Industrial Waste Surcharge Agreements
The Strategic Policies and Priorities Committee recommends the adoption of the
Recommendation of the Budget Committee embodied in the following communication
(April30, 1999) from the City Clerk:
Recommendation:
The Budget Committee on April 30, 1999, recommended to the Strategic Policies and
Priorities Committee, and Council, the adoption of the report (March 16, 1999) from the
Commissioner of Works and Emergency Services, wherein it is recommended that:
(1)the City not proceed with the unilateral termination of all existing Industrial Waste
Surcharge Agreements by January 1, 2000;
(2)subject to approval of Recommendation No. (1), the current Compliance Program with
Monetary Concession Policy be expanded to include not only new surcharge companies and
existing surcharge companies facing substantial increase in surcharge, but also existing
surcharge companies wishing to reduce or eliminate their surcharge assessments; and
(3)also subject to approval of Recommendation No. (1), the Committee adopt the
recommendations contained in the report dated November 20, 1998, from the Commissioner
of Works and Emergency Services, entitled "Industrial Waste Surcharge Agreement - Pizza
Pizza Limited, 58 Advance Road", with terms and conditions satisfactory to the City Solicitor
and the Commissioner of Works and Emergency Services.
Background:
The Budget Committee had before it a report (April 21, 1999) from the City Clerk, advising
that the Works and Utilities Committee on April 21, 1999, recommended to the Budget
Committee the adoption of the report dated March 16, 1999, from the Commissioner of
Works and Emergency Services, wherein it is recommended that:
(1)the City not proceed with the unilateral termination of all existing Industrial Waste
Surcharge Agreements by January 1, 2000;
(2)subject to approval of Recommendation No. (1), the current Compliance Program with
Monetary Concession Policy be expanded to include not only new surcharge companies and
existing surcharge companies facing substantial increase in surcharge, but also existing
surcharge companies wishing to reduce or eliminate their surcharge assessments; and
(3)also subject to approval of Recommendation No. (1), the Committee adopt the
recommendations contained in the report dated November 20, 1998, from the Commissioner
of Works and Emergency Services, entitled "Industrial Waste Surcharge Agreement - Pizza
Pizza Limited, 58 Advance Road", with terms and conditions satisfactory to the City Solicitor
and the Commissioner of Works and Emergency Services.
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(Report dated April 21, 1999, addressed to the
Budget Committee from the City Clerk)
Recommendation:
The Works and Utilities Committee on April 21, 1999, recommended to the Budget
Committee the adoption of the report dated March 16, 1999, from the Commissioner of
Works and Emergency Services respecting Industrial Waste Surcharge Agreements.
Background:
The Works and Utilities Committee on April 21, 1999, had before it a report (March 16,
1999) from the Commissioner of Works and Emergency Services recommending that:
(1)the City not proceed with the unilateral termination of all existing Industrial Waste
Surcharge Agreements by January 1, 2000;
(2)subject to approval of Recommendation No. (1), the current Compliance Program with
Monetary Concession Policy be expanded to include not only new surcharge companies and
existing surcharge companies facing substantial increase in surcharge, but also existing
surcharge companies wishing to reduce or eliminate their surcharge assessments; and
(3)also subject to approval of Recommendation No. (1), the Committee adopt the
recommendations contained in the report dated November 20, 1998, entitled "Industrial Waste
Surcharge Agreement - Pizza Pizza Limited, 58 Advance Road", with terms and conditions
satisfactory to the City Solicitor and the Commissioner of Works and Emergency Services.
