Reply to Comments on the Proposed Regulations Amending the On-Road Vehicle and Engine Emission Regulations

Transportation Division
Environment Canada
July 2006

1. Introduction

The On-Road Vehicle and Engine Emission Regulations (hereinafter referred to as the current Regulations), came into effect on January 1, 2004 under the Canadian Environmental Protection Act (CEPA 1999). The current Regulations contain emission standards for various classes of on-road vehicles and engines, including requirements for motorcycles of the 2004 and later model years. These Regulations are designed to align Canadian requirements with corresponding U.S. federal emission standards.

On January 15, 2004, the U.S. Environmental Protection Agency (EPA) published a new final rule[1] to introduce more stringent emission standards for on-road motorcycles beginning in the 2006 model year. The EPA rule introduces some new important elements in both the application and structure of future U.S. motorcycle emission standards that needed to be addressed in order to maintain Canada/U.S. alignment with respect to motorcycle emission standards.

In September 2004, Environment Canada issued a discussion document describing the technical content of the planned amendments to the current Regulations to address new elements of the U.S. rule for on-road motorcycles and inviting interested parties to provide comments on the proposed approach of aligning Canadian regulations for on-road motorcycles with the new U.S. standards. The comments of interested parties were taken into account in the development of the proposed "Regulations Amending the On-Road Vehicle and Engine Emission Regulations" (hereinafter referred to as the proposed Regulations).

The proposed Regulations were published in the Canada Gazette, Part I on November 5, 2005, for a formal 60-day public consultation. The primary purpose of the proposed amendments was to introduce new requirements for 2006 and later model year on-road motorcycles to maintain alignment with more stringent standards adopted by the EPA, but miscellaneous editorial changes that do not affect the application of the current Regulations were also proposed. Environment Canada has considered all the comments received during this consultation in developing the revised draft proposed Regulations.

The major issues raised by commenters in regards to the proposed Regulations are addressed in the Regulatory Impact Analysis Statement (RIAS) that will accompany the publication of the final Regulations in the Canada Gazette, Part II. This document provides a more detailed summary of the comments received from stakeholders and provides Environment Canada's response to those comments.

Please note that the information contained in this document, and in particular that which relates to the contents of the revised draft proposed Regulations, is subject to change pending final approval. Once final approval is received, the final Regulations will be published in of the Canada Gazette, Part II.

[1] Final Rule: Control of Emissions from Highway Motorcycles, U.S. Environmental Protection Agency, Federal Register, January 15, 2004.

2. Parties providing submissions

Submissions on the proposed Regulations were received from the following parties:

• Association of International Automobile Manufacturers of Canada (AIAMC)*
• Canadian Vehicle Manufacturers' Association (CVMA)*
• Dow Chemical Canada Inc. (Dow)
• Manufacturers of Emission Controls Association (MECA)
• Motorcycle and Moped Industry Council (MMIC)

Note - *The comments of the AIAMC and the CVMA were provided as a joint submission.

3. Issues on Regulatory Text: Comments and Reply

Alignment With U.S. Emission Standards

• Dow stated: "In the above cited regulation - Regulations Amending the On-Road Vehicle and Engine Emission Regulations - we do not object to the proposed amendments and support the Canadian/US alignment. Environment Canada should be encouraged to align to North American or regional regulatory regimes; when it makes sense. In this situation, there is no need for Canada to be differentiate and should participate in a common Canada/US regulatory approach."
  
  
• "MECA supports Environment Canada's efforts in aligning the Canadian motorcycle emission standards beginning with model year 2006 with the U.S. Environmental Protection Agency's (U.S. EPA) standards. The U.S. EPA Emission Standards for New Highway Motorcycles are expected to provide significant emission reduction through more stringent emission standards for currently regulated motorcycles, regulating previously unregulated motorcycle engines of less than 50 cc as well as through new evaporative emission standards."
• MMIC Stated: "In general the MMIC member companies support the Part I as written."

Reply:

The proposed amendments to the current Regulations have the primary purpose of introducing new requirements for 2006 and later model year on-road motorcycles to maintain alignment with new rules of the EPA. This approach provides major reductions in emissions at a low additional cost to Canadians.

Evidence of Conformity

AIAMC and CVMA stated:

• "While the majority of the proposed amendments pertain solely to the motorcycle industry, we note that an amendment is proposed to section 36(2) which has the potential to impact time and manner of compliance for the automotive industry."
  
