Canada: Ontario Introduces Waste Reduction Strategy And Proposed Waste Reduction Act, 2013

In June 2013, the Ontario government released its Waste Reduction Strategy, which incorporates the proposed new Waste Reduction Act, 2013, forecasting significant changes to the way wastes will be managed in Ontario. If passed, this Act will affect households, businesses and municipalities.

Background

Ontario first began its waste-diversion efforts through the Blue Box programs in the late 1980s. Later, the Ontario government enacted the Waste Diversion Act, 2002 (the WDA) to develop and operate various waste-reduction and waste-diversion programs (including the Municipal Hazardous or Special Waste (MHSW) Program, the Waste Electrical and Electronic Equipment (WEEE) Program and the Used Tires Program). However, according to the current government, the initiatives under the WDA have stalled (the government points out that only 25% of the roughly 12 million tonnes of waste generated in Ontario every year is diverted from landfills). In addition to dwindling capacity at municipal landfills and increasing waste-diversion costs borne by municipalities, waste-diversion programs enacted under the WDA faced cost overruns, compliance and enforcement issues and possible consumer confusion over "eco fees." The Ontario government determined that a major legislative overhaul was necessary. In June 2013, it released a Waste Reduction Strategy and submitted Bill 91, the Waste Reduction Act, 2013 (the Act) for first reading on June 6. The proposed approach appears designed, at least in part, to avoid some of the political issues (particularly regarding the addition of eco-fees to the costs of certain products at the cash register) that have arisen under the current approach.

Significant Proposed Changes Under the Waste Reduction Strategy and Waste Reduction Act, 2013

  1. Individual producer responsibility (IPR). IPR is a policy strategy emphasizing producers' responsibility for the end-of-life costs associated with their products and packaging. The ultimate goal of the strategy is to encourage producers to make their products more easily recyclable. Additionally, IPR forces producers to internalize the costs of product disposal that would otherwise be borne by municipalities (and, ultimately, taxpayers) and, through such internalization, avoid the possibility that the eco fees added to the consumers' cost could be characterized as taxes. The proposed Act emphasizes IPR by making producers directly responsible for meeting recycling requirements imposed by statute and regulations. More specifically, producers (of specific wastes as designated by regulations under the Act) would face heightened registration and reporting obligations under the Act and would be responsible for meeting recycling requirements either individually or through an intermediary (such as an industry association).
  2. More compliance "teeth." Under the Act, Waste Diversion Ontario (WDO), the government agency tasked with implementing the waste diversion, would be transformed into the Waste Reduction Authority (WRA). The proposed Act would provide significant enforcement and oversight powers to the WRA, including the ability to conduct inspections, issue compliance orders and levy administrative penalties against producers and intermediaries. The WRA would also be responsible for maintaining a registry established by the Act for producers and intermediaries to report on waste amounts and compliance with the Act.
  3. Integrated pricing of "environmental protection costs." The proposed Act would require waste-diversion costs to be integrated into the overall price of the product so that producers could not add an eco fee on top of their advertised product prices. The Act would require the "all-in" price to be more prominent than any other amounts referred to. Environmental protection costs can be disclosed, but they must be clearly and accurately described. It would be an offence under the proposed Act to make a false, misleading or deceptive representation relating to a recovered environmental protection cost.
  4. Increase in producer contributions to the Blue Box recycling program. The proposed Act would increase producers' responsibilities to municipalities by requiring producers to collect designated wastes from municipalities or to reimburse municipalities for certain costs associated with collecting, handling, transporting, storing, processing and disposing of those designated wastes.
  5. Increased waste diversion efforts aimed at the industrial, commercial and institutional (IC&I) sectors. New regulations are contemplated that are aimed at collecting recyclable waste from the IC&I sector (e.g., office buildings, malls, restaurants, hotels, educational institutions, hospitals, factories). The Waste Reduction Strategy suggests that designating paper and packaging supplied to the IC&I sector for waste diversion is "the largest single unaddressed recycling opportunity in the province." Additionally, Ontario intends to develop and implement new standards for diverting end-of-life vehicle (ELV) waste from landfills.
  6. Transition and phasing in. Both the Waste Reduction Strategy and the proposed Act anticipate a phased-in approach with extensive consultation with stakeholders. The Strategy and Act contemplate that the WRA will take the lead in ensuring an effective transition. It is further expected that industry-funded organizations under the WDA (e.g., Stewardship Ontario under the MHSW program) would be wound down as responsibility for waste diversion falls directly on producers through the IPR approach.

Discussion

If passed, the Waste Reduction Act, 2013 will usher in major changes that will affect businesses in Ontario, including the following:

  1. Increased enforcement. Producers may be subject to a more robust regulatory regime under the proposed Act and will be at risk of sanctions, including compliance orders, administrative penalties and fines, for non-compliance. The Act as drafted contemplates that administrative penalties will be issued on an absolute liability basis, meaning that the due diligence defence would not apply. However, the new "teeth" provided to the WRA may be welcome news for some businesses (e.g., stewards) that have complied with existing waste-management programs and have been competing against non-compliant businesses on price.
  2. No more eco-fees. Producers may need to take particular care when announcing product pricing because "advertising" a product's price includes not only announcements to the general public but "invoices, receipts and similar records." The proposed Act would require producers to include any "recovered environmental cost" in the all-in price of the product itself and, as outlined above, this inclusive price must be more prominent than any other amount listed on that advertisement. Making a false, misleading or deceptive representation regarding recovered environmental costs could result in significant financial penalties upon conviction. This measure appears intended to discourage producers and retailers from specifying the costs attributable to end-of-life recycling costs.
  3. Harmonization, nationalization of approach. A shift towards IPR would bring Ontario more in line with the European Union and other Canadian provinces (notably, British Columbia, Manitoba, New Brunswick, Nova Scotia and Quebec1). This increased harmonization may be beneficial for producers with operations across Canada that are faced with different regimes and reporting/remitting obligations.
  4. Paper and packaging recycling to dramatically increase. If, as expected, the IC&I sector is targeted for new recycling obligations for paper and packaging, countless businesses may need to make changes to implement more robust recycling practices. In addition, the waste-recycling services sector can expect a big increase in business as IC&I waste represents almost 60% of the waste generated in Ontario. According to the Waste Reduction Strategy, only 13% of this IC&I waste is being recycled under the current regime.
  5. Phased-in approach for transition. The government anticipates a phased-in approach to transitioning existing programs. The first program expected to transition to full IPR is the WEEE Program. That transition is expected to occur within one to two years, with the MHSW Program slated to begin its transition to full IPR within two to four years. In the longer term (four years and beyond), the Used Tire Program would transition to full IPR.
  6. Consultations. The phased-in approach also contemplates extensive stakeholder consultation as part of each phase. According to the Waste Reduction Strategy, there will be consultations on the recycling of IC&I paper and packaging waste, recycling standards for ELVs, the designation of additional wastes under the Act and the implementation of disposal bans for certain eligible wastes. The stated purpose of these consultations is to allow stakeholders to prepare adequately for, and participate in, the transition process to a new program. Producers and recyclers in particular may wish to consider the implications of the Waste Reduction Strategy and proposed Act as soon as possible to permit meaningful input to the Ontario government and the WDO/WDA.

Foontotes

1. EPR Canada, a not-for-profit association dedicated to encouraging extended producer responsibility (EPR), gave British Columbia, Manitoba, New Brunswick, Nova Scotia and Quebec the highest "marks" for EPR programs, with BC given an "A-" and the rest "B-" in 2011. Ontario was given a "C+". For further details, click here.

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