The Committee also had before it a the following communications:
(i)(March 30, 1999) from the City Clerk advising that the Budget Committee on
March29,1999, referred the report dated March 16, 1999, from the Commissioner of Works
and Emergency Services respecting Industrial Waste Surcharge Agreements, to the Works and
Utilities Committee for further consideration, to report thereon to the Budget Committee with
a request that, when considering Recommendation No. (2) from a budgetary point of view, the
same levels as 1998 be maintained;
(ii)(April 7, 1999) from the City Clerk advising that the Economic Development Committee
on March 29 and April6, 1999, had before it the report dated March 16, 1999, from the
Commissioner of Works and Emergency Services respecting Industrial Waste Surcharge
Agreements, and that the Economic Development Committee supports the adoption of such
report;
(iii)(January 29, 1999) from Ms. Anne Dubas, President, Local 79, Canadian Union of
Public Employees, expressing concern with respect to the implications of the
recommendations of the Works and Utilities Committee that Industrial Waste Surcharge
Agreements with existing industries be terminated by January 1, 2000; and noting that the
agreements allow industries to discharge non-toxic wastes provided that they can be treated at
the City's treatment plants, at a fee to offset operational costs of the plants, rather than through
the purchase of their own individual, costly equipment;
(iv)(February 1, 1999) from Mr. Frank Ingratta, Deputy Minister, Ministry of Agriculture,
Food and Rural Affairs, advising that any proposal to replace Industrial Waste Surcharge
Agreements with an increased fee structure would have significant competitive implications to
food processors in the City of Toronto; and noting that the beverage, brewery, confectionery,
dairy, fruit and vegetable and meat processing sectors would all face significant cost increases
on municipal water and wastewater charges which would make the food processing sector,
one of Toronto's largest employers, uncompetitive, and which could lead to plant closures and
reduce Toronto's ability to attract new food investment;
(v)(February 1, 1999) from Mr. Russell Tabata, Director, Operations, Molson Breweries -
Etobicoke, expressing concern with respect to the lack of consultation prior to the
recommendation with regard to the elimination of sewer surcharges being presented to
Toronto City Council; noting that Molson Breweries has been actively pursuing effluent
reduction initiatives and has made significant progress towards reducing loading to the
municipal sewer system, and further, that through a co-operative relationship with Toronto
Works and Emergency Services, the surcharge agreement has provided a very effective and
responsible strategy for the management of the treatable waste from the Etobicoke Brewery;
and requesting the opportunity to meet with the Committee and staff to discuss this issue
further;
(vi)(February 2, 1999) from Mr. Ken W. Holmes, Vice President - Operations, Campbell
Soup Company Ltd., urging that the recommendation to terminate existing sewer surcharge
agreements, and any related actions, be withdrawn immediately and deferred to permit a full
dialogue between the City of Toronto and the affected businesses; expressing concern that
there has been no consultation on this proposal and no notice of the City's intention to make
changes to the Industrial Waste Surcharge Agreement; and advising that the sudden
cancellation of this agreement does not permit sufficient time to identify and implement cost
effective alternatives and, if adopted, will severely impact the future operation of the Toronto
plant;
(vii)(February 23, 1999) from Mr. Charles Buehler, President, Organic Resource
Management Inc., advising that the recommendations of the Works and Utilities Committee at
its meeting of January 13, 1999, with respect to Industrial Waste Surcharge Agreements, are
unnecessary and financially damaging to many industries, in particular the food processing
industries; and providing a background on municipal wastewater treatment services for the
food processing and food services sectors, and arguments for maintaining the current system
of agreements;
(viii)(April 21, 1999) from Ms. Karen Buck, Toronto, Ontario, respecting the financial
implications of terminating Industrial Waste Surcharge Agreements and making
recommendations with respect thereto; and
(ix)(April 21, 1999) from Ms. Karey Shinn, Chair, Safe Sewage Committee, expressing
concerns with respect to Industrial Waste Surcharge Agreements and the draft Sewer User
By-law.
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(Report dated March 16, 1999, addressed to the
Works and Utilities Committee, the Economic Development
Committee and the Budget Committee from the
Commissioner of Works and Emergency Services)
Purpose:
To advise the Committee of the various impacts which would result from a unilateral
termination of all existing Industrial Waste Surcharge Agreements by January 1, 2000.
