Overview of Ontario’s draft blue box regulation

On October 19, 2020, the Government of Ontario announced the draft Blue Box regulation which proposes 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 program transition will occur between January 1, 2023 and December 31, 2025 with producers taking full control of the system by 2026. Over three years, the cost of Blue Box for producers will be brought to over $300 million. The Resource Productivity and Recovery Authority (RPRA) will oversee the program.

Based on member feedback, RCC consulted with government and submitted a formal submission in December 2020. The final regulation is expected in early 2021.

To help members better understand the proposed changes, we have divided up the regulation into the following sections along with the impact it will have on retailers. Please let us know if you have any questions or feedback to help inform the development of a submission. For more information on the consultation process including initial government proposals and RCC’s advocacy positions, please see our previous Blue Box webpage.

Draft regulation Impact to retailers
“Blue box material” means material that is primarily made from paper, glass, metal, flexible plastic, rigid plastic or compostable material that is:

Blue box packaging
– Primary packaging, convenience packaging or transport packaging provided with a product
– Ancillary products that are provided with/attached to another product to facilitate use (e.g., coffee cup sleeve)
– Products such has disposable 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.

Packaging-like products (e.g., aluminum foil, metal trays, plastic film, plastic wrap, paper bags, plastic bags, gift wrap, envelopes, etc.) when:
– 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.
Given the breadth of items sold by retailers, there will likely be obligations for most, if not all, material categories.

At this stage, it is not clear whether packages of items (e.g., package of metal trays) would be captured under the packaging-like products definition. RCC will continue to seek clarity around the definition.

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

Although compostable materials are designated, the government is not proposing a separate management target so they will be captured under the most relevant category in the management requirements section (e.g. paper, flexible plastic, rigid plastic, etc.). There will also be separate reporting on compostables to help gather data and fill knowledge gaps.  

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

Draft 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 packaging added by importer
1. Importer (resident in Ontario)
2. Retailer who supplied product to 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, if resident in Canada.

Marketplace sellers
If a marketplace seller is not a brand holder (resident in Canada) or importer (resident in Ontario) then the marketplace facilitator would be captured as a producer.
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 wrap, the retailer would be obligated for the plastic wrap.

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. RCC will continue to advocate on this definition because if a facilitator becomes obligated, they may not be in position to track packaging weights or transaction info from sellers, which could make reporting challenging.

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.

Draft regulation Impact to retailers
If a producer’s annual revenue from products and services is less than $2 million, they are exempt from:
– Part IV (Collection under annual allocation table)
– Part VI (Management)
– Part VII, other than section 53 (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: 2025-2029 Recovery Percentage: Post-2030
Paper 90% 90%
Rigid plastic 55% 60%
Flexible plastic 30% 40%
Glass 75% 85%
Metal 67% 75%
Non-alcoholic beverage containers 75% 80%
Draft regulationImpact to retailers
Management requirements are calculated by the following formula:
(A-B) x C x D
– A is total market supply
– B represents recycled content deductions (see next section for more info)
– C is a recovery percentage for the previous year for a material category (see management requirement tab for percentages)
– D is a redistribution factor that will be calculated and published by RPRA

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.

See the next section on recycled content for ways to reduce management requirements.

Draft regulation Impact to retailers
Producers have the ability to reduce their total supply based on:
– Re-use of PPP for original purpose, or;
– Inclusion of Recycled content in PPP.

There is an upper bound for deductions that you can apply – you cannot reduce your total supply by more than half. In other words, if you supply 10 tonnes of paper packaging, and 100% is recycled content, you can only reduce your supply by 5 tonnes.  

Management requirement is calculated by the following formula:
(A-B) x C x D
The value for “B”, recycled content deductions, cannot be greater than half of “A”, total market supply.  
C is a recovery percentage for the previous year for a material category (see management requirement tab for percentages)
D is a redistribution factor that will be calculated and published by RPRA
Obligated businesses can use recycled content in PPP or reusable PPP to reduce their management requirements up to 50% of their management obligation.

For example, if a retailer utilized reusable clam shells, you could reduce total supply at a 1:1 ratio. In other words, if one tonne of materials was reused, you could reduce your supply by one tonne.

