Atlantic Regional Model for Consumer Paint Product Stewardship
July 16, 2007
Ms. Lorrie Roberts
Manager, Waste-Resource Management
Nova Scotia Environment and Labour
5151 Terminal Road
P.O. Box 697
Halifax, NS B3J 2T8
Dear Ms. Roberts:
On behalf of Retail Council of Canada (RCC) and its members operating in Atlantic Canada, I am writing in response to the June 5, 2007, letter from the Nova Scotia Department of Labour and the May 22, 2007, letter from Newfoundland and Labrador regarding the harmonization of waste paint programs
RCC appreciates the opportunity to comment on the Atlantic Region Model Regulation for Consumer Paint Product Stewardship proposal brought forward by Nova Scotia's Department of Environment and Labour. Retailers are not only the sellers of designated products but are increasingly brand owners themselves and as such, have a significant stake in stewardship programs. Currently, RCC's members are active participants in over 30 such programs across the country, and will be called upon to expand their role as new ones are developed.
Retailers support the principles of waste diversion as a whole, and look forward to working together with other key stakeholders in creating a successfully harmonized paint stewardship program for Atlantic Canada. The following represents the initial thoughts of retailers, which may be added to and/or refined as further discussion and consultation takes place.
Costs
For retailers, the way in which fees are managed is a critical component of any product stewardship program. The draft model regulation proposes that retailers "are prohibited from visibly charging consumers for administrative fees or any other costs associated with their respective obligations under the regulation."
RCC and its members do not support any legislated or regulatory requirement that retailers bury the eco-fee within the final selling price of the product. As such, RCC recommends that the words "and internalization of costs" be deleted from clause 1(e)(ii) and that clause (8) be deleted from the proposed model regulation.
Funding for diversion activities are paid for by industry stewards based on a fee to cover the recycling of the end-of-life materials. These fees are not taxes since the funds collected equal the cost of running the program, and are dedicated in this fashion (the "nexus" principle).
It is commonly held that this facet of a stewardship program is outside of the responsibility of government, and that any government intervention in this area may undermine the market's ability to manage these programs in a manner that makes environmental and economic sense. Furthermore, allowing the government to intervene in the marketplace will create the expectation that they must always do so. In other words, once the government intervenes to prohibit fees, the reverse is also true — if it doesn't prohibit fees, it must be sanctioning them. Any permissible fee could then be seen as a government-sanctioned tax.
Moreover, it is counter to one of the prime objectives of the regulation which is to compel industry — not government — to develop and manage a harmonized consumer paint stewardship program for Atlantic Canada.
RCC has analysed the consequences of hidden fees and identified a number of serious impacts on retailers both large and small:
- Retailers who lease their premises pay more rent: rent is based on gross sales, which increase as prices are increased to cover stewardship program costs. This is a particularly troubling concern for small, local retailers.
- Higher advertising costs are incurred for national or regional retailers who must produce separate production runs with province-specific pricing.
- Some national and regional retailers have information systems that are not easily (or simply cannot be) configured for higher prices in a given province for the same product.
- Product prices in the province may become inflated as a result of the mark-ups that occur along the supply chain.
- Some retailers lose customers to neighbouring jurisdictions where the advertised price of a product is lower because there is not an imbedded eco-fee.
- The program creates an un-level playing field for retailers within a province.
Furthermore, RCC and its members generally agree that there should be a standardized or flat fee per product category, as opposed to a negotiated fee. This is vital to program clarity and success. Moreover, with the same fees being charged by all retailers, a level playing field is established amongst industry.
Again, RCC and its members do not support any legislated or regulatory requirements that retailers bury the fee within the final selling price of a product. Legislation and regulation must remain silent on how and where a steward fee if reflected as the management of stewardship fees associated with the cost of recycling the designated materials is a business decision that must be left to the discretion of each individual steward.
For the reasons listed above, we recommend that the reference to cost internalization be removed from clause 1(e)(ii) and that clause (8) be removed from the proposed Atlantic Region Model for Regulation for Consumer Paint Product Stewardship.
Steward Reporting
Section 6(2)(f) of the model regulation proposes that every brand owner operating a consumer paint product stewardship program shall provide the "total amount of consumer paint products sold" to the [Minister/Board].
The inclusion of this requirement is inconsistent with paint regulations in other jurisdictions. In the interests of harmonization — which is the intent of the proposed model regulation — the government should strive for consistency with other provincial paint stewardship regulations.
