— Conduct uncertainty testing - The implications of uncertainty on the net benefit estimate is identified and discussed.

The data and assumptions used in the estimation of net benefit are discussed below.

Solvent Use, Growth and Equipment Inventory

Based on information obtained from the CEPA Notice, August 2001, solvent degreasing operations using TCE and PERC operate 255 machines and use 1.5 kilotonnes of solvent (Table 1). Of this total, the proposed Regulations will cover 49 percent of the total number of machines and 99 percent of total annual TCE and PERC use in solvent degreasing.

Table 1: Regulatory Coverage for TCE/PERC Use and Machines, 2000

	Quantity Kilotonnes	# of Machines
Total TCE/PERC Use	1.51	255
Regulated Community of Machines: > 1 tonnes use	1.47	125
Regulated Community as % Total Community	99%	49%

Source: CEPA Notice, July 2001.

Table 2 and Table 3 provide an overview of the distribution of machines by TCE and PERC use in vapour and cold degreasing in 2000. Of the regulated machines, 72 percent are vapour degreasers, which account for 73 percent of solvent use.

Table 2: Profile of Vapour Degreasing Equipment Subject to Proposed Regulations

Range of TCE Use/Year		Machines		Quantity Used
	# Machines	% Machines	Tonnes	% Q
Small — 1 to 4 tonnes	37	41%	80.8	8%
Medium — 4 to 15 tonnes	32	36%	271.7	25%
Large — 15 to 30 tonnes	13	14%	265.3	24%
Very Large > 30 tonnes	8	9%	476.4	43%
Total	90	100%	1,094.1	100%

Table 3: Profile of Cold Degreasing Equipment Subject to Proposed Regulations

Range of TCE Use/Year		Machines		Quantity Used
	# Machines	% Machines	Tonnes	% Q
Small — 1 to 4 tonnes	21	60%	35.2	9%
Medium — 4 to 15 tonnes	6	17%	41.6	10%
Large — 15 to 30 tonnes	3	9%	66.5	16%
Very Large > 30 tonnes	5	14%	262.0	65%
Total	35	100%	405.2	100%

Use Growth Rate Estimate

An annual average growth rate of less than one percent (0.23 percent) in TCE and PERC use in solvent degreasing is projected. (see footnote 3)  In effect, the use of TCE and PERC in solvent degreasing is growing only marginally over time.

Based on this growth rate, it is estimated that approximately 1.5 kilotonnes of TCE will be used for solvent degreasing in 2006. Based on historical use patterns, 13 percent will be either captured for recycling or discarded as waste, while 87 percent of the remaining quantity will be released into the atmosphere. The forecast of TCE and PERC released into the atmosphere is projected to be approximately 682 tonnes in 2007 and 10.2 kilotonnes over the 2007 to 2020 period.

Costs

Compliance Costs

Initially, the proposed Regulations require that each solvent degreasing operation freeze its annual TCE and PERC use at a baseline level. This frozen level is an operation's allowance for the first three years of the proposed Regulations. The operation's allowance is determined by assessing, for each operation, the average use over three consecutive years during the January 1, 1994 to December 31, 2002 period.

During the first three years of the proposed Regulations, trading will be permitted. This trading would allow users of TCE and PERC to purchase allowances above their frozen amount, if required. Given that TCE and PERC use is expected to be somewhat stable into the future, the level of trading, and the demand for allowances above the frozen levels, is expected to be small and in the order of 10 percent.

After the three-year freeze, the proposed Regulations will require that solvent degreasing operations reduce their use by 65 percent below their allowance in 2007. As noted above, this reduction will impose compliance costs on the private sector. A number of considerations must be accounted for when estimating these compliance costs.

First, the proposed Regulations enable an allowance trading system that permits operations to buy, sell or use reductions. Under this system, lower overall compliance costs can be expected because some operations are able to reduce solvent use more cost-effectively than others. These operations, with low use reduction costs, can sell reductions, in the form of allowances, to firms with higher use reduction costs. The operations with relatively higher use reduction costs may not actually reduce their use, but instead are able to purchase other firms' extra allowances to comply with the proposed Regulations. Therefore, with allowance trading, it is expected that the overall compliance cost to achieve the aggregate 65 percent use reduction will be lower than if the proposed Regulations required all firms to actually reduce use by 65 percent.

Environmental performance is not compromised by the allowance trading system since a compliance regime will ensure that each operation achieves, either through actual reductions or through use reduction purchases, a 65 percent solvent use reduction. Thus the allowance trading system is expected to achieve the environmental objective while improving economic efficiency.

Another consideration is that solvent represents a significant cost in the solvent degreasing process. Using less solvent, or switching to substitute processes, will provide solvent savings for some operations in terms of reducing expenditures on TCE and PERC solvents. The overall compliance costs are therefore reduced from the cost-savings from lower solvent use. Indeed, in most cases, the capital and operating costs are more than offset by the savings in solvent.

Finally, operations will be able to conduct on-site recycling to comply with their use reduction. This control option has been factored into the compliance cost calculations identified below.

Government Costs

Costs to Government include expenditures to establish and maintain the allowance system, as well as enforcement costs.

Expenditures for the allowance system will be required for personnel, office overhead and surveys required for regulatory reporting. Based on Environment Canada's experience with the Methyl Bromide trading system, 3 full time equivalents (FTEs) will be required during the first three years of the allowance system (i.e. 3 FTEs in 2007 and until 2009). This includes personnel to monitor use during 2004, 2005, and 2006. Half as many FTEs (1.5 FTE) will be required before the allowance system is implemented (1.5 FTEs in 2004, 2005 and 2006) and after the first three years of operation (1.5 FTEs in 2010 to 2020). Experience with the Methyl Bromide trading system also indicates that expenditures for surveys and incidentals for the operation of the allowance system will be minimal and in the order of $5 000 yearly.

