Vol. 135, No. 48 — December 1, 2001

Order Adding Toxic Substances to Schedule 1 to the Canadian Environmental Protection Act, 1999

Statutory Authority

Canadian Environmental Protection Act, 1999

Sponsoring Departments

Department of the Environment and Department of Health

Publication of Final Decision on the Assessment of A Substance — Road Salts — Specified on the Priority Substances List (Subsection 77(6) of the Canadian Environmental Protection Act, 1999)

Whereas a summary of a report of the assessment of the substance road salts specified on the Priority Substances List is annexed hereby,

Notice therefore is hereby given that the Ministers of the Environment and of Health intend to recommend to Her Excellency the Governor in Council that road salts that contain inorganic chloride salts with or without ferrocyanide salts be added to the List of Toxic Substances in Schedule 1 to the Canadian Environmental Protection Act, 1999.

Notice furthermore is hereby given that consultations will be held on the development of a regulation or instrument respecting preventive or control action in relation to road salts that contain inorganic chloride salts with or without ferrocyanide salts.

DAVID ANDERSON
Minister of the Environment

ALLAN ROCK
Minister of Health

Annex

Summary of the Report of the Assessment of the substance Road Salts specified on the Priority Substances List

Road salts are used as de-icing and anti-icing chemicals for winter road maintenance, with some use as summer dust suppressants. Inorganic chloride salts considered in this assessment include sodium chloride, calcium chloride, potassium chloride and magnesium chloride. In the environment, these compounds dissociate into the chloride anion and the corresponding cation. In addition, ferrocyanide salts, which are added as anti-caking agents to some road salts formulations, were assessed. It is estimated that approximately 4 750 000 tonnes of sodium chloride were used as road salts in the winter of 1997-98 and that 110 000 tonnes of calcium chloride are used on roadways in a typical year. Very small amounts of other salts are used. Based on these estimates, about 4.9 million tonnes of road salts can be released to the environment in Canada every year, accounting for about 3.0 million tonnes of chloride. The highest annual loadings of road salts on a road-length basis are in Ontario and Quebec, with intermediate loadings in the Atlantic provinces and lowest loadings in the Western provinces.

Road salts enter the Canadian environment through their storage and use and through disposal of snow cleared from roadways. Road salts enter surface water, soil and groundwater after snowmelt, and are dispersed through the air by splashing and spray from vehicles and as wind-borne powder. Chloride ions are conservative, moving with water without being retarded or lost. Accordingly, all chloride ions that enter the soil and groundwater can ultimately be expected to reach surface water; it may take from a few years to several decades or more for steady-state groundwater concentrations to be reached. Because of the widespread dispersal of road salts through the environment, environmental concerns can be associated with most environmental compartments.

In water, natural background concentrations of chloride are generally no more than a few mg/L, with some local or regional instances of higher natural salinity, notably in some areas of the Prairies and British Columbia. High concentrations of chloride related to the use of road salts on roadways or releases from patrol yards or snow dumps have been measured. For example, concentrations of chloride over 18 000 mg/L were observed in runoff from roadways. Chloride concentrations up to 82 000 mg/L were also observed in runoff from uncovered blended abrasive/salt piles in a patrol yard. Chloride concentrations in snow cleared from city streets can be quite variable. For example, the average chloride concentrations in snow cleared from streets in Montréal ranged from 3 000 to 5 000 mg/L for secondary and primary streets, respectively. Waters from roadways, patrol yards or snow dumps can be diluted to various degrees when entering the environment. In the environment, resulting chloride concentrations have been measured as high as 2 800 mg/L in groundwater in areas adjacent to storage yards, 4 000 mg/L in ponds and wetlands, 4 300 mg/L in watercourses, 2 000 to 5 000 mg/L in urban impoundment lakes and 150-300 mg/L in rural lakes. While highest concentrations are usually associated with winter or spring thaws, high concentrations can also be measured in the summer, as a result of the travel time of the ions to surface waters and the reduced water flows in the summer. Water bodies most subject to the impacts of road salts are small ponds and water courses draining large urbanized areas, as well as streams, wetlands or lakes draining major roadways. Field measurements have shown that roadway applications in rural areas can result in increased chloride concentrations in lakes located a few hundred metres from roadways.

The potential for impacts to regional groundwater systems was evaluated using a mass balance technique that provides an indication of potential chloride concentrations down-gradient from saltable road networks. The mass balance modelling and field measurements indicated that regional-scale groundwater concentrations of chloride greater than 250 mg/L will likely result under high-density road networks subject to annual loadings above 20 tonnes sodium chloride per two-lane-kilometre. Considering data on loadings of road salts, urban areas in southern Ontario, southern Quebec and the Atlantic provinces face the greatest risk of regional groundwater impacts. Groundwater will eventually well up into the surface water or emerge as seeps and springs. Research has shown 10 to 60 percent of the salt applied enters shallow subsurface waters and accumulate until steady-state concentrations are attained. Elevated concentrations of chlorides have been detected in groundwater springs emerging to the surface.

Acute toxic effects of chloride to aquatic organisms are usually observed at relatively elevated concentrations. For example, the four-day median lethal concentration (LC₅₀) for the cladoceran Ceriodaphnia dubia is 1 400 mg/L. Exposure to such concentrations may occur in small streams located in heavily-populated urban areas with dense road networks and elevated road salt loadings, in ponds and wetlands adjacent to roadways, near poorly managed salt storage depots, and at certain snow disposal sites.

