Bill 151 MWA Spring Workshop May 11, 2016 Dave Gordon, Senior Advisor, Waste Diversion

New Waste Management Legislation In November 2015, the Minister of the Environment and Climate Change (MOECC) introduced a new legislative framework for waste management – Bill 151,The Waste Free Ontario Act (WFOA) Legislation is comprised of two proposed Acts: Resource Recovery and Circular Economy Act to set overarching provincial direction and establish a full producer responsibility regime for products and packaging Waste Diversion Transition Act (WTDA) to replace the WDA to help ensure a smooth transition of existing programs to the new full producer responsibility regime Strategy for a Waste Free Ontario: Building the Circular Economy to support Ontario in achieving its goals

Municipal Position on Bill 151 Municipalities support the Bill and the move to full producer responsibility, however there are key issues that need to be addressed While Bill 151 attempts to create certainty with respect to full producer responsibility for designate products and packaging, it results in considerable uncertainty with respect to the future role of the municipal sector in integrated waste management, particularly with respect to the Blue Box program We feel there are numerous issues that need to be clarified in the legislation now as opposed to through policy statements and regulations at a later date

Positive Elements of Bill 151 Move toward real producer responsibilities with financial savings with municipal governments Flexibility to designate a wide range of products and packaging Ability to increase producer’s current funding cap for the Blue Box program beyond 50% Creation of an oversight agency with proper tools to ensure effective compliance and enforcement Efforts made to maintain or improve upon current service standards and geographic coverage for programs

Municipal Concerns with Bill 151 Lack of recognition (or mention) of the integrated municipal waste system and responsibilities No formal role for municipalities at the decision-making table in future state- impact on our waste systems Language in the WDTA simply continues long-standing conflicts between Municipal governments and stewards No formal role for municipal governments in transition of existing waste diversion programs

Municipal Concerns with Bill 151 No principles for setting producer responsibility targets are outlined in the Act True enabling legislation = very light on details Heavily reliant on policy statements No intent to have Producers pay for designated material in municipal garbage/litter streams

Current Activity and Timing for Bill AMO pursued amendments to the legislation to primarily address the lack of a municipal role and the need for clarity on how municipalities should be paid for blue box services during the transition Both NDP and PC MPPs raised these issues during the clause-by- clause review of the Bill, but very few actual amendments were accepted by the Liberals Section 11 of the WDTA was amended to give the Minister more explicit powers to determine how the payments should be made

Current Activity and Timing for the Bill Any requirements for consultation had the language ‘with municipal representatives’ added to specifically reference municipal interests Bill will now go back to the Legislature for 3 rd reading. Expect this by end of May. Don’t expect Bill proclamation until January 2017

In the meantime…. We’re still trying to get paid fairly for the blue box services we currently provide Arbitration in 2014 Unsuccessful mediation in 2015 WDO establishes panel to develop methodology for setting the obligation and to review in-kind advertising program Municipalities cannot support any recommendations that invoke payment containment by arbitrarily trimming the annual Steward Obligation and having stewards pay less than 50% of verified reported costs based on ill conceived notion of municipal inefficiency

Panel Report Recommendations Prepare a study on the "Implications of the Evolving Tonne on the BB Program“. Prepare a study on Blue Box 2015/16 Best Practices. Make the Datacall simpler for smaller municipalities. Develop a process to assess the costs of adding new materials into programs. 50:50 cost sharing of the CIF between stewards and municipalities. Consider a provincial standard set of materials collected in Blue Box programs.

Panel Recommendations on Setting the Obligation Develop a new model to identify best practice costs, based on 2015/2016 Best Practices Study Develop new municipal groupings Toronto to become its own group Model to be used short term for top 55 programs, which contribute 90% of costs and 95% of tonnage to Blue Box program Operational audits to be done of all 55 programs over 2 years, starting with Toronto Each program gets 2 years to implement best practices, then only best practice costs are included in Obligation Model continues to be used to predict best practice costs for 170+ small/rural programs that contribute 5% of tonnage and 10% of costs

Panel Recommendations on Setting the Obligation Establish Technical Expert Team to oversee Model development, Audit Guideline development and implementation of audits Expert team also makes recommendations on the obligation Benefits of this phased approach: Can be implemented quickly Interim solution to identification of best practice costs (required in CCP) until actual best practice costs can be identified Allows transition to real best practice costs as basis of Obligation - no more models for top 55 Intended to resolve issue around lack of confidence in models

Municipalities Submit Separate report on Cost Containment Municipalities could not support the final recommendations from the Blue Box Cost Containment Panel which sought to make cuts to verified reported costs retroactively based on a notion of municipal inefficiency Arbitrator ruled used of verified reported costs was a reasonable approach to set the Obligation The panel did not address how other Cost Containment Principles should impact the setting of the Obligation No focus on other Cost Containment Principles that are included in the Cost Containment Plan Municipalities support cost containment as it is defined in the Cost Containment Plan (CCP), namely “reduction of the actual gross and net per tonne operating cost incurred by a municipality to collect, process and market Blue Box material as a result of the implementation of cost containment policies and practices” by both municipalities and stewards. We cannot support payment containment

Municipalities have paid their 50% share plus more than $233 million extra

Municipal Spending to Comply with Cost Containment Plan vs. Steward Investments Municipal InvestmentSteward Investment E&E Fund$18.3M Matching Funds from Municipalities$18.3M Subtotal E&E$36.6M CIF Fund$47.3M Matching Funds from Municipalities$67.2M Subtotal CIF$114.5M Total Investment$151.1M< $10M

