Reclay StewardEdge (RSE) is…

Reclay StewardEdge (RSE) is a pioneer in the recycling and sustainability field, with more than 25 years of experience in the conceptualization, design and delivery of complex projects and programs within the industry across Canada, the U.S. and internationally. Our expertise lies in Extended Producer Responsibility (EPR) and stewardship policy development as well as advising governments on recycling regulations and legislation. RSE operates PROs in Ontario and Manitoba. We are a member of Reclay Group, which operates recycling programs across Europe and South America.

RSE thanks the Government of Ontario for the opportunity to provide comments to this regulation and commends the Government of Ontario for proposing a recycling framework that will enable Ontario to be at the forefront of circular economy policy. It will allow Ontario to be a leader in recycling and enable Ontarians to live more sustainable lifestyles.

RSE has prepared comments on the following four areas, which – despite the regulation’s overall laudability – should be addressed:

Annual Allocation Table eligibility (section 8)
RSE recommends that all PROs/producers be eligible to participate in the allocation table, regardless of their market share, for the following reasons:
- The allocation table will significantly influence success opportunities for PROs, particularly due to its role in allocating collection regions, which will guide costs and profitability of any PRO endeavor
- Requiring a 10% market share threshold will significantly limit competition, resulting in possibly as few as two or three PROs operating in the market, since very few PROs will be able to attain such a high market share
o Given the importance of the allocation table, these few, powerful members of the allocation table will be able to limit competition for years to come by setting rules in their favour (e.g. requiring new market entrant to operate in expensive collection regions only)
 Tire PROs in Ontario were able to successfully work together on clearing house and collection requirements regardless of a PRO’s market share, i.e. the two dominant PROs were able to work with small PROs with under 3% market share
o Such an eligibility threshold allows the dominant player to potentially abuse its market position by binding its current clients that are large producers, making it virtually impossible for other PROs to accumulate enough producers to reach the 10% threshold (i.e. the dominant player (PRO) will only need to bind a small number of the largest producers, making it difficult for other PROs to approach a 10% market share)
- Limited competition will lead to less innovation, due to oligopolistic market structures and harm small business in three ways:
o It will allow large producers and 1-2 PROs to virtually dictate the market conditions, since small PROs are unable to accumulate more than 10% market share
o It will prevent small business PROs from entering the market
o It could severely restrict future PROs from entering the market

Timelines (sections 40 and 41, as well as Part IX)
While RSE appreciates the speed with which the government aims to implement the regulation, doing so favours the current monopoly and will limit competition, in addition to straining producers’ and PROs’ resources in the middle of a pandemic. RSE recommends the following to achieve an orderly transition:
- All registration requirements (section 40 and section 41) be pushed back by a full year to 2022
- That PROs be required to register before producers select a PRO. Otherwise there is a strong risk that most, if not all, producers select the current monopoly for lack of other registered PROs.
- That the transition period be maintained as is (start in 2023, be complete in 2025)
This will allow for more time to setup a functioning and competitive system, while maintaining the transition implementation schedule for municipalities. In addition, this will allow for more competition as particularly new market entrants will require time to approach potential clients and develop collection and sorting relationships.

Definition of obligated materials (section 2)
RSE would like to draw attention to two areas where the definition of designated materials may be ambiguous:
- Under section 2 (2), item 8., ancillary beverage packaging and service packaging for alcoholic beverages (e.g. carton packaging such as wine boxes or paper carry-out bags) are not included. This will lead to such packaging being discarded into the blue box stream, without any producers paying for its collection and treatment. RSE recommends that the exemption for these packaging types be removed.
- Under section 2 (1), the definition of packaging-like product is ambiguous. RSE recommends that the definition of product-like packaging be more clearly defined to avoid Producers paying for non-obligated material. Products like rigid containers, greeting cards, calendars will be disposed into the blue bin by customers and thus flow into the blue box system, yet these management costs will not be borne by the producer of said products.

Materials disposed of in IC&I settings (section 40)
The Regulation excludes packaging material that is supplied for business use, yet Section 40 does not specifically permit Producers to exclude Blue Box material supplied to consumers that is managed in the Industrial, Commercial and Institutional sector. Given that a collection network, as outlined in the

Regulation, is specific to residential and public space, producers are not able to collect and recover these materials. Furthermore, the material in the IC&I sector is already being managed. Without this permission, producers who supply products that are consumed (and the packaging disposed of) in the IC&I environment must include this in their generation report and must collect and process this material which is not available for collection.

RSE recommends that this material be excluded from a Producers reporting requirements to ensure fairness between producers and avoid this material being paid for by the producer as well as the IC&I establishment.