Consumer Products US Consumer Products Canada Electrical Consumer Products - Canada

CONSUMER PRODUCT SAFETY REGULATION UNITED STATES AND CANADA February 2011 WARNING: The information contained in this chart is a summary. For the actual text of the legislation, reference should be had to the referenced statutes and regulations. Consumer Products US Consumer Products Canada Electrical Consumer Products - Canada Legislation Consumer Product Safety Act ( CPSA ) Canada Consumer Product Safety Act ( CCPSA or Act ). Electricity Act, 1998 (Part VIII Electrical Safety) (the Act ) NOTE: While CPSA is the major legislation in the United States for consumer product safety, there are other important laws, including the Federal Hazardous Substances Act (FHSA) and others. Federal legislation that applies across Canada. Ontario Regulation 438/07 entitled Product Safety promulgated under the Electricity Act, 1998 (the Regulation or Reg. ) Ontario legislation but practical reach is across Canada. Agency U.S. Consumer Product Safety Commission ( CPSC ) Health Canada ( HC ) Electrical Safety Authority ( ESA ) Relevant Policy Guidelines Numerous regulations found in Title 16 of the U.S. Code of Federal Regulations ( CFR ) and on the U.S. CPSC website: www.cpsc.gov Pending - not yet published at the time of the release of this summary. However, reference is made below to a draft policy on mandatory reporting HC published for discussion in September 2010 ( Draft MR Policy ). Electrical Safety Authority, Final Industry Guidelines for the Management of Electrical Product Safety (Revised Feb. 10, 2010) ( ESA Guidelines ). Products Covered The CPSA applies to consumer products. Consumer product means any article, or component thereof, produced or distributed for sale to, or use, consumption or enjoyment by, a consumer in or around a home, a school, in recreation, or otherwise, except as excluded. The CCPSA applies to consumer products. Consumer products means 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 packaging. [Act, s. 2] Applies to electrical products and devices governed by the Ontario Electrical Safety Code. Electrical product or device means anything used or to be used in the generation, transmission, distribution, retail or use of electricity. [Act, s. 113.12.1] Practical scope is all electrical products, including consumer products, that plug into the grid (subject to the exclusions noted below). 1

Products Excluded Any article not customarily produced for, or distributed to, consumers Tobacco and tobacco products Motor vehicles and motor vehicle equipment (as defined in 49 USC 30101 et seq) Pesticides (as defined in 7 USC 136 et seq) Firearms and ammunition Aircraft and related equipment (as defined in 49 USC 40102(a)) Certain boats and vessels (see certain marine vessel statutes for details) Drugs, devices or cosmetics (as defined in 21 USC 321) Food (see certain agricultural statutes for details) Permanently fixed amusement park rides Excluded products include: natural health products as defined in the Natural Health Products Regulations under the Food and Drugs Act tobacco products (except and respect of their ignition propensity) products listed in Schedule 1 of the CCPSA including cosmetics drugs and medical devices pest control products motor vehicles as assembled or altered before their sale to the first retail purchaser fertilizers firearms and ammunition; cartridge magazine; cross bows Excluded are electrical products: used to generate or transmit electricity to be sold to the public; used in transportation vehicles such as aircrafts; cars; trains; used in facilities used in the operation of an electric railway or electric street railway; used in railway vehicles or equipment used to operate a railway; used in mines; used in transportation; or that are battery operated (only the recharging unit and/or transformer are caught) plants; seeds shipping vessels; aeronautic products animals Prohibitions No one can sell, offer for sale, manufacture for sale, distribute in commerce or import into the U.S. any regulated product that does not meet the specified standards. Standards are found in Title 16 of the CFR. No one can sell, offer for sale, manufacture for sale, distribute in commerce or import into the U.S. any product that is subject to a recall. Recalls are listed on the CPSC website. No one can sell, offer for sale, manufacture for sale, distribute in commerce or import into the U.S. a banned hazardous substance. Banned hazardous substances are listed in Part 1500 of the CFR. No one may manufacture, import, advertise or sell a consumer product listed in Schedule 2. These prohibited products include baby walkers on wheels, kites with metal parts, sneezing powder, lawn darts with elongated tips, etc. [Act, s. 5] No one may manufacture, import, advertise or sell a consumer product that does not meet the regulations. [Act, s. 6] Regulated products include (this list is not exhaustive): carbonated beverage glass containers carriages and strollers children s jewellery No one may affix to any electrical product an approval label that was not issued for that electrical product or device. [Reg. s.4] No one may use, advertise, display, sell, offer for sale or other disposal any electrical product unless it has been approved in accordance with the Regulation. [Reg., s.5(1)] If a certification or a field evaluation report (by a certifier) requires that a notice addressing safe and proper use be affixed to or provided with the product, no person shall use, advertise, display, sell, or offer for sale the product without the notice. [Reg., s.5(3)] corded window covering products cribs and cradles children s sleepwear 2