Enforcement costs for the proposed Solvent Degreasing Regulations are based on an estimate of the regulated community derived from responses to a Minister's notice issued in 2001 under section 71 of CEPA 1999.

For the first three years (2004, 2005 and 2006), following the coming into force of the proposed Regulations, the enforcement costs are estimated to require an annual budget of $91 908. This cost includes the following, 1.27 FTEs at an approximate cost of $45 954 (based on an average salary of $60 000 per FTE and a 20 percent allowance for monetary benefits), $30 636 for investigations and other enforcement measures (including environmental protection compliance orders, injunction and prosecution) and $15 318 for overhead and maintenance costs. Inspections will verify whether or not regulatees are complying with the freeze on their consumption of the regulated solvents, plus any transfers of unused consumption from others in the regulated community.

For 2007, the year during which regulatees will have their allowance reduced by 65 percent, the enforcement costs are estimated to require an annual budget of $121 716. This cost includes the following, 1.7 FTEs at an approximate cost of $60 858 (based on an average salary of $60 000 per FTE and a 20 percent allowance for monetary benefits), $40 572 for investigations and other enforcement measures (including environmental protection compliance orders, injunctions and prosecutions) and $20 286 for overhead and maintenance costs. The increased costs are due to the need for additional inspections to validate data submitted by regulatees and to verify if regulatees are respecting their new allowance, as authorized by the Minister and prescribed by the proposed Regulations.

In addition, a one-time amount of $25 000 will also be required for training for enforcement officers and CEPA analysts.

Cost Estimates

Tables 4 and 5 present the results of an optimization routine that uses marginal abatement cost curves for small medium, large, and very large vapour and cold degreasers. The cost curves represent the relationship between TCE and PERC use reductions and the costs to achieve those reductions.

The optimization routine solves for a least cost solution to achieve a 10 percent reduction in the period 2004, 2005 and 2006, and an overall 65 percent reduction in TCE and PERC use starting in 2007 (i.e. 10 percent in the first period and 55 percent in the second period). The optimization routine mimics an allowance system where it is assumed that operations will act to minimize abatement costs in order to meet their solvent use allowance.

The modeling of the allowance system indicates that the overall compliance cost of the proposed Regulations is negative, and thus not a cost but a benefit. This negative cost, or benefit, results when solvent savings totally offset the capital and operation costs required to comply with the proposed Regulations.

The modeling also predicts that the very large vapour degreasers will be responsible for the majority of use reductions, and will exceed their required 65 percent reduction. The very large vapour degreasers will therefore be a source of allowance credits (sellers) for other machine types. This finding implies that achieving the 65 percent reduction from all other machines is not as cost-effective; they will need to purchase TCE and PERC allowances to comply with the proposed Regulations.

Table 4 : Compliance Costs and Emission Reductions by Equipment Category to Achieve a 65% Aggregate Reduction in TCE and PERC Use (in 2001 dollars)

Equipment Category	Quantity TCE and PERC Use Reduction (Tonnes)	Distribution of TCE and PERC Use Reduction	Compliance Cost/ Solvent Savings Net Present Value 5% over 15 years
	Period 1 — 2004 to 2006
Vapour Degreasers
Small	0	0% of use	0
Medium	53	18% of use	($405,287)
Large	0	0% of use	0
Very Large	78	16% of use	($984,096)
Cold Degreasers
Small	0	0% of use	0
Medium	0	0% of use	0
Large	0	0% of use	0
Very Large	20	8% of use	($326,721)
Total Period 1	151	10% of total use	($1,716,091)*
	Period 2 — 2007 to 2021
Vapour Degreasers
Small	45	52% of use	($137,844)
Medium	77	27% of use	($983,200)
Large	128	54% of use	($893,725)
Very Large	413	84% of use	($2,062,436)
Cold Degreasers
Small	0	0% of use	$0.00
Medium	11	24% of use	($66,638)
Large	32	49% of use	($158,926)
Very Large	130	50% of use	($1,268,970)
Total Period 2	836	55% of total use	($5,571,743)
Total Both Periods	987	65% of total use	($7,287,848)

^* Solvent use reductions result in an overall cost-savings. This means that the overall cost of compliance are totally offset by solvent savings over the 15 years of the equipment life.

Government Costs

Government costs, discounted using a rate of 5 percent, are estimated to be in the order of $2.7 million over the 2004 to 2021 time period. Detailed yearly cost estimates are provided in Table 5.

Table 5 : Summary of Government Costs

Period	Yearly Cost	Total Period — Discounted
2004 to 2006	$229 440 year one, $204 440 after that	$ 526 576
2007 to 2009	$343 400	$1 030 200
2010 to 2021	$234 400	$1 412 164

Benefits

Benefits of the proposed Regulations are really avoided costs due to a reduction in the release of TCE and PERC. Three types of benefits are monetized in the estimate of net benefit:

— A reduction in solvent air emission results in a decrease in the incidence of cancer. This benefit is measured as the willingness-to-pay of individuals stemming from a risk reduction in the TCE and PERC exposure;

— TCE and PERC solvents have been linked to work place injuries, and data has been collected on the incidence of injury attributable to the solvents. By reducing the use of TCE and PERC solvents in the work place, a reduction in solvent-related injuries would occur. The measure of this benefit stems from the workers willingness-to-pay for reduced workplace risks. Workers Compensation estimates that identifying the number of workplace injuries as a result of solvent degreasing use forms the basis of this benefit estimate; and

— Studies have linked water supply contamination to TCE releases. A reduction in TCE use can be expected to result in a reduction in the incidence of water contamination. The avoided cleanup and alternative water supply costs can be used as a measure of this benefit. Although releases to groundwater are not specifically addressed by the proposed Regulations, a reduction in the probability of a release to water can be attributed to the proposed Regulations due to a reduction in the use of solvents.

