TABLE OF CONTENTS Jun 2013 - 2 comments

EPR: Ontario versus British Columbia

Ontario suddenly jumps ahead

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By: Rob Cook
2013-06-01

There’s broad consensus that Ontario’s Waste Diversion Act (WDA) is fundamentally flawed and in need of wholesale reform. The question is not whether but how it should be reformed. With any change, policymakers and stakeholders look to what other jurisdictions may have to offer.

Enter British Columbia, which has quietly added two new product categories to its Recycling Regulation every three years and touts itself as a world leader in extended producer responsibility (EPR). EPR Canada, a not-for-profit group that monitors the EPR performance of Canadian jurisdictions, ranked BC above all other provinces in 2012 in terms of EPR policy.

Despite its reported success, is BC’s EPR policy really the panacea that Ontario should be looking to?

On close inspection, the BC model comes loaded with many of the same problems as Ontario. It’s surprising that this has not attracted more attention. Consumers, municipalities and service providers face very similar issues; the difference for BC stewards is that they have less oversight than Ontario, despite how toothless Waste Diversion Ontario is perceived to be.

BC’s EPR model for products and packaging is not based on individual producer responsibility; rather, under BC’s Recycling Regulation, once a producer “… appoints an agency to carry out duties of the producer,” the stewardship agency (not the producer) becomes the regulated party.

The transfer of this legal liability from producers to stewardship agencies is accompanied by the development of a common system of stewardship fees (“eco-fees”) levied on products supplied by producers into the BC market (to cover stewardship program costs).

Mirroring Ontario, all programs are run by single collective stewardship agencies. Just like Ontario, the stewardship agency model allows producers to transfer their legal liability to a third party while affording that agency with what is essentially the power of private taxation.

Like Ontario, fixed eco-fees are widespread in BC. Over the past five years, British Columbians have paid almost $500-million in eco-fees on various products that do nothing to drive innovation, efficiencies or recycling.

Without incorporating recycling costs directly into the price of products, stewards are neither motivated nor encouraged to find innovative ways to reduce both waste and costs. Costs are simply passed directly on to consumers rather being borne by producers in their profit margins. They are therefore not scrutinized, but treated as a tax.

BC stewardship agencies have gone to great lengths to preserve and defend eco-fees, having engaged Consumer Protection BC (established under the Business Practices and Consumer Protection Authority Act) to explain and promote eco-fees to consumers.

BC stewardship agencies exert absolute market power over the recycling sector and municipalities, just like Ontario. BC stewardship agencies, not the government, set environmental standards, and implement and enforce those standards however they see fit.

For materials such as electronics and small appliances, the approach of allocating material quotas to recyclers undermines (rather than enhances) fair, open and competitive recycling markets.

Enforcement and oversight of EPR programs by the government in BC is minimal, with no systematic effort to determine what environmental outcomes are being achieved. Recently, to address this shortcoming, the BC Ministry of Environment tabled a new requirement for stewardship agencies to complete non-financial audits to track the disposition of materials collected, reused and recycled.

In BC, just as in Ontario, if agencies fail to meet environmental targets, producers are not subject to penalties. As a proposed Band-Aid, the BC environment ministry is suggesting stewardship agencies pay municipalities for the waste management costs associated with the uncollected portion of material necessary to meet the agencies’ recycling targets.

Simply adopting BC’s EPR model will not serve the interests of Ontario consumers, municipalities or the recycling sector, as the model is already so similar.

However, with the introduction of the Waste Reduction Act, Ontario rightly chose to adopt a clean-slate approach to EPR that’s economically efficient. Individual producers (not collective stewardship agencies) are held responsible for meeting environmental outcomes for the end-of-life management of their products or packaging. Collective action is allowed but does not sanction collectives. The proposed legislation preserve and protect fair, open, and competitive producer and recycler markets to drive efficiencies for both stewards and service providers. It restricts the collusive setting and coordinated passage of point-of-sale eco-fees to consumers and observes Canadian competition laws in regard to such eco-fee “price-fixing.”

The government sets enforceable environmental standards (proces-sing, transportation, collection), service standards (accessibility), administrative penalties, and targets (reduction, reuse, recycling and/or recovery).

Ontario’s Waste Reduction Act is precedent setting and reframes waste diversion in a manner true to the fundamental precepts of EPR: it harnesses competitive markets to protect the environment. It’s now up to the political parties in Ontario to move this important piece of legislation forward, and time (ironically) for BC to catch up.

Rob Cook is CEO of the Ontario Waste Management Association (OWMA) in Brampton, Ontario. Contact Rob at rcook@owma.org

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Reader Comments

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Derek Stephenson

Can you fairly hold an EPR beauty contest between the Recycling Regulation in British Columbia and the Waste Diversion Act (WDA) in Ontario? The BC Recycling Regulation was enacted in 2004 replacing previous regulations dating back to 1971 and explicitly states the intent to provide producers “with the flexibility to design product stewardship programs that work best for their businesses”. The stated purpose of the WDA, formulated in 2000 and enacted in 2002, “ is to promote the reduction, reuse and recycling of waste and to provide for the development, implementation and operation of waste diversion programs”. You will not find “EPR” defined or referenced in either of them.

And yet trade associations, their consultants and program service providers are publicly expressing their fond desire for (if not exactly lusting after) the “EPR models (?)” established under these fading beauties. Which better protects freedom of the market place? Which is better for educating consumers about the costs of recycling?

