Overview of Canadian Consumer Product Safety Law

ABA SECTION OF INTERNATIONAL LAW 2012 SPRING MEETING Selling Consumer Products Into the U.S. and Canada Navigating a New Course to Safety Overview of Canadian Consumer Product Safety Law

ABA SECTION OF INTERNATIONAL LAW 2012 SPRING MEETING Overview of Canadian Consumer Product Safety Law 1 I. Legislative background Hazardous Products Act, R.S.C. 1985 c. H-3. The Hazardous Products Act entered into force in 1969. It was designed to prohibit or regulate the advertisement, sale, or importation of hazardous materials and products. Goods covered under other legislation such as the Explosives Act, the Food and Drug Act, the Pest Control Products Act, and the Nuclear Safety and Control Act were not dealt with under the Hazardous Products Act. Hazardous Products Act provisions that dealt with consumer products became dated and ineffective. They were repealed and replaced by Canada Consumer Product Safety Act provisions. 2 The Canada Consumer Product Safety Act, S.C. 2010, c. 21 came into force on June 20, 2011. It replaced consumer product safety provisions which had been set out in Part I and Schedule I of the Hazardous Products Act. The Canada Consumer Product Safety Act is aligned with US consumer product safety legislation. The purpose of the Canada Consumer Product Safety Act is to protect the public by addressing or preventing dangers to human health or safety that are posed by consumer products in Canada. The Canada Consumer Product Safety Act applies to suppliers of consumer products in Canada, including manufacturers, importers, distributors, advertisers and retailers. The legislation requires suppliers of consumer products to play a role in addressing any dangers to human health or safety that may be posed by the products they put on the marketplace. 3 1 2 This paper has been authored by Daniel L. Kiselbach, Partner, Miller Thomson LLP, who can be reached at 604643-1263 or at dkiselbach@millerthomson.com. Any errors are solely the responsibility of the author. This paper should not be used or construed as legal advice. CBC News, Consumer safety bill passes Parliament, Tuesday, December 14, 2010, online: <http://www.cbc.ca/news/politics/story/2010/12/14/con-consumer-safety-act.html> 1

It is designed to protect the public by addressing dangers to health or safety posed by consumer products imported to, or produced within, Canada. Highlights of the new provisions of the Canada Consumer Product Safety Act relate to the following: 1. A prohibition of the manufacture, sale, advertisement of products that are: a. a danger to human health or safety; b. subject to a recall order or voluntary recall; or c. subject to a measure or order that has not been complied with. 2. A prohibition of misleading labeling or packaging respecting a product s danger or safety certification. 3. Document and record keeping requirements. 4. Mandatory product incident report requirements. 5. The power of the Minister of Health to order a product recall, impose safety measures or require tests or studies. 6. The power of the Minister of Health to disclose personal information in exigent circumstances. 7. Significant civil and criminal penalties for non compliance. II. Jurisdiction Health Canada is responsible for the administration and enforcement of the Canada Consumer Product Safety Act. 4 The Minister of Health is responsible for Health Canada. 5 3 4 5 Government of Canada, Red Tape Reduction Commission, Implementation Of The Canada Consumer Product Safety Act 2012-01-17, online: < http://www.reduceredtape.gc.ca/heardentendu/initiatives/ccps-cspc-eng.asp> Health Canada, About Health Canada 2011-11-17, online: <http://www.hc-sc.gc.ca/ahcasc/index-eng.php> Health Canada, About Health Canada, Minister, 2011-07-26, online: <http://www.hcsc.gc.ca/ahc-asc/minist/index-eng.php> 2

Health Canada's goal is for Canada to be among the countries with the healthiest people in the world. 6 The mission of Health Canada s Healthy Environments and Consumer Safety Branch (HECSB) is to help Canadians to maintain and improve their health by: promoting healthy and safe living, working and recreational environments; and reducing the harm caused by tobacco, alcohol, controlled substances, environmental contaminants, and unsafe consumer and industrial products. 7 HECSB has separate programs or directorates each with responsibilities for a variety of policies, programs and services, including the Consumer Product Safety Directorate. 8 The Consumer Product Safety Directorate deals with the administration and enforcement of the Canada Consumer Product Safety Act and its regulations and the Cosmetic Regulations made under the Food and Drugs Act with regard to consumer products and cosmetics. 9 III. Definition of a Consumer Product The Canada Consumer Product Safety Act defines the term consumer product to mean a product, including its components, parts or accessories, that may reasonably be expected to be obtained by an individual to be used for non-commercial purposes, including for domestic, recreational and sports purposes and includes its packaging. The Canada Consumer Product Safety Act states in general that it applies to consumer products with the exception of those listed in Schedule 1. 10 6 7 8 9 10 Health Canada, About Health Canada supra Health Canada, About Health Canada, Healthy Environments And Consumer Safety Branch 2011-12-08: < http://www.hc-sc.gc.ca/ahc-asc/branch-dirgen/hecs-dgsesc/index-eng.php> Health Canada, About Health Canada, Healthy Environments And Consumer Safety Branch supra. Health Canada, Consumer Product Safety Directorate, Report An Incident Involving A Consumer Product, 2011-08-09, online: < http://www.hc-sc.gc.ca/cps-spc/advisoriesavis/incident/index-eng.php> Ss. 4(1). See Appendix A. 3

