The ITIA and the ITWRA represent all the manufacturers, both of the major producers and a large number of retailers. We would like to thank the committee for giving us the opportunity to make a submission on SI 400.
As an industry, we recognise that we have both a legal and moral obligation to recycle our tyre waste in an environmentally appropriate manner. To give the committee some background, in March 2012 a minor desktop study costing €17,675, called the all-island waste tyre survey, was commissioned jointly by the Department of the Environment in Northern Ireland and the Department of the Environment, Community and Local Government in the Republic of Ireland. The most damning conclusion of this report was that between 24% and 50% of the waste tyres arising in the Republic of Ireland were unaccounted for. Regrettably, this survey had serious transcription errors from one calculation to the next which affected the final mathematical calculations and the statistical conclusions reached. We have attached some appendices to show how these errors were created.
In June 2012, the then Minister for Environment, Community and Local Government, Phil Hogan, ordered a broader review of the producer responsibility initiative model in Ireland, including waste tyres. A draft copy of this report was published in November 2013 which identified two key performance indicators that were used to measure the waste management performance of the existing compliance schemes. Of the waste tyres, 24% to 50% were unaccounted for, and 800 economic operators were not registered with a compliance scheme. The then Minister, Phil Hogan, relied on this inaccurate statistical analysis of waste collected and the implied postulation that 50% of the numerically non-compliant economic operators equated to 50% of the tyres placed on the market when he announced his decision to consider the imposition of a full producer responsibility initiative at the national waste summit on 28 November 2013.
The Minister, Phil Hogan, announced the establishment of tyre working groups in a press release in May 2014. The first tyre working group meeting was held on Tuesday, 27 May 2014. Most of the key stakeholders were in Germany attending a pre-eminent tyre conference and trade show. The tenor of future meetings was set by the absolute refusal of the chairman to consider rescheduling the initial meeting to facilitate attendance by stakeholders. The second meeting was held on Wednesday, 25 June 2014 at which Repak and the WEEE Registry Society, now PR Limited, were presented on the agenda for presentation, discussion and approval. No input or discussion took place with stakeholders prior to this meeting, so that the presumption has to be that the PR Limited and Repak ELT solution was pre-ordained by Department of the Environment, Community and Local Government officials. As a result of a very strong protest by the two industry representative bodies present at the meeting, the ITIA and ITWRA, the two organisations were allowed to present a joint industry solution at the third tyre working group meeting on Tuesday, 29 July 2014. This presentation was rejected by departmental officials. At a subsequent tyre working group meeting on Tuesday, 7 October 2014, when both organisations presented their individual solutions, each was summarily dismissed without discussion. This was not a very robust consultative process.
Instead of leading the process and potentially developing a consultative conclusion, departmental officials stymied the process with rigidity and overt formality, allowing positions to become entrenched because of the restrictive nature of the process itself. Each group was permitted to present without any effective conference. While the Environmental Protection Agency, EPA, the County and City Management Association, CCMA, and the National TransFrontier Shipment Office were all present at the tyre working group meetings, they did not participate in the outcome or recommendations and had no public input into the final documents considered by the Department.
There are three major deficiencies in SI 400 which will result in the failure of this instrument to ensure the environmentally appropriate management of tyre waste. Market disruption in Northern Ireland is not dealt with in any way. The reporting requirements for small tyre shops are confusing and convoluted and place a very significant administrative burden on small family tyre businesses. Enforcement resources are being squandered. Fixed penalty notices were to be a central foundation of new tyre regulations to enhance enforcement efforts by local authorities.
The Minister for Communications, Climate Action and Environment, Deputy Denis Naughten, made the point in his 18 September 2017 press release that the visible environmental management charge, visible EMC, would formalise and standardise the existing charge the consumer already pays when purchasing new tyres. This is simply not correct. At a meeting held in the Minister's constituency office on 15 September 2017, at which he met with two stakeholders, he stated that he understood the previous scheme, the TRACS compliance scheme, charged €2 per car tyre. It was pointed out to the Minister that this was not the case and that the scheme only ever collected a unit fee of €0.10 per tyre from producers to fund the administrative costs of the black box and reporting to the compliance scheme. The retailer paid the cost of recycling tyres from their revenue stream. The Minister further claimed in this same press release that the visible EMC for car tyres would be €2.80 and €1.50 for motorcycle tyres. This charge will in fact be €3.44 for cars and €1.85 for motorcycles. VAT is applicable at a rate of 23% on all retail sales, and legally VAT must be quoted in all retail pricing.
