Issues: Comments and Reply

• Alignment with U.S. Emission Standards
• Incorporation by reference of U.S. EPARegulations
• Prescribed Classes of Vehicles and Engines
• National Emissions Mark
• Prohibition of Defeat Devices
• Test Fuels
• NOx Fleet Average Standards for Light-Duty Vehicles, Light-Duty Trucks And Medium-Duty
• Evidence of Conformity
• Emission testing by Environment Canada
• Emission-related Information Labels
• Importation Requirements
• Exemptions
• Provisions for small-volume Manufacture
• Standard Military Pattern Logistic Vehicles
• Effective Date
• Consideration of Alternatives Measures
• Seamless Transition
• Low-Sulphur Diesel Fuel
• Other Fuel Quality Issues

Comments:

• "The Ontario Ministry of the Environment supports Environment Canada's direction to set maximum allowable emission limits for hydrocarbons, carbon monoxide, formaldehyde and particulate matter from on-road vehicles and engines. Aligning Canadian federal emission standards and test procedures with those of the U.S. Environmental Protection Agency (U.S. EPA recognizes the integrated nature of the automotive industry and will ensure emission reduction benefits."
• "The AIAMCand CVMArequest Environment Canada to continue the practice of aligning Canada's vehicle emission standards to those of the U.S. EPA".
• "EMAsupports Environment Canada's efforts to harmonize Canada's emission standards with those of the EPA."
• The MMIC stated: "In general, we are very supportive of efforts to harmonize with the U.S., since we believe that this provides the greatest benefit to Canadians at the lowest cost."
• Fordstated: " It is recognized that the adoption of U.S. federal emission requirements brings to Canada the cleanest vehicles in the world at the lowest cost to consumers.

Reply:

The proposed Regulations are designed to align with those of the U.S. EPA.

Comments:

• EMAstated: "In order to avoid uncertainty and confusion regarding Environment Canada's emission regulations, EPA's regulations should be referenced wherever possible, rather than attempting to redraft the equivalent requirements and language for Canada. EMAsupports Environment Canada's approach in the discussion draft, which for the most part, references EPA regulations.
• AIAMCand CVMAstated: "We believe that the EPA CFR 86.1803-01 definitions should be referred to wherever possible. We believe that unnecessary duplication of definitions in the Canadian regulations should be avoided. It is essential that the definitions remain consistent with those of the CEPA. This will ensure that the definitions are consistent with those of U.S. EPA and will allow for the automatic adoption of any changes. If there is a need to define or clarify EPA definitions specifically for these regulations, it must be carefully considered."
• The MMIC stated: "The draft regulation proposed will automatically reference the most recently amended U.S.EPAregulations. This moving target feature causes the industry some concern since it will require a concerted effort to keep abreast of developments in the U.S., which has the potential to be burdensome on the limited resources of Canadian industry."
• DNDstated "Para 11(a) - Section 1811, sub para c of the CFR - refers to MY 2001 or later. This was based on Tier 1 standards. The new rule is based on Tier2/Low sulphur standard. Assume the CFR will be changed to reflect this?

Reply:

The proposed Regulations set out technical standards for vehicles and engines respecting exhaust, evaporative and crankcase emissions and on-board diagnostics systems. These technical standards correspond to those of the EPA and sections of the U.S. Code of Federal Regulations are incorporated by reference as they apply to vehicles or engines of a given model year to ensure that the specified standards are identical in both countries. This continues the past approach under the Motor Vehicle Safety Act.

Canada, representing a relatively small portion the North American vehicle market, achieves efficiencies by referencing the complex U.S. emission standards. This approach enables the industry to effectively monitor developments on a "North American" basis. Nonetheless, the regulatory efficiencies provided by incorporating by reference must be balanced with the need to make the Regulations clear for users, particularly their scope. For this reason applicable definitions are reproduced in the proposed Regulations.

The Department will monitor changes to associated U.S. requirements and make any necessary adjustments to continue to provide an aligned program. Section 163 of CEPA 1999 contains specific provisions that enable such adjustments to be made expeditiously through the issuance of an interim order.

Comments:

• "The AIAMCand CVMArecommend that heavy-duty engines be deleted from the list of prescribed classes. Heavy-duty engines are defined as those engines used in heavy-duty vehicles. Since heavy-duty vehicles are being proposed as a prescribed class, heavy-duty engine requirements are to be covered under the heavy-duty vehicle requirements. This is consistent with the manner in which heavy-duty engines are regulated currently."