Prohibitions (Cont d) No one can fail to comply with specified reporting, record keeping and record access provisions stated in the law (various provisions of 15 USC Section 2068 and referenced provisions). No one can fail to furnish a certificate of conformity (required for regulated products including all children s products). No one can issue a false certificate of conformity. No one can fail to comply with any requirement of Section 14 of the Act (15 USC Section 2053), which relates to third-party testing of children s products and to providing tracking labels on children s products. No one can fail to report a potential substantial product hazard under 15 USC Section 2065 or certain lawsuit settlements under 15 USC Section 2084. No one can sell, offer for sale, manufacture for sale, distribute in commerce or import into the U.S. any consumer product bearing an unauthorized certification mark (such as UL certification, for example). See Section 19 of CPSA (15 USC Section 2068 for other prohibited acts. carpets kettles matches pacifiers tents toys No manufacturer, importer or person may advertise or sell a consumer product that is: the subject of a recall order or is the subject of a voluntary recall in Canada because the product is a danger to human health or safety; a danger to human health or safety. [Act, s. 7 & 8] Danger to human health or safety means any unreasonable hazard existing or potential that is posed by a consumer product during or as a result of its normal or foreseeable use and that may reasonably be expected to cause the death of an individual exposed to it or have an adverse effect on that individual s health including an injury whether or not the death or adverse effect occurs immediately after the exposure to the hazard, and includes any exposure to a consumer product that may reasonably be expected to have a chronic adverse effect on human health. [Act, s. 2] No one may remove a label, tag, seal or warning applied by the ESA to an electrical product without the consent of a Director appointed pursuant to the Act. [Act, s. 113.0.1(3)] No person shall package or label a consumer product in a manner that is false, misleading or deceptive regarding compliance with safety standards, or that could reasonably create an erroneous impression that the product is not a danger to health or safety. No person may advertise or sell a product packaged or labelled this way. [Act, s. 9 & 10] 3

Record- Keeping Requirements Most record keeping requirements are product-specific and contained in the product-specific regulations within Title 16 of the CFR. (For example, manufacturers of durable infant or toddler products must maintain names and contact information of purchasers for six years to facilitate recalls.) Persons who manufacture, import, advertise, sell or test consumer products for commercial purposes must prepare and maintain, for six years, at the person s place of business in Canada or otherwise as prescribed, documents that indicate: No express requirements. Domestic (U.S.) manufacturers and importers of products subject to any CPSC-administered standards must maintain records of test results supporting the general certificate of conformity. The suggested record retention period is three years. The general certificate of conformity must be retained and made available throughout the shipping period of the product. 16 CFR Part 1110. in the case of a retailer, the name and address of the person from whom they obtained the product and the location where and the period during which they sold the product, and for all others, the name and address of the person from whom they obtained the product and to whom they sold it. [s. 13] Companies can be exempted from the requirement to keep these records in Canada. [s. 13] Mandatory Reporting Requirements Reporting Trigger Each manufacturer, distributor or retailer must report to the CPSC upon receipt of information which reasonably supports the conclusion that a consumer product manufactured, distributed or sold by it (as the case may be): fails to comply with an applicable safety standard, regulation or ban; contains a defect which could present a substantial product hazard; or Manufacturers, importers and sellers ( suppliers ) of consumer products for commercial purposes must report to the Minister and the person from whom they got the product, all information within their control regarding incidents within two days after the day on which they become aware of them. [Act. s. 14(2)] Reporting to the Minister means reporting to Health Canada. A manufacturer, wholesaler, importer, product distributor or retailer that becomes aware of a serious electrical incident or accident or defect in the design, construction or functioning of an electrical product or device that affects or is likely to affect the safety of any person or cause damage to property, shall report to the ESA as soon as practicable after becoming aware. [Reg., s.8(1)] creates an unreasonable risk of serious injury or death (regardless of whether a defect has been identified). See Section 15 (15 USC Section 2064). Each manufacturer must report certain lawsuit settlements involving claims of death or grievous bodily injury. See Section 37 (15 USC Section 2084) and implementing regulations for details. 4

