2. Policy Issues: comments and response

• 3.1 Alignment with and reference to U.S. EPA Emission Standards
• 3.2 Engines and Persons subject to the proposed Regulations
• 3.3 Timing/Coming into Force
• 3.4 Averaging, banking and trading credit
• 3.5 Replacement Engines
• 3.6 Proposed changes to Regulations
• 3.7 Adoption of Tier 4 Standards

Saskatchewan Environment:

• "...the announced intention to align Canadian regulatory requirements for these engines and the sulphur content of the fuels with those of the U.S. EPA is a vital aspect of implementing these changes. Any move towards harmonizing the fuel and engine requirements for this range of equipment would be welcomed."

Canadian Association of Equipment Distributors (CAED):

• "...we applaud the governments' initiative concerning emission control and we strongly support the implementation of new emission regulations."
• "The [C]EPA standards should exactly follow those of the U.S. without addition or deletion. They should be a legal requirement, not a voluntary compliance."

B.C. Environment:

• "We remain supportive of the thrust of the federal vehicle and fuel agenda, and of its general approach of matching US requirements, with adjustments as appropriate for Canadian conditions."

Cummins Western Canada:

• "...we support the proposal as it appears to mirror the U.S. EPA regulations."
• "The standards should be exactly the EPA standards without any additions or deletions. We don't want any additional testing criteria."

Nova Scotia Department of Environment and Labour:

• "Nova Scotia also favours the proposed alignment with the U.S. EPA standards, and the convergence of environmental standards where environmental performance can be improved."

Manufacturers of Emission Controls Association (MECA):

• "...supports aligning Canada's emission standards for off-road CI engines with the U.S. EPA Tier 2, Tier 3 and, when finalized, the Tier 4 standards together with the 15 ppm sulphur limit for diesel fuel sold for use by off-road engines."

Equipment Manufacturers Association:

• "EMA supports EC's approach in the discussion draft, which for the most part, references EPA regulations."

Response:

The comments reaffirm support from respondents for Canada to align emission standards with the corresponding U.S. standards. As stated in section 2 of the proposed Regulations, one of the purposes of the Regulations is to establish Canadian emission standards and test procedures for engines that are aligned with those of the U.S. EPA. The proposed Regulations incorporate by reference where possible the applicable technical standards contained in the U.S. Code of Federal Regulations.

Environment Canada plans to maintain alignment with the U.S. EPA Tier 4 standards for nonroad compression-ignition engines. Comments on specific aspects of the Regulations are addressed in other sections of this document.

• CAED – "[...] the regulations should apply to both new and used equipment including those of authorized importing dealers, end user importers and grey market importers. Furthermore, whether new or used, both the equipment and their power sources should conform to the EPA rules in effect at the time that the equipment or vehicle was manufactured."
• Cummins Western Canada – "The rules should apply equally to authorized importing dealers, end users importers or grey market importers."

Response:

The proposed Regulations are in accord with the comment.

The proposed Regulations prescribe emission standards for 2006 and later model-year engines. The applicable standards are based on the model year of the engine. All persons importing such engines into Canada as well as persons in the business of manufacturing and/or distributing 2006 and later model-year engines manufactured in Canada would be subject to the proposed Regulations.

• Alberta Association of Municipal Districts and Counties – "Although our association supports the goals of lower emissions and cleaner air, the board must oppose the implementation of these regulations at this time. [...] impact on capital and maintenance costs for agricultural and other heavy equipment [...] devastating impact of closed borders to Canadian cattle and the lingering after-effects of drought and low commodity prices in Alberta."

Response:

As discussed in the Regulatory Impact Analysis Statement, in 1998, the U.S. Environmental Protection Agency estimated price increases for off-road diesel engines designed to meet the corresponding U.S. Tier 2 and 3 standards of about 0.5 to 3 percent for some power ranges. Most engines sold in Canada are already certified to U.S. EPA standards and therefore this is reflected in Canadian prices. Price increases due to this regulation are expected to be minimal.

The proposed Regulations are proceeding as planned.

• Cummins Western Canada – "The date of introduction should be the same as the US EPA."

