Ministry of Environment, MMBC Respond to Stewardship Plan Concerns

In 2011, packaging and printed paper (PPP) was added to the Recycling Regulation as a new product category. UBCM created a Working Group in 2012 to identify local government concerns and work with the province and Multi Materials BC (MMBC) on the implementation of the stewardship plan. The following provides a summary of the concerns identified by local governments and the responses of MMBC and the Ministry of Environment to these concerns.

This information is provided to assist local governments in their ongoing negotiations with MMBC on the implementation of the plan.

Ministry of Environment
At this meeting, the Working Group noted that many local governments were struggling with the financial incentive offer and the requirements put forward by MMBC in the Master Service Agreement (MSA) and Statements of Work (SOW). Several local governments feel that these contracts are too prescriptive and put local governments at a level of risk that outweighs the financial incentive that is being offered by MMBC. For example, these contracts contain high penalties for service level and reporting failures, unrealistic expectations for contaminant limits, and impractical and unclear standards for depots. A number of local governments also indicated that they had tried, but were unsuccessful, in negotiating with MMBC on contract changes.

The Working Group also informed the Ministry that local governments were provided with only 3 months to decide if they would accept the MMBC financial incentive offer and that this short time frame was not sufficient for a local government to consider an offer of this scale.

Given the issues with the contracts and the timeline, the Working Group cautioned that many local governments may not be in a position to accept or decline the offer by September 16. With local governments having invested significant staff and capital resources in providing recycling in their communities, it was felt by some that the conditions presented by MMBC were unreasonable and not in the spirit of cooperation.

In response to these concerns, Ministry staff indicated that, after approving the MMBC stewardship plan, their current role is to evaluate the performance measures for the packaging and printed paper plan. If there are problems with the contracts, local governments should negotiate individually with MMBC on the details of the contract; and if local governments do not accept the MMBC offer, then a private collector will be offered the contract to continue the service in their community.

Multi-Material BC (MMBC)
On August 12, UBCM met with MMBC and raised several concerns, similar to those that were presented to the Ministry of Environment. Specific requests were directed at MMBC and their responses are below.

These responses are provided as information to assist local governments in their individual contract negotiations with MMBC. Some Working Group members felt that the following answers were unsatisfactory and did not relieve the concerns of local governments.

1. Deadline for Accepting MMBC Offer
Local governments were provided with 3 months to consider the financial offer from MMBC, with a deadline of September 16. Several local governments have indicated that this short time frame does not provide a reasonable opportunity for local governments to conduct the requisite analysis, report to Council and seek direction on whether or not to accept the offer by the deadline. The Working Group requested an extension of the deadline, or a compromise to allow local governments with more time to consider the offer.

MMBC Response:

The deadline for accepting the MMBC offer cannot be extended given that implementation must begin on May 19, 2014 as required by the Recycling Regulation.

Information received from collectors by September 16 will be included in an RFP for post-collection services which will be issued in late September or early October with a due date in late December or early January. The responses to the RFP will be evaluated in January/February with contracts awarded as quickly as possible, leaving only a few months for these contractors to prepare for program launch on May 19, 2014, including making all the necessary logistical arrangements with local governments and other collectors to receive the collected PPP.

Local governments were also advised that they should speak to the Ministry of Environment if they wished to extend the implementation deadline.

2. Review of Market Clearing Price (MCP) in Year 3
The financial incentive, or market clearing price (MCP) be reviewed after year 3, however, the contracts signed by local governments last until year 5. The Working Group asked that the MCP be reviewed annually and be part of the Master Service Agreement; and that the MCP account for inflationary costs, variable fuel cost, labour cost, and other related costs arising from the collection process requirements stipulated in the Master Service Agreement and Statement of Work.

MMBC Response:

MMBC has committed in the PPP Stewardship Plan to consult with stakeholders on the timeline to achieve 75% recovery when three years of program operating data have been compiled. As part of this consultation process, changes to the collection system, including collection incentives, will be considered.

Inflationary costs are not provided as the MCP is considered an incentive for collectors, rather than a bid price.

3. Financial Incentive
Several local governments noted that the financial incentive collection, administration and education for curbside and depots is not sufficient to cover the costs. An increase to the incentive was requested.

MMBC Response:

No changes will be made to the financial incentive offer at this time. However, MMBC has committed in the PPP Stewardship Plan to consult with stakeholders on the timeline to achieve 75% recovery when three years of program operating data have been compiled. As part of this consultation process, changes to the collection system will be considered.

4. Performance Bonus
The performance bonus does not properly reimburse increased cost of collecting increased volume; and service level failures appear to favour multi-stream collection, but incentive fees favour single stream. It was requested that the performance bonus be increased with increased volume.

MMBC Response:

The value of the curbside and multi-family building performance bonus is not intended to reflect the incremental cost to collect the additional quantity of PPP. Rather, it is intended to signal that MMBC has an interest in effectively capturing PPP from residents in order to achieve 75% recovery.

5. Punitive charges
A number of local governments have indicated that the punitive charges in the contract are extremely high- ie. fine of $500/day for late reporting. The request to MMBC was to remove or reduce the punitive charges.

MMBC Response:

Post-collection service providers are responsible for weighing PPP received from collectors and submitting the weights to MMBC and collectors.

Reporting obligations for collectors include quarterly reports on customer service and annual reports, for curbside and multi-family building collectors, on any changes to households served. Service level failure credits for non-reporting by collectors apply only to the quarterly customer service reports, the annual report, the annual form which asks about changes to density, and the report on participation numbers (if requested by MMBC).