Reporting Trigger (Cont d) Other specific reporting requirements apply to specific products, such as balloons, etc. See Title 16 of the CFR for such specific requirements. Reportable Incident General reporting of substantial product hazards is not necessarily triggered by a particular incident, although an incident may trigger such a report, depending on the facts. CPSC rules require reporting of some specific types of incidents: Choking incidents involving marbles, small balls, latex balloons and other small parts if a child died, suffered serious injury, ceased breathing for any length of time or was treated by a medical professional (16 CFR Part 1117). Incidents in which a product defect is alleged to have caused death or grievous bodily injury are presumptively reportable (16 CFR 1115.12(d)). Incident means: (a) an occurrence in Canada or elsewhere that resulted or may reasonably have been expected to result in an individual s death or in serious adverse effects on their health, including a serious injury; (b) a defect or characteristic that may reasonably be expected to result in an individual s death or in serious adverse effects on their health, including a serious injury; (c) incorrect or insufficient information on a label or in instructions or the lack of a label or instructions that may reasonably be expected to result in an individual s death or in serious adverse effects on their health, including a serious injury; or (d) a recall or measure that is initiated for human health or safety reasons by (i) a foreign entity, (ii) a provincial government, (iii) a public body that is established under an Act of the legislature of a province, (iv) an aboriginal government as defined in subsection 13(3) of the Access to Information Act, or (v) an institution of an entity referred to in subparagraphs (ii) to (iv). [Act, s. 14(1)] Serious electrical incident or accident means an electrical incident or accident that, results in death or serious injury to a person, has the potential to cause death or a risk of serious injury to a person, or causes or has the potential to cause substantial property damage. [Regulation, s.1(1)] The ESA Guidelines state that incidents, accidents and defects must be reported to ESA whenever: the severity of actual impact passes the defined threshold for death or serious injury or substantial property damage ; or the nature of the incident, accident or defect means it has the potential to cause death or serious injury or substantial property damage. [ESA Guidelines, Part 6.2] 5

Defect The CPSA does not specifically define defect. CPSC regulations provide the following guidance: [A] defect is a fault, flaw, or irregularity that causes weakness, failure, or inadequacy in form or function. (16 CFR 1115.4). The CCPSA does not specifically define defect, however, HC suggests that [a] defect or characteristic may include a fault, flaw, or irregularity in any step from conception, design, manufacturing and packaging to handling and delivery to the customer that causes weakness, failure or inadequacy in form or function that may reasonably be expected to result in an individual s death or in serious adverse effects on their health. [Draft MR Policy] The Regulation does not define defect, however, the ESA Guidelines define defect as: [a] fault, flaw or irregularity in an electrical product that causes weakness, failure, or inadequacy in form or function of the product in question. [ESA Guidelines, Part 5] When Does the Company Become Aware CPSC rules provide a presumption that the company is aware of information when product safety related information [is] received by an official or employee of a subject firm capable of appreciating the significance of the information. (16 CFR 1115.14(b)). Ordinarily, five days is deemed sufficient for information to reach the CEO or responsible official. A firm may conduct an investigation to evaluate the reportability of information. Ordinarily, 10 days is deemed sufficient to conduct such an investigation. The Draft MR Policy provides that the company becomes aware of an incident when a responsible person becomes aware of an incident involving as consumer product the company supplies in Canada. A responsible person, is the directing mind of an organization, who through the exercise of due diligence, should become aware of an incident. A person may become aware through: direct notification by a consumer, government, NGO, standards body or supplier; The ESA considers a company to have obtained knowledge of a serious incident, accident or defect (become aware) when information regarding a reportable incident is received by an employee or official of the company who may reasonably be expected to be capable of appreciating the significance of that information. [ESA Guidelines, Part 6.11] Sources of such information include: consumer complaints, expert reports, legal actions, service work orders, public reports on product safety, etc. [ESA Guidelines, Part 6.11] receipt of reports from experts, test reports, scientific or epidemiological studies or other relevant information; or other public communication (e.g. news releases, media coverage). [Draft MR Policy] 6

