ARBITRATION TO DETERMINE THE 2014 STEWARD OBLIGATION FOR THE BLUE BOX PROGRAM BETWEEN:

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1 ARBITRATION TO DETERMINE THE 2014 STEWARD OBLIGATION FOR THE BLUE BOX PROGRAM BETWEEN: ASSOCIATION OF MUNICIPALITIES OF ONTARIO and THE CITY OF TORONTO - and- STEWARDSHIP ONTARIO Applicants Respondent AFFIDAVIT OF MARIA KELLEHER Introduction... 1 My background and expertise... 2 My reports Best practices... 6 Why have costs gone up... 7 Conclusion... 8 Introduction 1. My name is Maria Kelleher. I am an environmental consultant with expertise in matters of waste diversion, stewardship and best practices. My CV is attached. 2. I operate Kelleher Environmental, an environmental consulting firm based in Toronto, Ontario, Canada. We specialize in: a. Environmental research and policy development b. Energy conservation, climate change and green energy c. Waste diversion policy and stewardship program development, planning, implementation and evaluation I

2 3. I will be a witness at this arbitration because I have been compelled to do so by summons. 4. I consult to both stewards and municipalities. I am neutral in this matter, and take no position on the amount of the 2014 Steward's Obligation. My background and expertise 5. I am an environmental engineer who specializes in waste management issues. 6. I graduated with a Civil Engineering degree from University College, Cork, Ireland. I completed my Masters Degree in Environmental Engineering from the University of Toronto in 1982, and a Diploma in Environmental Health from McMaster University in Hamilton, Ontario in I have over 25 years of experience in the environmental consulting industry, and I have worked on a wide range of waste policy and strategy, quantification, management, planning and stewardship projects for a range of different materials for both private sector and public sector clients. 8. My areas of expertise include: extended producer responsibility for various materials (printed paper and packaging, electronics, batteries, appliances, etc), solid waste management planning for municipal clients(including City of Toronto; Region of York; City of Ottawa; City of Calgary; City of Vancouver), with a focus on waste diversion and the use of economic instruments to promote waste reduction; financing mechanisms to promote waste diversion, and organic waste management including production of biogas and green energy from waste. 9. Some recent assignments include: a. Member of the consulting team which developed the Current State and EP R Options Study for printed paper and packaging in British Columbia, for MMBC (March, 2012); b. Estimated the impacts of future lifestyles and demographics on the printed paper and packaging tonnages and composition which will arrive at a future MRF for Region of Peel Ontario; c. The Toronto Future Blue Box Study, which researched and evaluated the impacts of various packaging format and lifestyle changes on the contents of the Ontario curbside Blue Box system over time; d. Current State Fibres Analysis for Stewardship Ontario which researched current markets for printed paper and paper packaging products, and quality issues which will impact on available markets in the future; e. Composite Paper Packaging Study for Stewardship Ontario evaluating markets for aseptic, gable top and laminated paper packaging; 2

3 f. Two projects for CCME (Canadian Council of Ministers of the Environment) in support of the CCME Phase 1 and Phase 2 EPR (Extended Producer Responsibility) plan. The first project collected data for 25 EPR programs for 6 materials across Canada and identified KPI (Key Performance Indicators) which would be suitable for standardizing reporting; the second project evaluated potential materials to target in the Phase 2 plan (mattresses, construction and demolition waste; appliances, etc) g. For the Canadian Council of Grocery Distributors, facilitated two workshops with industry stewards to discuss how to transition to a 100% industry funded EPR system for printed paper and packaging in Ontario. h. Assignments completed for Waste Diversion Ontario include: studies on fluorescent lamps and lead acid batteries; verification of the Ontario GAP data and calculations and development of the Ontario Consumer Electronics Baseline Study in 2005 prior to implementation of the provincial electronics stewardship program. My reports I 0. I have prepared the following reports on topics relevant to Blue Box programs: a. Toronto Future Blue Bin Study, City of Toronto, 2010 (752) 1. The Toronto Future Blue Bin Study was initiated in summer, 2010 to identify how future lifestyle changes and packaging format changes might change the amount and composition of materials in the Blue Box over time. The study was carried out by Kelleher Environmental in association with Robins Environmental and Love Environment, in three separate reports addressing: Literature Review on Lifestyle Trends and Packagilng Format Changes; Packaging Audit Results and Future Blue Box Composition Scenarios. 11. The project identified the profound changes which will occur in the composition of Blue Box materials over the next ten years as a result of a number of packaging and lifostyle changes in the Toronto population. These include reduced newspaper hard copy readership in favour of electronic media, smaller household size, aging demographics, packaging format changes, increased on-line shopping and an increased focus on convenience and intelligent packaging. These trends will over time increase the amount of plastic and decrease the amount of paper fibres in the Blue Box, resulting in significant changes to the economics of collection and processing of source separated recyclables. The estimates were 3

