Ontario’s Hazardous Waste Program Still Raising Questions

Months after Ontario’s Municipal Hazardous and Special Waste Program came into effect, those having to deal with the program are still looking for answers.

The program is operated under the auspices of Stewardship Ontario and debuted in July of this year. It has a simple, admirable goal: reduce the environmental impact of hazardous materials and the packaging they come in.

“The primary goal is to find ways of promoting diversion of automotive materials from landfill and incineration. This is accomplished, in simple terms, by collecting steward fees up front to fund public education efforts that these are not things that should be tossed in the bin,” says Dave Blundell, who, as automotive and transporters/processors channel lead, administers the automotive section at Stewardship Ontario.

Blundell explains that funds go towards research and development when required. “In the automotive channel, most of the money goes toward the transportation and collection of these materials to keep them from the landfill.”

The basic program is designed to remove the onus for securing, and paying for, the collection and disposal from the end user, which is in most cases an automotive service provider’s repair facility, and to lay it at the feet of hazardous waste collection contractors.

“I hear from a lot of folks, and usually the first question is that they are already paying someone to pick up filters and antifreeze and it looks like they are getting double-dinged,” says Blundell. “The answer is that it might take a while to get everything worked through the system; you will get a new fee up front, but since most of that fee is an incentive for the ‘Safety Kleens’ of the world, that cost should now go to zero or close to zero.”

For those who have to deal with the hazardous and special waste they generate, the situation becomes more complex when you start to look at how existing practices mesh with the new requirements.

While products such as oil filters have long been dealt with privately, the product packaging has not. Plastics recycling capabilities are going to have to ramp up to get returns into the 50% to 60% level found in other provinces where programs exist.

“Less than 6% of the bottles get recycled here and the primary reason is that there is a lack of processing capacity in the province of Ontario.” Accordingly, discussions are in place with several firms to bring facilities into operation. But, at the end of the day, says Blundell, those in the business of servicing cars or supplying those who do should not be out of pocket.

“Before July 1, an automotive ASP was paying Safety Kleen or whoever to have their waste removed. After July 1, Safety Kleen can invoice Stewardship Ontario.”

There are a few wrinkles, such as the fact that the MHSW charges may be more than some shops may have formerly paid for safe disposal. But, he adds, other shops may pay less under the new program.

“Some people had a better deal before July 1. [But] somebody from the back forty may not have had the same deal as someone around the corner.”

Many ASPs seem to be taking to the deal without much bother. Jobber Adrian Gordon, owner of Gorwood Automotive in Woodstock, Ont., says that some understand it and some don’t, but nobody is kicking up much of a fuss. He thinks they should be asking more questions than they are, and among jobbers, the question of how to account for it has him concerned.

“The main concern is, you dress it up any way you want but we are basically taking an excise tax on the goods coming in, but it does not show on our cost of goods. It’s not reflected in [the value of] our inventory.

“So our inventory is undervalued as a result. We have paid for it, but when we sell it we don’t make money on that portion.” And, at the end of the year, that can have tax implications. “Technically, if you rotate your inventory three times a year, the entire inventory has that cost in it and it’s not showing.

“From the jobber community, I don’t know that guys are realizing that the inventory on the shelves is worth more than what their computer system is reporting. Because if you pay for it and write the cheque, you own it and it is part of your cost of goods.

“Nobody seems to grasp it.”

So it doesn’t become a separate line after it has been paid –only when they sell it.

Paying the MHSW fees up front in this way and not being able to charge them out until the sale is made makes him feel a bit like a bank, and he doesn’t like it. And he doesn’t understand why more people aren’t asking questions about it.

“All we are doing now is spreadsheeting it separately in the event that the government changes its mind. But as far as establishing a value in the inventory, we don’t know what the heck to do.”

He says that he’s not sure that other jobbers understand the impact of the issue, and seem to be content to let their accountants figure it out at year’s end. He doesn’t understand that approach. “Don’t you want to know where you are at now, not just the end of the year?”

From the supplier’s perspective, there continue to be questions about how, and who, should be remitting the fees to Stewardship Ontario.

Mark Reed, director of marketing for Shell Lubricants —and an active participant on the stakeholder board working with Stewardship Ontario — says that when products are shipping through distribution, it can be difficult to determine exactly how much product has been sold to the end user. In the same vein as the concerns voiced by Gordon, he feels products still in the distribution chain are in a sort of surcharge limbo.

“I am still trying to understand where this is going to land,” he says. “Canadian Tire and Uni-Select can remit on our behalf [by signing a remitter’s agreement], but they must remit by brand,” which can raise concerns over revealing who sells what and how much is being put into the public domain, not to mention stretching the ability of some distribution systems to determine what has been sold.

From a tracking aspect, it can become difficult for the brand holder to know where products are sold.

For example, says Reed, “We ship to Canadian Tire and Wal-Mart, but only 50% stays in Ontario.” Remitting on the basis of the initial shipping address alone would result in double charging. “We would have to pay on everything and then pay again in another province with another program,” he says. So there is still much to be worked out.

From a consumer standpoint, Reed says that he would appreciate more transparency, and cautions that service providers should not be too quick to plunk exorbitant “environmental charges” on goods covered by the MHSW.

“It comes back to the consumer — which is why we pushed for visible fees, unlike in Quebec where it is hidden. It was felt that if it was more visible, people wouldn’t be so inclined to play games with unwarranted fees.”

For example, he says, an oil filter, oil container, and the oil together might incur a charge of less than a dollar. “Somebody who tacks on $4, well, that’s not legit.”

“Other than the initial confusion, based on a lack of information, there has been lots of learning going on,” says Blundell. “Some people still don’t understand what the fundamental goal of the program is.”

Blundell stresses that the new MHSW charges are not a tax.

“It is not a tax. It goes to Stewardship Ontario. It is a not-for- profit organization. It is [designed] to pay out to offset the cost of transporting and handling.

“The ultimate goal is that none of this stuff will go to an incinerator.”

“If it costs 50 cents a filter to do all these things, that’s great; but if recycling improves, or the economics improve, and that number should be 30 cents, then that is what it is going to be. Ideally at some point, without making a promise, the combination of increased volumes and technology would mean that there is no fee at all.”

Blundell says that it is important not to lose sight
of the key objective, and the change in practice that will result.

“What the program is doing, is saying that whatever was done in the past, the costs of recycling the materials should have been built into the product from the beginning. It has been left up to the guy at the end of the road to decide whether he would do that,” which was wrong, and in fact produced an incentive to not handle the waste properly.

“At the end of the day, if somebody was already doing the right thing, they should not be hurt by it.”

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–Dave Blundell, Stewardship Ontario

“In the automotive channel, most of the money goes toward the transportation and collection of these materials to keep them from the landfill.”

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“It’s not reflected in [the value of] our inventory. So our inventory is undervalued as a result.”

–Adrian Gordon, Gorwood Automotive