Reply:

There are no heavy-duty engines manufactured in Canada. Heavy-duty engines are all imported from abroad and mostly from the United States. Under the current regulations, "non-complying" heavy-duty engines could be imported by companies and installed in heavy-duty vehicles that are subsequently sold within the province of its manufacture (i.e. unless prohibited by provincial Regulations) In addition, persons not falling under the definition of "company" could import heavy-duty engines for use in Canadian vehicles without any restrictions on their emission performance.

The proposed Regulations directly regulate heavy-duty engines for the first time whereas under the Motor Vehicle Safety Act these engines were regulated only when installed in heavy-duty vehicles. This approach, consistent with that in place in the United States, will ensure that all heavy-duty engines intended for use in Canadian heavy-duty vehicles comply with prescribed emission requirements as a condition of their importation into Canada.

Comments:

• Fordstated: "Ford requests that Environment Canada recognise the U.S. EPA "mark" as satisfactory evidence of conformity. If the EPA mark cannot be recognised, Ford requests that Environment Canada, Transport Canada and Industry Canada agree to a single "Federal" label that can be applied to vehicles sold in Canada."
• Fordalso stated: " The requirement to install an additional label will increase complexity, compound the opportunity for errors, increase costs and provide no environmental benefits."
• AIAMCand CVMAstated: " Also, a new Government of Canada Mark (GCM), or ‘Supermark', should be established to indicate compliance with all Canadian regulatory requirements, including vehicle safety, emissions and Radio Frequency Interference (RFI) conformance."

Reply:

Section 150 of CEPA 1999 states that: "The national emissions marks are national trade-marks" and "The exclusive property in and, except as otherwise provided in this Division, the right to use a national emissions mark are hereby vested in Her Majesty in right of Canada". The Act does not authorize the use of an EPA mark as the national emissions mark.

The proposed Regulations include a unique national emissions mark. Environment Canada has committed to work with Transport Canada and Industry Canada to examine the feasibility of alternative marking requirements that will fulfill the intention of the legislation in a manner most practical for the industry. If a more efficient form of mark is identified, Environment Canada plans to amend the final regulations to incorporate it.

Comments:

• AIAMCand CVMA stated "…the AIAMCand CVMA cannot support any requirement to mandate the installation of an NEM on any engine that conforms to U.S.EPArequirements. The engine EPA emission label provides clear information regarding the standards to which these engines conform. It is a very burdensome, non-value added proposal to require an engine NEM."
• EMAstated:"…additional flexibility for the placement of the National Emissions Mark Label is needed" and "Environment Canada should allow the National Emissions Mark Label to be located on or near the U.S. emission control information label."

Reply:

As mentioned in the previous section, the U.S. emissions label cannot replace the national emissions mark for the purposes of section 152 of CEPA 1999.

The primary purpose of directly regulating heavy-duty engines is to ensure that all engines intended for use in Canadian heavy-duty vehicles comply with prescribed emission requirements as a condition of their importation into Canada. Environment Canada would like to meet this objective in an efficient manner. Accordingly, a provision has been added to the proposed Regulations which enables a company to import a heavy-duty engine and transport it within Canada (i.e. between provinces) for installation in a new heavy-duty vehicle without a national emissions mark on the engine. Once assembly of the new heavy-duty vehicle is completed, a single national emissions mark would have to be affixed to the vehicle as a condition of its transport within Canada. The mark would cover compliance with emission standards for the vehicle and its engine.

The proposed Regulations have also been changed to allow the placing a national emissions mark on the U.S. emission control information label of a heavy-duty engine or vehicle, as well as on a separate label located next to the U.S.label.

Comments:

AIAMCand CVMAstated:

• …When authorization is granted to a company to apply the emissions mark, it should encompass any prescribed class of vehicles and engines manufactured or imported by that manufacturer, and installed at any location.…
• …Further, the Ministerial Authorization in Schedule 2, Line 1810, should be changed to reflect this and should be modified to read as follows. It should be noted that this is an interim request, while the Department continues its initiative to establish the …Supermark….
  
