June 22, 2016

Today, Waste Diversion Ontario (WDO) released a statement about the setting of the 2016 Steward Obligation for the 2014 Blue Box program year.  The Steward Obligation determines the funding municipalities receive for providing Blue Box services on behalf of brand owners and producers of designated printed paper and packaging.

Over the last several years, the calculation of the annual Steward Obligation for the Blue Box program has been arduous.  In 2014, AMO, City of Toronto and Stewardship Ontario (representative for obligated brand owners and producers) went to binding arbitration before retired Justice Robert Armstrong to resolve the 2014 Steward Obligation.  In 2015, no agreement could be reached between the parties and mediation was also unsuccessful.  Waste Diversion Ontario resolved to set the 2015 Steward Obligation using the Arbitrator’s methodology on an interim basis while staff developed a new methodology for determining the Steward Obligation for calculation of the 2016 Steward Obligation.
On June 15, 2016, the WDO Board decided to proceed with setting of the Steward Obligation as follows:
  • The 2015 Steward Obligation will not be adjusted retroactively.  This was paid in accordance with the Arbitrator’s recommended methodology of using 50% of reported, verified net costs from the WDO Datacall.
  • The 2016 Steward Obligation was set at $121,552,551.  This amount is 4% less than the calculated Obligation using the Arbitrator’s methodology of $126,936,839.
  • In arriving at this decision, the WDO Board deviated from the Arbitrator’s methodology by:
    • reducing the net system costs by $6.2M by accepting the outputs from the new cost containment model that WDO had commissioned.
    • deducting $109,500 in costs to manage non-obligated pots and pans.
    • adding $2.1M to the Obligation for Steward Cost Containment to represent cost increases stewards have had on the system due to their packaging and product choices.
We are pleased to see that the WDO Board did not adjust the 2015 Steward Obligation. Stewardship Ontario was seeking a considerable deduction to the 2015 Obligation.  We also recognize and appreciate WDO Board’s addition of $2.1 million cash to reflect a steward contribution to the municipal Blue Box program which reflects some of the cost increases resulting from changes in the nature of packaging material as per Principle #5 of the Cost Containment Plan.

However, we are disappointed that the WDO Board did not uphold the calculation of the 2016 Steward Obligation as recommended by retired Justice Armstrong in the 2014 Arbitration.  The Board’s acceptance of the new cost containment model and the calculation of the deduction for non-obligated materials in light of the large data gaps in the analysis is concerning to the municipal sector.  We will continue to consult with the City of Toronto, the Regional Public Works Commissioners of Ontario and the Municipal Waste Association, as well as brief the AMO Board of Directors, to determine if any actions are required to address this WDO Board decision at this time.