Grasping at Straws: Regulatory and Trade Considerations Regarding Canada’s Proposed Single Use Plastics Policy

The Government of Canada intends to add certain Plastic Manufactured Items to the list of substances appearing on Schedule 1 of the Canadian Environmental Protection Act (CEPA), fulfilling the Trudeau Government’s commitment to act on plastic waste released into the Canadian environment.  Importantly, the listing functions as a regulatory mechanism and necessary first step for later enacting prohibitions on certain plastic wastes, but does not, in and of itself, prohibit the sale or use of any plastic consumer or industrial products. The Proposed Order,[1] which is expected to become effective in 2021, amends Schedule 1 to list Plastic Manufactured Items as a class of materials considered by the Canadian Government to be toxic under CEPA, Canada’s primary environmental protection act.[2]  In support of the Proposed Order, the Canadian Government compiled a Science Assessment on Plastic Pollution,[3] which outlines the bases for the conclusions that plastic pollution is an ongoing problem that requires mitigation under CEPA, and that such pollution poses an actual or potential risk of harm to the environment and human or animal health. The addition of Plastic Manufactured Items to Schedule 1 authorizes the Canadian Government to propose and implement policies, consistent with CEPA, that are designed to address and mitigate plastic pollution throughout the supply chain, including: manufacturing, transportation, commerce, consumption, and disposal.  Despite the Government’s actions, however, a significant amount of confusion regarding the scope and intent of future regulatory actions remains to be addressed; in the meantime, numerous industry associations have submitted comments expressing concerns over the method of regulatory action, the lack of specificity and corresponding consequences that may result from such activity, and potential commercial and international trade impacts.  The provinces of Alberta and Ontario have expressed some of these same concerns.[4] The Canadian Environmental Protection Act The Canadian Environmental Protection Act, “[a]n Act respecting pollution prevention and the protection of the environment and human health in order to contribute to sustainable development,” came into force on March 31, 2000.  The Act provides the Government of Canada with the authority to protect the environment and human health, and take preventive and remedial measures as necessary to “protect, enhance and restore the environment.”[5] Notably, Section 2 of CEPA states that such authority shall be carried out under the precautionary principle.  Specifically, where there are “threats of serious or irreversible damage, [a] lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation…”[6]  Therefore, a showing of actual harm is not required to act under CEPA.  Instead, the Government must make a reasonable determination that proposed actions are appropriate by considering: (1) short and long-term human and ecological benefits; (2) positive economic impacts of environmental migration measures; and (3) any other relevant benefits resulting from the implementation of such measures.[7] Part 5 of CEPA states that one of the primary purposes of the Act is to “control toxic substances.” “Toxic substances” are broadly defined as those materials that:

• have or may have an immediate or long-term harmful effect on the environment or its biological diversity;
• constitute or may constitute a danger to the environment on which life depends; or
• constitute or may constitute a danger in Canada to human life or health.[8]

The Canadian Government states in a Guide to Understanding the Canadian Environmental Protection Act that “[d]etermining a substance to be toxic under CEPA 1999 is a function of its release or possible release into the environment, the resulting concentrations in environmental media and its inherent toxicity.”[9]  The Act further recognizes that not all substances that are listed as “toxic” are “inherently toxic.”  The latter are described as substances that “cause toxic effects to humans or non-human organisms” and “display either the characteristics of persistence (take a long time to break down) or bioaccumulation (collect in living organisms and end up in the food chain).”[10]  The addition of a substance or class of substances under Schedule 1 of CEPA represents a determination by the Government of Canada that such substances are “toxic” under the Act, and therefore, are candidates for prevention, control, and mitigation activities through regulatory action. The Government of Canada may find substances to be “toxic” (and therefore, eligible for addition under Schedule 1) pursuant to Sections 64 (“CEPA-toxic”) or 90(1) (“CEPA-toxic equivalent”) of the Act:

