Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 27 - Evidence - Meeting of April 23, 2015
OTTAWA, Thursday, April 23, 2015
The Standing Senate Committee on Agriculture and Forestry met this day at 8
a.m., to consider Health Canada's user fee proposal respecting pesticide cost
Senator Claudette Tardif (Deputy Chair) in the chair.
The Deputy Chair: I welcome you to this meeting of the Standing Senate
Committee on Agriculture and Forestry. I am Senator Claudette Tardif from
Alberta, deputy chair of the committee. I would like to start by asking the
senators to introduce themselves.
Senator Moore: Wilfred Moore from Nova Scotia.
Senator Enverga: Tobias Enverga, Ontario.
Senator Maltais: I am Senator Ghislain Maltais from Quebec.
Senator Oh: Senator Victor Oh from Ontario.
Senator Fortin-Duplessis: I am Senator Suzanne Fortin-Duplessis from
Senator Unger: Betty Unger from Alberta.
Senator Dagenais: I am Senator Jean-Guy Dagenais from Quebec.
The Deputy Chair: Today, the committee will examine Health Canada's
user fee proposal respecting pesticide cost recovery, pursuant to the User Fees
Act, S.C. 2004, c. 6, subsection 4(2). Pursuant to subsection 4(4) of the User
Fees Act, the proposal tabled in the Senate was referred to our committee on
Thursday, April 2, 2015.
Section 5 of the User Fees Act allows for the committee to examine the
proposed user fee and submit a report, if it wishes, to the Senate containing
its recommendation as to the user fee in question. The Senate may then pass a
resolution approving, rejecting or amending the recommendation made by the
committee pursuant to section 5 of the User Fees Act.
Honourable senators, we are pleased to have with us officials from Health
Canada's Pest Management Regulatory Agency: Richard Aucoin, Executive Director
and Jason Flint, Acting Director General, Policy and Regulatory Affairs
Thank you both for accepting our invitation to appear. I now invite you to
make your presentation, followed by a question period.
Richard Aucoin, Executive Director, Pest Management Regulatory Agency,
Health Canada: Honourable senators, I am the Executive Director of Health
Canada's Pest Management Regulatory Agency. I am very pleased to be here today
with Jason Flint, my director of policy and regulatory affairs, to discuss the
proposed revisions to the cost recovery regime for pesticides, under the User
As the regulators of pesticides, we are responsible for managing the risks
associated with a broad spectrum of products, from consumer insect repellents to
agricultural and forestry chemicals, to products used in aquaculture. Pesticides
are critical to the health and well-being of many Canadians and to the
profitability of many sectors of the economy — in particular, the agriculture
sector. Agriculture is one of the largest users of pesticides, and its needs
often drive the development and introduction of new pesticides.
As regulators, we are keenly aware of both the risks and the value of these
products to Canadian agriculture.
Madam Chair, when it comes to pesticides, Canada, as you can probably
appreciate, is a relatively small player representing only about 3 per cent of
the global market. Canadian growers have traditionally found it difficult to
gain access to new technologies for uses other than larger acreage crops like
grains and oil seeds. However, in the last few years that has changed
significantly. More and more, we are seeing products being registered in Canada
at the same time as the major markets like the United States and the European
Union, and with the same use patterns. This is the result of a much more global
regulatory system, an achievement of which we at PMRA are particularly proud to
have played a significant role.
Canada has long been regarded as a leader in its risk-based approach to
pesticide regulation and recognized by stakeholders for its commitment to
regulatory alignment and international regulatory cooperation. This year marks
20 years since the creation of PMRA within Health Canada, and the changes that
have occurred, we think, within that time are quite remarkable. We have gone
from piloting joint review and work-sharing approaches with regulators, with the
United States, to conducting international joint reviews with regulators, with
multiple countries around the world, as a primary course of business.
While growers are still looking for new ways to address ever-changing pest
problems and challenges in agriculture, their focus has shifted from not only
gaining access to the new technologies but also to the realization that access
to export markets may be hindered if those markets do not accept that technology
or do not accept pesticide residues on those commodities entering those markets.
Recently, PMRA has begun to work more closely with agriculture and Agri-Food
Canada to identify which pesticide-specific trade barriers are of highest
priority and of significance to Canadian exporters. We hope to provide a lot
more specialized scientific knowledge and expertise, as needed, to assist in
resolving some of these market access irritants. We are also using our
regulatory expertise to contribute to international food safety standards
setting through the Codex Alimentarius Committee on Pesticide Residues and are
looking to do much more work bilaterally with foreign jurisdictions to help
resolve some of these differences in the maximum residue level standards where
they create barriers to the free movement of safe and healthy food.
PMRA's increasingly important role in international regulatory cooperation on
pesticide and food commodity safety has been resource intensive and will
continue to require active leadership and participation. Global regulatory
alignment of our policies and approaches will be essential to meeting our broad
health and safety objectives in the future.
Stakeholders have been strong in their support for these efforts and have
supported the need to continue to modernize our cost recovery regime, as a
potential means of supporting those objectives. That brings us here today.
I will now like to turn the floor to Jason Flint, who will provide some
background on the pesticide cost recovery proposal currently before the
Jason Flint, A/Director General, Policy and Regulatory Affairs Division,
Pest Management Regulatory Agency, Health Canada: The current regulations
prescribing fees for processing applications and supporting the regulatory
system were introduced in 1997 and have not been changed in the last 18 years.
As you can imagine, the complexity and volume of work associated with pesticide
regulatory activities and their related costs have increased over those years.
We hope that the committee is supportive of the changes being proposed.
Four years ago when PMRA started to develop this proposal, we began with a
detailed activity-based costing of the various pesticide-related regulatory
activities undertaken by the department. We also heavily engaged stakeholders in
discussions about the pesticide regulatory system and their views on how it was
functioning. We spoke to a variety of stakeholders, not only the pesticide
manufacturers that pay the fees. We spoke to academics and NGOs as well as
agricultural producer groups and other pesticide users.