  …Pursuant to the Canadian Environmental Protection Act, I, Minister of Environment, hereby authorize [ name and address ] to use and apply the …Supermark… and this authorization number [ # ] on any prescribed class of vehicles or engine, provided that the vehicle or engine conform to all the emission standards applicable thereto.…
  
• …AIAMCand CVMArequest that there be no time limit placed on the authorization.…
• …The AIAMCand CVMA are very concerned with the proposed provisions to revoke a manufacturer's authorization to apply an NEM. AIAMCand CVMAmembers cannot support the inclusion of such provisions for revoking the use of an NEM.

Reply:

Under the proposed Regulations, a company may submit a single request for authorization to affix the national emissions mark to an unlimited number of prescribed classes of vehicles and engines and in an unlimited number of locations. However, the application must specify the various classes and locations so the Department can maintain an up to date registry of this information.

The proposed Regulations have been changed to remove a maximum duration of an authorization to use the national emissions mark and any specific provisions related to the revocation of a Minister's authorization. Instead, these will administered consistent with the discretion delegated to the Minister by CEPA 1999.

Comments:

• AIAMCand CVMAstated: "With respect to defeat device and unsafe conditions, vehicles and engines certified to U.S. EPA requirements will conform to those requirements, as included in the CFRs; no additional and/or non-harmonized Canadian requirements are needed. For unique Canadian vehicles and engines, the appropriate CFR sections for defeat devices and unsafe conditions should be included by reference".
• DNDstated: Vehicle Cold Start Aids (ethers, diesel fired coolant heaters) should be clarified for their acceptability of use. Environment Canada should clarify whether the use of these aids are/are not classified as a defeat device or Auxiliary emission control device(AECD)."

Reply:

Environment Canada believes it is important that the proposed Regulations include an explicit prohibition on the use of defeat devices on any prescribed vehicle or engine, regardless of whether or not it is covered by a U.S.certificate of conformity. The proposed Regulations contain such a prohibition.

The proposed Regulations specify that any auxiliary emission control device is not a defeat device if its use does not go beyond the requirements of engine starting.

Comments:

AIAMCand CVMAstated: "The following provision should be added to 17. (1) because there is no reference to the test fuels that are required to demonstrate compliance. Paragraph 17. (1) must also include the CFR reference to the test fuels used to demonstrate compliance to these standards.

(c) For certification vehicles and in-use vehicles, fuels having the specifications described in 40 CFR 86.113 and 86.213, Subpart B, shall be used for determination of conformance to (a)."

Reply:

The proposed Regulations are in accord with the concept expressed by the comment. Subsection 15(1) of the proposed Regulations specify that " The standards referred to in sections 9 to 14 are the certification and in-use standards set out in the CFR, at their applicable useful life, and include the test procedures and calculation methods set out in the CFR for those standards". The U.S. test procedures that are incorporated by reference include the applicable test fuel specifications.

Comments:

AIAMCand CVMAstated:

• "Prescribing requirements such as phase-in percentages banking and trading, and fleet averages, included in the Tier 2 emissions program, to vehicles certified by the U.S. EPA will only result in significant additional administrative costs to both industry and government while limiting model availability to Canadian consumers without any environmental benefit."
• We recommend that Environment Canada make provision for the sale of U.S. EPA Tier 2 certified products in Canada and also adopt a program that would permit the option of compliance to a Canadian Tier 2 program similar to the U.S. Tier 2 program for Canada unique products. AIAMCand CVMAmembers would report the necessary information to allow Environment Canada to monitor performance and help ensure that the environmental expectations of Canadians are being met."
  
  

  Fordstated

• " …when the phase-in is completed the fleet mix in Canada will likely show an environmentally desirable profile across the whole industry. We are concerned that because of one aspect of the proposed regulations - NOx averaging requirements for individual manufacturers - we may be embarking on a regimen that could restrict vehicle availability, possibly depriving the Canadian market of a desired product."
• "Imposing the administrative burden of achieving a specific average on every automobile company in Canada is unnecessary. It also puts an inequitable burden on full-line manufacturers compared to niche sellers. The associated costs of analysing, tracking, demonstrating and trading NOx credits and debits far exceed any real environmental benefits."
• "We urge Environment Canada to adopt a policy of accepting U.S. EPA certified vehicles without averaging requirements, and require that Canada-unique vehicles adhere to a Tier 2 certification regimen parallel to that of the U.S. EPA."