Chronic toxicity occurs at lower concentrations. Toxic effects to aquatic biota are associated with exposures to chloride concentrations as low as 870, 990 and 1 070 mg/L for median lethal effects (fathead minnow embryos, rainbow trout egg/embryos and daphnids, respectively). The No-Observed-Effect Concentration (NOEC) for the 33-day early life stage test for survival of fathead minnow was 252 mg/L chloride. Furthermore, it is estimated that 5 percent of aquatic species would be affected (median lethal concentration) at chloride concentrations of about 210 mg/L, and 10 percent of species would be affected at chloride concentrations of about 240 mg/L. Changes in populations or community structure can occur at lower concentrations. Because of differences in the optimal chloride concentrations for the growth and reproduction of different species of algae, shifts in populations in lakes were associated with concentrations of 12 to 235 mg/L. Increased salt concentrations in lakes can lead to stratification that retards or prevents the seasonal mixing of waters, thereby affecting distribution of oxygen and nutrients. Chloride concentrations between 100 and 1 000 mg/L or more have been observed in a variety of urban water courses and lakes. For example, maximum chloride concentrations in water samples from four Toronto-area creeks ranged from 1 390 to 4 310 mg/L. Chloride concentrations greater than about 230 mg/L, corresponding to those having chronic effects on sensitive organisms, have been reported from these four water courses through much of the year. In areas of heavy use of road salts, especially southern Ontario, Quebec, and the Maritimes, chloride concentrations in groundwater and surface water are frequently at levels likely to affect biota, as demonstrated by laboratory and field studies.

Application of road salts can also result in deleterious effects on the physical and chemical properties of soils, especially in areas that suffer from poor salt, soil and vegetation management. Effects are associated with areas adjacent to salt depots and roadsides, especially in poorly drained depressions. Effects include impacts on soil structure, soil dispersion, soil permeability, soil swelling and crusting, soil electrical conductivity and soil osmotic potential. These can have, in turn, abiotic and biotic impacts on the local environment. The primary abiotic impact is the loss of soil stability during drying and wetting cycles, and during periods of high surface runoff and wind. Biological impacts relate primarily to osmotic stress on soil macro- and microflora and fauna, as well as salt-induced mobilization of macro- and micronutrients that affect flora and fauna.

A number of field studies have documented damage to vegetation and shifts in plant community structure in areas impacted by road salt run-off and aerial dispersion. Halophytic species, such as cattails and common reed-grass, readily invade areas impacted by salt, leading to changes in occurrence and diversity of salt-sensitive species. Elevated soil levels of sodium and chloride or aerial exposure to sodium and chloride result in reductions in flowering and fruiting of sensitive plant species; foliar, shoot and root injury; growth reductions; and reductions in seedling establishment. Sensitive terrestrial plants may be affected by soil concentrations greater than about 68 mg sodium/kg and 215 mg chloride/kg. Areas with such soil concentrations extend linearly along roads and highways or other areas where road salts are applied for de-icing or dust control. The impact of aerial dispersion extends up to 200 m from the edge of multi-lane highways and 35 m from two-lane highways where de-icing salts are used. Salt injury to vegetation also occurs along watercourses that drain roadways and salt handling facilities.

Behavioral and toxicological impacts have been associated with exposure of mammalian and avian wildlife to road salts. Ingestion of road salts increases the vulnerability of birds to car strike. Furthermore, intake calculations suggest that road salts may poison some birds, especially when water is not freely available during severe winters. Road salts may also affect wildlife habitat, with reduction in plant cover or shifts in communities that could affect wildlife dependent on these plants for food or shelter. Available data suggest that the severity of road kills of federally-protected migratory bird species (e.g., cardueline finches) and the contribution of road salts to this mortality have been underestimated.

Ferrocyanides are very persistent but are of low toxicity. However, in solution and in presence of light, they can dissociate to form cyanide. In turn, the cyanide ion may volatilize and dissipate fairly quickly. The ultimate effects of ferrocyanides therefore depend on the complex balance between photolysis and volatilization, which in turn depend on environmental factors. Modelling studies undertaken in support of this assessment indicate that there is a potential for certain aquatic organisms to be adversely affected by cyanide in areas of high use of road salts.

Based on the available data, it is considered that road salts that contain inorganic chloride salts with or without ferrocyanide salts are entering the environment in a quantity or concentration or under conditions that have or may have an immediate or long-term harmful effect on the environment or its biological diversity or that constitute or may constitute a danger to the environment on which life depends. Therefore, it is concluded that road salts that contain inorganic chloride salts with or without ferrocyanide salts are "toxic" as defined in section 64 of the Canadian Environmental Protection Act, 1999 (CEPA 1999).

The use of de-icing agents is an important component of strategies to keep roadways open and safe during the winter and minimize traffic crashes, injuries and mortality under icy and snowy conditions. These benefits were recognized by the Minister's Expert Advisory Panel on the second Priority Substances List, even as they recommended that this assessment of potential impacts on the environment be conducted. Any measures developed as a result of this assessment must never compromise human safety; selection of options must be based on optimization of winter road maintenance practices so as not to jeopardize road safety, while minimizing the potential for harm to the environment. Any action taken to reduce impacts on the environment is also likely to reduce potential for contamination of groundwater-based drinking water supplies, which is clearly desirable.

Future management should focus on key sources in areas where the assessment has indicated concerns. These relate to patrol yards, roadway applications, snow disposal and ferrocyanides.

