Overview of Ontario’s blue box regulation

On October 19, 2020, the Government of Ontario released the draft Blue Box regulation which proposed to make producers 100% physically and financially responsible for the Blue Box, a recycling program in Ontario for materials like paper, glass, cardboard, plastics, and more. This contrasts with the current system where costs are equally shared between producers and municipalities. The regulation is important to retailers because they will have legal obligations to collect and manage printed paper and packaging based on the total amount supplied into the province. The Resource Productivity and Recovery Authority (RPRA) will oversee the program. Based on member feedback, RCC consulted with government on the draft regulation and submitted a formal submission in December 2020.

On June 3, 2021, the government released the final Blue Box regulation. The program transition will occur between July 1, 2023 and December 31, 2025 with producers taking full control of the system by 2026. Ontario’s 1,900 stewards will more than quadruple their annual contribution to recycling, from $135 million annually to $600 million each year, as per estimates prepared for industry by Deloitte. Since the inception of the blue box system, businesses have contributed more than $1.6 Billion to the program.

To help members better understand the timeline and regulatory obligations, we have divided the final regulation into the following sections along with the impact it will have on retailers. Please let us know if you have any questions.

Final Regulation
Producer Registration:
– Producers need to register with RPRA on or before October 1, 2021

Producer Representation Agreement with a PRO:
If a producer chooses to enter into an agreement with a PRO, info must be submitted to RPRA on or before the later of:
August 1, 2021 or 5 days from the date the producer entered into the agreement

PROs to negotiate rules for Allocation Table:
– Initial allocation table must be submitted to RPRA on or before July 1, 2022 and have a collection period that commences on July 1, 2023

Transition:
July 1, 2023 – December 31, 2025 (approx. 1/3 municipalities transitioning each year)

Final regulation Impact to retailers
“Blue box material” includes material that is primarily made from paper, glass, metal, plastic, or a combination of materials that is:

Blue box packaging
– Primary packaging, convenience packaging or transport packaging provided with a product
– Ancillary product that is integrated into the packaging
– Products such as straws, cutlery or plates that are supplied with a food/beverage product, that facilitate consumption of that product, and are ordinarily disposed of after a single-use, whether or not they can be reused.

Paper including printed/unprinted (e.g., magazines, newspapers, directories, paper used for writing/copying, promotional materials, etc.)
Does not include: hard/soft cover books, hardcover periodicals, etc. or any product that, at the time it is supplied to the end user, is blue box packaging or a packaging-like product.

Packaging-like products including aluminum foil, metal trays, plastic wrap, wrapping paper, paper bags, beverage cups, plastic bags, cardboard box/envelope, with the following characteristics:
– Ordinarily used for the containment, protection, handling, delivery, presentation or transportation of products
– Ordinarily disposed of after a single use, whether or not it could be reused.
– The product is not used as packaging when supplied to end user
Does not include: products made from flexible plastic that are ordinarily used for the containment, protection, or handling of food, such as cling wrap, sandwich bags, or freezer bags.
Given the breadth of items sold by retailers, there will likely be obligations for most, if not all, material categories.

The designation of single-use items (e.g., straws, cutlery, etc.) will impact some members but given the proposed federal single-use items ban, this may be irrelevant.

It is important to note that multi-packs of packaging-like products (e.g., packs of metal trays sold to customer) are captured.

Although compostable materials are designated, the government is not proposing a separate management target. There are separate reporting requirements for compostables to help gather data and fill knowledge gaps.

Similar to the batteries and electronics regulations in Ontario, the government has included a producer hierarchy definition. This is a comprehensive way to obligate producers, even if they do not have physical locations in Ontario.

Final regulationImpact to retailers
Blue Box Packaging – portion added by brand holder
1. Brand holder (resident in Canada)
2. Importer (resident in Ontario)
3. Retailer who supplied product to customer  
Portion of Blue Box Packaging added by importer
1. Importer (resident in Ontario)
2. Retailer who supplied product to customer
For any portion of Blue Box packaging not mentioned above, the producer is the retailer who supplied the product to the customer

Paper and Packaging-like Products
1. Brand holder (resident in Canada)
2. Importer (resident in Ontario)
3. Retailer who supplied product to customer

Franchises
If a franchise is captured under the above definitions, the producer is the franchisor.