These three types of benefits represent the quantified and monetized benefits that can be expected from the proposed Regulations. Other, non-quantified benefits, such as impacts on environmental receptors such as fresh water streams and biota, are not quantified. The quantified benefits, discussed below, can therefore be considered a minimum or lower bound estimate of the benefits of the proposed Regulations.

It is important to note that the benefit estimates assume a stream of benefits over a15-year time period and use a 5 percent discount rate. The 15-year time period reflects the expected useful life of the TCE and PERC equipment.

The Benefit of a Reduction in the Incidence of Cancer

TCE has been classified as being "probably carcinogenic to humans" and may constitute a danger to human life or health. Consequently, any reduction in the use and therefore air emissions of TCE will contribute to reducing the incidence of fatal cancer. The proposed Regulations thus trigger a benefit through a reduction in the release of solvents into the air. A method used by the United States Environmental Protection Agency (USEPA) has been transferred to the Canadian context. The model estimates how TCE emission reductions trigger benefits related to a reduction in the incidence of cancer and people's willingness-to-pay to avoid exposure that could lead to fatal cancer.

The model links solvent use, emissions and exposed populations to people's willingness-to-pay to avoid the probability of contracting cancer. First, the quantity of solvent released is translated into an exposure rate for the human population in large urban areas where the majority of solvent degreasers are located. The exposure rate is then multiplied by an incidence rate of cancer for the solvents, which produces an estimate of the probability of individuals, in the exposed population developing cancer. Individuals' willingness-to-pay to avoid contracting cancer are then used to value the change in the probability of contracting cancer. Therefore, the estimate of benefit is really an estimate of the avoided cases of cancer due to the proposed Regulations.

Using the analysis chain identified above produces a benefit that ranges between $135,000 and $452,000 with a central value of $225,000 per year. It is recognized that the uncertainty inherent in these estimates is significant. Therefore, a range of estimates is used for sensitivity and uncertainty testing (discussed below).

The Benefit of a Reduction in Solvent-related Worker Injuries

By reducing the use of degreasing solvents, the proposed Regulations will decrease the number and value of occupational injuries that result from TCE and PERC exposure. Occupational injuries and the value of the injury are used to estimate avoided injuries due to a decrease in the use of degreasing solvents. The value of the reduced injuries due to reduced TCE use is a benefit of the proposed Regulations.

Multiplying a range of willingness-to-pay values to avoid an occupational injury by an estimate of the number of injuries avoided due to the proposed Regulations produces a benefit estimate of avoided worker injuries in the range of $74,000 to $904,000, with a mean estimate in the range of $194,000 per year.

Again, the uncertainty in these estimates are significant, and uncertainty testing, using a range of values, is conducted to assess the implications of uncertainty on the benefits outcome.

The Benefit of a Reduction of Municipal Expenditures Due to Groundwater Contamination

The release of degreasing solvents has been identified as causing groundwater contamination. To address this type of contamination, affected municipalities are required to incur expenses for the short-term provision of alternative water supplies, for engineering studies and for establishing a new infrastructure. These expenditures have been estimated at between $2.2 and $11 million. (see footnote 4)  To be conservative, it is assumed that these expenditures result from one significant TCE or PERC contamination event every 10 years. Thus, on a yearly basis, the probability of a contamination event is 1 divided by 10, or 10 percent. The proposed Regulations will reduce this risk by 65 percent, which is the reduction in degreasing solvent use.

Multiplying the avoided expenditure due to the proposed Regulations by the yearly value of a contamination event due to TCE or PERC contamination results in a yearly benefit in the range of $112,000 to $563,000, with a central value of $337,000 per year.

Benefit Estimates

Table 6 provides a summary of the quantified yearly benefits of the proposed Regulations. The estimated benefits are assumed to occur over a 15-year period, and are discounted at a rate of 5 percent. The sum of the yearly benefits is estimated to be in the order of $8.7 million.

Table 6: Summary of Yearly Benefits (Net Present Value at 5%: $000s)

benefits	value
Avoided Incidence of Cancer	225
Avoided Solvent Related Worker Injuries	194
Avoided Groundwater Contamination	337
Total	757

Estimate of Net Benefit

Table 7 indicates that the net benefit of the proposed Regulations is positive, and in the order of $13.7 million. Uncertainty testing concludes that the net benefit is always positive, indicating that there is a low level of risk that the proposed Regulations will result in a negative net benefit to Canada.

Sensitivity testing on the discount rate was conducted with rates of 3 percent, 5 percent, and 7 percent. This range of discount rates does not result in the net benefit becoming negative, indicating that the results are insensitive to different discount rates.

Table 7: Summary of Net Benefit for Proposed Regulations (Net Present Value at 5%; $ millions over 15 years)

benefit	value
Program Costs	-($2.67)
Compliance Costs/ Solvent Savings	$ 7.28
Benefits	$ 8.70
Net Benefit	$13.32

Uncertainty Analysis

A risk-based analysis was conducted to ensure that the estimate of net benefit reflects the uncertainty in key input variables. In all, a range of uncertainty around 18 variables is factored into the analysis.

Uncertainty testing indicates that the net benefit of the proposed Regulation ranges between $6.1 million and $23.1 million, with a central value in the order of $12.5 million.

