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Volatile Organic Compound Concentration Limits for Certain Products Regulations response to comments

These proposed regulations were published in Canada Gazette, Part I on July 6, 2019, for a 75-day comment period. This document summarizes the comments received and our responses on how they have been considered in the regulations.

Background

We received 19 written submissions from the following stakeholders.

Comments were provided by:

List of acronyms

Choice of regulatory instrument

Comment summary: One stakeholder and one stakeholder association questioned the necessity for the regulations, stating that the results of a 2013 Survey showed that 90% of products are already in compliance with the 2010 CARB regulations. One association recommended the use of voluntary controls.

Another stakeholder is concerned that the regulations do not go far enough. This stakeholder suggested banning fragrances in personal care products, fabric softeners and air fresheners in order to help reduce VOCs in Canada while improving both indoor and outdoor air quality.

Response: The objective of the Volatile Organic Compound Concentration Limits for Certain Products Regulations is to protect the environment and health of Canadians from the effects of air pollution by reducing VOC emissions, which contribute to the formation of ground-level ozone and smog.

There has been limited uptake to existing guidelines to control VOCs in products. Regulatory measures will level the playing field for manufacturers and importers in Canada, and result in significant benefits. A 2013 Survey showed that the proposed regulations would lead to an estimated 25 kilotonne reduction in volatile organic compounds (VOCs) emitted per year. According to the cost-benefit analysis, health benefits attributable to air quality changes from the proposed regulations are estimated to be $886 million over the period of 2024-2033. The majority of health benefits are a result of reduced risks of premature death, hospital admissions, doctor visits, emergency room visits as well as lost work and school days.

Some exemptions have been provided for low level use of fragrances, or where the specific nature of the product, such as a personal fragrance product, relies on this component. Otherwise, fragrances that meet the definition of a VOC, would need to meet the regulatory limits.

Health Canada reviews fragrance ingredients like all other cosmetic ingredients. All cosmetics and their ingredients are subject to section 16 of the Food and Drugs Act which states that no person shall sell a cosmetic that contains a substance that could injure the health of the user. Therefore, if a fragrance ingredient is found to be unsafe for use in cosmetics, it cannot be used in cosmetics sold in Canada.

Consultations

Comment summary: One stakeholder noted that ECCC did not undertake sufficient consultations prior to publications of the proposed regulations in the Canada Gazette, Part I. Another stakeholder stressed the importance of consulting with international partners (e.g., European, Asian, and US). 

Response: Consultations regarding the proposed regulations have been broad reaching. Preliminary consultations with industry, provincial and territorial governments, and environmental non-governmental organizations (ENGOs) took place in 2013, which included publication of a consultation document, followed by a 60-day comment period and public meeting attended by about 130 stakeholders. Follow-up consultations with industry associations and ENGOs regarding the cost-benefit analysis framework and regulatory text took place in 2018 and 2019. The Department met with key industry associations including Cosmetics Alliance Canada, the Canadian Consumer Specialty Products Association, the Adhesives and Sealants Manufacturers Association of Canada, the Canadian Paint and Coatings Association, the Retail Council of Canada and the Canadian Vehicle Manufacturers Association.  The publication in Canada Gazette, Part I provided another formal opportunity to comment on the proposed regulatory text.

The CEPA National Advisory Committee (CEPA NAC) and relevant federal government departments were also consulted on the proposed regulations. International partners were consulted via a notice to the World Trade Organization (WTO) inviting countries to submit comments during the comment period following publication in Canada Gazette, Part I, in July 2019. Since the publication of the regulatory draft, ECCC has briefed the key industry groups on how stakeholder comments have been addressed.

Comment summary: One stakeholder group expressed that the proposed regulations are unclear, unworkable and inconsistent with the Government’s regulatory reform agenda and Treasury Board guidelines.

