCI and MCI engines, emit smog-forming air pollutants such as NOX, HC, CO, VOCs and PM, as well as other toxic substances listed in Schedule 1 to the Canadian Environmental Protection Act, 1999 (CEPA). All off-road engines account for approximately 5% of the emissions of these pollutants in Canada.

To address these emissions, the Department of the Environment and Climate Change (the Department) has successfully introduced a range of vehicle, engine and fuel regulations aligned with the corresponding standards of the U.S. EPA, in accordance with Canada’s commitment under the Canada–U.S. Air Quality Agreement.

The previous Regulations, published in the Canada Gazette, Part II, in 2005 and amended in 2011, established emission standards for MCI engines powered by diesel fuel and used to power construction, mining, farming and forestry machines that align with those of the U.S. EPA.

Large spark-ignition engines

Prior to the Regulations, LSI engines were not subject to emission standards in Canada, though they were regulated in the United States. These engines produce more than 19 kilowatts (kW) of power and are usually fuelled by gasoline, propane or natural gas and are used to power forklifts, generators, and many other farm, industrial and construction machines. Many of the Canadian businesses that import LSI engines also import MCI engines and thus were already subject to the previous Regulations under CEPA.

There are no known manufacturers of LSI engines in Canada; therefore, it is assumed that all LSI engines in the Canadian fleet are, and will continue to be, imported from the United States or other countries. Air pollutant emissions from LSI engines have been regulated in the United States under the U.S. EPA’s “Tier 2” emission standards since 2007.footnote 8 Given that the Department estimates that about 90% of LSI engines imported are certified by the U.S. EPA, it is estimated that about 90% of LSI engines entering the Canadian market already comply with the U.S. EPA’s Tier 2 standards.

The following table is a more detailed breakdown, by application, of the estimated population of LSI engines in Canada in 2017.

Table 1: LSI engines in the 2017 Canadian fleet, by application
Application Count
Tractors 46 734
Forklifts 24 081
Specialty vehicle carts 22 013
Mowers 20 163
Aerial lifts 13 949
Generator sets 8 556
Other 5 518
Total 141 014

Source: internal modeling conducted by the Department, using a modified version of the U.S. EPA’s NONROAD (non-road engines, equipment and vehicles) model. In the time since this analysis was conducted, the U.S. EPA has incorporated the NONROAD model into the Motor Vehicle Emission Simulator (MOVES model).

Stationary compression-ignition engines

SCI engines were excluded from the previous Regulations and were not subject to any emissions standards in Canada, despite having been regulated in the United States since 2006. SCI engines are usually fuelled by diesel and are mainly used in Canada in generator sets and in water pumps to provide electricity and to supply water to sprinkler systems during blackouts. A small proportion of SCI engines is used as the prime source of electricity in communities in remote locations,footnote 9 or in on-the-grid locations to produce electricity for residential or industrial use during peaking hours when electricity demands increase.

SCI engines are also used in various industries to power air compressors, to drive heating, ventilation and air conditioning control systems, or to provide air to power pneumatic tools. Other applications include such things as agricultural equipment, hydraulic power units, irrigation sets, and underground mining equipment.

In addition to the air pollutant emissions mentioned above, SCI engines are a source of short-lived climate pollutants (SLCP)footnote 4 such as black carbon, a major component of PM, which SCI engines emit due to the combustion of diesel fuel and a lack of emission control technology.

There are no known manufacturers of SCI engines in Canada; therefore, it is assumed that all SCI engines in the Canadian fleet are, and will continue to be, imported. Based on an analysis of the approximately 18 500 SCI engines imported into Canada from 2012 to 2015, 72% came from the United States, followed by 10% from the United Kingdom. Information on the Canadian fleet also suggests that about 95% of these imports already comply with the SCI engine emission standards, such that only 5% of SCI engines will be impacted by the Regulations.

A summary of the estimated SCI engine fleet in Canada in 2015 is presented below.

Table 2: SCI engines in the 2015 Canadian fleet, by application
Application Count
Generator sets 35 453
Air compressors 9 202
Industrial pumps 6 480
Fire pumps 2 421
Other 1 166
Total 54 722

Source: Power Systems Research fleet data provided by Ramboll Environ.

Table 2 indicates that in 2015, 65% of SCI engines were used as generator sets, 17% as air compressors, 12% as industrial pumps, 4% as fire pumps and 2% in other applications.

Objective

The objective of the Regulations is to reduce the release of air pollutants generated by the use of LSI and SCI engines in Canada, which contribute to adverse environmental and human health impacts. The Regulations also aim to create a level playing field in the Canada–U.S. market for importers and manufacturers of these engines, minimize administrative costs incurred by importers, and improve the clarity and consistency of certain provisions in two other engine-related regulations.footnote 5

Description

The Regulations will introduce new emission standards for LSI and SCI engines. The previous Regulations will be repealed and replaced by the Regulations, combining the previous MCI engine standards together with the new LSI engine and SCI engine standards into one consistent framework. Emission standards for MCI engines will remain unchanged, although some new flexibility for certain applications of MCI engines will be introduced.

LSI engine emission standards

New emission standards for LSI engines will apply to those engines manufactured after the coming-into-force date of the Regulations. The Regulations will incorporate the U.S. EPA’s Tier 2 exhaust emission standards for HC + NOx and CO for LSI engines. The emission standards will apply over a useful life of 5 000 hours of operation or seven years, whichever comes first.

The Regulations will also introduce standards for evaporative emissions for LSI engines, in order to align with the U.S. EPA standards. Evaporative emissions are fuel vapours that are released into the atmosphere from fuel tanks, fuel lines and other components of an engine’s fuel system. LSI engines that have complete fuel systems attached will have to comply with emission standards for fuel line permeation, emissions resulting from daily changes in temperature, and running losses caused from engine heat during operation over a useful life of five years.

SCI engine emission standards

New emission standards for SCI engines will apply to those engines manufactured after the coming-into-force date of the Regulations. The Regulations will also introduce standards for NOx, PM, non-methane HC and CO emissions that are aligned with the U.S. EPA’s Tier 2, 3, or 4 emission standards for SCI engines. These standards will apply to new SCI engines that have a displacement of less than 30 litres per cylinder.

The most stringent Tier 4 standards will apply to non-remote non-backup SCI engines of all power ranges, whereas backup SCI engines and those destined for use in remote locations will have the option to meet less stringent standards that vary by engine size. The following table illustrates the emission standards.

Table 3: Applicable tiers for Canadian SCI engine imports, model year 2021 and later
Power range Non-backup and non-remote Backup or remote
≤37 kW Tier 4 Tier 2
>37 kW to ≤560 kW Tier 4 Tier 3
>560 kW Tier 4 Tier 2

Note: Fire pumps have separate, less stringent standards.