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 de minimis thresholds for every material category

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

Draft regulation Impact to retailers
Residences:
– Permanent and seasonal single-unit residential dwellings (in an eligible community)
– Multi-unit residential buildings (where garbage collection is received at the same frequency as single-unit residential dwellings in an eligible community)

Facilities:
– A building that contains more than one dwelling unit but that is not a residence
– Long-term care home
– Retirement homes
– Public and private schools

Public spaces:
– Any land in any park, playground, or any outdoor area which is owned by, or made available by, a municipality, and that is located in a business improvement area designated under the Municipal Act, 2001 or by a by-law made under the City of Toronto Act, 2006

Service standards for applicable public spaces:
– Only where municipalities provide garbage collection services
– Bin twinning
– Bin monitoring for collection before it is full
– Collection throughout the year
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.

A bin twinning requirement will also add complexity as garbage collection is managed by municipalities while blue box collection services will be managed by industry. RCC will continue to advocate on limiting scope for public spaces to better manage cost increases.
Eligible Communities:
– All municipalities, unorganized territories, and reserves located outside the Far North would be eligible communities, including communities with populations below 5,000
– No more population threshold
– Far North only includes fly-in communities or communities only accessible via winter roads or non-numbered roads (e.g. Moosonee)
– Flexibility on how collection services would be offered for communities not currently covered
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.  

Draft regulation Impact to retailers
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 April 1, 2021.  

If you become a producer of blue box material after April 1, 2021, you must register with RPRA within 30 days of becoming a producer.  

Registration and reporting overseen by RPRA
– PROs, producers, eligible communities and processors all must register
– Keep record of supplied tonnage, system operations, promotion and education
The timeline is short so it will be important for retailers to keep track of deadlines, including registration. RCC will continue to support members in this area by making sure the government doesn’t delay the release of the final regulation with the April registration date in mind.

Draft regulationImpact to retailers
Common Collection System (CCS)
– CCS to provide collection services to all eligible sources
– Collect a consistent set of materials across the province
– PROs or individual producers to ensure delivery of services
– Qualification criteria to negotiate Annual Allocation Table rules
(e.g. minimum 10% of tonnage set by April 8, 2021)

Annual Allocation Table
– Rules will set an annual allocation table for all PROs that will include a fair mix of single-family, multi-residential buildings, public spaces and facilities
– AAT must be submitted to RPRA by July 1 of the preceding year for which the allocations apply; 1st one by March 31, 2022
– Rules can be amended by producers/PROs at any time to ensure success
– If no agreement can be reached after dispute resolution mechanisms (e.g., mediation-arbitration), the Minister would set the rules, reviewing existing rules.
– Minister may substitute PRO-initiated rules to ensure compliance
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 CCS 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 annual 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 AAT would have regulatory effect over producers and PROs in the CCS. An upside of this approach is predictability in understanding what your individual obligation will be in funding the CCS.

RCC is seeking clarity around the dispute-resolution process as the draft regulation gives significant power to the Minister to step in and make changes – Want to make sure that the principles of producer responsibility are maintained.

Draft regulation Impact to retailers
Beginning in 2024, annual reports must be submitted by April 30 of each year, unless under the de minimis threshold. Types of information include:
– Weight of blue box materials supplied to consumers in Ontario in the previous year
– Weight of recycled content in each material category
– Description of actions taken to fulfil responsibilities in the previous year
– And more

Independent audits for producers every 3 years

For compostables, reporting only:
– Weight of compostable blue box materials supplied annually
– Standard used to certify compostability of their blue box materials
– Proportion of materials supplied that was certified under each standard
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.

Draft 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 for producer or its PRO
– If the above info is disseminated in print form, a website should also be provided

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) – only for first year of operation
– A description about how materials should be sorted or bagged – only for first year of operation

There are also additional P&E Requirements for Alternative Collection Systems – see draft 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).

Draft regulation Impact to retailers
A Blue Box transition schedule was provided as a separate PDF along with the draft regulation.   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.

Draft regulation Impact to retailers
Supplemental Collection Systems
In addition to the CCS, 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
Exemption from participating in the common collection system if producers set up an alternative system.
Any alternative system must:
– Meet higher diversion targets
– Be operated year-round/ open during normal business hours
Beyond the CCS, 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, including having to meet higher diversion targets than the CCS.

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