Patrol yards: Key concerns relate to the contamination of groundwater at patrol yards and the discharge to surface water. In addition, overland flow of salty snowmelt waters can result in direct impacts to surface water and near-field vegetation. Based on surveys and reviews, salt losses from patrol yards are associated with loss at storage piles (which include salt piles as well as piles of sand and gravel to which salts have been added), and during the handling of salts, relating to both storage and loading and unloading of trucks. The discharge of patrol yard washwater is also a potential source of release of salts. Measures and practices should therefore be considered to ensure storage of salts and abrasives to reduce losses through weathering, to reduce losses during transfers, and to minimize releases of stormwater and equipment washwater.

Roadway application: Key environmental concerns have been associated with areas of high salt use and high road density. Regions of southern Ontario and Quebec and the Atlantic provinces have the highest rate of salt use on an area basis and as such have the highest potential for contamination of soils, groundwater and surface water by road salts as a result of roadway applications. In addition, urban areas in other parts of the country where large amounts of salts are applied are of potential concern, especially for streams and aquifers which are wholly surrounded by urban areas. In rural areas, surface waters receiving drainage from roadways may also be susceptible to contamination. Areas where splash or spray from salted roads can be transported through air to sensitive vegetation are a potential concern. Wetlands that directly adjoin roadway ditches and that receive runoff in the form of salty snowmelt waters are also potential management concerns. Therefore, measures should be considered to reduce the overall use of chloride salts in such areas. The selection of alternative products or of appropriate practices or technology to reduce salt use should be considered while ensuring maintenance of roadway safety.

Snow disposal: Key environmental concerns relate to eventual loss of meltwater into surface water and into soil and groundwater at snow disposal sites. Measures to minimize percolation of salty snowmelt waters into soil and groundwater at snow disposal sites should be considered. Practices to direct the release of salty snowmelt waters into surface waters that have minimal environmental sensitivity or into storm sewers could be considered. Measures should also be considered to ensure sufficient dilution before release.

Ferrocyanides: This assessment indicates that there is a possible adverse exposure for the more sensitive aquatic vertebrates in areas of very high use of road salts. Risks could be reduced by reducing total salt use or reducing content of ferrocyanides in road salt formulations. To reduce the possibility of exposure, producers of road salts could consider reducing the addition rate of ferrocyanides to road salts. Any reduction in total salt use would be expected to result in an equivalent reduction in release of ferrocyanides.

The full Assessment Report may be obtained from the Priority Substances List Assessment Report Page (www.ec.gc.ca/cceb1/ eng/final/index_e.html) or from the Inquiry Centre, Environment Canada, Hull, Quebec K1A 0H3, 1-800-668-6767.

Explanatory Note Respecting the Assessment of Road Salts

The use of de-icing and anti-icing agents is an important component of strategies to keep roadways safe during the winter. The selection of management options will be based on optimising winter road maintenance practices so as to minimise the potential for harm to the environment, while not compromising road safety. Environment Canada does not consider a general prohibition on the use of road salts to be necessary.

BARRY STEMSHORN
Assistant Deputy Minister
Environmental Protection Service

On behalf of the Minister of the Environment

REGULATORY IMPACT ANALYSIS STATEMENT

Description

The purpose of this initiative is to propose the addition of the following substance to the List of Toxic Substances in Schedule 1 of the Canadian Environmental Protection Act, 1999 (CEPA, 1999):

57. Road salts that contain inorganic chloride salts with or without ferrocyanide salts

Scientific assessments indicate that the substance, i.e. road salts that contain inorganic chloride salts with or without ferrocyanide salts, is entering or may enter the environment in a quantity or concentration or under conditions that have or may have an immediate or long-term harmful effect on the environment or its biological diversity, and that constitute or may constitute a danger to the environment on which life depends. Therefore, it is recommended that this substance be added to the List of Toxic Substances in Schedule 1.

The full scientific Assessment Report may be obtained from the Priority Substances List Assessment Report page (www.ec. gc.ca/cceb1/eng/final/index_e.html) or from the Inquiry Centre, Environment Canada, Hull, Quebec K1A 0H3, 1-800-668-6767.

Authority

Subsection 76(1) of CEPA 1999 requires the Minister of the Environment and the Minister of Health to compile a list, known as the Priority Substances List, which may be amended from time to time, and which identifies substances (including chemicals, groups of chemicals, effluents and wastes) that may be harmful to the environment or constitute a danger to human health. The Act also requires both Ministers to assess these substances to determine whether they are "CEPA toxic" or capable of becoming "CEPA toxic" as defined under section 64 of the Act. A substance is determined to be "CEPA toxic" if it is entering or may enter the environment in a quantity or concentration or under conditions that:

Assessment of Substances on the Priority Substances Lists

The responsibility for assessing priority substances is shared by Environment Canada and Health Canada. The assessment process includes examining potential effects to humans and other organisms as well as determining the entry of the substance into the environment, the environmental fate of the substance and the resulting exposure.

Upon completion of the scientific assessment for each substance, a draft assessment report is prepared and made available to the public. In addition, the Ministers must publish the following in the Canada Gazette:

1. a summary of the scientific results of the assessment; and

2. a statement as to whether they propose to recommend:

The notice in the Canada Gazette provides for a 60-day public comment period during which interested parties can file written comments on the recommendations that the Ministers propose to take and their scientific basis.

After taking into consideration any comments received, the Ministers may, if they deem it appropriate, make revisions to the draft assessment report. The Ministers must then publish in the Canada Gazette their final decision as to whether they propose to recommend that the substance be added to the List of Toxic Substances in Schedule 1 or whether they recommend that no further action be taken in respect of the substance. A copy of the final report of the assessment is also made available to the public. If the Ministers' final decision is to propose that the substance be added to the List of Toxic Substances in Schedule 1, they must also recommend to the Governor in Council that the substance be added to the List.