Marketplace sellers
If a retailer is captured by one of the sections above and is a marketplace seller (i.e., has a contract with a marketplace facilitator to sell products), the marketplace facilitator is the designated producer.

Marketplace facilitator means a person who:
(a)  contracts with a marketplace seller to facilitate the supply of the marketplace seller’s products by,
(i)  owning or operating an online consumer-facing marketplace or forum in which the marketplace seller’s products are listed or advertised for supply, and
(ii)  transmitting or otherwise communicating the offer or acceptance between the marketplace seller and a buyer, and
(b)  provides for the physical distribution of a marketplace seller’s products to the consumer, such as by the storage, preparation or shipping of products.
For blue box packaging, paper and packaging-like products, the first producer captured is the brand holder. This will capture retailers who carry their own brand-name product lines.

If there is no brand holder in Canada, the obligation falls to the importer, if resident in Ontario. In some cases, retailers can be classified as importers or will be the obligated producer as a retailer supplying products to customers.

If designated materials are supplied to you by an Ontario based distributor, that business would be captured as the obligated producer since it is an importer resident in Ontario.

For blue box packaging, it will be important to consider whether packaging has been added by an importer/retailer as they will be responsible for what has been added. For example, if vegetables came in a package but a retailer decided to add additional plastic packaging, the retailer would be obligated for the plastic packaging.

The regulation also includes a section on marketplace sellers and facilitators. For example, a seller may be a small independent merchant whereas the facilitator may be a large retailer with a marketplace platform.

This provision still offers the benefit of capturing materials that are currently not paid for by foreign-based sellers so in essence, it helps eliminate foreign free riders.

Final regulation Impact to retailers
If a producer’s annual revenue from products and services is less than $2 million, they are exempt from:
– Part III (Allocation Table)
– Part IV (Collection Under Allocation Table)
– Part VI (Management)
– Part VII, other than section 66 (Registration, Reporting, Auditing, and Record Keeping – other than any records that demonstrate annual revenue is less than $2 million)
– Part VIII (Promotion and Education)

Producers with more than $2 million in sales would still be required to register, report and keep records. They would be exempt from management requirements for a given material category should they supply less than:
– 9 tonnes of paper
– 2 tonnes of rigid plastic
– 2 tonnes of flexible plastic
– 1 tonne of glass
– 1 tonne of metal
– 1 tonne of non-alcoholic beverage containers
A small producer exemption, also known as a de minimis, is a way to reduce costs and administrative burdens for small producers.

Depending on annual revenue and tonnage supplied, some retailers will be exempt and not have any obligations when it comes to material collection/management, registration, reporting and more.
 
The dollar amount threshold is the same as it is now under the current system. Small businesses with more than $2 million in sales will still have an opportunity to be exempt given the tonnage thresholds.

Recoverable Material Recovery Percentage: 2026-2029 Recovery Percentage: Post-2030
Paper 80% 85%
Rigid plastic 50% 60%
Flexible plastic 25% 40%
Glass 75% 85%
Metal 67% 75%
Non-alcoholic beverage containers 75% 80%
Final regulationImpact to retailers
Management requirements = A x B
– A = weight in tonnes of Blue Box material in a material category that the producer is required to report in the previous year
– B = recovery percentage for the previous year for a material category (see table above)

During the transition period, management requirements will be “best effort”:
– The management target for 2023 for a producer is reduced by two thirds
– The management target for 2024 for a producer is reduced by one third
– The management target for 2025 is not reduced.
A management requirement is the minimum amount of blue box material that a producer (e.g., retailer) must manage.

By having reduced “best effort” targets in 2023 and 2024, producers will have more time to adapt for transition and ensure systems are operating efficiently.

Unlike the draft regulation, there are no reductions associated with using recycled content.