Response:

The proposed Regulations establish Canadian emission standards aligned with existing U.S. EPA rules. The U.S. EPA emissions standards are incorporated by reference to ensure alignment with the U.S. standards.

The proposed Regulations will come fully into force on January 1, 2006 and apply to 2006 and later model year engines, see Table 1. The emissions standards applicable to an engine of a given model year are the same as those in effect in the U.S. for an engine of the same model year.

• "EMA supports EC's proposal not to require a separate "sum-to-zero" averaging, banking and trading (ABT) program for Canada. [...] EMA supports EC's approach, which allows U.S. EPA certified ABT engines to be sold in Canada, but which does not require separate credit accounting for Canada."

Response:

The proposed Regulations are in accord with the comment.

As discussed in the Regulatory Impact Analysis Statement, Canada is part of a homogeneous Canada/U.S. market for off-road compression-ignition engines. Product offerings and sales mixes are expected to be similar in Canada and the U.S. and therefore overall emission levels from off-road compression-ignition engines would be comparable.

Environment Canada has determined that administering a Canadian averaging program for this category of engines would be a regulatory burden without commensurate environmental benefits.

• CAED – "We are hopeful this initiative will evolve to include remanufactured engines and go as far as to follow the U.S. initiative of government funding to bring old engines into EPA compliance."

Response:

The proposed Regulations introduce emissions standards for 2006 and later model-year engines.

Environment Canada has no current plans to regulate remanufactured engines.

Comments were received from Stevenson Equipment Ltd. regarding a concern that the EPA's Intent Rule will limit the ability of independent equipment dealers to compete in the diesel off-road equipment market. "In general our arguments centre around the basic proven principles relating to the basic fact that the EPA, the OEM's [Original Equipment Manufacturer] and the Engine Manufacturers have had a long standing unimpeded working relationship whereby the OEM/EM's have been the leaders in developing the guidelines and reforming the "off-road" regulations for the EPA. [...] To this the Independent Dealer fights for his livelihood [...] in an effort to maintain "free trade" and comply with global emission reduction goals."

Response:

The standards and administrative requirements of the proposed Regulations are not intended to affect competitiveness of the off-road diesel engine and machine industries in Canada or the industrial sectors using such engines and machines. Clear rules with a level playing field are expected to be beneficial to competitiveness as all engines and machines have to meet the same standards. The proposed Regulations would affect distributors who are currently marketing engines and machines that do not meet North American standards.

MECA provided comments they had made on the U.S. EPA proposed Tier 4 standards and 15 ppm fuel sulphur limit.

• "If the EPA's proposed nonroad diesel engine standards and diesel fuel sulphur control program is adopted, these companies are committed to make the necessary investments to ensure that the emission control technology needed is available."
• "MECA believes the U.S. EPA proposed Tier 4 exhaust and crankcase emission standards for nonroad diesel engines can be achieved in a cost-effective manner within the lead-time provided."
• "As is the case with meeting the 2007/2010 on-road HDE standards, < 15 ppm diesel sulphur fuel is absolutely essential for meeting EPA's proposed PM standards for nonroad diesel engines 25 to > 750 hp and EPA's proposed NO_x standards for nonroad diesel engines 75 to > 750 hp."
• "MECA also supports the implementation of an interim 500 ppm sulphur limit, which the U.S. EPA has proposed to take effect in 2007. Reducing sulphur in nonroad diesel fuel from the current levels found in Canada will not only provide direct air quality benefits and enhance engine durability, but will also enable the use of diesel oxidation catalyst technology."

Response:

The February 2001 Federal Agenda on Cleaner Vehicles, Engines and Fuels set out Canada's policy to develop emission standards aligned with the U.S. federal emission standards. The proposed emissions Regulations will introduce a regulatory scheme for off-road diesel engines aligned with the U.S. EPA standards. Environment Canada intends to maintain alignment with the EPA Tier 4 standards once they are finalized.

Environment Canada is developing amendments to the existing Sulphur in Diesel Fuel Regulations to regulate sulphur levels for off-road diesel fuel in alignment with U.S. EPA levels and as necessary to support engine emission control technologies.