Solid Waste & Recycling


WDO Industry Issues

The Waste Diversion Act (Bill 90) received Royal Assent on June 27, 2002. Under the Act, Waste Diversion Ontario (WDO) was created as a non-government corporation with various specific responsibilitie...

The Waste Diversion Act (Bill 90) received Royal Assent on June 27, 2002. Under the Act, Waste Diversion Ontario (WDO) was created as a non-government corporation with various specific responsibilities and powers. (See “Ontario Legislates Diversion” in the August/September 2001 edition.)

The board of the WDO is comprised of a collection of representatives of various industries involved in activities that have impacts on recycling in the province. There is also “non-voting” representation for the government on the board.

The WDO’s primary functions are to develop, implement, and fund waste diversion programs. Initially, it will have to create a sustainable funding plan for Ontario’s municipal blue box recycling program by establishing Industry Funding Organizations (IFOs) to determine and collect fees from industries that produce materials that eventually end up in blue boxes.

The level of funding to be collected by the WDO and forwarded to municipalities is not certain at this point. WDO funding can be as high as 50 per cent (but no more) of municipal blue box program net cost. While it has been assumed that the funding will actually be 50 per cent of municipal blue box programs that has yet to be confirmed.

Aside from the blue box responsibilities, the WDO will also develop, implement and fund waste diversion programs for various other materials including scrap tires, electronics and batteries.

Constitutional issues

The Waste Diversion Act has adopted an approach to funding recycling activities that is similar to many found in Europe and other jurisdictions. The basic premise that an organization or government agency collects monies from stakeholders who are involved in the production of materials that end up in the recycling stream is commonly accepted as a positive policy initiative.

However, the differences between the European legal system and the Canadian constitutional framework have thrown a wrench in the works. Given the amount of angst and hand wringing that has occurred in the past regarding the constitution in Canada, it will probably come as little surprise to Canadians that this is the case. The issue is essentially one related to the powers of taxation.

In Canada only governments can impose taxes and there are certain specific constitutional powers that allow taxes to be levied. Any fees or levies that are imposed by non-government organizations (such as an IFO) must be for services provided and may not take the form of general taxation. While non-lawyers may find the distinction irritating and not reflective of current societal requirements, it is, as they say, “the law.”

The reason this is so important for the WDO is that the Waste Diversion Act makes it clear that the IFOs will not be agencies of the government nor crown corporations. As such, there is absolutely no question that the IFOs cannot impose taxes and must, in levying fees or charges, ensure that they reflect the provision of services to those making the payments.

This situation might not be complicated if the blue box program only involved the collection of a single type of material from a single industry. Were, for instance, the blue box only used to collect newsprint, it would be clearer that the service will be provided throughout the province and the fees would be payable by those responsible for producing newspapers and related products. As the newspapers would be collected throughout the province, it would be fairly simple to apportion fees to producers and then to pass on the collected funds to municipalities involved in the program.

The reality, however, is not nearly so simple. Blue box programs vary widely across the province. Many jurisdictions do not enjoy the economies of size and scope that larger municipalities do, and as such are not able to include certain materials in their programs. The provincial program is a patchwork quilt with respect to the materials collected. This significantly complicates the levying of fees as the producers of a particular recyclable product — one that is recycled in a large city but not throughout the rest of the province — would not be subject to fees for the portions of the province that do not receive the collection service.

In addition to creating a patchwork funding arrangement, the WDO is constrained in its ability to collect fees and fund anything but the cost of the blue box program itself. While that is the stated purpose of the WDO, many environmentalists and industry stakeholders were hoping that the system would be more akin to the Quebec arrangement where fees collected from industry function as more than simply a cost-recovery mechanism for blue box programs. They hoped that the Waste Diversion Act would have more of an impact on broader stewardship issues than currently seems likely.

Finally, the Act deals only with blue box wastes and does not impose levies for non-blue box waste. The irony of this aspect is that the legislation could induce packaging producers to move away from recyclable materials to non-recyclable packaging materials so as to not be subject to a levy. That said, it’s not clear that this will happen or whether the cost of converting to other non-recyclable packaging would be higher than the levies imposed by the IFOs for blue box programs.

Issues related to the levies should not be exaggerated; the cost of blue box programs will be spread over a sizable industry base in Ontario. Moreover, the regime only allows for the funding of up to 50 per cent of the program through the WDO.

The WDO is a very young organization with a newly created mandate. Until such time as further details are determined the waste management industry can only wait and see what the eventual implications of the new regulatory regime will be.

Written by Adam Chamberlain, LL.B. of Power Budd, the Canadian affiliate of Cameron McKenna, an international law and consulting firm. Mr. Chamberlain is based in Toronto, Ontario.

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