Collection requirements to apply to producers of all categories of blue box materials except for:

• Producers of only exempted materials (e.g. compostable materials, which are subject only to reporting requirements);
• Producers who already have an established alternative collection system that meets all prescribed criteria;
• Producers who fall below the small producer exemption thresholds for every material category

Eligible sources includes residences, facilities and public spaces as follows:

Final regulation Impact to retailers
Residences:
– Permanent and seasonal single-unit residential dwellings (in an eligible community)

Facilities:
– Multi-unit residential buildings (e.g., apartment building, condominium)
– Long-term care homes (that are non-profit OR included in the WDTA blue box program on Aug. 15, 2019)
– Retirement homes (that are operated by a municipality or an entity that does not operate with a purpose of generating profit OR included in the WDTA blue box program on Aug. 15, 2019)
– Public and private schools

Public spaces (as of January 1, 2026):
– Outdoor area in a park, playground or sidewalk
– Public transit station or stop under municipal or provincial jurisdiction, including a track-level stop, to which the public is normally provided access

Service standards for eligible public spaces:
In each calendar year, a producer shall provide a number of blue box receptacles that is equal or greater to the amount determined by the following equation, in each eligible community in which the producer is allocated an eligible source: A × B / C

A = the number of residents in the eligible community in the previous calendar year divided by:
(a)  400, if the eligible community has a population equal to or greater than 500,000;
(b)  600, if the eligible community has a population equal to or greater than 30,000, but less than 500,000;
(c)  800, if the eligible community has a population equal to or greater than 5,000, but less than 30,000; and
(d)  1000, if the eligible community has a population less than 5,000, with no less than one blue box receptacle in any eligible community
B = aggregate weight of blue box material in every material category, other than certified compostable products and packaging
C = aggregate of all weights of blue box material in every material category, other than certified compostable products and packaging

During transition – public spaces:
Blue box receptacles must be provided in the same public spaces and in the same quantity as were provided in that eligible community under the WDTA blue box program.
Through the common collection systems, retailers will be obligated to collect from all of the eligible sources and communities.

Public spaces, such as parks and playgrounds, were not considered in scope during the consultation process and will represent a significant cost increase for producers.

In comparison to the draft regulation, RCC was successful in advocating for the removal of requirements related to bin twinning and servicing business improvement areas (BIA). There is now a bin ratio that is dependent on the eligible community’s population size.

Malls and office buildings are not captured under the definition of “facilities”.
Eligible Communities:
– All municipalities, local services board areas, and reserves located outside the Far North would be eligible communities (including communities with populations below 5,000).
The inclusion of communities with populations below 5000 will add about 5% in terms of tonnage but we expect costs to be more than 5% (given long distances that need to be covered, low population densities, etc.). A lack of data doesn’t allow us to have a clear cost assessment on how much additional this will be.  

Final regulation Impact to retailers
Producer Registration with RPRA:
– If you are currently a producer of Blue Box material supplied to consumers in Ontario, you will need to register with RPRA on or before October 1, 2021.  
– If you become a producer of blue box material after October 1, 2021, you must register with RPRA within 30 days of becoming a producer.  

Producer registration with a PRO:
– If a producer chooses to enter into an agreement with a PRO, information must be submitted to RPRA on or before the later of:
August 1, 2021 or five days from the date the producer entered into an agreement with the PRO.

In order to participate in rule creation for the Allocation Table, PROs will have to register with RPRA and submit information between August 1, 2021 – November 1, 2021.
Timelines are short so it will be important for retailers to keep track of deadlines, including registration. RCC will continue to support members in this area.

Final regulationImpact to retailers
Rule-Making for Allocation Table
In order to participate in rule making for the allocation table, PROs must:
– Have entered into a representation agreement with one or more producers
– Represent an aggregated supply of at least 20,000 tonnes of Blue Box material
– Have registered with RPRA between August 1 – November 1, 2021

The rules must have agreement from PROs that represent 66% of all producer tonnes at the negotiation table. Proposed rules can be submitted to RPRA on or after January 1, 2022.
– The initial allocation table must be submitted to RPRA on or before July 1, 2022 and have a collection period that commences on July 1, 2023.
– If rules are not made by July 1, 2022, the Minister can step in and make the rules. The Minister also has the ability to make, replace and/or amend rules at any time.
Producers will have the opportunity to sign-up with producer responsibility organizations (PROs) to help fulfill obligations such as collection and reporting.

In order to determine how the system will be set-up, PROs will come together to develop rules – this will include how the province is fairly broken up to ensure comprehensive collection services.

An allocation table will ensure that all eligible sources (e.g., residences) across the province are serviced by the CCS. It will fairly lay out which residences, facilities and public spaces producers are responsible for (i.e., who does what where).

Ultimately, rules in the Allocation Table have regulatory effect over producers and PROs. An upside of this approach is predictability in understanding what your individual obligation will be in funding the CCS.