The uncertainty testing indicates that the probability of a positive net benefit estimate is 100 percent, and that a negative outcome is not likely to occur. That is, using the most conservative combination of cost and benefit values (i.e. lowest benefit estimate, highest cost estimate, and a high discount rate) results in a positive net benefit estimate. Therefore, there is a high degree of confidence that the proposed Regulations will result in a positive net benefit for Canada.

Options Analysis

The option to not use the allowance trading system was tested to investigate the impact on the net benefit. Under this option, we assume that all operations must uniformly reduce emission by 65 percent, and that allowance trading is not permitted. We conclude that the costs of this option are greater than the costs with the allowance trading system. Benefits are unaffected by this option. Table 8 provides an indication of the difference in costs when all firms are required to reduce by 65 percent versus an aggregate 65 percent reduction with an allowance trading system.

The provision in the proposed Regulations for allowance trading results in cost savings that are greater than if no trading is allowed. The difference is in the order of $3.5 million, indicating that trading results in lower compliance costs (i.e. higher solvent savings). That is, without the provision, each firm is required to meet a 65 percent use reduction, resulting in higher compliance costs in the order of $3.5 million.

Table 8: Compliance Costs, including Solvent Savings of Trading Versus No Trading (NPV at 5%; $ million)

Allowance Trading	No Trading	Trading Cost Savings
-$5.8*	-$2.3	-$3.5

^* Negative cost is actually a benefit due to solvent savings that offset capital and maintenance costs. Thus the benefit is larger in the trading case than in the no trading case.

Distributional and Competitiveness Impacts

The proposed Regulations may also result in non-allocative impacts. Non-allocative impacts could be related to increased burdens on segments of Canadian society or particular regions. These impacts could also include adverse competitiveness impacts on economic sectors that are subject to the measures of the proposed Regulations.

Private sector operations will experience capital costs in the order of $5 million in the short-term as a result of the proposed Regulations, but these capital costs will be entirely offset due to solvent use reductions. Over the life of the equipment and as a result of solvent savings, the private sector operations will realize a return on their initial compliance cost investment in the order of 8 percent. Although this 8 percent is positive, it is likely lower than the return on investment that is normally used to assess the feasibility of private sector decisions.

A more likely private sector rate of return is in the order of 25 percent. Thus, the proposed Regulations require operations to accept a return on investment that is in the order of 17 percent lower than they would otherwise demand. However, given that the capital costs are in the order of $3 million (not including solvent savings), it is anticipated that an insignificant short-term cost burden will be placed on the operations subject to the proposed Regulations. Indeed, from a competitiveness perspective, the operations will experience a long-term gain in productivity as a result of the lower operating costs.

From a regional perspective, the majority of solvent degreasers are located in central Canada. Indeed, of the very large machines, all but two are located in Ontario or Quebec. Thus, the burden of impact can be expected to fall mostly on Ontario, and, to a lesser degree, on Quebec.

TCE and PERC are not manufactured in Canada, and all quantities are imported primarily from the U.S. Therefore, the TCE and PERC use reduction results in a cost savings to Canadian society, but may adversely impact some international private sector firms and some Canadian distributors.

Consultation

Environment Canada recognizes that consultation with all stakeholders, including the parties to be regulated, non-government organizations, other federal departments and the general public produces more effective measures for the protection of the environment and health.

Four meetings under the Strategic Options Progress (SOP), with the above stakeholders, were held between December 1994 and September 1995. The purpose of the SOP meetings was to ensure that the profile of affected industrial sectors was well understood, and that environmental and health concerns related to the use of TCE and PERC were also properly identified and understood by all members of the SOP. On the basis of these meetings, a report was drafted incorporating the recommendations made by members of the group. The SOP recommendations selected a management option that is cost effective and has the best potential to reduce emissions in the environment. The recommendations also identified the magnitude of the TCE and PERC use reduction to be anticipated and the timeframe for achieving this reduction.

In July 2001, Environment Canada conducted a one-day information session in Toronto for stakeholders on the proposed Regulations. The goal of the session was to explore key issues related to the application of the proposed Regulations. The key issues that were raised included:

— the source for the 65 percent reduction target;

— the eligibility timeline (1994-2000) for the baseline determination;

— the information requirement for the August 4, 2001 CEPA 1999 Notice;

— the impact of reduction on competitiveness; and

— the equity and fairness in the allowance trading framework.

Industry presented their concerns vis-à-vis the use of specific solvents with respect to specification in military and aerospace applications. Environment Canada agreed that these specifications should be changed to performance requirements rather than naming specific solvent requirements. Environment Canada and the Canadian Department of Defence are undergoing open dialogue on changing such requirements from their cleaning contract. The U.S. Military has worked to change their specifications in a similar fashion.

Industry was also concerned with the ability to meet increasing demand due to expanding markets and the difficulty in maintaining competitiveness in a global reality. Environment Canada explained to the industry that solvent reduction or replacement objectives could be met through innovation. In fact, innovation would be stimulated by information sharing between users and technical experts in the field of retrofitting and alternative processes and technologies. Environment Canada committed to supporting industry's efforts through publication of relevant materials on the National Office of Pollution Prevention Web site. A summary report of the information session was prepared and is posted on Environment Canada's web site at: http://www.ec.gc. ca/nopp/docs/rpt/tce_1/en/repsum.cfm.

In March 2002, an updated overview of the proposed Regulations was prepared for stakeholders review and comment. The overview was both posted on Environment Canada's Web site and distributed directly to the regulated community. This overview can be found at: http://www.ec.gc.ca/nopp/DOCS/consult/ tce/en/letter_03_02.cfm.

The following is a summary of the comments and concerns received, and how they are addressed by the proposed Regulations. The issue of to whom and where the proposed Regulations would apply and whether or not they would duplicate any existing Provincial/Territorial regulations was raised. The proposed Regulations will apply to all users who use more than 1 000 kg of a scheduled solvent, in a scheduled degreasing process, in a calendar year, regardless of location in Canada.