Some of what we heard in those discussions served to reinforce many of our
efforts over the years. We received many congratulatory comments on our ability
to meet our published performance standards for processing regulatory
applications from industry. We also received lots of support for our
international regulatory cooperation efforts, through the OECD Pesticide
Programme, the NAFTA Technical Working Group on Pesticides and more recently
through the Regulatory Cooperation Council Joint Action Plan. Our continued
efforts in global joint reviews were of significant interest.
Stakeholders recognized the potential impact on Canadian agricultural exports
of pesticide-related international food safety standards and recommended that
PMRA step up its work in supporting Canadian trade objectives through
participation in the development of these standards.
Stakeholders also urge PMRA to enhance its involvement in other international
efforts to align regulatory science policies through international bodies that I
mentioned earlier and recommended that several business improvements be
undertaken mostly related to information technology and public outreach.
Of note, stakeholders were quite adamant that funding enhancements to these
priority activities need to be considered in parallel with any possible or
potential revisions to PMRA fees.
The proposal that was tabled on April 2 was developed through a series of
consultations with both fee-payers and broader stakeholder community, including
the Minister of Health's Pest Management Regulatory Council. The majority of
fees related to applications from industry were established at approximately 30
per cent of the full cost to the department of providing the service. The fees
were benchmarked against similar fees in other jurisdictions and adjustments
were made to reduce some fees to address the differences. Fee mitigation is also
provided to support small business and compensate for the Canadian market size.
The proposal is affordable by the industry and will not significantly impact key
pesticide users such as agricultural producers. We built upon existing structure
with these fees adjusted as described and a small number of changes, either
additions or removals, in order to better reflect the work that PMRA currently
PMRA's current budget allocation is approximately $43 million, including
about $5.5 million in revenue from fees. If approved, the new fee structure
should generate an additional $4.5 million to $5 million in revenue.
Stakeholders have been supportive of the proposal but with the condition that
any public resources freed up by the increased fees are reinvested back into
PMRA in order to address the priorities they have identified and are not offset
by reductions to PMRA's budget.
In conclusion, Madam Chair, we believe the new cost recovery regime for
pesticide regulation is reasonable, based on solid evidence, and affordable. We
also believe that increased resources could help address the priorities of both
government and stakeholders.
This modernized cost recovery regime will help us meet the needs of all
Canadians through a pesticide regulatory system that continues to prevent
unacceptable risks to human health and the environment, and is modern, efficient
and economically sustainable.
The Deputy Chair: Thank you very much, gentlemen, for your interesting
and succinct presentation. We will now move on to questions from senators. I
will start with Senator Maltais, followed by Senator Enverga.
Senator Maltais: Thank you, Madam Chair. Welcome, gentlemen. We were
provided with a comparative table of costs. It is a bit difficult to understand,
as we are not experts on cost recovery. Do you have the tables? I assume you do.
They provide proposed fees, current fees and average costs to Canada. I see that
the differences are large. For instance, let's look at the basic application fee
for label review and/or processing. The proposed fee is $1,133, the current fee
is $262 and the average cost to Canada is $3,777. Some of the differences are
difficult to understand, and I would like you to explain those differences and
how it all works.
Mr. Aucoin: Thank you for the question, senator. The fees were
originally established in 1996-97, I believe, so we have a long period of time
during which we have been operating under that fee. The work has become
significantly more complex and the science has evolved substantially over that
period of time. The types of information and studies that we now have to take
into consideration before we make regulatory decisions have evolved and expanded
substantially. We recognize that it has increased substantially not only from a
cost-of-living perspective but also in regard to the actual nature of the work.
We can no longer do anything in a quick and cursory manner when we talk about
pesticides. They are by nature hazardous chemicals. So we need to be very
careful on how we make regulatory decisions around them. As Jason mentioned
earlier, we did an extensive costing exercise to understand what it actually
costs us today in the 2000s to do that work. We came up with that new cost. We
took a number of principles into consideration, as Jason mentioned. For example,
it was important to understand the impact of those changes on industry, in
particular small business and manufacturers, and whether it would be passed on
to the user community. We looked carefully at each change in fees and what the
impact of that would be potentially.
We also looked at how those kinds of activities were carried out in other
major comparative countries such as the United States, Australia and the U.K. We
tried to benchmark ourselves against those countries, in particular the United
States, which, as you know, is our major trading partner, to make sure that when
the manufacturers come in with new technologies, they consider both the Canadian
needs of our producers as well as the U.S. producers. We wanted to ensure that
we had a regulatory environment and a cost of those regulatory activities that
was not too far off from what they would expect in the United States.
We have a much smaller market, so we established fees that we think are about
30 per cent of the cost of doing the work. That benchmarked us comparably to
other jurisdictions around the world without essentially costing us out of the
market, if you will. If we made our fees too high, it would potentially be a
disincentive to industry to enter the Canadian market.
Senator Maltais: Just to make sure I understood correctly, the fees
have not increased in 18 years, right?
Mr. Aucoin: Yes.
Senator Maltais: Today, after 17 years, the pesticide issue has
changed a lot; it has become a lot more important, complex and international in
scope. It also costs a bit more, which is perfectly normal. What kind of an
impact does that evolution have on the consumer — not on the individual, but
rather on grain producers such as soy, corn or wheat producers? What kind of an
impact can it have on their costs?
Mr. Aucoin: I will turn the question over to Jason Flint, who has done
the bulk of the work directly with stakeholder groups in consultation looking at
potential impacts. Maybe I will ask him to respond to the question.
Mr. Flint: The cost of the fees that we put into the regulatory system
is not the most significant cost with respect to bringing a pesticide product to
market. We conducted some of the cost-benefit analysis and found that the cost
that could be passed on to the consumer, or in this case the agriculture
producer, was in the neighbourhood of 0.1 per cent. For the farmer, we're really
talking pennies per acre for the majority of the products that they're using so
it shouldn't have a significant impact on their bottom line.
Senator Maltais: Thank you, Mr. Flint. I have one last quick question.
Is Health Canada working with you on registering new pesticides, and on
evaluating those that have been removed from the market, future pesticides, and
pesticides registered by companies and pesticide producers, as well as by
farming associations? Does Health Canada have a say in that file to ensure
compliance when it comes to the health of Canadians and, of course, the
requirements of those to whom our products are exported?