Who Must Report Each manufacturer (which includes importers), distributor and retailer of a consumer product is subject to the reporting requirements and must report after receipt of reportable information unless the firm has actual knowledge that the CPSC has been adequately informed of the defect, failure to comply, or risk. All levels of the supply chain are responsible for reporting to their supplier and to HC upon becoming aware of an incident. This is regardless of how many others have already reported. All product suppliers, including manufacturers, wholesalers, importers, retailers or product distributors must report to ESA when they become aware of a serious electrical incident, accident or defect that is likely to affect the safety of any person or cause property damage. [s.8] A product supplier includes a retailer who sells in Ontario via the internet, and those who sell second hand goods. [ESA Guidelines, Part 6.7] When Report Must Be Delivered The statute specifies that the report is due immediately. See discussion above regarding reasonable time for investigation. A supplier must provide an initial report within two days of becoming aware of an incident (as defined). [Act, s.14(2)] A manufacturer or importer must provide an additional, more formal report within ten days of becoming aware of the incident, or as specified by the Minister. [Act, s.14(3)] The Regulation states that the report must be made as soon as practicable. [ESA Guidelines, s.8(1)] The ESA Guidelines provide that as soon as practicable means that an initial report should be made within 48 hours followed by a follow-up report within 10 business days. [ESA Guidelines, Part 6.11] 7

What Information Must be Reported The report must include substantial information about the product, the hazard, the incidents (if any) in the field, the proposed corrective action (if any) and other information. Specific content requirements for the report are found at 16 CFR Section 1115.13. Information that is not available or known at the time of the initial report can be supplemented later. Within two days suppliers must provide all information in their control regarding any incident related to the product, including incident type, product name or general category, supplier of the product and any measures already taken. [Act, s.14(2)] Within ten days manufacturers or importers must provide a written report containing information about the incident, the product involved in the incident, any products that they manufacture or import that to their knowledge could be involved in a similar incident and any measures they propose be taken with respect to those products. [Act, s.14(3)] The report must include: contact details of the person making the report or the person or firm on whose behalf the report is being made; information that would enable the ESA to identify the product or device; details of the serious electrical incident or accident or the defect, including details of any injury or damage to property or persons; and any other relevant information that is required by the ESA, in a form required by the ESA. [Regulation, s.8(4); ESA Guidelines, Part 6.10] There is an on-line form whose use the ESA requests and encourages. It seeks the following additional information not described above: the product s category, type, description, electrical rating, brand, model, date code, serial numbers, UPC, retail price and approval/certification status; contact details for the product s manufacturer, importer and all companies in the distribution chain; the number of products involved and when production, importation and distribution began and ended; whether the electrical product caused or could cause an electrical shock or personal injury (e.g. because of exposed live wires); 8

What Information Must be Reported (Cont d) whether the electrical product was involved in overheating causing or possibly causing property damage; whether the product or one of its components failed to perform its primary safety function (e.g., smoke detector, CO detector); whether the person is aware of other similar incidents involving the product that may be a warning sign of more serious problems; and details of any corrective actions and notification measures taken. Report Format There is an on-line form that may be used and submitted electronically, which is encouraged. Otherwise, the format is not specified as long as the required information is provided. Reports can be mailed or faxed if not provided on-line. HC has developed a draft report form that can be submitted by website, e-mail, fax or mail. A report may be made by: telephone, fax, online, or by any other means that brings it to the attention of the ESA. [Regulation, s.8(3)] That said, they request and encourage the use of their on-line reporting form. Reporting Alternatives None. The CCPSA gives the Minister discretion to specify an alternative to the 10 day reporting requirement. [Act, s. 14(3)]. None. 9