Industry questioned the basis for the baseline calculation. As recommended by the Issue Table, the baseline will be calculated by a predetermined formula using historical consumption data supplied by the users. The calculation would not include solvents recovered and recycled on-site, nor would they be charged against the baseline.

It was felt that the unavailability of effective alternative solvents, required of industrial practices governed by non-Canadian original equipment manufacturers (OEM's) not subject to the proposed Regulations, would make it difficult to attain the 65 percent reduction target. Also, international competitors would not have to acquire allowances to undertake degreasing thereby creating an 'uneven playing field'. Current unavailability of "just-as" effective alternative to TCE and PERC will always pose a problem for some industrial sectors, however the ability to recycle solvents on-site, allowance trading, coupled with better alternative solvent and management practices will aid in meeting the proposed reduction target and out-weight any shortcomings.

In respect to questions relating to the value, cost and availability of additional tradable allowances; market forces will determine these factors based on the requirements of users. Industry will be encouraged to establish an allowance 'clearing house' to facilitate information transfer and management of available allowances.

The reasonability of the 65 percent solvent reduction target and timetable was questioned by industry. The Issue Table addressed these issues, and it was decided that the proposed accepted schedules, as recommended by the Issue Table, would remain in place.

The auditing of results and achievement of goals will be tracked through annual reports from users and sellers and normal compliance monitoring procedures will apply. Environment Canada will address the need to assist industry in complying with the proposed Regulations through the implementation of compliance promotion plans and activities. Information dissemination would normally be part of such activities. A variety of commercial or industrial forums currently exist for additional technology exchange.

Regulated community involvement in the development of the proposed Regulations has been achieved through stakeholder participation in various forums including the SOP, the information seminar, and the Web site posting of the overview. Participation will be continued through the 60-day comment period further to the publication of the proposed Regulations in the Canada Gazette, Part I.

Compliance and Enforcement

Since the proposed Regulations would be promulgated under the CEPA 1999, the Compliance and Enforcement Policy implemented under the Act will be applied by CEPA enforcement officers. The policy outlines measures designed to promote compliance, including education, information, promoting of technology development and consultation on the development of the proposed Regulations.

When verifying compliance with these proposed Regulations, CEPA enforcement officers will abide by the Compliance and Enforcement Policy, which also sets out the range of possible responses to violations: warnings, directions and environmental protection compliance orders, ticketing, ministerial orders, injunctions and prosecutions. In addition, CEPA 1999 provides for environmental protection alternative measures, which are an alternative to a court trial after the laying of charges for a CEPA 1999 offense. In addition, the policy explains when Environment Canada will resort to civil suits by the Crown for costs recovery.

If, following an inspection, investigation or the report of a suspected violation, a CEPA enforcement officer has reasonable grounds to believe that a violation has been committed, the enforcement officer will select the appropriate response to the alleged offense, based on the following criteria:

— Nature of the alleged violation — This includes consideration of the damage, the intent of the alleged violator, whether it is a repeat violation, and whether an attempt has been made to conceal information or otherwise subvert the objectives and requirements of the Act.

— Effectiveness in achieving the desired result with the alleged violator — The desired result is compliance within the shortest possible time and with no further repetition of the violation. Factors to be considered include the violator's history of compliance with the Act, willingness to cooperate with enforcement officials, and evidence of corrective action already taken.

— Consistency — Enforcement officers will consider how similar situations have been handled in determining the measures to be taken to enforce the Act.

Contacts

Rick Loughlin, Senior Program Officer, Sustainable Consumption Division, National Office of Pollution Prevention, Department of the Environment, Ottawa, Ontario K1A 0H3, (819) 953-1607 (Telephone), (819) 994-5030 (Facsimile); or Céline Labossière, Senior Economist, Regulatory and Economic Analysis Branch, Economic and Regulatory Affairs Directorate, Department of the Environment, Ottawa, Ontario K1A 0H3, (819) 997-2377 (Telephone), (819) 997-2769 (Facsimile).

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 proposes, pursuant to subsection 93(1) and section 326 of that Act, to make the annexed Solvent Degreasing Regulations.

Any person may, within 60 days after the publication of this notice, file with the Minister of the Environment comments with respect to the proposed Regulations 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 General, Toxics Pollution Prevention Directorate, Environmental Protection Service, Department of the Environment, Ottawa, Ontario K1A 0H3.

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 28, 2002

EILEEN BOYD
Assistant Clerk of the Privy Council

SOLVENT DEGREASING REGULATIONS

INTERPRETATION

1. The following definitions apply in these Regulations.

"cold degreaser" means equipment designed for using a solvent in its liquid form to remove soils from a substrate by spraying, brushing, flushing, agitating or immersing. (dégraisseur à froid)

"consumption unit", with respect to a solvent, means each kilogram of the solvent that may be used in a degreasing process in excess of the threshold set out in column 3 of Schedule 1 and that has been issued by the Minister under section 4. (unité de consommation)

"degreasing" means a physical process that uses solvents to remove soils from a substrate by dissolving or dispersing the soils. (dégraissage)

"degreasing process" means a process set out in column 2 of Schedule 1. (procédé de dégraissage)

"reclaimed", with respect to a solvent, means recovered, reprocessed and upgraded through processes such as filtering, drying, distillation and chemical treatment to restore the solvent to a state that renders it reusable in a degreasing process. (régénéré)

"recovered", with respect to a solvent, means collected after the solvent has been used, or collected from machinery, equipment or containers during servicing or before disposal of the machinery, equipment or container. (récupéré)

