As of July 1, 2008 manufacturers, wholesalers, importers and other dealers of electrical products became subject to mandatory reporting requirements provided under new product safety regulations (the Regulations) to Ontario’sElectricity Act, 1998 (the Act). The Regulations, which apply to electrical products and devices governed by the Electrical Safety Code (the ESC), increase the enforcement capabilities of the Electrical Safety Authority (the ESA) – the administrative authority responsible for public electrical safety in Ontario and for enforcing the Act. To aid in the interpretation and application of the new Regulations, the ESA has created a number of draft guidelines (the Guidelines) which are available on the ESA web site.
Accidents, Incidents and Defects
Section 8 of the Regulations requires manufacturers, wholesalers, importers, product distributors and retailers who become aware of a “serious electrical incident or accident or a 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” to report the incident to the ESA “as soon as practicable” after becoming aware of it. Moreover, any certification body or field evaluation agency who has certified an electrical product for Ontario and who becomes aware of a serious electrical incident, accident or defect of an electrical product for which it has provided a report must also alert the ESA as soon as practicable.
Under s.1 of the Regulations (which section was in force as of October 1, 2007), a “serious electrical incident or accident” is defined as an electrical incident or accident that:
(i) results in death or serious injury to a person;
(ii) has the potential to cause death or a risk of serious injury to a person; or
(iii) causes or has the potential to cause substantial property damage.
The Guidelines published by the ESA clarify what is meant by “accident,” “incident” and “defect.” Those terms are defined (respectively) as “an event that results in death, injury or property damage;” “an event that could have resulted in death, injury or property damage;” and “a fault, flaw or irregularity that causes weakness, failure or inadequacy in form or function.”
Minimum thresholds for the reporting of serious electrical incidents, accidents or defects are further outlined in the Guidelines. An accident must be reported if its actual impact resulted in death, serious injury (a permanent impairment of a body function or permanent damage to a body structure, chronic effect or any injury requiring hospitalization or professional medical treatment) or substantial property damage (meaning a loss attributed to flames or failure to contain an ignition source or hazardous material, or impact on a building and its contents ranging from partial to total loss).
Of particular interest is the interpretation provided for the assessment of when defects must be reported under the Guidelines. The ESA’s interest in defects that “affect or are likely to affect the safety of any person or cause damage to any property,” is not limited to electrical defects. The Guidelines state that a defect “may create hazards of an electrical, mechanical, chemical or other nature that are addressed in the safety requirements for electrical products” under the ESC. Therefore, if a defect of any nature is related to an electrical product governed by the ESC, the reporting requirements will apply. The ESA will undertake to classify any report made to it and assist in determining the appropriate action to be taken.
Mandatory Reporting Requirements
The ESA has also released a document entitled “Final Draft Guideline for Mandatory Incident Reporting for Electrical Products” to assist in compliance with the Regulations (the Reporting Guidelines). In addition to manufacturers, wholesalers, importers, product distributors and retailers as listed in the Regulations, the Reporting Guidelines also require retailers who sell in or into Ontario via the Internet, mail order, auctions and flea markets, and those who sell second hand goods, to report to the ESA. The reporting obligation of certification bodies and field evaluation agencies stands whether the serious incident occurred in Ontario or outside Ontario with a product that they have certified for Canada or a product that is similar to a product manufactured for sale in or into Ontario. Distributors and retailers are required to notify manufacturers or importers of any concerns; should the manufacturer or importer fail to report to the ESA, the distributor or retailer must do so.
As previously indicated, a report must be made to the ESA “as soon as practicable” after a party becomes aware of the incident, accident or defect. The Reporting Guidelines indicate that the ESA interprets this to mean that “an initial report with the information that is available” must be made within 48 hours, followed by another report within 10 working days. “Becoming aware” is considered to be when a company or one of its employees or officials receives the relevant information and includes “something a company exercising due care should know about the product.”
The mandatory reporting requirements are the latest in a series of expanded powers granted to the ESA under the new Regulations. Provisions empowering the ESA to order manufacturers, certification bodies and field evaluation agencies to give notice to the public or any person or class of persons of the risk or defect in an electrical product or the occurrence of a serious electrical incident have been in force since October 1, 2007. If a party refuses or fails to comply with such an order, the ESA may issue the notice at the expense of the ordered party. Should the ESA (in its discretion) issue a notice, the manufacturer, certification body or field evaluation agency will be provided an opportunity to comment on the notice.
The “Final Draft Guideline for Corrective Action and Public Notification for Electrical Producers” reinforces the authority of the ESA to order corrective actions where responsible parties fail to do so. As outlined in this guideline, primary producers (manufacturers, importers or national brands), distributors or retailers, and certification bodies or field evaluation agencies, have different responsibilities regarding corrective actions based on their differing levels of expertise. It should be noted that retailers or distributors who import products into Ontario are considered importers and thus have the same responsibilities as primary producers. Corrective actions can include: altering the product design; withdrawing products from the supply chain; changing warning labels; recalling products; and issuing public notices about the product. The guideline also provides a corrective action checklist.
The ESA has also been granted powers regarding the retention and preservation of electrical products under the Regulations. As of January 1, 2008 should an order under the Act be issued requiring that an electrical product or device be retained and preserved, additional requirements may be imposed including that: the product or device be retained in a specified secure place; an inventory be provided; an inspector have access to the product or device; or a label be affixed to the product or device indicating it is no longer approved for sale, that it presents a safety risk, or that it should no longer be used.
As of October 1, 2007 only electrical products approved in accordance with the Regulations may be offered for sale, used, displayed or advertised in Ontario. As of that same date, products and devices with deemed approvals under the Regulations include those certified by a certification body, in receipt of a report by a field agency confirming all applicable standards have been met, and those examined by the ESA directly. Under section 6 of the Regulations, the ESA has the power to suspend or revoke the approval of an electrical product under certain circumstances, and may also revoke the recognition of a body as a certification body or field evaluation agency. Under the draft “Rules for the Suspension and Revocation of Product Approval and the Revocation of Recognition of a Certification Body or Field Evaluation Agency,” when a product is known or suspected to pose a serious hazard and an order has been made by the ESA to retain or turn over the product(s), suppliers must immediately cease offering the product for sale or use in Ontario. If the parties fail to take the action requested by the ESA following the ESA’s investigation, approval of the product may be revoked.
Penalties for refusing or neglecting to comply with the Regulations include personal fines of up to $50,000 or imprisonment for a term not longer than one year, or both, and a further fine of up to $5,000 for each day upon which such refusal or neglect is repeated or continued. Directors and officers may be liable for fines of up to $50,000 or imprisonment for a term of not more than one year, or both. Corporations may be liable for fines on conviction of up to $1,000,000.