• Section 64 risk assessments include: a Priority Substances List assessment; a screening assessment; or the review of a decision made by another competent regulatory jurisdiction.
• Section 90(1), in contrast, states that a substance may be added to the List of Toxic Substances in Schedule 1 upon the recommendation of the Ministers of Environment and Health. Such determination of “CEPA-toxic” equivalence requires that the substance or class of substance meets the definition of “CEPA-toxic” through the use and evaluation of a systematic, risk-based approach.[11]

If a substance is deemed toxic under Sections 64 or 90(1), the substance may be recommended for inclusion in the List of Toxic Substances in Schedule 1 of CEPA.  As of October 28, 2020, and notwithstanding the proposed inclusion of Plastic Manufactured Items, the List of Toxic Substances contains 151 discrete entries, including one former listing for a narrow class of plastic materials (“133. Plastic microbeads that are ≤ 5 mm in size”).[12] Basis for Schedule 1 Listing of Plastic Manufactured Items As discussed above, a substance may be considered “CEPA-toxic” equivalent if it satisfies the definition of “CEPA-toxic” through the use and evaluation of a systematic, risk-based approach under Section 90(1) of CEPA.  The Proposed Order states that the addition of Plastic Manufactured Items results from a recommendation under this Section. The Government of Canada’s conclusion that Plastic Manufactured Items are “CEPA-toxic” equivalent is set forth in the Science Assessment on Plastic Pollution, the final version of which was published on October 7, 2020, and appeared in the Canada Gazette (Part I: Vol. 154, No. 41) for a 60-day public comment period on October 10, 2020.[13]  The Government of Canada concluded that:

• Over 1% of plastic waste otherwise destined for recycling, landfill, incineration, or other controlled disposal enters the Canadian environment through pollution or mismanagement – equivalent to 29,000 tonnes in 2016;
• Plastic pollution consists of the release of macroplastics (e., materials larger than 5 mm) and microplastics (i.e., materials smaller than 5 mm), the latter of which primarily occurs through use in certain consumer products or the degradation of macroplastics over time; and
• Single-use plastics comprise the majority of microplastic pollution identified in the environment, including (but not limited to): plastic bags, straws, cutlery, plates, and stir sticks.[14]