"recycled", with respect to a solvent, means recovered and cleaned by a process such as filtering or drying for its reuse in a degreasing process. (recyclé)

"residue" means any solid, liquid or sludge waste that is generated by a degreasing process. (résidus)

"soils" includes uncured coatings, adhesives, inks and contaminants such as dirt, oil and grease. (salissures)

"solvent" means a substance set out in column 1 of Schedule 1. (solvant)

"tetrachloroethylene" means the substance specified in item 44 of the Toxic Substances List in Schedule 1 to the Canadian Environmental Protection Act, 1999, which is also known as perchloroethylene, that has the chemical formula C₂Cl₄ and bears the American Chemical Society's Chemical Abstracts Service Registry Number 127-18-4 (see footnote b) . (tétrachloroéthylène)

"trichloroethylene" means the substance specified in item 45 of the Toxic Substances List in Schedule 1 to the Canadian Environmental Protection Act, 1999, which is also known as TCE, that has the chemical formula C₂HCl₃ and bears the American Chemical Society's Chemical Abstracts Service Registry Number 79-01-6 (see footnote c) . (trichloroéthylène)

"vapour degreaser" means equipment designed for using a solvent in its vapour form to remove soils from a substrate by condensation of the vapour on the substrate. (dégraisseur à la vapeur)

"waste management facility" means a facility that is authorized under the laws of the jurisdiction in which it is located to handle, recycle or dispose of solvents and residues. (installation de gestion de déchets)

"year" means calendar year. (année)

APPLICATION

2. These Regulations do not apply in respect of:

• (a) the dry cleaning of textile and apparel goods, rugs, furs and leathers except in a manufacturing process; and
  (b) the use of a continuous scouring machine in a textile mill.

PROHIBITION

3. (1) No person shall, in a year, use a solvent set out in column 1 of Schedule 1 in a degreasing process set out in column 2 in a quantity that exceeds the threshold set out in column 3 on or after the date set out in column 4 unless, for each kilogram of solvent that exceeds the threshold, the person has a consumption unit issued by the Minister under subsection 4(1) or transferred under section 6.

(2) Subject to subsection (3), in a determination of the quantity of a solvent used in a degreaser, only the amount of solvent that is added to the equipment shall be considered used.

(3) In a determination of the quantity of a solvent used in a degreasing process, the amount of the solvent that has been reclaimed or recycled on site and reused by the person in the same degreasing process shall not be counted.

ISSUANCE OF CONSUMPTION UNITS

4. (1) The Minister shall, on request, issue consumption units to a person for a given solvent and a specific degreasing process for the year beginning on the date set out in column 4 of Schedule 1 or for any subsequent year, if the following conditions are met:

(a) the person has used the solvent in that process in the year immediately preceding that date;
(b) the request was submitted to the Minister before October 1 of the year preceding that date;
(c) the request is made on a form provided by the Minister and contains the information specified in Schedule 2 for each of the years relied on to establish the person's average annual consumption under subsection (4);
(d) at the time of submitting the request, the person had documentary evidence to support the information provided to the Minister referred to in paragraph (c); and
(e) the person has been informed in writing by the Minister of their average annual consumption.

(2) The person's consumption units for a year are equal to the person's average annual consumption determined in accordance with subsection (4), multiplied by the percentage set out in column 4 of Schedule 3, less the threshold set out in column 3 of Schedule 1, less any consumption unit retired under section 5.

(3) If the calculation in subsection (2) results in a number that

(a) is zero or less than zero, no consumption units are issued to the person; or
(b) is not a whole number, the units are rounded to the nearest whole number or, if the result is equidistant from two whole numbers, to the higher thereof.

(4) A person's average annual consumption in respect of a solvent used in a specific degreasing process is established as follows:

(a) if the person used the solvent in that process in the last year of the period set out column 5 of Schedule 1 but not in the preceding year, the average annual consumption is the quantity of the solvent used by the person during that year;
(b) if the person used the solvent in that process in the last two years of the period set out in column 5 of Schedule 1 but not in the year prior to those two years, the annual consumption is the average quantity of the solvent used by the person during each of those two years;
(c) if the person used the solvent in that process in the last three years of the period set out in column 5 of Schedule 1 but not in the year prior to those three years, the annual consumption is the average quantity of the solvent used by the person during each of those three years; and
(d) if the person used the solvent in that process in earlier years of the period set out in column 5 of Schedule 1, in addition to the last three years of that period, the annual consumption is the average quantity of the solvent used by the person during each of three consecutive years which the person chooses from that period and which they identify in the request.

(5) Following a person's request, the Minister shall inform the person in writing, of their average annual consumption.

(6) The Minister shall inform the person in writing of the number of consumption units issued to that person before the beginning of the year for which the Minister issues the units.

(7) Consumption units are valid only for the year for which they are issued.

5. (1) If a person wishes to retire a consumption unit, the person shall submit to the Minister the information specified in Schedule 4 on a form provided by the Minister.

(2) A consumption unit that is retired shall not be reissued.

TRANSFER OF CONSUMPTION UNITS

6. (1) A person may transfer unexpended consumption units to another person for use in the same year and in the same degreasing process for which the consumption units were issued.

(2) A person shall not transfer consumption units until they have been informed in writing that the Minister allows the transfer under subsection (4).

(3) The transferor and transferee shall jointly apply for the transfer of consumption units and shall submit to the Minister the information specified in Schedule 5 on a form provided by the Minister.

(4) The Minister shall allow a transfer, and shall so inform the transferor and transferee in writing, if

(a) the transferor has an unexpended consumption unit for each consumption unit of the proposed transfer; and
(b) the transferee undertakes to use each transferred consumption unit in the same year and in the same degreasing process for which the transferor's consumption unit was issued.

