Decision Date: September 1, 2016

Panel: Michael Tourigny

Keywords: Environmental Management Act – s. 115(1); Recycling Regulation – s. 2; administrative penalty; product stewardship plan

MTY Tiki Ming Enterprises Inc. (“MTY”) appealed a decision issued by the Director, Environmental Management Act (the “Director”), Ministry of Environment (the “Ministry”). The Director concluded that MTY had contravened section 2 of the Recycling Regulation (the “Regulation”), and he imposed an administrative penalty of $20,000 against MTY.

MTY is a franchisor of various restaurants in BC and across Canada. With respect to MTY’s BC operations, section 2 of the Regulation requires MTY, as a producer of packaging and printed paper products, to have an approved product stewardship plan, or to appoint an agency with an approved product stewardship plan to carry out MTY’s duties under the Regulation.

The requirement for producers of these products to have a product stewardship plan was added to the Regulation a few years before the Director issued the decision against MTY. On May 19, 2011, the Regulation was amended by adding Schedule 5, which made producers of packaging and printed paper products subject to the Regulation. Section 3 of Schedule 5 included a 36-month transition period which required producers of packaging and printed paper products to have an approved product stewardship plan in effect by May 19, 2014.

In June 2014, the Ministry sent a warning letter to MTY requesting that it advise the Ministry by September 2014 as to how it had met its obligations under the Regulation. By October 2015, MTY still had not advised the Ministry how it had met its obligations under the Regulation. The Ministry decided to proceed with enforcement action.

On February 25, 2016, the Director notified MTY that he was considering imposing an administrative penalty of $40,000 for MTY’s non-compliance with section 2 of the Regulation. The Director offered MTY an opportunity to be heard before making a final decision. In response, MTY advised the Director that it had appointed Multi-Material BC (“MMBC”) to carry out its duties under the Regulation with respect to product stewardship plans.

The Director concluded that MTY did not have an approved product stewardship plan as required by section 2 of the Regulation until March 21, 2016, when MTY appointed MMBC as its agent for the purposes of the Regulation. Since MTY had belatedly come into compliance with the Regulation, the Director reduced the penalty by 50 percent of the amount originally proposed, and imposed a penalty of $20,000 against MTY.

MTY appealed the decision on several grounds. MTY submitted that it had acted in good faith since 2012 to meet the requirements of the Regulation, and had paid a total of $16,869.01 to file annual reports with MMBC for 2013, 2014, and 2015. MTY argued that the penalty was “grossly excessive and disproportionate.” MTY also submitted that this was its first contravention, the contravention caused no environmental damage, and MTY did not profit from its behavior. MTY requested that the penalty be cancelled.

The Board found that, between May 19, 2014 and March 21, 2016, MTY was a producer of packaging and printed paper products, and was in contravention of its obligations under section 2 of the Regulation by reason of its failure to have an approved product stewardship plan or to have appointed an agency with an approved product stewardship plan under Part 2 of the Regulation.

In addition, the Board considered each of the applicable factors for assessing the appropriate penalty, as set out in section 7(1) of the Penalties Regulation, based on the evidence. Specifically, the Board found that MTY’s non-compliance persisted from May 19, 2014 until March 21, 2016, which undermined the integrity of the regulatory regime and the Ministry’s capacity to protect and conserve the natural environment. Although the immediate environmental impact of the contravention was low, a lack of producer fees to fund the packaging and printed paper recycling program in BC may undermine the program. The Board also found that the continuing non-compliance by MTY was deliberate. Despite a clear record of communication between MTY and the Ministry, and between MTY and MMBC, which showed that MTY was aware of its obligations and the steps it needed to take to comply with the Regulation, MTY failed to take reasonable steps to achieve compliance until March 2016, almost two years after the Regulation’s requirements came into effect. Although MTY did not “profit” from its contravention, it derived some economic benefit from its delay in paying MMBC fees of $16,869.01 until at least April 2016, rather than the earlier dates that payment would have been made if MTY has signed its membership agreement with MMBC effective from May 19, 2014, as required by the Regulation. Finally, the Board agreed with the Director’s reduction of the preliminary penalty amount by 50% to $20,000. The reduction acknowledged MTY’s belated efforts to correct the contravention, and reflected the fact that MTY had paid $16,869.01 in fees to MMBC that it had previously avoided paying through non-compliance.

In conclusion, the Board found that the administrative penalty of $20,000 was fair and reasonable in the circumstances, and would serve as an adequate deterrent specifically to MTY, and generally to other producers subject to the Regulation. Accordingly, the Board confirmed the Director’s decision and the $20,000 penalty.

Consequently, the appeal was dismissed.