Document preparation and maintenance requirements apply to persons who manufacture, import, advertise, sell or test a consumer product for commercial purposes. 11 Reporting requirements apply to persons who manufacture, import or sell a consumer product for commercial purposes. 12 The Canada Consumer Product Safety Act prohibits the manufacture, import, advertisement or sale of a consumer product listed in Schedule 2. 13 It also prohibits the sale of a product that does not comply with the requirement set out in applicable regulations. The word sell includes offer for sale, expose for sale or have in possession for sale or distribute whether or not the distribution is made for consideration and includes lease, offer for lease, expose for lease or have in possession for lease. 14 The size of the business is not relevant to the issue of whether or not a business must comply with the legislation. IV. Statutes Enforced Health Canada is responsible for the administration and enforcement of the Canada Consumer Product Safety Act and a variety of other statutes 15 including, for example: Food and Drugs Act which applies to all food, drugs, natural health products, cosmetics and medical devices sold in Canada (manufactured in Canada or imported). 16 The Controlled Drugs and Substances Act which controls the import, production, export, distribution and possession of substances classified as narcotic and controlled substances. 17 The Hazardous Products Act Part II of which establishes the supplier label and material safety data sheet requirements of the Workplace Hazardous Materials Information System. 18 11 12 13 14 15 16 17 18 S. 13. S. 14 S. 5. See Appendix B. S. 2. See full list of statutes in Health Canada, Health Canada, About Health Canada, Acts 2011-12-08 online: < http://www.hc-sc.gc.ca/ahc-asc/legislation/acts-lois/index-eng.php> Food and Drugs Act, R.S.C., 1985, c. F-27. Controlled Drugs and Substances Act, S.C. 1996, c. 19. Hazardous Products Act, R.S.C., 1985, c. H-3. 4

Health Canada inspectors are responsible for the administration and enforcement of the Canada Consumer Product Safety Act. 19 Inspectors have broad search and seizure powers under the Act and may enter any place or conveyance where consumer products or related documents are stored, manufactured, sold, imported, packaged, advertised, labeled, tested or transported. 20 V. Enforcement Provisions The Minister can order a manufacturer, importer or seller to carry out a recall of a consumer product if the Minister believes, on reasonable grounds, that it poses a danger to health or safety. The Minister can also order a person who manufactures, imports or sells a consumer product to take measures to stop the manufacturing, importing, packaging, storing, advertising, selling, labeling or transporting of the product if the Minister believes on reasonable grounds that it is subject to a voluntary recall or other measure that a person has not complied with the Canada Consumer Product Safety Act or its regulations, or that the person has not complied with a previous order. The Minister may apply for an injunction ordering a person to refrain from doing anything that would result in a commission of an offence. The Criminal Code provides whistleblower protection to employees who report employer violations. 21 VI. Penalties Civil penalties A person who contravenes an order of the Minister is liable to receive an administrative monetary penalty ( AMPS ) assessment. The maximum penalty is $25,000 ($5,000 for non-profit organizations and non-commercial activities). Due diligence is not a defence to an AMPS assessment. A person may request to enter into compliance agreement with the Minister as an alternative to paying an AMPS penalty. 19 20 Canada Consumer Product Safety Act, supra, s. 20. Canada Consumer Product Safety Act, supra, s. 21. 21 Criminal Code, R.S.C., 1985, c. C-46, s. 425.1. 5