Response: This regulatory proposal has been in the making for over a decade and stakeholders were extensively consulted throughout its development. At the request of stakeholders, the regulations have been aligned with regulations in place in California which are considered the industry standard.

ECCC has complied with the Cabinet Directive on Regulation during the development of these regulations.

Alignment with California

Comment summary: A total of 13 stakeholders or stakeholder associations provided comments related to the alignment of the proposed regulations and California Air Resources Board (CARB) Consumer Products Regulations. While 10 of these stakeholders expressed support for the Department’s intent to align, many raised concerns over differences between the proposed regulations and CARB’s regulations. They believe that the proposed wording does not harmonize the scope of the product definitions with CARB and will result in unintended mis-categorization of products that could have an impact on competitiveness for businesses and lead to confusion for industry and enforcement. Of the 13 stakeholders or stakeholder associations that commented on harmonization, 12 requested the verbatim adoption of CARB definitions or the incorporation of CARB definitions by reference, in the regulations.

Response: The Department acknowledges the support expressed by stakeholders on the intent to align the proposed regulations with California. Product category definitions in the regulations are aligned with the 2010 or 2013 CARB regulations for all product categories except for acoustical sealants, which is a specific product needed in the Canadian climate. 

Verbatim adoption of CARB definitions in the regulations would not be consistent with Canadian regulatory drafting conventions. For example, Canada does not define commonly known terms, restate dictionary definitions or allow for exemptions from product categories for products not within the scope of the definition. Furthermore, Canadian regulations are drafted in two languages, and must be drafted in a way that can be equally interpreted in both languages and under both the common and civil systems of law. As such, verbatim adoption of the CARB definitions within the regulatory text is not suitable.

The use of incorporation by reference for product category definitions would require referencing outdated versions of two California regulations, the Regulation for Reducing Volatile Organic Compound Emissions from Antiperspirants and Deodorants and the Regulation for Reducing VOC Emissions from Consumer Products. This could pose accessibility issues, as product definitions would not be available in the Canadian regulations nor the current CARB regulations. This may lead to challenges for some companies in understanding their obligations under the regulations, particularly for Canadian companies with no knowledge of Californian law. Furthermore, the CARB 2010 product definitions are only available in English. Therefore, incorporation by reference of CARB 2010 and 2013 product definitions would not be appropriate.

Although the wording of the product categories in the proposed regulations may not be the exact same as the wording used by the California Air Resources Board, ECCC has taken great care to ensure that the product definitions will align in scope and application. Regulatory drafters were provided with the California definitions and the Department also engaged with the California Air Resources Board to ensure alignment with the scope of the product categories. All comments received have been considered and precision was added to certain product categories to better align with California. ECCC will provide guidance materials to clarify the intent to align with CARB 2010 and 2013 definitions.

Comment summary: One stakeholder has requested that ECCC provide rulings or use those developed in California to determine what product category a product belongs to.

Response: ECCC is not able to provide advice regarding the categorization of a product, but will consider product labels and marketing materials (such as web sites, etc.) when considering compliance actions. Regulatees know their products best and should be able to classify them in the appropriate product category.

Comment summary: Three stakeholders advised that the concentration limits in the proposed regulations should be reasonable as well as technologically and commercially feasible in order to contribute to the regulatory objective of a net reduction on ozone impact. A fourth suggested that the exceptions to CARB 2010 based on technical feasibility be clearly articulated in the regulations.

Response: The existence of a high percentage of compliant products (nearly 90%) in Canada and alignment with existing California regulations demonstrates that there should be no technical issues with meeting the regulatory limits.

Companies that are not able to meet regulatory requirements for concentration limits, have the option to use one of the three alternative compliance options, Permit – Technical or Economic Non-Feasibility, Permit — Products Whose Use Results in Lower VOC Emissions and the VOC Compliance Unit Trading System.