Reply:

The proposed Regulations include a fleet-average standard aligned with the U.S. together with a Canadian compliance option reflecting the reality that differences in the Canadian and U.S. markets can cause individual manufacturers unreasonable difficulties if identical fleet averages were rigidly applied. The Department believes that the proposed fleet-average standard is necessary to ensure that the environmental performance of the Canadian vehicle fleet will be comparable to the U.S.. Without a Canadian fleet-average there is a risk that, over time, there would be an erosion of emission performance relative to the U.S.

The Department's rational for going forward with the NOx fleet-averaging standard is detailed in the Regulatory Impact Analysis Statement which accompanies the publication of the proposed Regulations in the Canada Gazette Part I.

Comments:

AIAMCand CVMAstated: "Under the CFR, medium-duty passenger vehicles (MDPVs) can be considered a separate vehicle class and are not required to be combined for the CFR. While EC appears to be trying to summarize the CFR requirements, it inadvertently does not cover all of the issues related to HLDT/MDPVs. AIAMCand CVMArecommend that it would be more appropriate to reference the appropriate CFR provisions for the unique Canadian vehicles. This entire section needs to be modified to reflect this suggested change."

Reply:

The Department acknowledges that the Discussion Draft of the proposed Regulations did not properly reflect the higher NOx cap for non-Tier 2 medium-duty vehicles (0.9 g/mile vs 0.6 g/mile for heavy light-duty trucks) in determining the fleet average emission standards for combined fleets of 2004 to 2006 model year heavy light-duty trucks and medium-duty passenger vehicles. The applicable fleet average emission standards for these model years have been adjusted in the proposed Regulations and are slightly higher than those in the Discussion Draft.

Comments:

• AIAMCand CVMAstated: "In the regulation, EC is proposing that for a model year after 2008, a company may elect not to calculate a fleet average NOx emission value for its vehicles if all of its light-duty vehicles, light-duty trucks and medium-duty passenger vehicles sold in Canada conform to NOx emission standards of 0.07 g/mile or less at the full useful life of the vehicles. This exemption should not be limited to model years after 2008. AIAMCand CVMArequest that EC make this exemption option available at the beginning of the program."

Reply:

Environment Canada agrees with the suggestion and has made provisions in the proposed Regulations to accommodate the request.

Comments:

• AIAMCand CVMAstated: "Section 35(1) and 35(2) should be combined and the references to the model years should be deleted. Section 35 should be re-written to read as follow:
  
  35. Every light-duty vehicle, light-duty truck, medium duty passenger vehicle and heavy-duty vehicle covered by an EPAcertificate of conformity, as per subsection 17(3), shall not be subject to a fleet average NOx emission standard under these Regulations provided that (a) each year the company submits an end of model year report pursuant to section 45."

Reply:

The references to model years in the section of the Discussion Draft referred to by AIAMC/CVMAwere included to make this a transitional provision for companies selling only U.S.EPA-certified vehicles in Canada until the U.S. fleet average standards were fully phased-in. Environment Canada continues to believe that once the fleet average emission standards are fully phased-in in the U.S., all companies should be subject to corresponding Canadian requirements. Accordingly, the proposed Regulations continue to be based on this approach.

Comments:

• "AIAMCand CVMAbelieve that this entire section is too prescriptive and that a large amount of new record keeping is being proposed. AIAMCand CVMArequest that these provisions should be deleted."

Reply:

The proposed Regulations continue to require that companies maintain specific vehicle information related to NOx fleet averaging standards. The information is consistent with that required to be retained by companies under the U.S. EPA's requirements. Such records are fundamental to enable the Department to monitor compliance with applicable standards.

Comments:

AIAMC/CVMAstated:

• "Section 36. Line 1095
  AIAMCand CVMArequest the following change to this section"
  "For the purposes of paragraph 153(1)(b) of the Act, in the case of a vehicle referred to in 17 (3) covered by an EPA certificate of conformity and offered for sale in Canada, the evidence of conformity shall be in the form of"
• Section 36. (b) - Line 1104
  The EPAapplication for certification shows the projected sales volume for the U.S. We are requesting that this provision be deleted.
• Section 36. (d) - Line 1112
  This provision should be simplified by deleting provisions d(i) to d(iv) and adding the following words to line 1115:
  
  "… in the form and location set out in the CFR."
  
  This request is being made because the certification for certain vehicles can be obtained under a different section, e.g. Part 88, of the CFR."

