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The Implementation of Canadian Environmental Protection Act 1999: Why Industry should care!

By Michael Teeter, Principal
November 2001

The new Canadian Environmental Protection Act (CEPA 99) has been in effect for well over a year now but the bugs and the wrinkles are still being worked out. Interested parties will discover the serious flaw and inherent difficulties with due process under this new Act.

The new Canadian Environmental Protection Act (CEPA 99) still has bugs to work out. As the Act’s long tentacles wrap themselves around successive industries’ end products and inputs, the lack of balance and serious flaws with due process under this new Act will become a growing concern. 23,000 substances are on the table.

The new Canadian Environmental Protection Act (CEPA 99) has been in effect for well over a year now but the bugs and the wrinkles are still being worked out. For the most part, industries and companies were unaffected by the old CEPA or learned to live with it.  In the not-too distant future, many companies and industries will learn about CEPA 99 as its long tentacles wrap themselves around their end products and inputs. Interested parties will discover the serious flaw and inherent difficulties with due process under this new Act.

This article explores some of the CEPA 99 issues and implications for industry.

23,000 substances are on the table

Environment Canada (EC) and Health Canada (HC) have to assess and categorize 23,000 substances within 5 years. This is a daunting task. Many of these substances will be critical to Canadian manufacturing and production.

If a product is assessed as CEPA-toxic then it will be subject to federal regulatory control.  Regulations will follow but the stigma of the toxic label may be the most significant burden to bear. The public relations and liability implications of a much larger number of substances being labeled CEPA-toxic are relatively untested. This will change given the 23,000 designated substances, the low toxicity hurdle imposed by CEPA 99 and the enshrinement of the “precautionary principle” within the Act. If you care about your product being called “toxic” then it might be prudent to take notice of CEPA 99.

Baskets of substances, including common items, are being proposed

Given the immense task of assessing and analyzing 23,000 substances, Environment Canada is looking for creative ways to capture baskets of substances under blanket listings. They are proposing to use the Section 69 provision for “Interpretive Guidelines” in order to narrow the focus of the regulations and the management measures imposed. (Section 69 may be a beneficial way to narrow regulatory scope but it does nothing to change the toxic label that could be affixed to an important product or input.)

How to get from a "designated substance" to a "priority substance" is still unclear

With 23,000 substances on the Designated Substances List (DSL), the determination of how and why a substance moves from the DSL to the Priority Substances List (PSL) is somewhat critical. Under the old CEPA Act, an "Expert Panel" was put together by Environment Canada. This panel determined which substances would be put on the PSL, what nomenclature would be used to describe those substances, and set the direction for study (risk assessment). Even those on the Panel would agree that this process could be flawed. No amount of expert representation could hide the fact that the PSL selection was frequently about "horse-trading" and expediency.

Once scheduled for review, the process is very difficult

Once an industry has been thrown into the risk assessment process, there is uncertainty and limited control over information or events. The assessment process, the substances and contexts studied and the people consulted are all in the control of the government assessors.

The Act specifically gives the assessors this exclusive authority and responsibility. (Health Canada is in the lead on a human health assessment; Environment Canada is in the lead on an environmental assessment.) If a substance is placed on the Priority Substance List (PSL) for risk assessment, the scientific review process established by the lead agency may involve outside resource people (including industry).  However, individuals are asked to participate as individuals, not as representatives of a delegative group or industry. Hence, the information shared, and the consultations conducted during the review process are extremely limited.

Agency reviewers almost exclusively consider the issue of toxicity. Outside peer review or toxicological examination is only prevalent if pressure is applied to achieve this end. And even if outside scientific review is conducted; there is no obligation that the Agency assessors heed the results of the outside review (unless the review is beneficial to the outcome the agency seeks).

An “Inherently toxic” definition is being developed internally that may capture baskets of substances without an obligation for scientific assessment

This definition, now being developed for environmental assessments, may move many substances to the “List of Toxic Substances” without scientific review or scrutiny.

Once a substance is under review, it can be argued there is tremendous built-in bias and pressure to assess toxicity. Officials in government devote years of their life to an assessment. Without toxicity, there is no further work, there is no follow up, and there is no risk management and regulation.

Environment Canada argues there are only two options for a substance under assessment: toxic or non-toxic. They are wrong.

Section 77 and precedent provides for a “no further action” decision despite the risk assessment process and the views of Agency assessors. While imperfect, the “no further action” option provides for voluntary measures and for a “middle ground” policy framework that can achieve public policy objectives without the negative consequences of the toxic label and federal regulation.

