Dear Editor, Re: “ARMA Alarm” (June/July 2005 edition)
Adam Chamberlain’s article “ARMA Alarm” (June/July 2005) attempts to trash Alberta’s new Electronics Recycling Program, the first of its kind in Canada. It’s unfortunate that Mr. Chamberlain chose to ‘recycle’ unsubstantiated and inaccurate information as opposed to contacting the Alberta Recycling Management Authority (ARMA) — the focus of his article — for comment.
Here are the facts:
Canada’s first E-Waste Program has been implemented with broad public and stakeholder support and acceptance. We’ve recycled more than 12,500 TVs, 28,500 monitors, 26,000 CPUs, & 16,000 printers (among other electronics). Albertans are able to drop off their old electronics at more than 100 municipal collection sites, where the materials are picked up from four qualified recyclers and processed into glass, metal and plastic.
Contrary to Mr. Chamberlain’s article, ARMA has not increased its fees or changed its definitions as part of an alleged “revenue grab”. Defining and further clarifying the categories for electronics was in direct response to enquiries from the commercial distribution sector of the electronics industry. For example, ARMA was asked to provide clarity between various types of printers and monitors for program eligibility.
Environmental fees were determined based on financial analysis and modeling done in conjunction with the national electronics industry, in addition to analysis for Alberta, using provincial sales, collection, transportation and processing estimates. ARMA is fully aware of the Eurig decision and conducts program reviews to confirm that the fees charged are reasonable relative to the cost of the services provided.
Extensive and on-going discussions with the electronics manufacturing, distribution and retail industries will continue to be an integral component of program development, as we apply theoretical models to reality.
ARMA’s approach has been pro-active and immediate in taking action to deal with a growing landfill and potentially hazardous waste issue in an environmentally effective manner. We will evaluate the effectiveness of other foreign programs once they are developed.
Perhaps Solid Waste & Recycling magazine should consider supporting leadership initiatives in environmental stewardship. Unfounded and inaccurate criticism based on guesswork is not only unproductive, but it may deter other jurisdictions across Canada from implementing their own solutions and meanwhile, electronic materials will continue to accumulate in landfills across the country.
Alberta Recycling Management Authority (ARMA)
Editor’s Comment: “ARMA Alarm” article and letter
For the benefit of readers I feel obliged to situate this debate in a wider context. Our magazine intends to continue to closely scrutinize product stewardship programs for electronics wastes, tires, batteries and other materials as they emerge across Canada. Our job as trade magazine publishers, as I see it, is not to act merely as flag wavers for new programs; stewardship organizations already advertise their own accomplishments. While we can and should acknowledge successes, what’s most useful for readers and policymakers is question-raising and analysis of potential shortcomings and unintended negative consequences.
We have a concern that stewardship programs in Canada will be hastily rolled out more to provide an environment minister with a photo op than to do anything truly environmentally progressive and economically sound. Worse, sometimes one discovers empire building from unaccountable quasi-governmental bureaucracies, or anti-competitive chicanery from rent-seeking industry, disguised with an environmental fig leaf. Board members of the organizations are often in a conflict of interest position. Anti-competitive behavior is possible, and organizations may overstep their constitutional authority and introduce what are effectively taxes (which only government can levy) and not economic fees.
Canada (as yet) has no equivalent of New York State Attorney General Eliot Spitzer to kick the doors open on this issue. Yet the constitutionality of “fees as taxes” alluded to in Adam Chamberlain’s article is not something we should treat lightly. ARMA’s members only need peer over the mountains to see that the Consumers’ Association of Canada has launched a class-action lawsuit against Encorp Pacific (Canada), the agency that collects and recycles beverage containers in British Columbia, and 40 companies that manufacture and sell beverages in that province. The lawsuit seeks to recover more than $60-million (no chump change) in fees that consumers have paid for recycling containers although the companies had no legal authority (the lawsuit claims) to impose the levy, which is beyond the simple container deposit. There’s a similar lawsuit in Quebec. (For convenience, we’ve reproduced an article on the B.C. lawsuit by Robert Matas on our website under the Posted Documents button.)
Legal opinions are emerging across the country about the constitutionality of charging today’s consumers for yesteryear’s product waste. Consider the June 8th 2005 letter (also available on our website under Posted Documents) from Mario Faieta, Solicitors Team Leader, Legal Services Branch, Ministry of the Environment to P.K. Misra, Director of the ministry’s Waste Management Policy Branch, declaring a proposed fee scheme for tires, from Ontario Tire Stewardship, as effectively a “tax” and thus unconstitutional. ARMA also administers Alberta’s tire stewardship program. Are its fees constitutional? Is it working? We’re told that shredded tires are being sent to landfill (ostensibly for “civil engineering” applications) and being counted as “recycled.” If there’s a problem with the tire fees, why not those for electronics?