Final regulation Impact to retailers
Annual Reports:
Beginning in 2022, annual reports must be submitted by April 30 of each year (based on the previous year’s supply), unless the producer is under the small producer exemption threshold. Types of information include:
– Weight of blue box materials supplied to consumers in Ontario in the previous year
– Description of actions taken to fulfil responsibilities in the previous year
– And more
There are specific reporting requirements for certified compostable products and packaging.

There are deductions available as follows (see section 45 of the regulation for more information):
Info needs to be submitted to RPRA (where applicable) including:
i.  The weight of blue box material in each material category.

ii.  The weight of blue box material in each material category required to be submitted under subparagraph i that was,
A.  deposited into a receptacle at a location that is,
1.  not an eligible source, and
2.  where the product related to the blue box material was supplied and used or consumed, and
B.  collected from an eligible source at the time a related product was installed or delivered.

iii.  The weight of blue box material in each material category required to be submitted under subparagraph i minus the weight of blue box material in each material category required to be submitted under subparagraph ii.

Audits (every 3 years):
On or before April 30, 2027, and every third year after that, a producer is required to have an independent audit of the immediately preceding three calendar years.
Reporting is an important way to assess performance. Producer responsibility organizations (PROs) can assist retailers with reporting.

Since there is a lack of data on compostables, a reporting only requirement for compostables (no separate management requirement for compostables) will help fill this knowledge gap and inform next steps.

Deductions may apply for producers who supply products (e.g., food, coffee) that are consumed on-site (e.g., in-store, in a shopping mall, etc.) or where packaging is taken away from an eligible source (e.g., customer’s home) at the time of delivery. For example, retailers often take packaging back to distribution centers/stores after furniture is delivered. In this case, the packaging would not end up in the residential waste/recycling streams and could be subtracted as per (iii.).

Final regulation Impact to retailers
Materials must be:
– Provided in French and English
– Available on a publicly accessible website
– In print and delivered by mail to each eligible source for which the producer has collection responsibilities, at least once per year.

P&E Program requirements include:
– A complete list of materials that can be included in the blue box receptacles
– List of materials that cannot be included in blue box receptacles
– A description of how receptacles can be replaced or how additional receptacles can be requested
– A description of how the producer will fulfill its collection responsibilities
– Contact info (telephone/email) where people can ask questions, make request for receptacles, etc.

During transition (2023-2026), there are additional P&E requirements, for example:
– A description of any significant changes from the collection service that was previously provided by a municipality (including changes to what materials can go in the blue box/changes to sorting procedures)
– A description about how to prepare materials for receptacle (e.g. rinsing)
– A description about how materials should be sorted or bagged

There are also additional P&E Requirements for Alternative Collection Systems – see regulation for more information.
If retailers are obligated, they will have to develop promotion and education materials – PROs can help with this work. Ultimately, P&E helps educate consumers and encourages proper sorting of materials which helps to reduce contamination.

It is important to note that there are additional requirements during transition so consumers are aware of any changes (e.g., what materials can go in the Blue Box).

Final regulation Impact to retailers
Transition will begin as of July 1, 2023 and end on December 31, 2025.

A Blue Box transition schedule was provided as a separate PDF along with the final regulation.  
The draft regulation originally had the transition starting as of January 1, 2023 but this has now been pushed until July 1, 2023 to give producers/PROs more time to prepare.

The transition list is fairly balanced and geographically grouped, where possible, so 1/3 of municipalities will transition each year – 2023, 2024, 2025. This will help spread out costs for retailers throughout the transition period rather than transitioning all municipalities at once (high upfront costs/complexity). A phased approach will also help minimize disruptions to the system.

Final regulation Impact to retailers
Supplemental Collection Systems
In addition to the common collection system, individual producers can establish supplemental collection channels (in-store take-back, collection events, etc.). This would count over and above the performance reached through the CCS.

Alternative Collection Systems
Producers can establish alternative collection systems for one or more categories of blue box materials.
Any alternative system must:
– Enable the producer to meet its management obligations
– Be operated year-round/open during normal business hours
– And more
Beyond the common collection system, retailers have options when it comes developing a supplemental or alternative collection system. A supplemental system can help obligated retailers collect even more materials to achieve high performance levels.

A retailer could also decide to set up an alternative collection system rather than contributing to the CCS. Although this is an option, there are additional requirements.

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