North America’s First Regulated Design-for-Environment Standards

As the pace quickens in imposing full Extended Producer Responsibility for numerous regulated products and materials under Ontario’s Resource Recovery and Circular Economy Act, 2016, the first design-for-environment (DfE) regulatory standards have been introduced, and e-waste (along with lighting and batteries) will be the test case.

DfE has long featured as an aspirational goal of the European Union circular economy program, but it’s been commonly out of reach of institutional product stewardship programs unable to provide incentives for individual producer innovation (see: “Extended Producer Responsibility Models For Delivering Design For The Environment.” Jonathan Cocker. Lawtext Publishing. Environmental Liability – Law, Policy and Practice, Issue 6, Volume 24).

This has finally changed under the Resource Recovery and Circular Economy Act, 2016, which mandates DfE as a “provincial interest”.  Its Electrical and Electronic Equipment Regulation, currently in draft form but with committed compliance dates in 2020 (the “EEE Reg”),  is almost certainly North America’s first set of DfE regulated standards within a circular economy law.

Electronics Industry Challenged Under EEE Reg

Under the EEE Reg, brand owners and first importers of electrical and electronic equipment (EEE) are obligated to resource recovery the product content for all EEE “marketed” in Ontario for 14 separate categories of informational technology, telecommunications and audio visual equipment (everything from printers to drones).

The EEE Reg sets accelerating rates of resource recovery (or “management”) obligations based upon the weight of the EEE marketed (under a prior year experience formula) as follows:

July 2020 – December 2021:   57% recovery rate
2022         75%
2023    80%

While these recovery rates are below current practice under the outgoing government-sanctioned product stewardship scheme, there is some expansion in the product categories caught and there will be a transitional period of adjustment as producers determine how they will individually, or in combination with other like-minded producers, meet their obligations.

EEE Management Obligations

Under an EEE Guideline, which is likely to be a version of the international R2 recycling standard, the principal activities are either:

  1. Refurbishment; or
  2. Processing for supply for new products and/or packaging.

There is also a very limited ability to count processed glass used as aggregate.  Whether any electrical and electronic equipment can be recovered by an EEE producer as compliance under the EEE Reg. isn’t clear.  In other words, can a company sell thousands of headphones and recycle a few speakers to satisfy its obligations?   Clarity is needed.

DfE Reduces Management Obligations

Regardless of how those EEE management obligations are allocated, the real innovation lies in the DfE provisions. There are three types of DfE activities which would qualify as reducing a producer’s EEE management obligations, which are capped at 50% of a producer’s overall obligation.  Each has been proposed as DfE policy but not in North American regulation (and arguably not legislatively in as comprehensive a package anywhere else, including in EU countries):

a)    Post-Consumer Recycled Glass or Plastic Content

A producer’s resulting EEE management obligation will be reduced where its product contains post-consumer recycled glass or recycled plastic content (including, it would appear, recycled content originating from outside of the province.)   The consequent reduction in management obligation is reduced by the equivalent amount of the weight of the recycled content.   This provision may well align with the push for recycled plastics content standards across numerous categories of plastic-containing products.

b)   Extended Warranties

Where the EEE marketed in the province contains a 1-3 year warranty or a warranty of at least 3 years, the management obligation is reduced respectively by 5% and 10%.  There is no guidance at present as to what the scope or base terms of a qualifying warranty might look like, but clearly there is a push to incent longer lasting products.   There might also be a role to be played by third party retailers who commonly offer extended warranties on a range of producers’ goods.

c)   Right-to-Repair

Finally, the EEE Reg. seeks to encourage right-to-repair with an obligation reduction equal to 10 percent of the weight of the EEE marketed in Ontario for products which include both no-cost information on repair (in some medium) and no or cost-recovery only charges for tools and parts to repair the EEE.  The logistics and risk management issues associated with the tools and parts supply elements of this scheme may be complicated for some EEE and require more development over time.  There is no doubt, however, that right-to-repair is emerging as a product standard

(http://www.environmentlawinsights.com/2019/02/11/eco-design-laws-mandate-right-to-repair/).

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Most across the electronic and electrical equipment product industries caught by the EEE Reg. will recognize these DfE provisions as works-in-progress at best.   Regulated producers should also, however, recognize them as opportunities to finally gain financially for the types of environmentally-beneficial product innovations that have too long laid dormant for want of exactly these types of incentives.

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For further information, please contact Jonathan Cocker:

jonathan.cocker@bakermckenzie.com

416-865-6908

Jonathan D. Cocker heads the Firm’s Environmental Practice Group in Canada and is an active member of firm Global Consumer Goods & Retail and Energy, Mining and Infrastructure groups. Mr. Cocker provides advice and representation to multinational companies on a variety of environment, health and safety matters, including product content, dangerous goods transportation, GHS, regulated wastes, consumer product and food safety, extended producer responsibilities and contaminated lands matters. He appears before both EHS tribunals and civil courts across Canada. Mr. Cocker is a frequent speaker and writer on EHS matters, an active participant on EHS issues in a number of national and international industry associations and the recent author of the first edition of The Environment and Climate Change Law Review (Canada chapter) and the upcoming Encyclopedia of Environmental Law (Chemicals chapter).