In correspondence between the environmental solicitor, William Fry, and the Minister, it was pointed out that under chapter 2, section 8(3) of the Waste Framework Directive 2008/98/EC it states: “When applying extended producer responsibility, member states shall take into account the technical feasibility and economic viability and the overall environmental, human health and social impacts, respecting the need to ensure the proper functioning of the internal market”. This is a legal requirement. We have attached appendix D and E to our submission to the committee showing this correspondence. In an answer to this correspondence by the principal officer of the Department of Communications, Climate Action and Environment, it was claimed that the flow of tyres from one jurisdiction to the other was more a direct result of currency fluctuations. With a visible environmental management charge of €3.44 and €13.50 respectively for car and truck tyres, the flow will only be one way. Two weeks ago, it cost €1.12 plus VAT to collect, recover and recycle a car tyre. Today, the exact same car tyre will cost €3.44 to recycle, a 250% increase, which will be passed on in full to the Irish motorist. Market distortion will occur because this visible environmental tax is not payable north of the Border and significantly exceeds the commercial cost of properly collecting and recycling a tyre.
Of the tyres imported into Ireland in 2016, 48% were directly imported from Europe, according to CSO figures. Free movement of goods within Europe precludes any official notification of these tyre imports to the Irish authorities. Tyres do not have a serial number. It is not credible to suggest that more than 2,500 small and medium-sized producers will self-declare these imports and pay the mandated environmental levy, nor is it credible to suggest that Repak ELT has designed and can fund an enforcement model capable of cost effectively inspecting and auditing 2,500 plus economic operators to oversee these imports, particularly when tyres can freely flow across the Border and the waste arising can be shipped back North, or worse, fly-tipped south of the Border. This will be become even more evident when a visible environmental management charge is added to truck tyres and they cost an extra €13.50 per tyre in January 2018.
The principal officer also stated in his reply letter referred to above, which we include in appendix E of our submission to the committee, that as a result of the new regulations, for “the first time there would be a clear view of tyre data coming on to and off the Irish market”. The new regulations include all of the new car, truck, tractor and farm machinery franchise dealers in the country, the 82,500 second-hand vehicles imported in the year to date from the United Kingdom and Northern Ireland and all of the hardware shops which sell wheeled garden equipment such as lawn tractors etc. All of these entities are importing tyres and have obligations to register as producers and must now pay the applicable environmental charge. It is not credible to suggest that Repak ELT can account for all of the potential tyre waste arising from all of these producer categories while maintaining a level playing field for compliant operators. The environmental impact from market distortion will be a dramatic increase in fly-tipping North and South, as retailers, farmers and transport companies purchase tyres they do not register to remain competitive and need to get rid of the waste arising.
A very important fact to note is that the confidentiality of the black box is today totally compromised by virtue of the fact that anyone can work out a tyre company’s market share by dividing their Repak ELT invoice by €3.44. Producers are entitled to and the scheme should ensure the confidentiality of commercially sensitive information at an absolute minimum. The reporting provisions for tyre retailers are administratively punitive. What is not recognised by the regulations is that practically every retail tyre dealer in Ireland will in fact be obliged to register as both a producer with PR Limited and as a retailer with Repak ELT. Most tyre dealers purchase tyres from Northern Ireland and the UK and further afield on a daily basis. Of all tyres placed on the Irish market, 23% come from Northern Ireland or the UK. As a producer, all retail tyre dealers must report the number of imported tyres they have sold on a monthly basis to PR Limited. In effect, they also must report as producers what they sell to themselves as retailers. They will then be invoiced €3.44 for each car tyre imported and placed on the market by Repak ELT.
As a tyre retailer they must also make a monthly report to Repak ELT, using ten headings, eight categories and 35 sub-categories under each heading. In most retail tyre shops, these reports will have to be completed by hand, as the computer programmes used at retail level are not sophisticated enough to automate the reporting process. I refer to the third schedule, part 11 of the new regulations, where it says, “information to be provided for the purposes of reporting to an approved body”.