The purpose of a compliance agreement is to ensure that a person invests in compliance and avoids future non-compliance. A compliance agreement may contain various conditions, including a requirement to give security as a compliance guarantee. Draft regulations to establish the Administrative Monetary Penalties regime were published in Canada Gazette 1 on March 24. The comment period is currently open. Criminal penalties In general, it is a criminal offence to contravene the Canada Consumer Product Safety Act. Potential criminal sentences for the most serious offences include a fine of up to $5 million and imprisonment for up to 2 years. If a corporation commits an offence, its directors, officers and agents are liable to criminal conviction and sentencing. Due diligence is a defence to a criminal prosecution. VII. Obligations of a Business under the Canada Consumer Product Safety Act A. Compliance - Businesses are expected to comply with all provisions of the Canada Consumer Product Safety Act 22. In general, consumer products are regulated by the Canada Consumer Product Safety Act. The Canada Consumer Product Safety Act prohibits the following: The manufacture, sale, importation or advertisement of listed products or products that fail to meet regulatory requirements; 23 The manufacture, sale, importation or advertisement of products that are: a danger to human health or safety; subject to a recall order or a voluntary recall; or 22 15 U.S.C. 2068 23 Ss. 5 and 6 and Schedule 2. Listed products have been deemed to pose a significant risk to consumers (e.g., baby bottles containing bisphenol A ). 6

subject to a measure or order that had not been complied with. 24 Misleading labeling or packaging respecting a product s danger or safety certification. 25 The following consumer products are exempt from the provisions of the Canada Consumer Product Safety Act: explosives under the Explosives Act; cosmetics, devices, drugs and food under the Food and Drugs Act; pest control products under the Pest Control Products Act; vehicles under the Motor Vehicle Safety Act; feeds under the Feeds Act; fertilizers under the Fertilizers Act; vessels under the Canada Shipping Act, 2001; firearms, ammunition, cartridge magazines, cross-bows and prohibited devices under the Criminal Code; most plants under the Plant Protection Act; most seeds under the meaning of the Seeds Act; controlled substances under the Controlled Drugs and Substances Act; aeronautical products under the Aeronautics Act; and animals under the Health of Animals Act. 26 24 25 26 Ss. 7 and 8. Ss. 9 and 10. Schedule 1. 7

B. Testing and Certification - Businesses should be prepared to test products and provide test results to the Minister. The Canada Consumer Product Safety Act provides that persons may be ordered to test products and provide test results to the Minister. 27 C. Reporting - Businesses must report consumer product incidents to the Minister and, if applicable, to the person from who they have received the product within 2 days after the day they become aware of the incident. Duty to report A person who manufactures, imports or sells a consumer product in Canada and receives information respecting an event must provide information when they are aware that an incident that is related to a consumer product that they supply in Canada has occurred. 28 A product incident is defined as: an occurrence in Canada or elsewhere that result or may reasonably have been expected to result in a death or in serious adverse health effects; a defect or characteristic that may reasonably be expected to result in a death or serious or adverse effects on their health; incorrect or insufficient information on a label or in the instructions, or the lack of a label or instructions, that may reasonably be expected to result in a death or serious adverse health effects; or a recall or measure that is initiated for human health or safety reasons by a foreign entity, specified government, public body or institution. 29 Determining Whether An Event Is A Product Incident Three questions have been designed to help determine whether an event is a reportable incident: Does the event relate to a consumer product that I sell, manufacture, or import in Canada for commercial purposes (including its components or accessories or packaging)? 27 28 29 S. 12. Health Canada, Guidance on Mandatory Incident Reporting under the Canada Consumer Product Safety Act s. 14 heading Duties in the Event of an Incident, 3-4 Key Features ( Reporting Guidance ). Ss. 14(1). 8

Reporting deadlines Does it meet the criteria of an incident in any of ss. 14(1)(a) to 14(1)(d) of the Consumer Product Safety Act. Does it indicate an unreasonable hazard posed by the normal or foreseeable use of the product or the foreseeable misuse of the product? 30 A manufacturer, importer or retailer who becomes aware of an incident must provide information to the Minister and, if applicable, the person from whom they received the product, within 2 days after the day on which they become aware of the incident. 31 A manufacturer, importer or retailer must provide a written report to the Minister within 10 days on which they become aware of the incident. 32 Contents of report The report must include information about the following: the incident; the product; products that could be involved in a similar incident; and measures that have been taken or proposed in respect of those products. 33 VIII. Recalls Most recalls in Canada in 2011 were voluntary. IX. Public Database Issues Health Canada works with companies to issue recalls and has established a database which allows consumers to identify goods that are the subject of a recall. Health Canada has not established a searchable internet database of consumer product safety complaints. 30 31 32 33 Reporting Guidance, supra heading 5. Determination of an incident. Ss. 14(2). Reporting Guidance, ibid heading 5.4 Provision of incident information. Ss. 14(3). Ss. 14(3). 9