Once a substance is listed on the List of Toxic Substances in Schedule 1 of CEPA 1999, the Government has the authority to develop a proposed regulation or instrument respecting preventive or control actions in relation to the substance (e.g. pollution prevention plan, an environmental emergency plan.)

Road Salts That Contain Inorganic Chloride Salts With or Without Ferrocyanide Salts (Road Salts)

Road salts enter the Canadian environment through their storage and use and through disposal of waste snow. Road salts are used for de-icing and anti-icing in winter road maintenance, with some use as summer dust suppressants. Inorganic chloride salts considered in this assessment include sodium chloride, calcium chloride, potassium chloride and magnesium chloride. In addition, ferrocyanide salts, which are added as anti-caking agents in road salts formulations, were assessed.

It is estimated that approximately 4 750 000 tonnes of sodium chloride de-icers were used in the 1997-98 winter and that 110 000 tonnes of calcium chloride are used on roadways in a typical year. Very small amounts of other salts are used.

These compounds enter surface water, soil and groundwater after snow melts, and are dispersed by splash and spray through the air. All chloride ions that enter groundwater can ultimately be expected to reach surface water; it may take from a few years to several decades or more for steady-state groundwater concentrations to be reached. Key environmental concerns have been associated with eventual loss of meltwater into surface water and into soil and groundwater at snow disposal sites.

In water, high concentrations of chloride related to the use of road salts on roadways have been measured. As examples, reported maxima reached about 19 000 mg/L in road runoff, 84 000 mg/L in leachate from uncovered sand/salt abrasive piles, 4 000 mg/L in ponds and wetlands, 4 300 mg/L in streams and small rivers, 150 to 300 mg/L in rural lakes and 2 000 to 5 000 mg/L in urban impoundment lakes. Toxic effects to aquatic biota have been associated in the laboratory with exposures to chloride concentrations for non-lethal effects at 400 mg/L (fungi) and median lethal effects around 900-1 000 mg/L (fish embryos).

In groundwater, concentrations of chloride as high as 2 800 mg/L have been associated with off-site impacts from storage yards. Considering data on road salt loadings, urban areas in southern Ontario, southern Quebec and the Maritimes face the greatest risk of regional groundwater impacts. Field measurements have shown that roadway applications in rural areas can also result in increased concentrations of chloride even in lakes a few hundred metres away from roadways.

It is estimated that five percent of aquatic species would be affected (median lethal concentration) at chloride concentrations of about 210 mg/L, and 10 percent of species would be affected at chloride concentrations of about 240 mg/L. Changes in populations or community structure can occur at lower concentrations. High concentrations of chloride in lakes can also increase availability of metals and, by preventing seasonal mixing of waters, affect distribution of oxygen and nutrients.

A number of field studies have documented damage to vegetation and shifts in plant community structure near roadways resulting from the use of road salts. Effects on tissue concentrations have been reported within about 200 m from the edges of Canadian highways.

Behavioral and toxicological impacts have been associated with exposure of mammalian and avian wildlife to road salts. Ingestion of road salts increases the vulnerability of birds to car strike. Furthermore, intake calculations suggest that road salts may poison some birds, especially when water is not freely available during severe winters. Road salts may also affect wildlife habitat, with reduction in plant cover or shifts in communities that could affect wildlife dependent on these plants for food or shelter.

Ferrocyanides are very persistent but are of low toxicity. However, in solution and in presence of light, they can dissociate and form cyanide. In turn, the cyanide ion may volatilize and dissipate fairly quickly. Modelling studies undertaken in support of this assessment indicate that there is a potential for certain aquatic organisms to be adversely affected by cyanide in areas of high use of road salts, although the likelihood that sensitive organisms would be exposed for extended periods in roadside habitats may be small.

Based on the available data, it is considered that road salts that contain inorganic chloride salts with or without ferrocyanide salts are entering or may enter the environment in a quantity or concentration or under conditions that have or may have an immediate or long-term harmful effect on the environment or its biological diversity, and that constitute or may constitute a danger to the environment on which life depends. Therefore, it is proposed that road salts that contain inorganic chloride salts with or without ferrocyanide salts be considered "CEPA toxic" or capable of becoming "CEPA toxic" as defined under paragraphs 64(a) and (b) of CEPA 1999.

Alternatives

The assessment report concludes that road salts that contain inorganic chloride salts with or without ferrocyanide salts are entering or may enter the environment in a quantity or concentration or under conditions that have or may have an immediate or long-term harmful effect on the environment or its biological diversity, and that constitute or may constitute a danger to the environment on which life depends. Consequently, the Ministers have determined that taking no further action is not acceptable for this substance.

When the Ministers indicate that they intend to recommend a substance for addition to the List of Toxic Substances in Schedule 1, a range of management options will be analyzed and considered as possible preventive or control actions for the substance.

Benefits and Costs

The decision to amend the List of Toxic Substances in Schedule 1 of CEPA, 1999 is solely based on a scientific assessment.

By proposing the addition of road salts to the List of Toxic Substances, the Government will be able to take preventive actions to ensure the protection of the environment, through the assessment of a range of alternative management strategies. This will include an analysis of the benefits and costs.

Consultation

A notice concerning the assessment of this priority substance under CEPA, 1999 was published in the Canada Gazette, Part I as follows:

Publication after Assessment of a Substance — Road Salts — Specified on the Priority Substances List (Subsection 77(1) of the Canadian Environmental Protection Act, 1999)
August 12, 2000

The notice was also posted on Environment Canada's Green Lane and on the CEPA Registry Web pages.

