Expanded producer responsibility: ‎How Ontario’s proposed Blue Box Regulation could affect your organization

A fundamental reorientation of Ontario’s approach to waste diversion is underway. On October 19, 2020, the Ontario Ministry of the Environment, Conservation and Parks (the “Ministry”) published draft regulations under the Resource Recovery and Circular Economy Act, 2016 that would, if implemented, significantly change how Ontario’s blue box waste diversion program operates.

This new regulatory framework is part of a broader suite of reforms aimed at transitioning away from Ontario’s existing waste diversion system, a system based on industry-funded organizations that either contribute funding to municipally operated diversion programs or operate such programs‎¹‎. In the place of this shared responsibility model of waste diversion, Ontario has said it intends to implement a full extended producer responsibility framework. Under this new framework, known as individual producer responsibility (“IPR”), producers of a variety of products will be individually responsible for collecting and then recycling or reusing their products and packaging. For paper products and packaging material, this shift to IPR entails the replacement of municipal blue box programs – which are funded in equal part by municipalities and industry – with a framework based on producers collecting and managing blue box materials at their own expense.

The rationale provided by the Ministry for IPR is that it will both relieve municipalities of some of the costs of waste diversion and incentivize producers to taken into account the post-consumer phase of their product’s life cycle. By compelling producers to internalize the costs of diversion, an IPR framework has the potential to induce producers to transform how they design their products and recover resources for use as manufacturing inputs, with the ultimate goal of creating a circular economy in which products and packaging are designed to last longer and be reused and recycled at the end of their lifecycle.

Key obligations created by the new regulation

The recently published draft regulation (the “Blue Box Regulation”) proposes to advance the objective of a circular economy by making producers of designated products and packaging responsible for operating a single common collection system across Ontario as well as recycling or reusing materials in accordance with producer-specific diversion targets (known as the producer’s “management requirement”). Producers may engage qualifying producer responsibility organizations (“PROs”) to act on their behalf to prepare and submit required reports and/or establish and operate a collection or management system.

A producer’s management requirement will be determined by the weight of paper and packaging material a producer supplies for each of the six material categories described in the regulation. The Blue Box Regulation prescribes individual recovery percentages for 2026-2029 and from 2030 onwards that will be used by producers to calculate their individual management requirements. While producers are expected to make best efforts to comply with their management requirement during the transition period (January 1, 2023 to December 31, 2025), after January 1, 2026 they will be legally obligated to meet their required diversion target for each category of material they supply. In order to do so, a producer will need to document and report the weight of the materials they reuse or recycle for each applicable category.

In addition to fulfilling their collection and management obligations, producers must also register with and report to the Resource Productivity and Recovery Authority (the “Authority”), a regulator mandated to oversee and enforce the Resource Recovery and Circular Economy Act, 2016 and its regulations. Producers will need to submit annual reports on or before April 30 of each year, commencing in 2024. While the content of these reports will differ depending on the material categories supplied by a producer, reports will generally include information on the weight of paper and packaging supplied, the weight of recovered resources from each material category, and the actions taken by the producer to fulfil their responsibilities under the regulation.

Finally, all producers who are required to establish and operate a collection system must implement a promotional and educational program to inform consumers about, among other things, what can and cannot be included in blue boxes, how to request the replacement of a blue box, and collection dates.

Exemptions

While all “producers” of paper and packaging materials supplied to the Ontario market are covered by the proposed Blue Box Regulation, producers whose annual revenue from products and services is less than $2 million are exempt from collection and management requirements, as well as from the requirement to register with the Authority and disseminate information about blue box collection services. Producers that earn revenue of at least $2 million per year may also be exempt from management requirements for a given material category if they supply less than a prescribed quantity of that material.

Another notable exemption proposes to relieve producers of blue box materials made of compostable content from collection and management requirements. The Blue Box Regulation, if approved, will only require such producers to register with the Authority and submit reports. The decision to exempt compostable materials is likely explained by the current inability of most recycling facilities to effectively sort compostable materials from non-compostable and the absence of reliable data on the type, amount, and use of compostable materials in Ontario. The Ministry indicates that by requiring producers of these materials to register and report annually on the weight of compostable materials supplied to Ontario consumers, it hopes to collect adequate data from producers to enable it to develop appropriate diversion policies for this category of materials.‎²‎ There is no timeline for expanding collection or management requirements to producers of compostable blue box materials.

Allocation of collection responsibilities

Producers and their PROs are responsible under the proposed Blue Box Regulation for providing collection services to the common collection system in accordance with prescribed service standards and an “annual allocation table”. This allocation table will assign each producer certain residences, facilities, or public spaces from which to collect blue box materials.‎³‎ Producers may, however, be relieved of compliance with these collection requirements if they have established an alternative collection system that satisfies prescribed criteria. These criteria include setting a higher diversion target than would be required under the common collection system. Thus, establishing an alternative collection system is not an easier route to compliance than participating in the common collection system.

The Blue Box Regulation make producers and PROs who register before July 31, 2021 responsible for developing the rules by which they will create the “annual allocation table”. Once these rules have been submitted, they will govern the allocation of collection responsibilities for all producers and PROs covered by the Blue Box Regulation.

While the proposed regulation gives producers some flexibility in designing the annual allocation table, it also prescribes factors that must be taken into account when designing the table and even gives the Minister of the Environment, Conservation and Parks the power to make allocation rules under certain circumstances. As a result, the Blue Box Regulation, as currently drafted, appears to represent a departure from the flexible, outcome-based model Ontario previously described in materials outlining its vision of the transition to IPR, which proposed to leave decisions about how to meet collection and management obligations to producers and PROs. Other Ontario IPR programs, such as the one for used tires, are less prescriptive and therefore remain more aligned with the Government’s initial approach to IPR.

Expansion of blue box collection to new materials, sources, and communities

In addition to shifting the responsibility for collection and management of paper and packaging from municipalities to producers, the Blue Box Regulation also expands the scope of the blue box program in several ways. Notably the Blue Box Regulation increases the categories of materials that may be put into blue boxes to include unprinted paper, single-use “packaging-like products” (e.g. foil, trays, boxes, bags), and single-use items associated with consumption of food or beverages (such as straws, plastic cutlery, and stir sticks). At the same time, the regulation extends blue box service to additional “eligible sources”, including multi-unit residential buildings, long-term care homes, schools, and retirement homes, while also incorporating all municipalities and local service boards, regardless of size, into the common collection system. Only communities located in the Far North are excluded from automatic inclusion in the common collection system. The expansive definition of “eligible sources” and “eligible communities” is a direct response to concerns raised by municipalities and environmental organizations during the regulation drafting process that schools and communities with less than 5,000 residents would be excluded from the new collection system.

Conclusion

Given the significant scope and implications of these reforms, stakeholders will want to follow developments closely to determine their future compliance obligations.

The Ministry is currently soliciting public comments on its proposed Blue Box Regulation, as well as proposed amendments to Regulation 101/94, a regulation made under the Environmental Protection Act. These amendments address how the current obligations of local municipalities to operate blue box programs will change during the transition to IPR. Should you wish to comment on the either of these proposed regulatory changes, you have until December 3, 2020 to provide your input.

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