4 used to develop the 2011 City of Toronto Business Plan and project costs to 2015 and b. MMBC Printed Paper and Packaging Phase 1, 2012 (770) 1. As a sub-consultant to Glenda Gies and Associates, Kelleher Environmental collected data and participated in development of a report which described the management of printed paper and packaging from residential sources in British Columbia in early 2012, using 2010 as a baseline. A second component of the project involved outlining options for development of an EPR program for residential printed paper and packaging to meet regulatory requirements for full industry steward funding of the recovery system by c. CCGD Printed Paper and Packaging Workshops (735) 1. Carried out research and facilitated two workshops with industry stewards exploring the implications of proposed funding changes to the Ontario Blue Box program, and potential industry approaches to transition to the new model. d. Current State Fibres Study, Ontario Blue Box Paper Fibres Stewardship Ontario, 2011 (763) 1. Kelleher Environmental, in association with Love Environment, carried out a comprehensive study of the flow of paper fibres (printed paper and packaging) through the residential Blue Box value chain. The study addressed end markets for different paper fibre grades, and projected future lifestyle and market trends which would impact on Blue Box economics. e. Laminated Paper Research- Stewardship Ontario, 2011 (757) 1. Kelleher Environmental carried out research to identify current practices with respect to the recycling of paper laminates (predominantly hot drink cups, ice cream containers, aseptic containers and spiral wound containers) in Ontario MRFs processing residential as well as IC&I materials. Identified bales into which different paper laminates are typically placed, and end markets (Canada, US, overseas) where paper laminates are sold, and end products produced. The study included interviews with MRF operators, collectors and end markets throughout Canada and North America. The project was followed by a consultation process with packaging stewards in April, f. Research on Behaviour Change Related to Recycling Hot Drink Cups, City of Toronto, 2009 (732) 1. For City of Toronto, Kelleher Environmental as well as two other consulting companies, provided support to the Toronto Hot Drink 4

5 Cup committee to explore the practical imp1ications of recycling hot drink cups in the City of Toronto Blue Box system. g. City of Toronto In-Store Packaging Research Report, 2008 (715) 1. Carried out research on policies in place in Canada, the US, Europe and Asia targeting plastic bags and fast food packaging. Options for voluntary and mandatory measures to reduce waste production were analysed with City staff. Results were presented at a 10th September, 2008 workshop. h. CCME Performance Tool, 2008 (720) 1. Kelleher Environmental carried out a research project for CCME in 2008 summarizing data on EPR programs across Canada for six material categories (tires, used oil containers and filters, packaging, electronics, paint, HHW and Beverage containers). Key performance indicators (KP Is) were recommended to compare performance of these programs. 1. Alberta EPR (Extended Producer Responsibility) C&D, (668) 1. Applying Extended Producer Responsibility (EPR) Policies to Construction and Renovation Waste in Alberta, Alberta Environment. As a sub-consultant to Sonnevera, Kelleher Environmental was involved in a project for Alberta Environment exploring various policy mechanisms to reduce the amount of C&D waste landfilled. 11. I have also prepared multiple reports on best practices in waste diversion, including: a. Toronto Community Housing Recycling Room Best Practices -(WDO, CIF) Continuous Improvement Fund, 2010 (750) 11. With funding from the Continuous Improvement Fund (CIF), TCHC installed recycling rooms in 21 multi-family buildings in Toronto. Kelleher Environmental carried out a 1-year monitoring program at all buildings to measure the impacts of the recycling rooms on recycling behavior and garbage quantities set out for collection. Workshops were held with building superintendents to obtain feedback on the recycling rooms. b. Knowledge Product Report - Waste Diversion for the FCM (Federation of Canadian Municipalities), 2009 (7 40) 111. For FCM (Federation of Canadian Municipalities), Kelleher Environmental, in association with Robins Environmental, developed case studies of municipalities with high diversion rates 5

