The paint and coatings industry, along with others in the chemicals sector, are constantly preoccupied with regulations. This is especially true with respect to the federal government’s Chemicals Management Plan (CMP) over the past 10 years, which will continue for another five years or longer. We must always consider what regulations really mean for industry and how we ensure full compliance with them. It is also necessary to consider the cost of complying with these regulations and the potential cost of non-compliance. Much of this is taken for granted in heavily regulated industries such as paint and coatings, but remains a major focus. In the recent strategic planning session
CPCA’s board noted that the association’s work on ensuring regulatory compliance is one of its key roles, that is, to get out ahead of and stay ahead of regulations. Governments also view associations as a key partner in compliance promotion, that is, communicating to its industry members the need for full compliance with existing regulations.
It is true that regulations do ‘level the playing field’ for industry, or should, given the fact that all must comply with the same regulations. Yet, the cost of regulations in Canada, especially over the past ten years or so, has been substantial due to the volume of information required for the CMP chemical assessment process. The recent federal budget committed another $500 million for phase three of the CMP on the government side. The work required of industry to help support the ongoing assessments, in all sectors, means industry will pay tens of millions in providing the information required for the assessment of chemicals in commerce. There will also be a cost for compliance with the eventual regulations and other pollution prevention instruments. That cost will include the necessary steps to assure compliance and/or the need to seek alternatives or substitutes for certain substances, which can also be a major cost driver.
In general, compliance means conforming to a rule, such as a specification, policy, standard or law. Regulatory compliance describes the goal that companies seek to achieve in their ongoing efforts to ensure they take the necessary steps to comply with relevant laws and regulations. The need for operational transparency is critical for ensuring full compliance. In recent years this has also driven the need for regulatory harmonization under the Regulatory Cooperation Council’s (RCC) efforts to align regulations for products shipped by Canada and the United States. Then there is the need to better align regulations across Canada with respect to provincial jurisdictions, which have different regulations from one province to the next, which we have seen with respect to waste management regulations. The expected outcome of such an approach is to ensure that all necessary regulatory requirements can be met without unnecessary duplication of effort and costs. This is still a work in progress on many fronts.
Associations have been involved with the necessary, grinding work on regulatory development to help ensure regulations are evidenced-based and grounded in sound science wherever possible. When regulations are developed under CEPA 1999, for example, stakeholders provide input and comments at various stages of the process. Compliance is easier when those being regulated understand the purpose of regulations and can provide input into their creation. CPCA’s work seeks to ensure that industry is fully aware of the proposed regulations as early as possible in the process, thereby ensuring that all aspects of the regulations are considered before formal implementation. Environment Canada promotes compliance through information sessions, conferences and workshops with ‘regulatees’ in attendance as well as through fact sheets, manuals, guidelines, reports, and notices in the Canada Gazette. It is hoped that by providing the means to participate in the creation of regulations and by promoting compliance using the tools outlined above, the result will be a high rate of compliance.
While oversight with respect to regulatory development is a primary focus of industry and their respective associations, compliance promotion is also important. There must be planned activities that are undertaken to increase awareness, understanding and compliance with the law and its regulations. Through these activities, information is provided to the regulated communities on what is essential for compliance, the benefits of compliance and the consequences of non-compliance.
The Canadian Environmental Protection Act (CEPA 1999) provides enforcement officers with a wide range of powers to enforce the Act. Enforcement officers can engage in the following:
Carry out inspections to verify compliance with the Act; conduct investigations of suspected violations; enter premises, open containers, examine contents and take samples; conduct tests and measurements; obtain access to information (including data stored on computers); stop and detain conveyances; search, seize and detain items related to the enforcement of the Act; secure inspection warrants to enter and inspect premises that are locked and/or abandoned or where entry has been refused; seek search warrants; and arrest offenders.
There is a wide range of enforcement measures available to respond to alleged violations. Many are designed to achieve compliance without resorting to formal court action, including directions, tickets, prohibition orders, recall orders, detention orders for ships, and Environmental Protection Compliance Orders (EPCOs). Measures to compel a return to compliance through court action include injunctions to stop or prevent a violation and prosecutions. In addition, a return to compliance can be achieved through Environmental Protection Alternative Measures (EPAMs), a program for diverting offenders away from the formal court process.
Half of the 57 CEPA regulations have some impact on the paint and coatings industry directly and indirectly, not to mention other federal and provincial regulations in other government departments. All CEPA regulations have mandatory fines, but the biggest cost for a company that finds itself in a situation of non-compliance, that becomes public, is the damage to the brand from the negative perception of its products in the marketplace. Often the sins of one quickly become the sins of many, as all in the industry sector will be implicated indirectly. Such a situation could require a significant investment in public relations to address both stakeholder and public perceptions. No one wants such a situation to occur and must take the appropriate measures to ensure compliance with the law.