Stewards Have Not Complied with Cost Containment Plan

Comparison of Program Performance for PPP* British Columbia (2015 projected) Manitoba (2013 actuals) Ontario (2013 actuals) Saskatchewan (preliminary projections) hhlds with program access >80%93%97%tbd kg recycled/capita Net cost/tonne$452$275$274$261 Net cost/capita$27$19 $10 Net cost/capita paid by producers $27 (100%)$15.20 (80%)$9.50 (50%)$7.50 (75%) *Comparison of Ontario Blue Box Costs with other Jurisdictions, Kelleher and Love, Feb 14, 2015

In-Kind Program Report: Key Recommendations Considerable discussion of: cash contributions by newspapers OCNA/CNA’s argument that they be recognized as a ‘public good’ Their ability to be removed from the program 18

In-Kind Recommendations (cont’d) If some form of In-kind Program remains, then the Panel recommended that WDO develop: 1.a mechanism by which Stewardship Ontario shares the data and detailed methodology (including underlying assumptions) for calculating the in-kind amount. 2.a process to ensure municipalities get in-kind value equivalent to what they can negotiate independently with local newspapers. 3.A process to ensure that municipalities, when using in-kind, are treated the same as ‘cash paying’ advertisers. 4.a process to bring the parties together in an attempt to resolve the question of whether in-kind advertising is an eligible reported cost. 19

In-Kind Recommendations (cont’d) 5.a coordinated strategy and communication plan across regions and/or province to promote waste diversion. 6.An operating agreement be created for the program, or at a minimum, the guidelines be updated 7.That no editorial control be exercised under the program with regard to advertisements related to waste diversion /management except for lobbying and that WDO make the final decision on lobbying issues. 20

Municipal Response on In-Kind Disagree with: consideration of taking ONP out of the BB. in-kind Editorial and expiry controls Agreed with WDO to move forward on a number of recommendations, e.g., improving the administration and WDO processes. 21

WDO Responds WDO Board received the reports from the Panel and the companion report from Municipalities WDO staff attempted to get Municipalities and Stewardship Ontario to agree to a negotiated settlement on how to set the Obligation, but this was unsuccessful WDO Board subsequently directed staff to: Develop a new cost containment model to set the Obligation Investigate Stewardship Ontario claims regarding inclusion of non-obligated materials in the Blue Box system costs Complete studies on several topics including the ‘evolving tonne’ and a national comparison of EPR programs for printed paper and packaging Implement changes to the in-kind program

Municipal MIPC input to WDO on New Model and Non-Obligated Material Projects Timelines for the projects are far too ambitious to enable meaningful recommendations Ensure proponents selected do not have, or appear to have conflicts of interest Projects need to be open and transparent to all stakeholders with all data being shared across the interested parties Cost Containment Model: Must include all principles included in the Cost Containment Plan including Principle 5 which requires Producers to use materials that can be cost- effectively managed in the Blue Box program Cost containment cannot negatively impact diversion

Municipal MIPC input to WDO on New Model and Non-Obligated Material Projects Non-Obligated Materials: Need to ensure suggested ‘non-obligated materials’ aligns with definitions and intentions of Waste Diversion Act and Blue Box Program Plan Need to consider if non-obligated material was solicited by municipal program or is inadvertent contamination by participants Need to consider datacall instructions from WDO on defining and accounting for non-obligated material Attempts to examine cost of non-obligated materials must be material- specific, include associated revenues, and consider fixed versus variable costs in the system

Next Steps on Steward Obligation WDO proceeding with projects on new cost containment model and non-obligated materials Municipalities and Stewardship Ontario are sitting on a steering committee to provide input Draft reports are completed and are being reviewed by the parties Updated in-kind guidelines have been drafted by WDO with intent to incorporate recommendations from Panel and are also being reviewed by stakeholders WDO intends to commission studies on the evolving tonne and national comparison of EPR programs later this year

Implications and Discussion

Implications and Thoughts on Bill 151 and Steward Obligation The methodology to calculate the steward obligation is important as it will be used as long as we’re in ‘transition’ The bill transfers economical and physical responsibility for management of designated materials to Producers. Full stop. Municipalities remain responsible for balance of integrated waste management system i.e. garbage, organics, LYW, etc. Producers will decide how to provide services to residents that may or may not include municipalities

Providing Services or not? Municipalities need to know their costs: Need excellent understanding of collection costs for electronics, HHW and tires Additionally must intimately understand collection and/or processing costs for blue box Councils will need to be prepared for future decisions: 1.Make deal with producers to provide service and break even/profit 2.Make deal with producers and subsidize shortfall from tax base 3.Turnover services to producers

Municipalities Need to be Organized The transition period will likely involve negotiations between municipalities and producers; likely multiple producer organizations to determine service provision AMO has organized a steering committee with representation from City of Toronto, Regional Public Works Commissioners of Ontario and the Municipal Waste Association to oversee collective work on this file Important to negotiate with a small group representing the sector than allowing ‘one off’ negotiations with individual municipalities

Considerations What’s important to municipalities? Service level to residents Integrated with other collection/depot services Maintain or increase current levels of service; mandatory geographic standards Customer service and complaint management Disentangle municipality from producer provided services Maximizing reduction/reuse/recycling of branded materials High targets for capture of designated materials Clear targets for residential vs. ICI markets Material specific targets By-laws, bans and levies to further incent diversion

Discussion What’s important to you? What needs to be considered? What’s been missed? What’s just plain wrong?

Thank you