6. Insurance
It was noted that some local governments could not meet the insurance requirements.

MMBC Response:

MMBC will review insurance requirements with each collector submitting a Response Form in order to prepare the MSA and SOWs for the specific collector.

7. Contamination
Some local governments felt that the 3% contamination rate is unrealistic and not achievable for a new program, particularly with the current conditions. MMBC was asked to clarify how the 3% non-PPP by Post-Collection Service Providers will be measured and collected; clarify procedures in the event that processors reject loads from collectors; clarify how the 3% non-PPP rate can be determined by the collectors at the curb; and clarify contamination for glass over the 12-month phase-in period.

MMBC Response:

The quantity of non-PPP in the collected PPP will be measured through composition audits of collected PPP. MMBC will be carrying out routine composition audits of incoming loads of PPP. As well, a post-collection service provider can raise concerns regarding quality of PPP from a specific collector which would then lead to a composition audit of PPP from this specific collector. Should composition audits identify more than 3% non-PPP, MMBC would notify the collector of the composition audit results so that the collector can take the necessary steps to reduce non-PPP. MMBC would implement follow up composition audits after a specified period of time to assess improvement. If improvement is not identified through subsequent audits, MMBC would require the development and implementation of a remediation plan, followed by additional audits after a specified period of time. If improvement is not identified, MMBC would provide written notice that the next composition audit identifying more than 3% non-PPP may be the basis for applying the service level failure credit. It is expected that the sequence of activities described above would have the effect of deferring service level failure credits for approximately the first year of operations.

Should a post-collection service provider reject a load, the collector is responsible for the load. The post-collection service provider would not be paid for managing the PPP in the load and the quantity of PPP in the load would not be counted towards the collector's performance bonus or the calculation of the 135 kg per household referenced in point # 2 of Attachment 3.4 to the Statement of Work for Curbside Collection Services Provided by Local Government.

Collectors should visually monitor curbside PPP to identify items that are non-PPP in order to provide the necessary education and feedback to residents.

With respect to glass contamination in curbside and multi-family building PPP, glass remaining in curbside and multi-family building PPP is not counted in the 3% non-PPP. Refer to point # 3 of Attachment 3.4 to the Statement of Work for Curbside Collection Services Provided by Local Government which sets out MMBC's expectations with respect to glass contamination in collected curbside PPP and the process to be followed if glass contamination exceeds 3% after one year. A similar requirement applies to PPP in multi-family building PPP.

8. Termination and Change Clauses
It was noted that the termination and change clauses in the contacts should be removed.

MMBC Response:

If local governments wish a termination clause for convenience, MMBC will consider this request.

9. SABC Standards
MMBC was asked for information and consultation on the SABC standards.

MMBC Response:

MMBC is not developing the depot standard. The SABC depot standards are being developed through discussions between SABC and the Ministry of Environment.

10. Collection Containers
Contracts require collection of “customer-provided containers”. This may not be feasible due to ergonomic and operational factors. As well, multi-family buildings may not have space to accommodate containers with sufficient capacity for weekly collection. For areas currently using commingled blue/clear bags there is no clarity on how bags will be distributed and what this will cost. It was asked that MMBC remove the section of the Agreement that allows customers to use their own containers.

MMBC Response:

Each collector should work with MMBC to determine what container is suitable for collection.

11. Scavenging
Collectors must prevent scavenging from garbage stream but this is may be unrealistic for local governments. MMBC was asked to remove the requirement that contractors must prevent scavenging from the garbage stream.

MMBC Response:

MMBC requires that its PPP collection contractors not interfere with garbage placed by residents at the curb. Thus, the requirement on scavenging cannot be removed from the contract.

12. Special Service to Elderly or Disabled
It was asked that if service is currently provided to the elderly or infirm, that this requirement be continued in the service agreement.

MMBC Response:

Local governments may continue to provide this service if they wish. MMBC is neither requiring nor prohibiting special service to the elderly or disabled.

13. Post Collection
Some local governments felt that the distance criterion for designated post-collection service providers was too high and that the requirements for post-collector is unclear (location, set-up requirements, distance etc.). Local governments advised that they are unable to determine if MCP is sufficient when post-collection location is unknown. MMBC was asked to reduce the distance criterion for post-collection service providers; clarify requirements for post-collectors; and determine potential travel distance for all local governments so that collection costs can be determined.

MMBC Response:

The 30-minute driving time in Metro Vancouver and 60 km driving distance in other parts of BC are considered worst case scenarios for purposes of considering the curbside and multi-family building collection incentive offer. Specific arrangements for handing over PPP from a curbside and multi-family building collector to a post-collection service provider can be determined following MMBC's selection of its post-collection service providers.

14. Reporting Requirements
It was noted that reporting requirements were costly, and that the reporting and auditing commitment was unclear. It was asked that MMBC provide additional reimbursement for reporting requirements; clarify the submittal process for reports; and clarify reporting and auditing commitments.

MMBC Response:

Post-collection service providers are responsible for weighing PPP received from collectors and submitting the weights to MMBC and collectors. Reporting obligations for collectors include quarterly reports on customer service and annual reports, for curbside and multi-family building collectors, on any changes to households served.

MMBC will be undertaking composition audits. These are not the requirement of collectors.

15. Customer Service
The customer service management and handling of complaints was found to be too onerous, particularly in a rural setting.

MMBC Response:

The question above was described during the meeting on August 12 as referring to the requirement for a collector's representative to be available by telephone 24 hours per day. MMBC clarified that the requirement to provide a telephone number accessible 24 hours per day is for MMBC to be able to contact a representative of the collector should there be an emergency.

UBCM's Packaging and Printed Paper Working Group drafted a policy paper, which was endorsed at the 2012 Convention.

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