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Manitoba's Electronic Waste Stewardship Program

RCC appreciates the opportunity to comment on the Proposed Electrical and Electronic Equipment Stewardship Regulation and the draft guideline for Electrical and Electronic Equipment Stewardship Regulation, brought forward by Manitoba Conservation for consultation.

Retailers, as the sellers of designated products and the touch point for both consumers and manufacturers, have a significant stake in the development of 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.

Indeed, retailers support the principles of waste diversion as a whole and look forward to working together with other key stakeholders in creating a successful industry-led electronic waste stewardship program for Manitoba.

The following represents the initial thoughts of retailers, which may be added to and/or refined as further discussion and consultation takes place.

Definition of a Steward
The proposed Regulation defines a "steward of designated material" as:

(a) the first person who, in the course of business in Manitoba, supplies designated material to another person; or
(b) a person who, in the course of business in Manitoba, uses a designated material obtained in a supply transaction outside of Manitoba.

By limiting the steward definition to only the "first seller" or "first importer" of designated products, a disproportionate amount of the stewardship obligations will fall to retailers since they will largely be the first importer of designated products into the province.

RCC recommends that a new bullet be added to the definition of "steward of designated material" in the proposed Regulation to include brand owners as designated stewards with respect to all electrical and electronic equipment.

Furthermore, RCC recommends that the electronic waste stewardship program plan include a "voluntary" steward provision which would allow for any person who elects to become a steward respecting designated electrical and electronic equipment that would otherwise be the responsibility of another steward, shall be designated a steward to allow them to report and remit on behalf of other stewards; and the steward otherwise responsible is exempt from the requirement to pay fees.

This will allow non-resident brand owners to report and assume the stewardship obligation for the designated products they sell into Manitoba but may not be directly responsible for under the requirements of the Regulation.

Program Management
The proposed Regulation is based on the principles of Extended Producer Responsibility and would shift responsibility for managing targeted waste materials to a new organization established by industry stewards. RCC supports industry-led stewardship programs and supports the government's intention to allow affected industry stewards to develop and implement an electronic waste stewardship program for Manitoba.

Program Materials

Product Phasing
The proposed list of electrical and electronic equipment, as contained in section (2) of the proposed Regulation, is extensive and covers a large range of product categories. RCC and its members believe that in order to develop a successful program, it is important to limit the list of products designated for diversion.

RCC recommends a phased-in approach for the program which is harmonized with designated materials in other existing or developing provincial electronic waste programs. As such, RCC recommends that Phase One of the program only include:

• Televisions,
• Desktop computers and laptop and other portable computers,
• Desktop computer monitors,
• Computer printers, and
• Peripherals for desktop computers, laptop and other portable computers and computer printers.

This is a consistent approach in other provincial electronic waste stewardship programs including Alberta, British Columbia, Saskatchewan and Nova Scotia.

By scheduling a manageable number of products, an Industry Funding Organization (IFO) will be able to successfully implement a waste diversion program, where additional products can be included in the future. To this end, the IFO should be authorized to conduct an annual review to determine if, when and what other products should be added to the program. However, it is important that the IFO be allowed to determine the rate at which products would be added to the existing waste diversion program.

Inter-provincial harmonization of product stewardship programs is a fundamental concern for the retail sector. 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; therefore, harmonization must be entrenched as a foundation of product stewardship programs. As such, we feel that it is appropriate that only some products be designated for diversion at this time. Furthermore, by phasing and limiting the list of products designated for diversion it simplifies the program which may help consumers more readily understand and accept it, and hence encourage their participation.

Batteries
The proposed Regulation also includes batteries as designated material for the purpose of the Act as follows: "Batteries of any kind, including, but not limited to, devices that convert chemical energy to electrical energy and rechargeable batteries, but not including lead acid automotive batteries or zinc-carbon or alkaline batteries."

RCC is concerned that including batteries in the proposed Regulation may duplicate current efforts in the marketplace to divert batteries from landfill, and may also cause confusion among stewards as it relates to the proposed Hazardous or Prescribed Household Material Stewardship Regulation, which Manitoba Conservation recently released for consultation.

The proposed household hazardous waste Regulation includes a category for "waste household hazardous materials" and it is possible that alkaline batteries could be included in this category. RCC is concerned that retailers could be subject to two separate fees under the two programs for the same product category.