Funding Sources, Financial Implications and Impact Statement:
Terminating all existing Industrial Waste Surcharge Agreements will mean the loss of
approximately $8 million per year in revenue.
Recommendations:
It is recommended that:
(1)the City not proceed with the unilateral termination of all existing Industrial Waste
Surcharge Agreements by January 1, 2000;
(2)subject to approval of Recommendation No (1), the current Compliance Program with
Monetary Concession Policy be expanded to include not only new surcharge companies and
existing surcharge companies facing substantial increase in surcharge but also existing
surcharge companies wishing to reduce or eliminate their surcharge assessments; and
(3)also subject to approval of Recommendation No. (1), the Committee adopt the
recommendations contained in the report (November 20, 1998) from the Commissioner of
Works and Emergency Services, entitled "Industrial Waste Surcharge Agreement- Pizza Pizza
Limited, 58 Advance Road", with terms and conditions satisfactory to the City Solicitor and
the Commissioner of Works and Emergency Services.
Council Reference/Background/History:
City Council on February 2, 3 and 4, 1999, had before it Clause No. 4 of Report No. 1 of The
Works and Utilities Committee, entitled "Industrial Waste Surcharge Agreement - Pizza Pizza
Limited", wherein it is recommended that:
(1)the report dated November 20, 1998, from the Commissioner of Works and Emergency
Services be adopted;
(2)the Commissioner of Works and Emergency Services be requested to advise those
industries with existing Industrial Waste Surcharge Agreements that such agreements will be
terminated by January 1, 2000, and that staff provide assistance wherever possible similar to
that provided to Nestlé Canada Inc. in cleaning up sewer discharge; and
(3)no further agreements be approved.
The Works and Utilities Committee reports, for the information of Council, having requested
the Commissioner of Works and Emergency Services to:
(1)send out the Nestlé Canada Inc. model to all those companies that have Industrial Waste
surcharge Agreements with the City of Toronto, with a suggestion that the City would be
willing to negotiate similar initiatives; and to invite all parties to a workshop or forum on this
topic in order to provide information to such industries regarding strategies for reducing
industrial waste; and
(2)submit a report to the Committee on:
(i)the banning, as well as phasing out, of such agreements;
(ii)the deployment of staff presently engaged in auditing industrial and commercial
operations; and
(iii)the doubling of fees charged, in the interim.
Council also had before it, during consideration of the aforementioned Clause, a report
(January29,1999) from the City Solicitor advising Council of the legal implications of the
unilateral termination by the City of all existing Industrial Waste Surcharge Agreements by
January 1, 2000.
Council also had before it, during consideration of the aforementioned Clause, the following
communications with respect to the implications of the recommendations of the Works and
Utilities Committee regarding the waste surcharge agreement with Pizza Pizza and other
existing Industrial Waste Surcharge Agreements:
(i)(January 29, 1999) from Ms. Anne Dubas, President, CUPE Local 79; and
(ii)(February 2, 1999) from Ken W. Holmes, Vice-President, Operations, Campbell Soup
Company Limited.
Council struck out and referred this Clause back to the Commissioner of Works and
Emergency Services for further consideration and report thereon to the Works and Utilities
Committee; and Council directed that the Commissioner of Works and Emergency Services
also submit a copy of such report to the Economic Development Committee for comment
thereon to the Works and Utilities Committee.
Further, the Budget Committee, at its meeting held on March 5, 1999, had before it a report
(March3,1999) from the Chief Administrative Officer on the subject of the Water and
Wastewater 1999 Operating Budget, recommending, among other matters that:
(5)the General Manager, Water and Wastewater Services Division, in consultation with the
Chief Financial Officer and Treasurer, report back to the Budget Committee on the overall
financial impact of the termination of industrial waste agreements.