Mr. Aucoin: PMRA is essentially a branch of Health Canada. We are part
of the department and our primary mandate is, in fact, both health and
environmental protection. That's our primary mandate. All the scientific reviews
and studies and work we do in support of regulatory decisions have that primary
mandate under the Pest Control Products Act front and centre. We work closely
with our stakeholders. As you can appreciate, pesticides are important to the
agricultural sector, so we work closely with the agriculture department and with
all agricultural stakeholder associations and groups. We are integrated within
the department in ensuring that we do the risk-assessment work.
Senator Enverga: Thank you for the presentation. In a study of
agricultural innovation, some witnesses talked about PMRA's efforts to harmonize
the process for new products internationally. For instance, PMRA is part of the
NAFTA Technical Working Group on Pesticides. The PMRA also works with the
Organisation for Economic Co- operation and Development's Working Group on
Pesticides, as well as the Regulatory Cooperation Council. My question is: How
will the increased revenues from higher user fees help the PMRA to pursue its
efforts towards international harmonization?
Mr. Aucoin: One of our greatest successes at PMRA has been the
achievements we have had in both contributing to and supporting, I suppose, the
regulatory alignment of the way pesticides are reviewed and examined around the
world. We started off being very active in the NAFTA technical working group and
have, for many years, worked closely with the U.S. EPA and our colleagues in
Mexico to try to not just align the work we're doing but also to share the
workload amongst the different countries.
We then took that practice over to the OECD and are very active today in OECD
in doing joint work-sharing and global joint reviews amongst many different
countries around the world. The benefits to us are certainly that we get access
to the best science in the world when we do that. We also make sure that
Canadian producers have the best opportunities for access to new technologies as
they're introduced globally.
This is the kind of work we do now. But in the future we see that we have to
do even more on that. We have to continue to expand our efforts globally to make
sure that Canadians have access to that science and that the users of pesticides
are at the table when some of these new technologies are being discussed by some
of these global manufacturers and there are discussions about where and when to
introduce those technologies into those countries.
Canada has a big leadership role in the OECD right now, in the working group
on pesticides. We need to maintain that effort, and that's one area that we need
to continue to support with cost recovery revenue in the future. A second very
important area is the work we do on developing food safety standards. Pesticide
residues on food commodities, as I indicated earlier, is an area now where
Canada is realizing that, even though we have, through these kind of OECD and
NAFTA working groups, really substantially increased the access of Canadian
growers to new technologies as they have come in — we have facilitated a lot of
that work — we have to do some of this work in foreign markets as well because
some of these pesticides and some of these pesticide residue levels may or may
not be accepted in foreign jurisdictions. That can hinder Canadian agricultural
That's another key area that is supported by stakeholders. With this
cost-recovery proposal, we will put additional effort into doing what we can, at
least, to provide specialized expertise to departments like Agriculture Canada
that are trying to advance market access for Canadian producers.
Senator Enverga: As a follow-up to that, it looks like it is important
for PMRA to reinvest their increased revenues gathered from these higher fees. I
want to know what additional activities PMRA has planned in order to better
serve the stakeholders in this sector.
Mr. Flint: Ms. Richard already started to discuss the concept of
supporting international trade and addressing trade barriers, particularly in
relation to pesticide residues on food. That was one area where stakeholders
said they really wanted to see some investment.
The second area is the alignment of science and policy approaches, so a lot
of the work we have done through the OECD in the past, again, enhancing that,
particularly as part of the global joint reviews. That's one of the areas where
we are really finding we have worked for many years to align the requirements.
Now, when a joint review is done, it is done based on the same data package.
Everybody is looking at the same studies. If it comes to Canada, it is also
coming to the European Union, to the U.S., possibly to Mexico or China or other
countries at the same time to be looked at.
As you are evaluating this, you start to see there are still some differences
potentially in the way you are looking at things, or in the approaches or
policies that you have in the different countries where there are some slight
differences. That is an ideal opportunity, at that point, when you are
participating in these global joint reviews to say, "Now, we need to look and
see why there are differences. Do there need to be differences? Should we be
adopting a different approach based on what other countries are doing?" So
investing in these areas where these differences may still exist.
The third large area that we're looking to invest in is around our business
practices. The majority of our performance standards, for example, are already
aligned with other jurisdictions around the world.
There's a couple, though, that were a little bit longer, and, with the
increased fees, they wanted to see some shortened performance standards. So we
were looking at shortening a couple of performance standards.
Also, we need to renew the electronic infrastructure that we have. As you can
imagine, the submissions that we receive are quite large, and so they're all
electronic now. For the last 10 years, at least, we have been receiving all of
our submissions electronically. That system needs to be updated and also made
more compatible with working with other countries internationally. If you are
working on a package that has between 10 and 30,000 pages of scientific studies
in it and you are communicating back and forth with foreign regulators, you want
to make sure that you have a system that supports that. We're looking at doing
some investments there.
The last area where we were asked to do some additional investment in is
around outreach, so making sure that the Canadian public and stakeholders have a
better understanding of what it is we're doing and the decisions we're making
and making sure that we're not only transparent but clear and that the
information we have is accessible to Canadians.
Those are the significant areas that we were asked to make investments in.
Senator Moore: Mr. Flint, I want to make sure of the numbers here. I
think you said the PMRA currently brings in $43 million a year in fees, or is
that your budget?
Mr. Flint: That's the total budget.
Senator Moore: What do you bring in annually now in fees?
Mr. Flint: About 8.5 on average; 8.5 million of that 43 is from
revenue from fees.
Senator Moore: If this proposed increase goes ahead, it will bring in
an extra five?
Mr. Flint: Four and a half to five, yes.
Senator Moore: So you are looking for two things here, as I read it.
One is the increased application fees as per the tables that are attached to the
brief. Second, you want to introduce an annual fee adjustment.
Mr. Flint: Yes.
Senator Moore: Right, so the two things. There is one thing I don't
understand, and maybe you can explain this to me. I look at this summary, which
I think your office prepared. It talks about PMRA seeking authority to re-spend
and, down below, that the increased fees will be reinvested. What do you mean by
"re-spend"? If you get the money, you are going to spend it on what you say.