  
• "The proposed regulatory text appears to be inconsistent with the principle of self certification, which has been the foundation of Canadian motor vehicle regulation since its inception. Self-certification has served Canadians well by making efficient use of both industry and government resources. The members of AIAMC and CVMA are concerned that the Department appears to be proposing a broad-brush approach to Canadian Specific Certification establishing essentially a "defacto" government "type approval" system for all Distributors/Manufacturers without demonstrating a need for this change in regulatory policy."
  
  
• "The members of AIAMC and CVMA wish to note that manufacturers require flexibility regarding filing and processing of regulatory related paper work to accommodate vehicles in various stages of the manufacturing and distribution process - a process which is deemed ongoing until the vehicle leaves the control of the manufacturer or its designated agent."
  
  
• "We also note that, depending upon the intent of the proposed amendment to Section 36(2), it has the potential to be inconsistent with what we consider to be the intent of Section 39 (2)and possibly provisions in the Canadian Environmental Protection Act 1999(CEPA 1999). It is the understanding of our members that section 153(2)of the CEPA 1999 provides manufacturers with the necessary flexibility to accommodate vehicles in various stages of the manufacturing process."
  
  
• "If the Department intends to proceed with an amendment to section 36, the AIAMC and CVMA believe that a common understanding is required around time of compliance, as it pertains to the manufacturing and distribution process and in what circumstances do the exemptions found in Section 153(2) of the Act apply. Additionally, a clear understanding surrounding the filing, timing and processing of paperwork, as may be specified for Canadian specific product, is necessary. We suggest then that an understanding and consensus could be reached on these important points."

MMIC Stated:

• "Regarding the new Section 36 (2), we note that, depending upon the intent of the proposed amendment to Section 36(2), it has the potential to be inconsistent with what we consider the intent of Section 39 (2) and possibly provisions in the Canadian Environmental Protection Act 1999 (CEPA 1999). It is the understanding of our members that section 153(2) of the CEPA 1999 provides manufacturers with the necessary flexibility to accommodate vehicles in various stages of the manufacturing process."
  
  
• "The actual definition of "time of compliance" has not been made evident and it would be useful to understand what the Division's thoughts are on this. We also note that while the provisions of 153(2) provide for exemptions, it is not altogether clear for what circumstances such anexemption can be used."

Reply:

The proposed amendment to section 36 did not impose new requirements on companies but were intended to provide greater clarity on the existing requirements when read in conjunction with pertinent provisions of the Act.

Section 36 of the current Regulations relates to paragraph 153(1)(b) of the Act which states:

• 153. (1) No company shall apply a national emissions mark to any vehicle, engine or equipment, sell any vehicle, engine or equipment to which a national emissions mark has been applied or import any vehicle, engine or equipment unless
  
  (a) ...
  
  (b) evidence of such conformity has been obtained and produced in the prescribed form and manner or, if the regulations so provide, in a form and manner satisfactory to the Minister;

In the case of vehicles that are not certified by the EPA (i.e., "Canada-unique" vehicles), section 36 of the current Regulations requires that the evidence of conformity "be obtained and produced by a company in a form and manner satisfactory to the Minister". Changes were proposed to section 36 of the current Regulations to make it clear that a company importing a "Canada-unique" vehicle must submit the evidence of conformity to Environment Canada before affixing the national emission mark or importing the vehicle to ascertain that it has been obtained and produced "in a form and manner satisfactory to the Minister". While this is effectively already required pursuant to the provisions of paragraph 153(1)(b) of the Act, there were indications that the process may not be clear to all regulatees.

Emission standards and the associated certification procedures for on-road vehicles and engines are complex. The vast majority of vehicles sold in Canada is sold concurrently in the U.S. and are therefore subjected to the EPA's comprehensive emission certification process. Section 36 of the Regulations provides an opportunity for the Department to review the evidence of conformity for "Canada-unique" vehicles for consistency with the requirements of the Regulations as early as possible when importing a vehicle into Canada under paragraph 153(1)(b).

Subsection 153(2) of the Act allows a company to import a vehicle to Canada for the purpose of sale even though all of the requirements of subsection 153(1) are not met at the time of importation, provided the requirements are met before the vehicle leave the possession or control of the company. These provisions would apply to the situation of a company manufacturing or importing a "Canada-unique" vehicle but has not yet received an acknowledgement from Environment Canada that the evidence of conformity has been obtained and produced in a form and manner that is satisfactory to the Minister. The wording of section 36 has been modified and a new section 36.1 has been added to the revised draft of the proposed Regulations to provide greater certainty that subsection 153(2) of the Act also applies in the case of the evidence of conformity.

