Yankee baseball legend Yogi Berra said, “It’s tough to make predictions, especially about the future.”
Unfortunately, we are now forced to do just that with respect to the effect of new Extended Producer Responsibility (EPR) legislation on recycling collection and processing contracts that are up for renewal.
Many municipalities have waited a long time to see what will be required in new contracts as result of passage of Bill 151, the Waste-Free Ontario Act, 2016. We simply don’t know yet. So what happens to those contracts that are living on borrowed time; the ones that are expiring in 2016 or have already been extended once or twice?
Municipalities in this position have waited as long as they can and CIF has seen an uptick in the numbers of municipalities requesting support for last minute RFP and tender development.
Change of Law Clauses Can Help Protect Your Operation
Our staff are always glad to help, even if it’s as little as to read through your draft documents with fresh eyes. Don’t hesitate to contact us anytime you want some help or a solution to a specific issue that you are trying to cover off in your latest RFP/tender. And, in case you missed it, you might check out an April 18 blog that describes how we worked with Peterborough staff recently as they worked through this process.
Since we don’t know exactly how EPR legislation and subsequent regs will affect new contracts, the standard advice at the moment is to keep your options open. That means you must have a robust “Change of Law” clause in your new contract. Simply put, that is a clause that both parties will use to work out the changes EPR will impose on the parties through negotiation, mediation/arbitration or ‘force majeure’ provisions.
Cap and Trade Regulation
Ontario has also finalized the rules for its new cap and trade program to limit greenhouse gas pollution in Bill 172, the Climate Change Mitigation and Low-Carbon Economy Act, which received Royal Assent on May 18.
- Greenhouse gas emission caps
- Entities covered by the program
- Auction and sale of allowances
- Distribution of allowances
The “cap” puts a limit on how many tonnes of greenhouse gas pollution that businesses, institutions and households can emit. This cap is set at a specific amount, which drops each year to encourage lower emissions. Companies must have enough allowances (also known as permits or credits) to cover their emissions if they exceed the cap.
To comply, companies can generally:
- Invest in clean technologies to become more efficient
- Burn less fossil fuels
- Purchase additional credits
As a municipality, you may wish to consider including a clause in your new contracts to allow you to retain any carbon credits generated through your diversion activities. Similarly, municipalities who contract out processing may wish to consider whether they wish to retain ‘right of ownership’ to their recyclables. Going forward, additional emphasis may need to be placed on using biofuels and other alternatives to power fleet operations.
CIF has contacted the MOECC to learn more about the implications of this new regulation on your municipality and what changes you should consider making to your contracts as a result. Stay tuned for more information.
Let’s go a step further and predict that the price of oil won’t stay at record low levels forever. The new cap and trade and a raising oil market is likely to increase fuel and energy costs for processing and collection in 2017 and beyond. So, do you have a fuel escalation clause in your new RFP, tender and contract?
For all the above, we have sample language for you to review when you need it. These are important considerations with significant financial implications and we encourage you to make sure you have covered them; otherwise, as Yogi Berra almost said, “When you come to a fork in the road, you may be forced to take it!”
Contact CIF Staff
CIF staff are always ready to help. We encourage you to contact any member of the team to discuss your issues and questions.