What kind of a word is "re-spend"? I have never heard of that before. You can't
spend money twice, the same dollar; it can't be done.
Mr. Aucoin: That's a good point.
Senator Moore: What is that? And "re-invest"? This is one fee.
Mr. Aucoin: As you can appreciate, as part of the process, we will be
seeking the authorities to re-spend these revenues. That is, normally —
Senator Moore: You are seeking the authority to spend them. You are
going to get the money from these people who apply and so on and the fee-payers,
and you are going to take that money and spend it on these different things you
Mr. Aucoin: Right. That's correct. As you can appreciate, the fees
would normally accrue to the Crown, and so there is a process for us to go and
seek the authorities necessary to have those fees not go directly to the Crown
but be, in fact, spent, or re-spent, by us.
Senator Moore: I just like to keep this stuff so that taxpayers
understand where the money is going. "Re-spending" is not a word that you hear
in the normal course of business.
With regard to the annual fee adjustment that you are seeking, based on a
five-year weighted average of public service wage adjustments, what five years?
Mr. Flint: That would have been not last year, the year before and the
previous five years. A large portion of our cost comes from salaries and, of
course, it was fairly comparable with the general cost of living increase across
Senator Moore: So the five years ending with the 2013-14 fiscal year.
Mr. Flint: Yes.
Senator Moore: I may be wrong, but it seems to me that that period we
had a year or so when the CPI increase was nominal, if anything. So I don't know
about this 2 per cent. I don't want to support something that's inflationary.
Have you got those numbers and could you share those with the clerk, so we can
have the base of that figure?
Mr. Flint: Yes, we can show you those numbers.
Senator Moore: You mentioned that Canada has 3 per cent of the global
market of pesticides. Who are the big players internationally and what
percentage do they have?
Mr. Aucoin: Certainly, the United States is probably the largest
market. China and — I think Brazil is probably one of the biggest players in the
pesticide industry right now. They have had a huge surge in their agricultural
production over the last number of years. They're a really big player.
Senator Moore: If you don't have those figures, could you send those
to the clerk as well? I'd like to know where we stand and who the big players
are by percentage. Do you have those figures here today or can you send them?
Mr. Flint: Roughly the U.S. is about a third and the European Union is
about a third. They're the two largest players with respect to the pesticide
Senator Moore: Okay. When you conducted your Canada-wide consultations
through the Health Canada website, did you hold any public meetings?
Mr. Flint: We had the document that went out. We didn't hold meetings
with the public more broadly, like town halls or anything like that. But we held
meetings with different groups of stakeholders and made webinars available. We
would do things over the Internet so people could participate if they wished.
Senator Moore: You said you received comments from only seven
stakeholders. I'd like to know who they were, what the nature of that was, so if
you could send that list in that would be helpful as well.
There is one other thing. As you probably know, maybe you don't, our
committee conducted a study on bee health and we're now in the throes of
completing our report. Some of the evidence that came before the committee was
in regard to the protracted length of time it was taking for an application to
be processed and registered. If you get this increase in fees will that help
expedite your processing and registering of applications? We heard it takes
anywhere from 10 to 20 years.
Mr. Aucoin: Just to clarify, senator, there were some concerns
expressed in the context of the bee studies and things with respect to certain
pesticides that were already registered for the purposes of pest control. Some
of those have had a conditional registration. So a couple of those chemicals
were and have been conditionally registered for a period of one, two or beyond
10 years. There have been some concerns expressed from a number of stakeholder
groups that this needs to be explained and understood. We are in the process of
reexamining how and when we issue conditional registrations and how we can seek
to avoid those in the future.
Currently, we issue very few conditional registrations. That's a bit of an
anomaly, those chemicals. It's a series of reasons, events happening around the
neonicotinoid chemistries for bees, including the fact that the science has
evolved substantially in that area of pollinators and bees. Some of the studies
that we asked for at the beginning of that process, there were not even
scientific protocols developed yet to conduct them.
Senator Moore: You'll await those studies. Would you issue a
conditional, once a year? It sounds like it's not something you do often.
Mr. Aucoin: Currently I think we are in the 2 per cent of the
regulatory decisions that we make that would be conditional registrations.
Historically, we had a much higher percentage of them that were conditional, but
we worked carefully to reduce that. Part of it has been a very high level of
standardization of the kind of data and information we need to make decisions
with, for example, through —
Senator Moore: Is that standardization internationally?
Mr. Aucoin: Internationally in terms of the data we're receiving, so
there are much smaller occasions where we think there is still a little bit more
information that we need that would be confirmatory.
Senator Dagenais: Senator Moore already started the question I wanted
to ask about an annual assessment or a five- year projection of PMRA's funding.
You are trying to anticipate costs. Senator Maltais mentioned that no
adjustments have been made in 18 years. Does your organization's funding include
a reserve fund — some sort of an actuarial reserve — so that, should the costs
exceed those you anticipated, you would have a reserve fund you could not touch?
Mr. Aucoin: I understand that there are no provisions available for us
to create a carry-over fund. We're fortunate that to this point over the last
five years, for example, the amount of revenue that we have received from
application fees, regulatory charges, the $8.5 million, $9 million has been
relatively stable. So the workload coming from those applications has been
relatively stable and we have been able to forecast out and manage our financial
situation quite well. But currently there is no provision for a reserve fund or
Senator Dagenais: Are you also not expecting any unfavorable variances
that could interfere with your reserves at some point? You say the situation has
been relatively stable from year to year.
Mr. Aucoin: Correct. Under the User Fees Act, one consideration that
we have to keep in mind is that as we go through this user fee proposal, we will
fall under the User Fees Act and under that act there are specific provisions
about what happens if you don't continue to meet the performance standards that
you have established and that you are recovering fees to support. So we could
see a situation that if we're not able to meet our performance standards, we
have to then think about fee mitigation down the road for those applications for
which we're not meeting performance standards.
