3. Issues on Regulatory Text: Comments and Reply

• Dow stated: "In the above cited regulation - Regulations Amending the On-Road Vehicle and Engine Emission Regulations - we do not object to the proposed amendments and support the Canadian/US alignment. Environment Canada should be encouraged to align to North American or regional regulatory regimes; when it makes sense. In this situation, there is no need for Canada to be differentiate and should participate in a common Canada/US regulatory approach."
  
• "MECA supports Environment Canada's efforts in aligning the Canadian motorcycle emission standards beginning with model year 2006 with the U.S. Environmental Protection Agency's (U.S. EPA) standards. The U.S. EPA Emission Standards for New Highway Motorcycles are expected to provide significant emission reduction through more stringent emission standards for currently regulated motorcycles, regulating previously unregulated motorcycle engines of less than 50 cc as well as through new evaporative emission standards."
• MMIC Stated: "In general the MMIC member companies support the Part I as written."

Reply:

The proposed amendments to the current Regulations have the primary purpose of introducing new requirements for 2006 and later model year on-road motorcycles to maintain alignment with new rules of the EPA. This approach provides major reductions in emissions at a low additional cost to Canadians.

AIAMC and CVMA stated:

• "While the majority of the proposed amendments pertain solely to the motorcycle industry, we note that an amendment is proposed to section 36(2) which has the potential to impact time and manner of compliance for the automotive industry."
  
• "The proposed regulatory text appears to be inconsistent with the principle of self certification, which has been the foundation of Canadian motor vehicle regulation since its inception. Self-certification has served Canadians well by making efficient use of both industry and government resources. The members of AIAMC and CVMA are concerned that the Department appears to be proposing a broad-brush approach to Canadian Specific Certification establishing essentially a "defacto" government "type approval" system for all Distributors/Manufacturers without demonstrating a need for this change in regulatory policy."
  
• "The members of AIAMC and CVMA wish to note that manufacturers require flexibility regarding filing and processing of regulatory related paper work to accommodate vehicles in various stages of the manufacturing and distribution process - a process which is deemed ongoing until the vehicle leaves the control of the manufacturer or its designated agent."
  
• "We also note that, depending upon the intent of the proposed amendment to Section 36(2), it has the potential to be inconsistent with what we consider to be the intent of Section 39 (2)and possibly provisions in the Canadian Environmental Protection Act 1999(CEPA 1999). It is the understanding of our members that section 153(2)of the CEPA 1999 provides manufacturers with the necessary flexibility to accommodate vehicles in various stages of the manufacturing process."
  
• "If the Department intends to proceed with an amendment to section 36, the AIAMC and CVMA believe that a common understanding is required around time of compliance, as it pertains to the manufacturing and distribution process and in what circumstances do the exemptions found in Section 153(2) of the Act apply. Additionally, a clear understanding surrounding the filing, timing and processing of paperwork, as may be specified for Canadian specific product, is necessary. We suggest then that an understanding and consensus could be reached on these important points."

MMIC Stated:

• "Regarding the new Section 36 (2), we note that, depending upon the intent of the proposed amendment to Section 36(2), it has the potential to be inconsistent with what we consider the intent of Section 39 (2) and possibly provisions in the Canadian Environmental Protection Act 1999 (CEPA 1999). It is the understanding of our members that section 153(2) of the CEPA 1999 provides manufacturers with the necessary flexibility to accommodate vehicles in various stages of the manufacturing process."
  
• "The actual definition of "time of compliance" has not been made evident and it would be useful to understand what the Division's thoughts are on this. We also note that while the provisions of 153(2) provide for exemptions, it is not altogether clear for what circumstances such anexemption can be used."

Reply:

The proposed amendment to section 36 did not impose new requirements on companies but were intended to provide greater clarity on the existing requirements when read in conjunction with pertinent provisions of the Act.

Section 36 of the current Regulations relates to paragraph 153(1)(b) of the Act which states:

• 153. (1) No company shall apply a national emissions mark to any vehicle, engine or equipment, sell any vehicle, engine or equipment to which a national emissions mark has been applied or import any vehicle, engine or equipment unless
  
  (a) ...
  
  (b) evidence of such conformity has been obtained and produced in the prescribed form and manner or, if the regulations so provide, in a form and manner satisfactory to the Minister;

In the case of vehicles that are not certified by the EPA (i.e., "Canada-unique" vehicles), section 36 of the current Regulations requires that the evidence of conformity "be obtained and produced by a company in a form and manner satisfactory to the Minister". Changes were proposed to section 36 of the current Regulations to make it clear that a company importing a "Canada-unique" vehicle must submit the evidence of conformity to Environment Canada before affixing the national emission mark or importing the vehicle to ascertain that it has been obtained and produced "in a form and manner satisfactory to the Minister". While this is effectively already required pursuant to the provisions of paragraph 153(1)(b) of the Act, there were indications that the process may not be clear to all regulatees.

Emission standards and the associated certification procedures for on-road vehicles and engines are complex. The vast majority of vehicles sold in Canada is sold concurrently in the U.S. and are therefore subjected to the EPA's comprehensive emission certification process. Section 36 of the Regulations provides an opportunity for the Department to review the evidence of conformity for "Canada-unique" vehicles for consistency with the requirements of the Regulations as early as possible when importing a vehicle into Canada under paragraph 153(1)(b).

Subsection 153(2) of the Act allows a company to import a vehicle to Canada for the purpose of sale even though all of the requirements of subsection 153(1) are not met at the time of importation, provided the requirements are met before the vehicle leave the possession or control of the company. These provisions would apply to the situation of a company manufacturing or importing a "Canada-unique" vehicle but has not yet received an acknowledgement from Environment Canada that the evidence of conformity has been obtained and produced in a form and manner that is satisfactory to the Minister. The wording of section 36 has been modified and a new section 36.1 has been added to the revised draft of the proposed Regulations to provide greater certainty that subsection 153(2) of the Act also applies in the case of the evidence of conformity.

Finally, subsection 39(2) is intended to align the importation requirements of the Regulations with those put in place by Transport Canada. The proposed amendment to section 36 does not modify the application of subsection 39(2).