The above notice offered interested parties the opportunity to comment within 60 days on the draft Priority Substances Assessment Report and the proposed recommendation to add road salts to the List of Toxic Substances in Schedule 1 to CEPA, 1999.

A total of 107 submissions were received contesting or supporting the proposal. Comments related to the regulatory process (consultation period, development of control instruments, etc.) and the scientific assessment process (scope of analysis, sources and validation of data and information, determination of toxicity under CEPA, 1999, etc.). The final assessment report was revised as appropriate to address relevant comments. Comments that focused on risk management issues have been forwarded to risk managers for their consideration, and it was made clear that a general ban on road salts was not being considered as an option.

Concerns were expressed regarding the designation "toxic" for road salts, particularly the potential public confusion and alarm about the safety of road salts and the requirement for a proactive communication strategy. Both departments will continue to develop and implement communications plans to ensure that the public understands the conclusions and ramifications of the designation "CEPA toxic," including the Government's determination that road safety will not be compromised by any possible management plan. Furthermore, the addition of road salts to the List of Toxic Substances should not be used as a basis for concluding that the substance is intrinsically hazardous under all conditions.

Comments were made that road safety could be affected by declaring road salts as "CEPA toxic" and that Environment Canada had not conducted a thorough investigation of the implications regarding liabilities of road agencies. Environmental protection will not compromise safety, considering that several control options (Road Weather Information System, anti-icing and others) lead to reduced use of salt, while actually increasing roadway safety. Other measures for storage yards or snow disposal sites would have no impact on roadway safety.

Comments were made that no economic assessment was performed prior to the designation of road salts as "CEPA toxic." Assessment associated with the addition of road salts to the List of Toxic Substances is based solely on science. As noted in the costs section, a full economic assessment of alternatives, cost and benefits will be completed at the risk management stage.

Inclusion of chloride salts other than sodium chloride under the denomination of road salts was considered inappropriate by some respondents. The focus of the assessment is on road salts that contained inorganic chlorides salts with or without ferrocyanide salts, having broadly similar behaviour and effects in the environment. The assessment of effects includes the toxicity of chlorides and this depends on the cumulative input of all chloride salts, including sodium, calcium, magnesium and potassium.

The addition of road salts to the List of Toxic Substances is justified considering that there have been no additional data or information presented to contradict the scientific conclusion of the assessment report.

A summary of comments and departmental responses may be obtained through the Priority Substances List Assessment Report Web page (www.ec.gc.ca/cceb1/eng/final/index_e.html) under the Summary of Comments page, or from the Priority Substance List Assessment Program, Existing Substances Branch, Environment Canada, Hull, Quebec K1A 0H3, (819) 953-4936 (Facsimile).

CEPA National Advisory Committee

The CEPA National Advisory Committee has been given an opportunity to advise the Ministers on the scientific evidence supporting the declaration of this substance as "CEPA toxic." There were no concerns raised with respect to the proposal to recommend that road salts be added to the List of Toxic Substances in Schedule 1 to the CEPA, 1999.

Compliance and Enforcement

There are no compliance or enforcement requirements associated with the List of Toxic Substances in Schedule 1 itself.

Contacts

Danie Dubé, Chief, Chemicals Evaluation Division, Department of the Environment, Hull, Quebec K1A 0H3, danie.dube@ ec.gc.ca, (819) 953-0356; or Arthur Sheffield, Team Leader, Regulatory and Economic Analysis Branch, Department of the Environment, Hull, Quebec K1A 0H3, arthur.sheffield@ec.gc.ca, (819) 953-1172.

PROPOSED REGULATORY TEXT

Notice is hereby given, pursuant to subsection 332(1) of the Canadian Environmental Protection Act, 1999 (see footnote a), that the Governor in Council, pursuant to subsection 90(1) of that Act, proposes to make the annexed Order Adding Toxic Substances to Schedule 1 to the Canadian Environmental Protection Act, 1999.

Any person may, within 60 days after the date of publication of this notice, file with the Minister of the Environment comments with respect to the proposed Order or a notice of objection requesting that a board of review be established under section 333 of that Act and stating the reasons for the objection. All comments and notices must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to the Director, Existing Substances Branch, Environmental Protection Service, Department of the Environment, Ottawa, Ontario K1A 0H3 (fax: (819) 953-4936, e-mail: PSL.LSIP@ec.gc.ca).

A person who provides information to the Minister of the Environment may submit with the information a request for confidentiality under section 313 of that Act.

Ottawa, November 23, 2001

RENNIE M. MARCOUX
Acting Assistant Clerk of the Privy Council

ORDER ADDING TOXIC SUBSTANCES TO SCHEDULE 1 TO THE CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

AMENDMENT

1. Schedule 1 to the Canadian Environmental Protection Act, 1999 (see footnote 1) is amended by adding the following after item 56:

57. Road Salts that contain inorganic chloride salts with or without ferrocyanide salts.

COMING INTO FORCE

2. This Order comes into force on the day on which it is registered.

[48-1-o]

Filing Penalties (Office of the Superintendent of Financial Institutions) Regulations

Statutory Authority

Office of the Superintendent of Financial Institutions Act

Sponsoring Department

Office of the Superintendent of Financial Institutions

REGULATORY IMPACT ANALYSIS STATEMENT

Description

The Filing Penalties (Office of the Superintendent of Financial Institutions) Regulations are made pursuant to section 23.1 of the Office of the Superintendent of Financial Institutions Act (OSFI Act). These Regulations provide for the implementation of a late and erroneous filing penalty (LEFP) framework. Section 23.1 of the OSFI Act provides authority for the Superintendent to assess penalties of a prescribed amount against financial institutions or administrators of pension plans where they fail to file required information that is on time, or where the required information is inaccurate or incomplete. The Filing Penalties (Office of the Superintendent of Financial Institutions) Regulations prescribe late and erroneous filing penalties for financial and non-financial returns that are required by governing legislation to be filed with the Office of the Superintendent of Financial Institutions (OSFI). Amounts collected under the LEFP framework will be remitted to the Consolidated Revenue Fund.