So there is a little bit of danger of a kind of cycling effect where if you
start to have to refund fees, it's not a true refund. But if you have to reduce
fees for submissions, if you don't meet your expectations then you can get into
a bit of a vortex of an even greater problem. But we've been able to manage our
financial situation very well. We're meeting our performance standards writ
large. Revenue is relatively stable and increasing, I think reflecting the fact
that there is continually new technology coming into the agricultural sector and
Canada is routinely a part of that introduction of new technology into North
America. So we're kind part of that user community, if you will, of the
manufacturers. What we're seeing now is that we should update those fees so that
there is a reasonable sort of public and private cost of the work that we're
doing. As we've said, the stakeholders are identifying the need for reinvestment
in a number of critical areas if the agricultural sector will continue to be
competitive and profitable in the future.
Senator Oh: Our agri-food products are exported to the international
market. It is important that we earn food safety quality for that international
market. This quality of safety and control of our agri-food products cannot be
compromised. It is so important. The market is so huge. When I travel overseas,
I always ask where the food comes from. If it's from Canada, I eat it; so I
thank you for your good work.
You said that your operation is $43 million a year? How big is your
Mr. Aucoin: PMRA has a workforce of approximately 375 to 380 FTEs.
Senator Oh: Do you work closely with provincial agricultural
Mr. Aucoin: We work very closely with our provincial colleagues both
in terms of agriculture departments and environment departments, which typically
have a role in pesticide regulation for the provinces. We tend to work with both
environment and agriculture departments.
Senator Oh: Sometimes I go to farmers and ask who inspects. They said
that sometimes an inspector comes to inspect their farms.
Mr. Aucoin: That's correct.
Senator Oh: That's during the time of harvest. Who are those
inspectors? Are they federal or provincial?
Mr. Aucoin: They're potentially from both, but PMRA has a robust
compliance and enforcement program. Together with our colleagues in the regions
and programs under a bureau of Health Canada, we have a large number of
inspectors devoted to examining agricultural practice, specifically pesticides
being used by producers, and to ensuring that they're being used correctly. We
have an annual program of inspection across the country to make sure that
everything is being used the way it should be used, recognizing that sometimes
there are human health and environmental consequences if they're not. It's a
The provinces also have a role to play often in certifying and training the
farmers. So they may have a role to play, depending on the province, in how
farmers are using chemicals.
Senator Oh: Do you have any idea of the total volume of pesticide use
in the Canadian agriculture business?
Mr. Aucoin: I believe we have a dollar value of approximately $2
billion to $2.2 billion in pesticide sales in Canada.
Senator Oh: How much will your fees increase on that volume?
Mr. Aucoin: It will be 30 per cent. I think the question is: How much
will the fees increase?
Senator Oh: Yes, a ballpark figure. You will have new fees. What will
the percentage increase be?
Mr. Flint: Our fees are $8.5 million and an additional $4.5 million
will be raised in fees.
Senator Oh: It's not a significant impact on the total.
Mr. Flint: No.
Mr. Aucoin: It's $4.5 million — a 50 per cent increase in fees. If
you're a fee payer, it potentially looks like a significant amount. Jason
mentioned earlier that we've done an analysis to ensure that the fees passed on
to the farmer will be extremely small.
Senator Oh: Food safety cannot be compromised.
Mr. Aucoin: No.
Senator Fortin-Duplessis: Welcome. This is quite an interesting topic.
I would like to know a bit more about the survey.
In your presentation, you talk about cost-benefit analyses. In August 2014,
you commissioned a cost-benefit analysis to estimate the fees and charges
proposed by the PPN for pesticide registrants, manufacturers, distributors and
users. That exercise included a survey to assess the impact of the proposed
changes. I saw further down that only 24 of the 45 registrants representing a
broad mix of companies responded.
My question is simple. Are you planning on requesting more surveys in the
future? If so, at what rate — after one, two or three years?
Mr. Flint: The survey you're referring to, I believe, is a business
impact test that was done in advance to gauge the impact on individual
businesses that would pay the fees. We are anticipating that after three years
we will revisit the fees to see what the impact has been in fact to try to gauge
whether the fees need to be adjusted or modified in some way.
Senator Fortin-Duplessis: So there would be another survey after three
Mr. Flint: Yes.
Senator Unger: Mr. Flint, you spoke about the stakeholder review and
you have already answered questions. When you did this review, were the answers
to your questions consistent or did some stakeholders have points that were
completely different from others? What was the consistency?
Mr. Flint: Again, this was a series of consultations over a number of
years. At the start, the questions were more divergent and there were a lot more
of them. Towards the end, as noted by Senator Moore, only seven written comments
were received on our proposal at the end of the day because of the fact that we
had consulted several times with industry and clarified our approach. There were
a couple of fees at the end of the day that had questions around them.
For the most part, stakeholders are supportive of the approach we're taking
with respect to the increase in fees and the desire for additional work to be
done by the Pest Management Regulatory Agency to increase investment in certain
Senator Unger: The more you consulted, the fewer and less diverse the
Mr. Flint: There were a few individual fees on which there were
Senator Unger: You were establishing user fees for microbial and
semiochemical pesticides. Due to a lack of experience, you decided that user
fees were premature. Would you explain the difference between these two?
Mr. Flint: Semiochemicals are used to communicate and change
behaviour. For example, pheromones are the common one that we use. They are a
sex attractant for insects. They can be used to attract all the males of a
particular insect and trap them rather than having to use a traditional
pesticide, which would be designed to be toxic and could have a greater impact
on other insects.
Microbials are micro-organisms, some of which are soil-borne. They can be
used either to out-compete other pests or they can have some insecticidal
effects. For example, Bacillus thuringiensis, BT, is commonly used by
organic producers and has a pesticidal effect on certain types of insects.
That's the base difference between the two. Generally, this is an area we tried
to support in the past because semiochemicals provide a non-toxic approach to
controlling pests and the microbials are generally a less hazardous class of
Senator Unger: I hope the semiochemicals don't apply to humans because
there are perfumes that contain those pheromones.
Basically, you have explained the importance. Would you apply that to
honeybees? Obviously, to me, the microbial ones would be more toxic. Would you
give examples or an example?