EMAstated:

• "Environment Canada should clarify the language in section 36 by specifying that the documentation described in section 36(a), (d) and (d) is required only on request."
• "In instances where evidence of conformity is requested or other documentation is required to be provided to Environment Canada, such documentation should be accepted in electronic form. Much of the documentation submitted to EPA to obtain certification is submitted by manufacturers in electronic form using FileMaker Pro templates. Environment Canada in the Regulations that requested documentation can be submitted in the same form as submitted to EPA".

Reply:

Section 36 of the Discussion Draft (e.g. now section 32 of the proposed Regulations) is intended to specifically address the evidence of conformity for vehicle models of a given model year that are covered by a U.S.EPAcertificate of conformity and are sold concurrently in Canada and the United States. Section 32 of the proposed Regulations is consistent with the wording and structure of the current Regulations and maintains the same approach as in the past.

The proposed Regulations refer to the specific U.S. labelling requirements applicable to the various classes of vehicles and engines rather than providing a general reference to the CFR. This is so that users can find the requirement more readily. The Department is considering the need to include a reference to the labelling requirements under Part 88 of the CFR.

The proposed Regulations have been changed to allow companies to maintain and submit prescribed information in readily readable electronic or optical form and specify the information that must be submitted to the Minister upon request.

Comments:

• "AIAMCand CVMA member companies have indicated that a minimum rate of 21% per year be the recommended rate. While this rate is more representative of current depreciation rates of new vehicles, we still prefer that Environment Canada purchase or lease the vehicles directly from the dealers."
• "AIAMCand CVMAsuggest the following revisions to this section.(2) Where a test vehicle or engine is made available under section 159 of the Act and the test results indicate that the vehicle or engine does not conform to an applicable standard prescribed by these Regulations because of a confirmed defect, the rental rate is no longer payable by the Minister effective on the date that the company is notified of the confirmed defect.
• Fordstated: "We also have a concern with the rental payment provisions detailed in section 39(2) of the Discussion Draft. Perhaps a Memorandum of Understanding (MOU) could be developed that would address the issue of vehicles that are held "in limbo" due to alleged non-conformance. Alternative compensation methods could be agreed to by all parties to address the compliance investigation period, which could last for months."

Reply:

CEPA 1999 contains specific provisions to enable the Minister to obtain test vehicles from companies to verify the accuracy of their emission certification information. The Department plans to obtain vehicles pursuant to these provisions as well as through other independent mechanisms as part of its compliance monitoring program.

The Discussion Draft of the proposed Regulations included a rental rate of 12% per year of the manufacturer's suggested retail price (MSRP) to be paid by the Minister to companies for making available test vehicles or engines. This rate was consistent with the rate in the current regulations that were adopted by Transport Canada in 1997. The proposed Regulations have been revised to include a higher first year rental rate of 18%. The proposed rate is slightly lower than that recommended by the industry to account for the fact that it is based on the MSRP

The proposed Regulations have also been amended by repealing the provisions that the rental rate would no longer be payable from the date that a company was notified of test results which indicate that a vehicle or engine does not conform to a prescribed standard. Under the proposed Regulations, the rental rate will continue to be payable for as long as a vehicle or engine continues to be available for testing by the Minister.

Notwithstanding the above, CEPA 1999 contains provisions that enable the Minister to detain a test vehicle or engine and institute proceedings in respect of an offence. In such a case, the vehicle may be detained as evidence until the proceedings are concluded and the rental rate would no longer be payable from that time as the vehicle would no longer be considered to be held for testing purposes.

Comments:

• AIAMC/CVMAstated: "There is no added value for the Department to undertake in-use testing on vehicles with an EPA certificate of conformity as mentioned above since these are already conducted in the U.S. However, if Environment Canada wishes to perform testing on in-use vehicles, it is required these vehicles use mileage accumulation fuels that are the same as those used to certify vehicles to emissions standards. Use of any other fuel can only be considered to be a test of the fuel, not a test of the emission control capability."
• Fordstated: "Ford recognises EC's desire to know and understand the overall compliance performance of vehicles in the Canadian marketplace. This testing, however, in large part duplicates testing already conducted in the U.S. At the same time, any in-use emissions test results must also be viewed as fuel quality impact test results as well."