Finally, subsection 39(2) is intended to align the importation requirements of the Regulations with those put in place by Transport Canada. The proposed amendment to section 36 does not modify the application of subsection 39(2).

4. Issues Related to the Regulatory Impact Analysis Statement : Comments and Reply

Technical Feasibility

• MECA stated: "These standards are expected to be met through an increased use of proven technologies already demonstrated to be effective on 4-stroke engines, such as air injection, electronic fuel injection systems, and catalytic converters."

Reply:

As indicated in the RIAS for the proposed Regulations, the EPA estimates that compliance with the new emission standards for 2006 and later model year motorcycles is technologically feasible. In the case of Class IA motorcycles (i.e., motorcycles having an engine displacement of less than 50 cc), the EPA believes that the standards can be met by replacing traditional 2-stroke engines with 4-stroke or possibly with advanced technology 2-stroke engines, and in some cases with catalysts. For other classes of motorcycles, the EPA believes that existing emission control systems that are already being used on many recent model year motorcycles (e.g. secondary pulse-air injection, fuel injection, engine modifications, etc.) will be sufficient to meet Tier 1 standards (i.e., 2006 and later model years for Classes IB/II and 2006-2009 model years for Class III). While the EPA also believes that compliance with the Tier 2 standards (2010 and later model years) for Class III motorcycles is technologically feasible using advanced emission control technologies such as close-coupled and closed-loop three-way catalyst, it recognizes that there will be additional technical challenges for motorcycle manufacturers and will be evaluating the progress towards meeting the standards to determine if changes are warranted.

Impact on National Emissions

• DOW stated: "Given these emissions are very small, from the data in the RIAS, they can be characterized as 1/400^thof transportation; and an even smaller portion of all contributing sources of smog, thus raising the question:
  
  Are these sources material to the smog issue being addressed? Will such emissions make any difference?
  
  At face value, the data presented to justify the regulatory amendments will not make a significant difference in the creation or formation of smog; but that does not preclude the regulatory amendments from proceeding. What should change is the justification; this is not longer a regulation for environmental improvement but a level playing field regulation that has an environmental contribution. Should the RIAS recognize this reality?"
• MECA stated: "Highway motorcycles are significant contributors to mobile-source air pollution and produce more harmful emissions per mile than a car or even a large SUV. The implementation of the new emission standards for exhaust and evaporative emissions from highway motorcycles will help reduce the public's exposure to mobile source air pollution and help avoid a range of adverse health effects associated with ambient ozone and particulate matter levels."

Reply:

The RIAS for the proposed Regulations recognizes that total motorcycle emissions will continue to represent a small portion of all contributing sources of smog. Nonetheless, motorcycles can be an important source of air pollution given that these vehicles are often used in urban areas during periods of warm weather associated with the formation of ground-level ozone and smog. In addition, motorcycle emissions can also be a source of airborne toxic substances for persons who operate or work with, or who are otherwise active in close proximity to these sources.

Emission standards for motorcycles have remained unchanged for the past 20 years and motorcycles have generally not kept pace with advancements in emission control technology. For example, maximum allowable levels for hydrocarbon exhaust emissions are about 90 times higher for motorcycles than for light vehicles. Tightening emission standards for motorcycles takes advantage of the opportunity to implement widely-available technologies to reduce smog-forming emissions.

The proposed Regulations are important to ensure that the environmental improvements to motorcycles will be achieved in Canada and also to maintain a level playing field for companies in Canada and the U.S.

Reduction of Toxic Substances

Dow stated:

• "While we agree in principle; if the statement "There are also direct health benefits from reductions in toxic substances (e.g. benzene, 1,3-butadiene, formaldehyde, acetaldehyde, acrolein)" is made, greater detail should be forthcoming to justify. Given the materiality question raised in the preceding point, information and/or data substantiating the above assertion should be provided."
  
  
• "Environment Canada is encouraged to provide data on what the specific health benefits are and quantify the benefits which result from this actual regulatory amendment"

Reply:

Although the proposed Regulations do not include specific limits for benzene, 1,3-butadiene, formaldehyde, acetaldehyde and acrolein, the standards will have the effect of reducing their emissions through the application of improved emission control technologies. The following explanation was provided in the RIAS supporting the publication of the current Regulations and also applies to motorcycles.

