Administrative Monetary Penalties (Consumer Products) Regulations

Registration

SOR 2013-0101 May 24, 2013

Canada Consumer Product Safety Act

P.C. 2013-0568 May 23, 2013

His Excellency the Governor General in Council, on the recommendation of the Minister of Health, pursuant to paragraphs 37(1)(i) and (p) and subsection 50(1) of the Canada Consumer Product Safety Act, makes the annexed Administrative Monetary Penalties (Consumer Products) Regulations.

Administrative Monetary Penalties (Consumer Products) Regulations

Interpretation

1. The following definitions apply in these Regulations.

"Act"
« Loi »
"Act" means the Canada Consumer Product Safety Act.
"compliance agreement"
« transaction »
"compliance agreement" means an agreement referred to in paragraph 53‍(2)‍(a) of the Act.
"violation"
« violation »
"violation" means a violation committed under section 49 of the Act.

Classification

Violation -- minor, serious, and very serious

2. A violation is classified as

(a) minor, if the total gravity factor for the violation is two;
(b) serious, if the total gravity factor for the violation is three or four; and
(c) very serious, if the total gravity factor for the violation is five.

Total Gravity Factor

Gravity factor -- sum

3. (1) Subject to subsection (2), the total gravity factor for a violation is the sum of the gravity factor set out in column 2 of Table 1 that is associated with the applicable description set out in column 1, and the gravity factor set out in column 3 of Table 2 that is associated with the applicable provision set out in column 1.

Table 1 - History
Item Column 1 Column 2
Description Gravity
Factor
1. No previous violation in respect of which a notice of violation was issued was committed by the person within the five years before the day on which the violation is committed 0
2. One violation in respect of which a notice of violation was issued was committed by the person within the five years before the day on which the violation is committed 1
3. More than one violation in respect of which a notice of violation was issued was committed by the person within the five years before the day on which the violation is committe 2
Table 2 - Provision of the Act
Item Column 1 Column 2 Column 3
Provision of the Act Short-form Description Gravity
Factor
The short-form descriptions are established by the Minister under paragraph 51(b) of the Act and are provided here for convenience only. They do not form part of these Regulations and may be amended by the Minister without the need to amend these Regulations.
1. Paragraph 32(1)(a) Failure to comply with an order by the Minister to take measures -- person did not comply with an order made under section 12 of the Act 2
2. Paragraph 32(1)(c) Failure to comply with an order by the Minister to take measures -- Minister believes on reasonable grounds that a product is the subject of a voluntary measure or recall 2
3. Paragraph 32(1)(d) Failure to comply with an order by the Minister to take measures -- Minister believes on reasonable grounds that there is a contravention of the Act or its regulations 2
4. Subsection 31(1) Failure to comply with an order by the Minister to recall a product 3
5. Paragraph 32(1)(b) Failure to comply with an order by the Minister to take measures -- Minister has already made an order under section 31 of the Act 3

Gravity factor -- reviewed order

(2) If, after completing a review under section 35 of the Act, the review officer decides that the order should have been made under a different provision, the calculation under subsection (1) must reflect that decision.

Penalties

Amount

4. The penalty for a violation with a total gravity factor set out in column 1 of the table is, in the case of a violation committed by a non-profit organization or by any other person for non-commercial purposes, the penalty set out in column 2 and, in any other case, the penalty set out in column 3.

Table 3 - Penalties
Item Column 1 Column 2 Column 3
Total Gravity Factor (Classification of Violation) Penalty for Violation Committed by a Non-profit Organization or by any Other Person for Non-commercial Purposes Penalty for Violation
Committed in any Other Case
1. 2 (minor) $1,000 $10,000
2. 3 (serious) $2,000 $15,000
3. 4 (serious) $3,500 $20,000
4. 5 (very serious) $5,000 $25,000

Payment Referred To In Subsections 52(1) And 53(1) Of The Act

Reduced penalty

5. (1) For the purposes of paragraph 52‍(1)‍(e) of the Act, the lesser amount that may be paid as complete satisfaction of the penalty is one half of the amount of the penalty.

Time and manner of payment -- reduced penalty

(2) A person that is provided with a notice of violation and wishes to pay the lesser amount must

(a) deliver the amount in person no later than 15 days after the day on which the notice is provided;
(b) send the amount by regular mail that is postmarked no later than 15 days after the day on which the notice is provided; or
(c) send the amount, by a mail or courier service that provides the recipient with a document specifying the date of sending, no later than 15 days after the day on which the notice is provided.

Time and manner of payment -- full penalty

(3) A person that is provided with a notice of violation and wishes to pay the amount of the penalty set out in the notice must

(a) deliver the amount in person no later than 30 days after the day on which the notice is provided;
(b) send the amount by regular mail that is postmarked no later than 30 days after the day on which the notice is provided; or
(c) send the amount, by a mail or courier service that provides the recipient with a document specifying the date of sending, no later than 30 days after the day on which the notice is provided.