Mr. Flint: To honeybees, for example, a lot of the semiochemicals, the
pheromones, are focused toward moths and those sorts of pests. As such, because
it's an attractant, we're not actually applying a pesticide that bees would be
susceptible to. Bees are a non-target organism. We don't generally try to kill
bees; we're trying to kill other plant pests. So the semiochemicals and the
microbials are generally specific to a certain type of insect, in which case
they would be more beneficial when applied around bees.
They're limited in the number we have, and they're not necessarily effective
in all situations. So we have to balance that out with the fact that they are
one of multiple tools that would need to be used by a farmer to control a pest
problem at times.
Senator Unger: So you're targeting pests and not bees, but there would
be an effect on bees. I assume that the semiochemical ones would not really have
an effect, but the other ones would.
Mr. Aucoin: Maybe I could just add, senator, a lot of the microbial
pesticides are very specific to a certain type of insect. So, for example, there
are some microbial pesticides that only affect the caterpillars that are feeding
on leaves and so would have absolutely no impact on bees because they are very
different biologies. Many pesticides are very targeted in how they act on the
pest and that's one of their great beneficial attributes. Other pesticides are
much more wide-spectrum and can potentially harm almost any insect, so that's
where we really have to be careful in how we use them.
Senator Unger: Back to fees, will there be a set of different fee
schedules for these things now that you have had a chance to study them longer?
Mr. Flint: Yes, we are actually proposing that we introduce a series
of fees for these microbial pesticides and semiochemicals. It's a much lower
rate than we have for other chemicals. We're hoping to encourage the use and the
registration of these products, particularly since they are, for the most part,
created by smaller companies and sometimes for more niche markets. So we have
set up a separate set of fees, and it was, of course, compared to the U.S.
system as well. So the lowest possible fee that could be charged in the U.S.
system is what we used as the basis for establishing fees in Canada.
Senator Unger: Certain pesticides have a problem with regard to us
conducting trade with the EU. This should all be science-based, so I'm wondering
if, when you have your consultations — and you mentioned that your work was more
collaborative than ever before — what do you do or do you do anything, are you
able to, if you suspect that a country is, for whatever reason, usually a trade
barrier — or it could be a trade barrier — not bargaining in good faith?
Mr. Aucoin: Our role is really to provide the science and the
scientific expertise to explain the basis for Canada's food safety standards.
Hopefully, in looking at the basis for a foreign jurisdiction's food safety
standard, we can also understand what data and information they've used and how
they came to that conclusion to have a different standard. That's our primary
role. Other departments like Agriculture Canada, for example, have a central
role in arranging trade agreements. We're providing support to those departments
in those kinds of negotiations where they have discovered what they believe to
be a trade barrier that's not founded on science. We can provide more expertise
to help to facilitate that discussion.
Senator Unger: Do any disputes usually get resolved?
Mr. Aucoin: I think we work collaboratively with so many countries now
on the establishment of new standards that we're also harmonizing or aligning
the way we set those standards so, increasingly, it's harder and harder to
rationalize why some of those standards are different. Countries are challenged
to sort of show us the science, show us the information they used to establish
that standard. There is also Codex, an international standard-setting body. That
is also another forum where some of that challenge occurs. I think we're being
helpful in that regard, and part of this cost-recovery proposal is that we do
more in support of other departments, as the leads in some of these discussions.
Senator Unger: To my thinking that should be number one. Thank you
Senator Moore: Gentlemen, in our Library of Parliament assistant's
brief we see three tables showing the proposed fee, the current fee and the
average cost. One table is an application for issuance or amendment of a
certificate of registration of a pest control product. The second is other
applications related to a pest control product. And the third is the application
mentioned by Senator Unger with regard to microbial or semiochemical pest
control products. What's the breakdown in terms of percentage of applications?
Which is the heaviest applied for? Do you have that?
Mr. Flint: Table one.
Senator Moore: This is the application for issuance or amendment of a
certificate of registration of a pest control product. Is that the heaviest
Mr. Flint: Yes.
Senator Moore: What percentage would that be of total applications?
Mr. Aucoin: Probably 90 per cent of the applications are for these
kinds of applications. The second table, as you note, has a lot to do with
getting research authorizations.
Senator Moore: I see that. What is that? What's the last one? How is
that 10 per cent remainder split up between two and three?
Mr. Aucoin: Two and three are very different purposes. I don't have
the numbers to say what the breakdown is. We only do about 150 research permits
per year. We have thousands of applications a year and only about 100 or so
Senator Moore: I don't know anything about this stuff, so it's
interesting. In table 1, 5(b) the current fee is 24,000, going down to not quite
6,000, for exposure data accompanying an application for a major new use. So
what is that and why is that dropping?
Mr. Flint: All of the fees on table 1 are different components. So if
somebody was registering a pest control product, we would have different data
requirements depending on what the submission was, and then we would charge them
appropriately to review whatever data was submitted. What you find is that,
under 5(a), (b) and (c), all fees are relating to the review of exposure data.
That would be data that would allow us to understand better how, for example, a
user would be exposed to a pesticide. For example, it could be a dermal
absorption, how much is absorbed through the skin, different information about
Senator Moore: Such as the possible negative impact of that pesticide
on a person using it?
Mr. Flint: Right. What you're finding is that, when we went back and
reassessed, as we have standardized the data over the years, 5(a), which is the
initial data package on exposure, has become more robust over the years as we
have gotten more knowledge. We don't have to use 5(b). It is often not used as
much because there is less data required as we have a better understanding now
of how the exposure standards work. There is less data required to come in and
therefore our costs are less to review.
Senator Moore: Has this been enhanced by the international standards
that are being used more in your work?
Mr. Flint: In part, yes.
Senator Moore: Number 11, there's no current fee. Let's protect the
data. No current fee now is $2,000. So what is that?
Mr. Flint: That is for the registration of generic pest control
products. So we have a system in place now, we have recently changed, put in
regulations in 2010, I believe, or 2012 that creates a different system for the
registration of generics. Generic pesticides are where, after a certain number
of years have gone by, companies can apply and say I wish to rely on all the
data provided by a previous registrant.
Senator Moore: The intellectual property asset has gone?