Alternate compliance mechanism for SCI engines

The Regulations include provisions to allow for alternative test procedures to the U.S. EPA test procedures set out in U.S. Code of Federal Regulations (CFR) part 60. These alternative test procedures must be equivalent to or more stringent than the U.S. EPA test procedures, which are incorporated by reference into the Regulations. Allowing for alternative test procedures will permit the manufacture and importation of new SCI engines that are not certified by the U.S. EPA (e.g. engines from other parts of the world), or that are certified by the U.S. EPA but not to the standards that are required by the emission standards. In the latter case, lower-tier engines could be imported into Canada, if they are subsequently modified with emission control after-treatment devices and tested to ensure they comply with the U.S. EPA Tier 4 emission standards. A company that uses alternative test procedures must, as part of the evidence of conformity, include evidence demonstrating that the alternative test procedures have parameters and specifications that are equivalent to or more stringent than the parameters and specifications of the U.S. EPA test procedures set out in CFR, part 60.

Reporting requirements for MCI, LSI and SCI engines

The Regulations will introduce the option to fulfill import declaration requirements via the Single Window Initiative of the Canada Border Services Agency (CBSA) and service providers that are qualified by the CBSA to transmit Integrated Import Declarations (IIDs). The IID integrates the Department’s declaration with data submissions required by the CBSA and other government programs. When an IID is submitted, the Department receives applicable data elements for review and retention. Therefore, importers who choose to use the IID are not required to submit separate import declarations to the Minister.

In addition, companies that import 50 or more LSI, SCI and MCI engines in a calendar year are permitted to submit a single import declaration to the Minister for each year in which they import engines. Companies that import fewer than 50 engines in a calendar year are required to submit a declaration to the Minister for each shipment of engines prior to their importation. Under the Regulations, a person who is not a company that imports fewer than 10 engines in a year is not required to submit an import declaration.

The Regulations will also include record keeping and several other administrative provisions necessary to administer and enforce compliance with the regulatory requirements, similar to what was required under the previous Regulations. These provisions include the following:

Other provisions

The Regulations also introduce flexibility for the following cases:

Minor administrative changes to other regulations

The Regulations include a number of consequential amendments to the SSI Regulations, as well as some amendments to improve consistency and clarity, as requested by the SJCSR. One amendment will align the emission standards with those of the U.S. EPA applicable to small engines used to power bicycles when the weight of the bicycle with its engine and complete fuel system weighs less than 20 kg. These amendments, otherwise, are minor in nature.

To be consistent with the approach of the U.S. EPA, the Regulations include a consequential amendment to the Marine Spark-Ignition Engine, Vessel and Off-road Recreational Vehicle Emission Regulations (the MERV Regulations) to allow MCI engines used in recreational vehicles to meet the standards for either a recreational vehicle or an MCI engine, and several amendments to improve consistency and clarity.

Coming into force

In general, most provisions of the Regulations will come into force on the day six months after the day on which they are registered. However, sections 26 and 27 of the Regulations will come into force on the day on which the Regulations are registered. Sections 55 and 56 of the Regulations will come into force on the day 18 months after the day on which the Regulations are registered. The Regulations will apply to MCI, LSI and SCI engines manufactured after the date on which the sections of the Regulations come into force, as applicable.

Regulatory development

Consultations

The Department conducted separate consultation sessions for LSI and MCI engines, and SCI engines. Results from both sets of consultations are summarized below.

LSI and MCI engines consultation

Preconsultations began in December 2014 with a webinar attended by approximately 40 attendees, including MCI and LSI importers and manufacturers, the Association of Equipment Manufacturers, Engine Manufacturers Association, and Industrial Truck Association. These stakeholders were provided with an overview of the planned provisions for LSI engines and the regulatory changes being considered for MCI engines. In February 2015, a working group was established to discuss various provisions of the proposed Regulations and four meetings were held prior to publication in the Canada Gazette, Part I.

The working group consisted of approximately 10 industry stakeholders comprised of association representatives, engine manufacturers and Canadian importers. Following the discussions, industry provided additional information relevant to the discussed topics to support regulatory development activities. Discussions also took place with the Department of National Defence concerning military activities that involve MCI engines. National Indigenous groups were informed of the proposed Regulations and invited to provide comments during the consultation period. Provinces and territories were consulted through the Canadian Council of Ministers of the Environment (CCME). Overall, participants expressed broad support for alignment with the U.S. EPA’s corresponding regulations along with the proposed reduction in administrative burden to streamline reporting and other proposed administrative flexibility.

The publication of the proposed Regulations in the Canada Gazette, Part I, on March 9, 2019, initiated a 75-day public comment period during which interested parties were invited to submit their written comments. The proposed Regulations were also posted on the CEPA Environmental Registry to make them broadly available to interested parties. Further, the Department emailed and posted letters to all known interested parties to inform them of the formal consultation process.

A webinar information session was held on April 30, 2019, to present an overview of the proposed key changes for MCI engines, compared to the previous Regulations. The session was attended by approximately 80 participants. A second information session was held on May 1, 2019, to present an overview of the proposed provisions for LSI engines, and was attended by approximately 60 participants.

During the 75-day public comment period on the proposed Regulations, the Department received 10 submissions with 34 comments from eight companies, one industry association, and one non-governmental organization. The Department held follow-up discussions with one of the industry associations representing engine manufacturers, and with one manufacturer of after-market treatment systems.

The Department also sent a notification to the Assembly of First Nations, the Métis National Council and the CEPA National Advisory Committee (NAC) to inform the members of these groups of the release of the proposed Regulations and the opportunity to be consulted and submit written comments. No comments were received from those Indigenous groups or CEPA NAC members.

All comments were taken into consideration during the development of the Regulations. Overall, Canadian stakeholders, including interested companies, industry associations, and non-government organizations, expressed support for the Department’s initiative to align with the U.S. EPA’s federal emission standards and to reduce air pollutant emissions from LSI engines in Canada. The following paragraphs summarize comments submitted by stakeholders, the Department’s analysis of these comments, and the resulting changes made to the Regulations.

Clarification on emergency situations

One company and one non-government organization requested that the scope of the definition of “emergency situation” (i.e. any situation in which there is a risk of loss of human life) be expanded to include loss of essential services, such as telecommunications and electricity. The Department considered this comment and subsequently modified the definition of “emergency situation” to include situations in which there could be any direct or indirect risk of the loss of human life. Since some essential services could indirectly affect human life, this change allows the possibility for some essential services to be within the scope of this provision, depending on the situation. Further guidance documents developed by the Department will provide examples of such risks.

One company requested that their amphibious vehicles powered by LSI engines be excluded from the Regulations, because in some instances, these vehicles can be used in emergency situations, such as search and rescue, and transportation of injured workers in remote areas. In addition, another company raised concerns about LSI engines used in fire pumps for emergency operations — specifically that their unique design requirements prevent these engines from being able to meet the applicable emission standards. To address these two comments, the Department added a provision that excludes LSI engines designed to be used exclusively in emergency machines from the Regulations and these engines must bear a label indicating that they are for use in or on an emergency machine only. This will ensure that situations requiring emergency response are not compromised, by allowing the use of LSI engines in which operational requirements and design features may prevent these engines from meeting the applicable emission standards. This approach is consistent with MCI engines and other regulations administered by the Department.

The proposed Regulations included a provision requiring companies to make a statement on an import declaration to indicate if the engine is equipped with an auxiliary emission control device (AECD). An industry association had requested that the Department reconsider the administrative burden associated with making this statement on an import declaration when this information is required to be maintained in the registration system for engines equipped with an AECD. The Department agreed that this information was duplicative and removed this requirement from the import declaration.