Manner of payment

(4) Payments must be made by means of a certified cheque or bank draft made payable to the Receiver General for Canada and must be delivered or sent to the address set out in the notice of violation.

Compliance Agreements

Request

6. (1) For the purposes of paragraph 53(2)(a) of the Act, a request to enter into a compliance agreement must be submitted in writing to the address set out in the notice of violation by

(a) delivering it in person no later than 15 days after the day on which the notice is provided;
(b) sending it by regular mail that is postmarked no later than 15 days after the day on which the notice is provided; or
(c) sending it, by a mail or courier service that provides the recipient with a document specifying the date of sending, no later than 15 days after the day on which the notice is provided.

Payment under paragraph 54(4)(a) of Act

(2) For the purposes of paragraph 54(4)(a) of the Act, if the person is liable to pay twice the amount of the penalty, that amount must be paid in a manner set out in subsection 5(2) except that the relevant time is 15 days after the day on which the notice of default is provided. The amount must also be paid in accordance with subsection 5(4).

Payment under subsection 55(1) of Act

7. For the purposes of subsection 55(1) of the Act, the amount of the penalty must be paid in a manner set out in subsection 5(2) except that the relevant time is 15 days after the day on which written notice of the Minister's refusal is provided. The amount must also be paid in accordance with subsection 5(4).

Review By Minister

Time and manner of request

8. (1) For the purposes of paragraph 53(2)(b) of the Act, a request for a review by the Minister must be submitted in writing to the address set out in the notice of violation by

(a) delivering it in person no later than 30 days after the day on which the notice is provided;
(b) sending it by regular mail that is postmarked no later than 30 days after the day on which the notice is provided; or
(c) sending it, by a mail or courier service that provides the recipient with a document specifying the date of sending, no later than 30 days after the day on which the notice is provided.

Time and manner of payment

(2) For the purposes of subsection 56(3) of the Act, the amount of the penalty that is confirmed or corrected in the Minister's decision must be paid in a manner set out in subsection 5(2) except that the relevant time is 30 days after the day on which the notice of the decision is provided. The amount must also be paid in accordance with subsection 5(4).

Providing Documents

Individuals

9. (1) Any document referred to in these Regulations, except an order made under section 31 or 32 of the Act, that is to be provided to an individual, other than the Minister, who is named in the document must be provided by

(a) delivering it to the individual at any place; or
(b) if delivery is attempted under paragraph (a) and for any reason is not successful, sending it, by a mail or courier service that provides the sender and the recipient with a document specifying the date of delivery, to the individual's last known address or usual place of residence.

Persons other than individuals

(2) Any document referred to in these Regulations, except an order made under section 31 or 32 of the Act, that is to be provided to a person, other than an individual, that is named in the document must be provided by

(a) sending it, by a mail or courier service that provides the sender and the recipient with a document specifying the date of delivery, to the person at the head office or place of business of the person or of the person's agent or mandatary; or
(b) delivering it, at the head office or place of business of the person or of the person's agent or mandatary, to an officer or any other individual who appears to be in control of or managing the head office or place of business.

Notice of compliance

(3) The requirements in this section also apply to notices provided under subsection 54(3) of the Act.

Coming Into Force

Registration

10. These Regulations come into force on the day on which they are registered.

Regulatory Impact Analysis Statement

(This statement is not part of the Regulations.)

Issue: Regulations are required to enable the implementation of the administrative monetary penalties system authorized by the Canada Consumer Product Safety Act (CCPSA).

Description: The Regulations will prescribe the time and manner in which the penalty is calculated, modified, and paid as well as the manner in which certain documents referred to in the Regulations must be provided.

Cost-benefit statement: There are no additional costs to industry, government or consumers for implementing these Regulations. It is anticipated that, over the long term, the Regulations will help to persuade persons to comply with the Act and its requirements.

"One-for-One" Rule and Small Business Lens:The "One-for-One" Rule does not apply to this proposal as there is no change in administrative burden to business. The Small Business Lens does not apply to this proposal as there is no impact to small business.

Issue

The Canada Consumer Product Safety Act (CCPSA) came into force on June 20, 2011. It establishes legislative and regulatory requirements to help protect the public by addressing dangers posed by unsafe consumer products.

The Act also established an administrative monetary penalty (AMP) system for compliance and enforcement of the CCPSA and associated Regulations. An AMP system is a compliance and enforcement tool that assigns a monetary penalty for contravening certain provisions of the Act. The coming into force of the Administrative Monetary Penalties (Consumer Products) Regulations (Regulations) will enable this AMP system to be implemented.