6 across Canada, and created the Green Municipal Fund Waste Diversion Knowledge Product c. Multi Family Building Best Practices for Increasing Waste Diversion (with Sheltair), Greater Vancouver Regional District, 2007 (694) d. As sub-consultant to Sheltair Consulting Group, Kelleher Environmental identified innovative and practical policies, programs and technologies to increase waste diversion in multi-family buildings throughout the Region. Researched and wrote a best practices paper describing innovative programs and policies to increase waste diversion in MF buildings in communities throughout North America and Europe. d. Calgary Collection and Processing Best Practices Evaluation, 2006 (678) 1v. Surveyed large municipalities across Canada to identify recyclables and organics collection and processing in place, and reasons for opting for public or private sector ownership and operation of services. e. Best Practices in Refrigerator Retirement and R1~placement Programs, OPA, 2006 (673) v. For the Conservation Bureau of the Ontario Power Authority (OPA), carried out research on best practices in refrigerator retirement and replacement programs in Canada and the US, to provide models which Ontario (population 13 million) could adopt. f. Calgary Regional Partnership Paper and Organics, CH2MHill ( 660) vi. As sub-consultant to CH2M Hill, Kelleher Environmental carried out data collection, design and development of strategies to address organic waste. Determined best practices for the management of paper and organics as part of a larger strategy to achieve high diversion of waste in Calgary and the surrouriding area. 12. I am presently retained by the Ontario Continuous Improvement Fund to prepare a report summarizing publicly available data on the comparative costs of managing different kinds of Blue Box materials through the Ontario Blue Box program. The report will document the comparatively high cost of managing lightweight, multi-layer packaging as compared to the costs of managing more traditional Blue Box materials such as newspaper, metal and glass. Best practices 13. Best practices generally mean practices that have been adopted by municipalities or other program operators that lead to reduced costs and/or increased efficiency. 6

7 14. Best practices vary by location; they are not the same for all municipal BB programs. As an example, practices that work well in rural areas may not work well in dense, urban settings and vice versa. 15. Not all best practices necessarily reduce costs; some may lead to achievement of other targets such as increased diversion Why have costs gone up 16. Net Ontario BB program costs incurred by municipalities have gone up since The major causes of the increase are: a. The changing mix of materials in the Blue Box over time, with addition of more light weight packaging (mostly light plm;tics and multi-layer packaging) which is more expensive to collect and process than traditional packaging that used to be in the Blue Box (cans, bottles, cereal boxes); b. A reduction in the amount of newsprint and other printed material in the Blue Box over time; c. Materials collected in the BB (Papers, metals, plastics, glass, etc.) are commodities which are traded on national and intemation markets. The revenues from these materials change over time based on supply and demand, economic factors and many trends in the economy, etc. BB revenues have changed over time, thereby increasing the net costs of the BB program. Some years revenues are high and other years they are low; as an example BB material revenues were very low for a number of months after the economic collapse of late 2008; d. Replacement of older BB collection and processing contracts with new contracts and prices that reflect the higher costs of managing the changing mix of BB materials and new collection and processing equipment. 7

8 Conclusion 17. I understand that this affidavit is sworn evidence to be offered to a legal tribunal deciding a question of public importance. I b ave done my best to make this evidence as accurate and as truthful as I can. I intend to be bound by it. ~~ ~~.Q_,~~ WITNESS Sworn or Affirmed before me ~ On April~ 2014 at the City of ~ t-p/<._-o ~a in the Province of Ontario A Commissioner, etc.. 8

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