Modified reporting requirements

There were several comments received regarding the reporting requirements applicable to importers of loose Tier 4 compression-ignition engines that are shipped into Canada separately from their emission control systems or fuel systems. As these engines cannot meet the Tier 4 standards at the time of import, these engines would be required to be imported under subsection 153(2) of CEPA. Persons who import engines under this subsection of CEPA are required to submit a declaration prior to each engine’s import that includes, in the case of engines whose manufacture will be completed in Canada, a statement from the engine manufacturer that the engine would meet the emission standards when the engine is completed in accordance with the manufacturer’s instructions. Additionally, these engines would not be eligible to be included in “bulk” declarations, which is a mechanism that reduces administrative burden for persons and companies that import 50 engines or more in a calendar year. The Department recognized that there was an unreasonable administrative burden associated with importing loose Tier 4 engines.

To address this unnecessary burden, the Department modified the requirements for engines whose assembly will be completed in Canada by means of installing the emission control system or fuel system by allowing importers of these engines to use alternate declaration requirements that are similar to those applicable to engines that are compliant with the emission standards at the time of importation. In addition, the engines would be allowed to be included in bulk declarations. The declaration must be accompanied by a statement that the emission control system will be installed in a manner that is in accordance with the EPA certificate and the certificate holder’s installation instructions and that the engine will meet the applicable emission standards when the assembly is completed.

Other changes

The definition of “replacement engine” was clarified. The intention of the replacement engine provisions is to allow persons to import a replacement engine for installation in or on a machine in Canada and not to allow machines already equipped with a replacement engine to be imported into Canada.

AECD provisions were updated to clarify that the conditions under which the AECD operates must be included in the exhaust emissions test procedures, rather than the previous text which referred to the conditions expected to be encountered under normal operation of the engine. In addition, if an engine is equipped with an AECD, then the AECD must be described in the evidence of conformity, otherwise it will be considered a “defeat device.”

The coming into force of the option for using CBSA’s Single Window Initiative will be delayed by one year to allow for appropriate implementation and testing of the new reporting system. In the one year before the coming-into-force date for this provision, importers may continue to use the import declaration form available on the CEPA Registry to submit their declarations to the Minister.

A minor change was made to ensure consistency between the CFR parts 1045 (control of emissions from spark-engine propulsion marine engines and vessels) and 1051 (control of emissions from recreational engines and vehicles), and the MERV Regulations. A definition for “amphibious vehicle” was added, aligned with the definition in the CFR, and the prescribed vehicles provision was updated to clarify that amphibious vehicles are not considered vessels.

Other minor changes were made to some provisions to clarify regulatory intent and to ensure consistency with CFR requirements:

SCI engines consultation

Preconsultations began in November 2016 with stakeholders including manufacturers, importers, industry associations, small businesses, non-governmental representatives, national Indigenous representatives, other government departments and provinces and territories. Working groups were established to consider the proposed regulatory approach, including introducing flexibilities for engines used in remote locations and backup or emergency engines, as well as alternative testing provisions. The majority of industry stakeholders and associations agreed that less stringent standards for SCI engines should be allowed in remote locations due to concerns regarding the reliability of Tier 4 engines in remote locations and for engines used in backup or emergency situations, due to limited hours of use of these engines. The working groups also discussed the proposed regulatory approach to alternative testing provisions. Specifically, the proposed Regulations had included a clause to allow for the use of an alternative test method where it is demonstrated to be equivalent to the U.S. EPA test method.

The publication of the proposed Regulations in the Canada Gazette, Part I, on March 9, 2019, initiated a 75-day public comment period during which interested parties were invited to submit their written comments. The Department received 12 written comments related to SCI engines. A variety of stakeholders submitted comments, including Canadian engine importers, foreign engine and machine manufacturers, industry associations, and Canadian electricity utilities.

All comments were taken into consideration during the development of the Regulations. Overall, stakeholders expressed support for reducing air pollutant emissions from SCI engines in Canada and the decision to align with the existing U.S. EPA standards. The following paragraphs summarize the comments submitted by stakeholders and the Department’s analysis of these comments.

Alternative test procedures for SCI engines

An industry association suggested that accepting alternatives to the U.S. EPA test procedures would create an un-level playing field by permitting the use of less rigorous and less costly test methods, and would therefore be inconsistent with the goal of regulatory alignment between Canada and the United States. The issue of transparency was also raised; stakeholders noted that proposals for using an alternative test procedure should be consulted on to ensure a clear and open process. Stakeholders also raised concerns that provisions on alternative test procedures would lead to market uncertainty as regulatees sought to use the provisions in order to increase their competitiveness.

The Department held multiple conference calls with the industry association representing engine manufacturers to understand their formal submission, in particular as it related to the alternative test procedures available for SCI engines.

The Regulations will ensure the integrity of alternative test procedures by requiring evidence of conformity and data to demonstrate that test procedures include parameters and specifications that are equivalent to or more stringent than the parameters and specifications of U.S. EPA test procedures. Any test procedures with insufficient evidence of conformity would not be considered to be acceptable alternative test procedures. The onus will therefore be on the regulatee to demonstrate equivalency to the Department. The Department will publish alternative test procedures in order to address transparency concerns.

An after-market emission control manufacturer also raised issues related to the alternative test procedure provisions. The manufacturer requested that compliance with provincial rules and in-use durability testing be accepted as a method to demonstrate compliance with the Regulations. The manufacturer also requested clarification on how the Department administers the National Emissions Mark.

The Department also held multiple conference calls with the after-market emission control company to understand their formal submission regarding the alternative test procedure provisions and to clarify how the National Emissions Mark is administered.

The Department has analyzed current provincial point source testing methods as an alternative to EPA test methods and has concluded that they are not as stringent and will not be accepted as equivalent. Part 7, Division 5 of CEPA, under which vehicle and engine regulations, including these Regulations, are made, precludes an “in-use” demonstration of durability. A fundamental aspect of regulations made under Part 7, Division 5, is that engines demonstrate conformity to the regulations over the useful life of the engine prior to the first retail sale while the engine is in possession and control of the regulatee.

The Department conducted conference calls with provincial and territorial governments to discuss the proposed Regulations. This opportunity was also used to assess the opinion of provincial and territorial staff on the proposed alternative test procedures for SCI engines. Although the opinions regarding the proposed alternative testing procedures were mixed, the Department decided to retain the alternative test procedure provisions in the Regulations.

The Department recognizes that there are concerns with the alternative test procedure provisions. Those concerns can largely be mitigated through impartial administration of the provisions and evaluating proposals based on the evidence of conformity and their scientific merit in a transparent manner. While the Department recognizes that there are currently no alternative test procedures that are equivalent to the U.S. EPA test procedures, retaining the alternative test procedure provisions will allow for potential future innovation which may lower costs for these engines.

Fire pump engines

The Department received one submission concerning the ability to use an EPA label for stationary fire pump engines under CFR part 60 (standards of performance for new stationary sources) to comply with the Regulations. The Department made the required changes to the Regulations to include a reference to CFR part 60 in order to enable the use of the label.