Treatment of Confidential Business Information ( CBI ) Information submitted under Section 15 of the Consumer Product Safety Act is confidential pursuant to Section 6(b) (5) of the Act unless the Commission has issued a complaint under Section 15, or the Commission has accepted a voluntary recall involving the product, or the submitter agrees to public release of information from the report, or the Commission publishes a finding that public health and safety requires disclosure of the information after notice to the submitter. These protections do not apply to information that is found to be imminently hazardous or that is believed by the Commission to be in violation of an applicable rule or standard. CBI is defined in the Act as business information that is not publicly available; in respect of which reasonable measures have been taken to ensure it remains so; that has actual or potential economic value to the company whose information it is or their competitors; and whose disclosure would result in material financial loss to the company or gain to a competitor. The Minister may disclose CBI in relation to a consumer product to a person or a government that carries out functions relating to the protection of human health or safety or the environment without notice if the recipient agrees in writing to maintain the confidentiality of the information and to use it only for the purpose of carrying out those functions. [Act, s. 16] The Minister may, without the consent of the person to whose business or affairs the information relates and without notifying that person beforehand, disclose [to anyone] CBI about a consumer product that is a serious and imminent danger to human health or safety or the environment, if the disclosure of the information is essential to address the danger. If there is such disclosure, the Minister must notify the person to whose business or affairs the information relates within one business day of the disclosure. [Act, s. 17] A Director appointed by the ESA may publish or disclose documents or information obtained in the exercise of powers under the Act [Act, s. 113.15(7)]. An inspector may only disclose documents or information collected in the course of compliance inspections if disclosure is for the purpose of carrying out the inspectors duties under the Act or if the inspector is compelled to appear as a witness in a civil proceeding in respect of the documents or information [Act, s. 113.15]. ESA s privacy policy states that ESA shall refuse to disclose records that constitute: (ii) records containing commercial, proprietary, technical or financial information of ESA or any person or business that has supplied records to ESA in confidence, if disclosure would result in undue loss or gain, prejudice a competitive position or interfere with contractual or other negotiations. [ESA Guidelines, Part 6.6] Recall Powers The Commission can order a recall if it concludes that a product presents a substantial product hazard. If the Minister of Health believes on reasonable grounds that a consumer product is a danger to human health or safety, he or she may order a person who manufactures, imports or sells the product for commercial purposes to recall it. [s. 31(1)] The ESA has broad powers to order that corrective measures be taken, including product recalls. The Act gives the ESA the power to issue such orders relating to work to be done, or the removal of things used, in the installation, removal, alteration, repair, protection, connection or disconnection of [electrical products] as the [ESA] considers necessary or advisable for the safety of persons or the protection of property. [Act, s. 113(11)] 10