Furthermore, the Rechargeable Battery Recycling Corporation (RBRC) runs a national program called Call2Recycle which is responsible for recycling rechargeable batteries including those with the following chemistries: Nickel Cadmium (Ni-Cd), Nickel Metal Hydride (Ni-MH), Lithium Ion (Li-ion) and Small Sealed Lead* (Pb).

As a national recycling program exists for rechargeable batteries and since the Proposed Hazardous or Prescribed Household Material Stewardship Regulation has the capability of addressing other types of batteries, including alkaline within the waste household hazardous materials category, RCC recommends that batteries be removed from the Proposed Electrical and Electronic Equipment Regulation.

Collection
Section 4(2)(c) of the proposed Regulation requires that the plan for an electrical and electronic equipment stewardship program include a provision for "a province-wide, convenient collection system for waste electrical and electronic equipment without user fees at the point of collection."

RCC and its members understand the importance of ensuring that consumers have reasonable access to collection points, particularly in remote areas. An issue of concern, however, is that one method that is consistently proposed to achieve this objective is a return-to-retail collection system.

RCC has reviewed the issues arising if retail stores acted as collection points for used or leftover consumer products and packaging. These issues include:

• Lack of space to store used products;
• Need for renovations to accommodate returns (additional ventilation, closed rooms, racking etc.)
• Need to hire additional staff to handle incoming used products;
• Need for specialized staff training to handle incoming used products;
• Employee and customer health and safety associated with handling and storing used products;
• Store insurance coverage;
• Store fire code compliance;
• Store municipal by-law compliance;
• Administrative costs; and,
• Breach of lease provisions.

Accordingly, RCC and its members do not support any legislated or regulatory requirements that used or leftover consumer products and packaging be returned-to-retail.

That being said, occasionally some retailers and their suppliers may operate specialized take-back events for used or leftover consumer products. Any product stewardship program should recognize these voluntary programs and allow retailers the flexibility to operate them.

Program Funding
The draft Regulation is silent on cost recovery, while section (8) of the draft Guideline states that the "affected industry and potential program partners will bear the costs of operating the program, or fund the implementation of the program." The Guideline also states that "fees required to support the implementation of an approved program plan will be set within an approved program plan and collected from product stewards" and further that "funds raised will be directly related to the costs of managing that designated material or product category."

RCC and its members recognize that waste is a societal issue, and as such, we all share a responsibility in the management of used or leftover products.

RCC is pleased that the proposed Regulation is silent on the management of steward fees as 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.

Typically, costs for product stewardship programs are funded by an environmental levy or eco-fee associated with a product, and financing these eco-fees for post-consumer material recovery and recycling presents challenges to all retailers. Some stewardship programs have been designed to require retailers to bury the eco-fee within the final selling price of a product, thereby, hiding the costs from consumers. As each retail operation is different, retailers require the flexibility to cover recycling program costs in a manner that minimizes the financial and administrative impact on their business.

RCC has analysed the consequences of such practices on retailers 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.

In addition to these concerns, retailers believe that transparency of program costs provides an important opportunity to educate consumers about a stewardship program, and hence encourage their participation.

To be clear, retailers require the flexibility to cover recycling program costs in a manner that minimizes the financial and administrative impact on their business. As stated earlier, RCC and its members do not support any legislated or regulatory requirements that retailers bury the eco-fee within the final selling price of a product.

Where possible, Manitoba should strive for consistency of fees with existing electronic waste diversion program programs. A number of provinces have implemented electronic waste programs including British Columbia, Saskatchewan and Nova Scotia (as of February 1, 2008).

Program Plan Development and Implementation Timing
When deciding upon the actual start date for these programs, RCC and its members recommend that retailers be provided with adequate time for program plan development and program plan implementation.

The proposed Regulation does not propose a schedule for program plan development or implementation. However, section (10) of the guideline states that "a program plan must be submitted for approval by the Minister within the time frame to be set in the regulation."

RCC recommends that the regulation be amended to include a section on timing as follows:

A program plan for Electrical and Electronic Equipment must be submitted for approval to the Minister within 12 months of the date this Regulation comes into force. Following that, the plan must be implemented within 12 months from date the Minister approves the Electrical and Electronic Equipment waste stewardship program plan.