Under governing legislation, federally regulated financial institutions (FRFIs), of which there are roughly 480, are required to file a variety of financial and non-financial information necessary for OSFI to carry out its legislative mandate. Much of this information is required to be filed in accordance with a predetermined schedule and is subjected to review for accuracy and completeness when it is received. OSFI follows up with every FRFI to resolve every instance of late filing of, or apparent errors in, this information because of its importance to OSFI's supervisory and regulatory program.

The frequency of late and erroneous filings is high for the industry overall. For example, over one third of all quarterly financial returns filed in the first three quarters of 1999, and over one half of the required filings of a key non-financial return for 1999, were filed late. These late and erroneous filings place a significant operational burden on OSFI and efforts to date to minimize their frequency have had only limited success. By creating meaningful consequences for an FRFI that fails to comply with filing requirements, OSFI anticipates that the industry's overall filing behaviour will improve.

The LEFP framework applies to all FRFIs, including banks, federally regulated trust and loan companies, co-operative credit associations, life insurance companies, fraternal benefit societies, and property and casualty insurance companies. Federally regulated pension plans are not subject to the LEFP framework at this time.

Only financial and non-financial information that is collected through specified regulatory returns and related filings is subject to the framework. To that end, at the close of each calendar year, OSFI will distribute to all FRFIs an updated list of all regulatory returns and related filings that will be subject to the LEFP framework in the ensuing year.

The penalties are not based on an estimate of the resources used by OSFI to obtain accurate filings. In the interest of introducing penalties that will act as meaningful deterrents, not be inordinately punitive, and that recognize the significant differences in FRFIs' sizes, the penalties are tiered ($100, $250 and $500 per return, per day) according to an FRFI's size, measured in terms of its total assets as reported to OSFI as at the end of the FRFI's financial year.

A late or incomplete return attracts a penalty at the prescribed per diem rate. An erroneous return attracts the same per diem penalty as a late return until such time as it is resubmitted and determined by OSFI to be free of errors. If a return that is filed on or before the due date is determined by OSFI to be erroneous, a penalty is not applicable if an error-free revision is received by OSFI before the end of the day on which the return is due.

There will be no doubling up of penalties. That is, a regulatory return that is both late and determined to be erroneous when it is received will be assessed a single per diem penalty until such time as an error-free revision is received by OSFI.

In the LEFP framework, errors are defined as follows: errors that can be identified by OSFI's validation process (Type I errors); those that cannot be identified by OSFI's validation process, but which, for example, are subsequently brought to OSFI's attention by the FRFI (Type II errors); and those that are identified through other means.

Type I errors should be avoidable because all FRFIs have access to the validation rules that OSFI uses to identify Type I errors. Thus, they have the ability to run the rules against their information prior to submitting their returns to OSFI. To minimize the potential disincentive for FRFIs to identify and correct Type II errors, the LEFP framework allows an FRFI to file revisions to original returns up to an annual limit before those revisions attract a penalty.

Because the legislation provides that the Superintendent "may" assess a penalty, OSFI intends to exercise discretion and not impose a penalty when the circumstances warrant (e.g., a systems crash at the institution). However, OSFI intends to exercise this discretion judiciously so as not to undermine the integrity of the framework.

The LEFP framework provides a dispute resolution mechanism whereby institutions can ask that their filing penalties be reviewed by OSFI's management. This mechanism and other key elements of the LEFP framework are described in an administrative procedures document that has been distributed to FRFIs.

At the end of every calendar quarter, OSFI will provide every FRFI that incurred a filing penalty during the quarter with a report of its filing record for the quarter and calendar year-to-date. The report will include the relevant details with respect to both financial and non-financial returns. Also, all FRFIs will receive an annual report of their filing performance for the year.

To permit regulated institutions to adapt to the LEFP framework, OSFI implemented the LEFP framework on a notional basis commencing April 1, 2001. Imposition of filing penalties will become effective as of April 1, 2002. Prior to that date, penalties will not be assessed, but FRFIs will receive quarterly reports advising them of the penalties that would have been applicable had the framework been fully implemented. This will permit FRFIs ample opportunity to identify and address any potential weaknesses in their reporting processes. All violations that occur on or after April 1, 2002, will be assessed the appropriate penalty amounts. The first invoices will be issued after June 30, 2002, in respect of the second calendar quarter of 2002.

Alternatives

I. Status quo, i.e., no change to existing filing practices.

II. Implement a filing penalty regime that prescribes penalties for late and erroneous filing of certain financial and non-financial information.

Analysis

OSFI has chosen to implement a filing penalty regime that prescribes penalties for late and erroneous filing of certain financial and non-financial information (Alternative II). By creating meaningful consequences for an FRFI that fails to comply with filing requirements, OSFI expects that the industry's overall filing behaviour will improve. In turn, this regime should improve OSFI's ongoing analysis of financial institutions, including problem institutions, and trends in the financial industry. This regime should also result in more timely publication of financial information representing every FRFI and reduce OSFI resources devoted to following up on late and erroneous returns.