Reply:

Environment Canada plans to conduct some testing of in-use vehicles to verify whether there are any defects in the design, construction or functioning of the vehicle or engine that affect, or are likely to affect, compliance with prescribed standards during the useful life. The Department plans to coordinate efforts with the U.S. EPA by sharing information to increase program efficiency and effectiveness.

Comments:

• In reference to the "Low Sulphur Diesel only label, the AIAMCand CVMAstated: "These provisions should not be required since Low-Sulphur diesel fuel (15 ppm), as announced by the Minister, is to be 100% available. AIAMCand CVMArequest that the sections related to labelling for low sulphur diesel be deleted as it is redundant. As it currently stands, diesel fuel pumps are labelled as low sulphur diesel (500 ppm max). Having this requirement will only serve to confuse the public and lead to potential misfuelling.

Reply:

The primary intent of a "Low Sulphur Diesel Fuel Only" label is to prevent the misfuelling of vehicles designed to use diesel fuel with a maximum sulphur content of 15 ppm. On December 22, 2001, Environment Canada published a proposed Regulations that would require that the vast majority of on-road diesel fuel have a maximum sulphur content of 15 ppm beginning in June, 2006 (i.e. implementation date for sales in northern regions is September 1, 2007, reflecting fuel distribution and logistical difficulties), as opposed to the U.S. three year phase-in of the fuel.

The proposed Regulations include a requirement for a "Low Sulphur Diesel Fuel Only" vehicle label. Pending comments received on the proposed low sulphur diesel regulations, the timing of the fuel regulations and the resulting risk of misfuelling, the Department will consider deleting the requirement for the vehicle label.

Comments:

• "AIAMCand CVMA member companies currently have importation documentation requirements covering both vehicle emissions and vehicle safety. It is imperative that the requirements for importation documentation do not result in any additional burden or duplication from the current requirements. The proposed language of Sections 46 and 47 is not totally consistent with those currently in-place under MVSR Section 11; for example no provision for companies with a world production of 2,500 or more vehicles to file quarterly is provided. The AIAMCand CVMArecommend seeking ways to maintain a single importation submission, as is currently done."

Reply:

The proposed Regulations are designed to make the importation documentation requirements for on-road vehicles compatible with those of Transport Canada. The proposed Regulations have been amended to include a provision for companies with a world production of 2,500 or more vehicles to file information on a quarterly basis, consistent with the allowance by Transport Canada.

Comments:

• "The AIAMCand CVMArecommend deletion of engines from the importation requirements of Sections 46 and 47. Engines are not currently subject to this type of importation requirement. The proposed requirements are overly burdensome to Canadian vehicle manufacturers who import heavy-duty engines for the manufacture of vehicles in Canada."

Reply:

The proposed Regulations include a requirement for importers of heavy-duty engines to make a declaration at a customs office containing information in respect to the engine, including a statement that establishes conformity with the applicable emission standards. Alternative procedures for providing the information are made available for any company that imports more than 1,000 engines per year.

The Department is examining whether more efficient mechanisms are available to obtain the required information and may make amendments in this regard.

Comments

• AIAMCand CVMAstated: "Transport Canada has established a registrar of imported vehicles to operate a national program related to the importation of vehicles sold in the United States. This program has been successful from both the vehicle manufacturer and government perspective. The AIAMCand CVMArecommend that this program needs to be retained and vehicle emissions should continue to be covered under it."

Reply:

Since Canada's emission standards are aligned with U.S. rules, all vehicles originally sold in the U.S. meet our standards. The Department does not see any need to establish a unique registrar system for vehicles originally sold at the retail level in the U.S. and is seeking to harmonize its importation requirements with those put in place by Transport Canada.

Comments:

• "Fordsuggests that a fourth provision be added to section 49, subsection3)(e). This provision would allow the option of stating other reasons why conformance is no longer required (e.g. scrapping the vehicle in question or ensuring that it is removed from the marketplace"

Reply:

The criteria under which the Governor in Council may grant an exemption to a prescribed emission standard are established in section 156 of CEPA 1999. The proposed Regulations cannot establish additional criteria for granting exemptions.

Comments:

• AIAMCand CVMAstated: "We request that for unique Canadian vehicles and/or engines, the small volume provisions as set out in Subpart S of the CFR be included but with an appropriately modified small volume manufacturer definition."