The first half of the Science Assessment describes sources of plastic waste and pollution, the environmental fate of such plastics in water, soil, and air, and the frequency of occurrence in the environment, food, and drinking water.  The second half of the Science Assessment discusses potential impacts on the environment, human health, and the need for further research.  Five appendices summarize public consultations, incidence and occurrence assessments, and relevant summaries of toxicological studies.  In general, the Science Assessment hypothesizes that macroplastic pollution results in negative environmental consequences primarily though physical mechanisms (i.e., entanglement and ingestion), whereas the health effects of microplastic pollution are “more limited.”  Nevertheless, Plastic Manufactured Items, without further description or clarification as to its definition, is recommended for inclusion under Schedule 1 on the basis of the precautionary principle. Regulatory Implications Contrary to much of the published reporting over the past few months, the addition of Plastic Manufactured Items to Schedule 1 of CEPA does not constitute an outright ban on plastic materials or articles, nor does it represent an immediate prohibition on the use of specific categories of consumer products; this despite the Government’s own press-releases purporting the same (see, e.g., “Canada to ban harmful single-use plastics and hold companies responsible for plastic waste”).[15] Instead, and consistent with Canada’s Action Plan on Zero Plastic Waste,[16] the Schedule 1 listing will serve as an initial mechanism that will then enable the Canadian Government to implement a more targeted environmental mitigation approach regarding specific categories of plastic materials.  These goals will be implemented through a combination of waste prevention (reduction) and value recovery (reuse, remanufacture, recycling, and energy recovery), within the broader framework of establishing a circular economy for plastic materials and products. Simply stated, the listing of Plastic Manufactured Items on Schedule 1 of CEPA is a first step (notwithstanding the appropriateness of the use of the mechanism), but in and of itself, is not sufficient to ban any consumer products.  Further regulatory activity will be necessary to accomplish these objectives. Challenges Ahead Questions Regarding Sufficiency of Alternatives Assessment The Trudeau Government has already made clear that it intends to leverage the Schedule 1 listing to target specific consumer products in the coming months and years.  Specifically, the Government has stated that it intends to ban certain single-use plastics as early as 2021, including: plastic bags, straws, cutlery, plates and stir sticks, where such bans are “supported by scientific evidence and warranted.”[17]  It remains an open question, however, to what degree the use of scientific evidence will drive a risk-based assessment of these products and alternatives, including on a life-cycle basis. The proposed targeting of this class of consumer products represents a recognition by the Canadian Government that similar single-use plastics bans have been proposed and implemented in other jurisdictions throughout the world – some with varying degrees of success.[18] Nevertheless, single-use plastic bans in other jurisdictions also have encountered resistance, insofar as governments have failed to adequately conduct robust and consistent alternatives assessments.  In certain cases, industry (and retailers alike) have successfully demonstrated that replacement products are prohibitively expensive, not yet widely available, potentially more harmful to the environment on a life-cycle basis, or are themselves not disposed of in a manner necessary to achieve environmental claims or objectives.  In other instances, recycling programs (e.g., bottle deposit and end-use product takeback programs) have proven to be successful in mitigating waste, but lack the necessary funding to establish full implementation.  Where such bans have been implemented, conflicts have arisen between federal, state/territory and local laws, particularly with regard to enforcement authority and penalties; on these bases, a number of single-use plastic bans have successfully been challenged, reversed, or pre-empted.[19]  The emergence of COVID-19 and a newfound appreciation for the protective benefits of plastic products has further resulted in the delay in implementation or complete reversal of local bans.[20]  The Canadian Government will need to contend with similar concerns regarding any proposed actions that result from the Schedule 1 listing. Definitions and Consumer Perception In the meantime, industry has raised more immediate concerns regarding the language and manner in which Plastic Manufactured Items are to be included in Schedule 1 of CEPA.  Unlike many of the other substances that currently appear on Schedule 1 (which are narrowly tailored in terms of their descriptions and chemical identities), the description of Plastic Manufactured Items raises the possibility that consumers will be confused regarding the scope and extent of the listing, as well as the perceived risk of harm from the use of such products. Plastics, by the Canadian Government’s own acknowledgement, are successfully used and managed from an environmental standpoint in a variety of industries, including automotive, textile, construction, and agriculture (according to the Government’s own analysis, the proportion of total plastic waste from these industries is a small fraction of total waste in Canada).