Benefits and Costs

These Regulations impose no new filing requirements. However, FRFIs that have demonstrated an inability to comply with OSFI's filing requirements may have to dedicate more resources to ensure compliance in the future and thereby avoid the imposition of late and erroneous filing penalties.

OSFI will incur nominal, one-time direct costs to implement the filing penalty framework but does not anticipate incurring incremental costs to administer the framework on an ongoing basis.

Consultation

OSFI first announced in March 1998 that it would be introducing penalties for late and erroneous filings. In July 1999 the various industry associations were reminded of OSFI's plans in this regard. No views were expressed by industry at either time.

In August of 2000, OSFI officials met to discuss the proposed LEFP framework with a committee of representatives from each of the financial services sectors that will be affected by the framework.

OSFI subsequently invited each of the industry associations (Canadian Bankers Association (CBA), The Trust Companies Association of Canada, the Credit Union Central of Canada, the Canadian Life and Health Insurance Association Inc. (CLHIA), the Canadian Fraternal Association, the Insurance Council of Canada (ICC), the Canadian Association of Mutual Insurance Companies, The Reinsurance Research Council (RRC) and the Canadian Association of Financial Institutions in Insurance) to meet separately to discuss the framework. The CBA, CLHIA and the ICC and RRC (together) subsequently met with OSFI.

The industry has expressed a number of concerns regarding the LEFP framework. Industry representatives are concerned about implementing a penalty framework at this time since companies may not be aware of their filing performance. They also argue that the LEFP framework will raise the profile of regulatory reporting within an FRFI to an unjustifiably high level. In addition, the usefulness of some of the information required by OSFI has been questioned.

OSFI has considered the industry's views. However, OSFI considers the LEFP framework to be both fair and balanced.

OSFI has established a 12-month phase-in period commencing April 1, 2001. Prior to that date, and at the end of each subsequent calendar year, OSFI will distribute to all FRFIs an updated list of all regulatory returns that will be subject to the framework in the ensuing year. Prior to April 1, 2002, penalties will not be assessed, but FRFIs will receive quarterly reports advising them of the penalties that would have been applicable had the framework been fully implemented. Accordingly, FRFIs will be aware of their filing requirements and filing performance, and will have ample opportunity to identify and address potential weaknesses in their reporting processes. This phase-in period will also give OSFI an opportunity to fine-tune and resolve any problems in the administration of the framework, working with stakeholders through the process, as required.

OSFI agrees that the LEFP framework will raise the profile of regulatory reporting within an FRFI. OSFI believes that this is necessary so that it receives an appropriate level of senior management attention. OSFI's perception is that regulatory reporting is not afforded enough importance by some FRFIs. Establishing filing penalties for late and erroneous regulatory reporting should heighten the importance of reliable and timely regulatory reporting.

A broad review of OSFI's information requirements is to be undertaken in 2001/2002. As a result of this process, some requirements may be eliminated but others may be identified. Such a periodic refocusing of OSFI's information requirements is necessary because FRFI businesses are constantly evolving. Nonetheless, this refocusing should not preclude OSFI from taking measures to ensure that the information it is required to collect is filed accurately and on time.

Given the preceding measures, OSFI believes that late and erroneous filing penalties will not present an undue burden, in terms of frequency and expense, for institutions that make an effort to comply with OSFI's filing requirements.

Compliance and Enforcement

These Regulations impose no new filing requirements. However, FRFIs that have demonstrated an inability to comply with OSFI's filing requirements may have to dedicate more resources to ensure compliance in the future to avoid the imposition of late and erroneous filing penalties.

Implementation and operation of the LEFP framework will require some minor changes in OSFI procedures (for example, providing every FRFI with a record of its filing performance for the preceding year; billing and collecting payments for late and erroneous filings; etc.). However, as the majority of the processes will be automated, no additional personnel resources are required. It is OSFI's expectation that the resources required to administer the LEFP framework will be available because of anticipated improvements in the overall filing performance and a corresponding reduction in resources dedicated to resolving late and erroneous returns.

Contact

Ms. Donna Bovolaneas, Chairperson, Late and Erroneous Filing Penalties Working Group, Office of the Superintendent of Financial Institutions, Kent Square, 14th Floor, 255 Albert Street, Ottawa, Ontario K1A 0H2, (613) 990-1889 (Telephone), (613) 991-6248 (Facsimile).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to subsection 23.1(4) (see footnote b) and section 23.3 (see footnote c) of the Office of the Superintendent of Financial Institutions Act (see footnote d), proposes to make the annexed Filing Penalties (Office of the Superintendent of Financial Institutions) Regulations.

Interested persons may make representations in writing with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Christa Sanders, Regulations Officer, Legislation and Precedents Division, Office of the Superintendent of Financial Institutions, 255 Albert Street, Ottawa, Ontario, K1A 0H2.

Ottawa, November 29, 2001

RENNIE M. MARCOUX
Acting Assistant Clerk of the Privy Council

FILING PENALTIES (OFFICE OF THE SUPERINTENDENT OF FINANCIAL INSTITUTIONS) REGULATIONS

LATE FILING PENALTIES

1. (1) Subject to subsection (2), for the purpose of assessing penalties under subsection 23.1(4) of the Office of the Superintendent of Financial Institutions Act in respect of a contravention of paragraph (a) of that provision, the following amounts are prescribed:

(2) The total amount that may be assessed as a penalty against a financial institution in respect of a specific failure must not exceed $25,000.