Again, we worry about the potentially conflicted composition of stewardship organization boards. Please see the article (posted on our website) by contributing editor Usman Valiante that appeared in the Financial Post on the Canada’s used-oil management associations. It makes for compelling reading.
The potential for self-conflict was poignantly indicated in a recent news item (published on our website’s home page) that Waste Diversion Ontario (WDO) — a stewardship policy administration entity — is in financial trouble, in part because it isn’t collecting anticipated fees from the (aforementioned) tire stewardship program. The fee scheme is unconstitutional and the program promotes tire incineration (forbidden under Ontario’s Waste Diversion Act). Ontario’s premier and finance minister killed the proposal, but one is left to wonder if the WDO approved the plan in part because it needed the anticipated fees to run its own operation.
I haven’t the space here to deconstruct every problem with ARMA’s e-waste program, but here are a few concerns.
1) In stewardship matters, being first does not necessarily equate to being best. Alberta’s e-waste program appears to be the only one emerging in Canada that is not industry led. Agencies and crown corporations have a dodgy track record in this country, including Alberta. Consider the Swan Hills Special Waste Management entity that didn’t treat anything like the anticipated volumes of waste. That white elephant was subsidized by Alberta taxpayers to the tune of half a billion dollars, with little to show for it. Years ago a similar entity in Ontario (the OWMC) was derailed before it could attempt the same thing (in part by articles I wrote or edited in our sister publication HazMat Management.)
2) ARMA’s e-waste program is not extended producer responsibility (EPR) in which brand owners pay the true costs of recycling their end-of-life products. But don’t take it from me; instead let me quote from a rev
iew of ARMA’s e-waste program by Thomas Lindhqvist (universally acknowledged as the “father” of EPR) and Chris van Rossem of Lund University, Sweden: “Since the advanced disposal surcharge (ADS) is based on per unit sold (regardless of inherent properties) there are no incentives for producers who design products to reduce end-of-life costs (battery type, hazardous material content, precious metal content, disassembly time, etc.). “ARMA’s program is simply an alternative collection program funded by consumers via the ADS. The tragic thing here is that EPSC — the national organization that represents the big electronics companies — is open to EPR. Sadly, my recent tour of the CRI/GEEP e-waste plant in Barrie, Ontario reveals that e-waste can easily be segregated by manufacturer, a pre-requisite for an EPR program. (See my article on page 16.)
3) ARMA’s fees were set using an adaptation of work that was based on an Ontario study, but the latest changes appear more the product of bureaucratic fiat. Overall, ARMA’s fees are not market-driven and market-efficient or self-correcting. I don’t think market-oriented Albertans would put up with this if they fully understood what is going on. There are practical ways of funding stewardship programs that don’t involve centrally planned fees. Efficient market-based pricing systems drive system costs down over time even as more material is collected and processed. Our columnist hinted that perhaps ARMA has already found itself in need of more cash and re-jigged the definition of CRT equipment to generate more revenue. If this is not so, a public agency like ARMA should be able to readily produce a financial statement disproving the suggestion. Where is it? (See sidebar on page 7.)
4) I have received correspondence from companies complaining about such things as ARMA’s refusal to allow anyone from outside the province to receive or process electronics from ARMA’s program, despite ARMA’s claim that its offers open competition for processors and fair market competition. Industry people have told me that consultation with ARMA has not been meaningful and suggestions are routinely ignored. It’s difficult to prove or disproved these claims, but this kind of communication is a red flag.
5) People I’ve spoken with express concern about accountability and transparency. Electronic product manufacturers have no idea where their products are ending up. ARMA has yet to release the results of an audit of recycling vendors — something that’s required by the EPSC guidelines. I am told that pallets of ARMA e-waste are showing up in Ontario. Vendors have no idea of the financial status of the ARMA program. ARMA, we have been told, said to its 1,500 registered electronic product sellers that overpayment of ADS is as much a problem as underpayment. By all accounts the ADS administration system is problematic, so it’s not surprising that administration of the ADS system is outstripping the costs of actual recycling. One electronic products manufacturer said to us that, “The tracking system to determine if they are getting what they should is hopelessly flawed with this remittance certificate required on a monthly basis from each person in the supply chain.”
These sort of murmurings cry out for detailed and fully documented disclosure. Perhaps this is forthcoming, but in the meantime we must ask, Where does each kilogram of e-waste collected go? Does some eventually end up in China’s dangerous processing yards? Without a proper cradle-to-grave audit, claims to the contrary may be nothing more than rhetoric.