Modern treaty obligations and Indigenous engagement and consultation

An initial assessment examined the geographical scope and subject matter of the Regulations in relation to modern treaties in effect, and did not identify any potential impacts to these treaties. The scope of the Regulations places regulatory requirements on non-remote non-backup LSI, SCI and MCI engines. Since this regulatory action is not expected to impact lands or resources covered by modern treaties, neither a detailed assessment nor specific consultation with Indigenous communities were deemed necessary.

Instrument choice

Several policy approaches have been considered, and descriptions of each are provided below.

Status quo

Under the status quo, it is estimated that around 90% of LSI engines imported annually already comply with the U.S. EPA’s Tier 2 standards, which are not presently mandatory in Canada. Although the proportion of compliant imports cannot be determined with the current SCI engine import data, it is estimated that 95% of the SCI engine imports already comply with the emission standards. While baseline compliance rates are high, the option of maintaining the status quo does not take full advantage of the opportunity for reductions in emissions from LSI and SCI engines.

Though the vast majority of imported engines comply with the U.S. EPA standards, approximately 3 000 LSI engines are imported into Canada each year, which emit up to 10 times more HC and NOx compared to engines with the latest technologies. At the same time, about 200 SCI engines are imported for non-backup non-remote use, which emit up to 80% more non-methane HC + NOx and up to 10 times more PM than similar engines destined for use in the United States. Without these standards, there is a risk that the import of higher-emitting LSI and SCI engines could continue. Maintaining the status quo would also be inconsistent with Canada’s commitment under the Canada–U.S. Air Quality Agreement to address transboundary air pollution and the objectives of the Canada–U.S. Regulatory Cooperation Council. Thus, this option was rejected.

Regulatory approach unique to Canada

If Canada were to adopt regulatory standards that are different from those introduced by the United States, product availability would potentially be reduced in the Canadian marketplace, and engine costs would likely increase. Unique Canadian standards would require additional design, manufacturing costs and extensive development of testing and certification procedures. The higher costs would be partly passed on to consumers. In addition, there would be an increased administrative burden on companies because they would be required to submit evidence of conformity to the Minister for all products to be imported, which would carry extra costs for businesses. Furthermore, if Canada adopted less stringent emission standards than those introduced by the U.S. EPA, environmental and health benefits would not be secured.

Harmonized regulatory approach

It is estimated that the benefits associated with environmental impact reductions would be greatest when aligning with U.S. EPA standards versus those of any other country because they are currently the most progressive of any federally established air pollutant emission standards for LSI and SCI engines. The alignment of emission standards in Canada with those of the United States would allow for incremental reductions in emissions by preventing the import of LSI and SCI engines into Canada that do not meet the U.S. EPA’s emission standards. Alignment with EPA standards therefore represents a cost-effective method for Canada to achieve important reductions in emissions from LSI and SCI engines, and would be consistent with the objectives of the Canada–U.S. Regulatory Cooperation Council and the Ozone Annex to the Canada–United States Air Quality Agreement.footnote 6 For these reasons, a harmonized regulatory approach was selected as the appropriate instrument.

Regulatory analysis

Benefits and costs

Analytical approach

An analysis of the incremental impacts (benefits and costs) was conducted using baseline and regulatory scenarios. To the extent possible, benefits and costs are quantified, monetized and expressed in 2018 Canadian dollars. Calendar years 2020 to 2035 are used as the time frame for this analysis, with 2018 being the present value base year and the more stringent standards for air pollutant emissions applying to the 2021 and later model year LSI and SCI engines. Further, the central analysis employs a 3% annual discount rate, in accordance with the Canadian Cost-Benefit Analysis Guide: Regulatory Proposals. When restricted by a lack of appropriate data, the impacts have been described in qualitative terms.

To provide an indication of the possible cost impacts and emission reductions that may be achieved as a result of the Regulations, the following two scenarios were modelled: (1) a baseline scenario in which it is assumed that, in the absence of the Regulations, around 90% of the LSI engines entering the Canadian market continue to comply with the U.S. EPA’s Tier 2 standards, and 95% of the SCI engines continue to comply with the applicable standards in the United States; and (2) a regulatory scenario in which 100% compliance with these standards is assumed. The assumption that 90% of imports of LSI engines are compliant with the U.S. EPA’s Tier 2 standard is based on an analysis of the countries of origin of historical imports and the emission standards in those areas. For SCI engines, 95% of engines are assumed to comply with the standards based on an analysis of the Canadian engine fleet. The analysis only considers the incremental costs and emission reductions projected to be generated by the Regulations.

There are no expected benefits or costs associated with the minor changes to the SSI Regulations or MERV Regulations, since the changes do not significantly alter the current standards nor introduce requirements that deviate from what is already expected to occur in the baseline scenario. The flexibility introduced for MCI engines used in certain applications is expected to have negligible impact given that the number of these engines and the number of hours of usage are low. These changes are therefore excluded from the analysis of benefits and costs.

Summary of impacts

From 2021 to 2035, the Regulations are projected to reduce air pollutant emissions from LSI engines, including reductions of about 179 500 tonnes of CO emissions, 26 900 tonnes of NOx emissions, and 10 600 tonnes of VOC emissions. The LSI emission standards will also contribute to reductions in the release of greenhouse gases, with the total estimated reductions being equivalent to the impact of 133 000 tonnes of carbon dioxide (CO2). Air pollutant emissions from SCI engines are expected to be reduced over this same time frame, including reductions in non-methane HC + NOx (combined) of about 19 600 tonnes, and reductions in PM emissions of about 900 tonnes. Other estimated benefits of the Regulations include fuel savings for owners of LSI engines in the order of 56 million litres of gasoline and mixed fuel, 138 million litres of liquefied petroleum gas, and 145 million litres of natural gas. The total present value of these fuel savings is estimated to be about $134.3M. In addition, the Regulations will generate an estimated $7.8M in administrative cost savings, $11.4M in maintenance cost savings, and $7.8M in GHG emission reductions.

It is estimated that the total costs of the Regulations will be around $79.0M over 2020 to 2035, which includes about $63.0M to domestic importers of LSI and SCI engines, $3.1M in additional costs to operate Tier 4 SCI engines, and costs to the federal government of about $13.0M for enforcement and compliance verification activities. Overall, the incremental impact of the Regulations is an estimated $82.3M in net benefits, in present value.

Benefits

The Regulations will reduce emissions of smog-forming air pollutants in Canada from LSI and SCI engines. LSI engines compliant with the Tier 2 emission standards will gradually replace existing higher-emitting engines as these older engines are removed from service, allowing for progressively greater emission reductions of air pollutants in Canada from the operation of the fleet of LSI engines. Similarly, the fleet of SCI engines will produce fewer emissions over time as higher-emitting non-backup non-remote engines are replaced by those that comply with the Tier 4 standards. Minimal near-term climate benefits are also expected given that reductions in PM, NOx and VOCs will result in reductions in black carbon and ozone, which are both SLCPs.