The proposed new legislation in Ontario, the Waste Reduction Act, resembles neither and repudiates key elements of both:
• Government should not be facilitating the creation of monopoly compliance schemes and providing them with de facto taxing powers.
• Obligated companies should be able (in practice and not just in theory) to meet their obligations operating individually, in cooperation with other like-minded companies or by forming a broader industry compliance scheme.
• The individual company should be held liable for meeting the performance goals set out in legislation, not their service provider.
• Municipalities should continue to play a key role in providing recycling collection services for their residents.
• The costs of recycling should be incorporated into the advertised price of the product but the producer should be free to inform the consumer of the recycling costs included in that price (think airline ticket and gasoline pricing).

Without question Bill 91 would clearly and formally extend a producer’s responsibility for the management of a product supplied into the Ontario market to include collection and recycling after use. It would not be continuing the current Canadian practice of dressing up waste management cost sharing regulations in locally knitted EPR clothing.

Without question, if passed, Bill 91 would significantly disrupt established product stewardship practices in Canada. For everyone.

If the provinces of Canada decide to make a leap from creating innovative waste management financing mechanisms to legislating EPR, it would seem prudent to focus more attention on how best to do that rather than arguing about who has the best policy framework in place today.

Posted July 26, 2013 02:27 PM


J. Gary LeRoux, President, CPCA

BC’s waste reduction programs may have certain issues from the perspective of some, but it cannot be called a failure. OWMA seems to be disparaging the success achieved in BC much as it does in its own Province where work by all (governments, producers, municipalities, service providers) have led to successes. Granted, there are things that might be improved, but that can only be achieved with positive, constructive dialogue based on the facts.

I can only speak for post-consumer paint recycling, but if Ontario is ahead of BC, why has BC had paint reclying in the Province since 1994 and it continues to be lauded as one of the better programs in the country? Could it be better than it is, of course, because when speaking of sustainability things can always be better. Striving for 100 percent is the goal, but likely unattainable in the forseeable future. In fact, the United States has now modeled its PaintCare program on BC’s model and rolling out similar programs State by State with the creation of new legislation in those jurisdictions based on that model.

Even in Ontario, paint producers have consistently exceeded post-consumer paint recycling targets approved by the MOE. This has been the case since the inception of the MHSW program in 2009 (15 years after BC started its program), yet some special interests still view this as a failure. Why is that? All other Provinces move forward with post-consumer paint recycling programs and continue to meet or exceed established targets without the acrimony and confusion created by special interests in Ontario, including the demonization of eco-fees as a tax.

What about eco-fees? To say that an eco fee is the 'power of private taxation' is pushing a new concept that is beyond comprehension, especially from a business perspective. Surely, you don’t suggest the fees charged by OWMA members for services are ‘private taxation’. All kinds of fees are charged for everything imaginable even for such things as RRSP contributions to mutual funds, banking fees, credit card fees, etc. etc. Is that ‘private taxation?” No, of course not.

As for visible eco fees, such fees are permitted under Bill 91 per the integrative pricing model as noted in the Waste Reduction Strategy, which states that the Act, “Would allow producers and retailers to disclose recycling costs to consumers as long as those costs are accurately represented and the final all-in price is prominently displayed.” Clearly the government recognizes that it is important to communicate to the public that waste diversion is preferred and thus a ‘call to action’ for consumers to return un-used product for recycling. This is something industry has always supported and it shows an enlightened government policy to focus on greater consumer awareness in this manner.

Referring to eco-fees as ‘price-fixing’ in the context of Canadian competition law is simply erroneous. The Competition Bureau ruled yesterday (July 22, 2013) that the ‘common fees’ established by the credit card companies for merchants (eg. Visa and Mastercard) - and the banks - do NOT contravene competition law. Those fees amount to $5 billion annually in Canada! These are of course passed onto consumers. As with any business model there is always only ONE payer, the consumer, whether it is integrative pricing or not. Maybe a facts-based approach to legal interpretation is the best way to proceed with respect to public discourse. Otherwise we will confuse the public and media, which will create a lot of unproductive noise – as in the past – that will lead to bad public policy in the long run. Maybe this is why all now condemn the current Waste Diversion Act.

As for the comment on ‘collusive action’ by service providers, here again this is not based on the facts per the proposed Act. Intermediaries are permitted under Section 40 of the Waste Reduction Act: “A person or entity is a producer’s intermediary with respect to a designated waste derived from the producers’ product.” Government again recognizes the fact that it makes good business sense to have a common service provider deal with waste to ensure that economies of scale can be realized and that business, especially small businesses, are not unduly taxed with the high costs of waste diversion. To ensure greater compliance laws must be fair and be seen to be fair. There are many business issues related to this concept given the fact that this proposed Act impacts many businesses in the Province. One can only hope that Ontario continues moving in the direction of being ‘open for business’ and once again take its rightful place as a leader with respect to investment and job creation.

Let's hope that ALL stakeholders work in a collaborative manner with respect to the proposed Waste Reduction Act. More importantly, that the discussion will be based on the facts per the various principles imbedded in the proposed Act. This approach will assure all interested parties that the objectives are clear and that the final outcome will be improvements for waste diversion policy in Ontario.

In the analysis referred to, BC wins and Ontario loses no matter how much one tries to dice it!

Posted July 25, 2013 02:23 PM


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