Google Maps imagePatrick Penner, Local Journalism Initiative Reporter

The Environmental Appeal Board has dismissed Coquitlam-based KMS Tools & Equipment Ltd.’s appeal of a $19,000 fine for refusing to comply with recycling regulations. 

The board issued its decision on May 22, 2024, ruling that regardless of KMS Tools’ continuous assertions it should be exempt from the regulations, it is not exempt, and the company failed to provide any persuasive evidence on why the penalty should be waived.

“Ministry staff repeatedly advised KMS Tools of its obligations under the regulation for some time before initiating the formal action,” ruled board chair, Linda Michaluk. “Absent any compelling argument from the appellant – which there has not been – I agree with the rationale in the decision.”

KMS Tools was issued the administrative penalty on March 7, 2023, for failing to comply with the Ministry’s regulations related to the recycling of its printed paper products.

Companies producing paper products like flyers, catalogues, boxes or brochures are required to get an Extended Producer Responsibility Plan (ERP) approved by the province or appoint a ministry-approved agency, like RecycleBC, to act on its behalf.

The ERP regulation is intended to make producers take responsibility for the end-of-life materials they supply to consumers, according to RecycleBC.

KMS Tools’ appeal requested the fine be waived, that it receive an official or unofficial exemption from the regulation, and that the regulation be reviewed and re-evaluated.

The company – which has 14 sales outlets across B.C. and Alberta, including an online store and distribution warehouse in Coquitlam – has failed to comply with these rules for over a decade, according to its own submissions.

Penalty

Ministry inspectors repeatedly contacted KMS Tools between September, 2020, and April, 2021, advising the company it may be considered a producer under the regulation, requesting information about its packaging and paper products, and providing information on how it could come into compliance.

KMS Tools had argued throughout this period that it should not be captured by the regulation, that it had an unofficial exemption, and it was impossible for it to comply.

The company was eventually sent a warning letter in May, 2021 for failing to provide information requested by investigators. 

Soon after, ministry staff confirmed KMS was contravening the rules, and issued a second warning letter in June.

Despite efforts by RecycleBC to advise the company on how it could carry out its ERP responsibilities, KMS Tools remained out of compliance by October, causing the issue to be referred for an administrative penalty.

The Ministry’s initial penalty recommended the maximum fine for administrative penalties under the Environmental Management Act (EMA), alongside additional penalties for deliberate non-compliance and economic benefits derived from the non-compliance.

The $38,000 fine was later halved by the Director of the EMA due to a re-evaluation of the adverse effects of the infraction. However, KMS Tools’ skirting of the regulations was still considered a “major” contravention, and determined to be an intentional act which reaped economic benefits.

Appeal

KMS Tools did not dispute that it was captured by the regulations, nor that it was contravening the rules.

Instead, it continued to assert that the regulations should not apply to them, and that the penalty was based on false information.

KMS Tools claimed that 10 years ago, it received a letter from Multi-Material BC (now RecycleBC) threatening a $200,000 fine if it did not comply with the regulation.

They submitted they become involved in “fight” for an exemption, which was ultimately successful, and that “99.75%” of B.C. businesses, including their competitors, were exempt.

However, the company also claimed their unofficial exemption status seemed to have “slipped through the cracks,” resulting in them being occasionally harassed over the past decade.

KMS Tools submitted that it has never been shown how it could come into compliance, only that it must comply. 

When it asked how to achieve compliance, the company claimed the ministry’s answers just repeated “the same old rhetoric.” 

KMS Tools also claimed a number of its direct competitors are not captured under the regulation, leading to an “unfair disadvantage.” 

It pointed to some of the compliant businesses listed under the Ministry’s program, claiming they were factually inaccurate.

KMS Tools argued an EPR plan is not appropriate for its business because the regulation mostly focuses on the food industry.

As an industrial distributor, KMS Tools said most of its marketing materials are mailed directly to consumers, and that it cannot change the nature of its packaging due to the controls by mega stores retailing its product.

While KMS Tools asserted they proposed certain solutions to the ministry, such as paying fees based on waste estimates, these discussions did not lead anywhere.

The company said  its contravention should not be considered “major” due to the number of B.C. businesses exempted from the program.

It added that many bureaucrats, MLAs, several mayors, and business leaders and organizations have agreed the regulation should not apply to the company.

Lastly, KMS Tools claimed the penalty has led the public to believe that it does not recycle at all, which has damaged its reputation and business.

EMA director’s response

The director of the EMA highlighted that KMS Tools was aware of its non-compliance with the regulation since 2013, and failed to comply in spite of repeated warnings and directions from the ministry.

Despite the many assertions made by KMS Tools, the company has not provided any evidence to support its claims, according to the director.

In fact, correspondence with the ministry demonstrates the company failed to engage in good faith with RecycleBC, and merely reiterated complaints about the regulatory scheme while asking irrelevant questions regarding compliance, according to the director.

The director said that regardless of its opposition to the rules, KMS Tools chose to produce paper products and the company should have worked to fulfill its duties once the ministry made contact in 2020.

The ministry needs to set penalties which will serve as effective deterrents and promote future compliance; if the fine is set too low, companies will only act once they are caught, according to the director.

He said the infraction is considered “major” because the company deliberately undermined the basic integrity of the ministry’s overarching regulatory regime and interfered with its ability to work.

KMS Tools refused to engage with RecycleBC to determine fees, and prevented the Ministry from determining the economic benefits derived from its regulatory infractions, the director said.

Ruling

Michaluk said KMS Tools’ opposition to the rules is irrelevant to the fact that it is knowingly violating the ministry’s recycling regulations.

No evidence was presented demonstrating the ministry improperly applied the EMA, the regulation, or the penalty, Michaluk said, noting the burden of proof fell on the company to prove otherwise

Which businesses the regulation applies to, and whether the ministry’s list of captured businesses is accurate are not in question to the ruling, according to Michaluk.

There is no evidence showing the company previously fought for, or achieved, any previous exemption from the regulation, she said.

“The fact that the ministry did not take formal action against the appellant for some time after the regulation was enacted is not evidence of an exemption – official or otherwise,” Michaluk stated in her decision. “It is clear to me, and I find, that the appellant was not, and is not, exempt from complying.”

Regarding KMS Tools request for an exemption, and a re-evaluation of the regulation, Michaluk ruled these questions are beyond the scope of the board’s jurisdiction.

By Patrick Penner, Local Journalism Initiative Reporter

Original Published on Jun 03, 2024 at 17:41

This item reprinted with permission from   Tri-Cities Dispatch   Coquitlam, British Columbia

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