Reply:

The proposed Regulations are structured in such a manner that U.S. EPA provisions for small-volume manufacturers are addressed through the acceptance of an EPAcertificate of conformity and our approach to the phase-in of emission standards. In the case of vehicles that are unique to Canada, a small-volume manufacturer may, like any other company, produce evidence of conformity in a form and manner that is satisfactory to the Minister.

The Department believes that the proposed Regulations will not disadvantage small-volume manufacturers. Section 156 of CEPA 1999 contains provisions enabling the Governor in Council to grant an exemption from conformity with a prescribed standard if such conformity creates substantial financial hardship for a company with specified low volumes of vehicles.

Comments:

DNDstated:

• "The Regulation as currently written (see definition of vehicles, para c) do not exempt Standard Military Pattern (SMP) logistic vehicles. However, the same reference would appear to exempt weapon platforms, e.g. military combat or tactical vehicles such as armour and or weaponry."
• "Operationally, it is unknown how these new, clean engines will perform outside North America, e.g. in areas of high sulphur fuels such as Africa (i.e. Somalia, Eritrea,…) and Eastern Europe (i.e. Bosnia, Kosovo,…) etc., and what will be the effect on engine life. The question then arises whether AECD or defeat device exemption is valid for military vehicles (SMP) to allow them to operate out-of-country theatres."

Reply:

The proposed Regulations have been amended to clarify that the definition of on-road vehicle does not include any military vehicle designed for use in combat or combat support.

Comments:

• AIAMC/CVMAstated: "The U.S. Tier 2 requirements provide for introduction of Tier 2 vehicles prior to 2004 MY. The AIAMCand CVMAbelieve that Environment Canada needs to address the possible early introduction of unique Canadian vehicles / engines with Tier 2 technology, including the concept of averaging."
• AIAMC/CVMAstated: "We are recommending that all initial Supermark authorization be provided no later than one year prior to the commencement date for the need of the Supermark and that the process be established to support this timing requirement. Alternatively, we recommend that the requirement for the Supermark become effective for the 2005 MY."
• DNDstated: "Para2(2), p.8 - Perhaps the caveat of "whatever comes first" should be added as the Department of National Defence will receive MY 2004 vehicles before 31 August 2003."

Reply:

The Regulations are proposed to come into force on September 1, 2003. The Department does not believe it is feasible to require companies to meet the new standards, particularly the labelling requirements, before September 1, 2003. However, the proposed Regulations have been changed to allow a company to include all of its 2004 model year vehicles in the calculation of its 2004 model year fleet average NOx value, including those manufactured before September 1, 2003. This permits companies to benefit from the early introduction of Tier 2 vehicles in the 2004 model year. In developing the final Regulations, the Department will take into consideration the lead time requirements of the industry.

Comments:

• Fordstated: "Our examination of this policy [the Government of Canada Regulatory Policy (1999)] shows that the process of "identifying and reviewing alternatives solutions" and "analysing benefits, costs and regulatory burden" is to be completed prior to the decision to regulate."

Reply:

The Department considered a non-regulatory approach as well as alternative forms of regulation for controlling emissions from on-road vehicles and engines. The rational for concluding that proposing the Regulations is the preferred approach is described in the Regulatory Impact Analysis Statement which accompanies the publication of the proposed Regulations in the Canada Gazette Part I.

Comments:

• Fordstated: "When EC assumed responsibility for vehicle emissions a commitment was made to the auto industry that a seamless transition would prevail in the shift from Environment Canada. We do not perceive the current Discussion Draft as carrying through that philosophy."

Reply:

Environment Canada has been administering the emission control program since April 2000, when the authority for regulating vehicle emissions was transferred from Transport Canada to Environment Canada. The Department is not aware of any difficulties imposed on the industry as a result of the transition.

In developing new regulations Environment Canada must address the requirements of CEPA 1999 and the evolution of new complex U.S.emission control regulations. As changes become necessary, the new requirements are being developed in consultation with stakeholders through the regulatory development process.

Comments:

• EMAstated: "EMA submitted comments to Environment Canada on its proposed Low-Sulphur Diesel Regulations. EMA recommended that Environment Canada adopt a diesel fuel sulphur cap of 15 ppm or less to be effective across the board without phase-in by January 1, 2006. EMA continues to stand by this recommendation and we encourage Canada to simultaneously low sulphur diesel regulations with the engine emission regulations."
• AIAMC/CVMAstated: "The member companies support Environment Canada regulatory action in reducing the level of sulphur in gasoline and its announcement to further limit the level of sulphur in diesel fuel."