We have added that as appendix C. The environmental impact of these confusing reporting requirements will be inaccurate market data resulting from double counting in some cases and distorted reporting from the list of retailers already mentioned struggling to report tyre purchases, sales and waste recovery under eight categories and 35 sub-categories.
Enforcement, and particularly fixed penalty notices, has been recognised by all stakeholders as a key component of a successful enforcement regime. Fixed penalty notices were discussed and promised at every stage of the process as a way to cost effectively manage enforcement resources. All of the stakeholders have publically supported fixed penalty notices at one time or another, including the RPS Group, which carried out both the all-island survey and a review of the PRI model in Ireland for the Department of Housing, Planning and Local Government, the Department itself, the EPA, CMMA, the Tyres Working Group, TWG, sub-committee on enforcement, PR Ltd., Repak ELT and both the ITIA and the ITWRA. Fixed penalty notices as an enforcement tool was promised at all TWG meetings and used as a means to maintain industry involvement in a process with which it was very uncomfortable.
The Minister has indicated that he has made €9 million available with regard to waste enforcement. He has also indicated that he will initiate robust enforcement procedures shortly after the new regulations are introduced. Given the way in which the regulations are constructed, there is very little self-policing, which means that there will be a continuous requirement to engage in costly enforcement actions with a consequent drain on enforcement resources. One of the key recommendations of the review of the producer responsibility initiative model in Ireland document was that non-compliance penalties would be set at an appropriate level and that there would be additional use of civil sanction. The environmental impact will be a squandering of enforcement resources on an ongoing basis because the scheme must be policed continuously rather than monitored continuously.
We feel this scheme will fail because front loading the vEMC has complicated the reporting protocol beyond the competency levels of most retail computer systems, requiring retailers who import from Northern Ireland to report the transaction first to PR Ltd. using one protocol and report the exact same transaction to Repak ELT Ltd using completely different criteria. This creates an administrative and reporting nightmare for the retailer. A back-loaded scheme would capture every tyre placed on the market, reducing reporting and auditing complications considerably. A back-loaded scheme would also allow for the free market to control the cost of collecting, treating and recovering tyre waste in an environmentally appropriate manner.
The producer definition has resulted in three manufacturers opting out of the scheme as producers. Northern Ireland wholesalers are offering to take back waste to allow southern tyre shops to circumvent the need to register. There are so many operational loopholes in this legislation that it has no chance of realising the recovery targets that have been set. The design of this compliance scheme compromises the very environmental outcome desired by all compliant stakeholders but there is a solution. The Minister and his Department maintain that a single compliance scheme is the answer. At one time, the industry supported this position in the full expectation that, as is with best practice throughout European countries operating a PRI, the compliance scheme would be operated and controlled by the industry itself. As it now stands we have a "not for profit" company, Repak ELT, which will receive over €6.5 million per annum in administrative fees without having recycled a single tyre.
As a consequence of a threatened legal challenge by the environmental solicitor firm William Fry to the award of the compliance scheme contract to Repak ELT as a monopoly, the new regulations now include a provision for a second scheme. The industry wrote to the Minister notifying him of its intention to apply to run an industry-led compliance scheme, one with the full support of key producer and retail stakeholders. This proposal was rejected by the Minister, however.
Most of the industry wants a compliance scheme which provides a level playing field for compliant operators with a commercially viable recycling fee which does not distort the marketplace and a reporting format which recognises that the industry consists of mostly small family-run Irish-owned businesses that want waste tyres to remain a waste issue and not become a trading issue. The framework already exists for such a model in the new regulations. The industry can deliver a much lower cost of compliance through proper controls and a more self-enforcement regime where precious enforcement resources can be deployed to counteract persistent non-compliers. The only requirement is for the Minister and his Department officials to recognise that a compliance scheme has a much better chance of being a success when those in it support the process 100%. This is something the industry will deliver should the Minister accept its application to run and fund an industry-led PRI compliance scheme which is fit for purpose, amends the current legislation to set the vEMC at a maximum of €3.44 rather than a fixed fee of €3.44 while recognising the full extent and scope of the underlying legislation.