LSI benefits

The Department forecasted emissions from LSI engines for four reference years (2017, 2020, 2025 and 2030) using the peer-reviewed EPA NONROAD model with Canadian baseline data for the 2010 calendar year.footnote 10 While recognizing that the absence of a comprehensive data set which accurately captures the stock and flow of the LSI engine population in Canada increases uncertainty in forecasting, the forecast depicts an emissions trend that is reasonable and directionally representative based on existing information. The Regulations will come into effect starting with model year 2021. Linear growth rates between the four reference years were applied to estimate cumulative emissions in the baseline and regulatory scenarios for the LSI emission standards. The incremental results can be interpreted as an estimate of the impacts of the Regulations over the 2021 to 2035 period.

The more stringent Tier 2 standards for LSI engines will result in emission reductions of certain air pollutants, including CO, NOx and VOCs. In particular, the Regulations are projected to reduce CO emissions by about 3 000 tonnes in 2021 and by about 17 000 tonnes in 2035; NOx emissions by approximately 435 tonnes in 2021 and by about 2 563 tonnes in 2035; and VOC emissions by about 174 tonnes in 2021 and by approximately 1 000 tonnes in 2035. In total, the LSI emission standards are expected to reduce CO emissions by about 179 500 tonnes, NOx emissions by about 26 900 tonnes and VOC emissions by approximately 10 600 tonnes during the analytical time frame. The improved technologies used to meet the LSI emission standards will also reduce the release of several greenhouse gases, including carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O), with the total reductions being equivalent to the impact of 133 000 tonnes of CO2.footnote 11 Using the social cost of CO2, the social cost of CH4, and the social cost of N2O from 2021 to 2035, the value of this co-benefit is estimated to be about $7.8M in present value terms.

In addition to the projected emission reductions, the Regulations will provide machine owners with fuel savings from the increased fuel efficiency of LSI engines resulting from the adoption of the Tier 2 standards in Canada. From 2021 to 2035, the Regulations are expected to decrease gasoline and multi-fuel use by around 56 million litres, liquefied petroleum gas use by around 138 million litres, and natural gas use by around 145 million litres. Using the 2021 to 2035 fuel price forecasts from the Department’s Energy, Emissions and Economy Model for Canada (E3MC), these reductions are estimated to result in savings of about $134.3M in present value terms.

These substantial savings are foregone in the baseline scenario for the estimated 10% of non-compliant LSI engines, despite the relatively modest compliance costs. This reflects a phenomenon in consumer decision-making known as the energy paradox, which has several possible and complementary explanations (e.g. consumers may undervalue future savings, be overly averse to upfront costs, have incomplete information or understanding of the value of savings, and/or be considering the uncertainty of future fuel prices). In the context of LSI engines in Canada, importers may lack the incentive to select machines that consume less fuel, since they do not operate the machines and would therefore not enjoy these operating cost savings.

Lastly, maintenance cost savings for LSI engines of about $400 per enginefootnote 12 are expected from improvements in reliability and durability as a result of the fuel system upgrades necessary to meet the Tier 2 standard. Total maintenance cost savings are estimated to be approximately $11.4M in present value terms over the analytical period.

SCI benefits

The Department forecasted emission reductions for SCI engines by applying the difference in emission standards for PM and non-methane HC + NOxfootnote 13 in the baseline and policy scenarios to the estimated SCI engine imports from 2021 to 2035.

An estimated 8 tonnes of PM and 170 tonnes of non-methane HC + NOx will be reduced in the first year that the more stringent Tier 4 standards come into effect for non-remote, non-backup SCI engines. The incremental emission reductions resulting from newer Tier 4 engines will be realized throughout the lifespan of the engines; therefore, emission reductions will be greater over time as a greater proportion of the engine fleet transitions to Tier 4. About 108 tonnes of PM and 2 400 tonnes of non-methane HC + NOx are expected to be reduced in 2035.

In total, from 2021 to 2035, the proposed SCI engine emission standards are expected to reduce emissions of PM by about 900 tonnes and non-methane HC + NOx by about 19 600 tonnes. Furthermore, although there is no numerical difference in the Tier 4 CO standards compared to those in the lower tiers, reductions in CO may be a co-benefit of the proposed SCI engine emission standards, since one of the technologies that is used to achieve the necessary PM reductions might also reduce emissions of CO.footnote 14

Reductions in administrative costs

The Regulations are projected to result in a net decrease in administrative costs by eliminating the requirement to submit an import declaration to the Minister for most Canadian companies that import MCI engines, if the required declaration information is submitted to CBSA via the Single Window Initiative IID. However, this reduction in administrative burden will be offset to some extent by the introduction of reporting requirements for importers of LSI and SCI engines. The present value of the net administrative cost savings due to the Regulations is estimated to be around $7.8M.

Health benefits

LSI and SCI engine emissions contain air pollutants that are known to cause adverse human health impacts, through inhalation of directly emitted pollutants or via their transformation in the atmosphere to secondary PM2.5 and ground-level ozone. The health impacts of these pollutants are well documented in the scientific literature and include an increased risk of various cardiovascular and respiratory outcomes, such as an increased risk of premature mortality, asthma attacks, sick days, emergency room visits, and hospitalizations. In addition, it is recognized that there is no exposure threshold for many of these effects.

The emission reductions resulting from the Regulations are small relative to overall anthropogenic emissions and, given available data, the locations of the emission reductions are estimated at the provincial level only. As a result, detailed photochemical modelling of the impact of these emission changes on Canadian air quality was not conducted. It was also difficult to develop an alternative approach to monetize health benefits, since there is no known correlation between the imports of affected LSI and SCI engines and urban areas. For this reason, there was no credible basis on which to supplement the provincial level data with additional assumptions regarding exposure to human populations. Nevertheless, given the well-established impacts of air pollution on human health and the emissions reductions projected from LSI and SCI engines, it is expected that the Regulations will have meaningful population health benefits in Canada.

As part of the development of the Multi-Sector Air Pollutant Regulations, the Department of Health carried out an analysis of the health benefits of reducing NOx emissions from industrial boilers and heaters. That analysis showed that a NOx reduction from boilers and heaters of approximately 100 000 tons over a period of 20 years would provide health benefits valued at roughly $390M in present value terms.footnote 15 In another example, as part of the Department of Health’s analysis of the amended On-Road Vehicle Engine and Emission Regulations and Sulphur in Gasoline Regulations, it was estimated that new vehicle and fuel standards would prevent approximately 28 000 tons of NOx, 16 000 tons of VOCs, and 720 tons of PM2.5 from being emitted from vehicles in the year 2030. In that analysis, it was estimated that the health benefits associated with those emission reductions would be roughly $1.5 billion for the year 2030 alone, or $1 billion in present value terms.footnote 16 These two examples illustrate that the health benefits associated with air pollution emission reductions from a regulation can be substantial.

Environmental benefits

Air pollutants such as NOx, VOCs and CO are precursors to the formation of secondary particulate matter and ground-level ozone, which impact air quality and the environment by damaging forest ecosystems, crops and wildlife. Deposition of excess nitrogen from NOx to surface waters may also lead to lake and stream eutrophication, which poses a threat to aquatic biota. Finally, smog and deposition of suspended particles may impair visibility and result in the soiling of surfaces, respectively, thereby reducing the welfare of residents and recreationists, and potentially increasing cleaning expenditures. Detailed modelling of the environmental benefits was not conducted as a result of the data limitations mentioned above.