(5) If the Minister discovers that the transferor did not have the unexpended consumption unit referred to in paragraph (4)(a) or that the transferee breached the undertaking referred to in paragraph (4)(b), the Minister shall cancel the transfer and transfer back to the transferor the consumption units unused by the transferee.

REPORTING AND RECORD KEEPING

7. Every person who has a consumption unit shall

(a) submit a report to the Minister containing the information specified in Schedule 6 on a form provided by the Minister, no later than 30 days after the end of the year to which the consumption unit applies; and
(b) keep the report required pursuant to paragraph (a) and any documents, including shipping records, supporting the information provided to the Minister or showing quantities of solvent purchased, returned or transferred, or sent to a waste management facility, at the location where the solvent is being used, for a period of five years after the end of the year in respect of which the report is made.

8. Every person who sells a solvent for use in degreasing shall

(a) submit a report containing the information specified in Schedule 7 to the Minister on a form provided by the Minister, no later than 30 days after the end of the year in which the sale occurs; and
(b) keep the report required pursuant to paragraph (a) and any documents, including shipping records, supporting the information provided to the Minister or showing quantities of solvent purchased, returned or transferred, or sent to a waste management facility, at the seller's principal place of business in Canada, for a period of five years after the year of the sale.

SIGNATURE OF DOCUMENTS

9. Any application, notice or report submitted to the Minister under these Regulations shall

(a) in the case of a corporation, be signed and dated by a person authorized to do so; and
(b) in any other case, be signed and dated by the person submitting the document, or by a person authorized to act on behalf of that person.

REFUSAL OR CANCELLATION

10. (1) The Minister may refuse to issue a consumption unit or may cancel a consumption unit if the person requesting it or the user, as the case may be, has submitted any false or misleading information.

(2) The Minister shall not refuse to issue, or shall not cancel, a consumption unit unless the Minister

(a) has provided the person requesting the issuance or the user, as the case may be, with written reasons for refusing to issue the consumption unit or for cancelling the consumption unit; and
(b) has allowed that person a period of at least 30 days after sending the notice in which to make oral or written representations in respect of the refusal or cancellation.

COMING INTO FORCE

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

SCHEDULE 1
(Section 1 and subsections 3(1) and 4(1), (3) and (5))

SOLVENT LIMITS

Item	Column 1 Solvent	Column 2 Degreasing Process	Column 3 Threshold kg/year	Column 4 Date	Column 5 Years
1.	Trichloroethylene	(a) degreasing by vapour degreaser	1000	January 1, 2004	1994-2002
		(b) degreasing by cold degreaser	1000	January 1, 2004	1994-2002
2.	Tetrachloroethylene	(a) degreasing by vapour degreaser	1000	January 1, 2004	1994-2002
		(b) degreasing by cold degreaser	1000	January 1, 2004	1994-2002

SCHEDULE 2
(Subsection 4(2))

INFORMATION FOR A CONSUMPTION UNIT REQUEST

1. Applicant Information

(a) name, civic and postal addresses, e-mail address, if any, telephone number and fax number, if any
(b) number of facilities and civic address for each facility
(c) name, civic and postal addresses, e-mail address, if any, telephone number and fax number, if any, of the person authorized to submit the request on behalf of the applicant

2. Confidentiality

Indicate if a request for confidentiality is being made under section 313 of the Canadian Environmental Protection Act, 1999 and the reason for the request.

3. Solvent and Degreasing Process Information

(a) name of solvent (see column 1 of Schedule 1)
(b) name of degreasing process (see column 2 of Schedule 1)
(c) date of commencement of the use of the solvent in the degreasing process
(d) years to be used for the average annual consumption

4. Information concerning average annual consumption

For each year relied on to establish the annual consumption, provide the following information with quantities in kilograms with respect to the solvent:

(a) opening inventory;
(b) quantity supplied by sellers (identify by name and civic address);
(c) quantity supplied by others (identify by name and civic address);
(d) quantity recovered and sent for off-site reclamation or recycling;
(e) quantity returned from off-site reclamation or recycling;
(f) quantity sold or transferred to others (identify by name and civic address); and
(g) closing inventory.

SCHEDULE 3
(Subsection 4 (3))

CONSUMPTION UNIT REDUCTION

Item	Column 1 Solvent	Column 2 Degreasing Process	Column 3 Years	Column 4 Percentage of Average Annual Consumption
1.	Trichloroethylene	(a) degreasing by vapour degreaser	2004, 2005 and 2006	100%
			2007 and every year thereafter	35%
		(b) degreasing by cold degreaser	2004, 2005 and 2006	100%
			2007 and every year thereafter	35%
2.	Tetrachloroethylene	(a) degreasing by vapour degreaser	2004, 2005 and 2006	100%
			2007 and every year thereafter	35%
		(b) degreasing by cold degreaser	2004, 2005 and 2006	100%
			2007 and every year thereafter	35%

SCHEDULE 4
(Subsection 5(1))

INFORMATION FOR CONSUMPTION UNIT RETIREMENT NOTICE

1. Person Retiring Consumption Unit

(a) name, civic and postal addresses, e-mail address, if any, telephone number and fax number, if any
(b) number of facilities and civic address for each facility
(c) name, civic and postal addresses, e-mail address, if any, telephone number and fax number, if any, of the person authorized to submit the notice on behalf of the person retiring consumption unit

2. Confidentiality

Indicate if a request for confidentiality is being made under section 313 of the Canadian Environmental Protection Act, 1999 and the reason for the request.

