The Nickel Report

With the growing emergence of Extended Producer Responsibility (EPR) laws, companies selling products in the United States must increasingly plan for the end of a product’s life. EPR programs shift waste-management responsibilities that have traditionally been handled by consumers or state and local governments to the “producer” of the product.

Most existing EPR programs in the United States target packaging materials, especially plastic packaging. So far, four states have finalized EPR legislation for packaging: Maine, Oregon, Colorado, and California.[1] Each of these states is currently in the process of developing a regulatory program. In 2023, several additional states introduced EPR legislation, signaling that other states may soon follow.

What types of products do existing packaging EPR laws cover?

While California focuses on “single-use” plastic packaging intended for disposal rather than refill or reuse, programs in Maine, Oregon, and Colorado include other materials, such as metal and glass. Some states also go beyond packaging to include food service ware (e.g., clamshells, cups, utensils, plates) and paper products (e.g., flyers, catalogs, magazines, newspapers). All four states include some exemptions for products not covered by the program. These exemptions vary but usually include an exemption for packaging material containing products regulated by a federal program, such as prescription drugs, infant formula, and hazardous or toxic materials. In addition, EPR laws typically include an exemption for small producers based on revenue or material tonnage threshold.

Who qualifies as a producer?

Although the definition of “producer” varies slightly from state to state, EPR responsibilities are defined largely with reference to branding. Where an item is sold in packaging under the manufacturer’s own brand, the “producer” is the manufacturer. Where an item is manufactured by a person other than the brand owner, the “producer” is the trademark or brand licensee, regardless of whether the trademark is registered in the relevant state.

Lack of intellectual property rights does not necessarily mean that a company does not have EPR obligations, however. All four EPR states have versions of an “importer” provision, which serves as a catch-all when there is no brand owner or licensee with legal obligations under the program, imposing compliance obligations on the entity that imports the product into the United States or first offers it for sale in the relevant state.

Importantly, a foreign company can have EPR obligations if it is the first company that distributes a covered product in the state, such as through a remote online transaction. Entities that sell products online must carefully evaluate their obligations under EPR laws. While the “producer” of a product sold online is typically defined with reference to the rules described above, in some states, such as Colorado and Oregon, the person who packages and ships a product into the state is also considered a “producer” of the shipping packaging.

This hierarchy of legal obligations means that companies selling products in states with EPR laws must gain a clear understanding of how they are situated with respect to others in the supply chain in order to develop an appropriate compliance plan. In some cases, companies may be able to contractually allocate EPR responsibilities, but the ability to do so is dependent upon state law.[2]

What do producers need to do?

The most significant obligation for producers under EPR programs is to join a state-designated Producer Responsibility Organization, or PRO. PROs are tasked with operating the EPR program to achieve statewide recycling goals, including by collecting fees and various information from producers. Although no fee schedules have so far been announced, some states have set forth various criteria for PROs to use in setting fees for their members. Oregon, for example, directs PROs to structure fees to incentivize reduction of environmental impacts from covered products. This means that products considered to have higher environmental impacts will be subject to higher fees. Producers will also be required to collect and submit certain information to the PRO, including the total weight of each type of packaging material sold, offered for sale, or distributed in the state.

States typically allow producers to develop an alternative program in lieu of joining the designated PRO. The advantages and burdens of this alternative compliance pathway may depend on state law, the type of producer, and the covered product at issue.

If a producer fails to join a PRO or establish an alternative program, it will be banned from selling covered products into the state.

What’s upcoming for EPR programs?

Existing state programs are still in the early stages of implementation. Colorado is the only state thus far to designate a PRO – the Circular Action Alliance. The Circular Action Alliance is a non-profit organization founded by eighteen food, beverage, and consumer goods companies. Currently, the Circular Action Alliance is conducting a statewide needs assessment to inform its 2030 and 2035 recycling targets. The needs assessment is due on July 30, 2024.

California’s application period for potential PROs closed on January 1, 2024. Once CalRecycle – the agency tasked with overseeing the state EPR program – selects a PRO, producers will be given a compliance deadline to join the PRO. Shortly before the start of 2024, California also completed several additional steps toward implementing its EPR program, including publishing draft regulations, a draft covered materials list, and a report to the legislature on the current recyclability and compostability status of covered materials. CalRecycle will open a comment period on the draft regulations in early 2024 and anticipates adopting a final version by 2025.

Oregon is working on its second rulemaking under the Plastic Pollution and Recycling Modernization Act of 2021. The first rulemaking established the rules governing administrative aspects of the program. The second rulemaking is expected to address covered product exemptions, standards for environmental impact evaluation and disclosure, and waste prevention and reuse fees, among other topics. Oregon has also expressed a desire to align its EPR program with Colorado.

Although Maine was the first state to pass an EPR law, implementation is slower than in other states. Maine must initiate rulemaking for the program by the end of 2023, with adoption of rules anticipated in summer 2024. Maine plans to open PRO applications in fall 2025 and anticipates the first round of producer payments in 2026.

Other states are considering adopting EPR programs. Maryland is currently conducting a needs assessment, to be completed in December 2024, which may provide a basis for establishing an EPR program in the state. Additional states to watch in 2024 include Connecticut, New York, Massachusetts, and Minnesota, among others.

Compliance planning

EPR compliance requires assessing the business’s role and position in the supply chain of relevant products. Businesses that sell or distribute products should review sales destinations and branding of their products to determine whether producer obligations attach. Businesses with product sales in multiple jurisdictions may be considered a producer in one state for a particular product and not in another for the same product.

If you believe your company may be a producer of covered products under a state EPR program, the Product Stewardship team at Hunton Andrews Kurth can help navigate regulatory uncertainties and compliance obligations.

[1] Two states, Washington and New Jersey, have passed post-consumer recycled (PCR) content laws instead of full EPR programs. Like EPR programs, these laws target plastic packaging, bags, and containers. Washington’s requirements are already effective, and New Jersey’s requirements will begin at the start of 2024. Both laws feature periodic increases in the required percentage of PCR content in plastic materials.

[2] In Oregon, for example, an entity that qualifies as a “producer” of covered products under the statute is not required to comply with EPR requirements if another entity registers as the producer for all such covered products.