COMING INTO FORCE

2. These Regulations come into force on April 1, 2002.

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Regulations Amending the General Pilotage Regulations

Statutory Authority

Pilotage Act

Sponsoring Department

Department of Transport

REGULATORY IMPACT ANALYSIS STATEMENT

Description

Section 52 of the Pilotage Act gives the Governor in Council the authority to make regulations:

— prescribing the minimum qualifications (navigational, experience at sea and health) required by applicants for a licence or pilotage certificate;

— respecting the medical examinations that a licensed pilot or holder of a pilotage certificate must undergo and the intervals at which they are held, these intervals not to be less than once every three years; and

— prescribing the forms of licences and pilotage certificates.

The Medical Examination of Seafarers — Physician's Guide (TP 11343) has recently been amended and a proposed amendment to the Crewing Regulations was published in the Canada Gazette, Part I, on October 7, 2000. This amendment and proposed amendment necessitated a review of the General Pilotage Regulations with respect to medical and health qualifications since applicants and holders of pilotage licences and certificates must also comply with the medical requirements set out in TP 11343.

To ensure consistency and uniformity with the Crewing Regulations and associated medical standards, it is necessary to make a few minor amendments to the General Pilotage Regulations.

These amendments will ensure that:

— the medical requirements for applicants and holders of pilotage licences and certificates are compatible with those for deck department personnel; and

— the reference to the new TP 11343 sections that are incorporated by reference in the Regulations are appropriately renumbered.

These amendments will update the Regulations, and other amendments make the language more acceptable from a human rights perspective.

Also, on the form of certificates and pilotage licences, the signature block has been amended so that in future the chief executive officer of the pilotage authority will sign them. This change is made to reflect the business practices of the pilotage authorities.

Alternatives

Retention of the status quo was considered and rejected. Although most of the editorial amendments could have been deferred to a later date, it is essential that correct references be made to the new sections relating to medical examinations, following the revision of the Medical Examination of Seafarers — Physician's Guide (TP 11343) and also to the forms for certificates and pilotage licences.

Benefits and Costs

These amendments, which are essentially of an editorial nature, are beneficial in that they will update the Regulations and ensure consistency with the Crewing Regulations and their associated standards. The amendments will not have a cost impact upon the pilotage authorities, pilots or the marine industry.

Consultation

The proposed amendments were forwarded to the four pilotage authorities and major stakeholders for their comments. All comments received were supportive of these amendments.

Compliance and Enforcement

Sections 27 and 30 of the Pilotage Act provide an authority with the necessary compliance and enforcement mechanisms to suspend and cancel licences and pilotage certificates where the licensed pilot or the holder of a pilotage certificate does not meet the required qualifications.

Section 48 of the Pilotage Act provides for penalties if the Regulations are contravened. These include fines of up to $5,000.

Contact

Captain Jules St-Laurent, Senior Advisor, Pilotage, Marine Personnel Standards and Pilotage, Department of Transport, Place de Ville, 330 Sparks Street, Ottawa, Ontario K1A 0N8, (613) 998-0697 (Telephone), (613) 990-1538 (Facsimile).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to section 52 (see footnote e) of the Pilotage Act, proposes to make the annexed Regulations Amending the General Pilotage Regulations.

Interested persons may make representations concerning the proposed Regulations to the Minister of Transport within 30 days after the date of publication of this notice. All such representations must be in writing and cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Jules St-Laurent, Marine Personnel Standards and Pilotage, Department of Transport, Place de Ville, Tower C, 10th Floor, 330 Sparks Street, Ottawa, Ontario K1A 0N8 (Tel.: (613) 998-0697; fax: (613) 990-1538).

Ottawa, November 29, 2001

RENNIE M. MARCOUX
Acting Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE GENERAL PILOTAGE REGULATIONS

AMENDMENTS

1. The portion of subsection 2(1) of the English version of the General Pilotage Regulations (see footnote 2) before paragraph (a) is replaced by the following:

2. (1) Every applicant or holder shall undergo a medical examination, at the time or within the interval prescribed in this subsection, conducted by a designated physician to determine their physical and mental fitness for pilotage duties

2. (1) The portion of subsection 3(1) of the Regulations before paragraph (a) is replaced by the following:

3. (1) The designated physician conducting a medical examination shall determine whether the applicant or holder has any of the following disabilities:

(2) Paragraph 3(1)(g) of the Regulations is replaced by the following:

(g) an active psychiatric disorder, including drug or alcohol dependence or abuse.

(3) Subsection 3(2) of the Regulations is replaced by the following:

(2) The designated physician shall

3. Section 9 of the Regulations is replaced by the following:

9. A requirement in these Regulations that a person hold a named certificate is satisfied if the person holds a certificate that entitles the holder to all the rights and privileges of the named certificate and is valid for use at sea.

4. Schedule 1 to the Regulations is amended by replacing the word "Chairman" in the signature blocks of Forms 1 and 2 with the words "Chief Executive Officer".

COMING INTO FORCE

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

[48-1-o]

Footnote a

S.C. 1999, c. 33

Footnote 1

S.C. 1999, c. 33

Footnote b

S.C. 1999, c. 28, s. 131

Footnote c

S.C. 1997, c. 15, s. 339

Footnote d

R.S., c. 18 (3rd Supp.), Part I

Footnote e

R.S., c. 31 (1st Supp.), s. 86

Footnote 2

SOR/2000-132

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