ABA SECTION OF INTERNATIONAL LAW 2012 SPRING MEETING Overview of Health Canada/Canada Border Services Agency Import Process I. Canada Border Services Agency Import Jurisdiction The Canada Border Services Agency ( CBSA ) officers assist departments such as Health Canada in the administration and enforcement of legislation such as the Canada Consumer Product Safety Act. 34 II. Detention A CBSA officer may detain and examine goods at any port of entry where the officer has reasonable grounds to believe that the entry of the goods would be contrary to provisions of any federal Act or regulation. 35 III. Seizure A CBSA officer may detain goods until he/she is satisfied that the goods have been dealt with in accordance with the Customs Act and any other federal legislation that prohibits, controls or regulates the importation of goods. 36 Health Canada inspectors may request that CBSA officers detain goods on the grounds that the entry of the goods into Canada would be contrary to the Canada Consumer Product Safety Act. A Health Canada inspector may seize and detain goods for the purpose of verifying compliance or preventing non-compliance with the Canada Consumer Product Safety Act. 37 IV. Conditional Release There are no provisions for the conditional release of goods under the Customs Act. An inspector who seizes a thing under this Act shall release it if he/she is satisfied that the provisions of the Canada Consumer Product Safety Act and the regulations with respect to it have been complied with. 38 34 35 36 37 38 Canada Border Services Agency Act, S.C. 2005, c. 38, ss. 5. and 110. Customs Act, R.S.C., 1985, c. 1 (2nd Supp.) ss. 99(1)(f). Customs Act, supra, s. 101. The Canada Consumer Product Safety Act s. 5 provides that no person shall import consumer products that are prohibited pursuant to ss. 5 7 (which prohibit the importation of products listed in Schedule 2, goods that do not meet the requirements of the regulations, and goods that are a danger to health or safety, the subject of a recall or precautionary measure). Canada Consumer Product Safety Act, supra ss 21(1) and 21(2)(e) Canada Consumer Product Safety Act, supra s. 25.

An inspector may order a person to take consumer product measures including: Stopping the importation of a consumer product. Requiring that a person remedy a non-compliance with the Canada Consumer Product Safety Act or the regulations (including any measure necessary in order for the product to meet regulatory requirements or to address or prevent a danger to human health or safety). 39 Such an order shall be in writing and must include: a statement of the reasons for the measure; and the time and manner in which the measure is to be carried out. 40 V. Refusal of Admission/ Exportation/Destruction The Canada Consumer Product Safety Act prohibits the importation of noncompliant goods. It does not expressly provide for (or prohibit) the exportation of non-compliant goods. The federal Crown may elect to forfeit the seized thing if: within 60 days after the seizure, no person is identified as its owner or as a person who is entitled to possess it; or the owner or person who is entitled to possess it, within 60 days after the day on which they are notified that the inspector has released the seized thing, does not claim it. 41 An exception to the right of forfeiture applies where criminal offence proceedings are instituted. 42 A seized thing that is forfeited may be disposed of at the expense of its owner or the person who was entitled to possess it at the time of its seizure. 43 If a person is convicted of an offence under the Canada Consumer Product Safety Act the court may order that a seized thing by means of or in relation to which the offence was committed be forfeited to the federal Crown. 44 39 40 41 42 43 Canada Consumer Product Safety Act, supra s. 32(2). Canada Consumer Product Safety Act, supra s. 32(3). Canada Consumer Product Safety Act, supra s. 26(1). Canada Consumer Product Safety Act, supra s. 26(2). Canada Consumer Product Safety Act, supra s. 26(3). 2

A seized thing that is forfeited may be disposed of at the expense of its owner or the person who was entitled to possess it at the time of its seizure. 45 If the owner of a seized thing consents to its forfeiture, the seized thing is forfeited to the federal Crown and may be disposed of at the expense of the owner. 46 VI. Redelivery under the CBP Bond There is no express mechanism for redelivery of noncompliant goods into CBSA custody where goods can not be modified so as to make them compliant. As noted, a Health Canada inspector may seize and dispose of a non-compliant thing. 47 VII. Payment of Expenses The federal Crown may dispose of a forfeited thing at the expense of the owner or the person who was entitled to possess it at the time that it was seized. 48 VIII. Administrative Procedure Review officers may review recall orders or orders for taking measures that are issued pursuant to the Canada Consumer Product Safety Act. 49 A Minister may designate any individual or class of individuals that are qualified as review officers for the purpose of reviewing orders under s. 35. A person who receives a recall order or order to take measures may make a written request to a review officer on grounds that involve questions of fact alone or questions of mixed law and fact. 50 44 45 46 47 48 49 50 Canada Consumer Product Safety Act, supra s. 27(1). Canada Consumer Product Safety Act, supra s. 27(2). Canada Consumer Product Safety Act, supra s. 28. Canada Consumer Product Safety Act, supra s. 26. Canada Consumer Product Safety Act, supra s. 26(3). Canada Consumer Product Safety Act, supra ss 34 and 35. Canada Consumer Product Safety Act, supra ss 35(1). 3