Other Agency Powers The Commission has broad investigatory powers. Its staff can enter places of business (factories, warehouses, retail establishments, for example) to inspect products or business records. It can order any manufacturer, private labeller or distributor of a consumer product to maintain records or make reports to determine compliance with the Act. The Commission can require disclosure of the name and address of the actual manufacturer, retailer or distributor (including subcontractors) of a consumer product. The Commission can intercept samples of consumer products being offered for import (through the cooperation of the U.S. Customs Service). The Commission may authorize the export of noncompliant consumer products; absent such authorization, the goods may not be exported if they were ever offered for sale in the US. The Commission may approve third-party testing labs to evaluate compliance with safety standards, and may revoke approvals of such facilities. The Minister may order any person who manufactures or imports a consumer product for commercial purposes to conduct tests or studies or compile information necessary to verify compliance with the Act and regulations. [Act, s. 12] Inspectors appointed under the Act have broad powers to do things for purposes of verifying compliance or preventing non-compliance. They include entering establishments and conveyances, examining or testing products, seizing and detaining articles, taking documents, downloading computer information, taking photos and inspecting conveyances. [Act, s. 21] The Minister may issue orders to stop the manufacturing, importation, packaging, storing, advertising, selling, labelling, testing or transportation of a consumer product. [Act, s. 32(1)-(2)] The Minister may order any measure he or she considers necessary to remedy non-compliance with the Act or regulations. [Act, s. 32(1)-(2)] The ESA s power to order corrective measures is very broad. In addition to recalls, other corrective measures that the ESA may order include, but are not limited to: design or manufacturing changes, repairs, warning label changes and public notification [Act, s. 113(11); ESA Guidelines, Part 8.1] The ESA may require a supplier, certification body, field evaluation agency or other person to give notice to the public of a risk or defect in an electrical product or of the occurrence of a serious electrical incident. [Reg., s.9(1)] The ESA may also issue such notice itself although it must give the supplier, certification body or field agency an opportunity to comment on the notice. [Reg, s.9(3)] Inspectors appointed pursuant to the Act may enter any land or premises (except private dwellings) for the purpose of verifying compliance with the Act and may examine documents, records, electrical products or other things relevant to the inspection. They may remove documents, records or data storage disks for the purpose 11

Other Agency Powers (Cont d) The Minister may only make such orders if there is a noncompliance with an order made under section 12 (to provide information); the Minister has made an order under section 31 with respect to the product (to recall); or the Minister believes on reasonable grounds that the product is the subject of a measure or recall undertaken voluntarily by the manufacturer or importer or there is a contravention of the CCPSA in relation to the product. [Act, s.32(1)-(2)] of making a copy, but are required to return the originals promptly [Act, s. 113.13] In the course of an inspection, inspectors may seize or order the preservation of any electrical product which they believe on reasonable grounds not to be compliant with the Act or Regulations. [Act, s. 113.13.1] The ESA may suspend or revoke the approval of an electrical product if, it is not manufactured in accordance with all standards of design and construction and all terms and conditions set out in the certification or field evaluation report; the ESA finds the product to be unduly hazardous to persons or property; or an examination by the ESA of the product or the certification or field evaluation report for the product shows it does not comply with all applicable standards. [Reg., s.6(1)] Post-Recall Reporting Manufacturers must report monthly on recall completion data and related information. Reports must continue until the case file is closed by CPSC staff. Not currently addressed although HC s practice is to request the entity effecting a recall to complete an on-line Recall Effectiveness Form 60 days after implementing the recall. The entity effecting the recall or taking other corrective measures ordered by the ESA must provide effectiveness reports to the ESA containing the following information: the circumstances leading to corrective action; the action taken; the results (quantity or percentage of stock returned, corrected, outstanding, etc.); confirmation, where practicable, that customers or consumers have received corrective action notification; the method of destruction or disposal of recalled goods; and the action proposed to be implemented in the future to prevent a recurrence of the problem. [ESA Guidelines, Part 8.6.6] 12