Comments and/or Discussion and/or Justification:
By-law No. 153-89 establishes wastewater sewer discharge limits and prohibits the discharge
of certain toxic materials. The by-law also allows for the limits of suspended solids and
biochemical oxygen demand (BOD), which are treatable at our treatment plants, to be
exceeded if the company is willing to enter into a surcharge agreement to pay for the
additional cost of treatment. No surcharge agreement is allowed for the discharge of
untreatable wastes such as heavy metals. About 85 percent of the companies with surcharge
agreements with the City are in the food processing sector, e.g., dairy processing, tofu
processing, slaughterhouse, brewery, candy production, sugar refining, cake and pastry
production, etc. The remaining 15 percent is a mixture of industrial and commercial
launderers, used paper recyclers, and household cleaning and personal care product
manufacturers. Their discharges are high in organic matter which is treatable waste at each of
the Water Pollution Plants and not detrimental to the quality of sewage sludge.
The Committee's recommendations to unilaterally terminate all existing Industrial Waste
Surcharge Agreements and not allow any further agreements to be approved by January 1,
2000, will impact industries in the following ways:
(1)most industries would be unable to arrange for alternative treatment on site or to make
other alternative arrangements due to the short notice period proposed;
(2)those that are unable to arrange for alternative treatment on site to meet the by-law limits
by January 1, 2000, will immediately face prosecution under By-law No. 153-89;
(3)we are aware of treatment systems costing as much as $10 million in capital costs and
$2million in annual operating costs; seventy percent of the companies with surcharge
agreements are paying less than $30,000.00, while most small biological treatment systems
(e.g.,biofilters) can cost between $100,000.00 to $300,000.00, not including the annual
operating and sludge disposal costs; and a number of small companies may find the capital
and operating costs for on-site treatment prohibitive;
(4)it may also be very difficult for many industries to install effluent treatment systems to
comply with the by-law due to space limitations;
(5)the purpose of surcharge agreements is to avoid the proliferation of small private sewage
treatment plants throughout the community for biological treatment; these plants may have
problems with odours or upsets due to the less efficient biological treatment provided at small
plants when compared to a centrally operated sewage treatment plant;
(6)industries operating biological treatment systems will be required to transport sludge
from these plants through their local communities to disposal locations, thus increasing truck
traffic and air pollution; and
(7)effluents from food processing firms, which account for 85 percent of our surcharge
companies, are best treated by a biological plant similar to our sewage treatment plants; and
Agriculture Canada, due to health reasons, will not allow such a plant to be located in the
same facility.
It is true that in November 1986, the Region of Peel considered requiring any new industry
moving into Peel since 1986 to meet the sewer use by-law limits (i.e., no surcharge agreement
allowed) and terminating all surcharge agreements in January, 1990. They had to abandon this
policy on September 11, 1989, due to serious negative economic implications.
On the issue of deployment of staff presently engaged in auditing industrial and commercial
operations, we anticipate that with all the 157 surcharge companies without a surcharge
agreement come January 1, 2000, a majority of them will not be in compliance of the by-law
and we need the resources to enforce the by-law. Currently we have 22 inspectors, and 33
percent of their work involves sampling, negotiating and maintaining surcharge agreements.
The remaining 66 percent of their work involves enforcing the by-law on those companies that
are not eligible for surcharge plus finding new companies who can be put on surcharge.
The City Legal Department has advised that the current policy for administering the
Compliance Program with Monetary Concession is not equitable in that it is only available to
companies entering into new surcharge agreements and existing surcharge companies facing
substantial increase in surcharge costs. Consequently, it is proposed to expand our current
Compliance Program with Monetary Concession Policy to include all existing surcharge
companies wishing to reduce or eliminate their surcharges.
We, therefore, propose the following guidelines for considering applications for Compliance
Program with Monetary Concession:
(1)all companies who have existing surcharge agreements, including new companies
seeking their first agreement and companies facing substantial increase in their surcharge
costs, are eligible to apply;
(2)the applicant must commit in writing, in the form of a Compliance Program with specific
program activities, commencement dates, completion dates and program costs, to reduce their
waste loading by up to 50 percent;
(3)the reduction in surcharge could be for a period of between one and three years,
depending on the time required to complete the program for waste reduction;
(4)pollution prevention would be the preferred option for waste reduction; end-of-pipe
treatment would be approved only if there are no pollution prevention options available;
(5)an applicant can only be granted one Compliance Program with Monetary Concession per
lifetime; and
(6)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.