[21]  Plastics play a critical role in each of these industries, and provide an efficient and cost-effective method of replacing materials that themselves result in significant environmental impact (e.g., increased fuel costs associated with transporting heavier replacement materials).  Within the context of consumer products, single-use plastics effectively function to preserve and protect food and beverages, resulting in a significant reduction in food waste and contamination, as well as associated transportation, disposal, and landfilling costs.  The categories of single-use materials subject to the proposed listing under Schedule 1 provide an equally important role in protecting the health and safety of consumers.  The generic description of Plastic Manufactured Items may result in confusion at the consumer level regarding the safety and suitability of plastic materials. Plastics have been used throughout the world for decades, on the basis of long-standing and well-recognized authorizations by competent jurisdictions such as the U.S. Food and Drug Administration (FDA), the European Food Safety Authority (EFSA), China’s National Center for Food Safety Risk Assessment (CFSA), and Japan’s Ministry of Health, Labour and Welfare (MHLW).  Each authorized substance has undergone a rigorous safety assessment, which typically includes an evaluation of the potential dietary exposure to the substance viewed in light of its toxicological profile. Notably, Health Canada relies on the same criteria used in other jurisdictions, and in some cases precisely the same assessments, as the basis to conclude that packaging materials may be safely used as intended in Canada.  The potential designation of Plastic Manufactured Items as “toxic” and associated future bans may result in consumer perception of a safety risk that does not exist, and may lead to unnecessary deselection that itself results in counterproductive environmental consequences. Trade Implications on the Radar On May 1, 2020, a group of more than two dozen trade associations representing a significant number of economic sectors – e.g., manufacturing, chemicals, plastics, pesticides, biocides, packaging, plumbing, roofing, fabrics, household products, insulation, frozen food, and information technology products – wrote to Canada’s Minister of Small Business, Export Promotion, and International Trade, Mary Ng, to express potential trade concerns with the Proposed Order given the “truncated and incomplete CEPA review that bypasses risk assessment.”  The concerns focused on possible violations of the World Trade Organization Agreement on Technical Barriers to Trade (WTO TBT Agreement) and the United States-Mexico-Canada Agreement (USMCA).[22] We note that the WTO TBT Agreement provides, in relevant part, that: [T]echnical regulations shall not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment would create…  In assessing such risks, relevant elements of consideration are, inter alia: available scientific and technical information…or intended end-uses of products.[23] For its part, USMCA provides that “[e]ach Party shall conduct an appropriate assessment concerning any major technical regulations it proposes to adopt,” and such an assessment can include a regulatory impact analysis and an analysis of potential alternative measures.[24]  USMCA also contains hortatory provisions with regard to taking a risk-based approach to regulating chemicals and aligning risk assessment and risk management approaches for chemicals with other USMCA Parties.[25] In a December 7, 2020 letter to USTR Robert Lighthizer and Minister Ng, seven Democratic U.S. Senators responded to the multi-association letter by noting their view that the science on the adverse impact of single-use plastics ban is clear, and “[i]f the Canadian government reasonably decided to take action to limit such plastics… it is well within its rights to do so under USMCA.” One threshold question is whether the Proposed Order is a “technical regulation,” which the WTO TBT Agreement defines as a: “[d]ocument which lays down product characteristics or their related processes and production methods, including the applicable administrative provisions, with which compliance is mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or production method.”[26] WTO Members are required to notify a proposed technical regulation to the WTO: (a) where there is no relevant international standard or the proposed technical regulation deviates from a relevant international standard, and (b) if the proposed technical regulation may have a “significant effect on trade of other Members.”[27] It appears that Canada and the United States disagree on whether the measure is a technical regulation.  We understand that the United States has requested that Canada notify the Proposed Order to the WTO TBT Committee to allow WTO Members to comment and to take the comments into account, but Canada has not done so.