Inter-provincial harmonization of product stewardship programs is a fundamental concern for the retail sector. The need for regulation to encourage harmonization with other provinces cannot be overstated. Approaches to product stewardship across Canada are far from consistent and increasingly place national retailers in the position of having to comply with a patchwork of requirements across the country. Implementing different programs in every province has proven to be costly and administratively burdensome for retailers.
Furthermore, the feasibility of meeting this requirement is limited as many national and regional retailers do not order products on a per-province basis. Rather, they order products in bulk and then distribute them to warehouses and stores as required. The merchandise is then shipped from vendors to retailers' warehouses where it is centrally stocked and then allocated and shipped vial their internal supply chain to stores. Given these circumstances, in some cases, some affected retailers would not be able to provide accurate information.
Moreover, requiring stewards to provide the total amount of consumer paint products sold represents significant concerns for retailers as such information is private and the unnecessary release of it could result in anti-competitive practices in the marketplace.
For the reasons listed above, RCC recommends that clause 6(2)(f) be removed from the draft regulation.
Industrial, Commercial and Institutional Waste
Section (1) of the draft regulation defines consumer paint products for "residential, institutional, commercial and/or industrial use." RCC recommends that the reference to industrial, commercial and institutional (IC&I) waste be deleted from the definition, which is consistent with the practice of other jurisdictions where IC&I waste paint is not included. Limiting the programs to waste that enters the residential stream only is consistent with the practice of other provinces, including British Columbia and Saskatchewan's paint stewardship programs.
Retail Representation
As stated earlier, retailers have a significant stake in the development of effective stewardship programs. In addition to being sellers of designated products, RCC's members are increasingly also product brand-owners themselves and are responsible for the end-of-life management of those products and packaging. Given the major role that retailers play in product stewardship, retail must be represented in the decision-making bodies.
Newfoundland and Labrador
The letter dated May 22, 2007, requests feedback on financial penalties for non-compliance, including penalties for failure to meet specific performance targets.
While retailers are committed to achieving high levels of diversion from landfill and compliance across product categories, RCC and its members contend that it is premature to identify performance targets in the program criteria at this time. Without a harmonized program in place, it is impossible to realistically determine how and when different performance targets may be achieved.
A more effective approach to developing a strategy for waste paint diversion in Atlantic Canada might be to focus first on four inter-related questions:
- Is the target diversion rate achievable through reduction, reuse and recycling?
- What are the most effective policies and practices to reach this goal?
- How long would it take?
- Would the benefits outweigh the costs?
RCC and its members feel strongly that a rigorous and comprehensive evaluation of the economic and environmental costs and benefits associated with each target should be completed before setting an appropriate date for achieving the targets.
Furthermore, industry should not be penalized for failure to meet specific performance targets in an approved plan, as proposed in the Newfoundland and Labrador letter. Environmental stewardship is a shared responsibility and penalizing stewards for not achieving performance targets for a program that impacts not only stewards but consumers as well is not appropriate.
With respect to the "mandating of a single industry stewardship organization to take responsibility for paint recovery and recycling of all brand owners in Newfoundland and Labrador," as outlined in the first point of the letter, RCC would like to offer the following comments.
While RCC and its members support harmonization we recommend that the reference to "mandating" be removed. It is our understanding that the Atlantic Solid Waste Resource Committee (ASWRC) was created to work with industry on identifying potential opportunities to harmonize and develop common programs to manage used products. Harmonization of existing and developing paint stewardship programs in Atlantic Canada and mandating a single industry stewardship organization for paint recovery in Atlantic Canada are two distinct issues.
The purpose of this consultation is to gather feedback on harmonization and in particular on the Atlantic Region Model Regulation for Consumer Paint Product Stewardship. If the Atlantic Canada provinces were to consider mandating the development of a single industry stewardship organization for paint recovery, there should be separate consultations with affected industry stewards.
Further, the suggestion that there be a mandatory single industry stewardship organization for paint recovery in Atlantic Canada may have the unintended consequence of deterring affected stewards to develop and adopt programs and practices for the reduction, recycling and reuse of waste. Most existing provincial product stewardship legislation permits stewards to either be part of a common product stewardship program or operate their own program. There are several industry-led waste diversion programs in place across Canada and stewards should have the flexibility to operate their own program.
We look forward to actively working with the Nova Scotia government and other stakeholders to minimize the environmental impacts associated with waste from consumer products. If you require any further information or clarification, please do not hesitate to contact me at (888) 373-8245; e-mail: rkagan@retailcouncil.org.
Sincerely,
Rachel Kagan
National Manager, Government Relations (Environment)
cc: RCC Environment Committee