Objectives

The purpose of the Regulations is to enable the implementation of the AMP system laid out within the CCPSA (sections 49 to 66). The Regulations prescribe the time and manner in which the penalty is calculated, modified, and paid as well as the manner in which certain documents referred to in the Regulations must be provided to an individual, a personFootnote 1 or the Minister of Health.

Description

The AMP system is a compliance and enforcement tool that assigns a monetary penalty for the contravention of certain provisions of the Act. More specifically, under the CCPSA, an AMP may only be issued in response to non-compliance with Orders made under sections 31 or 32, or Orders reviewed under section 35. These Orders are written notices that direct a person to take specific actions. Contravention of these Orders constitutes either a violation or an offence. Note that proceeding with a contravention of an Order as a violation precludes proceeding with it as an offence, and vice versa.

Therefore, the violation of an Order made under sections 31 or 32, or reviewed under section 35, is the action that could initiate the AMP system and, in that case,  results in the issuance of a Notice of Violation (NoV) -- the document by which the monetary penalty is issued.

Penalty ranges

The penalties within the Regulations range from $1,000 to $25,000 per violation for which a NoV was issued. In the case of a violation committed by a non-profit organization (or by any other person for non-commercial purposes), the maximum penalty for a violation is $5,000, and $25,000 in any other case. Furthermore, the violation of an Order made under section 31 or section 32, or reviewed under section 35, that is continued on more than one day constitutes a separate violation. Therefore, a NoV could be issued each day until compliance with the Order is completed.

The determination of the amount of the penalty depends on two factors: (i) the CCPSA provision under which the Order was issued; and (ii) the person's past AMP history. Once a penalty has been determined and issued through a NoV, it must be paid within the allotted time-frame specified by the Regulations. Persons who submit payment early (within 15 days of receiving the NoV) will only have to pay half of the original penalty. This incentive is intended to encourage persons to pay their penalty and end the process quickly. In addition, the CCPSA also enables persons who receive a NoV that has a penalty of $5,000 or more to make a request to enter into a compliance agreement with the Minister of Health. Under a compliance agreement, the penalty may be reduced, in whole or in part, if persons agree to take appropriate steps to ensure compliance with the Order to which the violation relates.

Finally, under the CCPSA, there are two conditions under which the NoV may be reviewed, and potentially corrected: (i) the facts surrounding the case indicate that a violation was not committed (i.e. the Order was not contravened); or (ii) the calculation of the penalty was not established in accordance with the Regulations. All requests for a review by the Minister of Health must be made in writing and delivered or sent to the address set out in the NoV, according to the Regulations.

Regulatory and non-regulatory options considered

No non-regulatory options are available. These provisions of the AMP system must be implemented by regulation in accordance with the CCPSA.

Benefits and costs

Costs

Annual cost to industry

There are no additional costs to industry for implementing these Regulations.

Annual cost to Government

All costs associated with administering the Regulations have already been funded through the Food and Consumer Safety Action Plan.

Annual cost to consumers

Annual consumer costs are not expected to change.

Benefits

While it is impractical to put a monetary amount on the increased compliance that will result from the introduction of this system, this compliance and enforcement tool is expected to assist Health Canada (HC) in promoting compliance with the requirements of the Act, which will in turn benefit the health and safety of Canadians. Furthermore, it is expected that the existence of these Regulations and the manner in which the penalty is calculated will act as a deterrent for non-compliance.

It is anticipated that over the long term, these regulations and penalties, coupled with the fact that the Minister may publish information about any contravention of the Act or its regulations, or any violations referred to in section 49, for the purposes of encouraging compliance with this Act will help persuade persons to comply with the legislation.

These benefits provide a net benefit to Canadians who can expect more efficient and responsive actions to legislative and regulatory non-compliances. The experience of other agencies administering similar AMP systems has demonstrated that this approach is very effective in increasing compliance.

"One-for-One" Rule

The "One-for-One" Rule does not apply to this proposal as there is no change in administrative burden to business.

Small Business Lens

The Small Business Lens does not apply to this proposal as there are no costs to small business.

Consultation

Over the course of 2008 to 2010, substantial efforts took place to engage industry, consumers, and other government stakeholders in an effort to gather their views on the then-proposed versions of the CCPSA (Bills C-52, C-6 and C-36). Overall, the reaction to these new legislative efforts, including the proposed AMP provisions, was favourable.

A Web-based consultation for all stakeholders was conducted between August 25, 2010, to November 26, 2010 for the purposes of bringing attention to and providing information about the proposed Regulations, the maximum/minimum penalties, the methods of accepted payment and the methods of penalty modification. A total of three submissions were received during the comment period. All three respondents supported the proposed Regulations and also provided suggestions on ways to improve them.

On March 24, 2012, the Administrative Monetary Penalties (Consumer Products) Regulations were published in Part I of the Canada Gazette (Vol. 146 No. 12). A total of seven submissions were received during the 75-day comment period from two industry representatives, one law firm, one member of academia, and three private citizens.