Comment summary: Three stakeholder groups have requested that guidance material be made available to provide clarification where the regulations do not verbatim reflect CARB 2010, including difference in product category definitions and in the definition of a VOC. Two of these stakeholders also requested that the product categories for which a unique Canadian requirement is proposed, be clearly identified.

Some stakeholders are concerned that the definitions of: VOC, LVOC, HVOC and MVOC appears not to align with the California regulations.

Response: The Canadian VOC definition as outlined in CEPA Schedule 1 aligns with the US EPA definition (2016) and includes more exemptions than California’s VOC definition. The regulatory definitions for LVOC, HVOC and MVOC are the same, however different units are used in some cases (for example kPa instead of mm Hg for pressure) but the values are the same.

Product category definitions in the regulations are aligned with the 2010 or 2013 CARB regulations for all product categories except for acoustical sealants, which is a specific product needed in the Canadian climate. Product concentration limits are higher in Canada for a few categories, including certain sealant and caulking products, paint thinner and multipurpose solvent, to adapt to climate or marketplace conditions.

The department has considered all comments received and has added precision to certain product categories to better align with California. ECCC will provide guidance materials to clarify the intent to align with CARB 2010 and 2013 product category definitions.

Product category definitions

Comment summary: Stakeholders provided detailed comments on nearly all product category definitions. 

Response: The Department has reviewed all comments in detail and has engaged with the California Air Resources Board to ensure alignment with the scope of the product categories. All comments received have been considered and precision was added to certain product categories to better align with California. Meetings have been held with key stakeholders to provide them specific explanations on how these comments have been incorporated into the product category definitions. 

Comment summary: Four stakeholder associations and three companies submitted comments requesting that we align our product category definitions with CARB’s and ensure ECCC provides exactly what is included or excluded for each.

Response: Although the wording of the product categories in the proposed regulations may not be exactly the same as the wording used by the California Air Resources Board, the Department has taken great care to ensure that the product definitions will align in scope and application. Product category definitions in the regulations are aligned with the 2010 or 2013 CARB regulations for all product categories except for acoustical sealants, which is a specific product needed in the Canadian climate. Verbatim adoption of CARB definitions in the regulations would not be consistent with Canadian regulatory drafting conventions. For example, Canada does not define commonly known terms, restate dictionary definitions or allow for exemptions from product categories for products not within the scope of the definition. 

Comment summary: One stakeholder requested that “designed or labelled” be used instead of “designed” to avoid any potential confusion with products not being designed but labelled for a specific application.

Response: This request has been incorporated into the regulatory text. A product belongs to a specific product category if it is indicated anywhere on its container, or in any documentation relating to the product that is supplied by the product’s manufacturer, importer or their authorized representative, that the product may be used as a product that fits within that product category. However, if there are more than one primary designed or labelled uses, the lowest applicable concentration limit would apply except under four circumstances as per Section 4(2) in the proposed regulations: antiperspirant for the human axilla, deodorant for the human axilla, hair shine products and general-purpose cleaner. As product categories are mutually exclusive, one product category cannot include another one.

Comment summary: For some product categories, one stakeholder requested that the terms “or” be used instead of “and” to better align with CARB regulations.

Response: This request has been incorporated into the regulatory text.

Coming into force and sell-through timelines

Comment summary: Divergent comments were received regarding the proposed coming into force dates with two associations expressing gratitude for the extended coming into force dates during previous consultations; one association requesting an additional year for a sell-through period and three associations and three companies asking for additional time to comply.

One stakeholder expressed support for the focus of the proposed regulations being on manufacture and import rather than on sale. Others sought confirmation or requested that there be no sell-through limitations for products manufactured or imported before the implementation of the regulations.

