Canada's New Product Safety Law Takes Effect

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The Canada Consumer Product Safety Act ("CCPSA"), which received Royal Assent on December 15, 2010, came into force on June 20, 2011. Health Canada is responsible for administering the CCPSA, which replaces Schedule I of Canada's Hazardous Products Act. The law is intended to align Canada's product safety laws with those of the United States and European Union. The CCPSA substantially broadens the scope of Canada's product safety regime, applying to any consumer product, including its packaging. Existing regulations for specific consumer products (e.g., toys and jewelry) will continue to be in force. Below is a summary of key provisions and issues related to the CCPSA.

Overview of the CCPSA

Product Recalls. General recall authority, previously lacking for the Health Minister, has been granted through the CCPSA and can be invoked if a product is a danger to human health or safety, meaning that the product poses an unreasonable hazard during normal or foreseeable use that could cause death or adverse health effects, including injury. Despite this recall authority, it is expected that most recalls will remain voluntary, similar to the situation in both the U.S. and the EU. Health Canada suggests voluntary recalls be initiated when the manufacturer becomes aware of a defect that makes a product unsafe, an injury or death to consumers caused by an unsafe product, or a product that does not comply with legislative requirements. While a timeframe is not provided to submit this information, Health Canada may, on its own initiative, require a manufacturer to recall a product.

Prior to enactment of the CCPSA, companies determined whether a product subject to a recall in the U.S. was distributed in Canada, and based on a Memorandum of Understanding, the CPSC and Health Canada would share that information. The CCPSA adds a new step to the recall process for products sold in the U.S. and Canada by requiring a company to file a report with both Health Canada and CPSC, adding time and expense to a product recall.

Mandatory Reporting Obligations. Similar to the U.S. Consumer Product Safety Act ("CPSA"), the CCPSA requires manufacturers, importers and sellers of consumer products to report "incidents" involving their products within two days of learning about the incident, including product recalls, regardless of whether the event or recall took place in or outside of Canada. A more detailed final report must be submitted to Health Canada within ten days. The process is similar to the "initial" and "full" 15(b) reports that must be submitted to the CPSC. Guidelines on the reporting requirements have been issued, and list death, serious injury and choking as the types of injuries that require reporting, whereas reporting in the U.S. is predicated on a determination that a product either fails to meet a mandatory standard or contains a defect that creates a substantial risk of injury.

Confidential Information. The CCPSA grants the Minister of Health authority to disclose personal and confidential business information obtained, for example, through incident reports and mandatory reporting obligations under certain circumstances. Confidential information may be released without consent or notification if: (1) The information relates to "a serious and imminent danger to human health or safety or the environment, [and] if the disclosure of the information is essential to address the danger"; or (2) if the information is provided "to a person [including corporations, trade associations etc.] or a government that carries out functions relating to the protection of human health or safety or the environment," if the receiving party "agrees in writing to maintain the confidentiality of the information and to use it only for the purpose of carrying out those functions."

The ability to release confidential information without notice and consent is in stark contrast to Section 6 of the CPSA, which bans release of such information in all circumstances. It is possible that plaintiff's lawyers, environmental groups, trade associations, and the like will pursue confidential information from Health Canada under the auspices of their public health and safety functions.

Document Retention. The CCPSA requires those who manufacture, import, advertise, sell or test a consumer product to prepare and maintain certain records. Retailers are required to prepare and maintain records that show the name and address of the person from whom they obtained the product, the location where they sold the product, and the period during which they sold the product. Those who manufacture, import into Canada, advertise, sell or test a consumer product must keep records that indicate the name and address of the person from whom they obtained the product and/or the person to whom they sold it. All records must be kept for at least six years at the entities' place of business, and Health Canada may request the documents.

Increased Enforcement Powers. The CCPSA grants inspectors the power to enter any business without a warrant, and seize, inspect or examine a product to verify its compliance with the Act. The Minister of Health may also order a product be tested, or require the production of test results and/or studies on a product, to show compliance with the CCPSA and its associated regulations.

Fines and Penalties. Individuals who fail to comply with the CCPSA's provisions, including complicit company directors, officers, and agents, can have either criminal or civil administrative monetary penalties levied upon them. According to Health Canada's guidance document, penalties will typically range from $1,000 to $25,000 per day, based on the seriousness of the offense, but can be as high as $5,000,000 or include imprisonment for up to two years.

Deceptive Marketing. Packaging and labeling of a product may not contain false, misleading, or deceptive language to either create an erroneous impression that the product is not a danger to human health or safety or is in compliance with applicable safety standards and regulations.

Conclusion

The CCPSA substantially alters the product safety landscape in Canada. It follows in many areas with US policies by, for example, requiring incident reporting and establishing recall authority to the lead federal agency. However, the change in law creates new burdens for manufacturers that sell their products in the US and Canada. For example, in some cases, incident reports may need to be submitted to both the CPSC and Health Canada, and in others they may only need to be submitted to one agency. Also, voluntary recalls may require both CPSC and Health Canada be involved, and of course, the recall could trigger a reporting obligation in both, or either, countries as well.

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