Offences & Penalties Any person who violates the CPSA or a regulation promulgated thereunder is liable for civil penalties of as much as $100,000 per violation up to a maximum of $15 million for a related series of violations. A knowing and wilful violation of the Act can result in imprisonment for a term of up to five years for officers, directors or agents. A violation of the Act can result in criminal fines (the size of which is determined by reference to another statute and depends on the company s compliance status under other federal laws). Also see Prohibitions section above for more details about prohibited acts. Offences A person who contravenes a provision of the CCPSA (other than ss. 8, 10, 11 or 20), the regulations, or an order made under the Act, is guilty of an offence and is liable on conviction on indictment, to a fine of not more than $5,000,000 or to imprisonment for a term of not more than two years or to both; or on summary conviction, for a first offence, to a fine of not more than $250,000 or to imprisonment for a term of not more than six months or to both and, for a subsequent offence, to a fine of not more than $500,000 or to imprisonment for a term of not more than 18 months or to both. [Act, s.41(1)] A person who contravenes section 8, 10, 11 (the prohibition sections see above) or 20 (obstructing an inspector) or who knowingly or recklessly contravenes the Act, regulations or an order made under the Act is guilty of an offence and is liable A corporation that fails to comply with an order made under s. 113(11) (recall or corrective measures) or with the Act or Regulations is guilty of an offence and is liable for a fine not exceeding $1,000,000. An individual who fails to comply is liable for a fine of up to $50,000 or to imprisonment for a term of not more than one year, or to both, and for a further fine of up to $5,000 for each day of continued non-compliance [Act, s. 113(12)-(13); s. 113.20(1)-(2)]. Directors and officers of a corporation are liable for the fine applicable to individuals if they fail to carry out their duty to take all reasonable care to ensure that the corporation complies with the Act or the Regulations [Act, s. 113.20(3)- (4)]. Each day an offence continues constitutes a separate offence. [Act, 113.20(5)] on conviction on indictment, to a fine in an amount that is at the discretion of the court or to imprisonment for a term of not more than five years or to both; or on summary conviction, for a first offence, to a fine of not more than $500,000 or to imprisonment for a term of not more than 18 months or to both and, for a subsequent offence, to a fine of not more than $1,000,000 or to imprisonment for a term of not more than two years or to both. [Act, s. 41(3)] If a company commits an offence, directors, officers, agents or mandataries who directed, authorized, assented to, acquiesced in or participated in the commission of the offence are parties and liable on conviction to the punishment provided for by this Act, even if the company is not prosecuted for the offence. [Act, s. 42] 13

Offences & Penalties (Cont d) Proof that an employee, agent or mandatary of an accused committed an offence is proof of the offence even if the former are not identified or prosecuted. [Act, s. 43] Each day an offence continues constitutes a separate offence. [Act, s. 44] Administrative Monetary Penalties [ AMPs ] In addition to creating offences, the CCPSA creates an AMP regime pursuant to which every person who contravenes an order made by the Minister under ss. 31 or 32 (recall orders or other measures ) commits a violation and is liable to a penalty of up to $25,000. The quantum of the penalty will vary depending on whether the violation is classified as minor, serious or very serious. [Act, s. 49 & 50] Notices of violation may be issued by persons authorized to do so under the regulations (not yet published) [Act, s. 51(a)]. Instead of paying the penalty, a person named in a notice of violation may enter into a compliance agreement with the Minister (in the case of a penalty of $5,000 or more) or request a written review by the Minister, failing which the person is deemed to have committed the violation. [Act, s. 53] The CCPSA provides that no further review of the Minister s decision is available. Recourse to the courts for further review will therefore be very limited. [Act, s. 57(3)] Each day a violation continues constitutes a separate violation. [Act, s. 63] No due diligence or reasonable and honest belief defences are available with respect to AMPs. [Act, s. 59] If a company commits a violation, its directors, officers, agents or mandataries who directed, authorized, assented to, acquiesced in or participated in the commission of the violation are liable for the violation regardless of whether the company is proceeded against with respect to the violation. [Act, s. 61] 14

Offences & Penalties (Cont d) For Further Information On U.S. Requirements, contact: Erika Jones, Partner Mayer Brown LLP 1999 K Street, N.W. Washington, DC 20006-1101, USA Companies are liable for violations committed by their employees, agents or mandataries acting in the course of their employment, regardless of whether the latter are proceeded against with respect to the violation. [s. 62] The Minister may register a certificate in Federal Court certifying the unpaid amount of a penalty, which once registered may be enforced as if it were a judgment. [Act, s. 58] Liability for offences and AMPs is not concurrent. If an act or omission can be proceeded against as either a violation or an offence, proceeding in one manner precludes proceeding in the other [Act s. 69]. On Canadian Requirements, contact: Teresa Dufort, Partner McMillan LLP Brookfield Place, 181 Bay Street Suite 4400 Toronto, ON, M5J 2T3 Phone: 202.263.3232 Email: ejones@mayerbrown.com Phone: 416.865.7145 Email: teresa.dufort@mcmillan.ca 15