Appendix A

Environment Canada E-mail Requesting Comments

From: Guthrie,Jeffrey [NCR]

Sent: December 21, 2004 2:47 PM

Subject: RE: Proposed amendments to the federal Sulphur in Diesel Fuel Regulations

On October 2, 2004 , proposed Amendments to the Sulphur in Diesel Fuel Regulations were published in Part of the Canada Gazette I (original e-mail attached). Environment Canada is seeking your views on an issue that has been raised regarding potentially less stringent sulphur limits in the north from 2007 until 2010-2012.

In their submissions (attached), Yukon Environment and Northern Cross (Yukon) Limited requested that a sulphur limit of 750 mg/kg apply to diesel fuel for use in off-road, vessel and locomotive engines that is produced and sold in the north until 2010-2012 (the proposed amendments have limits of 500 mg/kg during that period). Northern Cross ( Yukon ) Limited has suggested that the less stringent limits should apply to all parts of Canada north of the 60th parallel. These comments were made in view of a small refinery being considered in the Yukon.

In its submission (attached), the Engine Manufacturers Association stated "We oppose any delays for Northern Areas".

We seek your views on the changes that have been suggested by the Yukon and Northern Cross.

Please provide your comments on this issue by January 20th, 2005 . Specifically,

• What are you views on temporary less stringent limits for a defined northern area as has been suggested by Yukon Environment and Northern Cross (Yukon) Limited ?
• In the event that less stringent temporary limits were implemented, would you recommend that should they apply to all areas north of the 60th parallel, just within the Yukon , or within some other defined area?

I thank you in advance for providing us with your views on this issue.

Jeffrey Guthrie
Program Engineer
Oil, Gas and Energy Branch
Environment Canada
(819) 956-9279

(http://www.ec.gc.ca/energ/fuels/fuel_home_e.htl)

Responses Received

Yukon

Sent: December 22, 2004 3:02 PM
To: Guthrie,Jeffrey [NCR]
Subject: RE: Proposed amendments to the federal Sulphur in Diesel Fuel Regulations

Thanks Jeffrey,

Can I assume no further response is required from us (Government of Yukon) on this matter - or are you expecting comments from us in response to the EMA submission?

Thanks in advance,

Northwest Territories

Sent: January 25, 2005 2:30 PM
To: Guthrie, Jeffrey [NCR]
Subject: RE: RE: Proposed amendments to the federal Sulphur in Diesel Fuel Regulations

Thank you for requesting input into the proposed amendment in regard to the Federal Sulphur in Diesel Regulation.

Nunavut sent a letter to the Deputy Minister of the Environment, Dr. Len Good in August 1999 indicating our concern on this issue. Nunavut pointed out that we supported the Federal Government's position and agree with the positive benefits to the health of Canadians and our environment.

We also indicated that we had some concerns about early regulation for lower sulphur levels in diesel. Although we will ultimately support this activity, we would appreciate a phased-in period of 6 years, particularly for the arctic, after the adoption of any regulation stipulating lower sulphur levels in diesel. This would permit us time to utilize all of our stored diesel, and to retrofit furnaces, burners, etc. to ensure that equipment are capable of handling the new fuel. At the same time our communities would be refilling empty storage tanks with new low-level sulphur fuel.

Our costs and the quantity of diesel fuel stored in the north are very substantial. Therefore, we would very much appreciate the opportunity to utilize all of the stored fuel that would have been already purchased before commencing use of any new low sulphur diesel.

We support the less stringent period allowing for a phase-in period.

Sorry for the late response; I returned from vacation yesterday.

Regards

Newfoundland and Labrador

Sent: December 23, 2004 12:40 PM
To: Guthrie,Jeffrey [NCR]
Subject: RE: Proposed amendments to the federal Sulphur in Diesel FuelRegulations

The following are more thoughts than a position.

The variation seems to apply to that area served by a proposed refinery. Therefore I do not see applying it to northern Newfoundland, Quebec, Ontario etc .

If it is determined that the refinery will go ahead and is important to the local economy, then I would suggest that a very clear zone be established where the regulations are varied and hence where they can sell.

Those who could purchase their fuel should be informed so that they can advise on the impact to them. The impacts on users needs to be weighed against the impact on the producer.

Quebec

Sent: January 18, 2005 5:13 PM
To: Guthrie,Jeffrey [NCR]
Subject: RE: RE: Proposed amendments to the federal Sulphur in Diesel Fuel Regulations

Jeffrey,

Thank you for this reminder. Due to the highest priority we are presently assigning to the work for preparing the documents for the parliamentary commission on the Quebec Energy Strategy, I had to postpone dealing with your request for comments. I will make a special effort to integrate it in my short term schedule. However, let me tell you that I will propose to my Deputy- Minister that Quebec stands for the same rules to apply everywhere. So, no special case for Northern Areas except for some flexibility regarding tank bottoms when refilling tanks with new on spec product.

Regards,

Nunavut

Sent: January 24, 2005 6:46 PM
To: Guthrie,Jeffrey [NCR]
Subject: RE: RE: Proposed amendments to the federal Sulphur in Diesel Fuel Regulations

My apologies for the late response,

The Petroleum Products Division of the Government of Nunavut, the regulation adjustment to 500 or the provision to stay at 750 for some time in areas above the 60th parallel will not affect our operation at all as we are involved only in the distribution of the LSD. Our end user's by volume are mostly heating customers, so this does not affect us.

Thank you for including PPD in your considerations.

CPPI

January 20, 2005

Mr. Jeffrey Guthrie
Program Engineer
Oil, Gas and Energy Branch
Environment Canada
351 St. Joseph Blvd.
Gatineau, Quebec K1A 0H3

Re: Request from Yukon Environment and Northern Cross ( Yukon ) Limited (NCL) to Limit Off-road, Vessel and Locomotive Engines Diesel Sulphur to 750 mg/kg until 2010-2012

Dear Jeff:

CPPI has received views from a few of our members regarding your email request of December 21, 2004 to provide comments on the Yukon Environment/ NCL proposal for flexibility to allow 750 mg/kg sulphur (versus the Gazette 1 requirement of 500 mg/kg) in diesel fuel used in off-road, vessel and locomotive engines north of the 60 th parallel until 2010 - 2012.

The proposal is not supported. The Notice of Intent for the regulatory requirement was issued in February 2001 thereby, allowing all refiners in Canada sufficient time to appropriately plan the needed changes to their plants to meet the 500 mg/kg requirement in the timeframe specified in the Gazette 1 Regulations. We see no valid reason to exempt the northern region because one single refiner, NCL, for what appear to be reasons of project economics, is unable to meet the 500 mg/kg sulphur limit.

In addition, we are not aware of any issue around reliability of supply to the Yukon, so there is no reason to grant the proposed flexibility on these grounds.

Finally, there are already built in flexibility provisions for northern regions in the Gazette 1 Regulations which provides more time for diesel fuel produced, imported and sold to meet the 500 mg/kg limit.

We hope these comments are helpful and would be pleased to discuss them further.

Sincerely,