Potentially we could lose $4 million of the $8 million revenue if all the existing companies
with surcharge agreements take advantage of this new policy, but realistically, the true
financial impact is hard to predict, as a majority of food processing companies will not be able
to install biological treatment systems on site due to Health Canada regulations. Further, some
industries may find the capital expenditures to provide on-site treatment cannot be justified
given the economic incentives the City provides under the Monetary Concession Program.
Financial Impact:
We currently have 157 Industrial Waste Surcharge Agreements with companies across the
new City. These agreements result in the annual revenue of approximately $8 million. We
have consulted with the Finance Department, and they have advised that with the termination
of these agreements there will be an impact of about two percent on the water rate.
Also, without the surcharge agreements we would have no revenue to support the Compliance
Program with Monetary Concession policy (the "Nestlé Canada Inc. Model") to rebate
companies up to 50 percent of their surcharge if they wish to reduce or eliminate their
surcharge by installing wastewater treatment systems.
Potential Impact on Biosolids Quality:
The majority of our surcharge industries are food processors, e.g., dairy products, tofu
processing, meat and fish processing, etc. Their wastes contain, in addition to high organic
wastes (BOD) which we surcharge, nitrogen in both organic and inorganic forms, which ends
up in biosolids. This enhances biosolids nutrient content and makes it more desirable for
beneficial use. Ontario's Guideline for the Utilization of Biosolids and Other Wastes on
Agricultural Land determines whether biosolids are acceptable for beneficial use based on
nitrogen to metal ratios. By eliminating all existing surcharge agreements, with the majority of
them in the food sector discharging high nitrogen bearing wastes, will result in a reduction in
the nitrogen content of our biosolids. With beneficial use we must pay particular attention to
the nutrient content of the biosolids, otherwise it would undermine our current plan to
eliminate incineration and get into the beneficial reuse of biosolids.
Legal Implications:
Under the terms of the surcharge agreement, the City may terminate the agreement at any time
only where there is an emergency situation of immediate threat to any person, property, plant
or animal life, or waters. This is not the case with the present surcharge agreements.
The City Solicitor submitted a report (January 29, 1999) to City Council on
February2,3and4,1999, in which he concluded that "If all the Industrial Waste Surcharge
Agreements were terminated by January 1, 2000, as recommended by the Works and Utilities
Committee, the City would be open to a large number of claims for breach of contract, and
could be liable to pay a substantial amount of damages to those with whom it had entered into
Industrial Waste Surcharge Agreements. If the City wished to terminate all existing Surcharge
Agreements, it would have to provide a reasonable period of notice to the affected parties."
The City Solicitor also advised Council that if the City tries to drastically increase the fee
charged in the interim, this approach could likely be successfully challenged. The Supreme
Court of Canada has recently held that the amount of a fee charged for a service provided
must bear a reasonable connection to the cost to the City in providing that service.
Economic Development Impact:
The purpose for the economic incentives under our Compliance Program with Monetary
Concession Policy was to provide industries with the opportunity to upgrade their facilities to
minimize their surcharge. By terminating all surcharge agreements, industries would not be
able to take advantage of the economic incentives provided under the Compliance Program
with Monetary Concession Policy as we would have no revenue to support such a program.
Similarly, the Compliance Program with Monetary Concession allows a three-year phase-in,
whereas the proposal to terminate surcharge agreements by January 1, 2000, is only months
away.