Response: The Department has already extended the coming into force timelines as part of the consultation process and have deemed the current timeline sufficient as the VOC concentration limits would come into force on January 1, two years after the regulations are registered, with the exception of disinfectants, which have an additional year to comply. The coming into force for certain aspects of the regulations has been modified, to allow for the application for permits and the building of compliance units one year in advance of the coming into force of the product limits. Companies have been aware of plans for these regulations since 2004 and the coming-into-force date for the proposed VOC concentration limits provides regulated parties with time to align with these proposed limits. The regulations offer alternative compliance options to provide flexibility for companies that find it challenging to meet the regulatory requirements. These options include a VOC Compliance Unit Trading System, as well as limited-term permits for companies that are unable to meet the regulatory requirements for technical or economic reasons. 

Given that these regulations set limits for manufacturers and importers of certain products containing VOCs, sellers are not directly regulated. Products manufactured and imported into Canada before the regulations come into force may still be sold with no restrictions. The sell-through period is expected to be relatively short. Not including sellers will reduce burden, especially for small and medium enterprises. Over time, these regulations are expected to eliminate non-compliant products from the Canadian market.

Scope

Comment summary: Some stakeholders have asked to add definitions for consumer, industrial and institutional products to the regulations. A stakeholder also requested a definition of certain products.

Response: These terms are not used within the proposed regulations and will therefore not be defined. The regulations align with California and cover all products within the product categories, whether they are consumer, institutional or industrial/commercial products, unless otherwise indicated. There is a general exemption for products designed or labelled to be used solely in a manufacturing or processing activity. 

Comment summary: One stakeholder expressed concern that the VOC concentration exclusions in the proposed regulations differ from California’s regulations.

Response: The VOC concentration exclusions are consistent with those found in the California regulations.

Comment summary: One stakeholder raised concerns with situations in which some products normally used in a manufacturing or processing activity could also be used in vocational institutions, colleges or universities for training purposes. The stakeholder requested that these products be exempted from the regulations.

Response: An exemption for products used for educational purposes would not be aligned with the California regulations on which these are based. Laboratory analytical standards and products used solely for manufacturing and processing are exempt.

Comment summary: Stakeholders have asked for clarification regarding exemptions for products used solely in a manufacturing and processing activity and have noted particular concerns with products used in automotive repair.

Response: Other Canadian regulations define a manufacturing or processing activity as: an activity whereby any goods, products, commodities or wares

  1. are made, fabricated, processed or refined out of any raw material or other substance or combination thereof,
  2. are converted or rebuilt, but not repaired, or
  3. are made by causing any raw material or other substance to undergo a significant chemical, biochemical or physical change including change that preserves or improves the keeping qualities of that raw material or other substance but excluding change by growth or decay

This clarification regarding manufacturing and processing will be included in guidance materials that accompany the regulations. Products designed or labelled to be used solely in a manufacturing or processing activity are exempted from the regulations. However products that also have other uses would need to meet the regulatory limits. Products used for repair would be subject to the regulations. These provisions align with the scope of products covered under the comparable regulations in California. 

In Canada, products that are used in or on a new car at the time of its manufacture are also exempt.

Comment summary: Two stakeholders noted certain exclusions for impurities and unintentionally added components were not consistent with the California regulations.

Response: The California regulations contain specific provisions related to the regulation of other non-VOC substances, such as ozone depleting substances or those not captured under the VOC definition in Canada. As such, exclusions have not been included that are beyond the scope of the Canadian regulations.

Compliance requirements

Comment summary: One stakeholder has suggested including detailed information of the testing methodologies in the regulations in order to facilitate product testing.

Response: Regulatees are not required to provide test results for their products. Testing will be used by ECCC to verify that products meet the concentration limits set out in the regulations. The methodology that ECCC will be using for product testing will be outlined in a separate guidance document.

Comment summary: Two stakeholders submitted comments in support of the flexible approach for labelling the date of manufacture set out in the proposed regulations. 

Response: Noted

Record keeping

Comment summary: Several stakeholders have requested that the record keeping provisions of the regulations align with CARB 2010 and allow regulatees 90 days to provide necessary records to reduce the burden on regulated entities to maintain records at a facility in Canada.