Costs
LSI costs

Compliance costs per LSI engine to meet the Tier 2 emission standards are assumed to be relatively minor. These standards have been implemented in the United States since 2004, thereby giving manufacturers many years to achieve efficiencies in the manufacturing process. Furthermore, expensive after-treatment devices are not required in order to comply with the proposed Tier 2 emission limits. For this reason, input values from the U.S. Regulatory Impact Analysis: Control of Emissions from Nonroad Diesel Engines (PDF) were inflated to 2018 Canadian dollars to arrive at a reasonable approximation of the engine compliance costs for the proposed LSI standards. Based on this information, the undiscounted per-engine costs are assumed to be approximately $1,120 for engines that use gasoline and multi-fuel and $770 for those that use liquefied petroleum gas (LPG) or natural gas (NG). These incremental costs represent a relatively small proportion of total machine costs, which can range from $10,000 to more than $200,000. Given that 90% of LSI engine imports are assumed to comply with the Tier 2 standards in the baseline scenario, the majority of machines on the market are already expected to have these cost increases reflected in their prices.

Using import data from CBSA, these undiscounted annual costs are estimated at $2.5M in 2021, and are estimated to rise to $2.8M in 2035. In present value terms, costs are expected to decrease over time, despite an assumed 1% growth rate in LSI engine imports, due to the effects of discounting. The engine compliance costs that will result from the proposed LSI emission standards from 2021 to 2035 are estimated to be about $29.5M.

SCI costs

The after-treatment devices, which are often required to meet the Tier 4 NOx and PM limits, can significantly increase costs when compared to SCI engines of lower tiers. In order to arrive at an accurate estimate of the costs that will be incurred as a result of the Regulations, the Department established a contract to obtain engine cost differentials between the tiers over a variety of power ranges. In addition to the increase in capital cost paid by Canadian importers of SCI engines, there are incremental operating costs associated with the proper use of the after-treatment devices. This includes refilling certain fluids that are used to reduce the release of NOx, and replacing filters that are used to reduce the release of PM.

The following table presents the average per-engine undiscounted capital and operating costs that are expected to be incurred as a result of the transition to Tier 4 from the Tier 2 or Tier 3 standards.

Table 4: Average per-engine incremental costs for Tier 4 SCI engines
Engine size (kW) Capital cost (one time) Operating cost (annual) Tier 4 Technologies
19–37 $2,000 — DPF + DOC
37–56 $3,900 — DPF + DOC
56–75 $5,600 $20 DPF + DOC + SCR
75–130 $7,500 $40 DPF + DOC + SCR
130–225 $10,600 $50 DPF + DOC + SCR
225–450 $21,500 $120 DPF + DOC + SCR
450–560 $20,500 $250 DPF + DOC + SCR
560–2237.1 $82,200 $1,830 DOC + SCR

Note: DPF stands for “diesel particulate filter,” DOC stands for “diesel oxidation catalyst,” and SCR stands for “selective catalytic reduction.”

The Regulations are expected to increase average engine costs by about 35% to 50% relative to their costs in the baseline scenario. Given that the purchase of machines powered by SCI engines represents a significant capital expenditure, these cost impacts are expected to be amortized over the expected lifespan of the machines, which is typically about 15 years.

Applying the above-mentioned per-engine cost increments to the estimated number of non-compliant imports in the first year that the Regulations come into effect yields a present value capital cost of $2.8M in 2021. The present value capital costs are estimated to be about $1.6M in 2035, with a total discounted capital cost from 2021 to 2035 of about $33M. Operating costs will be about $35,000 in 2021. Operating costs are higher in the later years of the analysis, as more incremental Tier 4 engines will be in operation over time, with about $330,000 in present value expected in 2035. In total, the discounted operating costs incurred as a result of the Regulations will be about $3.1M over 2021 to 2035, for a total present value cost associated with the proposed SCI emission standards of approximately $35.6M.

Miscellaneous costs

Importers and manufacturers of LSI and SCI engines, or the machines that use them, will also carry miscellaneous costs under the regulatory scenario. These additional costs include external testing to demonstrate compliance, and providing, updating and/or translating engine operating instructions for engine purchasers. These costs are estimated to be approximately $0.9M in present value terms over 2021 to 2035.

Government costs

The federal government will also carry some costs as a result of the Regulations for compliance verification and enforcement. With respect to enforcement costs, a one-time amount of approximately $300,000 will be required for the training of enforcement officers and $70,000 for strategic intelligence assessment work. Additionally, the estimated annual cost of administration, coordination and analysis to support enforcement activities is approximately $30,000. The annual enforcement costs are estimated to be about $300,000 broken down as follows: roughly $150,000 for inspections (which includes operations and maintenance costs, transportation and sampling costs) and measures to deal with alleged violations (including warnings, environmental protection compliance orders and injunctions), approximately $70,000 for investigations, and about $50,000 for prosecutions, with no additional investments expected to be required for ongoing intelligence.

Alternative test procedures for SCI engines

In contrast to Tier 4 certified SCI engines that are imported from U.S. equipment manufacturers, certain Canadian businesses specialize in the production of exhaust after-treatment units that can be added to new Tier 2, 3 or 4 engines to further reduce emissions. These products may be sold to achieve compliance with the provincial engine emissions limits in Ontario, or with the facility-level emission standards in other provinces. To provide flexibility for these businesses, the Regulations include provisions that allow for alternative test procedures to the U.S. EPA test procedures set out in CFR part 60. A company that uses alternative test procedures must, as part of the evidence of conformity, include evidence demonstrating that the alternative test procedures have parameters and specifications that are equivalent to or more stringent than the parameters and specifications of the U.S. EPA test procedures set out in CFR part 60.

Due to data limitations, the allowance of alternative testing methods was not factored into the central analysis. The use of aftermarket emission control systems to comply with the SCI engine emission requirements, should an alternative testing method be accepted, could reduce the incremental compliance costs. The exact magnitude of the price difference between a new Tier 4 engine and a modified engine of a lower tier, and the extent to which modified engines could potentially be chosen as a method of compliance with the Regulations is not known at this time.

Changes between Canada Gazette, Part I and Part II

The following changes were made to the cost-benefit analysis that was used in the Canada Gazette, Part I (CGI), publication:

These changes yield an increase in the estimated net present value of costs and benefits. Since the increase in benefits exceeds the increase in costs, which is primarily due to the increased value of estimated fuel savings, the summary in Table 5 indicates a slightly higher net benefit than in the CGI publication.

Summary

The following is a summary of the benefits and costs that are expected to result from the implementation of the Regulations.

Table 5: Summary of estimated benefits and costs, 2020 to 2035

A. Quantified impacts (in Can$, 2018 price level)
  Total (PV) Annualized average
Benefits
Industry Fuel savings 134,302,988 11,250,102
Administrative cost savings 7,773,675 651,174
Maintenance cost savings 11,403,486 955,231
Canadians GHG emission reductions 7,830,039 655,896
Total monetized benefits 161,310,189 13,512,403

Note: Costs are in 2018 CAD, and present values were calculated using a 3% discount rate and a discount year of 2018. The total analytical period is 16 years, however incremental costs in 2020 are exclusively incurred by the government. Costs to regulatees and corresponding benefits are assumed to begin in 2021.