Overall, the majority of stakeholders were supportive of the proposal. Many of the comments focused on the relationship between Orders and penalties, the criteria for determining the size of the penalty, and the latitude for modifying the penalty.

Relationship between Orders and Violations

Comments were received regarding the relationship between Orders and violations, in particular, when a NoV could be issued. A penalty can only be issued under the Regulations when an Order has been contravened as stated in Section 49 of the CCPSA:

  • 49. Every person who contravenes an order that is made under section 31 or 32 or reviewed under section 35 commits a violation and is liable to the penalty established in accordance with the regulations.

Criteria for making an Order are found in sections 31 and 32 of the CCPSA.  Contravention of an Order is called a 'violation' and may result in the issuance of a NoV.

Criteria for determining the size of a penalty

Many comments referred to factors that would be considered when calculating a penalty. The penalty calculation criteria include: i) the CCPSA provision under which the Order was issued; and ii) the person's past history of violations (if any). However, suggestions were made to include other factors such as: the intended use of the consumer product, the gross revenue of a company, the severity of the risk of injury and others. A suggestion was also made to harmonize these factors with those already in use by the United States Consumer Product Safety Commission. It was suggested that these additional criteria could capture the unique circumstances present in each enforcement scenario and help to arrive at a penalty that is appropriate.  Under the CCPSA, a number of these suggested factors are already considered in the decision making process for Orders, prior to any AMP activities.

As previously stated, a monetary penalty can only be issued under the Regulations when an Order has been contravened. Sections 31 and 32 of the CCPSA contain the authorities to issue an Order [subsections 31(1) and 32(1)], the format of an Order [subsections 31(2) and 32(3)], and a brief elaboration on what measures may be imposed by an Order [subsections 31(1) and 32(2)].

The penalty calculation is designed to be clear to enable affected persons to easily and consistently determine what penalty amount would correspond to a given Order. The design of the Regulations maximizes the use of the Order and functions as a deterrent by making apparent (or providing upfront the range of) penalties associated with contravening that Order.

Additionally, the maximum penalty for a violation is legislated under subsection 50(2) of the CCPSA. Thus certain criteria suggested by some stakeholders for determining the maximum size of the penalty were not possible under the law (i.e. Gross revenue of the violating company).

Latitude for modification of penalty

A number of comments recommended that more latitude/discretion be given to Health Canada officials for the purposes of modifying a designated penalty amount. The CCPSA provides alternatives to full penalty payment and the Regulations elaborate further on these mechanisms.

Subsection 53(1) of the CCPSA allows for the payment of a 'lesser amount' provided that the payment is remitted within a 'prescribed time and manner'. This provision is elaborated further within the Regulations under subsection 5(2). It allows for the payment of one half of the original penalty amount if that payment is made within 15 days of receiving the NoV.

Paragraph 53(2) (a) of the CCPSA provides for compliance agreements which, according to CCPSA paragraph 54(1) (b), may "provide for the reduction, in whole or in part, of the penalty for the violation." The CCPSA contains foundational elements concerning compliance agreements including: condition for their acceptance, means of penalty modification, and consequences of non-compliance. The Regulations build on these elements under sections 6 and 7, providing for the time and manner in which a request must be made and adhered to.

Finally, paragraph 53(2) (b) of the CCPSA provides persons the right to request a review of either:  i) the amount of the penalty (including its calculation) or ii) the alleged violation itself. Again, the CCPSA contains fundamental provisions for the review process and the Regulations build on these by providing the time and manner for requesting and conducting reviews.

In the interest of fairness and transparency, these are the only means by which a penalty issued under the Regulations can be modified.

The remaining comments focused on topics such as: electronic means of document delivery and payment, time limits associated with NoVs, the applicability of the new "One-for-One" Rule, and the anticipated date of publication in Canada Gazette, Part II. All comments received during the 75-day comment period were addressed and each of the seven submitters received a response. No further correspondences were received from interested parties.

A meeting was also held on September 13, 2012 with industry stakeholders, at their request. During this meeting, HC responded to the stakeholders' questions by providing an explanation of the relationship between Orders and Violations, the penalty calculation formula, and the means by which the CCPSA permits modification and payment of penalties.

Implementation, enforcement and service standards

The Regulations will come into force on the day on which they are registered.

The Regulations will provide another effective tool to encourage compliance with the CCPSA and its regulations.

Contact

James Hardy
Project Officer
Consumer Product Safety Directorate
Healthy Environments and Consumer Safety Branch
Department of Health
269 Laurier Avenue, 8th Floor
Address Locator 4908B
Ottawa, Ontario
K1A 0K9
Fax: 613-952-2551
Email: james.hardy@hc-sc.gc.ca

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