Many stakeholders have requested the ability to keep electronic records in order to alleviate the necessity to maintain records at a facility in Canada.

Response: Immediate access to records is needed to allow enforcement to access and assess completeness of records and to reduce the potential for falsifying records. One compliance checkpoint is to assess the completeness of records kept. This must be assessed immediately rather than allowing a few months for documents to be produced.

Electronic records can be used, if saved on a server located in Canada. Saving on a server in a foreign country limits enforceability specifically in the context of an investigation. This is a common approach taken on record-keeping in regulations made under CEPA.

Comment summary: One industry association requested that the period to keep records be reduced to threee years to align with legislation in the United States.

Response: Under CEPA regulations, five years is considered the minimal period for keeping records.  Records are required for enforcement officers to verify compliance with the regulations. Given the high number of regulated entities covered by the regulations, it would be impossible to inspect a significant number of companies within less than five years considering the available enforcement officers as well as the number of CEPA regulations that we enforce.

Comment summary: According to four stakeholder associations, the record keeping provisions would increase burden on importers. They recommend that these provisions be limited to data that would be key to regulatory compliance verification activities when a product is challenged, and that records be similar for manufacturers and importers of products. Specifically, the record keeping provisions for importers to keep port-of-entry information would add a significant burden. One government stakeholder requested a record-keeping requirement be added for VOC concentrations.

Response: In order to reduce the burden on importers, the obligation to record the port of entry through which a product is imported has been removed from the regulations. ECCC considers that the remaining record keeping provisions for importers are minimal and will allow access to data that is key to regulatory compliance verification activities. This information can be found, for the most part, on bills of lading or as part of the standard manufacturing records. These provisions do not align with CARB as California does not regulate import, but are consistent with other CEPA products regulations. No additional record-keeping requirements were deemed essential for enforcement.

Permits and the compliance unit trading system

Comment summary: Three stakeholders expressed concern that the proposed regulations will pose challenges to businesses, especially small businesses, to comply. A recommendation was made to allow for flexibility to tailor permit requirements to individual circumstances. One also suggested that requirements for permit renewal be simplified.

Response: The proposed regulations include a provision for temporary permit applications for products that would otherwise be unable to meet the regulatory requirements for technical or economic reasons at the time of coming into force of the regulations. The permit would be valid for a period of up to two years, with the possibility of a two-year extension. Permit requirements have been standardized to ensure a level playing field and avoid unfair competition practices. Companies that continue to have difficulties in complying have the option to use the VOC Compliance Unit Trading System to balance within their product lines to meet the concentration limits or trade compliance units with another company. Renewal requirements for this Permit are aligned with original application to provide the Minister with sufficient information to determine if the applicant meets the permit conditions.

Comment summary: One stakeholder, although supportive of the proposed Permit – Products Whose Use Results in Lower VOC Emissions, recommends that the Department have a process to grant approval for this Permit to all products that California has approved as innovative products. Another would like this Permit to be renewable for an unlimited time and simplified renewal requirements.

Response: The application process for the Permit — Products Whose Use Results in Lower VOC Emissions has been developed to ensure the necessary information is provided to the Minister to make a decision regarding a permit application. Products may exceed the VOC concentration limits if, as a result of product design, formulation, delivery or other factors, the total VOC emissions from that product would be lower than those from a comparable compliant product when used in accordance with the manufacturer’s written instructions. 

The Department is unable to accept permits approved in California as ECCC’s VOC definition differs slightly from California’s definition. There are also Canadian specific data requirements such as manufacture and import quantities. However, the applicant may submit similar technical emissions evidence to ECCC for consideration.

These permits are renewable every four years. Renewal requirements for this Permit are aligned with original application to provide the Minister with sufficient information to determine if the applicant continues to meet the permit conditions.

