September 22, 1998
To:Works and Utilities Committee
From:Barry H. Gutteridge, Commissioner, Works and Emergency Services
Subject:Compliance Program with Monetary Concession - Nestlé Canada Inc. (Ward 19)
Purpose:
To address a request for a Compliance Program with Monetary Concession from Nestlé Canada Inc. to allow them to
pay only 50 percent of the increase to the existing Industrial Waste Surcharge Agreement for 1998 in return for them
investing in on-site pollution control equipment to reduce their effluent loadings to our sewers by 50 percent.
Funding Sources, Financial Implications and Impact Statement:
This Department maintains approximately 157 Industrial Waste Surcharge Agreements, which allows for the recovery
of approximately $7.5 million per year in additional treatment costs. These charges reflect a user pay philosophy and
directly offset the cost of operation of our treatment plants. Nestlé Canada Inc.'s new annual surcharge assessment is
$211,317.50, an increase of $125,562.06 over their old surcharge of 85,755.44 per year. By allowing the company to
pay at a reduced rate of 50 percent of the increase would mean a reduction in revenue of $62,781.03 per year.
Recommendations:
It is recommended that:
(1)a compliance Program with Monetary Concession be granted to Nestlé Canada Inc. as described herein, to allow for
payment of their re-assessed surcharge less 50 percent of the increase for 1998, subject to the company's investment of
the avoided surcharge payment in the 1998 Phase 1 activities; and
(2)If the waste loading is not reduced by 50 percent after 1998 Phase 1 is completed, the remaining Phase 1, plus
Phase 2 and Phase 3 will be implemented to achieve this reduction and staff be authorized to continue the monetary
concession to Nestlé Canada Inc. for the remaining Phase 1 activities in 1999, Phase 2 in 1999, and Phase 3 in 2000, if
required, to reduce the waste loading by 50 percent.
Council Reference/Background/History:
On November 9, 1989, Metropolitan Council, by adoption of Clause No. 6 of Report No. 16 of The Works Committee,
authorized execution of agreements with industries, permitting them to discharge wastewater in excess of the limits set
out under By-law No. 153-89, providing that the over-strength discharges are amenable to treatment at our treatment
plants. Industries are required to pay for the additional cost of treatment above the limit of the By-law.
Section 6 of this By-law allows the owner of industrial premises to submit to the Commissioner of Works, a program
to prevent, or to reduce and control the discharge of wastewater into the sewer system. The Commissioner of Works
may then issue an approval known as a "Compliance Program" to the person who submitted the program. The person
to whom a Compliance Program has been issued shall not be prosecuted under the By-law during the period within
which the Compliance Program is applicable, provided that the person complies fully with the terms of the Compliance
Program.
On August 10 and 11, 1994, Metro Council, by adoption of Clause No. 12 of Report No. 14 of The Works Committee,
authorized the Works Department to discuss modifications to Industrial Waste Surcharge Agreements and Compliance
Program policies with existing and potential surcharge companies to promote and encourage improvements in on-site
treatment and source reduction.
The policy approved by Metro Council was to allow industries facing significantly increased surcharge for new
agreements or amendments to existing agreements to apply to be allowed to avoid up to 50 percent of the payment of
the new agreement or the increase to the existing agreement, for up to three years if they commit under a Compliance
Program to invest the avoided surcharge payment for specific improvements to their on-site pre-treatment system.
There has been two Compliance Programs with Monetary Concessions approved by Metro Council and one by City
Council to date.
Comments and/or Discussion and/or Justification:
Recently, several companies have complained that their new surcharge assessment or increased surcharge assessment
on existing agreements are creating financial hardship and have expressed an unwillingness to pay the surcharge. These
companies would like to reduce these costs, however, they would have to install treatment facilities which would add
further costs.
Recognizing that some industries are really facing financial hardship, we recommend that industries facing significant
increases in surcharges for new agreements or amendment to existing agreements could apply for a surcharge reduction
of 50 percent of the new agreement or the increase to the existing agreement, for up to three years if they commit under
a Compliance Program to invest the reduced surcharge payment for specific pollution control equipment. In this way,
the discharger benefits in the long term because they permanently reduce their surcharge costs. We also benefit in that
more treatment capacity is free for additional development.
The following conditions must be met to be considered for a Compliance Program with monetary concessions:
(1)the applicant must commit in writing, in the form of a Compliance Program, to reduce their waste loading by at
least 50 percent by a specified date;
(2)the reduction in surcharge could be for a period of between one and three years, depending on the time required to
complete the installation of pre-treatment equipment;
(3)an applicant can only be granted one Compliance Program with monetary concession per lifetime; and
(4)at the end of the Compliance Program period, the companies who are unsuccessful in reducing their waste loading
to within By-law limits must resume paying surcharge based on the actual waste loading at that time.
The Region of Niagara has a similar policy of granting a discharge under a "Program Approval" (which is similar to
our Compliance Program) with monetary concessions. The concession has been as high as 50 percent for a period of
one year. The reduction is based on the size of the surcharge compared to the amount the discharger plans to spend in
effecting a reduction in both the hydraulic and contaminant load to the municipal sewage treatment system.
The type of waste generated by Nestlé Canada Inc. is biodegradable and amenable to treatment at our Main Treatment
Plant.
On August 13, 1998, Nestlé Canada Inc. submitted an application to have the industrial waste surcharge amount
reduced in accordance with the policy adopted by Metro Council on August 10 and 11, 1994.
The company has retained Hatch Associates in Mississauga to undertake a study to evaluate their operations and
develop an effluent loading reduction program to bring their effluent contaminants down to 50 percent by May 6, 1999
(Phase 1), July 22, 1999 (Phase 2) and September 14, 2000 (Phase 3). They have provided us with a detailed schedule
for their Compliance Program which is summarized as follows:
Phase 1 (1998), estimated expenditures $71,000
Phase 1 (1999), estimated expenditures $34,000
Phase 2 (1999), estimated expenditures $30,000
Phase 3 (1999 & 2000), estimated expenditures $1,030,000
Nestlé Canada Inc. is currently under a surcharge agreement with the City. The surcharge is based on an average
suspended solids (S.S.) concentration of 2,078 mg/L at an annual discharge of 216,328 cubic metres. The average
biochemical oxygen demand (B.O.D.) concentration is 1,973 mg/L. The estimated annual S.S. and B.O.D. loading
from the facility before the proposed treatment are 449,530 kg per year and 426,815 kg per year, respectively. With the
assumption that the pre-treatment will reduce the S.S. and B.O.D. concentrations by 50 percent, the estimated loading
for S.S. and B.O.D. after pre-treatment will be 224,765 kg per year and 213,408 kg per year, respectively.
Conclusions:
In accordance with Section 6, Compliance Program, of Sewer Use By-law No. 153-89 and the policy adopted by Metro
Council on August 10 and 11, 1994, a Compliance Program with monetary concession should be issued to Nestlé
Canada Inc. to provide a mechanism by which the over-strength effluent, which exceeds the By-law limit for S.S. and
B.O.D. can be discharged on a 50 percent reduced fee basis while the company implements further wastewater
treatment controls, under the conditions previously stated in this report.
Contact Name:
V. Lim, Chief Engineer - Environmental Services
Water Pollution Control Division
Telephone: (416) 392-2966
Fax: (416) 397-0908
E-Mail: victor_lim@metrodesk.metrotor.on.ca
Michael A. Price, P.Eng., FICE
General Manager
Water and Wastewater Services
Barry H. Gutteridge
Commissioner
Works and Emergency Services
vl:File No. 1047.20 SP
NestleW&U.doc