A) General Comments and…

A) General Comments and Summary of Main Points

We would appreciate the opportunity to further discuss this feedback in more detail as you proceed with the consultation process.

(1) We recognize and appreciate the need to review and revise the regulation(s) associated with the RRCEA, particularly now that some regulations have been in place since January 1, 2019 and the ‘real world application’ of the regulation(s) is becoming more clear. However, it is expected that the proposed changes:

• should reinforce the spirit of the RRCEA and Individual Producer Responsibility (IPR)

• should create a more even ‘playing field’ for the various persons (ie. Producers, PROs, Service Providers), and not create a ‘higher standard’ for larger industry participants

• should reduce unnecessary administrative burden on the various persons WITHOUT compromising the integrity of regulation (ie. reporting, auditing)

• should take into consideration the ‘cross-regulation’ impact, ESPECIALLY considering the implications of the Administrative Penalties Regulation.

(2) Many of the proposed changes would erode the intent of Individual Producer Responsibility and essentially create a new “Stewardship model” that would in effect shift the core accountability/ responsibility onto the PRO(s) that a Producer chooses to work with. We have no problem with PROs being accountable, rather this move seems to deemphasize the Producer Responsibility aspect of the Regulation.

The interchangeability of Producer and PRO in the proposed changes (new Section 4.1):

a. Could make PROs ultimately responsible for all reporting, including Producer supply reporting, and therefore subject to administrative penalties.

b. Could eliminate the ‘market-based competition’, as a PRO would essentially be seen as ‘the same as any other PRO’ since a Producer could divest themselves of any accountability to the PRO(s)

c. Creates a structure whereby the Collection System and the Tire Management System are ‘owned’ by the PRO (not the Producer), thus shifting the liability to the PRO (ie. it is no longer a Producer’s Collection System, or a Producer’s Tire Management System)

d. Could make the PRO subject to the administrative penalties that SHOULD be ‘owned’ by the
Producer, especially if the subject of the penalty is not within the context of the contractual
terms between the PRO and the Producer.

Considering the Administrative Penalties regulation, where the Registrar or a Deputy Registrar is
incentivized to issue Penalty Orders, both Producers and PROs may now be subject to penalties for
the same contravention because they would be considered ‘interchangeable’.

(3) The proposed changes to the auditing requirements (eg. Tire Performance Audit after 3 years;
Supply to Market audit changed to a ‘spot verification’ and can be passed on to a PRO or other
prescribed person; Visible Fees audit removed), while they may superficially look good ‘on paper’
creates risk within the system

• Tire Performance Audit

a. is already done by the PRO on behalf of their Producers, so from a practical point of view, there is no direct benefit to the Producer to move it to a 3-year cycle.

b. Given the requirement to report accurate information (which needs to be audited eventually), an annual audit should be done regardless in order to ensure accurate annual reporting and avoid administrative penalties related to ‘reporting incorrect information’

c. by making it a 3-year audit, there is greater risk of PROs and/or Producers exiting the industry and/or entering into different contractual arrangements in the middle of the 3-year cycle, thus creating confusion and/or disputes about who is ‘on the hook’ for particular reporting years’ audits

• Supply to Market Audit

a. Supply to Market determines future years obligation

b. This is the ONLY mechanism to accurately verify the actual amount of tires introduced into
market

c. Removing the audit creates risk that a given year’s obligation may change years down the road once a performance year has been completed, thus impacting whether a PRO/Producer has met their obligation.

(4) The timing for any changes to Regulation 225/18-Tires to come into effect should be January 1, 2023 (for the 2023 performance year onwards), as planning and auditing has already begun for the 2022 performance year.

• This will allow for time/opportunity to fully understand the true impact of the changes to any commercial agreements and subsequently re-negotiate terms if required.

As indicated, the above is a summary of the MAIN POINTS we believe create the greatest risk to the intent of IPR contemplated by the RRCEA, and only forms a part of the full set of comments related to this consultation.

More detail is provided in the attached documentation to further clarify the impact of the proposed changes.

We welcome the opportunity to further clarify any comments.