Comment summary: Although supportive of the addition to the proposed regulations of the three alternative compliance options, stakeholders have expressed concerns about potential misalignments with CARB 2010 and that the planned transparency of the Program could compromise Confidential Business Information (CBI).

Response: The three alternative compliance options, Permit – Technical or economic Non-Feasibility, Permit – Products Whose Use Results in Lower VOC emissions and VOC Compliance Unit Trading System, in the regulations align in principle with the 2010 CARB regulations. Where appropriate under the program requirements, regulatees can utilize certain technical information submitted to California for their approval process. However, they would also be required to provide Canada-specific data where needed to demonstrate they meet the permit requirements under a Canadian context. For example, Canadian manufacturers and importers would be required to provide manufacture and import data for Canada.

Companies participating in the Compliance Unit Trading System and permit information would be made public in order to promote transparency. Information to be made public would include the company name and product name. Pursuant to section 313 of CEPA, any person who provides information in a permit application may submit, with the information, a written request that the information or part of it be treated as confidential. If requested, confidential information such as product formulations and manufacture and import quantities would not be made public.

Comment summary: Although supportive of the proposed VOC Compliance Unit Trading System , two stakeholders believe it differs from CARB’s ACP. Four stakeholders requested the January 31 VOC Compliance Unit Trading System reporting deadline be changed from January 31 to March 1 to align with the CARB reporting deadline for products containing Perchloroethylene or Methylene Chloride.

Response: The intent of these proposed regulations is to align with the provisions of California Air Resources Board (CARB) regulations for consumer products but may include minor differences to address the Canadian context. For example, the proposed regulations require that applicants provide forecasted manufacture and import data to demonstrate that overall emissions will be neutral or reduced in Canada while CARB requires projected sales data for each compliance period. Manufacture and import quantities should be readily available to the applicant based on their activities prior to year-end.

The Department has considered stakeholder comments and has changed the annual reporting deadline for the VOC Compliance Unit Trading System from January 31 to March 1, noting this change will delay the issuing of compliance units by up to 30 days.

Comment summary: One stakeholder group feels that having a formalized expedited process and service standard for a permit application would be beneficial, as delays in the application process would adversely affect the timely delivery of service in the stakeholder’s industry.

Response: The service standards attached to the permit application process include an administrative procedure that may take up to 90 working days. Compliance with the service standards for processing permit applications would be monitored and evaluated as part of the regulatory evaluation process. The Department has deemed the current timeline sufficient to process permit applications in a timely manner.

Compliance

Comment summary: Stakeholders noted the need for and challenges of compliance monitoring for the Department as well as for regulatees.

Response: The performance of the regulations will be evaluated by ECCC through compliance audits as required by the Cabinet Directive on Regulation. It is expected that regulatees will be able to monitor their compliance with the regulations through their manufacturing process or through information from their suppliers.

Comment summary: One stakeholder asked what the penalties are for violating the regulations.

Response: Compliance with CEPA and its regulations is mandatory and specific offences are established by subsections 272(1), 272.1(1), 272.2(1), 272.4(1) and 272.5(1) of the Act. Subsections 272(2), (3) and (4) and 272.1(2), (3) and (4) of the Act set the penalties for persons who commit an offence under the Act. Offences include the offence of failing to comply with an obligation arising from the Act and the offence of providing false or misleading information. Penalties for the most serious offences include minimum fines and/or imprisonment. The penalty can vary from a minimum amount of $5,000 for an individual convicted following summary proceedings and/or to imprisonment for a term of up to six months, to a maximum of $6,000,000 for a large corporation convicted on indictment. The fine range doubles for second or subsequent offences and individuals may also be liable to a term of imprisonment of up to three years. Offences other than those in the category of “serious offences” are punishable by fines set at a maximum that ranges from $25,000 for an individual convicted following summary proceedings to $500,000 for a large corporation convicted on indictment. The maximum fines double for second or subsequent offences.