Retailers have expressed concerns in other jurisdictions with the extraordinarily quick pace that governments have allocated for the development of product stewardship programs. Retailers require ample time and opportunity to fully digest any program plan, budget for it, and take the necessary steps to prepare their respective organizations for compliance with the program. This is compounded by the fact that retailers are engaged in the development of other stewardship programs, which can leave them resource challenged.

Further that, RCC recommends that the plan recognize that program implementation cannot occur during retailers' black-out periods, which take place during the back-to-school shopping period (August/September) and the holiday shopping period (November-January). As these are the busiest time for retailers, it could make program plan implementation unfeasible for many retailers.

Program Targets
The proposed Regulation is silent on program targets; however, section (15) of the draft Guideline states that the program plan will propose program targets and performance measures after consultation with stakeholders; that interim targets may be established by the Minister for purposes of plan development; and that acceptable targets and performance measures will be set as part of the written guidelines to be established by the Minister.

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 comprehensive programs in place, it is impossible to realistically determine how and when different performance targets may be achieved.

The program should be operational for at least one year before performance targets are established.

With regards to the examples of performance measures listed in section (9) of Part II of the guideline, RCC believes that sales data is not an appropriate or relevant measure and should be removed from the draft Guideline.

Promotion and Education
Product stewardship is a shared responsibility and waste diversion programs will only be successful if consumers are aware of the program and see the benefits of participation. Educating consumers on stewardship issues is a fundamental component of any stewardship program. As the touch point for both consumers and manufacturers, retailers are a vital link in the supply chain and are strategically well positioned to assist in educating and increasing awareness among consumers.

Section 3(3) of the proposed regulation contains a requirement that point-of-sale information be made available to consumers, and the draft Guideline states that retailers are "required to provide information on the stewardship program to the consumer." Furthermore, the guideline specifies that the establishment and administration of point-of-sale information for the program is a requirement that must be included in the stewardship plan.

While RCC agrees that point-of-sale information should be made available to consumers, we believe such educational material should be prepared and provided to retailers by the program administrator; it should not be the responsibility of the steward. This will ensure that a uniform message is delivered to consumers and will assist with increasing compliance with the program. This approach is also consistent with existing stewardship programs in other provinces.

Furthermore, RCC recommends that the costs for the establishment and administration of the point-of-sale information should be the responsibility of the program administrator, and should be included in the overall cost of the program; which is consistent with other jurisdictions. For example, the Alberta Recycling Management Authority includes awareness and education costs in the environmental fee charged to consumers on the sale of designated materials. It should not be the responsibility of the individual steward to fund the costs for the establishment and administration of point-of-sale information on the stewardship program.

Cost Containment
Section 4(2)(d) of the draft Regulation states that the Electrical and Electronic Equipment stewardship plan must include a provision for "a system for the payment of expenditures incurred in the collection, transportation, storage, processing and disposal of waste electrical and electronic equipment in connection with the waste reduction and prevention program." RCC agrees that the management of costs incurred by the program should be left to the discretion of the IFO.

However, in addition to provision (d) of section 4(2), provision (h) requires the stewardship plan to include a condition that "the payment of salaries and other costs of government for the administration and enforcement of this regulation and of the Act as it relates to electrical and electronic equipment."

RCC does not support section 4(2)(h) of the proposed Regulation as it is inappropriate to require individual stewards to pay for government salaries and "other costs" for the administration of the program. Specific details of what the administrative costs may include should be left to the discretion of the IFO, as outlined in section 4(2)(d).

Requiring the stewardship plan to include a provision for a system of payment for incurred costs is consistent with other provincial jurisdictions; whereas including a provision to compensate government salaries is inconsistent with other jurisdictions.

RCC recommends that clause (h) from section 4(2) be deleted from the draft Regulation.

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.

Currently, RCC, or a retail representative, is represented on many stewardship boards across the country including Stewardship Ontario, Waste Diversion Ontario, Tire Stewardship British Columbia, Tire Stewardship Manitoba and the Saskatchewan Scrap Tire Board, Saskatchewan Waste Electronic Equipment Program Board, Éco Entreprises Québec, Société de gestion des huiles usagées (SOGHU), among others.

Given the major role that retailers play in product stewardship, retailers must be involved in program plan development and implementation and must represented in the decision-making bodies related to the proposed Electrical and Electronic Equipment Stewardship program.