A. Quantified impacts (in Can$, 2018 price level) — continued
  Total (PV) Annualized average
Costs
Industry LSI engine compliance costs 29,522,900 2,473,032
SCI engine compliance costs 32,580,809 2,729,183
SCI engine operating costs 3,059,043 256,246
Miscellaneous compliance costs 876,383 73,412
Government Government costs 12,980,287 1,033,372
Total monetized costs 79,019,422 6,565,244
Net monetized benefits 82,290,767 6,947,159

Note: Costs are in 2018 CAD, and present values were calculated using a 3% discount rate and a discount year of 2018. The total analytical period is 16 years, however incremental costs in 2020 are exclusively incurred by the government. Costs to regulatees and corresponding benefits are assumed to begin in 2021.

B. Quantified impacts (in non-$)
  Total reductions Annual average
Positive impacts
Canadians CO emission reductions (t) 179 470.9 11 964.72
NOx emission reductions (t) 26 919.6 1 794.64
VOC emission reductions (t) 10 601.4 706.76
CO2 equivalent emission reductions (t) 133 079.4 8 871.96
Non-methane HC + NOx emission reductions (t) 19 626.9 1 308.46
PM2.5 emission reductions (t) 875.7 58.38
Reduced consumption of natural gas (ML) 145.2 9.68
Reduced consumption of propane (ML) 137.7 9.18
Reduced consumption of gasoline and multi-fuel (ML) 56.1 3.74
Negative impacts
Canadians None 0 0

Note: Reduction of emissions in tonnes (t) and reduction of fuel consumption in million litres (ML).

C. Qualitative impacts

Positive health impacts (avoided health issues) to Canadians from reductions in air pollutant emissions are anticipated.

A sensitivity analysis with a 7% discount rate was also conducted. In that scenario, the total monetized costs would be $55,979,373 and total monetized benefits would be $109,860,605 in present value terms. This scenario therefore implies a net benefit of monetized impacts of $53,881,232 in present value terms, in contrast to $82,290,767 if a 3% discount rate is used.

Small business lens

Numerical values in this section were calculated using a 10-year analytical period (from 2021 to 2030), a 2020 present value base year, a 7% discount rate, and constant 2012 Canadian dollars.

For the purposes of the small business lens analysis, a proxy value was generated to estimate the number of small businessesfootnote 17 that import MCI, LSI, and SCI engines into Canada. By analyzing information on imports into Canada for the 2016 calendar year, it was established that, in general, companies that import fewer than 21 engines in a calendar year could be classified as small businesses or “small business importers,” based on the declared values of their imports made under several transportation-related regulations administered by the Department. As a result, it is estimated that the Regulations will have an impact on up to 2 652 small business importers, which is approximately 80% of the 3 309 identified businesses.

Further, a small number of machine manufacturing companies that install or modify fuel systems on MCI, LSI, and SCI engines in Canada will be considered engine manufacturers under the Regulations, and they will consequently be required to demonstrate compliance with the evaporative emission standards. It is assumed that, in order to demonstrate compliance, all of the small Canadian manufacturers will opt to use engine components that have already been certified by the U.S. EPA to avoid carrying the costs associated with independently conducting emission test procedures.

Some compliance costs would be incurred by small businesses as a result of the Regulations. Compliance costs to regulatees include the price premium to import LSI and SCI engines of higher tiers, and providing, translating and updating instruction materials. Some compliance costs will also be incurred by end users of SCI engines due to the incremental operating costs associated with Tier 4. In addition, end users of LSI engines will enjoy fuel savings and maintenance cost savings associated with the efficiency improvements from Tier 2. Due to data limitations, the costs and benefits associated with end users could not be disaggregated by business size. The compliance cost impact on small business importers was calculated by applying the fraction of small versus medium and large importers to the estimated LSI and SCI engine capital costs over a 10-year analytical period, from 2021 to 2030. These costs have a present value of approximately $29M.

Since importers of LSI and SCI engines were not previously regulated in Canada, the Regulations will increase the administrative burden incurred due to imports of these engines by imposing reporting requirements. This administrative burden, which will affect some small businesses, is associated with learning about regulatory requirements, record keeping, and gathering and submitting information to demonstrate compliance. The Regulations also contain two elements that will reduce administrative burden for small businesses. First, as described above, the Regulations will introduce the option to fulfill import declaration requirements via the CBSA’s Single Window Initiative and service providers that are qualified to transmit IIDs, which will be available one year after the coming into force of the Regulations. Second, businesses that are not “companies” as defined under CEPA, and that also import fewer than 10 engines in a calendar year, will be exempt from the requirement to submit declarations to the Minister. The net administrative impact on small businesses as a result of these flexible reporting options is a savings of approximately $3.3M from 2021 to 2030, in present value terms.

In total, the sum of compliance costs and administrative cost savings that will be incurred by small businesses as a result of the Regulations is approximately $9,700 per affected business, in present value, from 2021 to 2030.

Table 6: Small business lens summary
Cost type Annualized average Present value
Compliance costs $4,123,500 $28,961,760
Administrative costs −$471,780 −$3,313,610
Total costs $3,651,720 $25,648,150
Average costs per small business $1,380 $9,670

The estimated net impact of fuel savings, maintenance cost savings, and incremental SCI engine operating costs are not reported in Table 6, but these items total approximately $66M in savings between 2021 and 2030. While data on end user business sizes was not available, a breakeven analysis suggests that the net impact of the Regulations on small businesses is positive if just 39% of these end user savings fall on small businesses.

Although businesses that are not “companies” as defined in CEPA and that import fewer than 10 engines per calendar year will not be required to submit declarations, compliance monitoring and enforcement of the regulatory requirements can be effected through the use of Harmonized System Code import data from CBSA. Therefore, this flexibility is not expected to introduce any considerable risks to human health or the environment as a result.

From December 2014 through June 2015, and in November 2017, the Department consulted five small businesses subject to the Regulations, as well as three industry associations representing small importers in Canada, in order to discuss the proposed measures to reduce administrative burden under the Regulations. During these discussions, the Department proposed options for submitting importation declarations. In general, the stakeholders were supportive of the proposed option of accepting CBSA’s Integrated Import Declaration, and of not requiring submission of declarations for businesses that are not “companies” as defined by CEPA and that import fewer than 10 engines annually.

One-for-one rule

The one-for-one rule applies, as the Regulations will result in an incremental change in administrative burden on business. The Regulations repeal an existing regulation and replace it with a new regulatory title, which results in no net increase or decrease in regulatory titles. The increase in administrative burden associated with learning about regulatory requirements, record keeping, and gathering and submitting information to demonstrate compliance will be more than offset by a decrease in the administrative burden incurred as a result of changes associated with import declarations for MCI engines. The Regulations will eliminate the requirement for most Canadian companies that import MCI engines to submit an import declaration to the Minister, if the required declaration information is submitted to CBSA via the Single Window Initiative IID. These flexible reporting options are assumed to decrease administrative burden through time savings due to reduced information retrieval, and reporting or submitting information. This corresponds with reduced labour costs to staff in administrative as well as management positions. Overall, the off-road engine and machine industry as a whole is expected to incur a net decrease in administrative burden; therefore, the Regulations are an “OUT” under the rule.