In the short term, industry should come together to argue that the "no further action" option within the current Act be used to provide for middle ground outcomes where the toxic label is inappropriate and unsupported, but where a non-toxic finding may not be in the public interest.

In the mandatory five-year review of CEPA 99, the government and industry should propose a more detailed legislative approach to the middle ground position. Again, as established by precedent, classification as “substance of concern”, or other nomenclature may be a good approach.

It is very possible that this modest amendment to the Act could be made very quickly and outside the auspices of the full 5-year review. As the addition of a new classification has no impact on positive environmental actions (and in fact will accelerate these actions), all-party support for such an amendment may be relatively easy to obtain.

Listing Nomenclature: a key issue under debate

It is the listing itself that determines the extent of regulatory control and action. The broader the listing is, then the broader the potential regulatory action.  Regulators are attempting to frame a consistent approach to listing based on a narrow interpretation of Section 3 of the Act. This approach forces broad listings even if the science does not support it. This is a critical policy issue for Canadian industry. If broad listings without science are permitted, then regulatory actions with little government and political oversight may be a feature of the new legislation.

Listing a substance within an environmental context has been a standard feature of CEPA since its inception. Assuming the listing process continues to be foundation for CEPA, then contextual listings will be essential to the maintenance of science-based decision-making.

Without science-based decision-making, Canada provides justification for foreign governments to use environmental legislation as a trade barrier against Canadian resource and manufacturing exports. The national interest is better served by clear and sound science-based decision-making.

Is Listing subject to regulatory policy?

Privy Council Office is responsible for regulatory policy and reports to the Special Committee of Council (SCC), both as Secretariat and as keeper of regulatory policy accountability.

Regulatory Policy clearly stipulates that proposed regulations are subject to proper consultations with stakeholders, that a cost-benefit analysis be conducted, that alternatives to regulations be considered, etc. (This comprises the Regulatory Impact Assessment Statement that must accompany any Gazette notice for proposed regulations.) Currently, Environment Canada has successfully argued with the Privy Council Office that the listing process is exempt from regulatory policy as science and science only is the statutory determinant of listing or non-listing outcomes.  Environment Canada argues where a conflict exists between legislation and regulatory policy, legislation always takes precedence.

This point of view may well be wrong. There are references in CEPA 99 to the need for balance in decision-making. Additionally, students of CEPA may have noticed that the listing Gazette notice no longer says there is no socio-economic impact associated with listings.  This is a significant change brought about by pressure over one of the current assessments.  It has now been acknowledged that listing as a toxic substance does have socio-economic impact and hence non-scientific factors must be considered in Cabinet decision-making.

The non-political appeal process is virtually non-existent

Environment Canada and the Act cite the Board of Review appeal process enshrined within a number of sections of the Act. The problem is a Board of Review is only mandatory when mandated timeframes are deemed to be unfulfilled or a “no further action” approach is taken. Reviews are completely discretionary to the Minister in all other instances. Additionally, there is no obligation to act on the results of a review.

The Good News: Politicians and Senior Officials are listening

Despite the serious flaws in the Act and the way it is interpreted, Ministers on the Special Committee of Council Cabinet Committee are engaged and paying attention to assessments as they come before them. Additionally, there is and has been debate within caucus, as the socio-economic impact of the legislation is increasingly understood. There is a growing understanding that CEPA 99 is a flawed piece of legislation.

A Summary of the CEPA 99 issues for Industry

  • Sound science must support a listing and the nomenclature for it. Pressures to assess 23,000 substances in 5 years should not justify listing without science or the use of Interpretative Guidelines where the science is unclear.
  • What is the process for getting on the Priority Substance list under CEPA 99? Let' s make sure is it better than under the old CEPA.
  • Is listing a regulation and subject to regulatory policy? If so, the Gazetting process has to change.
  • There is a "middle ground" position between toxic and non-toxic in CEPA 99. It is called "no further action". Industry must promote a public interest policy framework for the use of the no further action clause. Industry and Parliamentarians should consider a quick amendment to CEPA that provides for a new listing outcome (e.g. “list of substances of concern”) where the toxic stigma is inappropriate and not in the public interest. The environment will be well served by this change, as faster and more significant consensus on environmental actions will arise.
  • Contextual listing is acceptable when the science supports context. The Section 3 definitions should not be seen as sufficient to override the sound science foundations of the Act.
  • What is the decision-making process for development of the "inherently toxic" definition? Is industry sufficiently involved?
  • The degree of peer and scientific review, industry and stakeholder involvement and consistent consultation processes in the risk assessment phases are desperately weak. You cannot have sound science without a sound process for determining appropriate scientific conclusions.  Industry needs to be heard on this point.

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