Comment summary: One stakeholder provided suggestions for reducing VOC emissions including imposing fees for high VOC emitters. They also recommended that occupational exposure standards should be considered as long term exposure to VOCs can cause serious health issues.

Response: The regulations set VOC content limits for products, with the aim to reduce emissions to the environment. It is the regulatee’s responsibility to determine how to achieve the limits (e.g., use of alternatives). CEPA has ranges of fines for different categories of offenders. Fines are directed to the Environmental Damages Fund for restoration and other environmental protection projects.

Federal, provincial and territorial (FPT) occupational health and safety regulators adopt and enforce occupational exposure standards in their jurisdictions. Health Canada is working with FPTs to explore ways to enhance the protection of workers from exposure to chemicals as part of the next phase of chemicals management in Canada, including potential development of occupational exposure limits. For more information, refer to the consultation document and summary of feedback received.

Modelling and cost-benefit

Comment summary: Some stakeholders have stated that the health benefits identified in the RIAS are an overestimation. They also assert that if the benefits were as high as stated, the regulations should have been put in place many years ago.

Some stakeholders believe that with over 90% of products already compliant, there is little health or safety benefits or meaningful VOC reductions to be gained.

Response: The modelling approach used to estimate the expected health benefits associated with the regulations is consistent with the Department’s modelling approach for other analyses of regulations with significant VOC emission reductions. This approach uses peer-reviewed and internationally accepted models to estimate changes in atmospheric concentrations of air pollutants and the resulting changes in health impacts. These changes in health impacts are then monetized using economic values drawn from the available literature to estimate the average per capita economic benefits.

The majority of the benefits are expected to be a result of estimated reductions in the risk of premature death. Values based on average willingness to pay for small reductions in the risk of premature death are based on Treasury Board of Canada Secretariat guidance. Additional benefits are derived from reduced risk of chronic and short-term respiratory problems.

The data used to estimate health benefits is based on a study completed by Toxecology Environmental Consulting in 2014. While data was used from previous studies conducted in 2006, a new survey was conducted requesting information from industry stakeholders to validate and update this data.

The estimated percentage of products currently compliant with CARB 2010 regulations does not account for the sales volume of each product, or the VOC content of each product. It is estimated that 90% of products identified as compliant in the Toxecology study contributed only 40% of total VOC emissions. The study also demonstrated that large quantities of total VOC emissions are concentrated within a small number of key product types. For example, multi-use solvents, paint thinner and automotive brake cleaner contributed more than 20% of all VOC emissions combined while representing less than 0.5% of all products manufactured or imported.

Comment summary: Stakeholders believe the Cost-Benefit Analysis is flawed as it inaccurately assesses administrative costs as well as the benefit and value of the proposed regulations. The data used to estimate the reduction in VOC emissions, healthcare costs and that reformulation costs would be low was also seen as inaccurate.

Response: The Department has conducted a review of the administrative cost analysis and concluded that the One-for-One Rule applies to the regulations. Estimates of administrative costs associated with familiarization with information requirements and compilation of data necessary to comply with record-keeping requirements are presented in the One-for-One Rule section in the RIAS, along with the assumptions used to derive these estimates. Administrative costs associated with voluntary compliance mechanisms have not been estimated, in accordance with Section 7.2.3 of the Government of Canada’s Policy on Limiting Regulatory Burden on Business. The results of this updated analysis demonstrate that the administrative costs associated with the regulations are not disproportionately high.

The magnitude of government costs is independent of the current compliance level. Once regulations are in place, government resources will be required to promote and verify compliance. These costs represent a small fraction of the expected health benefits, thus the Department has deemed these activities as a cost-effective use of resources. The nature of these costs is outlined in the RIAS.

