AMO Policy Update – June 17, 2010 Product Stewardship

Update on MHSW Negotiations

Extended Producer Responsibility (EPR), also known as Product Stewardship, uses legislative means to hold producers responsible for the costs of managing their products at end of life. It involves the transition from the current, traditional end-of-pipe waste 'diversion' programs (funded by local government and therefore the public, and of no responsibility to the producer) to 'cradle to cradle' recycling systems designed, financed, and managed by the producers themselves. EPR promotes that producers (usually brand owners) have the greatest control over product design and marketing and therefore have the greatest ability and responsibility to reduce toxicity and waste.

Ontario moves to 100% Product Stewardship with the introduction of the Consolidated Municipal Hazardous or Special Waste Program Plan (MHSW Program) effective July 1, 2010. Under the Consolidated program, Stewardship Ontario (SO) is responsible for the costs associated with collection (depots and special event days), as well as for post collection i.e. transportation and recycling or safe disposal of the waste.

AMO/Municipal Waste Association (MWA) would like to provide municipalities the following information, effective July 1, 2010:

1. Municipalities currently pay for collection.  As of July 1, 2010 they no longer will pay for collection or any other aspect of MHSW program.
2. When you no longer pay the following needs to be addressed:
    
   (a) SO is working with municipalities with permanent Household Hazardous Waste (HHW) Depots or HHW event days on a one-to-one basis to discuss collection service provider contracts.  These contracts will define the services SO agrees to purchase from the municipality and the price to be paid for these services.
   (b) If a Municipality wishes to continue to provide collection service to their residents they must negotiate with Stewardship Ontario (SO) regarding program cost recovery and the service levels which will be provided to their residents.
    
3. SO is continuing with a promotion campaign geared to residents on MHSW reduction and reuse by suggesting buying only what you need, using it up or giving it away to someone else.

Stewardship Ontario is preparing to negotiate with close to 30 Municipalities currently operating Permanent Depots and those that have over 100 scheduled special event days.  The deadline for Phase 2 Commencement is July 1st, less than two weeks away; negotiations/discussions are in full swing.

AMO and MWA have worked with municipal staff on the realities of being a contractor or perhaps continuing to provide service on their own without full or perhaps any program funding.    SO approached most municipalities to get a sense of their operating costs.  Proposals for “existing” operations were requested.  Since this program is new, most Municipalities would benefit from reviewing existing services for effectiveness and efficiency. 

Municipalities who do not sign a Contract prior to July 1st are being offered a cost per tonne funding proposal.
The final consolidated MHSW Program Plan recognizes the diversity in program delivery by Municipalities.  The Plan does not envisage a cost per tonne approach.  However, information indicates that Option B (if municipalities do not enter into a Contract with SO by July 1st) are being offered on a cost per tonne basis.  Also some offers have been less than the average operating costs to deliver Blue Box initiatives across Ontario at $233.80 per tonne.  

Most Municipalities who have received an Offer from SO, a number of others are in the process of completing the initial proposal stage, report that they will sign on and that the funding will cover most, not all,  of their costs with little disruption to their residents.  There are a few program operators though, that are facing some tough decisions.  Municipalities that have been offered less than 50% of their proposed operating costs have difficult decisions to make. 

For those Municipalities still working on determining their program costs, it is recommended that all program costs are included; operations, capital, administration dedicated to managing Household Hazardous Waste collection operations for example:

• Initial capital costs to build a HHW depot and carry the depreciable capital on an annual basis and include that in the operating cost as a component. 
• Include HHW Depot or Event Day staffing and administrative costs (heat/hydro, site maintenance, property and equipment rentals etc.) 
• Include a percentage of salaries dedicated to providing this service (i.e. Director, Coordinators).
• For event days and mobile collection include costs for maintenance, staffing, advertising, security, signage etc.

If your municipality should decide to opt out and let the Stewards take on the full EPR program, SO has an obligation to provide an alternative collection strategy for your municipality. 

Hazardous Waste EPR Program negotiations are the precursor to the far more complex EPR Blue Box Recycling Stewardship Program which is expected to follow in the coming years.

AMO Contact:   Milena Avramovic, Senior Policy Advisor, email: MAvramovic@amo.on.ca, (416) 971-9856 ext. 342