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Manitoba's Multi-Material Stewardship Program

RCC appreciates the opportunity to comment on the Draft Packaging and Printed Paper Stewardship Regulation and the Stewardship Regulation Guidelines for Product Stewards, brought forward by Manitoba Conservation. 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 multi-material stewardship program for Manitoba. RCC is pleased to be a member of the Printed Paper and Packaging Working Group which has since become Multi-Material Stewardship Manitoba, and we look forward to continuing our active participation and working with the government and other stakeholders on the development of a successful industry-led multi-material stewardship program for the province.

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 draft regulation defines a "steward of designated material" as:

(a) the first person who, in the course of business or a prescribed activity in Manitoba, supplies a designated material to another person; or
(b) a person who, in the course of business or a prescribed activity 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 draft regulation to include brand owners as designated stewards with respect to all packaging and printed paper (PPP).

Furthermore, RCC recommends that the multi-material stewardship program plan include a "voluntary" steward provision which would allow for any person who elects to become a steward respecting designated PPP 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. This is a consistent approach in other provincial product stewardship programs including Ontario and Quebec.

RCC respectfully requests clarification with regards to section (2) of the guideline, "Who is a Product Steward in Manitoba," which explains that a "steward is sometimes referred to…as the 'first seller' or 'first importer'..." and goes on to say that "this may include a variety of participants in the product distribution chain, including a brand owner, producer, manufacturer, distributor, retailer or a business that imports packaging or printed paper for its own use" (emphasis added). "For its own use" could be interpreted as meaning that the multi-material program will include business owners and operators; in other words, the industrial, commercial and institutional sector. However, section (7) of the guideline states that "the program plan does not need to include designated packaging and printed papers managed by industrial, commercial and institutional (IC&I) generators." As IC&I waste is not included in the province's proposed multi-material program, RCC requests clarification as to what "for its own use" implies.

Program Funding

Cost Sharing
Section (2) of the guideline states that one of the requirements for the multi-material program plan is that the "program operator shall fund 80% of the cost of managing designated materials through municipal residential diversion programs."

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. As such, we support the concept of equal cost sharing for Manitoba's proposed multi-material stewardship program; which is a consistent approach with similar product stewardship programs in other provinces including Ontario and Quebec.

RCC and its members do not support an 80/20 funding split between industry and municipalities, as proposed by the Government of Manitoba.

While we recognize and commend the government's shift towards an extended producer responsibility approach it's important to recognize that the success of the program is dependent on recognizing that industry and municipalities have an equal responsibility in the management of waste. A shared responsibility approach requires fair and equal incentives that promote cost effective and administratively efficient programs in which costs are shared equally between industry and municipalities. As mentioned earlier, equal cost share approaches are already in place in both Ontario and Quebec's multi-material stewardship programs.

RCC strongly recommends that the government reconsider its position and amend the guideline to apply a 50/50 split for Manitoba's multi-material stewardship program.

Further that, RCC respectfully recommends that the government establish cost containment measures for stewards to allow industry to outline its funding obligations accordingly. Cost containment is a key factor to ensuring the sustainability of Manitoba's multi-material stewardship program.

Visibility of Fees
RCC and its members are pleased that the draft regulation is silent on the visibility of fees. Section (8) of the guideline 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."

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.

Transparency of costs associated with stewardship programs provides retailers with the flexibility required to cover recycling program costs in a manner that minimizes the financial and administrative impact on their business. Transparency of costs also provides an important opportunity to educate consumers about a stewardship program, and hence encourage their participation.

Collection
Section 4(2) of the regulation requires that the plan for a packaging and printed paper stewardship program include a provision for "a province-wide, convenient collection system for waste packaging and printed paper 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.

Small PPP Waste Generators
RCC recognizes that while many high-profile retailers are big businesses, retail is in fact a small business sector. Close to 25 per cent employ only one to four people and a further 46 per cent are classified as indeterminate businesses, that is, businesses such as sole proprietorships and partnerships, (i.e., usually without a payroll; a representative trait of a number of businesses in the retail trade). In total, approximately 90 per cent of retailers employ less than twenty employees. In most cases, small businesses do not have the financial or human resources to comply with difficult and onerous regulations. Further, additional red tape would hinder their ability to compete and grow their business.

As such, RCC recommends that the rules for the PPP program include a threshold that would exempt small players from undue financial and administrative hardship, so long as it remains fair, reasonable, provides for a level playing field for all businesses and ensures that the majority of designated PPP materials are being captured and reported on.

In Ontario, companies that generate Blue Box waste are exempt from paying fees if they have sales under $2 million and if they generate less than 15 tonnes of Blue Box waste. The purpose of this is to relieve the smallest companies from the financial and administrative burden of the requirements of the program and the resulting cost of their administration on the program.

A similar provision exists in Quebec's curbside compensation regime which allows companies that generate less than 10 tonnes of designated waste, or whose gross sales, receipts, revenue or other inflows in Quebec are less than $1.5 million, the option of paying a flat fee of $280 to relieve them of the reporting requirements of the program.

Without such an exemption level, it would likely cost the industry funding organization more in administration costs than what would be recovered by the potential stewards.

Education and Awareness
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 Stewardship Regulation Guidelines for Product Stewards 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 PPP 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 packaging and printed paper 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 industry funding organization.

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 packaging and printed paper."

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 industry funding organization, as clearly 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 PPP stewardship regulation.

Implementation Time Frames
When deciding upon the actual start date for these programs, RCC and its members recommend that retailers be provided with adequate time for implementation.

The draft regulation does not propose a schedule for program implementation. However, section (10) of the guideline states that the plan "must include a program start date no later than six months following approval by the Minister."

RCC respectfully requests that program implementation not begin between the beginning of October and the end of January. This time period is the busiest for retailers and the detailed program implementation requirements that are necessary would not be possible to achieve during this time frame.

When deciding upon the actual start date for these programs, RCC and its members recommend that retailers be provided with adequate time for implementation. 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.

Program Targets
The draft regulation is silent on program targets; however, section (15) of the guideline states that the program plan will propose program targets and performance measures; 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 guideline.

Harmonization
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; and as such, harmonization must be entrenched as a foundation of product stewardship programs.

RCC strongly recommends that Manitoba Conservation harmonize its PPP stewardship program, where feasible, with existing PPP stewardship programs in Ontario and Quebec.

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.

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, among others.

As mentioned earlier, RCC is pleased to be represented on the industry-led Manitoba Multi-Material Stewardship board.