The modelling approach used to estimate the expected health benefits associated with the regulations is consistent with the Department’s modelling approach for other analyses of regulations with significant VOC emission reductions. This approach uses peer-reviewed and internationally accepted models to estimate changes in atmospheric concentrations of air pollutants and the resulting changes in health impacts. These changes in health impacts are then monetized using economic values drawn from the available literature to estimate the average per capita economic benefits.

The Department recognizes that reformulation costs will vary across companies and products. The reformulation cost used in the CBA represents an average across all products. It is expected that certain products will require reformulation costs that are higher than this average value. It should be noted that the analysis also assumes all products are reformulated, although it is likely that some products can simply be replaced with existing formulations for other products where relevant.

Information received by the Department from stakeholders regarding alternative reformulation cost estimates is not comprehensive enough to use in the central CBA analysis. However, this information has been used to inform the sensitivity analysis conducted for the final RIAS.

Comment summary: The industry data used for analysis in the RIAS comes from the year 2013. This data is outdated and therefore the benefits could be overestimated. More information should be provided on the data used so industry can verify it. A new, up-to-date survey should be conducted that better reflects the current landscape of products from industry.

Response: The Department acknowledges that early compliance with the VOC content requirements of the regulations may have occurred since the data used to support the cost-benefit analysis was sourced. However, air quality modelling conducted by the Department demonstrates that the health benefits expected as a result of the regulations are proportional to VOC reductions, within a range of plausible reduction outcomes. Additionally, companies with products that are already compliant with the regulatory requirements would not incur additional costs as a result of the regulations. Thus, if VOC emissions are in fact lower than those estimated in the RIAS, the regulations are still expected to result in net benefits to Canadians.

The Department invited stakeholders to provide new information and to redistribute the survey to their members to provide updated data. In lieu of updated data, the RIAS provided estimates of the expected impacts for alternative scenarios in the Sensitivity Analysis section. This analysis concluded that the regulations will result in net benefits to Canadians over a range of plausible outcomes.

Comment summary: Several stakeholders have noted the administrative burden to comply with the regulations and the costs to industry were significantly underestimated. Some have asked for data in the cost-benefit analysis be updated to better reflect these costs to industry. Stakeholders believe the cost to comply with a confusing set of regulations and the record-keeping requirements will be quite high. The One for One rule should apply to these regulations given the new administrative burden companies will have.

Response: The Department has conducted a review of the administrative cost analysis and concluded that the One-for-One Rule applies to the regulations. Estimates of administrative costs associated with familiarization with information requirements and compilation of data necessary to comply with record-keeping requirements are presented in the One-for-One Rule section below, along with the assumptions used to derive these estimates. Administrative costs associated with voluntary compliance mechanisms have not been estimated, in accordance with Section 7.2.3 of the Government of Canada’s Policy on Limiting Regulatory Burden on Business. The results of this updated analysis demonstrate that the administrative costs associated with the regulations are not disproportionately high.

Comment summary: Stakeholders assert that the administrative cost for the Government to administer the regulations is too high given the number of products already compliant.

Response: The magnitude of government costs is independent of the current compliance level. Once regulations are in place, government resources will be required to promote and verify compliance. These costs represent a small fraction of the expected health benefits; thus the Department has deemed these activities as a cost-effective use of resources. The nature of these costs is outlined in the RIAS.

Comment summary: One stakeholder has stated the RIAS did not provide a comprehensive analysis of alternative instruments, such as guidelines and targeted compliance promotion, or incorporating the CARB 2010 regulations by reference.

Response: An explanation for why voluntary measures were rejected is included in the Instrument Choice section of the RIAS for the proposed regulations. Further explanation for why incorporation by reference was not considered feasible has been included in the RIAS for the final regulations.

Volatile organic compounds limits

Comment summary: Stakeholders appreciated that Canadian specific VOC limits have been considered for multi-purpose solvents, paint thinners, and acoustical sealants to account for weather and market differences and between California and Canada which will maintain product effectiveness and reduce the impact on Canadian SME manufacturing.

Response: Noted.

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