Ontario recently entered the EPR ring with its newly released draft Waste Diversion Act — Bill 90. Bill 90 serves as enabling legislation for the formation of a non-crown corporation — Waste Diversion Ontario (WDO) — made up of four municipal, one individual, eight industry voting members (and one non-voting public servant).
The Act makes WDO responsible to ensure the implementation of policies established by the environment ministry for designated wastes and blue box materials. WDO is to develop individual programs in co-operation with industry-funding organizations (IFOs), either existing or newly formed by the WDO. IFOs will also have the power to designate “stewards” (i.e., entities with a commercial connection to a designated waste), set fees payable by the stewards, exempt certain stewards, and inspect records and reports from stewards. Individual stewards that seek exemption from IFO-related fees may submit their own industry stewardship plan to the WDO. The plan must achieve objectives similar or better than the original program and must be approved by the environment minister. (See Regulation Roundup in the August/September 2001 edition.) It’s likely that several industries currently operating successful independent programs in other Canadian jurisdictions (for materials such as tires and used oil) will submit such plans to the WDO.
While the legislation is vague about the requirements for diversion programs for designated wastes, it is very specific about how the blue box program will be managed under the new law.
First, with regard to municipal subsidies, Bill 90 states: “A waste diversion program developed under this Act for blue box waste shall not provide for payments to municipalities that total more than 50 per cent of the total net operating costs incurred by the municipalities in connection with the program.”
This means anywhere from zero to 50 per cent of net operating costs — a funding commitment that falls far short of the recommendations presented by the Waste Diversion Organization (WDO’s predecessor) of September 1, 2000. The report recommended sharing the net costs for municipal diversion programs. Specifically, “residential recycling” would be split 50/50 between industry and municipalities.
Second, it allows for an IFO to levy funds from companies to help pay municipalities. This financing model is common for packaging recovery in some parts of Europe, but the share of industry responsibility and financial contributions vary greatly. Adopting such a model in Ontario is not easy. Canada’s Constitution only allows governments to tax. Revenue collected by a designated third party (in this case the designated IFO) is a levy, which must represent the cost of service. (As per the Eurig probate challenge of 1998.)
Because the new Act covers blue box waste only, non-blue box waste is not subject to levies. This means that non-recyclable material (i.e., packaging made from multi-layer composites, blister packs, bottles with nylon liners and PVC) are exempt. Ironically, this loophole will result in a financial incentive to shift to environmentally “unfriendly” or non-recyclable packaging.
Similarly, for those materials that are “recyclable” but are only collected in a few blue box programs due to high costs and limited markets (e.g., polystyrene, film plastic and tubs and lids) there will be little incentive for industry to develop the recycling market. It’s another loophole — less collection for recycling means lower net costs and lower fees. Conceivably, the Act may create financial disincentives for market development for some materials.