Stakeholders familiar with the existing reporting requirements were consulted on the administrative costs associated with import declarations and report submissions. Companies that were familiar with the reporting requirements of the previous Regulations were sent a questionnaire asking them to confirm the Department’s administrative burden estimates or to supply their own estimates. The Department considered their estimates when calculating the administrative burden change that will result from the Regulations.

The previous Regulations are repealed and replaced with the Regulations, satisfying the requirement that no additional regulatory titles be created. Using constant 2012 Canadian dollars, a 10-year time frame, a 2012 present value base year, and a 7% discount rate, the Regulations are expected to result in annualized administrative cost savings of $306,447, which is equivalent to an annualized saving of $93 per small business.footnote 18

Regulatory cooperation and alignment

The Regulations will satisfy the objectives of the Canada–U.S. Air Quality Agreement by aligning Canadian emission standards for LSI and SCI engines with the standards in force in the United States. The only provision concerning LSI engine standards that is unique to the Canadian Regulations is the exclusion for LSI engines installed in emergency machines. Alignment with these standards is expected to result in an exchange of compliance verification and testing information between the governments of Canada and the United States.

Through the Canada–U.S. Regulatory Cooperation Council, Canada has committed to more effective approaches to regulation that enhance the economic competitiveness and well-being of the two countries, while maintaining high standards with respect to public health and safety and environmental protection.

Strategic environmental assessment

LSI engines

The Regulations have been developed under the AAP HI. A public statement on the strategic environmental assessment (SEA) for the AAP HI was issued in 2017. The assessment concluded that activities under the AAP HI support the Federal Sustainable Development Strategy’s goal of minimizing the threats to air quality so that the air Canadians breathe is clean and supports healthy ecosystems.

SCI engines

The SCI engine portion of the Regulations has been developed under the Pan-Canadian Framework. A public statement on the SEA for the Pan-Canadian Framework was issued in 2016. The SEA concluded that regulatory policies developed under the Pan-Canadian Framework are expected to reduce GHG emissions, black carbon in the case of the Regulations, and are in line with the goals in the 2016–2019 Federal Sustainable Development Strategy of effective action on climate change and clean energy.

Gender-based analysis plus (GBA+)

The Department obtained data and information on the population, location, and application of LSI and SCI engines across Canada. This data allowed the Department to assess how regulating these engines might impact diverse groups of Canadians differently. The analysis demonstrated that LSI and SCI engines are used for various applications across multiple industry sectors, including power generation, fire pumps, agriculture equipment, construction equipment, and mining equipment. The data also showed that these engines are located in all Canadian provinces and territories.

Consultation sessions were held throughout the regulatory development process with various stakeholder groups that may be impacted by the Regulations, such as industry associations, engine manufactures, engine importers, utility companies, end users, other government departments, and provincial, territorial and municipal governments. These sessions allowed the Department to identify and consider factors that may impact certain groups of individuals disproportionately.

From discussions with provincial and territorial governments, it was brought to the Department’s attention that SCI engines used to provide prime power in remote communities will require special consideration given their significance to these communities. To address this, flexibilities have been put in place to ensure that there will be no higher costs to purchase new SCI engines in remote locations as compared to the status quo. The flexibilities allow for Tier 2 or 3 engines to be used in remote locations as opposed to the most stringent Tier 4 standards. The Department’s research indicates that SCI engines below Tier 2 standards are not available in the Canadian market, resulting in no additional impacts to remote communities once the Regulations come into force. In addition, the Regulations will introduce a flexibility for MCI engines used exclusively to provide primary power in remote locations. These engines will not be required to meet Tier 4 standards, but are instead permitted to comply with Tier 2 or 3 standards.

An analysis of additional feedback received from the consultations suggested that the Regulations are not expected to impact individuals or groups differently based on factors such as gender, sex, age, income, geography, language, or education. The Department will monitor and evaluate potential emergent differences in impacts over time.

Implementation, compliance and enforcement, service standards, and performance measurement and evaluation

Implementation

In general, most provisions of the Regulations will come into force on the day six months after the day on which they are registered. However, sections 26 and 27 of the Regulations will come into force on the day on which the Regulations are registered. Sections 55 and 56 of the Regulations will come into force on the day 18 months after the day on which the Regulations are registered. The Regulations will apply to MCI, LSI and SCI engines manufactured after the date on which the sections of the Regulations come into force, as applicable.

Compliance and enforcement

The Department will undertake various compliance promotion activities associated with the Regulations, such as providing information to regulated parties concerning the requirements of the Regulations, maintaining a web page related to the Regulations on the CEPA Registry, distributing advisory emails and letters, and responding to inquiries. A guidance document will be published on the Department’s web page to facilitate the implementation of the Regulations and to assist companies with the administrative and technical provisions of the Regulations, such as evidence of conformity and the procedures that should be followed when submitting required documentation to the Minister. For compliance verification purposes, departmental enforcement officers will apply the compliance and enforcement policy for CEPA to the Regulations in the same manner that the policy was applied to the previous Regulations.

Service standards

Service standards will continue to apply to the Regulations in the same manner that they applied to the previous Regulations.

Performance measurement and evaluation

The expected outcome of the Regulations will be reported as an indicator within the AAP HI. The AAP HI outcomes and performance indicators are reported annually through the Department’s Departmental Results Report. The AAP HI indicators are found in the Air Quality Program Performance Information Profile within the Departmental Results Framework. The immediate outcomes of the Regulations will contribute to the shared ultimate program outcome: Canadians will have clean air; and the intermediate mitigation outcome: Canadian air pollutants will be reduced. The intermediate mitigation outcome is determined on the basis of two performance indicators: emissions of air pollutants from industrial and transportation sources in tonnes of fine particulate matter, sulphur oxides, NOx, and VOCs; and emissions of air pollutants from transportation and mobile sources in tonnes of CO.

Clear and quantified performance indicators will be defined to measure the progress of compliance with federal air pollution regulations, which will contribute to the AAP HI outcome. For example, these indicators will include measurements of incidents of non-compliance reported by enforcement officers, compliance with requirements for records that regulated parties must submit to the Minister and emissions testing of various CI and LSI engine samples. Compliance verification will be largely based on current programs that are carried out to verify compliance with the previous Regulations and other regulations related to emissions from transportation sources. Follow-up assessments will be scheduled in accordance with the Department’s regulatory planning cycle.

Contacts

Matt Watkinson
Director
Regulatory Analysis and Valuation Division
Environment and Climate Change Canada
200 Sacré-Cœur Boulevard
Gatineau, Quebec
K1A 0H3
Email: ec.darv-ravd.ec@canada.ca

Stéphane Couroux
Director
Transportation Division
Environment and Climate Change Canada
351 Saint-Joseph Boulevard
Gatineau, Quebec
K1A 0H3
Email: ec.apregdevinfo-infodevregpa.ec@canada.ca

Matthew Cloutier
Acting Director
Electricity and Combustion Division
Environment and Climate Change Canada
351 Saint-Joseph Boulevard
Gatineau, Quebec
K1A 0H3
Email: ec.combustion.ec@canada.ca