We have consulted with the Economic Development, Culture and Tourism Department and
they have advised that depending on the cost of on-site treatment versus the surcharge costs,
Toronto industries may have a competitive disadvantage compared with industries in other
municipalities. Without any economic incentives, a majority of surcharge companies will find
the cost of installing a treatment system prohibitive. By denying industries the choice of
entering into a surcharge agreement with the City, many industries will be forced to terminate
their operations in Toronto and potentially move to other jurisdictions that allow surcharge
agreements, such as the Regions of Peel, York, Durham, Halton, and Hamilton-Wentworth.
Conclusions:
The 157 companies with agreements need time to assess their potential for, and legal position
of, installing on-site treatment. The City needs to take a proactive approach with the
companies and offer them options and solutions to their discharges that exceed our current
by-law limits. In this regard, staff could undertake both a communication plan and an
education workshop or forum on this issue if the recommendations in this report are approved.
The Committee should not proceed with the termination of all existing Industrial Waste
Surcharge Agreement by January 1, 2000, for the reasons noted above. Further, it is
recommended that for equity reasons, all existing surcharge companies be considered under
the Compliance Program with Monetary Concession Policy.
Contact Name:
Mr. Vic Lim, P.Eng., Manager, Industrial Waste and Storm Water Quality, Quality Control
and System Planning, Telephone: (416) 392-2966; Fax: (416) 397-0908, e-mail:
vic_lim@metrodesk.metrotor.on.ca.
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(Report dated November 20, 1998, entitled
"Industrial Waste Surcharge Agreement
- Pizza Pizza Limited, 58 Advance Road"
addressed to the Works and Utilities Committee
from the Commissioner of Works and Emergency Services)
Purpose:
To allow Pizza Pizza Limited to enter into an Industrial Waste Surcharge Agreement with the
City of Toronto permitting them to discharge overstrength effluent which is amenable to
treatment at our treatment plants and pay a surcharge fee.
Funding Sources, Financial Implications and Impact Statement:
This Department maintains approximately 157 Industrial Waste Surcharge Agreements, which
allow 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 the operation of our
treatment plants.
Recommendation:
It is recommended that we be authorized to enter into an Industrial Waste Surcharge
Agreement with Pizza Pizza Limited, 58 Advance Road, under terms and conditions
satisfactory to the City Solicitor and the Commissioner of Works and Emergency Services.
Council Reference/Background/History:
On November 9, 1989, Metropolitan Council, by adoption of Clause No. 6 of Report No. 16
of TheWorks 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 overstrength 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.
Comments and/or Discussion and/or Justification:
The type of waste generated by Pizza Pizza Limited is biodegradable and amenable to
treatment at our Humber Treatment Plant.
This company has been notified of the annual charge to be levied, and has signified agreement
to the amount of the assessment:
AnnualExcess
Yearly Plant WasteBy-law
EffectiveSurchargeDischargeStrength Limit
Date $ m3 mg/L mg/L
Pizza Pizza LimitedJan. 1, 1998$7,167.11 13,751 922 350
SS SS
The alternative to an Industrial Waste Surcharge Agreement would be to force the industry to
comply with the Sewer Use By-law limit for suspended solids (SS) and biochemical oxygen
demand (BOD), by the addition of effluent pretreatment equipment. This would be an
impossibility for many companies due to financial and/or space limitations. Those industries
that could afford to install pretreatment systems may have problems with odours or upsets.
The Ministry of the Environment acknowledges the need for surcharge agreements in their
Model Sewer Use By-law (1988).
Conclusions:
The overstrength effluent from the above industry is organic in nature, biodegradable and
amenable to treatment at our treatment plants.
In accordance with Section (5) of our Sewer Use By-law No. 153-89, an Industrial Waste
Surcharge Agreement should be established with the above industry to provide a mechanism
by which the overstrength effluent which exceeds the by-law limit for SS can be discharged
on a fee basis.
Contact Name:
Vic Lim, P.Eng., Chief Engineer - Environmental Services, Water Pollution Control,
Telephone: (416) 392-2966; Fax: (416) 397-0908, E-mail:
victor_lim@metrodesk.metrotor.on.ca.