Reply:

On December 22, 2001, Environment Canada published the proposed Sulphur in Diesel Fuel Regulations in the Canada Gazette Part I to lower the maximum limit for sulphur in on-road diesel fuel to 15 ppm commencing June 1, 2006. The implementation date for sales in northern regions is September 1, 2007, reflecting fuel distribution and logistical difficulties in northern Canada. The goal of the proposed Sulphur in Diesel Fuel Regulations is to ensure that the level of sulphur in on-road diesel fuel will not impede the effective operation of advanced emission control technologies planned to be introduced on 2007 and later model year vehicles (i.e. mid-2006) in order to comply with the proposed Regulations.

Comments:

DNDstated "The removal of sulphur to the intended low levels will also strip other polar molecules that provide fuel lubricity. If standard bodies such as ASTM and the refiners/oil companies cannot develop a standardized test method to determine fuel lubricity, or to agree upon a minimum limit, and/or develop a suitable lubricity additive, fuel delivery systems may be jeopardized (premature failures)."

Reply:

In its final rule establishing the low sulphur diesel fuel regulation for the U.S., the EPArecognized that refiners would likely rely on hydrotreating to achieve the 15 ppm sulphur limit and that this process may reduce concentrations of those components of diesel fuel which contribute to adequate lubricity. The EPA indicated that this may result in an increased need for the use of lubricity additives. However the EPA did not establish a regulatory limit for lubricity, deciding it was best to allow the industry and the market to address the lubricity issue in the most economical manner and in a way that provides the greatest flexibility.

The Department is taking a similar approach for Canada. The Canadian Petroleum Products Institute (CPPI) has informed Environment Canada that, unlike the previous reduction in the sulphur content of diesel fuel to 500 ppm, refiners are fully aware of the potential problem. CPPI sees a straightforward solution of the addition of lubricity-improving additives.

Comments:

DNDstated: "Furthermore, has Environment Canada investigated the impact of using high sulphur fuels if new engines are obtained prior to the conversion of diesel fuels?"

Reply:

The proposed emission standards for on-road vehicles and engines are aligned with those of the United States. On December 21, 2000, the U.S. released its final rule setting emission standards for 2007 and later model year heavy-duty engines and requirements for sulphur in on-road diesel fuel. The U.S. EPA determined that:

• in order to meet the 2007 and later model year emission standards, manufacturers of heavy-duty diesel engines would have to "employ exhaust emission control devices that require low sulphur fuel to ensure proper operation";
• misfuelling with high sulphur fuel "icould seriously degrade the emission performance of sulphur-sensitive exhaust emission control devices, or perhaps destroy their functionality altogether";
• "if such (2007 heavy-duty) vehicles were fuelled with 500 ppm diesel fuel, the emission control systems could be irreversibly damaged and any benefit of the new emission standard could be eliminated.

In view of above findings, any person acquiring heavy-duty diesel vehicles that meet the 2007 emission standards in advance of the general introduction of low sulphur diesel fuel would have to secure an adequate supply of this fuel to avoid the significant risks associated with misfuelling.

Comments:

AIAMC/CVMAstated:

• "These Tier 2 emission control technology equipped vehicles will be among the cleanest in the world and will require wide availability of compatible fuels to enable Canadians to obtain the full environmental benefits of the low emission levels that Tier 2 vehicles are capable of achieving."
• "Tier 2 vehicles are being designed to perform effectively, and meet emission requirements, with specific fuel qualities, including deposit control performance, distillation properties, ash forming tendency and other properties. The AIAMCand CVMAcomments of October 1st to the Notice of Intent provide additional details on the need to address fuel quality properties as outlined in the World Wide Fuel Charter."

Reply:

The Government recognizes that vehicles and fuels must be treated as an integrated system to effectively reduce emissions. Since 1997, the federal government has put in place several regulations to improve the environmental performance of fuels and complement tighter vehicle emission standards, including: Diesel Fuel Regulations, Benzene in Gasoline Regulations, Sulphur in Gasoline Regulations and the Gasoline and Gasoline Bend Dispensing Flow Rate Regulations.

Environment Canada has set out its planned agenda respecting the quality of fuels in the Notice of Intent published in the Canada Gazette Part I on February 17, 2001.