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Reducing the flow of plastic waste into the environment and forging a future without plastic waste is an important and laudable objective shared by regulators, companies, and consumers around the globe.  For example, it is estimated that 22 million pounds of plastic enter the North American Great Lakes every year,[28] with microplastics reaching levels as high as 1.25 million particles/km2 – concentrations on par with what is found in the ocean’s garbage patches.[29]  Attaining these goals will require collaboration amongst all stakeholders – including local, provincial/state, and federal governments; civil society; industry; and the public – in both Canada and the United States and on a cross-border basis.[30]  The Trudeau Government should seek to address the significant procedural and definitional/scope issues, as well as important international trade considerations, with respect to the Proposed Order through a collaborative process.  At the same time, the recent change in U.S. administration may present opportunities for pursuing bilateral, North American, and/or regional approaches to curtailing and ending plastic waste in a manner that addresses the issues that have been raised.  

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  [1]           See Order Adding a Toxic Substance to Schedule 1 to the Canadian Environmental Protection Act, 1999 and Regulatory Impact Analysis Statement, available at: http://www.gazette.gc.ca/rp-pr/p1/2020/2020-10-10/html/reg1-eng.html.  The Canadian Government provided notice, pursuant to subsection 332(1) of the Canadian Environmental Protection Act (1999) that the Ministers of Health and Environment propose to implement an Order Adding a Toxic Substance to Schedule 1 on October 5, 2020.  The Order states, in relevant part: “Schedule 1 to the Canadian Environmental Protection Act, 1999 is amended by adding the following numerical order: 163. Plastic manufactured items.” [2]           S.C. 1999, c. 33, available at: https://laws-lois.justice.gc.ca/eng/acts/c-15.31/ [3]           Science assessment of plastic pollution, Environment and Climate Change Canada, Health Canada (October 2020), available at: https://www.canada.ca/en/environment-climate-change/services/evaluating-existing-substances/science-assessment-plastic-pollution.html. [4]           See, e.g., https://www.ctvnews.ca/climate-and-environment/canada-banning-plastic-bags-straws-cutlery-and-other-single-use-items-by-the-end-of-2021-1.5135968. [5]           CEPA, Administrative Duties – Duties of the Government of Canada at 2(1)(a.1). [6]           Id. at Preamble. [7]           CEPA, Administrative Duties – Considerations at (1.1)(a). [8]           See Section 64(a)-(c). [9]           See https://www.canada.ca/en/environment-climate-change/services/canadian-environmental-protection-act-registry/publications/guide-to-understanding/chapter-5.html. [10]         See Guide to understanding the Canadian Environmental Protection Act: Chapter 5, Section 5.2.2, available at: https://www.canada.ca/en/environment-climate-change/services/canadian-environmental-protection-act-registry/publications/guide-to-understanding/chapter-5.html. [11]         See Government of Canada, “Determining What is Toxic,” available at: https://www.canada.ca/en/environment-climate-change/services/canadian-environmental-protection-act-registry/substances-list/toxic.html [12]         See https://www.canada.ca/en/environment-climate-change/services/canadian-environmental-protection-act-registry/substances-list/toxic/schedule-1.html. [13]         See footnote 3. [14]         Id. [15]         See https://pm.gc.ca/en/news/news-releases/2019/06/10/canada-ban-harmful-single-use-plastics-and-hold-companies-responsible. [16]         See https://www.ccme.ca/en/resources/waste/waste/plastic-waste.html. [17]         See https://www.canada.ca/en/environment-climate-change/news/2020/01/draft-science-assessment-of-plastic-pollution-confirms-negative-impact-of-plastic-pollution-on-the-environment-in-canada.html. [18]         See, e.g., https://www.nationalgeographic.com/environment/2018/07/ocean-plastic-pollution-solutions/. [19]         See, e.g., U.S. State of Oklahoma SB 1001 (2019) pre-empting local governments from regulating the use of an “auxiliary container,” including disposable food containers, plastic bags, and water bottles. [20]         See, e.g., https://www.usatoday.com/story/money/2020/04/08/plastic-bag-bans-reversed-coronavirus-reusable-bags-covid-19/2967950001/. [21]         See Canadian Council of Ministers of the Environment, Strategy on Zero Plastic Waste, available at: https://www.ccme.ca/files/Resources/waste/plastics/STRATEGY%20ON%20ZERO%20PLASTIC%20WASTE.pdf. [22]         Many of the formal comments that associations filed with the Canadian government subsequent to the multi-association letter raise similar concerns. [23]         WTO Agreement on Technical Barriers to Trade, Article 2.2 [24]         USMCA, Chapter on Technical Barriers to Trade, Article 11.5.1. [25]         USMCA, Sectoral Annex 12-A on Chemical Substances, Article 12.A.4.  A “risk-based approach” is further defined as evaluation of a chemical “that includes the consideration of both the hazard and exposure.”  See Article 12.A.1. [26]            WTO Agreement on Technical Barriers to Trade, Annex 1. [27]            WTO Agreement on Technical Barriers to Trade, Article 2.9. [28] https://www.sciencedirect.com/science/article/abs/pii/S0025326X1630981X?via%3Dihub [29]         https://www.frontiersin.org/articles/10.3389/fenvs.2017.00045/full. [30]            For example, such an approach will be proposed by the Council of the Great Lakes Region through its soon-to-be-launched Great Lakes Circular Economy Partnership, which will have plastic waste as an initial focus.  (Note: Jeff Weiss serves on the Board of Directors of the Council.)