• The U.S. EPA indicates that "technologies used to reduce exhaust hydrocarbons also reduce the hydrocarbon species listed as MSATs [Mobile Source Air Toxics]. This is true whether control is achieved through engine or component modifications, add-on devices, or the use of aftertreatment devices such as oxidation or three-way catalysts. We are not aware of vehicle or engine technologies that selectively reduce MSATs without reducing other hydrocarbons to a similar degree[2]"

In addition, the EPA indicated in its final rule for motorcycles that the projected reduction in hydrocarbon emissions should result in an equivalent percent reduction in air toxic emissions. For Canada, the emission reduction for hydrocarbons (i.e. VOCs) is estimated at 45 percent for the year 2020 relative to a base case without regulations.

Cost-Benefit Analysis

Dow stated:

• "This statement " the fact that the incremental costs associated with the proposed amendments are low, the benefits of the Canadian proposed amendments are expected to outweigh the associated costs" presents a conclusion that benefits are greater than costs. But it is presented in terms of what is "expected". In the making of regulation and their justification, the conclusion should be based on fact and analysis and not expectations. Environment Canada is encouraged to conduct RIAS analytically. It is recommended the cost/benefit be on a scientifically sound, economically justifiable basis."
  
  
• "If Environment Canada is moving away from an objective analytical approach to that of opinions and expectations, this establishes a precedent worthy of greater communication to the regulated community."
  
  
• "With this regulatory amendment, Environment Canada is encouraged to analytically justify the statement asserting that benefits exceed costs."

Reply:

The RIAS that was published with the current Regulations described the environmental and economic rationale that support a policy of alignment of Canadian emission standards for all classes of on-road vehicles with those of the U.S. - an approach that has been broadly supported by stakeholders in various regulatory consultation processes.

The structure of the current Regulations incorporates the U.S. technical emission standards by reference to the U.S. Code of Federal Regulations for a given model year of vehicle and therefore most of the EPA's new emission requirements for 2006 and later model year on-road motorcycles are automatically incorporated in the current Regulations. There are, however, some new elements in both the application and structure of future U.S. motorcycle emission standards that must be addressed in order to maintain complete Canada/U.S. alignment, including the incorporation of a new class of previously unregulated motorcycles having an engine displacement of less than 50 cc and compliance-related flexibilities.

In the support document[3] for the final rule for motorcycles, the EPA estimated an average cost per ton of less than US$2,200/ton to meet the emission standards. The EPA found the cost effectiveness of the standards for this rule to be comparable to the cost per ton values of other recent mobile source rules for on-road vehicles (i.e. range from US$300 to $2,600/ton). While it is true that some previous programs have been more cost efficient, the EPA indicated that getting further emission reductions from sources that are already well regulated will be more expensive than reducing emissions from those sources that have not been as well regulated in the past since the costly mean of reducing emission is generally pursued first. Accordingly, the EPA also compared the cost effectiveness of the rule for motorcycles to various potential future technologies that were identified to achieve the emission reductions needed to meet National Ambient Air Quality Standards (NAAQS) as part of a regulatory impact analyses for the particulate matter (PM) and ozone NAAQS and regional haze rule[4]. The average cost effectiveness of these technologies estimated by the EPA exceeded US$5,000/ton, confirming that future emission control strategies necessary to meet the NAAQS are likely to be more expensive than the rule for motorcycles.

Canada's regulatory policy recognizes that the extent of cost and benefit analyses can vary and should be proportional to the significance and impact of the regulations. In view of the highly integrated nature of the North American vehicle manufacturing industry and the fact that the proposed Regulations continue to be aligned with those of the U.S., the impact of the proposed Regulations are considered to be minimal. Accordingly, the department believes that a qualitative assessment of costs and benefits is sufficient to conclude that the expected health and environmental benefit of reducing motorcycle emissions exceed the costs of meeting the Canadian Regulations. While the analysis only consider those impacts associated with the proposed Canadian Regulations, the RIAS has been supplemented with quantitative information on the cost per ton for meeting the U.S. final rule for motorcycles to provide more context on the cost-benefit impacts of the Regulations.

[2]Final Rule: Control of Emissions of Hazardous Air Pollutants from Mobile Sources, U.S. Environmental Protection Agency, Federal Register of March 29, 2001.

[3] Final Regulatory Support Document: Control of Emissions from Highway Motorcycles, U.S. Environmental Protection Agency, EPA420-R-03-015, December 2003.

[4] Regulatory Impact Analyses for the Particulate Matter and Ozone National Ambient Air Quality Standards and Regional Haze Rule, U.S. Environmental Protection Agency, Document II-A-77, July 1997.