Appendix A Schedule 1: Exempted Products 1. Explosives within the meaning of section 2 of the Explosives Act. 2. Cosmetics within the meaning of section 2 of the Food and Drugs Act. 3. Devices within the meaning of section 2 of the Food and Drugs Act. 4. Drugs within the meaning of section 2 of the Food and Drugs Act. 5. Food within the meaning of section 2 of the Food and Drugs Act. 6. Pest control products within the meaning of subsection 2(1) of the Pest Control Products Act. 7. Vehicles within the meaning of section 2 of the Motor Vehicle Safety Act and a part of a vehicle that is integral to it as it is assembled or altered before its sale to the first retail purchaser including a part of a vehicle that replaces or alters such a part. 8. Feeds within the meaning of section 2 of the Feeds Act. 9. Fertilizers within the meaning of section 2 of the Fertilizers Act. 10. Vessels within the meaning of section 2 of the Canada Shipping Act, 2001. 11. Firearms within the meaning of section 2 of the Criminal Code. 12. Ammunition within the meaning of subsection 84(1) of the Criminal Code. 13. Cartridge magazines within the meaning of subsection 84(1) of the Criminal Code. 14. Cross-bows within the meaning of subsection 84(1) of the Criminal Code. 15. Prohibited devices within the meaning of paragraphs (a) to (d) of the definition prohibited device in subsection 84(1) of the Criminal Code. 16. Plants within the meaning of section 3 of the Plant Protection Act, except for Jequirity beans (abrus precatorius). 17. Seeds within the meaning of section 2 of the Seeds Act, except for Jequirity beans (abrus precatorius).

18. Controlled substances within the meaning of subsection 2(1) of the Controlled Drugs and Substances Act. 19. Aeronautical products within the meaning of subsection 3(1) of the Aeronautics Act. 20. Animals within the meaning of subsection 2(1) of the Health of Animals Act. 2

Appendix B Schedule 2: Prohibited Products 1. Jequirity beans (abrus precatorius) or any substance or article that is made from or that includes jequirity beans in whole or in part. 2. Spectacle frames that, in whole or in part, are made of or contain cellulose nitrate. 3. Baby walkers that are mounted on wheels or on any other device permitting movement of the walker and that have an enclosed area supporting the baby in a sitting or standing position so that their feet touch the floor, thereby enabling the horizontal movement of the walker. 4. Products for babies, including teethers, pacifiers and baby bottle nipples, that are put in the mouth when used and that contain a filling that has in it a viable microorganism. 5. Structural devices that position feeding bottles to allow babies to feed themselves from the bottle while unattended. 6. Disposable metal containers that contain a pressurizing fluid composed in whole or in part of vinyl chloride and that are designed to release pressurized contents by the use of a manually operated valve that forms an integral part of the container. 7. Liquids that contain polychlorinated biphenyls for use in microscopy, including immersion oils but not including refractive index oils. 8. Kites any part of which is made of uninsulated metal that is separated from adjacent conductive areas by a non-conductive area of less than 50 mm and that either (a) (b) has a maximum linear dimension in excess of 150 mm, or is plated or otherwise coated with a conductive film whose maximum linear dimension exceeds 150 mm. 9. Kite strings made of a material that conducts electricity. 10. Products made in whole or in part of textile fibres, intended for use as wearing apparel, that are treated with or contain tris (2,3 dibromopropyl) phosphate as a single substance or as part of a chemical compound.

11. Any substance that is used to induce sneezing, whether or not called sneezing powder, and that contains (a) (b) (c) (d) 3,3 -dimethoxybenzidine (4,4 -diamino-3,3 -dimethoxybiphenyl) or any of its salts; a plant product derived from the genera Helleborus (hellebore), Veratrum album (white hellebore) or Quillaia (Panama Wood); protoveratrine or veratrine; or any isomer of nitrobenzaldehyde. 12. Cutting oils and cutting fluids, that are for use in lubricating and cooling the cutting area in machining operations, and that contain more than 50 µg/g of any nitrite, when monoetha-nolamine, diethanolamine or triethanolamine is also present. 13. Urea formaldehyde-based thermal insulation, foamed in place, used to insulate buildings. 14. Lawn darts with elongated tips. 15. Polycarbonate baby bottles that contain 4,4 -isopropylidenediphenol (bisphenol A). 2