Mr. Flint: Right. There's the concept of the patent that protects the
innovation itself. We also provide protection for the fact there are often
millions of dollars used to generate these studies they submit to the regulator,
so we provide data protection for that.
For a certain number of years, you cannot rely on that data. It is just for
the person that generated it. After that period of time, we allow other
companies to come in and register a generic product. If additional data has been
provided to improve or —
Senator Moore: The original?
Mr. Flint: After it is originally registered. If the original
registrant comes in and has new data they provide and a generic company wishes
to register a product, then we say you should have to compensate them for that.
We would go through and conduct an assessment of all the submissions that we
received in the last 12 years and ask, "Is there any data that has been
submitted to us that supports the registration that you need to gain access to
as a generic registrant?" We provide that data to the generic registrant. They
would then be required to go and negotiate access with the data learned.
Senator Moore: What is the period of time during which the patent is
protected before it becomes generic and then people can come in and ask to rely
Mr. Flint: When somebody comes in to register a brand new active
ingredient, a new pesticide, they're given 10 years of exclusive protection.
That means they cannot be required to have anybody else rely on their data. It
is market exclusivity.
Senator Moore: No one else can see it?
Mr. Flint: Right.
Senator Moore: Ten years go by and I have an idea to enhance that
product, so what do I do?
Mr. Flint: If you have exactly the same product, you would like to
provide a cheaper version of this to farmers, you would like to produce
something that is chemically equivalent to the original product, a generic
version, then you can come in and rely on all of that original data submitted to
register the product 10 years earlier, and you don't have to pay any
compensation for it at all.
All you have to do is come in and show that you are chemically equivalent and
that's the precedent product on which you want to register. If they have
provided additional information, expanded the use pattern and added minor uses
to support agriculture, and you wish to have those minor uses on your label,
then you have to pay compensation, if it's been done within the last 12 years.
Senator Moore: To pay compensation to the original data owner?
Mr. Flint: The data owner, the person who generated the data. Or if we
require as part of a re-evaluation that they generate some new scientific study
to show that their product continues to be safe and can be allowed to remain on
the market, then as a generic you would also be required to compensate them for
that new data that they were required to produce.
Senator Moore: This number 11, this protected data: That fee applies
to me coming in with these extra add-ons? That doesn't apply to the data already
Mr. Flint: It applies to the generic. If the generic is saying, "I
would like to register," then they would have to generally put in an application
that would include fee number one, the basic application fee. It would include a
review of the chemistry and to show that they're equivalent. They would pay this
fee, which would ask PMRA to go through all your records and make sure that you
can provide me with a list of all the data that you used to support regulatory
decisions during that period of time for which I have to seek access for
Senator Moore: That's a one-time fee, is it?
Mr. Flint: Yes, when a generic comes in they have to pay that fee.
Senator Moore: Okay. There are two others in table 2. They're small
items, but there are no current fees and, again, research notification and
actual notification. So I take it that up to now you have not charged anything —
Mr. Flint: Correct.
Senator Moore: — to process two items?
Mr. Flint: Correct.
Senator Moore: Yet they are an integral part of this research
Mr. Flint: Yes. Well, it's the difference between a notification and
an authorization, right? So for research notification, if you meet certain
criteria, you simply have to inform us that you're going to be doing this. It is
usually a less-involved process versus an authorization that would come in with
more information. It is a much bigger process.
In the past we have allowed the notifications to come in at no charge and now
we're going to be recovering some of the costs associated with those
Senator Fortin-Duplessis: On page 24 of your fee proposal document,
under section 6.7, you talk about the proposed penalty structure. Since this is
a complicated matter — at least for me — I would like some further explanations.
I would like to know whether you often have to impose a penalty for a target
being missed. The penalty can be monetary or not, but have people ever ignored
Mr. Flint: In the case of the proposed penalty structure, it is
actually more of a penalty that's imposed upon PMRA as a result of the User Fees
Act. So the User Fees Act, when it was written and approved by Parliament,
includes within it a requirement that user fees have a public performance
standard and if that performance standard is not met, then the fees in the
subsequent year would be reduced.
For example, if we are processing a certain type of application and we are
meeting our performance standard with respect to the amount of time it takes to
do those reviews, 90 per cent of the time, then we continue to charge the full
fee for the review of that submission.
However, if our performance drops below 90 per cent, then our fees in the
subsequent year need to be reduced, as a penalty on the government agency, for
not actually meeting their published performance standards.
So anybody who would come in with a similar type of submission in the
following year would have a fee that is reduced. If we had 80 per cent
performance last year that would mean we could only charge 80 per cent of the
fee for that category of submission in the following year. Then at the end of
that year our performance would be assessed again and if it was brought back up
above 90 per cent then we could charge the full fee. If our performance went
down, we would have to perhaps charge a lower fee, down to half of the fee.
It is not really something within our control. By amending these regulations,
we are becoming subject to the User Fees Act and this is one of the provisions
of the User Fees Act for which we will now be accountable.
Senator Fortin-Duplessis: Are many people currently ignoring that
penalty? Do you impose penalties often?
Mr. Aucoin: We are not currently under the User Fees Act. So we're not
currently subject to these penalties. We're kind of grandfathered now, I think
is the term. After we go through these revisions, we will fall under the User
Fees Act, so it is in the future that we have to worry about this provision.
Senator Fortin-Duplessis: It is currently not in effect.
Mr. Aucoin: No, not currently.
Senator Enverga: My question is more on table 2, which is more on the
research component. What is happening here is that, currently, when you look at
the current fees, they are really low. How do we compare with other countries?
Would you think that increasing the fees will reduce our investment on research
and development in Canada?
Mr. Flint: In fact, some concerns were raised so we haven't increased
the number of categories for research authorization. Originally we only had two,
authorization or notification. We now have different ones, full research
authorization and lower fees for some other categories. We have done that to try
to recognize that in some situations we can perhaps support a lower fee for some
types of research authorizations to ensure that we're not actually impeding
The highest fees are generally used for large-scale trials that are more
beneficial to the industry, for example, for showing efficacy to prospective
clients and things like that. The actual innovative research is usually done on
smaller plots of land, small acreages. A number of them could even come in under
notifications, depending on the products. We don't think that the increase we're
proposing will have any significant impact on innovation.