3. Solvent and Degreasing Process Information

(a) date retirement of consumption units is to be effective
(b) name of solvent for which consumption units were issued (see column 1 of Schedule 1)
(c) name of degreasing process for which consumption units were issued (see column 2 of Schedule 1)
(d) quantity, in kilograms, of consumption units to be retired
(e) reason for retirement of the consumption units

SCHEDULE 5
(Subsection 6(3))

INFORMATION FOR A CONSUMPTION UNIT TRANSFER

1. Transferor Information

(a) name, civic and postal addresses, e-mail address, if any, telephone number and fax number, if any
(b) number of facilities and civic address for each facility
(c) name, civic and postal addresses, e-mail address, if any, telephone number and fax number, if any, of the person authorized to submit the information on behalf of the transferor

2. Transferee Information

(a) name, civic and postal addresses, e-mail address, if any, telephone number and fax number, if any
(b) number of facilities and civic address for each facility
(c) name, civic and postal addresses, e-mail address, if any, telephone number and fax number, if any, of the person authorized to submit the information on behalf of the transferee

3. Confidentiality

Indicate if a request for confidentiality is being made under section 313 of the Canadian Environmental Protection Act, 1999 and the reason for the request.

4. Solvent and Degreasing Process Information

(a) name of solvent for which consumption units were issued (see column 1 of Schedule 1)
(b) name of degreasing process for which consumption units were issued (see column 2 of Schedule 1)
(c) year to which the issued consumption units apply
(d) effective date of consumption unit transfer
(e) consumption units, in kilograms, for the following:

(i) issued to the transferor before transfer
(ii) transferor's unexpended units before transfer
(iii) unexpended consumption units to be transferred

SCHEDULE 6
(Subsection 7(a))

INFORMATION FOR ANNUAL SOLVENT CONSUMPTION REPORT

1. Person Using Solvent

(a) name, civic and postal addresses, e-mail address, if any, telephone number and fax number, if any
(b) number of facilities and civic address for each facility
(c) name, civic and postal addresses, e-mail address, if any, telephone number and fax number, if any, of the person authorized to submit the report on behalf of the person using solvent

2. Confidentiality

Indicate if a request for confidentiality is being made under section 313 of the Canadian Environmental Protection Act, 1999 and the reason for the request.

3. Solvent and Degreasing Process Information

The following information must be given for each solvent and degreasing process:

(a) applicable year of report;
(b) name of solvent and degreasing process;
(c) average annual consumption, in kilograms;
(d) consumption units issued by the Minister, in kilograms;
(e) total quantity, in kilograms:

(i) of solvent in opening inventory;
(ii) of solvent supplied by sellers (identify each seller by name and civic address);
(iii) of solvent supplied by others (identify each other supplier by name and civic address);
(iv) of solvent transferred to use in a degreasing process from other on-site uses (identify each other on-site use);
(v) of solvent transferred to use in a degreasing process from other off-site uses (identify each other off-site use);
(vi) of solvent reclaimed or recycled on site;
(vii) of solvent or residue sent to waste management facilities (identify each facility by name and civic address);
(viii) of solvent transferred on site for other uses (identify each other use);
(ix) of solvent transferred off site for other uses (identify each other use);
(x) of solvent sold or transferred to others (identify each other purchaser or transferee by name and civic address); and
(xi) of solvent in closing inventory.

SCHEDULE 7
(Paragraph 8(a))

INFORMATION FOR ANNUAL SOLVENT SALES REPORT

1. Seller Information

(a) name, civic and postal addresses, e-mail address, if any, telephone number and fax number, if any
(b) number of facilities and civic address for each facility
(c) name, civic and postal addresses, e-mail address, if any, telephone number and fax number, if any, of the person authorized to submit the report on behalf of the seller

2. Confidentiality

Indicate if a request for confidentiality is being made under section 313 of the Canadian Environmental Protection Act, 1999 and the reason for the request.

3. Solvent Information

Total quantity, in kilograms:

(a) of solvent sold (identify each purchaser by name and civic address, and specify date of sale);
(b) of solvent returned by purchasers (identify each purchaser by name and civic address, and specify date of return);
(c) of recycled solvent sold to purchasers (identify each purchaser by name and civic address, and specify date of sale);
(d) of recycled solvent returned by purchasers (identify each purchaser by name and civic address, date of return);
(e) of reclaimed solvent sold to purchasers (identify each purchaser by name and civic address, and specify date of sale);
(f) of reclaimed solvent returned by purchasers (identify each purchaser by name and civic address, and specify date of return);
(g) of residue collected from purchasers (identify each purchaser by name and civic address, and specify date of collection); and
(h) of solvent or residue sent to waste management facilities (identify each facility by name and civic address, and specify date of sending).

[49-1-o]

Footnote 1 
This report is available from Environment Canada or can be downloaded from: http://www.ec.gc.ca/degrease/degrease.htm

Footnote 2 
Environment Canada, Strategic Option for the Management of Toxic Substances, Trichloroethylene and Tetrachloroethylene in Solvent Degreasing, Report of Stakeholder Consultations, Page i.

Footnote 3 
Based on National Pollutant Release Inventory data 1995-1999, Canada Customs Importation data 1997-2001 and ChemInfo 2000 Report.

Footnote 4 
Raven Beck Environmental Ltd., Survey of Tetrachloroethylene and Trichloroethylene Occurrences in Canadian Groundwater, March, 1995.

Footnote a 
S.C. 1999, c. 33

Footnote b 
The Chemical Abstracts Service (CAS) Registry Number is the property of the American Chemical Society and any use or redistribution is not permitted without the prior written permission of the American Chemical Society, except if the use or redistribution is required by law.

Footnote c 
The Chemical Abstracts Service (CAS) Registry Number is the property of the American Chemical Society and any use or redistribution is not permitted without the prior written permission of the American Chemical Society, except if the use or redistribution is required by law.

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