Senator Enverga: Are there times when other countries come to Canada
just because of our lower fees to invest more in research and development? Can
you see any decrease or increase in the research money coming from outside
Canada with regard to this kind of work?
Mr. Aucoin: The amount of research that's conducted on pesticides in
Canada is significant. I think we have done quite a lot of work to make sure
that we understand that these fee increases will not create a disincentive for
that research. As Jason was indicating, a lot of the research is done in
small-plot facilities, federal or provincial laboratories, or even in some of
the manufacturers' small facilities and labs.
A lot of research that is undertaken comes under this notification ability or
perhaps is exempt from the need to pay these higher fees. We have done quite a
bit of work to make sure that the increase in fees is not a disincentive and
that those fees, when they're applied, like the $5,000, actually apply to a
relatively small number of research permits.
Senator Enverga: How would you compare with other countries? Are you
Mr. Aucoin: I believe we're similar to other countries in all our
fees. We have made sure that our fees equate or are less than major comparators,
such as the United States, so we're not a disincentive to either registration or
Depending on the nature of the research, sometimes companies will conduct
certain studies as part of the research. Those are then used directly as part of
a submission for approval to that country. Depending on the structure, you are
getting this work done as part of your research, so there's an advantage to
doing it up front and paying up front. We don't believe these are disincentives.
The Deputy Chair: I would like to get back to your comment, Mr.
Aucoin, with regard to a question from Senator Moore on conditional
registration. When the Commissioner of the Environment and Sustainable
Development appeared before the committee during our bee study, she indicated
that seven to eight products were on the conditional registration list according
to her 2008 study. Since then, I believe one of those products has been
definitely registered. That would leave about seven products, or so, on the
conditional registration list.
You indicated that fewer conditional registrations are being given out. At
the time, going back in some cases 10 to 20 years ago because some of those
products are still on that list, conditional registrations were made because no
scientific studies had been provided. That's quite a surprising statement. Why
were those conditional registrations given if no scientific studies were
Mr. Aucoin: To clarify, Madam Chair, a relatively small number of
active ingredients have products associated with them that are conditionally
registered. The number of conditionally registered products in that 10-year time
frame is a very small number.
I need to clarify that in the case of the neonicotinoid pesticides, for
example, which have become quite a focal point, if you will, we had scientific
studies at the time to make our decision. We made a decision that the risks
would be acceptable based on those studies, but we made those registrations
conditional because we knew we needed some further information. We wanted some
confirmatory information. There was still some level of scientific uncertainty,
but not enough to make us overly concerned about registering neonic pesticides,
which were replacing much more hazardous pesticides at the time. We felt that we
had enough information to make a regulatory decision that the risks would not be
unacceptable, provided that the manufacturers generated additional studies for
us, particularly in this area of bee health and long-term impact on bees, which
has been evolving quite substantially over the last 10 years.
For some of the information we knew we wanted to have specific scientific
protocols that had not been developed yet. The vast majority of the protocols,
for example those that involve generating data on pesticides for regulators
around the world, are standardized through an OECD mechanism. This was one area
that did not have good protocols already established. As these studies were
being developed, we needed to agree with the companies on the protocol to get at
some of those questions on long-term impact. So we worked closely with them.
Some of the studies were provided quickly while other studies took longer.
Some of the studies where we need to understand long-term impacts can take
more than a couple of years to generate, to be sure. We knew we had some
uncertainties, but we were confident at the time that the risks were not
The Deputy Chair: Have the results of further studies come in so that
these products can now be considered definitive registrations?
Mr. Aucoin: We have received a number of the studies at different
points during this period. Sometimes the studies needed to be redone, for
example, because the results didn't work out the way everybody had hoped, if you
will. So we asked for some of those studies to be repeated.
There are still more data and information coming in on some of the
conditionally registered chemicals. And we're working closely in a very aligned
reassessment along with the United States Environmental Protection Agency to re-
examine the science, including this new science coming in so that within the
next year or two we can definitively understand whether there are any risks that
we haven't accounted for.
The Deputy Chair: Thank you for that clarification.
Senator Moore: Further to the deputy chair's question, in terms of the
process, is it up to the applicant to meet certain deadlines you have set or do
you bring the file forward every so often?
Mr. Aucoin: We set the expectations. A condition is accompanied by a
specific time period.
Senator Moore: If they don't read them, it doesn't get registered, but
does it hurt them commercially?
Mr. Aucoin: Commercially the product remains in the marketplace unless
we take regulatory action otherwise. As I say, in these cases, it wasn't a
question that the risks were unacceptable. Rather, we wanted some additional
information to confirm our original decision.
Senator Unger: With regard to what you were talking about, Mr. Aucoin,
are there ever differences of opinion when you are discussing such a product
that has taken a long time to go through the registration process? Within your
organization, are there differing opinions on whether or not a product is safe?
Mr. Aucoin: Certainly differences of opinion occur among scientific
staff. We have a large scientific community and, yes, there can be differences
of opinion. But our goal is to manage the process. And we have a science
management committee. We have senior level committees. We have peer review
processes within the different scientific disciplines to make sure that when we
do come out with a decision it represents a consensus amongst the different
That is integrated into our process of registration so that when we do go out
and make a decision it represents a consensus within the agency.
Senator Unger: Does this happen very often or is it just once in a
while when there is a product like neonics?
Mr. Aucoin: I think the neonic situation is unique in terms of the
amount of time it has been conditionally registered and the nature of the
studies. The whole bee health bee pollinator issue is something that has been
growing for a number of years. But even 10 years ago it really wasn't on the
radar. It is a new area of science that we and other regulators around the world
are paying closer attention to.
Senator Unger: Thank you.
The Deputy Chair: As there are no more questions, on behalf of the
committee, it is my pleasure to thank the witnesses who have appeared before us
Thank you, Mr. Aucoin and Mr. Flint, for a very informative and interesting
Senators, we will resume in camera.
(The committee continued in camera.)